Exhibit 10.3
COLUMBIA BANCORP
00000 Xxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxx 00000
____________, 19__
Incentive Stock Option Agreement
--------------------------------
[Name]
[Address]
Dear ____________:
The Administrator of the Columbia Bancorp 1997 Stock Option Plan (the
"Plan") takes pleasure in extending to you an option (the "Option") to purchase
shares of Common Stock of Columbia Bancorp (the "Common Stock") pursuant to the
Plan. The Option shall be subject to the following terms and conditions:
(1) Incentive Stock Option. The Option is intended to qualify
as an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended or replaced (the "Code"), to
the fullest extent permitted within the limit set forth under Section
422(d) of the Code. The tax treatment under Code Section 421 for
incentive stock options may not be applicable to a transfer of the
Shares (as defined in Paragraph (2) hereof) to you if the Option or the
Shares do not satisfy the requirements of: (i) Code Section 421(b)
(denying Section 421 tax treatment upon a disposition of the Shares
within two (2) years from the Date of Grant or one (1) year after the
transfer of Share to you); (ii) Section 422(a)(2) (denying such tax
treatment if you have not been an employee continuously from the Date
of Grant up to at least three (3) months before the date of exercise,
except in the case of disability or death); or (iii) Section 422(b)
(other requirements for incentive stock options).
(2) Number of Shares. The Option covers ________ shares
of Common Stock (the "Shares").
(3) Option Price. The exercise price per share of Common Stock
covered by the Option shall be $_________ ("Exercise Price Per Share";
hereinafter "Exercise Price" means the exercise price with respect to
all Shares acquired pursuant to each exercise of the Option).
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(4) Exercise of Option. [For Options of 200 Shares or Less:
Except as provided in Section 5(c) of the Plan, this Option may not be
exercised during the first year after the Date of Grant, as defined in
Paragraph (6) hereof. Unless terminated earlier pursuant to other
provisions hereof, this Option shall become exercisable in full after
one year after the Date of Grant.] [For Options of More than 200
Shares: Except as provided in Section 5(c) of the Plan, this Option (A)
may not be exercised during the first year after the Date of Grant, and
(B) unless terminated earlier pursuant to other provisions hereof, the
Option may be exercised to acquire up to: (i) twenty-five percent (25%)
of the Shares after one year after the Date of Grant; (ii) fifty
percent (50%) after two years; (iii) seventy-five percent (75%) after
three years; and (iv) one hundred percent (100%) after four years.
(5) Termination of Employment. This Option, to the extent it
is not then exercisable, shall terminate when your employment with the
Company and all Subsidiaries terminates. Except as provided in
Paragraphs (5)(A) and (5)(B) hereof, the Option, to the extent it is
exercisable but has not been exercised (the "Unexercised Option"),
shall also terminate when your employment with the Company and its
Subsidiaries terminates.
(A) Retirement or Voluntary Resignation. If you
terminate employment with the Company and its Subsidiaries due to (i)
Retirement, as defined hereinafter, or (ii) voluntary resignation with
the consent of the Board of Directors of the Company or a Subsidiary,
the Unexercised Option may be exercised until the expiration of three
(3) months after the date your employment terminates. "Retirement"
means a retirement from employment with the Company and its
Subsidiaries either on or after the first day of the month coinciding
with or next following your sixty-fifth (65th) birthday.
(B) Death or Disability. If you terminate employment
with the Company and its Subsidiaries due to (i) death or (ii)
Disability, as defined hereinafter, the Unexercised Option may be
exercised (in the case of death, by your executor, personal
representative, or the person to whom the Unexercised Option shall have
been transferred by will or the laws of descent and distribution, as
the case may be) until the expiration of one (1) year after the date of
your termination of employment. "Disability" means a permanent mental
or physical disability due to accident or illness that renders you
unable to perform every duty of your occupation with the Company and
the Subsidiaries for a period of at least one hundred eighty (180)
days, provided that you establish such disability to the satisfaction
of the Administrator. Evidence of such Disability shall include the
certificate of a competent licensed physician selected by you and
approved by the Administrator which confirms that you have a Disability
as defined herein.
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(6) Term of Option. This Option is effective as of the date
the Administrator approved the Option, _______________, 19___ (the
"Date of Grant"). Notwithstanding anything herein to the contrary, this
Option may not be exercised, in whole or in part, after ten (10) years
from the Date of Grant (i.e., after ________________, 20___).
(7) Manner of Exercise. You or any person exercising the
Option may do so only by delivering written notice thereof to the
Administrator. Such notice shall be in such form as the Administrator
may require at its sole discretion.
(A) Payment of Exercise Price. Full payment for the
Exercise Price shall be made at or prior to the time that the Option,
or any part thereof, is exercised (or, in the discretion of the
Administrator, at such later time as the certificates for such Shares
are delivered). Such payment shall be made: (A) by cash or certified
check; or (B) in the discretion of the Administrator, by causing the
Company to withhold shares of Common Stock with a Fair Market Value,
determined as of the date of exercise.
(B) Withholding Taxes. In the event any federal,
state or local income and employment taxes required to be withheld with
respect to the Option (e.g., upon a loss of tax treatment under Code
Section 421), you shall pay to the Company, or make provision
satisfactory to the Administrator for payment of such taxes no later
than the date of the event creating the tax liability. The Company may,
to the extent permitted by law, deduct any such tax obligations from
any payment of any kind otherwise due to you. In the event that payment
to the Company of such tax obligations is made in shares of Common
Stock, such shares shall be valued at Fair Market Value on the
applicable date for such purposes.
(8) Right As Stockholder. You will have no rights as a
stockholder solely because of the grant or exercise of the Option
before the certificates for the Shares as to which the Option has been
exercised is issued to you by the Company.
(9) Option Non-Assignable and Non-Transferable. The Option and
all rights granted hereunder, including the right to surrender the
Option, is not assignable or transferable other than by will or the
laws of descent and distribution and, during your lifetime, is
exercisable only by you or your guardian or legal representative.
(10) Restricted Stock. You will receive Shares restricted in
terms of transferability, as will be indicated in a legend printed on
the stock certificate in the event that there is not an effective
registration statement with respect to such Shares at the time of their
issue.
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(11) Terms of Plan. The Option is granted under and subject to
the provisions applicable to incentive stock options under the Plan, a
copy of which is attached to the Option. Unless stated otherwise
herein, capitalized terms herein shall have the same meaning as defined
in the Plan.
(12) Notices. Any notice required or permitted to be given to
the Administrator shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to:
Personnel, Compensation and Stock Option Committee
Columbia Bancorp
0000 Xxxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the postmark
on the receipt for registration or certification.
(13) Non-Guarantee of Employment. Nothing in the Plan or in
this Incentive Stock Option Agreement shall confer any right on an
individual to continue in the employ of the Company or any Subsidiary
or shall interfere in any way with the right of the Company or a
Subsidiary to terminate such employment at any time.
(14) Binding Effect. The covenants and agreements of this
Incentive Stock Option Agreement contained herein shall be binding
upon, and inure to the benefit of, the heirs, legal representatives,
successors, and assigns of the respective parties hereto.
(15) Entire Agreement. Except as provided in Paragraph (11)
hereof, this Incentive Stock Option Agreement contains the entire
agreement between the Company and you with respect to the subject
matter contained herein. Any oral or written agreements,
representations, warranties, written inducements, or other
communications made prior to the execution of this Incentive Stock
Option Agreement shall be void and ineffective for all purposes.
(16) Governing Law. The validity, construction and effect of
this Incentive Stock Option Agreement, and of any rules, regulations,
determinations or decisions made by the Administrator relating thereto,
and the rights of any and all persons having or claiming to have any
interest hereunder, shall be determined exclusively in accordance with
applicable federal laws and the laws of the State of Maryland, without
regard to its conflict of laws principles.
The copy of the Option enclosed should be signed by you, dated, and
returned to the Company prior to _______________, 19__ to acknowledge your
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receipt of the Option and your approval of each of the terms and conditions
hereof. If the Option has not been accepted and approved by you in writing by
such date, it shall terminate.
Very truly yours,
ADMINISTRATOR, COLUMBIA BANCORP
1997 STOCK OPTION PLAN
By: _____________________________________
Print Name: _____________________________
Title: __________________________________
Accepted and Approved:
______________________________________
Print Name: __________________________
Dated: _________________________, 19__
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