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:
______________________________
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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 Ac
