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:
_____________________________
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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 a
