FORM OF
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:
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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
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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
distribu-tions or
other rights on or with respect to Option Shares for
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which the record date is prior to the issuance of that stock
certificate, except
as the Plan or the attached Award otherwise provides.
4.
Restriction on
Transfer of Option and of Option Shares. The Option
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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.
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(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.
6.
Special Limitation on Exercise. No purported exercise of the
Option
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shall be effective
without the approval of the Committee, which may be withheld
to the extent that the
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exercise, either
individually or in the aggregate together with the exercise of
other previously exercised stock options and/or offers and
sales
