EXHIBIT 10.2
INCENTIVE STOCK OPTION AWARD
PURSUANT TO THE ISLANDS BANCORP
2002 STOCK INCENTIVE PLAN
THIS AWARD is made as of the Grant Date by ISLANDS BANCORP (the "Company")
to _________________ (the "Optionee").
Upon and subject to the Terms and Conditions attached hereto and
incorporated herein by reference, the Company hereby awards as of the Grant Date
to Optionee an incentive stock option (the "Option"), as described below, to
purchase the Option Shares.
A. Grant Date: ____________.
B. Type of Option: Incentive Stock Option.
C. Plan under which granted: Islands Bancorp 2002 Stock Incentive Plan.
D. Option Shares: All or any part of shares of the
Company's no par value common stock (the "Common Stock"), subject to
adjustment as provided in the attached Terms and Conditions.
E. Exercise Price: $______ per share, subject to adjustment as provided
in the attached Terms and Conditions. The Exercise Price is, in the
judgment of the Committee, not less than 100% of the Fair Market
Value of a share of Common Stock on the Grant Date or, in the case
of an Over 10% Owner, not less than 110% of the Fair Market Value of
a share of Common Stock on the Grant Date.
F. Option Period: The Option may be exercised only during the Option
Period which commences on the Grant Date and ends, generally, on the
earliest of (a) the tenth (10th) anniversary of the Grant Date
(unless the Optionee is an Over 10% Owner, in which case the fifth
(5th) anniversary of the Grant Date); (b) three (3) months following
the date the Optionee ceases to be an employee of the Company
(including any Parent or Subsidiary) for any reason other than death,
Disability or termination with Cause; (c) one (1) year following the
date the Optionee ceases to be an employee of the Company (including
any Parent or Subsidiary) due to death or Disability; or (d) the date
the Optionee ceases to be an employee of the Company (including any
Parent or Subsidiary) due to a termination with Cause; provided,
however, that the Option may be exercised as to no more than the
vested Option Shares, determined pursuant to the Vesting Schedule.
Note that other limitations to exercising the Option, as described in
the attached Terms and Conditions, may apply.
G. Vesting Schedule: The Option Shares shall become vested in
accordance with Schedule 1 hereto.
IN WITNESS WHEREOF, the Company has executed and sealed this Award as of
the Grant Date set forth above.
ISLANDS BANCORP
By: _________________________________
Title: ______________________________
TERMS AND CONDITIONS
TO THE
INCENTIVE STOCK OPTION AWARD
PURSUANT TO THE ISLANDS BANCORP
2002 STOCK INCENTIVE PLAN
1. EXERCISE OF OPTION. Subject to the provisions provided herein or in
the Award made pursuant to the Islands Bancorp 2002 Stock Incentive Plan:
(a) the Option may be exercised with respect to all or any portion
of the vested Option Shares at any time during the Option Period by the
delivery to the Company, at its principal place of business, of a written
notice of exercise in substantially the form attached hereto as Exhibit 1,
which shall be actually delivered to the Company no earlier than thirty
(30) days and no later than ten (10) days prior to the date upon which
Optionee desires to exercise all or any portion of the Option; and
(b) payment to the Company of the Exercise Price multiplied by the
number of Option Shares being purchased (the "Purchase Price") as provided
in Section 3.
(c) Notwithstanding any other provision of this Agreement, in the
event that the capital of the Company falls below the minimum requirements
determined by the primary federal regulator of the Company (the
"Regulator"), the Regulator may direct the Company to require the Optionee
to exercise, or otherwise forfeit, the Option in whole or in part. If the
Regulator gives such direction, the Company will notify the Optionee within
forty-five (45) days from the date the Regulator notifies the Company in
writing that the Optionee must exercise, or otherwise forfeit, the Option
in whole or in part. If the Optionee does not exercise the Option in
accordance with the Company's direction within twenty-one (21) days of the
Company's notification to the Optionee, the Committee may provide for the
cancellation of the Option.
Upon acceptance of such notice and receipt of payment in full of the Purchase
Price and, if applicable, any withholding taxes, the Company shall cause to be
issued a certificate representing the Option Shares purchased.
2. WITHHOLDING. To the extent the Option is deemed to be a Non-
Qualified Stock Option in accordance with Section 18 hereof, the Optionee must
satisfy his federal, state and local, if any, withholding taxes imposed by
reason of the exercise of the Option either by paying to the Company the full
amount of the withholding obligation (i) in cash; (ii) by tendering shares of
Common Stock which have been owned by the Optionee for at least six (6) months
prior to the date of exercise having a Fair Market Value (as defined in the
Plan) equal to the withholding obligation; (iii) by electing, irrevocably and
in writing in substantially the form of Exhibit 2 (the "Withholding Election"),
to have the smallest number of whole shares of Common Stock withheld by the
Company which, when multiplied by the Fair Market Value (as defined in the Plan)
of the Common Stock as of the date the Option is exercised, is sufficient to
satisfy the amount of minimum required withholding tax obligations; or (iv) by
any combination of the above. Optionee may make a Withholding Election only if
the following conditions are met:
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(a) the Withholding Election is made on or prior to the date on
which the amount of tax required to be withheld is determined (the "Tax
Date") by executing and delivering to the Company a properly completed
Notice of Withholding in substantially the form attached hereto as Exhibit
2; and
(b) any Withholding Election will be irrevocable; however, the
Committee (as defined in the Plan) may, in its sole discretion, disapprove
and give no effect to the Withholding Election.
3. PURCHASE PRICE. Payment of the Purchase Price for all Option Shares
purchased pursuant to the exercise of an Option shall be made in cash or
certified check or, if and when the Common Stock becomes traded by brokers,
whether on a national securities exchange or otherwise, by receipt of the
Purchase Price in cash from a broker, dealer or other "creditor" as defined by
Regulation T issued by the Board of Governors of the Federal Reserve System
following delivery by the Optionee to the Committee of instructions in a form
acceptable to the Committee regarding delivery to such broker, dealer or other
creditor of that number of Option Shares with respect to which the Option is
exercised.
4. RIGHTS AS SHAREHOLDER. Until the stock certificates reflecting the
Option Shares accruing to the Optionee upon exercise of the Option are issued to
the Optionee, the Optionee shall have no rights as a shareholder with respect to
such Option Shares. The Company shall make no adjustment for any dividends or
distributions or other rights on or with respect to Option Shares for which the
record date is prior to the issuance of that stock certificate, except as the
Plan or the attached Award otherwise provides.
5. RESTRICTION ON TRANSFER OF OPTION AND OF OPTION SHARES. The Option
evidenced hereby is nontransferable other than by will or the laws of descent
and distribution and shall be exercisable during the lifetime of the Optionee
only by the Optionee (or in the event of his Disability, by his personal
representative) and after his death, only by his legatee or the executor of his
estate.
6. CHANGES IN CAPITALIZATION.
(a) If the number of shares of Common Stock shall be increased or
decreased by reason of a subdivision or combination of shares of Common
Stock, the payment of a stock dividend in shares of Common Stock or any
other increase or decrease in the number of shares of Common Stock
outstanding effected without receipt of consideration by the Company, an
appropriate adjustment shall be made by the Committee, in a manner
determined in its sole discretion, in the number and kind of Option Shares
and in the Exercise Price.
(b) If the Company shall be the surviving corporation in any
merger, consolidation, reorganization, extraordinary dividend, spin-off, or
other change in capital structure of the Company or its Common Stock, the
Optionee shall be entitled to purchase the number and class of securities
to which a holder of the number of shares of Common Stock subject to the
Option at the time of the transaction would have been entitled to receive
as a result of such transaction, and a corresponding adjustment, where
appropriate, shall be made in the Exercise Price. In the event of a Change
in Control or other corporate transaction pursuant to which the Company is
not the surviving entity, the Committee may provide for the assumption of
the Option by the surviving entity or the substitution of a new option,
adjusted in a manner similar to that contemplated by the immediately
preceding sentence; however, if the surviving entity does not agree to the
assumption or substitution of the Option, the Committee may elect to
terminate the Option Period as of the effective date of the Change in
Control in consideration of the payment to the Optionee of the sum of the
difference between the then Fair Market Value of the Common Stock and the
Exercise Price for each vested Option Share which has not been exercised as
of the effective date of the Change in Control. A dissolution or
liquidation of the Company shall cause the Option to terminate as to any
portion thereof not exercised as of the effective date of the dissolution
or liquidation.
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(c) The existence of the Plan and the Option granted pursuant to
this Agreement shall not affect in any way the right or power of the
Company to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure, any
merger or consolidation of the Company, any issue of debt or equity
securities having preferences or priorities as to the Common Stock or the
rights thereof, the dissolution or liquidation of the Company, any sale or
transfer of all or any part of its business or assets, or any other
corporate act or proceeding. Any adjustment pursuant to this Section may
provide, in the Committee's discretion, for the elimination without payment
therefor of any fractional shares that might otherwise become subject to
any Option.
7. SPECIAL LIMITATION ON EXERCISE. No purported exercise of the Option
shall be effective without the approval of the Committee, which may be withheld
to the extent that the exercise, either individually or in the aggregate
together with the exercise of other previously exercised stock options and/or
offers and sales pursuant to any prior or contemplated offering of securities,
would, in the sole and absolute judgment of the Committee, require the filing
of a registration statement with the United States Securities and Exchange
Commission or with the securities commission of any state. If a registration
statement is not in effect under the Securities Act of 1933 or any applicable
state securities law with respect to shares of Common Stock purchasable or
otherwise deliverable under the Option, the Optionee (a) shall deliver to the
Company, prior to the exercise of the Option or as a condition to the delivery
of Common Stock pursuant to the exercise of an Option, such information,
representations and warranties as the Company may reasonably request in order
for the Company to be able to satisfy itself that the Option Shares are being
acquired in accordance with the terms of an applicable exemption from the
securities registration requirements of applicable federal and state securities
laws and (b) shall agree that the shares of Common Stock so acquired will not
be disposed of except pursuant to an effective registration statement, unless
the Company shall have received an opinion of counsel that such disposition is
exempt from such requirement under the Securities Act of 1933 and any applicable
state securities law.
8. LEGEND ON STOCK CERTIFICATES. Certificates evidencing the Option
Shares, to the extent appropriate at the time, shall have noted conspicuously
on the certificates a legend intended to give all persons full notice of the
existence of the conditions, restrictions, rights and obligations set forth
herein and in the Plan.
9. GOVERNING LAWS. This Award and the Terms and Conditions shall be
construed, administered and enforced according to the laws of the State of South
Carolina.
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10. SUCCESSORS. This Award and the Terms and Conditions shall be binding
upon and inure to the benefit of the heirs, legal representatives, successors
and permitted assigns of the Optionee and the Company.
11. NOTICE. Except as otherwise specified herein, all notices and other
communications under this Award shall be in writing and shall be deemed to have
been given if personally delivered or if sent by registered or certified United
States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.
12. SEVERABILITY. In the event that any one or more of the provisions
or portion thereof contained in the Award and these Terms and Conditions shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
the same shall not invalidate or otherwise affect any other provisions of the
Award and these Terms and Conditions, and the Award and these Terms and
Conditions shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.
13. ENTIRE AGREEMENT. Subject to the terms and conditions of the Plan,
the Award and the Terms and Conditions express the entire understanding of the
parties with respect to the Option.
14. VIOLATION. Any transfer, pledge, sale, assignment, or hypothecation
of the Option or any portion thereof shall be a violation of the terms of the
Award or these Terms and Conditions and shall be void and without effect.
15. HEADINGS AND CAPITALIZED TERMS. Section headings used herein are for
convenience of reference only and shall not be considered in construing the
Award or these Terms and Conditions. Capitalized terms used, but not defined,
in either the Award or the Terms and Conditions shall be given the meaning
ascribed to them in the Plan.
16. SPECIFIC PERFORMANCE. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of the
Award and these Terms and Conditions, the party or parties who are thereby
aggrieved shall have the right to specific performance and injunction in
addition to any and all other rights and remedies at law or in equity, and
all such rights and remedies shall be cumulative.
17. NO RIGHT TO CONTINUED RETENTION. Neither the establishment of the
Plan nor the award of Option Shares hereunder shall be construed as giving the
Optionee the right to continued employment with the Company or any affiliate.
18. QUALIFIED STATUS OF OPTION. In accordance with Section 2.4 of the
Plan, the aggregate Fair Market Value (determined as of the date an Incentive
Stock Option is granted) of the Option Shares which become exercisable for the
first time by an individual during any calendar year shall not exceed $100,000.
If the foregoing limitation is exceeded with respect to any portion of the
Option Shares, that portion of the Option Shares which cause the limitation to
be exceeded shall be treated as a Non-Qualified Stock Option.
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19. DEFINITION OF CAUSE. As used in this Award, "Cause" means Cause as
defined in any Employment Agreement between the Optionee and the Company or an
Affiliate, or if none, conduct amounting to (a) fraud or dishonesty against the
Company or Affiliate(s); (b) Optionee's willful misconduct, repeated refusal to
follow the reasonable directions of the Board of Directors of the Company or an
Affiliate or knowing violation of law in the course of performance of the duties
of Optionee's service with the Company or Affiliate(s); (c) repeated absences
from work without a reasonable excuse; (d) repeated intoxication with alcohol
or drugs while on the Company's or Affiliate(s)' premises during regular
business hours; (e) a conviction or plea of guilty or nolo contendere to a
felony or a crime involving dishonesty; or (f) a breach or violation of the
terms of any agreement to which Optionee and the Company or Affiliate(s) are
party.
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EXHIBIT 1
---------
NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE
COMMON STOCK OF
ISLANDS BANCORP
Name ____________________________
Address _________________________
_________________________________
Date ____________________________
Islands Bancorp
2348 Boundary Street
Beaufort, S.C. 29902
Attn: President
Re: Exercise of Incentive Stock Option
Gentlemen:
Subject to acceptance hereof by Islands Bancorp (the "Company") and
pursuant to the provisions of the Islands Bancorp 2002 Stock Incentive Plan (the
"Plan"), I hereby give notice of my election to exercise options granted to me
to purchase ______________ shares of Common Stock of the Company under the
Incentive Stock Option Award (the "Award") dated as of ____________. The
purchase shall take place as of __________, 200__ (the "Exercise Date").
On or before the Exercise Date, I will pay the applicable purchase price
as follows:
[ ] by delivery of cash or a certified check for $___________ for the
full purchase price payable to the order of Islands Bancorp.
[ ] by delivery of the purchase price by _________________________, a
broker, dealer or other "creditor" as defined by Regulation T
issued by the Board of Governors of the Federal Reserve System. I
hereby authorize the Company to issue a stock certificate for the
number of shares indicated above in the name of said broker, dealer
or other creditor or its nominee pursuant to instructions received
by the Company and to deliver said stock certificate directly to
that broker, dealer or other creditor (or to such other party
specified in the instructions received by the Company from the
broker, dealer or other creditor) upon receipt of the purchase
price.
Exhibit 1 - Page 1 of 3
The required federal, state, and local income tax withholding obligations,
if any, on the exercise of the Award shall be paid on or before the Exercise
Date in cash or with previously owned shares of Common Stock, as provided in
the Award, or in the manner provided in the Withholding Election previously
tendered or to be tendered to the Company no later then the Exercise Date.
As soon as the stock certificate is registered in my name, please deliver
it to me at the above address.
If the Common Stock being acquired is not registered for issuance to and
resale by the Optionee pursuant to an effective registration statement on Form
S-8 (or successor form) filed under the Securities Act of 1933, as amended (the
"1933 Act"), I hereby represent, warrant, covenant, and agree with the Company
as follows:
The shares of the Common Stock being acquired by me will be acquired for my
own account without the participation of any other person, with the intent
of holding the Common Stock for investment and without the intent of
participating, directly or indirectly, in a distribution of the Common
Stock and not with a view to, or for resale in connection with, any
distribution of the Common Stock, nor am I aware of the existence of any
distribution of the Common Stock;
I am not acquiring the Common Stock based upon any representation, oral or
written, by any person with respect to the future value of, or income from,
the Common Stock but rather upon an independent examination and judgment as
to the prospects of the Company;
The Common Stock was not offered to me by means of publicly disseminated
advertisements or sales literature, nor am I aware of any offers made to
other persons by such means;
I am able to bear the economic risks of the investment in the Common Stock,
including the risk of a complete loss of my investment therein;
I understand and agree that the Common Stock will be issued and sold to me
without registration under any state law relating to the registration of
securities for sale, and will be issued and sold in reliance on the
exemptions from registration under the 1933 Act, provided by Sections 3(b)
and/or 4(2) thereof and the rules and regulations promulgated thereunder;
The Common Stock cannot be offered for sale, sold or transferred by me
other than pursuant to: (A) an effective registration under the 1933 Act
or in a transaction otherwise in compliance with the 1933 Act; and (B)
evidence satisfactory to the Company of compliance with the applicable
securities laws of other jurisdictions. The Company shall be entitled to
rely upon an opinion of counsel satisfactory to it with respect to
compliance with the above laws;
The Company will be under no obligation to register the Common Stock or to
comply with any exemption available for sale of the Common Stock without
registration or filing, and the information or conditions necessary to
permit routine sales of securities of the Company under Rule 144 under the
1933 Act are not now available and no assurance has been given that it or
they will become available. The Company is under no obligation to act in
any manner so as to make Rule 144 available with respect to the Common
Stock;
Exhibit 1 - Page 2 of 3
I have and have had complete access to and the opportunity to review and
make copies of all material documents related to the business of the
Company, including, but not limited to, contracts, financial statements,
tax returns, leases, deeds and other books and records. I have examined
such of these documents as I wished and am familiar with the business and
affairs of the Company. I realize that the purchase of the Common Stock
is a speculative investment and that any possible profit therefrom is
uncertain;
I have had the opportunity to ask questions of and receive answers from
the Company and any person acting on its behalf and to obtain all material
information reasonably available with respect to the Company and its
affairs. I have received all information and data with respect to the
Company which I have requested and which I have deemed relevant in
connection with the evaluation of the merits and risks of my investment
in the Company;
I have such knowledge and experience in financial and business matters that
I am capable of evaluating the merits and risks of the purchase of the
Common Stock hereunder and I am able to bear the economic risk of such
purchase; and
The agreements, representations, warranties and covenants made by me herein
extend to and apply to all of the Common Stock of the Company issued to me
pursuant to this Award. Acceptance by me of the certificate representing
such Common Stock shall constitute a confirmation by me that all such
agreements, representations, warranties and covenants made herein shall be
true and correct at that time.
I understand that the certificates representing the shares being purchased
by me in accordance with this notice shall bear a legend referring to the
foregoing covenants, representations and warranties and restrictions on
transfer, and I agree that a legend to that effect may be placed on any
certificate which may be issued to me as a substitute for the certificates
being acquired by me in accordance with this notice. I further understand
that capitalized terms used in this Notice of Exercise without definition
shall have the meanings given to them in the Plan.
Very truly yours,
_________________________________
AGREED TO AND ACCEPTED:
ISLANDS BANCORP
By: ___________________________
Title: ________________________
Number of Shares
Exercised: ____________________
Number of Shares
Remaining: ____________________ Date: ___________________________
Exhibit 1 - Page 3 of 3
EXHIBIT 2
---------
NOTICE OF WITHHOLDING ELECTION
ISLANDS BANCORP
2002 STOCK INCENTIVE PLAN
TO: Islands Bancorp
FROM: __________________________________
RE: Withholding Election
This election relates to the Option identified in Paragraph 3 below. I hereby
certify that:
(1) My correct name and social security number and my current address are set
forth at the end of this document.
(2) I am (check one, whichever is applicable).
[ ] the original recipient of the Option.
[ ] the legal representative of the estate of the original recipient of
the Option.
[ ] a legatee of the original recipient of the Option.
[ ] the legal guardian of the original recipient of the Option.
(3) The Option to which this election relates was issued under the Islands
Bancorp 2002 Stock Incentive Plan (the "Plan") in the name of
_________________________ for the purchase of a total of _______________
shares of Common Stock of the Company. This election relates to
_______________ shares of Common Stock issuable upon exercise of the
Option, provided that the numbers set forth above shall be deemed changed
as appropriate to reflect the applicable Plan provisions.
(4) In connection with any exercise of the Option with respect to the Common
Stock, I hereby elect:
[ ] to have certain of the shares otherwise issuable pursuant to the
exercise withheld by the Company for the purpose of having the value
of the shares applied to pay federal, state, and local, if any,
taxes arising from the exercise.
[ ] to tender shares held by me for a period of at least six (6) months
prior to the exercise of the Option for the purpose of having the
value of the shares applied to pay such taxes.
Exhibit 2 - Page 1 of 2
The shares to be withheld or tendered, as applicable, shall have, as
of the Tax Date applicable to the exercise, a Fair Market Value
equal to the minimum statutory tax withholding requirement under
federal, state, and local law in connection with the exercise.
(5) This Withholding Election is made no later than the Tax Date and is
otherwise timely made pursuant to the Plan.
(6) I understand that this Withholding Election may not be revised, amended or
revoked by me.
(7) The Plan has been made available to me by the Company. I have read and
understand the Plan and I have no reason to believe that any of the
conditions to the making of this Withholding Election have not been met.
(8) Capitalized terms used in this Notice of Withholding Election without
definition shall have the meanings given to them in the Plan.
Dated: ___________________ ____________________________________________
Signature
___________________________ ____________________________________________
Social Security Number Name (Printed)
____________________________________________
Street Address
____________________________________________
City, State, Zip Code
Exhibit 2 - Page 2 of 2
SCHEDULE 1
VESTING SCHEDULE
INCENTIVE STOCK OPTION AWARD
ISSUED PURSUANT TO THE
ISLANDS BANCORP
2002 STOCK INCENTIVE PLAN
A. The Option Shares shall become vested Option Shares following completion
of the years of service as an employee of the Company or any Parent or
Subsidiary as indicated in the schedule below.
Percentage of Option Shares Years of Service
Which are Vested Shares after the Grant Date
----------------------- --------------------
33 1/3% 1
66 2/3% 2
100% 3
B. Notwithstanding Part A, in the event of a Change in Control, the Option
will be fully vested as of a date determined by the Committee which is no
less than ten (10) days prior to the effective date of the Change in
Control.
C. For purposes of the Vesting Schedule, Optionee shall be granted a year of
service for each twelve-consecutive-month period following the Grant Date
and during which Optionee continues, at all times, as an employee of the
Company or any Parent or Subsidiary.
Schedule 1 - Page 1 of 1