Exhibit 10.3
PACIFIC FINANCIAL
CORPORATION
2000 STOCK INCENTIVE COMPENSATION
PLAN
NONQUALIFIED STOCK OPTION
AGREEMENT
(for Nonemployee
Directors)
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(F)
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Vesting Commencement Date:
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THIS NONQUALIFIED STOCK OPTION
AGREEMENT (the “Agreement”) is made and entered into as
of the date set forth in Item (B) above (the “Grant
Date”) between Pacific Financial Corporation, a Washington
corporation (the “Company”) and the person named in
Item A above (“Holder”).
THE PARTIES AGREE AS
FOLLOWS:
1.
Grant of Option; Grant Date . The Company hereby grants to
Holder pursuant to the Company’s 2000 Stock Incentive
Compensation Plan, as amended from time to time (the
“Plan”), a copy of which is available from the Company
on request, the right (the “Option”) to purchase up to
the number of shares of the Company’s Common Stock listed in
Item (C) above (the “Option Shares”) at the price
per share set forth in Item (D) above (the “Exercise
Price”), on the terms and conditions set forth in this
Agreement and in the Plan, the terms and conditions of the Plan
being incorporated into this Agreement by reference. This Option is
not intended to qualify as an incentive stock option for
purposes of Section 422 of the Internal Revenue Code of 1986, as
amended. The number and kind of Option Shares and the Exercise
Price may be adjusted in certain circumstances in accordance with
the provisions of Section 13 of the Plan.
2.
Termination of Option. A vested Option will terminate, to
the extent not previously exercised, upon the first to occur of the
following events:
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(a)
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The expiration of ten years from the
date of grant;
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(b) The
expiration of 24 months from the date that Holder is required to
retire from the Company's Board of Directors under the mandatory
retirement policy adopted by the Board of Directors and applicable
to all nonemployee directors ("Mandatory Retirement"), except that
if Holder dies during the first 12 months of such 24 month period,
the Option will terminate one year after the date of Holder's
death;
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(c) The
expiration of one year from (i) the date of Holder's death or (ii)
Holder's ceasing to be a director of the Company due to Disability
(as defined in the Plan);
(d) Immediately
upon the discovery by the Company of circumstances with respect to
Holder determined to be Cause (as defined in the Plan);
and
(e) The
expiration of three months from the date that Holder ceases to be a
director for any reason not specified in clauses (b) through (d)
above.
3.1
Exercise Schedule . This Option will vest and become
exercisable according to the following schedule: (a) 20% on the
date one year after the Vesting Commencement Date; and (b) an
additional 20% each successive year thereafter, so that 100% of the
Option is fully vested and exercisable on and after the date which
is five (5) years after the Vesting Commencement Date; provided
that, notwithstanding the foregoing, the Option will become fully
vested and exercisable, to the extent not previously vested, on the
date of Holder's Mandatory Retirement. The unvested portion of the
Option, if any, will terminate immediately upon Holder's ceasing to
be a director of the Company for any reason whatsoever. The vesting
schedule for the Option is subject to acceleration in accordance
with the provisions of Section 13.2 of the Plan.
3.2
Manner of Exercise . Holder may exercise this Option by: (i)
the surrender of this Option Agreement to the Secretary of the
Company at the principal office of the Company, accompanied by an
executed notice of exercise in the form attached hereto as
Exhibit 3.2 (or at the option of the Company such other form
of stock purchase agreement as shall then be acceptable to the
Company), (ii) paying in full the Exercise Price in the manner
provided in Section 3.3 below and (iii) paying his or her share of
any applicable withholding or employment taxes. This Option may
only be exercised to purchase that number of Shares having an
aggregate Fair Market Value (as defined in the Plan) on the date of
exercise greater than or equal to $2,500 (or the lesser number of
remaining shares covered by this Option). The date the Company
receives each of the above items will be considered the date this
Option was exercised.
3.3
Payment . Payment is required to be made for Option Shares
purchased at the time written notice of exercise of the Option is
given to the Company as provided in Section 7.5 of the Plan. The
proceeds of any payment shall constitute general funds of the
Company.
4.
Nonassignability of Option . This Option is not assignable
or transferable by Holder except in accordance with Section 12 of
the Plan. Any attempt to assign, pledge, transfer, hypothecate or
otherwise dispose of this Option in a manner not herein
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permitted, and any levy of
execution, attachment, or similar process on this Option, shall be
null and void.
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5.
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Restriction on Issuance of
Shares .
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5.1
Legality of Issuance. The Company shall not be obligated to
sell or issue any Option Shares pursuant to this Agreement if such
sale or issuance, in the judgment of the Company and the
Company’s counsel, might constitute a violation by the
Company of any provision of law, including without limitation the
provisions of the Securities Act of 1933, as amended (the
“Securities Act”).
5.2
Registration or Qualification of Securities. The Company
may, but shall not be required to, register or qualify the sale of
any Option Shares under the Securities Act or any other applicable
law. The Company shall not be obligated to take any affirmative
action in order to cause the grant or exercise of this Option or
the issuance or sale of any Option Shares pursuant thereto to
comply with any law.
6.
Restriction on Transfer . Regardless of whether a sale of
the Option Shares has been registered under the Securities Act or
has been registered or qualified under the securities laws of any
state, the Company may impose restrictions upon the sale, pledge,
or other transfer of Option Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of
the Company and the Company’s counsel, such restrictions are
necessary or desirable in order to achieve compliance with the
provisions of the Securities Act, the securities laws of any state,
or any other law, or if the Company does not desire to have a
trading market develop for its securities.
7.
Professional Advice . The acceptance and exercise of the
Option and the sale of Option Shares has consequences under federal
and state tax and securities laws which may vary depending upon the
individual circumstances of the Holder. Accordingly, Holder
acknowledges that he has been advised to consult his personal legal
and tax advisor in connection with this Agreement and his dealings
with respect to the Option and the Option Shares. Holder further
acknowledges that the Company has made no warranties or
representations to Holder with respect to the income tax
consequences of the grant and exercise of this Option or the sale
of the Option Shares and Holder is in no manner relying on
the
