EXHIBIT 10.11
FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
FOR EMPLOYEES OF CAVANAUGHS HOSPITALITY CORPORATION
THIS AGREEMENT, dated ________, 1998, is made by and between Cavanaughs
Hospitality Corporation, Inc., a Washington corporation hereinafter referred to
as "Company," and __________, an employee of the Company, hereinafter referred
to as "Optionee":
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock; and
WHEREAS, the Company wishes to carry out the Plan (the terms of which are
hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Committee appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
shareholders to grant the Non-Qualified Option provided for herein to the
Optionee as an inducement to enter into or remain in the service of the Company
and as an incentive for increased efforts during such service, the Board has
ratified such determination and the Committee has instructed the undersigned
officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
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Capitalized terms used herein without definition shall have the respective
meanings set forth therefor in The 1998 Stock Incentive Plan of Cavanaughs
Hospitality Corporation (the "Plan"). Whenever the following terms are used in
this Agreement, they shall have the meaning specified below unless the context
clearly indicates to the contrary. The masculine pronoun shall include the
feminine and neuter, and the singular the plural, where the context so
indicates.
"Cause" shall mean (i) the Optionee's failure or refusal to perform
specific and lawful directions with respect to the Optionee's employment with
the Company or any Subsidiary, (ii) the commission by the Optionee of a felony
or the perpetration by the Optionee of an act of fraud, dishonesty, or
misrepresentation against, or breach of fiduciary duty toward, the Company or
any Subsidiary, or (iii) any willful act or omission by the Optionee which is
injurious in any material respect to the financial condition or business
reputation of the Company or any Subsidiary.
"Option" shall mean a non-qualified stock option granted under this
Agreement and Article III of the Plan.
"Optionee" shall mean an Employee granted an Option under this Agreement
and the Plan.
ARTICLE II
GRANT OF OPTION
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Section 2.1 Grant of Option
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For good and valuable consideration, including services performed by
Employee on behalf of the Company, effective as of the date hereof the Company
irrevocably grants to the Optionee the option to purchase any part or all of an
aggregate of ____ shares of its $.01 par value Common Stock upon the terms and
conditions set forth in this Agreement.
Section 2.2 Purchase Price
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The purchase price of the shares of stock covered by the Option shall be
$____ per share without commission or other charge.
Section 2.3 Status as an Employee
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Nothing in the Plan or this Agreement shall confer upon any Optionee any
right to continue in the employ of the Company or any Subsidiary, or as a
director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge the Optionee at any time for any reason whatsoever, with or without
cause.
Section 2.4 Adjustments in Option
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(a) In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split up, stock dividend or combination of shares, the
Committee shall make an adjustment in the number and kind of shares as to which
the Option, or portions thereof then unexercised, shall be exercisable, in the
manner set forth in the Plan. Any such adjustment made by the Committee shall
be final and binding upon the Optionee, the Company and all other interested
persons.
(b) Notwithstanding the foregoing, in the event of such a reorganization,
merger, consolidation, recapitalization, reclassification, stock split up, stock
dividend or combination, or other adjustment or event which results in shares of
Common Stock being exchanged for or
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converted into cash, securities or other property, the Company will have the
right to terminate the Plan as of the date of the exchange or conversion, in
which case all of the Optionee's rights under this Option shall become the right
to receive such cash, securities or other property, net of any option purchase
price.
(c) In the event of a "spin-off" or other substantial distribution of
assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Committee may in its discretion
make an appropriate and equitable adjustment to the Option to reflect such
diminution.
ARTICLE III
PERIOD OF EXERCISABILITY
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Section 3.1 Commencement of Exercisability
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(a) The Option shall become exercisable in two cumulative
installments as follows:
(i) The first installment shall consist of fifty percent (50%) of the
shares covered by the Option and shall become exercisable on the fourth
anniversary of the date of this Agreement.
(ii) The second installment shall consist of fifty percent (50%) of
the shares covered by the Option and shall become exercisable on the fifth
anniversary of the date of this Agreement.
(b) Notwithstanding Section 3.1(a), after the first anniversary of the
date of this Agreement, if the shares of Common Stock are then trading on an
exchange and the closing price of such shares on the principal exchange on which
shares of Common Stock are then trading equals or exceeds the following prices
for a period of twenty (20) consecutive trading days, then a portion of the
shares covered by the Option, to the extent not then already exercisable under
Section 3.1(a), shall become immediately exercisable as follows:
Installment of Option
Stock Closing Price Immediately Exercisable
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$____ 25%
$____ 50%
$____ 75%
$____ 100%
(c) No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable, except as may be otherwise
provided by the Committee.
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Section 3.2 Duration of Exercisability
--------------------------
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
Section 3.3 Expiration of Option
--------------------
The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a) The expiration of ten (10) years from the date the Option was granted;
or
(b) The time of the Optionee's Termination of Employment unless such
Termination of Employment results from the Optionee's death, the Optionee's
retirement in accordance with the Company's retirement policies or after age
fifty five (55) if the Optionee has completed five (5) years of continuous
employment with the Company, the Optionee's total and permanent disability, or
the Optionee's being discharged by the Company other than for Cause; or
(c) The expiration of three (3) months from the date of the Optionee's
Termination of Employment by reason of the Optionee's being discharged by the
Company other than for Cause, unless the Optionee dies within said three-month
period; or
(d) The expiration of one (1) year from the date of the Optionee's
Termination of Employment by reason of the Optionee's total and permanent
disability or the Optionee's retirement in accordance with the Company's
retirement policies or after age fifty five (55) if the Optionee has completed
five (5) years of employment with the Company; or
(e) The expiration of one (1) year from the date of the Optionee's death;
or
(f) The effective date of either the merger or consolidation of the Company
with or into another corporation, the exchange of all or substantially all of
the assets of the Company for the securities of another corporation, the
acquisition by another corporation or person of all or substantially all of the
Company's assets or eighty percent (80%) or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company,
unless the Committee waives this provision in connection with such transaction.
At least twenty (20) days prior to the effective date of such merger,
consolidation, exchange, acquisition, liquidation or dissolution, the Committee
shall give the Optionee notice of such event if the Option has then neither been
fully exercised nor become unexercisable under this Section 3.3.
Section 3.4 Acceleration of Exercisability
------------------------------
In the event of the merger or consolidation of the Company with or into
another corporation, the exchange of all or substantially all of the assets of
the Company for the
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securities of another corporation, the acquisition by another corporation or
person of all or substantially all of the Company's assets or eighty percent
(80%) or more of the Company's then outstanding voting stock, or the liquidation
or dissolution of the Company, the Committee may, in its absolute discretion and
upon such terms and conditions as it deems appropriate, provide by resolution,
adopted prior to such event and incorporated in the notice referred to in
Section 3.3(f), that at some time prior to the effective date of such event this
Option shall be exercisable as to all the shares covered hereby, notwithstanding
that this Option may not yet have become fully exercisable under Section 3.1(a);
provided, however, that this acceleration of exercisability shall not take place
if :
(a) This Option becomes unexercisable under Section 3.3 prior to said
effective date; or
(b) In connection with such an event, provision is made for an assumption
of this Option or a substitution therefor of a new option by the successor
corporation or a parent or subsidiary of such corporation.
The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with such acceleration of exercisability, including, but not by way of
limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction.
None of the foregoing discretionary terms of this Section shall be
permitted to the extent that such discretion would be inconsistent with the
requirements of Rule 16b-3.
ARTICLE IV
EXERCISE OF OPTION
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Section 4.1 Person Eligible to Exercise
---------------------------
During the lifetime of the Optionee, only the Optionee, or an alternate
payee under a QDRO, may exercise the Option or any portion thereof. After the
death of the Optionee, any exercisable portion of the Option may, prior to the
time when the Option becomes unexercisable under Section 3.3, be exercised by a
beneficiary designated by the Optionee, the Optionee's personal representative
or by any person empowered to do so under the Optionee's will or under the then
applicable laws of descent and distribution.
Section 4.2 Partial Exercise
----------------
Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.3;
provided, however, that each partial exercise
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shall be for not less than one hundred (100) shares (or the minimum installment
set forth in Section 3.1, if a smaller number of shares) and shall be for whole
shares only.
Section 4.3 Manner of Exercise
------------------
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or the Secretary's office of all of the following
prior to the time when the Option or such portion becomes unexercisable under
Section 3.3:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Committee or the Board; and
(b) (i) Full payment (in cash) for the shares with respect to which such
Option or portion is exercised;
(ii) With the consent of the Committee, payment may be delayed for up
to thirty (30) days from the date the Option, or portion thereof, is exercised;
or
(iii) With the consent of the Committee, (A) shares of the Company's
Common Stock owned by the Optionee duly endorsed for transfer to the Company or
(B) shares of the Company's Common Stock issuable to the Optionee upon exercise
of the Option, with a Fair Market Value on the date of Option exercise equal to
the aggregate purchase price of the shares with respect to which such Option or
portion is exercised; or
(iv) With the consent of the Committee, property of any kind which
constitutes good and valuable consideration; or
(v) With the consent of the Committee, a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code or successor provision) and payable upon
such terms as may be prescribed by the Committee or the Board. The Committee may
also prescribe the form of such note and the security to be given for such note.
The Option may not be exercised, however, by delivery of a promissory note or by
a loan from the Company when or where such loan or other extension of credit is
prohibited by law; or
(vi) With the consent of the Committee, any combination of the
consideration provided in the foregoing subparagraphs (iii), (iv) and (v); and
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee or the Board, signed by the Optionee or other
person then entitled to exercise such Option or portion, stating that the shares
of stock are being acquired for the Optionee's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable
rules and
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regulations thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion will indemnify the Company against and hold it
free and harmless from any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is contrary to
the representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option
exercise does not violate the Securities Act, and may issue stop-transfer
orders covering such shares. Share certificates evidencing stock issued on
exercise of this Option shall bear an appropriate legend referring to the
provisions of this subsection (c) and the agreements herein. The written
representation and agreement referred to in the first sentence of this
subsection (c) shall, however, not be required if the shares to be issued
pursuant to such exercise have been registered under the Securities Act, and
such registration is then effective in respect of such shares; and
(d) Full payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, are required to be
withheld upon exercise of the Option; with the consent of the Committee, (i)
shares of the Company's Common Stock owned by the Optionee duly endorsed for
transfer, or (ii) shares of the Company's Common Stock issuable to the Optionee
upon exercise of the Option, having a Fair Market Value at the date of Option
exercise equal to the sums required to be withheld, may be used to make all or
part of such payment; and
(e) In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option.
Section 4.4 Conditions to Issuance of Stock Certificates
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The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission
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or of any other governmental regulatory body, which the Committee or Board
shall, in its absolute discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee or Board shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The receipt by the Company of full payment for such shares, including
payment of all amounts which, under federal, state or local tax law, are
required to be withheld upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
the Option as the Committee or Board may from time to time establish for reasons
of administrative convenience.
Section 4.5 Rights as Shareholder
---------------------
The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
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Section 5.1 Administration
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The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Optionee, the
Company and all other interested persons. No member of the Committee or the
Board shall be personally liable for any action, determination or interpretation
made in good faith with respect to the Plan or the Option. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under this Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations
or rules issued thereunder, are required to be determined in the sole discretion
of the Committee.
Section 5.2 Option Not Transferable
-----------------------
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Optionee or the
Optionee's successors in interest or shall
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be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that this Section 5.2 shall not prevent (i) transfers by
will or by the applicable laws of descent and distribution, (ii) the
designation by the Optionee of a beneficiary to exercise the Optionee's Option
or other rights under this Agreement after the Optionee's death, or (iii)
transfers pursuant to a QDRO.
Section 5.3 Shares to Be Reserved
---------------------
The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4 Notices
-------
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Optionee shall be addressed to the Optionee at the address given
beneath the Optionee's signature hereto. By a notice given pursuant to this
Section 5.4, either party may hereafter designate a different address for
notices to be given to that party. Any notice which is required to be given to
the Optionee shall, if the Optionee is then deceased, be given to the Optionee's
personal representative if such representative has previously informed the
Company of such representative's status and address by written notice under this
Section 5.4. Any notice shall be deemed duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the
United States Postal Service.
Section 5.5 Titles
------
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.6 Shareholder Approval
--------------------
The Plan has been approved by the Company's shareholders.
Section 5.7 Construction
------------
This Agreement shall be administered, interpreted and enforced under the
laws of the State of Washington.
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Section 5.8 Conformity to Securities Laws
-----------------------------
The Optionee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
Section 5.9 Amendments. etc.
----------------
This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by the Optionee or such other person as may be
permitted to exercise the Option pursuant to Section 4.1 and by a duly
authorized representative of the Company.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
CAVANAUGHS HOSPITALITY CORPORATION
By: _____________________________
President
By: _____________________________
Secretary
[Name]
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Optionee
[ ]
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Address
Optionee's Taxpayer
Identification Number:
[ ]
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