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TRANSAX INTERNATIONAL LIMITED
2004 INCENTIVE STOCK OPTION PLAN
SECTION 1
INTRODUCTION
1.1 Establishment. Transax International Limited (the "Company"), a Colorado
corporation, hereby establishes the Transax International Limited 2004 Stock
Option Plan (the "Plan") for employees, consultants, directors, and other
persons associated with the Company whom the Board wishes to incentivise.
Transax International Limited, together with its affiliated corporations, as
defined in Section 2.1 hereafter, are referred to as the "Company", except
where the context otherwise requires.
1.2 Purposes. The purposes of this Plan are to (i) attract and retain the
best available personnel for positions of responsibility within the Company
(ii) provide incentives to employees, officers, and management of the Company,
(iii) provide Directors, Consultants and Advisors of the Company with an
opportunity to acquire a proprietary interest in the Company to encourage their
continued provision of services to the Company, and to provide such persons
with incentives and rewards for superior performance more directly linked to
the profitability of the Company's business and increases in shareholder value,
and (iv) generally to promote the success of the Company's business and the
interests of the Company and all of its stockholders, through the grant of
options to purchase shares of the Company's Common Stock.
Incentive benefits granted hereunder may be either Incentive Stock
Options, Non-qualified Stock Options, stock awards, Restricted Shares or cash
awards. The types of options or other incentives granted shall be determined
by the board or the Compensation Committee and reflected in the terms of
written agreements.
SECTION 2
DEFINITIONS
2.1 Definitions. The following terms will have the meanings set forth
below:
"Affiliated Corporation" means any corporation or other entity (including, but
not limited to, a partnership) that is affiliated with the Company through
stock ownership or otherwise.
"Board" means the Board of Directors of the Company.
"Common stock" means the USD 0.00001 par value common stock of Transax
International Limited.
"Code" means the Internal Revenue Code of the USA or the Income Tax Act of
Canada, as it may be amended form time to time, and as appropriate to the
context and as applies to the Eligible Participant.
"Effective Date" means the effective date of the Plan, which will be December
1, 2004.
"Eligible Participants" means any employees (including, without limitation, all
officers), directors, consultants and any other persons whom the Board wishes
to incentivise to contribute to the fortunes of the Company and permitted by
law or policy to receive options.
"Fair Value" means the value of a Share of Stock as determined by the Stock
Option Committee acting in good faith and in its sole discretion in accordance
with this Agreement. Notwithstanding the above, if the Stock is actively
traded in an established stock or quotation market, "Fair Value" will mean the
officially quoted closing price of the Stock on such exchange (a "National
Exchange") on a particular date selected by the Stock Option Committee in
establishing the purchase price of Shares of the Option.
"Incentive Stock Option" means An Option as described in Section 9 hereinbelow
intended to qualify under section 422 of the United States Internal Revenue
Code of 1986, as amended
"Stock Option Committee" means the Compensation Committee of the Company,
unless the Board strikes a separate committee, and in the absence of an
empowered committee shall mean the Board.
"Non-Statutory Option" means an Option granted under this Plan in accordance
with the requirements of the Code, as amended from time to time.
"Option" means a right to purchase Stock of the Company granted under this Plan
at a stated price for a specified period of time.
"Option Price" means the price at which shares of Stock subject to an Option
may be purchased, determined in accordance with this Agreement and as
established by the Stock Option Committee and contracted by the Option
contract.
"Option Holder" means an Eligible Participant designated by the Stock Option
Committee from time to time during the term of the Plan to receive one or more
Options under the Plan.
"Plan Limit" shall have the meaning set forth in section 4.1.
"Share" or "Shares" means a share or shares of Stock.
"Stock" means the common stock of the Company.
2.2 Gender and Number. Except where otherwise indicated by the context, the
masculine gender also will include the feminine gender, and the definition of
any term herein in the singular also will include the plural.
SECTION 3
PLAN ADMINISTRATION
The Plan shall be administered by the Board. The Board shall have the
authority granted to it under this section and under each other section of the
Plan.
In accordance with and subject to the provisions of the Plan, the Board is
hereby authorized to provide for the granting, vesting, exercise and method of
exercise of any Options all on such terms (which may vary between Options and
Optionees granted from time to time) as the Board shall determine. In
addition, and without limiting the generality of the foregoing, the Board shall
select the Optionees and shall determine: (i) the number of shares of Common
Stock to be subject to each Option, however, in no event may the maximum number
of shares reserved for any one individual exceed 15% of the issued and
outstanding share capital of the Company; (ii) the time at which each Option is
to be granted; (iii) the purchase price for the Option Shares; (iv) the Option
period; and (v) the manner in which the Option becomes exercisable or
terminated. In addition, the Board shall fix such other terms of each Option
as it may deem necessary or desirable. The Board may determine the form of
Option Agreement to evidence each Option.
The Board from time to time may adopt such rules and regulations for carrying
out the purposes of the Plan as it may deem proper and in the best interests of
the Company subject to the rules and policies of any exchange or over-the-
counter market which is applicable to the Company.
The Board may from time to time make such changes in and additions to the Plan
as it may deem proper, subject to the prior approval of any exchange or over-
the-counter market which is applicable to the Company, and in the best
interests of the Company; provided, however, that no such change or addition
shall impair any Option previously granted under the Plan. If the shares are
not listed on any exchange, then such approval is not necessary.
Each determination, interpretation or other action made or taken by the Board
shall be final, conclusive and binding on all persons, including without
limitation, the Company, the stockholders, directors, officers and employees of
the Company and the Optionees and their respective successors in interest.
SECTION 4
STOCK SUBJECT TO THE PLAN AND EXCEPTIONS
4.1 Plan limit. A maximum of 7,000,000 Shares ("Plan Limit") are authorized
for issuance under the Plan in accordance with the provisions of the Plan.
Shares that are issued upon the exercise of Options will be deducted from the
Plan Limit and such Plan Limit shall not be increased without approval of the
board or, if shareholders of the Company have so required, without approval of
the shareholders of the Company. While any Options are outstanding, the
Company will retain as authorized and unissued Stock at least the number of
Shares from time to time required under the provisions of the Plan or otherwise
assure itself of its ability to perform its obligations hereunder.
4.2 Unused and Forfeited Stock. Any Shares that are subject to an Option
under this Plan that are not used because the terms and conditions of the
Option are not met or any Shares that are used for full or partial payment of
the purchase price of Shares with respect to which an Option is exercised or
any Shares retained by the Company for any purpose of this Plan automatically
will be returned to the Plan Limit and become available for again for use under
the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company at any
time increases or decreases the number of its outstanding Shares of Stock, or
changes in any way the rights and privileges of such Shares by means of the
Payment of a Stock dividend or any other distribution upon such Shares payable
in Stock, or through a stock split, subdivision, consolidation, combination,
reclassification or recapitialization involving the Stock, then, in relation to
the Stock that is affected by the above events, the provisions of this Section
4.3 will apply. In such event, the numbers, rights and privileges of the
following will be increased, decreased or changed in like manner as if such
shares had been issued and outstanding, fully paid and nonassessable at the
time of such event:
(i) adjustment to the Shares of Stock as to which Options may be
granted under the Plan; and
(ii) adjustment to the exercise price of each outstanding Option
granted hereunder.
4.4 General Adjustment Rules. If any adjustment or substitution provided
for in this Section 4 will result in the creation of a fractional Share under
any Option, the number of Shares subject to the Option will be rounded to the
next higher Share.
1.1 Determination by Stock Option Committee, Etc. Adjustments under this
Section 4 will be made by the Stock Option Committee, whose determinations with
regard thereto will be final and binding upon all parties.
4.6 Options Exceptional to Plan. With the concurrence of the board, the
Stock Option Committee may grant Options outside the Plan or within the Plan
but in excess of the Plan Limit, such that the available Plan Limit is not
diminished, for exceptional circumstances or to acquire or retain personnel or
achieve important goals or strategic targets considered important to the
Company but which cannot reasonably be fit into the Plan Limit or the Plan due
to insufficiency of available Plan Options, legal impediments whereby the
recipient cannot or is best not included in the Plan, or other purposes or
reasons considered appropriate to the board.
SECTION 5
REORGANIZATION OR LIQUIDATION
5.1 Reorganization and Options. In the event that the Company is merged or
consolidated with another corporation (other than a merger or consolidation in
which the Company is the continuing corporation and that does not result in any
reclassification or change of outstanding Shares), or if all or substantially
all of the assets or control of the outstanding voting stock of the Company is
acquired by any other corporation, business entity or person (other than by a
sale or conveyance in which the Company continues as a holding company of an
entity or entities that conduct the business of businesses formerly conducted
by the Company), or in case of a reorganization (other than a reorganization
under the United States Bankruptcy Code) or liquidation of the Company, the
Stock Option Committee will have the power and discretion to prescribe the
terms and conditions for the exercise or modification of any outstanding
Options granted hereunder. By way of illustration, and not by way of
limitation, the Stock Option Committee may provide for the complete or partial
acceleration of the dates of exercise of the Options, or may provide that such
Options will be exchanged or converted into options to acquire securities of
the surviving or acquiring cooperation, or may provide for a payment or
distribution in respect of outstanding Options (or the portion thereof that
currently is exercisable) in cancellation thereof. The Stock Option Committee
may provide that Options must be exercised in connection with the closing of
such transaction and that if not so exercised such Options will expire. Any
such determinations by the Stock Option Committee may be made generally with
respect to all Option Holders, or may be made on a case-by-case bases with
respect to particular Option Holders. The provisions of this Section 5 will
not apply to any transaction undertaken for the purpose of reincorporating the
Company under the laws of another jurisdiction, if such transaction does not
materially affect the beneficial ownership of the Company's capital stock. Any
determination by the Stock Option Committee hereunder shall not amend the terms
of any Option without the consent of the Option Holder unless, in the opinion
of the Committee acting reasonably, such amendment is necessary to permit the
alterations to the Company to be effected and such is in the interest of
shareholders generally.
SECTION 6
STOCK OPTIONS
6.1 Grant of Options. An Eligible Participant may be granted one or more
Options. Options granted under the Plan will be Non-Statutory Options.
6.2 Option Agreements. Each Option granted under the Plan will be evidenced
by a written stock option agreement that will be entered into by the Company
and the Eligible Participant to whom the Option is granted (the "Option
Holder"), and will be deemed to contain the following terms and conditions,
unless other terms and conditions inconsistent therewith have been entered into
the Option agreement. In the event of inconsistency between the provisions of
the Plan and any Option agreement entered into, the provisions of the Option
agreement will be considered to have been determined to be exceptional from the
below and such Option Agreement shall govern where not inconsistent with law.
However, the provisions of the Plan will govern where the agreement omits to
provide for a matter governed by the Plan and the agreement will not be
incomplete nor unenforceable if it fails to provide for a matter provided by
the terms of this Plan as such shall be incorporated by reference:
(a) Number of Shares. Each Stock option agreement will state that it covers a
specified number of Shares, as determined by the Stock Option Committee and the
agreement. If the agreement fails to state the number then it shall be the
number set forth in the minutes of the Stock Option Committee.
(b) Price. The price at which each Share covered by an Option may be purchased
will be determined by the Stock Option Committee and set forth in the Stock
Option agreement. Where the price shall be omitted the price shall be the Fair
Market Value of the Stock on the date set forth at the beginning of the Option
agreement.
(c) Vesting Period. Each Stock Option will state the time and the amount of
the Shares of the Option which vest, and are exercisable thereafter, at
specified times during the Option Period. Unless otherwise provided in the
Option agreement, Options will vest and be exercisable for types of Option
Holders as follows:
(i) Directors and senior officers to Vice-President - 100% of the
amount of the Shares under Option upon granting.
(ii) Employees Generally - 50% at the end of the later of any probation
period pursuant to which the Employee is subject to or date of
engagement and 50% twelve months thereafter.
(iii) Other Option Holders - 50% at the end of the first 30 days of
engagement, 50% upon completion of the term (if term less than
twelve months) or 50% twelve months after commencement of the
contract.
(d) Duration of Options. Each Stock option agreement will state the period of
time within which the Option may be exercised by the Option Holder (the
"Option Period"). The Option Period shall expire not more than five years from
the date an Option is granted. Unless otherwise stated, director and senior
officer Options shall be the lesser of five years or the term of their office
plus 90 days, Employee Options the lesser of five years or the term of their
employment plus 30 days, and other Option Holders the lesser of five years or
the term of the engagement agreement plus 30 days.
(e) Termination of Employment, Death, Disability Etc. Except as otherwise
determined by the Stock Option Committee, each Stock Option agreement will
provide as follows with respect to the exercise of the Option upon termination
of the employment or the death of the Option Holder:
(i) Termination. If the Option Holder's employment or office with
the Company is terminated within the Option Period for cause, as
determined by the Company in its sole discretion, or if the Option
Holder resigns without appropriate or agreed notice and agreed
termination terms, the Option will be void for all purposes immediately
upon notice of termination or resignation, as the case may be, unless
otherwise agreed solely at the discretion of the Company. Unless
specified in an engagement agreement, "cause" means a material
violation, as determined by the Company, of the Company's established
policies and procedures and the terms of engagement and a failure to
rectify within 15 days of notice. If the Option Holder is terminated
for another reason, not provided for below or in the engagement
agreement or the Option agreement, then the Option shall be exercisable,
as to the vested portion only on the date of termination, for a period
of 30 days after termination, except as otherwise permitted by the sole
discretion of the Stock Option Committee but not to exceed the Option
Period. The effect of this Section will be limited to determining the
consequences of a termination and nothing in this Section will restrict
or otherwise interfere with the Company's discretion with respect to the
termination of any Employee.
(ii) Death or Disability. If the Option Holder's employment with the
Company is terminated within the Option Period because of the Option
Holder's death or disability the Option will remain exercisable, to the
extent that it was vested and exercisable on the date of the Option
Holder's death or disability, for a period of six months after such
date; provided, however, that in no event may the Option be exercised
after the expiration of the Option Period.
(iii) Non-Employees or non-Office Holders. For all purposes under this
Section, an Eligible Participant who is not an Employee or office holder
of the Company will be considered to have a termination at the
conclusion of the relevant contract or upon notice by the Company of
termination for default or breach of agreement. If the contract is
terminated for breach or default then the Option shall terminate
immediately. Otherwise the Option shall terminate in accordance with
its terms or section 6.2(d) above.
(f) Transferability of Option. Each stock option agreement will provide that
the Option and exercise rights granted therein are not transferable or subject
to assignment or lien for security purposes by the Option Holder except to the
Option Holder's legal representative, his estate, a family corporation or
personal holding corporation, a bona fide lender or in such other circumstance
as the Stock Option Committee may approve in its sole discretion, which may be
exercised contrary without reason. Each assignment of an interest in an Option
must be approved before such will be enforceable.
(g) Exercise, Payments, Etc. Unless otherwise provided by the Stock Option
agreement the method for exercising the Option granted will be by delivery to
the office of the Company of written notice specifying the particular Option
(or portion thereof) that is being exercised and the number of Shares with
respect to which such Option is exercised, together with payment of the Option
Price. The exercise of the Option will be deemed effective upon actual receipt
of such notice and payment to the Company of the Option Price in a form
satisfactory to the Company, acting reasonably. The purchase of such Stock
will take place at the principal offices of the Company upon delivery of such
notice. A properly executed certificate or certificates representing the Stock
will be issued by the Company and delivered to the Option Holder with
reasonable dispatch. Unless restricted by the Option agreement, the exercise
price shall be paid by any of the following methods or any combination of the
following methods:
(i) in cash;
(ii) by cashier's check, certified cheque, or other acceptable banker's
note payable to the order of the Company;
(iii) by net exercise notice whereby the Option Holder will authorize
the return to the Plan pool, and deduction from the Option Holder's
Stock Option, of sufficient Option Shares whose net value (Fair Value
less Option exercise price) is sufficient to pay the Option Price of the
Shares exercised. The Fair Value of the Shares of the Option to be
returned to the Plan pool as payment will be determined by the closing
price of the Company's Shares on the date notice is delivered;
(iv) by delivery to the Company of a properly executed notice of
exercise together with irrevocable instructions (referred to in the
industry as `delivery against payment') to a broker to deliver to the
Company promptly the amount of the proceeds of the sale of all or a
portion of the Stock or of a loan from the broker to the Option Holder
necessary to pay the exercise price; or
(v) such other method as the Option Holder and the Stock Option
Committee may determine as adequate including delivery of acceptable
securities (including securities of the Company), set-off for wages or
invoices due, property, or other adequate value.
(h) Date of Grant. An Option will be considered as having been granted on the
date specified in the grant resolution of the Stock Option Committee.
6.3 Stockholder Privileges. Prior to the exercise of the Option and the
transfer of Shares to the Option Holder, an Option Holder will have no rights
as a stockholder with respect to any Shares subject to any Option granted to
such person under this Plan and, until the Option Holder becomes the holder of
the record of such Stock, no adjustments, other than those described in Section
4, will be made for dividends or other distributions or other rights to which
there is a record date preceding the date such Option Holder becomes the holder
of record of such Stock.
SECTION 7
RIGHTS OF EMPLOYEES AND OPTION HOLDERS
7.1 Employment. Nothing contained in the Plan or in any Option will confer
upon any Eligible Participant any right with respect to the continuation of
employment by the Company, or interfere in any way with the right of the
Company, subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or decrease
the compensation of such Eligible Participant form the rate in existence at the
time of the grant of an Option.
SECTION 8
GENERAL RESTRICTIONS
8.1 Investment representations. The Company may require any person to whom
an Option is granted, as a condition of exercising such Option or receiving
Stock under the Option, to give written assurances, in substance and form
satisfactory to the Company and its counsel, to the effect that such person is
acquiring the Stock subject to the Option for his own account for investment
and not with any present intention of selling and to such other effects as the
Company deems necessary or appropriate in order to comply with federal and
applicable state and provincial securities laws. Legends evidencing such
restrictions may be placed on the certificates evidencing the Stock.
8.2 Compliance with Securities Laws. Each Option will be subject to the
requirement that if at any time counsel to the Company determines that the
listing, registration or qualification of the Shares subject to such Option
upon any securities exchange or under any state, provincial or federal law, or
the consent or approval of any governmental or regulatory body, is necessary as
a condition of, or in connection with, the issuance or purchase of Shares
thereunder, such Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval will have been
effected or obtained on conditions acceptable to the Stock Option Committee.
Nothing herein will be deemed to require the Company to apply for or to obtain
such listing, registration or qualification. However, where available to the
circumstances of an Option Holder the Company will include the Option with any
other filings that the Company elects, at its sole discretion, to file under S-
8 or any other filings with the SEC but the Company shall not be obliged to
make an individual filing for a particular Option, unless such shall have been
required pursuant to the specific Option agreement.
SECTION 9
OTHER EMPLOYEE BENEFITS
9.1 Benefits and Taxes. The amount of any compensation deemed to be
received by an Option Holder as a result of the exercise of an Option will not
constitute "earnings" with respect to which any other employee benefits of such
Option Holder are determined, including, without limitation, benefits under any
pension, profit sharing, life insurance or salary continuation plan. Any
taxable consequences of any Option are entirely the responsibility of the
Option Holder and no contribution shall be required of the Company and,
further, if the Company should suffer liability for unpaid taxes of an Option
Holder then the full amount of such shall be a debt of the Option Holder to the
Company payable immediately and for which the Company may seek judgment and,
before judgment or process, may set-off against any amounts due to the Option
Holder or may recover, again before judgment or process, by exercise of any
Options of the Option Holder on the Option Holder's behalf, at the discretion
of the Stock Option Committee.
SECTION 10
PLAN AMENDMENT, MODIFICATION AND TERMINATION
10.1 Amendment. The Board may at any time terminate and, from time to time,
may amend or modify the Plan provided, however, that no amendment or
modification may become effective without approval of the amendment or
modification by the stockholders where stockholder approval is required to
enable the Plan to satisfy any applicable statutory requirements, or if the
Company, on the advice of counsel, determines that stockholder approval
otherwise is necessary or desirable.
No amendment, modification or termination of the Plan will in any manner
adversely affect any Options theretofore granted under the Plan, without the
consent of the Option Holders holding such Options.
SECTION 11
WITHHOLDING
11.1 Withholding Requirement. The Company's obligations to deliver Shares
upon the exercise of an Option will be subject to the Option Holder's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements and applicable securities requirements.
11.2 Withholding With Stock. At the time an Option is granted the Stock
Option Committee, in its sole discretion, may permit the Option Holder to pay
all such amounts of tax withholding, or any part thereof, that is due upon
exercise of the Option by such adjustments as the Stock Option Committee
determines, including adjustment to a net exercise price or adjustment to the
Option Price.
SECTION 12
BROKERAGE ARRANGEMENTS
12.1 Brokerage. The Stock Option Committee, in its discretion, may enter
into arrangements with one or more banks, brokers or other financial
institutions to facilitate the disposition of shares acquired upon exercise of
Stock Options, including, without limitation, arrangements for the simultaneous
exercise of Stock Options and sale of the Shares acquired upon such exercise.
SECTION 13
NONEXCLUSIVITY OF THE PLAN
13.1 Other Plans. The adoption of this Plan by the Board will not be
construed as creating any limitations on the power or authority of the Board to
adopt such other or additional incentive or other compensation arrangements of
whatever nature as the Board may deem necessary or desirable or preclude or
limit the continuation of any other plan, practice or arrangement for the
payment of compensation or fringe benefits to employees generally, or to any
class or group of employees, or any other persons that the Company or any
Affiliated Corporation now has lawfully put into effect, including, without
limitation, any retirement, pension, savings and stock purchase plan,
insurance, death and disability benefits and executive short-term incentive
plans.
SECTION 14
REQUIREMENTS OF LAW
14.1 Requirements of Law. The insurance of Stock and the payment of cash
pursuant to the Plan will be subject to all applicable laws, rules and
regulations.
14.2 Governing Law. The Plan and all agreements hereunder will be construed
in accordance with and governed by the laws of the State of Colorado.
SECTION 15
DURATION OF THE PLAN
15.1 Termination. The Plan will terminate at such time as may be determined
by the Board, and no Option will be granted after such termination. If not
sooner terminated under the preceding sentence, the Plan will fully cease and
expire on the earlier of one year from the date that the Plan Limit has been
exhausted and all Options exercised or expired or December 1, 2014. Options
outstanding at the time of the Plan termination may continue to be exercised in
accordance with their terms.