Exhibit 10.5


 


FORM OF
NON-QUALIFIED STOCK OPTION AGREEMENT

FOR NON-EMPLOYEE DIRECTORS


 


UNDER THE
MAC-GRAY CORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN


 


Name of Optionee:                                                                             


No. of Option Shares:                                                                        


Option Exercise Price per Share:                                                                 


Grant Date:                                                                                          


Expiration Date:                                                                                  


 


Pursuant to the Mac-Gray Corporation 2005 Stock Option and Incentive
Plan (the “Plan”) as amended through the date hereof, Mac-Gray Corporation (the
“Company”) hereby grants to the Optionee named above, who is a Director of the
Company but is not an employee of the Company, an option (the “Stock Option”)
to purchase on or prior to the Expiration Date specified above all or part of
the number of shares of Common Stock, par value $0.01 per share (the “Stock”)
of the Company specified above at the Option Exercise Price per Share specified
above subject to the terms and conditions set forth herein and in the Plan.


 


1.             Exercisability Schedule. 
No portion of this Stock Option may be exercised until such portion
shall have become exercisable.  Except as
set forth below, and subject to the discretion of the Administrator (as defined
in Section 2 of the Plan) to accelerate the exercisability schedule
hereunder, this Stock Option shall be exercisable with respect to the following
number of Option Shares on the dates indicated:


 


	
  Number of

  Option Shares Exercisable

  	
   

  	
  Exercisability
  Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
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  (      

  	
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In the event of the termination of the Optionee’s service as a Director
of the Company because of death, this Stock Option shall become immediately
exercisable in full, whether or not exercisable at such time.  Once exercisable, this Stock Option shall
continue to be exercisable at any time or times prior to the close of business
on the Expiration Date, subject to the provisions hereof and of the Plan.


 


 





















 


2.             Manner of Exercise.


 


(a)           The
Optionee may exercise this Stock Option only in the following manner:  from time to time on or prior to the
Expiration Date of this Stock Option, the Optionee may give written notice to
the Administrator of his or her election to purchase some or all of the Option
Shares purchasable at the time of such notice. 
This notice shall specify the number of Option Shares to be purchased.


 


Payment of the purchase price for the Option Shares may be made by one
or more of the following methods:  (i) in
cash, by certified or bank check or other instrument acceptable to the
Administrator; (ii) through the delivery (or attestation to the ownership)
of shares of Stock that have been purchased by the Optionee on the open market
or that have been beneficially owned by the Optionee and are not then subject
to restrictions under any Company plan; (iii) by the Optionee delivering
to the Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the option purchase price,
provided that in the event the Optionee chooses to pay the option purchase
price as so provided, the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements as
the Administrator shall prescribe as a condition of such payment procedure; or (iv) a
combination of (i), (ii) and (iii) above.  Payment instruments will be received subject
to collection.


 


The making of a book entry in the Optionee’s name by the Company’s
transfer agent representing the Option Shares will be contingent upon the
Company’s receipt from the Optionee of full payment for the Option Shares, as
set forth above and any agreement, statement or other evidence that the Company
may require to satisfy itself that the issuance of Stock to be purchased
pursuant to the exercise of Stock Options under the Plan and any subsequent
resale of the shares of Stock will be in compliance with applicable laws and
regulations.  In the event the Optionee
chooses to pay the purchase price by previously-owned shares of Stock through
the attestation method, the number of shares of Stock transferred to the
Optionee upon the exercise of the Stock Option shall be net of the Shares
attested to.


 


(b)           A
book entry for shares of Stock purchased upon exercise of this Stock Option
shall be made by the Company’s transfer agent in the name of the Optionee upon
compliance to the satisfaction of the Administrator with all requirements under
applicable laws or regulations in connection with such issuance and with the
requirements hereof and of the Plan.  The
determination of the Administrator as to such compliance shall be final and
binding on the Optionee.  The Optionee
shall not be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares of Stock subject to this Stock Option unless
and until this Stock Option shall have been exercised pursuant to the terms
hereof, the Company shall have issued the shares to the Optionee, and the
Optionee’s name shall have been entered as the stockholder of record on the
books of the Company.  Thereupon, the
Optionee shall have full voting, dividend and other ownership rights with
respect to such shares of Stock.


 


(c)           The
minimum number of shares with respect to which this Stock Option may be
exercised at any one time shall be 100 shares, unless the number of shares with
respect to 


 


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which
this Stock Option is being exercised is the total number of shares subject to
exercise under this Stock Option at the time.


 


(d)           Notwithstanding
any other provision hereof or of the Plan, no portion of this Stock Option
shall be exercisable after the Expiration Date hereof.


 


3.             Termination as Director. If the Optionee ceases to be a Director
of the Company, the period within which to exercise the Stock Option may be
subject to earlier termination as set forth below.


 


(a)           Termination
For Cause.  If the Optionee ceases to
be a Director for Cause, any Stock Option held by the Optionee shall
immediately terminate and be of no further force and effect.  For purposes hereof, “Cause” shall mean a
vote by the Board resolving that the Optionee shall be dismissed as a result of
(i) any material breach by the Optionee of any agreement between the
Optionee and the Company; (ii) the conviction of or plea of nolo
contendere by the Optionee to a felony or a crime involving moral turpitude; or
(iii) any material misconduct or willful and deliberate non-performance
(other than by reason of disability) by the Optionee of the Optionee’s duties
to the Company.


 


(b)           Termination
by Reason of Death.  If the Optionee
ceases to be a Director by reason of death, any Stock Option held by the
Optionee may be exercised by his or her legal representative or legatee for a
period of 12 months from the date of death or until the Expiration Date, if
earlier.


 


(c)           Other
Termination.  If the Optionee ceases
to be a Director for any reason other than Cause or death, any Stock Option
held by the Optionee may be exercised for a period of 12 months from the date
of termination or until the Expiration Date, if earlier.


 


4.             Incorporation of Plan. 
Notwithstanding anything herein to the contrary, this Stock Option shall
be subject to and governed by all the terms and conditions of the Plan,
including the powers of the Administrator set forth in Section 2(b) of
the Plan.  Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.


 


5.             Transferability. 
This Agreement is personal to the Optionee, is non-assignable and is not
transferable in any manner, by operation of law or otherwise, other than by
will or the laws of descent and distribution. 
This Stock Option is exercisable, during the Optionee’s lifetime, only
by the Optionee, and thereafter, only by the Optionee’s legal representative or
legatee.


 


6.             Miscellaneous.


 


(a)           Notice
hereunder shall be given to the Company at its principal place of business, and
shall be given to the Optionee at the address set forth below, or in either
case at such other address as one party may subsequently furnish to the other
party in writing.


 


(b)           This
Stock Option does not confer upon the Optionee any rights with respect to
continuance as a Director.


 


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(c)           Pursuant
to the Plan, the Committee may at any time amend or cancel any outstanding
portion of this Stock Option, but no such action may be taken which adversely
affects the Optionee’s rights under this Agreement without the Optionee’s
consent.


 


	
   

  	
  MAC-GRAY
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  



 


The foregoing Agreement is hereby accepted and the
terms and conditions thereof hereby agreed to by the undersigned.


 


 


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  Optionee’s Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s name and address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


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