OF COUNSEL ENTERPRISES, INC.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE.
The purpose of this Stock Option Plan for Non-Employee Directors
(the "Plan") of Of Counsel Enterprises, Inc. (the "Corporation") is to
strengthen the Corporation's ability to attract and retain the services of
knowledgeable and experienced persons who, through their efforts and
expertise, can make a significant contribution to the success of the
Corporation's business by serving as members of the Corporation's Board of
Directors and to provide additional incentive for such directors to continue
to work for the best interests of the Corporation and its stockholders
through ownership of its Common Stock, $.01 par value (the "Common Stock").
Accordingly, the Corporation will grant to each non-employee director options
to purchase shares of the Corporation's Common Stock on the terms and
conditions hereafter established.
2. STOCK SUBJECT TO PLAN.
The Corporation may issue and sell a total of 125,000 shares of its
Common Stock pursuant to the Plan. Such shares may be either authorized and
unissued or held by the Corporation in its treasury. New options may be
granted under the Plan with respect to shares of Common Stock which are
covered by the unexercised portion of an option which has terminated or
expired by its terms, by cancellation or otherwise.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Board of Directors of the
Corporation (the "Board") or a committee designated by the Board. The
interpretation and construction by the Board of any provisions of the Plan or
of any other matters related to the Plan shall be final. The Board may from
time to time adopt such rules and regulations for carrying out the Plan as it
may deem advisable. No member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan.
The Board of Directors may at any time amend, alter, suspend or
terminate the Plan; provided, however, that any such action would not
impair any option to purchase Common Stock theretofore granted under the
Plan; and provided further that without the approval of the Corporation's
stockholders, no amendments or alterations would be made which would (i)
increase the number of shares of Common Stock that may be purchased by each
non-employee director under the Plan (except as
permitted by Paragraph 10), (ii) increase the aggregate number of shares of
Common Stock as to which options may be granted under the Plan (except as
permitted by Paragraph 10), (iii) decrease the option exercise price (except
as permitted by Paragraph 10), or (iv) extend the period during which
outstanding options granted under the Plan may be exercised; and provided
further that Paragraph 5 of the Plan shall not be amended more than once
every six months other than to comply with changes in the Internal Revenue
Code of 1986, as amended, or the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder.
4. ELIGIBILITY.
All non-employee directors of the Corporation shall be eligible to
receive options under the Plan. Receipt of stock options under any other
stock option plan maintained by the Corporation or any subsidiary shall not,
for that reason, preclude a director from receiving options under the Plan.
5. GRANTS.
(i) Except as set forth in Paragraph 5(iii) below, each non-
employee director shall be issued an option to purchase 5,000 shares of the
Corporation's Common Stock (the "Initial Option") on the date of his initial
election or appointment to the Board of Directors (the "Initial Grant Date")
at the following price for the following term and otherwise in accordance
with the terms of the Plan:
(a) The option exercise price per share of Common Stock
shall be the Fair Market Value (as defined below) of the
Common Stock covered by such Initial Option on the Initial
Grant Date.
(b) Except as provided herein, the term of an Initial
Option shall be for a period of ten (10) years from the
Initial Grant Date.
(ii) In addition, each non-employee director shall, on each
anniversary of the Initial Grant Date (the "Additional Grant Date"), if he is
still a non-employee director on such date, be granted an option to purchase
7,500 shares of the Corporation's Common Stock (the "Additional Option") at
the following price for the following term and otherwise in accordance with
the terms of the Plan:
(a) The option exercise price per share of Common Stock
shall be the Fair Market Value (as defined below) of the
Common Stock covered by such Additional Option on the
Additional Grant Date.
(b) Except as provided herein, the term of an Additional
Option shall be for a period of ten (10) years from the
Additional Grant Date.
(iii) In the case of Mr. William Lerner, who was elected a
director in December 1993, an Initial Option to purchase 5,000 shares of the
Corporation's Common
Stock shall be granted under the Plan as of February 1, 1994, the date of the
Plan's adoption by the Board of Directors, which date shall be the Initial
Grant Date for Mr. Lerner. Such Options may not be exercised unless and
until the stockholders of the Corporation approve the Plan. Mr. James B.
Fleming, who was elected a director prior to the adoption of this Plan by the
Board of Directors, shall not receive an Initial Option but shall receive, as
of the date the stockholders of the Corporation approve the Plan (which date,
in the case of Mr. Fleming, shall be deemed the Additional Grant Date), an
Additional Option and, so long as Mr. Fleming is a director, he shall receive
an Additional Option on each anniversary of the date that the Plan is
approved by the stockholders of the Corporation.
(iv) "Fair Market Value" shall mean, for each Grant Date, (A)
if the Common Stock is listed or admitted to trading on the New York Stock
Exchange (the "NYSE") or the American Stock Exchange (the "ASE"), the average
of the high and low sale price of the Common Stock on such date or, if no
sale takes place on such date, the average of the highest closing bid and
lowest closing asked prices of the Common Stock on such exchange, in each
case as officially reported on the NYSE or the ASE, or (B) if no shares of
Common Stock are then listed or admitted to trading on the NYSE or the ASE,
the average of the high and low sale prices of the Common Stock on such date
on the NASDAQ National Market or, if no shares of Common Stock are then
quoted on the NASDAQ National Market, the average of the closing bid and
highest asked prices of the Common Stock on such date on NASDAQ or, if no
shares of Common Stock are then quoted on NASDAQ, the average of the highest
bid and lowest asked prices of the Common Stock on such date as reported in
the over-the-counter system. If no closing bid and highest asked prices
thereof are then so quoted or published in the over-the-counter market, "Fair
Market Value" shall mean the fair value per share of Common Stock (assuming
for the purposes of this calculation the economic equivalence of all shares
of classes of capital stock), as determined on a fully diluted basis in good
faith by the Board, as of a date which is 15 days preceding such Grant Date.
(v) Options granted hereunder shall not be "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended.
6. REGULATORY COMPLIANCE AND LISTING.
The issuance or delivery of any Option may be postponed by the
Corporation for such period as may be required to comply with the Federal
securities laws, any applicable listing requirements of any applicable
securities exchange and any other law or regulation applicable to the
issuance or delivery of such Options, and the Corporation shall not be
obligated to issue or deliver any Options if the issuance or delivery of such
options would constitute a violation of any law or any regulation of any
governmental authority or applicable securities exchange.
7. RESTRICTIONS ON EXERCISABILITY AND SALE.
(i) Subject to Paragraph 7(ii) below, each Option
granted under the Plan shall become exercisable as to 100% of the number of
shares issuable under such Option on the date which is one year after the
Grant Date of such Option.
(ii) Notwithstanding anything herein to the contrary, if the
shares of Common Stock issuable upon exercise of Options granted under the
Plan have not been registered under the Securities Act of 1933, as amended,
the Board may condition the exercisability of Options upon compliance with
applicable federal and state securities laws.
8. CESSATION AS DIRECTOR.
In the event that the holder of an Option granted pursuant to the
Plan shall cease to be a director of the Corporation for any reason such
holder may exercise any portion of the Option that is exercisable by him at
the time he ceases to be a director of the Corporation, but only to the
extent such Option is exercisable as of such date, within six months after
the date he ceases to be a director of the Corporation.
9. DEATH.
In the event that a holder of an Option granted pursuant to the
Plan shall die, his estate, personal representative or beneficiary may
exercise any portion of the Option that was exercisable by the deceased
Optionee at the time of his death, but only to the extent such Option is
exercisable as of such date, within twelve months after the date of his
death.
10. STOCK SPLITS, MERGERS, ETC.
In the event of any stock split, stock dividend or similar
transaction which increases or decreases the number of outstanding shares of
Common Stock, appropriate adjustment shall be made by the Board of Directors,
whose determination shall be final, to the number and option exercise price
per share of Common Stock which may be purchased under any outstanding
Options. In the case of a merger, consolidation or similar transaction which
results in a replacement of the Corporation's Common Stock with stock of
another corporation, the Corporation will make a reasonable effort, but shall
not be required, to replace any outstanding Options granted under the Plan
with comparable options to purchase the stock of such other corporation, or
will provide for immediate maturity of all outstanding Options, with all
Options not being exercised within the time period specified by the Board of
Directors being terminated.
11. TRANSFERABILITY.
Options are not assignable or transferable, except upon the
optionholder's death to a beneficiary designated by the optionee in
accordance with procedures established by the Board or, if no designated
beneficiary shall survive the optionholder, pursuant to the optionholder's
will or by the laws of descent and distribution, to the extent set forth in
Paragraph 9, and during the optionholder's lifetime, may be exercised only by
him.
12. EXERCISE OF OPTIONS.
An optionholder electing to exercise an Option shall give written
notice to the Corporation of such election and of the number of shares of
Common Stock that he has elected to acquire. An optionholder shall have no
rights of a stockholder with respect to shares of Common Stock covered by his
Option until after the date of issuance of a stock certificate to him upon
partial or complete exercise of his option.
13. PAYMENT.
The Option exercise price shall be payable in cash, check or in
shares of Common Stock upon the exercise of the Option. If the shares of
Common Stock are tendered as payment of the Option exercise price, the value
of such shares shall be the Fair Market Value as of the date of exercise. If
such tender would result in the issuance of fractional shares of Common
Stock, the Corporation shall instead return the difference in cash or by
check to the optionholder.
14. OBLIGATION TO EXERCISE OPTION.
The granting of an Option shall impose no obligation on the
director to exercise such option.
15. CONTINUANCE AS DIRECTOR.
Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any director for reelection by the
Corporation's stockholders.
16. TERM OF PLAN.
The Plan shall be effective as of the date on which it is adopted
by the Board, subject to the approval of the stockholders of the Corporation
within one year from the date of adoption by the Board. The Plan will
terminate on the date ten years after the date of adoption by the Board,
unless sooner terminated by the Board. The rights of optionees under options
outstanding at the time of the termination of the Plan shall not be affected
solely by reason of the termination and shall continue in accordance with the
terms of the option (as then in effect or thereafter amended).