Optionee:_____________________
Address:______________________
PREFERRED EMPLOYERS HOLDINGS, INC.
FORM OF STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of ___________, 19__ (the
"Agreement"), by and among PREFERRED EMPLOYERS HOLDINGS, INC., a Delaware
corporation (the "Company"), ________________ ("Optionee") and XXXXXX XXXXX
("Grantor"), is entered into pursuant to the Share Escrow Agreement, dated as of
November ___, 1997, by and among the Company, Grantor and Xxxx Marks & Xxxxx
LLP, a New York limited liability partnership, as Escrow Agent (the "Escrow
Agreement").
PURSUANT TO THE ESCROW AGREEMENT, it is agreed as follows:
1. Grant of Option. Grantor hereby grants to the Optionee on the date
hereof the right and option (the "Option") to purchase an aggregate of ______
shares of Common Stock, $.01 par value per share, of the Company (the "Shares"),
which are currently held in escrow by the Company on behalf of Grantor pursuant
to the terms of the Escrow Agreement.
2. Payment; Term. (a) The exercise price of the Option is $______ per Share
which shall be paid in cash or by certified or bank cashier's check payable to
the order of the Grantor at the time of exercise. Payment in full shall be
required before the issuance of any Shares pursuant to this Option. In addition,
before or concurrently with delivery to the Optionee of a Certificate
representing such Shares, the Optionee shall pay to the Company any amount
necessary to satisfy applicable federal, state, or local tax requirements.
(b) The Option granted herein shall expire on ________ __, 2001. [the fifth
anniversary of the date of the prospectus filed with the Securities and Exchange
Commission on behalf of the Company in connection with the Company's initial
public offering].
3. Exercise of Option. (a) Subject to Section 2(b) above, the Optionee may
exercise, on a cumulative basis, the Option granted hereby in accordance with
the following:
(i) on or after the date hereof, up to ___% (ignoring fractional Shares) of
the total number of Shares subject to this Option;
(ii) on or after the date which is one year after the date hereof, up to
___% (ignoring fractional Shares) of the total number of Shares subject to
this Option;
(iii) on or after the date which is two years after the date of the grant,
up to ___% (ignoring fractional Shares) of the total number of Shares
subject to this Option; and
(iv) on or after the date which is three years after the date of the grant,
the remaining Shares subject to this Option.
(b) The Optionee may exercise the Option (to the extent it is then
exercisable) by delivering to the Company a written notice duly signed by the
Optionee stating the number of Shares that the Optionee has elected to purchase
and accompanied by payment (by certified check or bank cashier's check) of an
amount equal to the full purchase price for the Shares to be purchased. Within
twenty days after receipt by the Company of such notice and payment, the Company
shall (subject to Section 12 of this Agreement) issue from escrow the Shares in
the name of the Optionee or assignee and deliver the certificate therefor to the
Optionee. No Shares shall be issued until full payment therefor has been made.
4. Non-Transferability of Option. The Option may be transferred only by
will or the laws of descent and distribution, and the Option may be exercised
during the Optionee's lifetime only by the Optionee or by the Optionee's legal
representative.
5. Tax Status. It is not intended that this option qualify as an incentive
stock option within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended. In addition, the Optionee hereby agrees that no representation
has been made to him by the Company or the Grantor with respect to the tax
consequences of (i) the Option granted hereby, (ii) any transfer of the Option
granted hereby, (iii) the exercise of the Option granted hereby or (iv) any
transfer of the Shares.
6. Rights in the Event of the Optionee's Disability. If the Optionee's
employment with the Company or any parent or subsidiary corporation (within the
meaning of Section 424(e) and (f) of the Internal Revenue Code of 1986, as
amended (the "Code"), ("Affiliates")) is terminated on account of permanent and
total disability (as defined in Code Section 22(e)(3)), the Optionee or the
Optionee's legal representative (or the Optionee's estate if the Optionee dies
after termination of employment) may exercise the Option, to the extent
exercisable on the date of the Optionee's termination of employment, at any time
within one year after termination of employment but in no event after the
expiration of the term of the Option as provided in Sections 2(b). The
Optionee's "estate" means the Optionee's legal representative or any person who
acquires the right to exercise the Option by reason of the Optionee's death.
7. Rights in the Event of the Optionee's Death. If the Optionee dies while
an employee of the Company or any Affiliate (or within three months after the
Optionee ceases to be
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such an employee) but while he still has the right to exercise this Option, his
estate may exercise the Option, to the extent exercisable at the date of the
Optionee's death, any time within one year after the Optionee's death, but in no
event after the expiration of the term of the Option as provided in Section
2(b).
8. Rights in the Event of Termination of Employment. If Optionee's
employment with the Company or any Affiliate is terminated involuntarily for
"Cause" the Optionee's Option shall expire as of the date of termination of
employment. "Cause" under this Agreement shall mean (i) material misconduct by
the Optionee, (ii) any act by the Optionee that is materially adverse to the
Company or any Affiliate, or (iii) breach by the Optionee of any employment or
confidentiality or nondisclosure agreement with the Company or any Affiliate.
"Cause" also shall have the meaning given to that term, or any similar term,
under any employment agreement with the Company or any Affiliate. If the
Optionee's employment is terminated for any reason other than death, disability,
or as described in the preceding sentences of this Section, the Optionee (or the
Optionee's estate, if the Optionee dies after the termination) may exercise the
Option, to the extent exercisable before the termination, within three months
after the termination, but in no event after the expiration of the term of the
Option as provided in Section 2(b).
9. Adjustment in the Shares. If the Shares, as presently constituted, shall
be changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split, reverse split,
combination of shares, or otherwise) or if the number of Shares shall be
increased through the payment of a share dividend, the Optionee shall receive
upon exercise of the Option the number and kind of shares or other securities
into which each outstanding Share shall be so changed, or for which each such
Share shall be exchanged, or to which each such Share shall be entitled, as the
case may be. The exercise price and other terms of the Option shall be
appropriately amended to reflect the foregoing events. If there shall be any
other change in the number or kind of the outstanding Shares, or of any shares
or other securities into which the Shares shall have been changed, or for which
the Shares shall have been exchanged, then, if the Board of Directors (or the
Compensation Committee thereof (the "Compensation Committee")) shall, in its
sole discretion, determine that such change equitably requires an adjustment in
the Option, such adjustment shall be made in accordance with that determination;
provided, however, that, without the consent of Odzer, which consent will not be
unreasonably withheld, no adjustment, modification or other change made pursuant
to this Section 9 shall be inconsistent with the intent of the Escrow Agreement
or have a material adverse effect on Odzer. Notice of any adjustment shall be
given by the Company to the Optionee.
10. No Limitation on Rights of the Company. The grant of this Option shall
not in any way affect the right or power of the Company to make adjustments,
reclassifications, or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell, or transfer all or any part of its
business or assets.
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11. Rights as a Shareholder. The Optionee shall have the rights of a
shareholder with respect to the Shares covered by the Option only upon becoming
the holder of record of those Shares. Until the Optionee becomes the holder of
record of his respective Shares, Odzer shall retain all rights as a shareholder
with respect to such Shares, including, but not limited to, the right to receive
any dividends and other distributions with respect to the Shares, and to vote
such Shares for all purposes and all permissible methods, and nothing herein
shall be deemed or construed to limit such rights.
12. Compliance with Applicable Law. Notwithstanding anything herein to the
contrary, neither the Company nor the Grantor shall be obligated to cause to be
issued or delivered from escrow any certificates for Shares pursuant to the
exercise of the Option, unless and until the Company is advised by its counsel
that the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority, and the requirements of
any exchange upon which Shares are traded. Neither the Company nor the Grantor
shall in any event be obligated to register any securities pursuant to the
Securities Act of 1933 (as now in effect or as hereafter amended) or to take any
other action in order to cause the issuance and delivery of such certificates to
comply with any such law, regulation or requirement. The Board of Directors (or
the Compensation Committee) may require, as a condition of the issuance and
delivery of such certificates and in order to ensure compliance with such laws,
regulations, and requirements, that the Optionee make such covenants,
agreements, and representations as the Board of Directors (or the Compensation
Committee, as the case may be), in its sole discretion, considers necessary or
desirable.
13. No Obligation to Exercise Option. The granting of the Option shall
impose no obligation upon the Optionee to exercise the Option.
14. Agreement Not a Contract of Employment. This Agreement is not a
contract of employment, and the terms of employment of the Optionee or the
relationship of the Optionee with the Company or any Affiliate shall not be
affected in any way by this Agreement except as specifically provided herein.
The execution of this Agreement shall not be construed as conferring any legal
rights upon the Optionee for a continuation of employment or relationship with
the Company, the Grantor or any Affiliate, nor shall it interfere with the right
of the Company or any subsidiary thereof to discharge the Optionee and to treat
him without regard to the effect which that treatment might have upon him as a
Optionee.
15. Withholding. Whenever Shares are to be delivered upon exercise of this
Agreement, the Company shall be entitled to require as a condition of delivery
that the Optionee remit to the Company an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with respect to
the exercise of the Option granted hereby.
16. Notices. All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt
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requested) to the parties at the following addresses or sent by electronic
transmission to the telecopier number specified below:
(a) If to Grantor, to:
Xxxxxx Xxxxx
c/o Preferred Employers Holdings, Inc.
00000 Xxxxxxxx Xxxx., Xxxxxxxxx
Xxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (305)
with copies to:
Steel Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxx P.A.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) If to the Company, to:
Preferred Employers Holdings, Inc.
00000 Xxxxxxxx Xxxx., Xxxxxxxxx
Xxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (305)
with copies to:
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(c) If to Optionee, to address set forth above.
17. Governing Law. Except to the extent preempted by Federal law, this
Agreement shall be construed and enforced in accordance with, and governed by,
Delaware law.
18. Receipt of Escrow Agreement. Optionee acknowledges receipt of a copy of
the Escrow Agreement, and represents that he is familiar with the terms and
provisions thereof,
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and hereby accepts this Option subject to all the terms and provisions of this
Option and of the Escrow Agreement. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board of Directors
of the Company or the Compensation Committee, upon any questions rising under
the Escrow Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
PREFERRED EMPLOYERS
HOLDINGS, INC.
__________________________ By:___________________________
Witness Its:
-------------------------- -------------------------------
Witness XXXXXX XXXXX, Grantor
-------------------------- -------------------------------
Witness , Optionee
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