PREFERRED EMPLOYERS HOLDINGS, INC.
FORM OF STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated as of January ___, 1997,
between PREFERRED EMPLOYERS HOLDINGS, INC., a Delaware corporation (the
"Company"), having an address at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx,
Xxxxxxx 00000 and [ ], having an address at ___________________________________
(the "Grantee").
In accordance with the Preferred Employers Holdings, Inc. 1996 Stock Option
Plan (the "Plan"), the Company hereby grants to the Grantee an incentive stock
option (the "Option") to purchase all or any part of an aggregate of [ ] shares
of the Company's common shares, $.01 par value per share (the "Shares").
To evidence the Option and to set forth its terms, the Company and the
Grantee agree as follows:
1. Confirmation of Grant. The Company hereby evidences and confirms its
grant of the Option to the Grantee on the date of this Agreement.
2. Number of Shares. This Option shall be for an aggregate of [ ] Shares.
3. Exercise Price. The exercise price shall be [$ ] per share for
a total of [$ ].
4. Medium and Time of Payment. The exercise price of the Option shall be
paid in cash or by check payable to the order of the Company at the time of
exercise. In addition, the Company shall accept full or partial payment in
Shares having a fair market value on the date of exercise equal to the portion
of the exercise price being so paid.
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 Grantee of a Certificate representing such Shares, the Grantee shall pay any
amount necessary to satisfy applicable federal, state, or local tax
requirements.
5. Term and Exercise of the Option. The Option shall expire five years from
the date of this Agreement and may be exercised at the times and for the number
of Shares as follows:
(a) on or after the date hereof, up to ___% (ignoring fractional
shares) of the total number of Shares subject to this Option;
(b) 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;
(c) on or after the date which is two years after the date hereof, up
to ___% (ignoring fractional Shares) of the total number of Shares subject
to this Option; and
(d) on or after the date which is three years after the date of the
grant, the remaining Shares subject to this Option.
This Option may be exercised only by written notice to the Company
indicating the number of Shares which are being purchased. Such notice must be
signed by the Grantee and be accompanied by full payment of the exercise price.
6. Nontransferability. The Option may be transferred only by will or the
laws of descent and distribution, and the Option may be exercised during the
Grantee's lifetime only by the Grantee or by the Grantee's legal representative.
7. Rights in the Event of the Grantee's Disability. If the Grantee'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 Grantee or the
Grantee's legal representative (or the Grantee's estate if the Grantee dies
after termination of employment) may exercise the Option, to the extent
exercisable on the date of the Grantee'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. The Grantee's "estate" means the Grantee's
legal representative or any person who acquires the right to exercise the Option
by reason of the Grantee's death.
8. Rights in the Event of the Grantee's Death. If the Grantee dies while an
employee of the Company or any Affiliate (or within three months after the
Grantee ceases to be 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 Grantee's death, any time within one year after
the Grantee's death, but in no event after the expiration of the term of the
Option.
9. Rights in the Event of Termination of Employment. If Grantee's
employment with the Company or any Affiliate is terminated involuntarily for
"Cause" the Grantee's Option shall expire as of the date of termination of
employment. "Cause" under this Agreement shall mean (i) material misconduct by
the Grantee, (ii) any act by the Grantee that is materially adverse to the
Company or any Affiliate, or (iii) breach by the Grantee of any employment or
confidentiality or nondisclosure agreement with the Company or any Affiliate.
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"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
Grantee's employment is terminated for any reason other than death, disability,
or as described in the preceding sentences of this Section, the Grantee (or the
Grantee's estate, if the Grantee 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.
10. 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 Grantee 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 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. Notice of any adjustment shall be given by the Company to the
Grantee.
11. Effect of Termination or Amendment of Plan. No suspension, termination,
modification, or amendment of the Plan may, without the express written consent
of the Grantee, adversely affect the rights of the Grantee under this Option.
12. 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.
13. Rights as a Shareholder. The Grantee 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.
14. Compliance with Applicable Law. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
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. The Company shall in no 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 may require, as a condition of the issuance
and delivery of such certificates and in order to ensure compliance with such
laws, regulations, and
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requirements, that the Grantee make such covenants, agreements, and
representations as the Board of Directors, in its sole discretion, considers
necessary or desirable.
15. No Obligation to Exercise Option. The granting of the Option shall
impose no obligation upon the Grantee to exercise the Option.
16. Agreement Not a Contract of Employment. This Agreement is not a
contract of employment, and the terms of employment of the Grantee or the
relationship of the Grantee 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 Grantee for a continuation of employment or relationship with
the Company or any Affiliate, nor shall it interfere with the right of the
Company or any subsidiary thereof to discharge the Grantee and to treat him
without regard to the effect which that treatment might have upon him as a
Grantee.
17. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally or sent by
certified, registered, or express mail, postage prepaid. Any such notice shall
be deemed given when so delivered personally or, if mailed, four days after the
date of deposit in the United States mails, to each party at its address set
forth above or to such other address as may be designated in a notice given in
accordance with this Section.
18. 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.
19. Receipt of Plan. Grantee acknowledges receipt of a copy of the Plan,
and represents that he is familiar with the terms and provisions thereof, and
hereby accepts this Option subject to all the terms and provisions of this
Option and of the Plan. Grantee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board of Directors of the
Company or the Committee, as defined in the Plan, upon any questions rising
under the Plan.
IN WITNESS WHEREOF, the Company and the Grantee have duly executed this
Agreement as of the date first written above.
PREFERRED EMPLOYERS
HOLDINGS, INC.
__________________________ By:___________________________
Witness Its:
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Witness [GRANTEE]
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