Non-Employee Directors Stock Option Plan, Amended and Restated



 Exhibit 4.2 
  
 CAPITAL TITLE GROUP, INC. 
  
 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN 
  
 Amended and Restated Effective May 23, 2003 
  
 1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best available individuals to serve as non-employee members of the
Board of Directors of the Company, to reward such directors for their contributions to the profitable growth of the Company, and to maximize the identity of interest between such directors and stockholders generally. 
  
 2. Definitions. As used herein, the following definitions shall apply:

  
 (a) “Board” shall mean the
Board of Directors of the Company. 
  
 (b)
“Company” shall mean Capital Title Group, Inc., a Delaware corporation. 
  
 (c) “Effective Date” shall be the date that the Board of Directors of the Company adopts this Plan. 
  
 (d) “Eligible Director” shall mean (i)
those individuals who are serving as non-employee members of the Board on the Effective Date, or (ii) those individuals who are elected or appointed as non-employee members of the Board after the Effective Date, whether through appointment by the
Board or election of the Company’s stockholders. 
  
 (e) “Exercise Price” shall mean, with respect to Shares of Optioned Stock, the Fair Market Value of such Shares on the date of grant of the Option. 
  
 (f) “Fair Market Value” shall mean, with respect to the date a given Option is granted or
exercised, the value of the Common Stock determined by the Board in such manner as it may deem equitable for Plan purposes; provided, however, that where there is a public market for the Common Stock, the Fair Market Value per Share shall be the
mean of the bid and asked prices of the Common Stock on the date of grant, as reported in the Wall Street Journal (or, if not reported, as otherwise reported by the National Association of Securities Dealers Automated Quotation System) or, in
the event the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange, the Fair Market Value per Share shall be the closing price on such exchange on the date of grant of the Option, as reported in the Wall Street
Journal. 
  

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 (g) “Option” shall mean a right to purchase Stock, granted pursuant to
the Plan. 
  
 (h) “Optioned
Stock” shall mean the Stock subject to an Option. 
  
 (i) “Optionee” shall mean a non-employee director of the Company who has been granted an Option. 
  
 (j) “Plan” shall mean this Non-Employee Directors Stock Option Plan. 
  
 (k) “Share” shall mean a share of the
Stock. 
  
 (l) “Stock” shall
mean the Common Stock of the Company described in the Certificate of Incorporation of the Company. 
  
 (m) “Stock Option Agreement” shall mean the written agreement evidencing the grant of an Option. 
  
 (n) “Trading Day” shall mean a day on which
the Fair Market Value of the Stock can be determined. 
  
 3.
Common Stock Subject to the Plan. Subject to increases and adjustments pursuant to Section 9 of the Plan, the number of Shares reserved and available for distribution under the Plan shall be Seven Hundred Fifty Thousand (750,000). If an
Option shall expire or become unexercisable for any reason without having been exercised in full, the unauthorized Shares covered by the Option shall, unless the Plan shall have terminated, be available for future grants of Options. 
  
 4. Option Grants. 
  
 (a) Each individual who first becomes an Eligible Director
on or after the Effective Date, whether through election by the stockholders or appointment of the Board, shall automatically be granted at the time of such initial election or appointment, an Option to purchase 15,000 shares of Stock. 

 
 (b) On the third business day after the announcement by
the Company of its annual financial results each year (the “Annual Grant Date”), beginning with the date of such announcement in 1996, each individual who is at that time an Eligible Director shall automatically be granted an Option
under the Plan to purchase an additional 10,000 shares of Stock; provided such individual (i) has attended 75% of the meetings of the Board held during the 12-month period immediately preceding the Annual Grant Date, or (ii) if such
individual was appointed or elected as a director during such 12-month period, he or she has attended 75% of the meetings of the Board held during his of her term as a director, and (iii) has attended 75% of the meetings of any Committee of the
Board to which such individual has been appointed as a member during such 12-month period. 
  

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 (c) The purchase price of Shares subject to an Option shall be the Fair Market Value on
the date of grant. 
  
 (d) Options granted shall
vest as follows: (i) fifty percent (50%) of the total Options granted shall vest and become exercisable two (2) years from the date of grant, and (ii) the remaining fifty percent (50%) shall vest and become exercisable three (3) years from the date
of grant. Options are only exercisable provided the Optionee remains an Eligible Director at such vesting date. 
  
 5. Stockholder Approval. This Plan was adopted by the Board of Directors of the Company on May 23, 1996 (the “Effective Date”).
Options may be granted under the Plan on and after the Effective Date. The Plan shall be submitted for stockholder approval at the next annual or special meeting of stockholders. However, the failure to obtain such approval shall not affect the
effectiveness of the Plan. No Option may be granted after the expiration of ten (10) years from the effective date of the Plan; provided, however, that the Plan and all outstanding Options shall remain in effect until such Options
shall have been exercised, shall have expired or shall otherwise be terminated. 
  
 6. Term; Exercise; Rights as a Stockholder. 
  
 (a) The term of each Option shall be five (5) years from the date of grant thereof. The Option may be exercised in whole or in part at any
time after vesting and during the term of the Option. No fractional Shares will be issued upon exercise of the Option and, if the exercise results in a fractional interest, an amount will be paid in cash equal to the value of such fractional
interest based on the Fair Market Value of the Shares on the date of exercise. 
  
 (b) An Option shall be deemed to be exercised upon receipt by the Company from the Optionee of written notice of such exercise. Such
notice shall be accompanied by full payment for the Shares subject to such exercise. 
  
 7. Payment. The Exercise Price shall be paid: 
  
 (a) In United States dollars in cash or by check payable to the order of the Company; or 
  
 (b) Subject to the approval of the Board, by delivery of
Shares with an aggregate Fair Market Value equal to the Exercise Price; or 
  
 (c) By any combination of (a) and (b) above. 
  
 The Board shall determine acceptable methods for tendering Stock as payment upon exercise of an Option and may impose such limitations and prohibitions on the use of Stock to exercise an Option as it deems
appropriate. 
  

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 8. Transferability of Options. The Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of descent and distribution to the limited extent provided herein or pursuant to a “qualified domestic relations order” as defined by the Internal Revenue Code or
the Employee Retirement Income Security Act or the rules thereunder. Except as permitted herein, an Option may be exercised, during the lifetime of the Optionee, only by the Optionee or by his guardian or legal representative. 
  
 In the event of the Optionee’s death, his or her Option shall be
exercisable, prior to the expiration of the Option, by the person or persons to whom his or her accrued and vested rights pass by will or by the laws of descent and distribution. 
  
 9. Adjustments Upon Changes in Capitalization or Merger. Subject to any required action by the stockholders 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 or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per Share covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse
stock split, consolidation, subdivision, stock dividend, combination or reclassification of the Shares, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, 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 subject to an Option. 
  
 In the event of the proposed dissolution or liquidation of the Company, all Options will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board. The Board may,
in the exercise of its sole discretion in such instances, declare that any Option shall terminate as of a date fixed by the Board and give each holder the right to exercise the Option as to all or any part thereof, including Shares as to which the
Option would not otherwise be exercisable. 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, the Option shall be assumed or an equivalent Option
shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the holder shall
have the right to exercise the Option as to all of the Shares, including Shares as to which the Option would not otherwise be exercisable. If the Board makes an Option exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify the holder that the Option shall be fully exercisable for a period of thirty (30) days from the date of such notice (but not later than the expiration of the term of the Option), and the Option will terminate
upon the expiration of such period. 
  
 10. Amendment and
Termination of the Plan. The Board may amend the Plan from time to time in such respects as the Board may deem advisable or terminate the Plan; provided, 

  

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however, that amendments to the Plan relating to the amount, price or timing of Option grants shall not be made more than once in any six month
period, other than amendments necessary to comply with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. Any amendment or termination of the Plan shall not affect Options already granted and
such Options shall remain in full force and effect as if this Plan had not been amended or terminated. 
  
 Notwithstanding the foregoing, revisions or amendments that accomplish any of the following shall require approval of the stockholders of the Company, to
the extent required by law, rule or regulation: 
  
 (a) Materially increase the benefits accruing to participants under the Plan; 
  
 (b) Materially increase the number of Shares which may be issued under the Plan; 
  
 (c) Materially modify the Plan as to eligibility for
participation in the Plan; or 
  
 (d) Otherwise
cause the Plan to lose its exemption under Section 16(b) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 
  
 11. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or market system upon which the Shares may be listed, and shall be further subject to the approval of counsel for the Company with respect to such
compliance. 
  
 As a condition to the exercise of an Option, the
Company may require the Optionee to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required or advisable. 
  
 Inability of the Company to obtain authority from a regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary or advisable to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 
  

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 12. Termination of Option. 
  
 (a) Termination as a Director. If an Optionee ceases to be a director, unless such cessation occurs
due to death or disability, then the Option shall terminate on the date thirty (30) days after the date the Optionee ceases to be a director. 
  
 (b) Disability. Unless otherwise provided in the Stock Option Agreement, in the event an Optionee is unable to continue to be a
member of the Board as a result of his permanent and total disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended), he may exercise the Option at any time within twelve (12) months following the date he ceased to
be a director, but only to the extent he was entitled to exercise it on the date he ceased to be a director. To the extent that he was not entitled to exercise the Option on the date he ceased to be a director, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option shall terminate. 
  
 (c) Death. Unless otherwise provided in the Stock Option Agreement, if an Optionee dies during the term of the Option, the Option
may be exercised at any time within twelve (12) months following the date of death, but only to the extent that an Optionee was entitled to exercise the Option on the date of death. To the extent that decedent was not entitled to exercise the Option
on the date of death, or if the Optionee’s estate, or person who acquired the right to exercise the Option by bequest or inheritance, does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option
shall terminate. 
  
 13. Option Agreement. Options shall be
evidenced by Stock Option Agreements in such form as the Board shall approve. 
  
 14. Miscellaneous Provisions. 
  
 (a) Plan Expense. Any expenses of administering this Plan shall be borne by the Company. 
  
 (b) Construction of Plan. The validity, construction, interpretation, administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined by the Board in accordance with the laws of the State of Delaware. 
  
 (c) Taxes. The Company shall be entitled if necessary or desirable to pay or withhold the amount of any tax attributable to the
delivery of Common Shares under the Plan after giving the person entitled to receive such Shares notice as far in advance as practical, and the Company may defer making delivery of such Shares if any such tax may be pending unless and until
indemnified to its satisfaction. 
  

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 (d) Gender. For purposes of this Plan, words used in the masculine gender shall
include the female and neuter, and the singular shall include the plural and vice versa, as appropriate. 
  

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