No. of Shares________
PACIFIC REHABILITATION & SPORTS MEDICINE, INC.
INCENTIVE STOCK OPTION
AND
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option is granted and this
Incentive Stock Option Agreement (the "Agreement") is executed by
and between Pacific Rehabilitation & Sports Medicine, Inc., a
Delaware corporation (the "Company"), and__________________ (the
"Optionee"), effective ___________________, 199_____.
RECITALS
A. The Company has duly adopted that certain PACIFIC
REHABILITATION & SPORTS MEDICINE, INC., 1993 AMENDED AND RESTATED
COMBINATION STOCK OPTION PLAN, AS AMENDED, a copy of which is
attached hereto as Exhibit A (the "Plan").
B. The Plan authorizes the Board of Directors of the
Company to grant incentive stock options to officers and
employees.
C. The Board of Directors has selected the Optionee to
receive an incentive stock option under the Plan.
NOW, THEREFORE, THE COMPANY AND THE OPTIONEE COVENANT AND AGREE
AS FOLLOWS:
1. NUMBER OF SHARES SUBJECT TO OPTION AND OPTION PRICE.
The Company hereby grants to the Optionee an incentive stock
option (the "Option") to purchase from the Company
___________________________________ (________) shares of the
common stock of the Company, $0.01 par value (the "Common Stock")
at an exercise price of $__________ per share. The Option is
exercisable upon the terms and conditions contained herein.
2. ADDITIONAL TERMS OF THE OPTION. Subject to the
provisions of Paragraph 3 below, the Option shall have the
following terms:
2.1 The effective date of the grant of the Option
shall be ______________, 19_____.
-1-
2.2 The Option shall vest as follows:
Cumulative
Date Percentage Vested
---- -----------------
2.3 The Option shall expire on ________________, (the
"Expiration Date").
2.4 To the extent vested, the Option may be exercised
in whole or in part at any time and from time to time prior
to the Expiration Date.
2.5 The Option must be exercised, if at all, as to a
whole number of shares.
3. INCORPORATION BY REFERENCE OF THE TERMS AND CONDITIONS
OF THE PLAN. The terms and conditions of this Option shall be
subject to all of the terms and conditions of the Plan, which
terms and conditions are expressly incorporated by reference into
this Agreement to the same extent and with the same effect as if
such terms and conditions were set forth herein. In the event of
a conflict or inconsistency between the terms and conditions set
forth in this Agreement and the terms and conditions of the Plan,
those of the Plan shall control.
4. EXERCISE OF THE OPTION; DELIVERY OF CERTIFICATES.
4.1 The Option may be exercised only in accordance
with the terms and conditions of Section 7 of the Plan and by
delivery to the Company of a Notice of Exercise substantially in
the form of Exhibit B, including all exhibits and attachments
thereto.
4.2 Within a reasonable time after exercise, the
Company shall deliver to the Optionee a certificate for the
shares of Common Stock for which exercise of the Option was made
and, unless the Option has expired or been exercised in full, a
new Incentive Stock Option Agreement (or Nonstatutory Stock
Option Agreement if the Optionee is no longer eligible to hold
incentive stock options and the Company, in its sole discretion
and with the consent of the Optionee, agrees to convert the
incentive stock option into a nonstatutory stock option in
accordance with Section 12 of the Plan) covering the balance of
the shares of Common Stock covered by this Option for which
exercise has not been made. Unless otherwise agreed to by the
Company and the Optionee, the new agreement shall have the same
terms and conditions of this Option and Agreement (except as to
the number of shares of Common Stock subject thereto and except
to the extent that the Plan has been modified or amended, in
which case the new Option and agreement shall reflect the
modified and amended terms and conditions of the Plan).
-2-
5. TRANSFERABILITY OF THE OPTION. The Option is
transferable only in accordance with Section 8 of the Plan.
6. WARRANTIES AND REPRESENTATIONS OF THE OPTIONEE. By
executing this Agreement, the Optionee accepts the Option and
agrees to be bound by all of the terms of the Option, this
Agreement and the Plan.
7. INDEMNIFICATION BY THE OPTIONEE. The Optionee agrees
to indemnify and hold the Company harmless from any loss or
damage, including attorney's fees or other legal expenses,
incurred in the defense or payment of any such claim against the
Company resulting from a breach by the Optionee of the
representations, warranties or provisions contained in this
Agreement.
8. NO RIGHT TO CONTINUED RELATIONSHIP. Nothing herein
shall confer upon the Optionee the right to continue as an
employee or officer of or with the Company, nor affect any right
which the Company may have to terminate its relationship with the
Optionee.
9. RIGHTS AS SHAREHOLDERS. The Optionee shall have no
rights as a shareholder of the Company on account of the Option
nor on account of shares of Common Stock of the Company which
will be acquired upon exercise of the Option (but with respect to
which no certificates have been delivered to the Optionee).
10. FURTHER ASSURANCES. From time to time and upon request
by the Company, the Optionee agrees to execute such additional
documents as the Company may reasonably require in order to
effect the purposes of the Plan and this Agreement.
11. BINDING EFFECT. This Agreement shall be binding upon
the Optionee and such Optionee's heirs, successors and assigns,
including the Qualified Successor of the Optionee (as this term
is defined in Section 8.2 of the Plan).
12. WAIVERS/MODIFICATIONS. No waivers, alterations or
modifications of this Agreement shall be valid unless in writing
and duly executed by the party against whom enforcement of such
waiver, alteration or modification is sought. The failure of any
party to enforce any of its rights against the other party for
breach of any of the terms of this Agreement shall not be
construed a waiver of such rights as to any continued or
subsequent breach.
-3-
13. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Washington.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
PACIFIC REHABILITATION & SPORTS MEDICINE, INC.
By__________________________________
__________________________________
Its_________________________________
OPTIONEE:
____________________________________
-4-
