EXHIBIT 4.2
INTERNATIONAL TRUST AND FINANCIAL SYSTEMS, INC.
NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN FOR THE
YEAR 2004
1. Introduction. This Plan shall be known as the "International Trust
------------
and Financial Systems, Inc. Non-Employee Directors and Consultants Retainer
Stock Plan for the Year 2004," and is hereinafter referred to as the "Plan."
The purposes of this Plan are to enable International Trust and Financial
Systems, Inc., a Florida corporation (the "Company"), to promote the interests
of the Company and its stockholders by attracting and retaining non-employee
Directors and Consultants capable of furthering the future success of the
Company and by aligning their economic interests more closely with those of the
Company's stockholders, by paying their retainer or fees in the form of shares
of the Company's common stock, par value $0.001 per share (the "Common Stock").
2. Definitions. The following terms shall have the meanings set forth
-----------
below:
"Board" means the Board of Directors of the Company.
"Change of Control" has the meaning set forth in Paragraph 12(d) hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder. References to any provision of the Code or rule or
regulation thereunder shall be deemed to include any amended or successor
provision, rule or regulation.
"Committee" means the committee that administers this Plan, as more fully
defined in Paragraph 13 hereof.
"Common Stock" has the meaning set forth in Paragraph 1 hereof.
"Company" has the meaning set forth in Paragraph 1 hereof.
"Deferral Election" has the meaning set forth in Paragraph 6 hereof.
"Deferred Stock Account" means a bookkeeping account maintained by the
Company for a Participant representing the Participant's interest in the shares
credited to such Deferred Stock Account pursuant to Paragraph 7 hereof.
"Delivery Date" has the meaning set forth in Paragraph 6 hereof.
"Director" means an individual who is a member of the Board of Directors of
the Company.
"Dividend Equivalent" for a given dividend or other distribution means a
number of shares of the Common Stock having a Fair Market Value, as of the
record date for such dividend or distribution, equal to the amount of cash, plus
the Fair Market Value on the date of distribution of any property, that is
distributed with respect to one share of the Common Stock pursuant to such
dividend or distribution; such Fair Market Value to be determined by the
Committee in good faith.
"Effective Date" has the meaning set forth in Paragraph 3 hereof.
"Exchange Act" has the meaning set forth in Paragraph 12(d) hereof.
"Fair Market Value" means the mean between the highest and lowest reported
sales prices of the Common Stock on the New York Stock Exchange Composite Tape
or, if not listed on such exchange, on any other national securities exchange on
which the Common Stock is listed or on The Nasdaq Stock Market, or, if not so
listed on any other national securities exchange or The Nasdaq Stock Market,
then the average of the bid price of the Common
1
Stock during the last five trading days on the OTC Bulletin Board immediately
preceding the last trading day prior to the date with respect to which the Fair
Market Value is to be determined. If the Common Stock is not then publicly
traded, then the Fair Market Value of the Common Stock shall be the book value
of the Company per share as determined on the last day of March, June,
September, or December in any year closest to the date when the determination is
to be made. For the purpose of determining book value hereunder, book value
shall be determined by adding as of the applicable date called for herein the
capital, surplus, and undivided profits of the Company, and after having
deducted any reserves theretofore established; the sum of these items shall be
divided by the number of shares of the Common Stock outstanding as of said date,
and the quotient thus obtained shall represent the book value of each share of
the Common Stock of the Company.
"Participant" has the meaning set forth in Paragraph 4 hereof.
"Payment Time" means the time when a Stock Retainer is payable to a
Participant pursuant to Paragraph 5 hereof (without regard to the effect of any
Deferral Election).
"Stock Retainer" has the meaning set forth in Paragraph 5 hereof.
"Third Anniversary" has the meaning set forth in Paragraph 6 hereof.
3. Effective Date of the Plan. This Plan was adopted by the Board
------------------------------
effective March 5, 2004 (the "Effective Date").
4. Eligibility. Each individual who is a Director or Consultant on the
-----------
Effective Date and each individual who becomes a Director or Consultant
thereafter during the term of this Plan, shall be a participant (the
"Participant") in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its subsidiaries. Each credit of shares of the Common Stock pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant, if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.
5. Grants of Shares. Commencing on the Effective Date, the amount of
------------------
compensation for service to directors or consultants shall be payable in shares
of the Common Stock (the "Stock Retainer") pursuant to this Plan at the deemed
issuance price of $0.25 per Share.
6. Deferral Option. From and after the Effective Date, a Participant may
---------------
make an election (a "Deferral Election") on an annual basis to defer delivery of
the Stock Retainer specifying which one of the following ways the Stock Retainer
is to be delivered (a) on the date which is three years after the Effective Date
for which it was originally payable (the "Third Anniversary"), (b) on the date
upon which the Participant ceases to be a Director or Consultant for any reason
(the "Departure Date") or (c) in five equal annual installments commencing on
the Departure Date (the "Third Anniversary" and "Departure Date" each being
referred to herein as a "Delivery Date"). Such Deferral Election shall remain
in effect for each Subsequent Year unless changed, provided that, any Deferral
Election with respect to a particular Year may not be changed less than six
months prior to the beginning of such Year, and provided, further, that no more
than one Deferral Election or change thereof may be made in any Year.
Any Deferral Election and any change or revocation thereof shall be made by
delivering written notice thereof to the Committee no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral Election
or revocation thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.
7. Deferred Stock Accounts. The Company shall maintain a Deferred Stock
------------------------
Account for each Participant who makes a Deferral Election to which shall be
credited, as of the applicable Payment Time, the number of shares of the Common
Stock payable pursuant to the Stock Retainer to which the Deferral Election
relates. So long as any amounts in such Deferred Stock Account have not been
delivered to the Participant under Paragraph 8 hereof, each Deferred Stock
Account shall be credited as of the payment date for any dividend paid or
2
other distribution made with respect to the Common Stock, with a number of
shares of the Common Stock equal to (a) the number of shares of the Common Stock
shown in such Deferred Stock Account on the record date for such dividend or
distribution multiplied by (b) the Dividend Equivalent for such dividend or
distribution.
8. Delivery of Shares.
--------------------
(a) The shares of the Common Stock in a Participant's Deferred Stock
Account with respect to any Stock Retainer for which a Deferral Election has
been made (together with dividends attributable to such shares credited to such
Deferred Stock Account) shall be delivered in accordance with this Paragraph 8
as soon as practicable after the applicable Delivery Date. Except with respect
to a Deferral Election pursuant to Paragraph 6 hereof, or other agreement
between the parties, such shares shall be delivered at one time; provided that,
if the number of shares so delivered includes a fractional share, such number
shall be rounded to the nearest whole number of shares. If the Participant has
in effect a Deferral Election pursuant to Paragraph 6 hereof, then such shares
shall be delivered in five equal annual installments (together with dividends
attributable to such shares credited to such Deferred Stock Account), with the
first such installment being delivered on the first anniversary of the Delivery
Date; provided that, if in order to equalize such installments, fractional
shares would have to be delivered, such installments shall be adjusted by
rounding to the nearest whole share. If any such shares are to be delivered
after the Participant has died or become legally incompetent, they shall be
delivered to the Participant's estate or legal guardian, as the case may be, in
accordance with the foregoing; provided that, if the Participant dies with a
Deferral Election pursuant to Paragraph 6 hereof in effect, the Committee shall
deliver all remaining undelivered shares to the Participant's estate
immediately. References to a Participant in this Plan shall be deemed to refer
to the Participant's estate or legal guardian, where appropriate.
(b) The Company may, but shall not be required to, create a grantor trust
or utilize an existing grantor trust (in either case, "Trust") to assist it in
accumulating the shares of the Common Stock needed to fulfill its obligations
under this Paragraph 8. However, Participants shall have no beneficial or other
interest in the Trust and the assets thereof, and their rights under this Plan
shall be as general creditors of the Company, unaffected by the existence or
nonexistence of the Trust, except that deliveries of Stock Retainers to
Participants from the Trust shall, to the extent thereof, be treated as
satisfying the Company's obligations under this Paragraph 8.
9. Share Certificates; Voting and Other Rights. The certificates for
------------------------------------------------
shares delivered to a Participant pursuant to Paragraph 8 above shall be issued
in the name of the Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the shares, and the Participant shall receive all dividends and other
distributions paid or made with respect thereto.
10. General Restrictions.
---------------------
(a) Notwithstanding any other provision of this Plan or agreements
made pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of the Common Stock under this Plan prior
to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon official notice of
issuance of such shares on the New York Stock Exchange, Inc., or such other
securities exchange as may at the time be a market for the Common Stock;
(ii) Any registration or other qualification of such shares under
any state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Committee shall, upon the advice
of counsel, deem necessary or advisable; and
(iii) Obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Committee shall, after receiving
the advice of counsel, determine to be necessary or advisable.
3
(b) Nothing contained in this Plan shall prevent the Company from
adopting other or additional compensation arrangements for the Participants.
11. Shares Available. Subject to Paragraph 12 below, the maximum number
-----------------
of shares of the Common Stock which may in the aggregate be paid as Stock
Retainers pursuant to this Plan is 2,000,000. Shares of the Common Stock
issuable under this Plan may be taken from treasury shares of the Company or
purchased on the open market. In the event that any outstanding Stock Retainer
under this Plan for any reason expires or is terminated, the shares of Common
Stock allocable to the unexercised portion of the Stock Retainer shall be
available for issuance under the International Trust and Financial Systems, Inc.
Employee Stock Incentive Plan for the Year 2004.
12. Adjustments; Change of Control.
---------------------------------
(a) In the event that there is, at any time after the Board adopts
this Plan, any change in corporate capitalization, such as a stock split,
combination of shares, exchange of shares, warrants or rights offering to
purchase the Common Stock at a price below its Fair Market Value,
reclassification, or recapitalization, or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, stock dividend, or
other extraordinary distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete liquidation
of the Company (each of the foregoing a "Transaction"), in each case other than
any such Transaction which constitutes a Change of Control (as defined below),
(i) the Deferred Stock Accounts shall be credited with the amount and kind of
shares or other property which would have been received by a holder of the
number of shares of the Common Stock held in such Deferred Stock Account had
such shares of the Common Stock been outstanding as of the effectiveness of any
such Transaction, (ii) the number and kind of shares or other property subject
to this Plan shall likewise be appropriately adjusted to reflect the
effectiveness of any such Transaction, and (iii) the Committee shall
appropriately adjust any other relevant provisions of this Plan and any such
modification by the Committee shall be binding and conclusive on all persons.
(b) If the shares of the Common Stock credited to the Deferred Stock
Accounts are converted pursuant to Paragraph 12(a) into another form of
property, references in this Plan to the Common Stock shall be deemed, where
appropriate, to refer to such other form of property, with such other
modifications as may be required for this Plan to operate in accordance with its
purposes. Without limiting the generality of the foregoing, references to
delivery of certificates for shares of the Common Stock shall be deemed to refer
to delivery of cash and the incidents of ownership of any other property held in
the Deferred Stock Accounts.
(c) In lieu of the adjustment contemplated by Paragraph 12(a), in the
event of a Change of Control, the following shall occur on the date of the
Change of Control (i) the shares of the Common Stock held in each Participant's
Deferred Stock Account shall be deemed to be issued and outstanding as of the
Change of Control; (ii) the Company shall forthwith deliver to each Participant
who has a Deferred Stock Account all of the shares of the Common Stock or any
other property held in such Participant's Deferred Stock Account; and (iii) this
Plan shall be terminated.
(d) For purposes of this Plan, Change of Control shall mean any of
the following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40
percent or more of either (1) the then outstanding shares of the Common Stock of
the Company (the "Outstanding Company Common Stock"), or (2) the combined voting
power of then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions shall not
constitute a Change of Control (A) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired directly from the
Company), (B) any acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (D) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if, following
such reorganization,
4
merger or consolidation, the conditions described in clauses (A), (B) and (C) of
paragraph (iii) of this Paragraph 12(d) are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the
Board of the Company (as of the date hereof, "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger, binding share exchange or consolidation, unless,
following such reorganization, merger, binding share exchange or consolidation
(A) more than 60 percent of, respectively, then outstanding shares of common
stock of the corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 20 percent or more of, respectively, then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation entitled
to vote generally in the election of directors, and (C) at least a majority of
the members of the board of directors of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation were members of
the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, binding share exchange or
consolidation; or
(iv) Approval by the stockholders of the Company of (1) a
complete liquidation or dissolution of the Company, or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale or other
disposition, (A) more than 60 percent of, respectively, then outstanding shares
of common stock of such corporation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20 percent or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20
percent or more of, respectively, then outstanding shares of common stock of
such corporation and the combined voting power of then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (C) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
5
13. Administration; Amendment and Termination.
--------------------------------------------
(a) This Plan shall be administered by a committee consisting of two
members who shall be the current directors of the Company or senior executive
officers or other directors who are not Participants as may be designated by the
Chief Executive Officer (the "Committee"), which shall have full authority to
construe and interpret this Plan, to establish, amend and rescind rules and
regulations relating to this Plan, and to take all such actions and make all
such determinations in connection with this Plan as it may deem necessary or
desirable.
(b) The Board may from time to time make such amendments to this
Plan, including to preserve or come within any exemption from liability under
Section 16(b) of the Exchange Act, as it may deem proper and in the best
interest of the Company without further approval of the Company's stockholders,
provided that, to the extent required under Florida law or to qualify
transactions under this Plan for exemption under Rule 16b-3 promulgated under
the Exchange Act, no amendment to this Plan shall be adopted without further
approval of the Company's stockholders and, provided, further, that if and to
the extent required for this Plan to comply with Rule 16b-3 promulgated under
the Exchange Act, no amendment to this Plan shall be made more than once in any
six month period that would change the amount, price or timing of the grants of
the Common Stock hereunder other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the regulations
thereunder. The Board may terminate this Plan at any time by a vote of a
majority of the members thereof.
14. Restrictions on Transfer. Each Stock Option granted under this Plan
--------------------------
shall be transferable only by will or the laws of descent and distribution. No
interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
15. Term of Plan. No shares of the Common Stock shall be issued, unless
--------------
and until the Directors of the Company have approved this Plan and all other
legal requirements have been met. This Plan was adopted by the Board effective
March 5, 2004, and shall expire on March 5, 2014.
16. Governing Law. This Plan and all actions taken thereunder shall be
--------------
governed by, and construed in accordance with, the laws of the State of Florida.
17. Information to Shareholders. The Company shall furnish to each of its
---------------------------
stockholders financial statements of the Company at least annually.
18. Miscellaneous.
-------------
(a) Nothing in this Plan shall be deemed to create any obligation on
the part of the Board to nominate any Director for reelection by the Company's
stockholders or to limit the rights of the stockholders to remove any Director.
(b) The Company shall have the right to require, prior to the
issuance or delivery of any shares of the Common Stock pursuant to this Plan,
that a Participant make arrangements satisfactory to the Committee for the
withholding of any taxes required by law to be withheld with respect to the
issuance or delivery of such shares, including, without limitation, by the
withholding of shares that would otherwise be so issued or delivered, by
withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.
6
IN WITNESS WHEREOF, this Plan has been executed effective as of March 5,
2004.
INTERNATIONAL TRUST AND FINANCIAL
SYSTEMS, INC.
By /s/ Wilbert H. Marmion
-------------------------------------------
Wilbert H. Marmion, President
7