NETWORK SIX, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
This Network six, Inc. Non-Employee Director Stock Option Plan
(the "Plan") is adopted by Network Six. Inc. (the "Company") for the
purpose of advancing the interests of the company by providing
incentives for the continued services of the company's non-employee
directors and by attracting able individuals to directorships with the
Company.
1. Definitions. For purposes of this Plan, the following term
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shall have the meanings set forth below:
"Board" means the Board of Directors of the Company.
"Common Shares" means the Company's common stock, $.10 par value
per share.
"Company" means Network Six, Inc., a Rhode Island corporation.
"Effective Date" means March 15, 1995.
"Grant Date" means the effective date of a grant of options
pursuant to Paragraph 4(a) and 4(b) hereof.
"Market Value" means the closing price of the Common Shares as
reported by NASDAQ.
"participant" means a director who has met the requirements of
eligibility and participation described in Paragraph 3 hereof.
2. Administration. The Plan shall be administered by the Board.
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Subject to the provisions of the Plan, the Board shall have the
authority to interpret the provisions and supervise the administration
or the Plan. All decisions made by the Board under the provisions of
the Plan shall be made by the affirmative vote of a majority of the
directors then in office. The following provisions shall apply to the
administration of the Plan by the Board:
(a) The Board shall have full authority subject to the
express provisions of the Plan to interpret the Plan, to provide,
modify and rescind rules and regulations relating to it to
determine the terms and provisions of each option and the form of
any option agreement evidencing an option granted under the Plan
and to make all other determinations and perform such actions as
the Board deems necessary or advisable to administer the Plan.
(b) The Board shall not be held liable for any action taken
or determination made in good faith with respect to the Plan or
any option granted hereunder.
3. Eligibility and Participation
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(a) A non-employee director of the Company shall
automatically become a Participant in the Plan as of the later of (1)
the Effective Date, or (ii) the date of initial election to the Board.
A director who is a regular employee of the Company is not eligible to
participate in the Plan.
(b) A Participant shall cease participation in the Plan as
of the date the Participant (i) fails to be re-elected to the Board,
(ii) resigns or otherwise vacates his position on the Board, or (iii)
becomes a regular employee of the Company.
4. Grant of Options.
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(a) Each person who is a Participant on the Effective Date
shall be automatically and without the exercise of discretion by any
person awarded a non-qualified option to purchase 5,000 Common Shares
effective as of the Effective Date, at a price equal to the Market
Value of Common Shares on that date. Any person who becomes a
Participant after the Effective Date. shall be awarded a non-qualified
option to purchase 5,000 Coupon Shares effective as of the date on
which such Participant is first elected to the Board, at a price equal
to the Market Value of Common Shares on that date.
(b) Beginning with January 15, 1996, each Participant shall,
automatically and without the exercise of discretion by any person, be
awarded as of January 15 of each year that the Plan is in effect a
non-qualified option to purchase 5,000 Common Shares at a price equal
to the Market Value of Common Shares on that date.
(c) Notwithstanding Sections (a) and (b) above, no
Participant shall be awarded options for more than 15,000 Common
Shares in total under the Plan.
(d) All options awarded under the Plan shall have a term of
10 years.
(e) Options awarded under the Plan shall not qualify as
incentive stock options within the meaning of Section 423 of the
Internal Revenue Code.
5. Method of Exercise. An option granted under the Plan may be
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exercised, in whole or in part, by submitting a written notice to the
Board, signed by the Participant or such other
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person who may be entitled to exercise such option, and specifying the
number of Common Shares as to which the option is being exercised.
Such notice shall be accompanied by the payment of the full option
price for such Common Shares, or shall fix a date. (not more than ten
business days from the date of such notice) for the payment of the
full option price of the Common Shares being purchased. Payment shall
be made in the form of cash, Common Shares (to the extent permitted by
law) , or both. A certificate or certificates for the Common Shares
purchased shall be issued by the Company after the exercise of the
option and full payment therefor. Upon exercise or an option, the
optionee will be required to pay to the Company the amount of any
federal , state or local taxes required by law to be withheld in
connection with such exercise.
6. Termination of Directorship. If a participant fails to be
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re-elected to the Board, resigns or otherwise ceases to be a director
of the company for reasons other than death or disability (within the
meaning of Section 22(e) (3) of the Internal Revenue Code), all
options granted under this Plan to such participant which have not
been exercised on such date shall terminate if not exercised before
thirty (30) days following such termination, or at such earlier time
as lay be applicable under Paragraph 4(c) above. If the Participant
dies or becomes disabled within the thirty (30) day period described
above, such remaining options may be exercised by the Participant or
the Participant's personal representative at any time before the
expiration of twelve (12) months following the date of death or
commencement of disability.
If a Participant ceases to be a director of the company by reason
or death or disability (within the meaning of Section 22(e)(3) of the
Internal Revenue Code), all options granted under this Plan to such
Participant which have not been exercised on such date may be
exercised at any time before the expiration of twelve (12) months
following the date of death or commencement of disability, or such
earlier time as may be applicable under Paragraph 4(c) above.
7. Non-transferability. Each option and all tights thereunder
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shall be exercisable during the Participant's lifetime only by him and
shall be non-assignable and non-transferable by the participant
except, in the event of the Participant's death, by will or by the
laws of descent and distribution. In the event the death of a
Participant occurs, the representative or representatives of the
Participant's estate, or the person or persons who acquired (by
bequest or inheritance) the rights to exercise the Participant's
options in whole or in part may exercise the option prior to the
expiration of the applicable exercise period, as specified in
Paragraph 6 above.
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8. No Rights as Stockholder. A Participant shall have no rights
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as a stockholder with respect to any Common Shares subject to the
option prior to the date of issuance of a certificate or certificates
for such Common Shares.
9. Compliance with Securities Laws. Options granted and Common
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Shares issued by the Company upon exercise of options shall be granted
and issued only in full compliance with all applicable securities
laws, including laws, rules arid regulations of the Securities and
Exchange Commission and applicable state Blue Sky Laws. With respect
thereto, the Board may impose. such conditions on transfer,
restrictions and limitations as it may deem necessary and appropriate
to assure compliance with such applicable securities laws.
10. Shares Subject to the Plan.
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(a) The Common Shares to be issued and delivered by the
Company upon the exercise of options under the Plan may be either
authorized but unissued shares or treasury shares of the Company.
(b) The aggregate number of Common Shares of the Company
which may be issued under the Plan shall not exceed 100,000 shares;
subject, however, to the adjustment provided in Paragraph 11 in the
event of stock splits, stock dividends, exchanges of shares or the
like occurring after the effective date of this Plan.
(c) common Shares covered by an option which is no longer
exercisable with respect to such shares shall again be available for
issuance under this Plan.
11. Share Adjustments. In the event there is any change in the
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Company's Common Shares resulting from stock splits, stock dividends,
combinations or exchanges of shares, or other similar capital
adjustments, equitable proportionate adjustments shall automatically
be made without further action by the Board in (i) the number of
Common Shares available for award under this Plan, (ii) the number of
common Shares subject to options granted under this Plan, and (iii)
the option price of options granted under this Plan.
12. Amendment or Termination. The Board may terminate this Plan
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at any time, and may amend the Plan at any time or from time to time;
provided, however, that the Plan shall not be amended more than once
every six months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income security Act, or the
rules thereunder; and further provided that any amendment that would
increase the aggregate number of Common Shares that may be issued
under the Plan, materially increase the benefits accruing to
Participants under
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this Plan, or materially modify the requirements as to eligibility for
participation in the Plan shall be subject to the approval of the
Company stockholders to the extent required by rule 16b-3 wider the
securities Exchange Act of 1934, as amended, or any other governing
rules or regulations except that such increase or modification that my
result from adjustments authorized by Paragraph 11 does not require
such approval. If the Plan is terminated, any unexercised option shall
continue to be exercisable in accordance with its terms.
l3. Company Responsibility. All expenses of this Plan, including
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the cost of maintaining records, shall be borne by the Company.
14. Stockholders Approval. This Plan must be approved by the
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Company's stockholders within twelve (12) months of the Effective Date
and if not so approved, this Plan and all options granted hereunder
shall be void from their inception.
15. Implied Consent. Every Participant, by acceptance of an
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award under this Plan, shall be deemed to have consented to be bound,
on his or her own behalf and on behalf of his or her heirs, assigns,
and legal representatives, by all of the terms and conditions of this
Plan.
16. Rhode Island law to Govern. This Plan shall be construed and
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administered in accordance with and governed by the laws of the State
of Rhode Island.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized officer as of the 15th day of March,
1995.
NETWORK SIX, INC.
By: /s/ Richard F. Hawkins
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Title: President
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FIRST AMENDMENT TO THE NETWORK SIX, INC.
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NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
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Pursuant to the resolution of the Board of Directors dated
May 25, 1995, the Network Six, Inc. Non-Employee Director Stock
option Plan is hereby amended with respect to Paragraph 7
thereof to allow the assignment to Saugatuck Associates II,
Inc. of any and all options and rights thereunder which may be
granted to Owen Stevenson Crihfield under the Plan.
IN WITNESS WHEREOF, this Amendment has been signed by the
Company's president as of the 25th day of May, 1995.
NETWORK SIX, INC.
By: /s/ Richard F. Hawkins
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Title: President
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