Exhibit 10.2
 

PACIFIC HEALTH CARE ORGANIZATION, INC.
 
2005 STOCK OPTION PLAN
 
RESTRICTED STOCK AWARD AGREEMENT
 

This Restricted Stock Award Agreement (this “Agreement”), which contains the
terms and conditions of the Restricted Stock granted to _____________ by Pacific
Health Care Organization, Inc., a Utah corporation (“PHCO”), under the Pacific
Health Care Organization, Inc., 2005 Stock Option Plan (the “Plan”), is made and
entered into as of the __the day of _______ 20__ between  ____________ (“you”)
and PHCO.
 
1.           Grant of Restricted Stock.  PHCO has granted to you, effective
_______ __, 20__ (the “Grant Date”), the right to receive _______________ shares
of $0.001 par value common stock of PHCO (the “Shares”) subject to certain
vesting conditions.  Before the Shares are vested and delivered to you, they are
referred to in this Agreement as “Restricted Stock.”
 
2.           Plan Governs.  The Restricted Stock and this Agreement are subject
to the terms and conditions of the Plan.  The Plan is incorporated in this
Agreement by reference and all capitalized terms used in this Agreement have the
meaning set forth in the Plan, unless this Agreement specifies a different
meaning.  By signing this Agreement, you accept the Plan Award of Restricted
Stock, acknowledge that the Plan and the prospectus covering the Plan have been
made available to you and acknowledge that the Restricted Stock is subject to
all the terms and provisions of the Plan and this Agreement.  By signing this
Agreement, you further agree to accept as binding, conclusive and final all
decisions and interpretations of the Plan by the board of directors or, if and
when one is established a committee of the board of directors responsible for
administering the Plan (jointly referred to herein as the “Board”).
 
3.           Stockholder Rights.  Your Restricted Stock will be held for you by
PHCO until the applicable delivery date described in Paragraph 4.  You shall
have all the rights of a stockholder of Shares of Restricted Stock that
vest.  With respect to your unvested Shares of Restricted Stock,

A.    you shall have the right to vote such Shares on any matter as to which
Shares have voting rights at any meeting of shareholders of PHCO;
B.    you shall have the right to receive, free of vesting restrictions (but
subject to applicable withholding taxes) all cash dividends paid with respect to
such Shares; and
C.    any non-cash dividends and other non-cash proceeds of such Shares,
including stock dividends and any other securities issued or distributed in
respect of such Shares shall be subject to the same vesting and forfeiture
conditions as the Shares of Restricted Stock to which they relate, and the term
“Restricted Stock” when used in this Agreement shall also include any related
stock dividends and other securities issued or distributed in respect of such
Shares.
 
4.           Vesting and Delivery of Restricted Stock

A.    Condition described below:

Percentage of Shares Vesting
Vesting Date
100%
 

B.    Forfeiture Conditions:
1. The Shares of your Restricted Stock that would otherwise vest on a Vesting
Date will not vest and shall be immediately forfeited if on or prior to the
Vesting Date, your employment with or service to PHCO or a Subsidiary shall be
terminated for any reason.
2. In the event your employment with PHCO or a Subsidiary is terminated for any
reason whatsoever, and within one year after the date thereof such Holder
accepts employment with any competitor of, or otherwise engages in competition
with, PHCO, the Board may require you to return to PHCO the economic value of
any award which was realized or obtained by you at any time during the period
beginning on that date which is six months prior to the date of termination of
your employment with or service to PHCO or a Subsidiary.
3. In the event your employment with PHCO or a Subsidiary is terminated for
cause, the Board may annul any award granted under the Plan to return to PHCO
the economic value of any award which was realized or obtained by you at any
time during the period beginning on that date which is six months prior to the
date of the termination of employment with or service to PHCO or a Subsidiary.
C.    Accelerated Vesting.  If (i) any person or entity other than PHCO and/or
any stockholders of PHCO as of the Effective Date of the Plan acquires
securities of PHCO (in one or more transactions) having 25% or more of the total
voting power of all the PHCO securities then outstanding and (ii) the Board does
not authorize or otherwise approve such acquisition, then, the Vesting Date of
your Restricted Stock shall be accelerated and your Restricted Stock award will
immediately and entirely vest, and you will have the immediate right to receive
the Shares of Restricted Stock subject to this award on the terms set forth in
the Plan and this Agreement.
 
 
 

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D.    Delivery Date.  Shares that vest shall be delivered to you within 30 days
(or as soon as administratively feasible thereafter) of:
1. the applicable Vesting Date; or
2. an Accelerated Vesting pursuant to Paragraph 4C above.
 
5.           Forfeiture of Restricted Stock. If you suffer a Forfeiture
Condition (e.g., if your employment with or service to PHCO or a Subsidiary is
terminated prior to the Vesting Date and the vesting is not accelerated under
Paragraph 4C), you will immediately forfeit your Restricted Stock (including any
cash dividends and non-cash proceeds related to the Restricted Stock for which
the record date occurs on or after the date of the forfeiture), and all of your
rights to and interest in the Restricted Stock and the Shares underlying the
Restricted Stock shall terminate upon forfeiture without payment of
consideration. Forfeited Restricted Stock shall be reconveyed to PHCO.

Any Shares of Restricted Stock forfeited pursuant to this Agreement shall be
transferred to, and reacquired by, the Company without payment of any
consideration by the Company, and neither the Grantee nor any of the Grantee’s
successors, heirs, assigns or personal representatives shall thereafter have any
further rights or interests in such Shares. If certificates for any such Shares
containing restrictive legends shall have theretofore been delivered to the
Grantee (or his/her legatees or personal representative), such certificates
shall be returned to the Company, complete with any necessary signatures or
instruments of transfer.
 
6.           Taxes and Tax Withholding.

A.    You agree to consult with any tax advisors you think necessary in
connection with your Restricted Stock and acknowledge that you are not relying,
and will not rely, on PHCO or a Subsidiary for any tax advice.  Please see
Paragraph 7 regarding Section 83(b) elections.
B.    You acknowledge that, regardless of any action taken by PHCO and/or, any
Subsidiary that employs you, the ultimate liability for all income tax, social
insurance, payroll tax, fringe benefits tax, payment on account or other
tax-related items related to your participation in the Plan and legally
applicable to you (“Tax-Related Items”), is and remains your responsibility and
may exceed the amount actually withheld by PHCO or a Subsidiary. You further
acknowledge that PHCO and its Subsidiaries (1) make no representations or
undertakings regarding the treatment of any Tax-Related Items in connection with
any aspect of the Restricted Stock, including, but not limited to, the grant,
vesting or delivery of the Restricted Stock, the subsequent sale of Shares
acquired pursuant to such delivery and the receipt of any dividends; and (2) do
not commit to and are under no obligation to structure the terms of the grant or
any aspect of the Restricted Stock to reduce or eliminate your liability for
Tax-Related Items or achieve any particular tax result.  Further, if you are
subject to Tax-Related Items in more than one jurisdiction between the Grant
Date and the date of any relevant taxable or tax withholding event, as
applicable, you acknowledge that PHCO and/or the Subsidiary that employs you (or
former employer, as applicable) may be required to withhold or account for
Tax-Related Items in more than one jurisdiction.
C.    In order to comply with any applicable Tax-Related Item, PHCO may take
such action as it deems appropriate to ensure that all applicable federal or
state payroll, withholding, income or other taxes, which are your sole and
absolute responsibility, are withheld or collected from you.
D.    In accordance with the terms of the Plan, and such rules as may be adopted
by the Board under the Plan, you may elect to satisfy your federal and state
income tax withholding obligations arising from the receipt of, or the lapse of
restrictions relating to, the Shares, by (i) delivering cash, check (bank check,
certified check or personal check) or money order payable to PHCO, (ii) having
PHCO withhold a portion of the Shares otherwise to be delivered having a Fair
Market Value equal to the amount of such taxes, or (iii) delivering to PHCO
shares of Common Stock already owned by you having a Fair Market Value equal to
the amount of such taxes.  Any shares already owned by you must have been held
by you for no less than six months prior to the date they are delivered to PHCO
if such shares were acquired upon the exercise of an option or upon the vesting
of restricted stock units or other restricted stock. PHCO will not deliver any
fractional Shares but will pay, in lieu thereof, the Fair Market Value of such
fractional Share.  Your election must be made on or before the date that the
amount of tax to be withheld is determined.
E.    Finally, you agree to pay to PHCO or the Subsidiary or Subsidiaries that
employ you, including through withholding from your wages or other cash
compensation paid to you by PHCO or the Subsidiary that employs you, any amount
of Tax-Related Items that PHCO and/or the Subsidiary that employs you may be
required to withhold or account for as a result of your participation in the
Plan that cannot be satisfied by the means previously described.  PHCO may
refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if
you fail to comply with your obligations in connection with the Tax-Related
Items.
 
7.           Section 83(b) Election.  You hereby acknowledge that, to the extent
you are subject to U.S. tax laws, you may file an election pursuant to
Section 83(b) of the Code to be taxed currently on the fair market value of the
Shares of Restricted Stock (less any purchase price paid for the Shares),
provided that such election must be filed with the Internal Revenue Service no
later than thirty (30) days after the grant of such Restricted Stock.  You will
seek the advice of your own tax advisors as to the advisability of making such a
Section 83(b) election, the potential consequences of making such an election,
the requirements for making such an election, and the other tax consequences of
the Restricted Stock award under federal, state, foreign and any other laws that
may be applicable.  PHCO and its Subsidiaries, Employees and agents have not and
are not providing any tax advice to you.
 
 
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8.           Restricted Stock Not Transferable.  Neither the Restricted Stock,
nor your interest in the Restricted Stock, may be sold, conveyed, assigned,
transferred, pledged or otherwise disposed of or encumbered at any time prior to
vesting and delivery applicable to any Shares underlying your vested Restricted
Stock. Any attempted action in violation of this Paragraph shall be null, void,
and without effect.
 
9.           Securities Laws.  In connection with the award of the Restricted
Stock, you hereby covenant, represent and warrant that:

A.    The Restricted Stock you will acquire pursuant to this Agreement will be
acquired for your own accounts and not with a view to, or intention of,
distribution thereof in violation of the Securities Act of 1933, as amended,
(the “Securities Act”) or any applicable state securities laws, and neither the
Restricted Stock, nor the Shares, will be disposed of in contravention of the
Securities Act, any applicable state securities laws and any procedures
reasonably established by the Board to ensure compliance with the foregoing.
B.    Prior to the date of this Agreement , you had a preexisting personal or
business relationship with PHCO or one or more of its officer, directors or
controlling persons, or by reason of your business or financial experience or
the business and financial experience of your professional advisers who are
unaffiliated with and who are not compensated by PHCO or its Subsidiaries or any
affiliates or selling agents of PHCO or its Subsidiaries, directly or
indirectly, could be reasonably assumed to have the capacity to protect your own
interests in connection with the Restricted Stock.
C.    You are able to bear the economic risk of your investment in the
Restricted Stock for an indefinite period of time.
D.    Your acquisition of the Restricted Stock was not accomplished by the
publication of any advertisement.
E.     You have had an opportunity to ask questions and receive answers
concerning the terms and conditions of this award of Restricted Stock and have
had full access to such other information concerning PHCO as you have requested.
F.     PHCO shall not be required, and shall not have any liability for failure,
to deliver Shares of Restricted Stock until the requirements of any federal or
state securities or other laws, rules or regulations (including the rules of any
securities exchange) as may be determined by PHCO to be applicable are
satisfied.
G.    PHCO is relying upon your representations and warranties contained herein
in connection with this Agreement, this award of Restricted Stock and the
issuance of the Shares of Restricted Stock.
 
10.           Other Provisions

A.    The value of your Restricted Stock and the underlying Shares under this
Agreement will not be taken into account in computing the amount of your salary
or other compensation for purposes of determining any pension, retirement, death
or other benefit under any employee benefit plan of PHCO or any Subsidiary,
except to the extent such plan or another agreement between you and PHCO
specifically provides otherwise.
B.    PHCO may, without liability for its good faith actions, place legend
restrictions upon Shares underlying your vested Restricted Stock and issue “stop
transfer” instructions requiring compliance with applicable federal and state
securities laws and the terms of this Agreement and the Plan.
C.    Determinations regarding this Agreement (including, but not limited to,
whether an event has occurred resulting in the forfeiture of or vesting of
Restricted Stock) shall be made by the Board in accordance with this Agreement,
and all determinations of the Board shall be final and conclusive and binding on
all persons.
D.    Neither this Agreement nor the Plan creates any contract of employment,
and nothing in this Agreement or the Plan shall interfere with or limit in any
way the right of PHCO or a Subsidiary to terminate your employment or service at
any time, nor confer upon you the right to continue in the employ of PHCO and/or
any Subsidiary.  Nothing in this Agreement or the Plan creates any fiduciary or
other duty to you owed by PHCO, any Subsidiary, or any member of the Board
except as expressly stated in this Agreement or the Plan.
E.     PHCO reserves the right to amend the Plan at any time.  The Board
reserves the right to amend this Agreement at any time.
F.     By accepting this Agreement, you agree to provide any information
reasonably requested from time to time.
G.    This Agreement shall be construed under the laws of the State of Utah,
without regard to its conflict of law provisions.
H.    The provisions of this Agreement are severable, and if any one or more
provisions are determined to be unenforceable, in whole or in part, the
remaining provisions shall nevertheless be binding and enforceable.
I.      PHCO may, in its sole discretion, decide to deliver any documents
related to current or future participation in the Plan by electronic means.  You
hereby consent to receive such documents by electronic delivery.
 
 
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J.     You acknowledge that a waiver by PHCO of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any other
provision of this Agreement, or of any subsequent breach by you or any other
Employee.
K.    You understand that the United States has insider trading and market abuse
laws which may affect your ability to acquire or sell Shares under the Plan
during such times you are considered to have “inside information” (as defined in
the securities laws of the United States).  These laws may be the same or
different from any PHCO insider trading policy.  You acknowledge that it is your
responsibility to be informed of and compliant with such regulations, and are
advised to speak to your personal advisor on this matter.
L.     PHCO reserves the right to impose other requirements on your
participation in the Plan, on the Restricted Stock and on any Shares acquired
under the Plan, to the extent PHCO determines it is necessary or advisable for
legal or administrative reasons, and to require you to sign any additional
agreements or undertakings that may be necessary to accomplish the foregoing.
M.   By signing this Agreement, you acknowledge that the Plan and this Agreement
have been made available to you and that you have read and understood these
documents.  By signing this Agreement, you accept the terms and conditions of
your Restricted Stock as set forth in this Agreement, subject to the terms and
conditions of the Plan.

 
[Signature page follows]
 
 
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IN WITNESS WHEREOF, this this Agreement has been executed by you and PHCO as of
the date first written above.

 
Pacific Health Care Organization, Inc.
 
By: _____________________________
By:________________________________
Name: __________________________
Name: Tom Kubota
Title: Chief Executive Officer
Address: _________________________
 
 
_________________________________
 

 
 
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