EXHIBIT 10.3
NON-QUALIFIED 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 a non-qualified stock option (the "Option"), as described below, to
purchase the Option Shares.
A. Grant Date: _______________.
B. Type of Option: Non-Qualified 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.
F. Option Period: The Option may be exercised only during the Option
Period which commences on the Grant Date and ends, generally, on the
earlier of (a) the tenth (10th) anniversary of the Grant Date; or (b)
ninety (90) days following the date the Optionee ceases to be a
director of the Company for any reason; 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
NON-QUALIFIED 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 2.
(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, the Company shall cause to be issued a certificate representing the
Option Shares purchased.
2. 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, subject to applicable law, 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.
3. 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.
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4. 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.
5. 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
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 such corporate transaction 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 such corporate transaction. 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.
(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.
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6. 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 exercise, 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
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13. 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.
14. 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.
15. 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.
16. 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 service with the Company or any affiliate in any
capacity.
17. DEFINITION OF CHANGE IN CONTROL. As used in the Vesting Schedule
attached to this Award, the term "Change in Control" shall have the same meaning
as ascribed to the term in the warrants issued to directors of the Company in
connection with the organization of the Company.
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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 Non-Qualified 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 Non-
Qualified 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
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;
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;
Exhibit 1 - Page 2 of 3
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
SCHEDULE 1
VESTING SCHEDULE
NON-QUALIFIED STOCK OPTION AWARD
ISSUED PURSUANT TO THE
ISLANDS BANCORP
2002 STOCK INCENTIVE PLAN
A. The Option Shares shall become vested Option Shares following the
Optionee's completion of the years of service as a director of the Company
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 a director of the
Company.
Schedule 1 - Page 1 of 1