ANCHOR PACIFIC UNDERWRITERS INC, S-8, 1995-05-25

ANCHOR PACIFIC UNDERWRITERS INC
S-8, 1995-05-25
COMPUTER STORAGE DEVICES

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<PAGE>

As filed with the Securities and Exchange Commission on May 25, 1995
Registration No. 33-___________

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________

ANCHOR PACIFIC UNDERWRITERS, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-1687187
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)

1800 SUTTER STREET, SUITE 400, CONCORD, CA 94520
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
________________________________________

ANCHOR PACIFIC UNDERWRITERS, INC. 1994 STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
________________________________________

THE CORPORATION TRUST COMPANY
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
(NAME AND ADDRESS OF AGENT FOR SERVICE)
_______________

(800) 677-3394
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE OF PROCESS)

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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>

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Proposed Maximum Proposed Maximum
Title of Securities Amount to Offering Aggregate Amount of
to be Registered be Registered Price per Share Offering Price Registration Fee
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.02 par 700,000 (1) $2.25 (2) $1,575,000 (2) $543.11
value
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<FN>
1 Issuable upon exercise of options to be granted under the Anchor Pacific
Underwriters, Inc. 1994 Stock Option Plan.

2 Estimated solely for the purpose of determining the registration fee, based
upon the average of the bid and asked prices for the Common Stock on
May 19, 1995 pursuant to Rule 457(h).
</TABLE>

The Exhibit Index is located at page 9.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

The information required to be included in the Section 10(a) prospectus is
not required to be included herein.

PART II
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed or to be filed by the Company with the
Commission are incorporated in this Registration Statement by reference:

a. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 filed pursuant to Section 13(a) of the Securities Exchange Act
of 1934, as amended (the `Exchange Act');

b. The Company's Current Report on Form 8-K dated January 6, 1995, filed
pursuant to Section 13(a) of the Exchange Act;

c. The Company's Amendment No. 1 to the Current Report on Form 8-K dated
March 22, 1995, filed pursuant to Section 13(a) of the Exchange Act; and

d. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 filed pursuant to Section 13(a) of the Exchange Act.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date of this Registration Statement and
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold, or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement, and to be a part hereof from the date of such filing.

ITEM 4. DESCRIPTION OF SECURITIES

The stock of the Company being registered is 700,000 shares of Common
Stock, $.02 par value per share, of which the Company is authorized to issue
8,000,000 shares. Each holder of Common Stock is entitled to one vote for each
share held of record on the applicable record date on all matters presented to a
vote of shareholders, including elections of directors; provided, however, that
if the Company is subject to Section 2115 of the California Corporations Code,
shareholders will be entitled to cumulative voting in each election of directors
if certain conditions described in Section 708 of the California Corporations
Code are satisfied. Cumulation of votes means that each shareholder has a
number of votes equal to the number of shares owned by the

2
<PAGE>

shareholder, multiplied by the number of directors to be elected, and a
shareholder may cumulate such votes for a single candidate or distribute such
votes among as many candidates as the shareholder deems appropriate. Holders of
Common Stock have no preemptive rights or other rights to subscribe for
additional shares. There are no conversion rights, redemption rights, or
sinking fund provisions with respect to shares of Common Stock.

The Company is also authorized to issue 500,000 shares of preferred stock.
The Board of Directors of the Company has the authority, without further action
of the existing holders of Common Stock, to fix the rights, preferences,
privileges and restrictions on any preferred stock issued, including dividend
rights, conversion rights, voting rights, terms of redemption, liquidation
preferences, sinking fund terms and the number of shares constituting any series
or the designation of any such series. No shares of preferred stock are
currently outstanding. Subject to preferences that may be applicable to any
shares of any preferred stock outstanding at that time, holders of Common Stock
of the Company are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor, and in the
event of liquidation, dissolution or winding up of the Company, are entitled to
share ratably in all assets remaining after the payment of all liabilities.

ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Delaware and California General Corporation Law provide for the
indemnification of officers and directors who are made or are threatened to be
made a party to any legal proceeding by reason of their service to the Company.
The Restated Certificate of Incorporation and Bylaws of the Company permit
indemnification of directors and officers to the maximum extent permitted by
California law. The Company has in effect director and officer liability
insurance policies indemnifying the Company and the officers, directors and
certain assistant officers of the Company and officers and directors of the
Company's subsidiaries within specific limits for certain liabilities incurred
by reason of their being or having been directors or officers. The Company pays
the entire premium for these policies.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED

Not applicable.

3
<PAGE>

ITEM 8. EXHIBITS

4.1 Anchor Pacific Underwriters, Inc. 1994 Stock Option Plan

4.2 Form of Nonstatutory Stock Option Agreement under 1994 Plan

4.3 Form of Incentive Stock Option Agreement under 1994 Plan

4.4 Form of Nonstatutory Stock Option Agreement for Outside Directors
under 1994 Plan

4.5 Restated Certificate of Incorporation (incorporated by reference from
the Company's Annual Report on Form 10-K filed with the Commission on
March 24, 1995)

4.6 Bylaws (incorporated by reference from the Company's Annual Report on
Form 10-K filed with the Commission on March 24, 1995)

5 Opinion of Counsel; Bronson, Bronson & McKinnon

23.1 Consent of Ernst & Young LLP, Independent Auditors

23.2 Consent of Hirose, Oto & Bailey Accountants Inc., Independent Auditors

23.3 Consent of Counsel (See Exhibit 5)

24 Power of Attorney (see signature pages)

ITEM 9. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and

4
<PAGE>

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 6, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

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<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Concord, California, on this 22nd day of May, 1995.

ANCHOR PACIFIC UNDERWRITERS, INC.

By /s/ James R. Dunathan
-------------------------------
James R. Dunathan
President and
Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints James R. Dunathan and Earl Wiklund and each of
them, with full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities (until revoked in writing) to sign registration statements pursuant
to the Securities Act of 1933, as amended, relating to the registration of
shares of Common Stock of Anchor Pacific Underwriters, Inc. to be offered
pursuant to the Anchor Pacific Underwriters, Inc. 1994 Stock Option Plan, and to
sign any and all amendments (including post-effective amendments and amendments
thereto) to such registration statements, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.

6
<PAGE>

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ James R. Dunathan President, May 22, 1995
-------------------------- Chief Executive
James R. Dunathan Officer and Director

/s/ Earl Wiklund Chief Operating May 22, 1995
-------------------------- Officer, Chief
Earl Wiklund Financial Officer,
Secretary and Director

/s/ Donald H. Cameron Director May 22, 1995
--------------------------
Donald H. Cameron

/s/ Audie J. Dudum Director May 22, 1995
--------------------------
Audie J. Dudum

/s/ Steven A. Gonsalves Director May 22, 1995
--------------------------
Steven A. Gonsalves

/s/ R. William MacCullough Director May 22, 1995
--------------------------
R. William MacCullough

/s/ Donald B. Putnam Director May 22, 1995
--------------------------
Donald B. Putnam

/s/ Michael R. Sanford Director May 22, 1995
--------------------------
Michael R. Sanford

7
<PAGE>

SIGNATURE TITLE DATE

/s/ Richard L. Taylor Director May 22, 1995
--------------------------
Richard L. Taylor

/s/ James P. Wieking Director May 22, 1995
--------------------------
James P. Wieking

8
<PAGE>

EXHIBIT INDEX

Exhibit
No. Exhibit Name
------- ------------

4.1 Anchor Pacific Underwriters, Inc. 1994 Stock
Option Plan

4.2 Form of Nonstatutory Stock Option Agreement
under 1994 Plan

4.3 Form of Incentive Stock Option Agreement
under 1994 Plan

4.4 Form of Nonstatutory Stock Option Agreement
for Outside Directors under 1994 Plan

4.5 Restated Certificate of Incorporation (incorporated by reference from the
Company's Annual Report on Form 10-K filed with the Commission on March 24,
1995)

4.6 Bylaws (incorporated by reference from the Company's Annual Report on Form
10-K filed with the Commission on March 24, 1995)

5 Opinion of Counsel; Bronson, Bronson & McKinnon

23.1 Consent of Ernst & Young LLP, Independent Auditors

23.2 Consent of Hirose, Oto & Bailey Accountants Inc., Independent Auditors

23.3 Consent of Counsel (See Exhibit 5)

24 Power of Attorney (see signature pages)

<PAGE>

Exhibit 4.1

<PAGE>

ANCHOR PACIFIC UNDERWRITERS, INC.
1994 STOCK OPTION PLAN

<PAGE>

ANCHOR PACIFIC UNDERWRITERS, INC.
1994 STOCK OPTION PLAN

1. PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . 1

3. ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

4. THE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

5. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS. . . . . . . . . . . . . . . 3

6. GRANTS TO EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . 5

7. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS . . . . . . . . . . 8

8. ADJUSTMENT OF, AND CHANGES IN, THE SHARES. . . . . . . . . . . . . 9

9. AMENDMENT AND TERMINATION OF THE PLAN. . . . . . . . . . . . . . . 11

10. EFFECTIVENESS OF THE PLAN. . . . . . . . . . . . . . . . . . . . . 11

11. INFORMATION TO OPTIONEES . . . . . . . . . . . . . . . . . . . . . 11

12. PRIVILEGES OF STOCK OWNERSHIP, SECURITIES LAW
COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

13. NOTICE OF SALE . . . . . . . . . . . . . . . . . . . . . . . . . . 12

14. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . 12

<PAGE>

ANCHOR PACIFIC UNDERWRITERS, INC.
1994 STOCK OPTION PLAN

1. PURPOSE

The purpose of this Anchor Pacific Underwriters, Inc. 1994 Stock Option
Plan (the "Plan") is to provide a method whereby those key employees,
nonemployee directors and consultants of Anchor Pacific Underwriters, Inc. (the
"Company") and its affiliates, who are primarily responsible for the management
and growth of the Company's business and who are presently making and are
expected to make substantial contributions to the Company's future management
and growth, may be offered incentives in addition to those presently available,
and may be stimulated by increased personal involvement in the fortunes and
success of the Company to continue in its service, thereby advancing the inter-
ests of the Company and its shareholders.

The word "affiliate," as used in the Plan, means any corporation in any
unbroken chain of corporations beginning or ending with the Company, if at the
time of the granting of an option, each such corporation other than the last in
that chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in the chain.

2. ADMINISTRATION

The following provisions shall govern the administration of the Plan:

(a) Subject to paragraphs (b) and (c) below, the Plan shall be
administered by the Board of Directors or a duly appointed committee of the
Board. The Board of Directors may from time to time remove members from or add
members to the committee. Vacancies on the committee, however caused, shall be
filled by the Board of Directors. The Board of Directors may designate a
Chairman and Vice-Chairman of the committee from among the committee members.
Acts of the committee (i) at a meeting, held at a time and place and in
accordance with rules adopted by the committee, at which a quorum of the
committee is present and acting, or (ii) reduced to and approved in writing by
all members of the committee, shall be the valid acts of the committee.

(b) Discretionary grants of options to "officers" (as defined in
Section 16 of the Securities Exchange Act of 1934, as amended) of the Company or
its affiliates, including officers who are also directors of the Company, shall
be made by (i) the Board of Directors when all members of the Board are
Disinterested Persons, or (ii) a duly appointed committee of the Board composed
solely of Disinterested Persons having full authority to act in the matter. The
term "Disinterested Person" as used in the Plan shall have the meaning set forth
in Rule 16b-3 as promulgated by the Securities and Exchange Commission ("SEC")
under Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as such rule may be amended from time to time, and as inter-
preted by the SEC ("Rule 16b-3").

<PAGE>

The committee required by this paragraph shall consist of not less than
the minimum number of Disinterested Persons from time to time required by Rule
16b-3.

(c) The full Board of Directors shall administer the Plan with
respect to the automatic grant of options to Outside Directors pursuant to
Section 5 of the Plan.

(d) The Board and any such committee(s) referred to in Section 2(a)
or 2(b) is referred to hereinafter as the "Committee," except where otherwise
expressly provided or where the context requires otherwise.

(e) The Committee shall effect the grant of options under the Plan by
execution of instruments in writing in a form approved by the Committee.
Subject to the express terms and conditions of the Plan and except with respect
to the automatic grant of options to Outside Directors pursuant to Section 5,
the Committee shall have full power to construe the Plan and the terms of any
option granted under the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan or such options and to make all other
determinations necessary or advisable for the Plan's administration, including,
without limitation, the power to (i) determine which persons meet the require-
ments of Section 3 hereof for selection as participants in the Plan; (ii)
determine to whom of the eligible persons, if any, options shall be granted
under the Plan; (iii) establish the terms and conditions required or permitted
to be included in every option agreement or any amendments thereto, including
whether options to be granted thereunder shall be "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") or nonstatutory stock options not described in Sections 422(b) or 423(a)
of the Code; (iv) specify the number of shares to be covered by each option; (v)
determine the fair market value of shares of the Company's common stock for any
purpose under this Plan; (vi) take appropriate action to amend any option here-
under, provided that no such action may be taken without the written consent of
the affected optionee; (vii) cancel outstanding options and issue replacement
options therefor with the consent of the affected optionee, and (viii) make all
other determinations deemed necessary or advisable for administering the Plan.
The Committee's determination on the foregoing matters shall be conclusive.

3. ELIGIBILITY

The persons who shall be eligible to receive the discretionary grant of
options under this Plan shall be those key employees and officers of the Company
or its affiliates (including officers who may also be directors of the Company)
selected for participation by the Committee and consultants of the Company or
its affiliates who render bona fide services to the Company or such affiliates
other than in connection with the offer or sale of securities in a capital
raising transaction ("Consultants"). Directors of the Company who are not also
employees of the Company or any of its affiliates ("Outside Directors") are not
eligible for the discretionary grant of options under this Plan. Outside
Directors are eligible only for the nondiscretionary grant of options pursuant
to Section 5 of this Plan. No person shall be

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<PAGE>

eligible to receive options to purchase more than an aggregate of 250,000 shares
of Common Stock during the term of this Plan.

4. THE SHARES

The shares of stock subject to options authorized to be granted under the
Plan shall consist of seven hundred thousand (700,000) shares of the common
stock (the "Shares") of the Company, or the number and kind of shares of stock
or other securities which shall be substituted for such Shares or to which such
Shares shall be adjusted as provided in Section 8 hereof. Upon the expiration
or termination for any reason of an outstanding option under the Plan which has
not been exercised in full, all unissued Shares thereunder shall again become
available for the grant of options under the Plan. Shares of the Company's
common stock which are (i) delivered by an optionee in payment of the exercise
price of an option, or (ii) delivered by an optionee, or withheld by the Company
from the shares otherwise due upon exercise of an option, in satisfaction of
applicable withholding taxes may again become available for the grant of options
under the Plan.

5. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS

Immediately following the issuance of a permit from the California
Department of Corporations for the grant of options under the Plan and the
issuance of shares pursuant to the exercise of such options (if, in the opinion
of counsel for the Company, such a permit is required to be obtained), each
person who is an Outside Director and who held options under the Anchor Pacific
Underwriters, Inc. Director Stock Option Plan (which terminated on January 5,
1995) shall be granted an option to purchase 35,000 Shares, and each person who
is an Outside Director and who did not hold options under said Director Stock
Option Plan shall be granted an option to purchase 15,000 Shares (an "Initial
Grant"). Each other person who is thereafter first elected or appointed as an
Outside Director shall receive an option to purchase 15,000 Shares on the date
of such election or appointment (also, an "Initial Grant". Notwithstanding
anything to the contrary contained herein, if an Outside Director who received
an Initial Grant ceases to serve on the Board and is subsequently re-elected or
appointed to the Board such director shall not be entitled to an additional
Initial Grant. In addition, each Outside Director who is re-elected to the
Board by the Company's shareholders shall receive an additional option to
purchase 1,000 Shares (an "Annual Grant") immediately following the
shareholders' meeting at which such director was elected.

Notwithstanding the foregoing, (i) the aggregate amount of Shares (as
adjusted pursuant to Section 8) subject to options granted to all Outside
Directors as a group shall not exceed fifty percent (50%) of the Shares, plus
Shares underlying expired or terminated options which are added back to the
number of Shares available under the Plan pursuant to Section 4, and (ii) if
there are insufficient Shares available under the Plan for each Outside Director
who is eligible to receive an option, the number of options that an eligible
Outside Director shall receive, if any, shall be determined on a pro rata basis
(as rounded down to avoid fractional Shares) in the following order: Initial
Grants shall first be satisfied and, to

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<PAGE>

the extent of available Shares then remaining, Annual Grants shall next be
satisfied. All options granted to Outside Directors shall be subject to the
following terms and conditions:

(a) NONSTATUTORY OPTIONS. All stock options granted to Outside
Directors pursuant to the Plan shall be nonstatutory stock options.

(b) OPTION PRICE. The purchase price under each option granted to an
Outside Director shall be one hundred percent (100%) of the fair market value of
the Shares subject thereto on the date the option is granted; provided, however,
that the purchase price of an option granted to an Outside Director who owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company shall not be less than one hundred ten
percent (110%) of the fair market value of the Shares subject thereto on the
date the option is granted.

(c) DURATION AND VESTING OF OPTIONS. Each option granted to an
Outside Director shall be for a ten (10) year term and shall be vested for
exercise in annual increments of twenty five percent (25%) of the Shares subject
to the option with the first increment vesting on the first anniversary of the
date of grant, except that the first Initial Grants to persons who were Outside
Directors on January 6, 1995 shall be for a ten (10) year term and shall be
immediately vested for exercise from and after the date of grant of the option.

(d) TERMINATION OF TENURE ON THE BOARD. Upon the termination of an
Outside Director's status as a member of the Board, his or her rights to
exercise any options then held shall be only as follows:

DEATH OR DISABILITY: If an Outside Director's tenure on the
Board is terminated by death or disability, such Outside Director's or
such Outside Director's qualified representative (in the event of the
Outside Director's mental disability) or the Outside Director's estate
(in the event of the Outside Director's death) shall have the right
for a period of twelve (12) months following the date of such
termination to exercise the option to the extent the Outside Director
was entitled to exercise such option on the date of such termination;
provided the actual date of exercise is in no event after the
expiration of the term of the option. An Outside Director's "estate"
shall mean the Outside Director's legal representative or any person
who acquires the right to exercise an option by reason of the Outside
Director's death. To the extent the option is not exercised within
such period the option will terminate.

CAUSE: If an Outside Director is removed as such in accordance with
applicable corporate law, the Outside Director shall have the right for a
period of thirty (30) days after his removal to exercise the option to the
extent the option was exercisable on the date of termination; provided that
the date of exercise is in no

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event after the expiration of the term of the option. To the extent the
option is not exercised within such period the option will terminate.

OTHER REASONS: If an Outside Director's tenure on the Board is
terminated for any reason other than those mentioned above under
"Death or Disability" or "Cause," the Outside Director may, within two
and one-half years following such termination, exercise the option to
the extent such option was exercisable by the Outside Director on the
date of such termination; provided the date of exercise is in no event
after the expiration of the term of the option. Notwithstanding
anything to the contrary contained herein, if an Outside Director's
tenure on the Board is terminated within one (1) year from January 6,
1995 for any reason other than those mentioned above under "Death or
Disability" or "Cause," such Outside Director may, for a period of
five years after such termination, exercise the option. To the extent
the option is not exercised within such period the option will
terminate.

(e) The automatic grants to Outside Directors pursuant to this
Section 5 shall not be subject to the discretion of any person.

6. GRANTS TO EMPLOYEES AND CONSULTANTS

Options, in the discretion of the Committee, may be granted at any time
prior to the termination of the Plan to persons who are employees of the Company
or its affiliates, including employees who are also directors of the Company, or
to Consultants of the Company or its affiliates. Options granted by the
Committee to employees and Consultants pursuant to the Plan shall be subject to
the following terms and conditions:

(a) GRANT OF OPTIONS. Options granted to employees pursuant to the
Plan may be either incentive stock options or nonstatutory stock options. If
the aggregate fair market value of the shares issuable upon exercise of
incentive stock options which are exercisable for the first time during any one
(1) calendar year under all incentive stock options held by an optionee exceeds
$100,000 (determined at the time of the grant of the options), such options
shall be treated as nonstatutory stock options to the extent of such excess.
Options granted to Consultants pursuant to the Plan shall be nonstatutory stock
options.

(b) OPTION PRICE. The purchase price under each option shall not be
less than eighty-five percent (85%) of the fair market value of the Shares
subject thereto on the date the option is granted; provided, however, that the
purchase price of an option granted to an individual who owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company shall not be less than one hundred ten percent (110%) of
the fair market value of the Shares subject thereto on the date the option is
granted. For any purposes under this Plan, fair market value per share shall
mean, where there is a public market for the Company's common stock, the mean of
the bid and asked

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<PAGE>

prices (or the closing price if listed on a stock exchange or The Nasdaq
National Market) of the Company's common stock for the date of grant, as report-
ed in the Wall Street Journal (or, if not so reported, as otherwise reported by
The Nasdaq Stock Market or the National Quotation Bureau or the Company's
primary market maker.) If such information is not available for the date of
grant, then such information for the last preceding date for which such
information is available shall be considered as the fair market value. If there
is no public market for the Company's common stock, the fair market value
thereof shall be determined by the Committee using any reasonable valuation
method.

(c) DURATION OF OPTIONS. Each option shall be for a term determined
by the Committee; provided, however, that the term of any option may not exceed
ten (10) years and, provided further, that the term of any incentive stock
option granted to an individual who owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
shall not exceed five (5) years. Each option shall vest in such manner and at
such time as the Committee shall determine and the Committee may accelerate the
time of exercise of any option; provided, however, that no option shall vest for
exercise at a rate of less than twenty percent (20%) per year during the five
(5) year period following the date of grant of an option.

(d) TERMINATION OF EMPLOYMENT, CONSULTANT OR EMPLOYEE-DIRECTOR
STATUS. Upon the termination of an optionee's status as an employee or
Consultant, his or her rights to exercise an option then held shall be only as
follows:

DEATH OR DISABILITY: If an optionee's employment or consulting
relationship is terminated by death or disability, such optionee or
such optionee's qualified representative (in the event of the
optionee's mental disability) or the optionee's estate (in the event
of optionee's death) shall have the right for a period of twelve (12)
months (or such longer period as the Committee may determine at the
date of grant or during the term of the option) following the date of
such termination to exercise the option to the extent the optionee was
entitled to exercise such option on the date of such termination;
provided the actual date of exercise is in no event after the
expiration of the term of the option. To the extent the option is not
exercised within such period the option will terminate. An optionee's
"estate" shall mean the optionee's legal representative or any person
who acquires the right to exercise an option by reason of the
optionee's death.

CAUSE: If an optionee's employment or consulting relationship is
terminated because such optionee is determined by the Board to have
committed an act of embezzlement, fraud, dishonesty, breach of
fiduciary duty to the Company (which for purposes of this Section 6(d)
includes the Company's affiliates), or to have deliberately
disregarded the rules of the Company which resulted in loss, damage or
injury to the Company, or if an optionee makes any unauthorized
disclosure of any of the secrets or

6
<PAGE>

confidential information of the Company, induces any client or customer of
the Company to break any contract with the Company or induces any principal
for whom the Company acts as agent to terminate such agency relations, or
engages in any conduct which constitutes unfair competition with the
Company, the optionee shall have the right for a period of thirty (30) days
following such termination to exercise the option to the extent the option
was exercisable on the date of termination; provided that the date of
exercise is in no event after the expiration of the term of the option. To
the extent the option is not exercised within such period the option will
terminate. For the purpose of this paragraph, termination of employment or
Consultant status shall be deemed to occur when the Company dispatches
notice or advice to the optionee that the optionee's employment or status
as a Consultant is terminated, and not at the time of optionee's receipt
thereof.

OTHER REASONS: If an optionee's employment or consulting
relationship is terminated for any reason other than those mentioned
above under "Death or Disability" and "Cause," the optionee may,
within three (3) months (or such longer period as the Committee may
determine at the date of grant or during the term of the option)
following such termination, exercise the option to the extent such
option was exercisable on the date of termination of the optionee's
employment or status as a Consultant; provided the date of exercise is
in no event after the expiration of the term of the option and
provided further that any option which is exercised more than three
(3) months following termination shall be treated as a nonstatutory
option whether or not it was designated as such at the time it was
granted. To the extent the option is not exercised within such period
the option will terminate.

TERMINATION OF TENURE ON THE BOARD: Notwithstanding anything to the
contrary contained herein:

(a) If an employee-director's tenure on the Board is terminated
for any reason other than "Death or Disability" or removal from
office, and at the same time, such employee-director's employment is
terminated for any reason other than "Death or Disability" or "Cause,"
then such employee-director may, within two and one-half years
following such termination, exercise the option to the extent such
option was exercisable by the employee-director on the date of such
termination; provided the date of exercise is in no event after the
expiration of the term of the option; and provided further that if
such termination occurs within one (1) year from January 6, 1995, the
employee-director's option shall become immediately exercisable upon
such termination irrespective of the vesting provisions applicable
thereto, and such employee-director may, for a period of five years
after such termination, exercise the option; provided that the date of
exercise is in no event after the expiration of

7
<PAGE>
the term of the option. To the extent the option is not exercised
within such period the option will terminate.

(b) If an employee-director's tenure on the Board is terminated
for any reason other than "Death or Disability" or removal from
office, and if such employee-director remains an employee of the
Company after his tenure on the Board is terminated, then his or her
options shall continue to be governed by the terms of his or her
option agreement (I.E., the option will continue to have a term as
specified in the option agreement and will continue to be subject to
the termination provisions contained in the option agreement such that
if, for example, the optionee's employment is LATER terminated for any
reason other than "Death or Disability" or "Cause," the provisions
contained in this Section 6(d) relating to termination for "Other
Reasons" shall govern the period in which he or she must exercise the
option); provided, however, that if such termination occurs within one
(1) year from January 6, 1995, such option shall become immediately
exercisable upon such termination irrespective of the vesting
provisions applicable thereto.

7. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS

The following terms and conditions shall apply to all options granted
pursuant to the Plan:

(a) EXERCISE OF OPTIONS. To the extent the right to purchase Shares
has vested under an optionee's stock option agreement, options may be exercised
from time to time by delivering payment therefor in cash, certified check,
official bank check, or the equivalent thereof acceptable to the Company,
together with written notice to the Secretary of the Company, identifying the
option or part thereof being exercised and specifying the number of Shares for
which payment is being tendered. An optionee may also exercise an option by the
delivery and surrender of shares of Company common stock which (a) have been
owned by the optionee for at least six (6) months or, with respect to options
granted to persons other than Outside Directors, such other period as the
Committee may require; and (b) have an aggregate fair market value on the date
of surrender equal to the exercise price. In addition, an option may be
exercised by delivering to the Company (i) an exercise notice instructing the
Company to deliver the certificates for the Shares purchased to a designated
brokerage firm and (ii) a copy of irrevocable instructions delivered to the
brokerage firm to sell the Shares acquired upon exercise of the option and to
deliver to the Company from the sale proceeds sufficient cash to pay the
exercise price and applicable withholding taxes arising as a result of the
exercise.

The Company shall deliver to the optionee, which delivery shall be not less
than fifteen (15) days and not more than thirty (30) days after the giving of
such notice, without transfer or issue tax to the optionee (or other person
entitled to exercise the option), at the principal office of the Company, or
such other place as shall be mutually acceptable, a

8
<PAGE>

certificate or certificates for such Shares dated the date the options were
validly exercised; provided, however, that the time of such delivery may be
postponed by the Company for such period as may be required for it with
reasonable diligence to comply with any requirements of law.

(b) TRANSFERABILITY OF OPTION AND SHARES. Each option shall be
transferrable only by will or the laws of descent and distribution and shall be
exercisable during the optionee's lifetime only by the optionee, or in the event
of disability, the optionee's qualified representative. In addition, in order
for Shares acquired upon exercise of incentive stock options to receive the tax
treatment afforded such Shares, the Shares may not be disposed of within two (2)
years from the date of the option grant nor within one (1) year after the date
of transfer of such Shares to the optionee.

(c) WITHHOLDING. The Company shall have the right to condition the
issuance of Shares upon exercise of an option upon payment by the optionee of
any applicable taxes required to be withheld under federal, state or local tax
laws or regulations in connection with such exercise. An optionee may elect to
pay such tax by (i) requesting the Company to withhold a sufficient number of
Shares from the total number of Shares issuable upon exercise of the option or
(ii) delivering a sufficient number of shares of Company common stock (which
have been held by the optionee for such period as the Committee may require) to
the Company. The value of shares withheld or delivered shall be the fair market
value of such shares on the date the exercise becomes taxable as determined by
the Committee. Such an election is subject to approval or disapproval by the
Committee, and if the optionee is subject to Section 16 of the Exchange Act, the
timing of the election must satisfy the requirements of Rule 16b-3.

(d) OTHER TERMS AND CONDITIONS. Options may also contain such other
provisions, which shall not be inconsistent with any of the foregoing terms, as
the Committee shall deem appropriate. No option, however, nor anything
contained in the Plan, shall confer upon any optionee any right to continue in
the employ or in the status as a director or Consultant of the Company or its
affiliates, nor limit in any way the right of the Company or its affiliates to
terminate an optionee's employment or status as a Consultant at any time.

8. ADJUSTMENT OF, AND CHANGES IN, THE SHARES

(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding
option, and the number of Shares which have been authorized for issuance under
the Plan but as to which no options have yet been granted, as well as the price
per share of common stock covered by each such outstanding option, shall be
proportionately adjusted for any change in the outstanding shares of common
stock resulting from a stock split, reverse stock split, stock dividend,
recapitalization, combination or reclassification of the common stock, or any
other change affecting the outstanding shares of common stock as a class
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible

9
<PAGE>

securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Board of
Directors, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of common stock subject to an option.

(b) DISSOLUTION, LIQUIDATION, SALE OR MERGER. In the event of a
proposed dissolution or liquidation of the Company, options outstanding under
the Plan shall terminate immediately before the consummation of such proposed
action. The Board will, in such circumstances, provide written notice to the
optionees of the expected dates of termination of outstanding options and
consummation of the proposed dissolution or liquidation.

In the event of a proposed sale of all or substantially all of the assets
of the Company, or the merger of the Company with or into another corporation in
a transaction in which the Company is not the surviving corporation, outstanding
options may be assumed or equivalent options may be substituted by the successor
corporation (or a parent or subsidiary of the successor corporation), unless the
successor corporation does not agree to assume the options or to substitute
equivalent options. If outstanding options are not assumed or substituted by
equivalent options, all outstanding options shall terminate immediately before
the consummation of such sale or merger (subject to the actual consummation of
the sale or merger) and the Company shall provide written notice to the
optionees of the expected dates of termination of the options and consummation
of such transaction. If the transaction is not consummated, unexercised options
shall continue in accordance with their original terms.

(c) NOTICE OF ADJUSTMENTS, FRACTIONAL SHARES. To the extent the
foregoing adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive. No right to purchase fractional shares
shall result from any adjustment in options pursuant to this Section 8. In case
of any such adjustment, the shares subject to the option shall be rounded down
to the nearest whole share. Notice of any adjustment shall be given by the
Company to each holder of an option which was in fact so adjusted and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of the Plan.

Any issue by the Company of shares of stock of any class, or securities
convertible into shares of any class, shall not affect the number or price of
shares of common stock subject to the option, and no adjustment by reason
thereof shall be made. The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.

10
<PAGE>

9. AMENDMENT AND TERMINATION OF THE PLAN

The Board shall have complete power and authority to terminate or amend the
Plan; provided, however, that the Board shall not, without the approval of the
shareholders of the Company, amend the Plan in a manner that requires
shareholder approval for continued compliance with the terms of Rule 16b-3, as
promulgated under the Exchange Act, Section 422 of the Code, any successor
rules, or other regulatory authority; and provided further that the provisions
of Section 5 shall not be amended more than once every six months, other than to
comport with changes in the Code, or the rules thereunder. Except as provided
in Section 8, no termination, modification or amendment of the Plan may, without
the consent of the optionee to whom such option was previously granted under the
Plan, adversely affect the rights of such optionee. Any consent required by the
preceding sentence may be obtained in any manner deemed appropriate by the
Committee.

The Plan, unless sooner terminated, shall terminate on December 5, 2004,
ten (10) years from the date the Plan was originally adopted by the Board. An
option may not be granted under the Plan after the Plan is terminated.

10. EFFECTIVENESS OF THE PLAN

The Plan was approved by the directors of the Company on December 5, 1994
and the shareholders of the Company on December 19, 1994.

11. INFORMATION TO OPTIONEES

The Company shall provide to each optionee during the period for which he
or she has one or more outstanding options annual financial statements.

12. PRIVILEGES OF STOCK OWNERSHIP, SECURITIES LAW
COMPLIANCE

No optionee shall be entitled to the privileges of stock ownership as to
any Shares not actually issued and delivered to the optionee. The grant of
options and the issuance of Shares pursuant to the exercise of options granted
under the Plan shall be conditioned upon the registration of the Shares with the
SEC and qualification of the options and underlying Shares under the California
securities laws, unless in the opinion of counsel to the Company such
registration or qualification is not necessary. The Company shall diligently
endeavor to comply with all applicable securities laws before any options are
granted under the Plan and before any Shares are issued pursuant to the exercise
of such options.

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<PAGE>

13. NOTICE OF SALE

The optionee shall give the Company notice of any sale or other disposition
of any Shares acquired upon exercise of an incentive stock option not more than
five (5) days after such sale or disposition.

14. INDEMNIFICATION

To the extent permitted by applicable law in effect from time to time, no
member of the Board or the Committee shall be liable for any action or omission
of any other member of the Board or Committee nor for any act or omission on the
member's own part, excepting only the member's own willful misconduct or gross
negligence. The Company shall pay expenses incurred by, and satisfy a judgment
or fine rendered or levied against, a present or former director or member of
the Committee in any action against such person (whether or not the Company is
joined as a party defendant) to impose liability or a penalty on such person for
an act alleged to have been committed by such person while a director or member
of the Committee arising with respect to the Plan or administration thereof or
out of membership on the Committee or by the Company, or all or any combination
of the preceding; provided the director or Committee member was acting in good
faith, within what such director or Committee member reasonably believed to have
been within the scope of his or her employment or authority and for a purpose
which he or she reasonably believed to be in the best interests of the Company
or its shareholders. Payments authorized hereunder include amounts paid and
expenses incurred in settling any such action or threatened action. This
section does not apply to any action instituted or maintained in the right of
the Company by a shareholder or holder of a voting trust certificate
representing shares of the Company. The provisions of this section shall apply
to the estate, executor, administrator, heirs, legatees or devisees of a
director or Committee member, and the term "person" as used in this section
shall include the estate, executor, administrator, heirs, legatees or devisees
of such person.

<PAGE>

Exhibit 4.2

<PAGE>

ANCHOR PACIFIC UNDERWRITERS, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

Anchor Pacific Underwriters, Inc., a Delaware corporation (the "Company"),
has granted to ___________________________ (the "Optionee"), an option (the
"Option") to purchase a total of ______________ shares of Common Stock, at the
price determined as provided herein, and in all respects subject to the terms,
definitions and provisions of the Anchor Pacific Underwriters, Inc. 1994 Stock
Option Plan (the "Plan"). The terms defined in the Plan shall have the same
defined meanings herein.

1. NATURE OF THE OPTION. This Option is intended by the Company and the
Optionee to be a nonstatutory stock option and does not qualify for any special
tax benefits to the Optionee. This option is NOT an Incentive Stock Option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.

2. EXERCISE PRICE. The exercise price is $__________ for each share of
Common Stock, which price is not less than [85% of] the fair market value per
share of the Common Stock on the date of grant.

3. EXERCISE OF OPTION. This Option shall be exercisable during its term
in accordance with the provisions of Section 6 of the Plan as follows:

(a) RIGHT TO EXERCISE.

(i) This Option shall vest cumulatively from the date of grant
of the Option, exercisable during a period of ____ months after the date of
grant as follows: ______% of the Shares subject to the Option shall be vested
on the first anniversary of the date of grant, and an additional _____% of the
Shares subject to the Option shall vest on each anniversary of the date of grant
thereafter. [insert other vesting provisions as determined by the committee, not
less than 20% per year over a five year term.]

(ii) This Option may not be exercised for less than ten shares
nor for a fraction of a share.

(iii) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Sections 5, 6, 7 and 8 below.

(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise the Option and the number of
shares in respect of which the Option is being exercised. Such written notice
shall be signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company.

<PAGE>

No shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange or inter-dealer quotation system upon
which the Shares may then be listed or quoted. Assuming such compliance, the
shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such shares. An Optionee shall have no
rights as a shareholder of the Company with respect to any shares until the
issuance of a stock certificate to the Optionee for such shares.

4. METHOD OF PAYMENT. Payment of the exercise price shall be by cash,
certified check, official bank check, or by the delivery of previously owned
shares of the Company's Common Stock held for at least six months [or such other
period as the Committee may require] and with a fair market value on the date of
surrender equal to the exercise price. In addition, the Optionee may exercise
the Option by delivering to the Company, together with the exercise notice, (i)
a copy of irrevocable written instructions provided by the Optionee to a
designated brokerage firm to effect the immediate sale of the purchased Shares
and remit to the Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price payable for the
purchased Shares plus all applicable federal, state and local income and
employment taxes required to be withheld by the Company by reason of such
purchase and (ii) written instructions to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order
to complete the sale transaction.

5. TERMINATION OF STATUS AS AN EMPLOYEE FOR ANY REASON OTHER THAN DEATH,
DISABILITY OR CAUSE. If an Optionee ceases to serve as an Employee, he may, but
only within three months [or such longer period as the Committee may determine
at the date of grant or during the term of the Option] after the date he ceases
to be an Employee of the Company, exercise this Option to the extent that the
Option was vested as of the date of such termination; provided that in no event
is the date of exercise beyond expiration of the Option. To the extent that the
Option was not vested as of the date of such termination, or if Optionee does
not exercise this Option within the time specified herein, the Option shall
terminate.

6. TERMINATION OF STATUS AS AN EMPLOYEE FOR CAUSE. If an Optionee's
status as an Employee is terminated for Cause, as provided in Section 6(d) of
the Plan, this Option shall terminate on the thirtieth day after the date of
termination of employment. "Cause" may consist of an act of embezzlement;
fraud; dishonesty; breach of fiduciary duty to the Company; deliberate disregard
of the rules of the Company which result in loss, damage or injury to the
Company; the unauthorized disclosure of any of the secrets or confidential
information of the Company; the inducement of any

2
<PAGE>

client or customer of the Company to break any contract with the Company or the
inducement of any principal for whom the Company acts as agent to terminate such
agency relations; or engagement in any conduct which constitutes unfair
competition with the Company.

7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 5
above, if Optionee is unable to continue his employment with the Company as a
result of his disability (as defined below), he may, within 12 months [or such
longer period as the Committee may determine at the date of grant or during the
term of the Option] from the date of termination of employment, exercise his
Option to the extent the Option was vested as of the date of such termination;
provided that in no event is the date of exercise beyond expiration of the
Option. To the extent that the Option was not vested as of the date of
termination, or if he does not exercise such Option within the time specified
herein, the Option shall terminate. For purposes of this provision,
"disability" shall mean the inability of Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment and shall be determined by the Board of Directors or the Committee on
the basis of such medical evidence as the Board of Directors or Committee deems
warranted under the circumstances.

8. DEATH OF OPTIONEE. In the event of the death of Optionee while
Optionee is an Employee, the Option may be exercised, at any time within 12
months [or such longer period as the Committee may determine at the date of
grant or during the term of the Option] following the date of death, by
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent the Option was vested as of
the date of death; provided that in no event is the date of exercise beyond
expiration of the Option.

9. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

10. TERM OF OPTION. Subject to earlier termination as provided in the
Plan, this Option shall terminate_____ years from the date of grant of this
Option, and may be exercised during such term only in accordance with the Plan
and the terms of this Option.

11. TAXATION UPON EXERCISE OF OPTION. Optionee understands that upon
exercise of this Option, he will generally recognize income for tax purposes in
an amount equal to the excess of the then fair market value of the Shares over
the exercise price.

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<PAGE>

The Company will be required to withhold tax from Optionee's current
compensation with respect to such income; to the extent that Optionee's current
compensation is insufficient to satisfy the withholding tax liability, the
Company may require the Optionee to make a cash payment to cover such liability
as a condition of exercise of this Option. [The Optionee may elect to pay such
tax by (i) requesting the Company to withhold a sufficient number of shares from
the shares otherwise due upon exercise or (ii) by delivering a sufficient number
of shares of the Company's Common Stock which have been previously held by the
Optionee for such period of time as the Committee may require. The aggregate
value of the shares withheld or delivered, as determined by the Committee must
be sufficient to satisfy all such applicable taxes, except as otherwise
permitted by the Committee. If the Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended, the Optionee's election must be
made in compliance with rules and procedures established by the Committee.]

DATE OF GRANT: __________________, 199_

Anchor Pacific Underwriters, Inc.

By: _____________________________
_________________, Duly
Authorized on Behalf of
Anchor Pacific Underwriters, Inc.

Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board of Directors or the Committee upon any
questions arising under the Plan.

Dated: ____________________

_____________________________
Optionee

<PAGE>

Exhibit 4.3

<PAGE>

ANCHOR PACIFIC UNDERWRITERS, INC.

INCENTIVE STOCK OPTION AGREEMENT

Anchor Pacific Underwriters, Inc., a Delaware corporation (the "Company"),
has granted to _______________________ (the "Optionee"), an option (the
"Option") to purchase a total of ___________ shares of Common Stock, at the
price determined as provided herein, and in all respects subject to the terms,
definitions and provisions of the Anchor Pacific Underwriters, Inc. 1994 Stock
Option Plan (the "Plan"). The terms defined in the Plan shall have the same
defined meanings herein.

1. NATURE OF THE OPTION. This Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code.

2. EXERCISE PRICE. The exercise price is $_________ for each share of
Common Stock, which price is not less than the fair market value per share of
the Common Stock on the date of grant.

3. EXERCISE OF OPTION. This Option shall be exercisable during its term
in accordance with the provisions of Section 6 of the Plan as follows:

(a) RIGHT TO EXERCISE.

(i) This Option shall vest cumulatively from the date of grant
of the Option, exercisable during a period of _____ months after the date of
grant as follows: _____% of the Shares subject to the Option shall be vested on
the first anniversary of the date of grant, and an additional _____% of the
Shares subject to the Option shall vest on each anniversary of the date of grant
thereafter. [insert other vesting provisions as determined by the committee, not
less than 20% per year over a five year term.]

(ii) This Option may not be exercised for less than 10 shares nor
for a fraction of a share.

(iii) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Sections 5, 6, 7 and 8 below.

<PAGE>

No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange or inter-dealer quotation system upon
which the shares of the Company's Common Stock may then be listed or quoted.
Assuming such compliance, the shares shall be considered transferred to the
Optionee on the date on which the Option is exercised with respect to such
Shares. An Optionee shall have no rights as a shareholder of the Company with
respect to any shares until the issuance of a stock certificate to the Optionee
for such shares.

4. METHOD OF PAYMENT. Payment of the exercise price shall be by cash,
certified check, official bank check, or the equivalent thereof acceptable to
the Company, or by the delivery of previously owned shares of the Company's
Common Stock held for at least six months [or such other period as the Committee
may require] and with a fair market value on the date of surrender equal to the
exercise price.

5. TERMINATION OF STATUS AS AN EMPLOYEE FOR ANY REASON OTHER THAN DEATH,
DISABILITY OR CAUSE. If Optionee ceases to serve as an Employee, he may, but
only within three months [or such longer period as the Committee may determine
at the date of grant or during the term of the Option] after the date he ceases
to be an Employee of the Company, exercise this Option to the extent that the
Option was vested as of the date of such termination; provided that in no event
is the date of exercise beyond expiration of the Option. To the extent that the
Option was not vested as of the date of such termination, or if Optionee does
not exercise this Option within the time specified herein, the Option shall
terminate.

6. TERMINATION OF STATUS AS AN EMPLOYEE FOR CAUSE. If Optionee's status
as an Employee is terminated for Cause, as provided in Section 6(d) of the Plan,
this Option shall terminate on the thirtieth day after the date of termination
of employment. "Cause" may consist of an act of embezzlement; fraud;
dishonesty; breach of fiduciary duty to the Company; deliberate disregard of the
rules of the Company which result in loss, damage or injury to the Company; the
unauthorized disclosure of any of the secrets or confidential information of the
Company; the inducement of any client or customer of the Company to break any
contract with the Company or the inducement of any principal for whom the
Company acts as agent to terminate such agency relations; or engagement in any
conduct which constitutes unfair competition with the Company.

2
<PAGE>
as the Committee may determine at the date of grant or during the term of the
Option] from the date of termination of employment, exercise his Option to the
extent the Option was vested as of the date of such termination; provided that
in no event is the date of exercise beyond expiration of the Option; and,
provided further, that, in certain situations, an exercise after three months
following such termination may preclude favorable tax treatment normally
accorded incentive stock options (I.E., the Option will be taxed as a non-
qualified stock option). To the extent that the Option was not vested as of the
date of termination, or if Optionee does not exercise such Option within the
time specified herein, the Option shall terminate. For purposes of this
provision, "disability" shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Board of Directors or the
Committee on the basis of such medical evidence as the Board of Directors or
Committee deems warranted under the circumstances.

8. DEATH OF OPTIONEE. In the event of the death of Optionee while
Optionee is an Employee of the Company, the Option may be exercised, at any time
within 12 months [or such longer period as the Committee may determine at the
date of grant or during the term of the Option] following the date of death, by
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent the Option was vested as of
the date of death; provided that in no event is the date of exercise beyond
expiration of the Option.

10. TERM OF OPTION. Subject to earlier termination as provided in the
Plan, this Option shall terminate _____ years from the date of grant of this
Option, and may be exercised during such term only in accordance with the Plan
and the terms of this Option.

11. EARLY DISPOSITION OF STOCK. Optionee understands that if he disposes
of any shares received under this Option within two years after the date of this
Agreement or within one year after such shares were transferred to him, he will
be treated for federal income tax purposes as having received ordinary income at
the time of such disposition in an amount generally measured by the difference
between the exercise price and the lower of the fair market value of the shares
at the date of the exercise or

3
<PAGE>

the fair market value of the shares at the date of disposition. OPTIONEE
AGREES TO NOTIFY THE COMPANY IN WRITING WITHIN 5 DAYS AFTER THE DATE OF ANY SUCH
DISPOSITION. Optionee understands that if he disposes of such shares at any
time after the expiration of such two-year and one-year holding
periods, any gain on such sale will be taxed as long-term capital gain.

12. QUALIFICATION AS AN INCENTIVE STOCK OPTION. Optionee understands that
the Option is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code. Optionee understands, further, that: (a)
under the Code, if an optionee is unable to continue his or her employment with
the Company as a result of a total and permanent disability (as defined in
Section 22(e)(3) of the Code), and if the other requirements for incentive stock
option treatment contained in Section 422 of the Code are satisfied, Optionee
will be entitled to exercise the Option within 12 months of such termination
without defeating incentive stock option treatment; but (b) if Optionee is
unable to continue his or her employment with the Company as a result of his or
her disability, and such disability is not a total and permanent disability (as
defined in Section 22(e)(3) of the Code), the Option will not qualify as an
incentive stock option unless it is exercised within three months of the date
of termination (I.E., while the Option may be exercised for a period of 12
months after such termination, the exercise more than three months following
termination will result in the Option being taxed as a non-qualified stock
option). Finally, Optionee understands that: (a) the exercise price for the
shares subject to this Option has been determined in accordance with the Plan at
a price not less than 100% (or, if Optionee owned at the time of grant more than
10% of the voting securities of the Company, 110%) of the fair market value of
the shares at the time of grant; (b) the Company believes that the methodology
by which the fair market value was determined at such time represented a good
faith attempt, as defined in the Code and the regulations thereunder, at
reaching an accurate appraisal of the fair market value of the shares; and (c)
the Company shall not be responsible for any additional tax liability incurred
by Optionee in the event that the Internal Revenue Service were to determine
that the Option does not qualify as an incentive stock

4
<PAGE>

option, for any reason, including a determination that the valuation did not
represent a good faith attempt to value the shares.

DATE OF GRANT: ________________, 199_

Anchor Pacific Underwriters, Inc.

By: ______________________________
___________________, Duly
Authorized on Behalf of
Anchor Pacific Underwriters, Inc.

Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board of Directors and the Committee upon
any questions arising under the Plan.

Dated: ____________________

______________________________
Optionee

<PAGE>

Exhibit 4.4

<PAGE>

ANCHOR PACIFIC UNDERWRITERS, INC.

NONSTATUTORY STOCK OPTION AGREEMENT
FOR OUTSIDE DIRECTORS

Pursuant to the automatic nondiscretionary terms of Section 5 of the Anchor
Pacific Underwriters, Inc. 1994 Stock Option Plan (the "Plan"), Anchor Pacific
Underwriters, Inc., a Delaware corporation (the "Company"), hereby grants to
___________________________ (the "Optionee"), an option (the "Option") to
purchase a total of [35,000] [15,000] shares of Common Stock, at the price
determined as provided herein, and in all respects subject to the terms,
definitions and provisions of the Plan. The terms defined in the Plan shall
have the same defined meanings herein.

2. EXERCISE PRICE. The exercise price is $__________ for each share of
Common Stock, which price is not less than the fair market value per share of
the Common Stock on the date of grant.

3. EXERCISE OF OPTION. This Option shall [become vested for exercise in
annual increments of twenty five percent (25%) of the Shares subject to the
option with the first increment vesting on the first anniversary of the date of
grant in accordance with Section 5(c) of the Plan.] [be immediately vested for
exercise from and after the date of grant of the option.] This Option may not
be exercised for less than ten shares nor for a fraction of a share. In the
event of Optionee's death, disability or other termination of his status as an
Outside Director, the exercisability of the Option is governed by Sections 6, 7,
8 and 9 below.

4. METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise the Option and the number of
shares in respect of which the Option is being exercised. Such written notice
shall be signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company.

<PAGE>

shares. An Optionee shall have no rights as a shareholder of the Company with
respect to any shares until the issuance of a stock certificate to the Optionee
for such shares.

5. METHOD OF PAYMENT. Payment of the exercise price shall be by cash,
certified check, official bank check, or by the delivery of previously owned
shares of the Company's Common Stock held for at least six months and with a
fair market value on the date of surrender equal to the exercise price. In
addition, the Optionee may exercise the Option by delivering to the Company,
together with the exercise notice, (i) a copy of irrevocable written
instructions provided by the Optionee to a designated brokerage firm to effect
the immediate sale of the purchased Shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased Shares plus all applicable
federal, state and local income and employment taxes required to be withheld by
the Company by reason of such purchase and (ii) written instructions to the
Company to deliver the certificates for the purchased Shares directly to such
brokerage firm in order to complete the sale transaction.

6. TERMINATION OF STATUS AS AN OUTSIDE DIRECTOR FOR ANY REASON OTHER THAN
DEATH, DISABILITY OR CAUSE. If an Optionee ceases to serve as an Outside
Director, he may, but only within two and one-half years after the date he
ceases to be an Outside Director, exercise this Option to the extent that the
Option was vested as of the date of such termination; provided that in no event
is the date of exercise beyond expiration of the Option. [Notwithstanding the
foregoing, if an Outside Director's tenure on the Board is terminated within one
(1) year from January 6, 1995 for any reason other than those mentioned below
under "Death or Disability" or "Cause," such Outside Director may, for a period
of five years after such termination, exercise the option.] To the extent that
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.

7. TERMINATION OF STATUS AS A DIRECTOR FOR CAUSE. If an Optionee's
tenure on the Board is terminated for Cause, as provided in Section 5(d) of the
Plan, this Option shall terminate on the thirtieth day after the date of
termination of employment.

8. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 6
above, if Optionee is unable to continue his service as an Outside Director as a
result of his disability, he may, within 12 months from the date of termination
of such service exercise this Option to the extent the Option was vested as of
the date of such termination; provided that in no event is the date of exercise
beyond expiration of the Option. To the extent that Optionee does not exercise
this Option within the time specified herein, the Option shall terminate. For
purposes of

2
<PAGE>

this provision, "disability" shall mean the inability of Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment and shall be determined by the Board of Directors
or the Committee on the basis of such medical evidence as the Board of Directors
or Committee deems warranted under the circumstances.

9. DEATH OF OPTIONEE. In the event of the death of Optionee while
Optionee is an Outside Director, the Option may be exercised, at any time within
12 months following the date of death by Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Option was vested as of the date of death; provided that in
no event is the date of exercise beyond expiration of the Option. To the extent
that this Option is not exercised within the time specified herein, the Option
shall terminate.

10. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

11. TERM OF OPTION. Subject to earlier termination as provided in the
Plan, this Option shall terminate ten years from the date of grant of this
Option, and may be exercised during such term only in accordance with the Plan
and the terms of this Option.

DATE OF GRANT: __________________, 199_

Anchor Pacific Underwriters, Inc.

By: _____________________________
_________________, Duly
Authorized on Behalf of
Anchor Pacific Underwriters,
Inc.

3
<PAGE>

Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board of Directors or the Committee upon
any questions arising under the Plan.

Dated: ____________________

_____________________________
Optionee

<PAGE>

Exhibit 5

<PAGE>

[BRONSON, BRONSON & MCKINNON LETTERHEAD]

May 22, 1995

Board of Directors
Anchor Pacific Underwriters, Inc.
1800 Sutter Street, Suite 400
Concord, California 94520

Re: Anchor Pacific Underwriters, Inc. 1994 Stock Option Plan
--------------------------------------------------------

Ladies and Gentlemen:

We refer to the Registration Statement on Form S-8 to be filed by Anchor
Pacific Underwriters, Inc. (the "Company") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to 700,000
shares of the Company's Common Stock, $.02 par value, issuable under the
Company's 1994 Stock Option Plan. As counsel to the Company, we have examined
such questions of law and such corporate records and other documents as we have
considered necessary or appropriate for the purposes of this opinion and, upon
the basis of such examination, advise you that in our opinion these shares have
been duly and validly authorized and, when issued and sold in the manner
contemplated by the Registration Statement, will be validly issued, fully paid,
and nonassessable.

We consent to the filing of this opinion as an exhibit to the Registration
Statement.

Very truly yours,

/s/ Bronson, Bronson & McKinnon

kxf/AJM

<PAGE>

EXHIBIT 23.1

We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Anchor Pacific Underwriters, Inc. 1994 Stock Option Plan
of Anchor Pacific Underwriters, Inc. of our reports (a) dated March 3, 1995,
with respect to the consolidated financial statements of Anchor Pacific
Underwriters, Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1994, (b) dated March 3, 1995, with respect to the consolidated
financial statements of Anchor Pacific Underwriters, Inc. for the year ended
December 31, 1994, included as an exhibit to its Amendment No. 1 to the Current
Report on Form 8-K, dated March 22, 1995, (c) dated January 27, 1995, with
respect to the financial statements of Putnam, Knudsen & Wieking, Inc. for the
nine month period ended September 30, 1994 and for each of the two years in the
period ended December 31, 1993, included as an exhibit to the Anchor Pacific
Underwriters, Inc. Amendment No. 1 to the Current Report on Form 8-K, dated
March 22, 1995 and (d) dated December 19, 1994, with respect to the financial
statements of Benefit Resources, Inc. for the ten months ended July 31, 1994 and
for each of the two years in the period ended September 30, 1993, included as an
exhibit to the Anchor Pacific Underwriters, Inc. Amendment No. 1 to the Current
Report on Form 8-K, dated March 22, 1995, filed with the Securities and Exchange
Commission.

May 22, 1995
/s/ Ernst & Young LLP

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we consent to the incorporation by reference
in the Anchor Pacific Underwriters, Inc. Registration Statement (Form S-8 with
respect to the Anchor Pacific Underwriters, Inc. 1994 Stock Option Plan) of our
report dated April 1, 1994, with respect to the consolidated financial
statements of Anchor Pacific Underwriters, Inc. for the years ended December 31,
1993 and 1992, included in its Form 8-K/A-1 dated March 22, 1995 and its Annual
Report (Form 10-K) for the year ended December 31, 1994, filed with the
Securities and Exchange Commission.

/s/ Mary E. Bailey, CPA
-------------------------------------
Hirose, Oto & Bailey Accountants Inc.
May 22, 1995