Exhibit 10.42

 

INNSUITES HOSPITALITY TRUST

NONQUALIFIED STOCK OPTION AGREEMENT

[Time-Based Vesting]

 

Notice of Stock Option Award

 

InnSuites Hospitality Trust (the “Company”), grants to the Grantee named below,
in accordance with the terms of the InnSuites Hospitality Trust 2015 Equity
Incentive Plan (the “Plan”) and this Nonqualified Stock Option Agreement (the
“Agreement”), an option (the “Stock Option”) to purchase the number of Shares at
the exercise price per share (“Exercise Price”) as follows:

 

 

Name of Grantee:

{TBD}

 

 

Number of Shares:

{TBD} Shares

 

 

Exercise Price:

$3.50 per Share

 

 

Date of Grant:

{TBD}

 

Terms of Agreement

 

1.     Grant of Stock Option. Subject to and upon the terms, conditions and
restrictions set forth in this Agreement and in the Plan, the Company hereby
grants to the Grantee, as of the Date of Grant set forth above, this Stock
Option to purchase the number of Shares at the Exercise Price as set forth
above. This Stock Option is intended to be a nonqualified stock option and shall
not be treated as an “incentive stock option” within the meaning of that term
under Section 422 of the Code.

 

2.     Vesting of Stock Option.

 

(a)     Unless and until terminated as hereinafter provided, the Stock Option
shall vest as set forth in the vesting schedule below (subject to rounding
conventions adopted by the Company), provided that the Grantee shall have
remained in the continuous employ of the Company or a Subsidiary through each
applicable Vesting Date. For purposes of this Agreement, a “Tranche” shall be
the number of Shares for which the Stock Option has vested on a particular
Vesting Date.

 

 

Tranche

Shares for which the

Stock Option is Vested

 

Vesting Date

A

1/3

May 17, 2016

B

1/3

2nd anniversary of the Date of Grant

C

1/3

3rd anniversary of the Date of Grant

 

 
 

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(b)     Notwithstanding the provisions of Section 2(a), the Stock Option will
become immediately vested in full if, prior to a Vesting Date: (i) the Grantee
ceases to be employed with the Company and its Subsidiaries by reason of death
or Disability (defined by reference to the long-term disability plan covering
the Grantee that is maintained by the Company or a Subsidiary); or (ii) a Change
in Control occurs while the Grantee is employed by the Company or any
Subsidiary.

 

(c)     For purposes of this Agreement, the continuous employment of the Grantee
with the Company and its Subsidiaries shall not be deemed to have been
interrupted, and the Grantee shall not be deemed to have ceased to be an
employee of the Company and its Subsidiaries, by reason of the transfer of his
employment among the Company and its Subsidiaries or a leave of absence or
layoff approved by the Company.

 

3.     Forfeiture of Stock Option. To the extent that the Stock Option has not
yet vested pursuant to Section 2 above, it shall be forfeited automatically
without further action or notice if the Grantee ceases to be employed by the
Company and its Subsidiaries prior to an applicable Vesting Date other than as
provided in Section 2(b).

 

4.     Exercisability of Stock Option. Vested Tranches shall become exercisable
as set forth below to the extent that the GAAP pre-tax profit of IBC Hotels LLC
is greater than or equal to the Performance Objective for the applicable
Performance Period. For the avoidance of doubt, if the Performance Objective
fails to be satisfied for all Performance Periods, the Stock Option shall not be
exercisable.

 

Performance Period

(Fiscal Year Ending)

Performance Objective

(GAAP pre-tax profit of IBC Hotels LLC)

Exercisable

Tranche(s)

January 31, 2016

$60,000

A

January 31, 2017

$200,000

A and B

January 31, 2018

$400,000

A, B, and C

 

5.     Exercise of Stock Option.

 

(a)     To the extent that the Stock Option becomes vested and exercisable in
accordance with Sections 2 and 4 of this Agreement, it may be exercised in whole
or in part from time to time by written notice to the Company or its designee
stating the number of Shares for which the Stock Option is being exercised
(which number must be a whole number), the intended manner of payment, and such
other provisions as may be required by the Company or its designee. The Stock
Option may be exercised, during the lifetime of the Grantee, only by the
Grantee, or in the event of his legal incapacity, by his guardian or legal
representative acting on behalf of the Grantee in a fiduciary capacity under
state law and court supervision. If the Grantee dies before the expiration of
the Stock Option, all or part of this Stock Option may be exercised (prior to
expiration) by the personal representative of the Grantee or by any person who
has acquired this Stock Option directly from the Grantee by will, bequest or
inheritance, but only to the extent that the Stock Option was vested and
exercisable upon the Grantee’s death.

 

(b)     The Exercise Price is payable (i) in cash or by certified or cashier’s
check or other cash equivalent acceptable to the Company payable to the order of
the Company, (ii) by surrender of Shares (including by attestation) owned by the
Grantee having an aggregate Fair Market Value at the time of exercise equal to
the total Exercise Price, (iii) by a cashless exercise (including by withholding
Shares deliverable upon exercise and through a broker-assisted arrangement to
the extent permitted by Applicable Laws), or (iv) by a combination of the
foregoing methods.

 

 
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6.     Term of Stock Option. The Stock Option will terminate, to the extent not
previously exercised or forfeited, on the earliest of the following dates (the
“Expiration Date”):

 

(a)     One year after the termination of the Grantee’s employment by the
Company and its Subsidiaries due to death or Disability;

 

(b)     Three months after the termination of the Grantee’s employment with the
Company and its Subsidiaries for any reason other than for death, Disability or
Cause;

 

(c)     Immediately upon termination of employment, if the Grantee’s employment
is terminated by the Company and its Subsidiaries for Cause; or

 

(d)     Midnight on the fourth anniversary of the Date of Grant.

 

Notwithstanding the foregoing provisions of this Section 6, the period during
which the Stock Option can be exercised after a termination of employment
subject to Section 6(b) above will automatically be extended if, on the
scheduled expiration date of such Stock Option as set forth above, the Grantee
cannot exercise the Stock Option because such an exercise would violate an
applicable federal, state, local, or foreign law; provided, however, that such
period shall not extend beyond the earlier of (i) thirty days after the exercise
of the Stock Option first would no longer violate an applicable federal, state,
local, and foreign law, or (ii) the fourth anniversary of the Date of Grant.

 

7.     Delivery of Shares. Subject to the terms and conditions of this
Agreement, Shares shall be issuable to the Grantee as soon as administratively
practicable following the date the Grantee (a) exercises the Stock Option in
accordance with Section 5 hereof, (b) makes full payment to the Company or its
designee of the Exercise Price, and (c) makes arrangements satisfactory to the
Company (or any Subsidiary, if applicable) for the payment of any required
withholding taxes related to the exercise of the Stock Option. The Grantee shall
not possess any incidents of ownership (including, without limitation, dividend
and voting rights) in the Shares until such Shares have been issued to the
Grantee in accordance with this Section 7.

 

8.     Transferability. The Stock Option may not be sold, exchanged, assigned,
transferred, pledged, encumbered or otherwise disposed of by the Grantee;
provided that the Grantee’s rights with respect to such Stock Option may be
transferred by will or pursuant to the laws of descent and distribution. Any
purported transfer or encumbrance in violation of the provisions of this Section
8 shall be void, and the other party to any such purported transaction shall not
obtain any rights to or interest in such Stock Option.

 

 
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9.     No Employment Contract. Nothing contained in this Agreement shall confer
upon the Grantee any right with respect to continuance of employment by the
Company and its Subsidiaries, nor limit or affect in any manner the right of the
Company and its Subsidiaries to terminate the employment or adjust the
compensation of the Grantee, in each case with or without Cause.

 

10.     Relation to Other Benefits. Any economic or other benefit to the Grantee
under this Agreement or the Plan shall not be taken into account in determining
any benefits to which the Grantee may be entitled under any profit-sharing,
retirement or other benefit or compensation plan maintained by the Company or a
Subsidiary and shall not affect the amount of any life insurance coverage
available to any beneficiary under any life insurance plan covering employees of
the Company or a Subsidiary.

 

11.     Taxes and Withholding. The Grantee is responsible for any federal,
state, local or other taxes with respect to the Stock Option. The Company does
not guarantee any particular tax treatment or results in connection with the
grant or exercise of the Stock Option or the delivery of Shares. To the extent
the Company or any Subsidiary is required to withhold any federal, state, local,
foreign or other taxes in connection with the delivery of Shares under this
Agreement, then the Company or Subsidiary (as applicable) shall retain a number
of Shares otherwise deliverable hereunder with a value equal to the required
withholding (based on the Fair Market Value of the Shares on the date of
delivery); provided that in no event shall the value of the Shares retained
exceed the minimum amount of taxes required to be withheld or such other amount
that will not result in a negative accounting impact, unless the Company and the
Grantee agree to another method.

 

12.     Compliance with Law. The Company shall make reasonable efforts to comply
with all applicable federal and state securities laws and listing requirements
with respect to the Stock Option; provided that, notwithstanding any other
provision of this Agreement, and only to the extent permitted under Section 409A
of the Code, the Company shall not be obligated to deliver any Shares pursuant
to this Agreement if the delivery thereof would result in a violation of any
such law or listing requirement.

 

13.     Adjustments. The Exercise Price and the number and kind of shares of
stock covered by this Agreement shall be subject to adjustment as provided in
Section 15 of the Plan.

 

14.     Amendments. Subject to the terms of the Plan, the Committee may modify
this Agreement upon written notice to the Grantee. Any amendment to the Plan
shall be deemed to be an amendment to this Agreement to the extent that the
amendment is applicable hereto. Notwithstanding the foregoing, no amendment of
the Plan or this Agreement shall adversely affect in a material way the rights
of the Grantee under this Agreement without the Grantee’s consent unless the
Committee determines, in good faith, that such amendment is required for the
Agreement to either be exempt from the application of, or comply with, the
requirements of Section 409A of the Code, or as otherwise may be provided in the
Plan.

 

15.     Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.

 

 
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16.     Relation to Plan. This Agreement is subject to the terms and conditions
of the Plan. This Agreement and the Plan contain the entire agreement and
understanding of the parties with respect to the subject matter contained in
this Agreement, and supersede all prior written or oral communications,
representations and negotiations in respect thereto. In the event of any
inconsistency between the provisions of this Agreement and the Plan, the Plan
shall govern. Capitalized terms used herein without definition shall have the
meanings assigned to them in the Plan. The Committee acting pursuant to the
Plan, as constituted from time to time, shall, except as expressly provided
otherwise herein, have the right to determine any questions which arise in
connection with the grant of the Stock Option.

 

17.     Successors and Assigns. Without limiting Section 8 hereof, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the successors, administrators, heirs, legal representatives and assigns of the
Grantee, and the successors and assigns of the Company.

 

18.     Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.

 

19.     Use of Grantee’s Information. Information about the Grantee and the
Grantee’s participation in the Plan may be collected, recorded and held, used
and disclosed for any purpose related to the administration of the Plan. The
Grantee understands that such processing of this information may need to be
carried out by the Company and its Subsidiaries and by third party
administrators whether such persons are located within the Grantee’s country or
elsewhere, including the United States of America. The Grantee consents to the
processing of information relating to the Grantee and the Grantee’s
participation in the Plan in any one or more of the ways referred to above.

 

20.     Electronic Delivery. The Grantee hereby consents and agrees to
electronic delivery of any documents that the Company may elect to deliver
(including, but not limited to, prospectuses, prospectus supplements, grant or
award notifications and agreements, account statements, annual and quarterly
reports, and all other forms of communications) in connection with this and any
other award made or offered under the Plan. The Grantee understands that, unless
earlier revoked by the Grantee by giving written notice to the Secretary of the
Company, this consent shall be effective for the duration of the Agreement. The
Grantee also understands that he or she shall have the right at any time to
request that the Company deliver written copies of any and all materials
referred to above at no charge. The Grantee hereby consents to any and all
procedures the Company has established or may establish for an electronic
signature system for delivery and acceptance of any such documents that the
Company may elect to deliver, and agrees that his or her electronic signature is
the same as, and shall have the same force and effect as, his or her manual
signature. The Grantee consents and agrees that any such procedures and delivery
may be effected by a third party engaged by the Company to provide
administrative services related to the Plan.

 

(signature page follows)

 

 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Date of Grant.

 

 

 

InnSuites Hospitality Trust

 

By:                                                                            

Name:                                                                        

Title:                                                                         

 

 

GRANTEE

 

                                                                                     

Name:                                                                         

 

 

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