EXHIBIT 10.3
STATE OF NORTH CAROLINA
COUNTY OF HYDE
EMPLOYEE STOCK OPTION AGREEMENT
THIS EMPLOYEE STOCK OPTION AGREEMENT (the "Agreement") is made as of
this _____ day of ____________, 19____ (the "Date of Grant"), by and between THE
EAST CAROLINA BANK, a North Carolina banking corporation (the "Bank"), and
____________________, a resident of ____________________________ County, North
Carolina (the "Optionee").
WHEREAS, on January 21, 1998, the Bank's Board of Directors adopted
the OMNIBUS STOCK OWNERSHIP AND LONG TERM INCENTIVE PLAN (the "Omnibus Plan"),
subject to the approval of the Bank's shareholders; and
WHEREAS, the Plan provides that the Incentive Committee (the
"Committee") of the Bank's Board of Directors from time to time may grant to
officers and employees of the Bank and its subsidiaries the right or option to
purchase shares of the Bank's $10.00 par value common stock ("Common Stock") on
the terms and conditions set forth in the Omnibus Plan; and
WHEREAS, the Optionee currently is a full-time employee of the Bank
and the Committee has selected the Optionee as an employee to whom it will grant
an option to purchase Common Stock under the Omnibus Plan;
NOW, THEREFORE, in consideration of the premises and the agreements
of the parties set forth herein, the Bank and the Optionee hereby agree as
follow:
1. GRANT OF OPTION. Pursuant to and subject to the terms and
conditions contained in this Agreement and Articles I, II and III of the Omnibus
Plan, the Bank hereby grants to the Optionee the right and option (the "Option")
to purchase from the Bank all or any number of an aggregate of
________________________________________________ (_____________________________)
shares of Common Stock (the "Option Stock") which may be authorized but unissued
shares or shares acquired by the Bank on the open market or in private
transactions.
The Option is intended to be (check one):
[ ] an Incentive Stock Option (an "ISO")
[ ] a Non-qualified Stock Option
as those terms are defined in the Omnibus Plan.
The Option is granted under and pursuant to the Omnibus Plan
in the form in which it has been approved by the Board of Directors (a copy of
which will be provided to the Optionee upon his or her request), and the terms
and conditions of Articles I, II and III of the Omnibus Plan are incorporated
herein by reference. Capitalized terms used in this Agreement which are defined
in the Omnibus Plan shall have the same meanings herein as are assigned to them
in the Omnibus Plan. In the event any provision of this Agreement conflicts or
is inconsistent with a term or condition of the Omnibus Plan, then the Omnibus
Plan provision shall be controlling and shall supersede the provision of this
Agreement.
2. APPROVAL BY SHAREHOLDERS. This Agreement and the Option described
herein are expressly made subject to approval of the Omnibus Plan by the Bank's
shareholders at the Bank's 1998 annual meeting of shareholders. Notwithstanding
anything contained herein to the contrary, the Option may
not be exercised prior to receipt of such approval. In the event such approval
is not obtained, then this Agreement and the Option shall, without any action by
the Bank or the Optionee, become void and unenforceable and of no further force
or effect.
3. DATE OF GRANT OF OPTION. For purposes of the Omnibus Plan and
this Agreement, the effective date of the grant of the Option (the "Date of
Grant") shall be the date of this Agreement.
4. EXERCISE PRICE. The Exercise Price to be paid by the Optionee for
the purchase for the Option Stock upon exercise of the Option shall be:
_________________________________________ Dollars ($_______________) per share.
5. EXERCISE SCHEDULE. Subject to any further restrictions contained
in the Plan or this Agreement, the Optionee's right to exercise the Option,
either in whole or in part, shall be conditioned upon the Optionee's completion
of (check one):
[ ] two years
[ ] Other: _________________
of service in the employment of the Bank following the Date of Grant (the
"Vesting Period") and, following expiration of the Vesting Period, if any, the
Option will become exercisable on the following dates as to the indicated
numbers of the shares of the Option Stock:
DATE OPTION STOCK AVAILABLE FOR EXERCISE
--------------- ------------------------------------
_______________ ................ ____________ SHARES
_______________ ................ ____________ SHARES
_______________ ................ ____________ SHARES
Notwithstanding anything contained herein to the contrary, the Option may
not be exercised at any time as to a fractional share and, in the event
adjustments in the number of Option Shares as provided in the terms of the
Omnibus Plan results in a fractional shares, the number of shares as to which
the Option may be exercised at any particular time shall be rounded down to the
next lower whole share.
6. METHOD OF EXERCISE. To exercise the Option in whole or in part,
the Optionee must deliver written notice of such exercise (a "Notice of
Exercise") to the President or Secretary of the Bank. Such written notice shall
be substantially in the form attached hereto as Exhibit A, shall specify the
number of shares of Option Stock to be purchased, and shall be accompanied by
payment in full (in the form described below) of the Exercise Price of shares to
be purchased, together with payment of the Optionee's Tax Withholding Liability
(if any). A Notice of Exercise shall not be effective (and the Bank shall have
no obligation to sell any Option Stock to the Optionee pursuant to such Notice)
unless it satisfies the terms and conditions contained in the Omnibus Plan and
this Agreement, is accompanied by such payments or other information as is
required by the Omnibus Plan or this Agreement, and actually is received by the
Bank prior to the Expiration Date or any earlier termination of the Option.
Notwithstanding anything contained herein to the contrary, the
Optionee may not exercise the Option to purchase less than one hundred (100)
shares at any one time, unless the Committee otherwise approves or unless the
partial exercise is for all remaining shares of Option Stock available under the
Option. Following receipt from the Optionee of a valid and effective Notice of
Exercise and full payment of the Exercise Price relating to a number the shares
of Option Stock being purchased, a stock certificate representing that number of
shares shall be issued and delivered by the Bank to the Optionee as soon as
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practicable; provided however that, if the Option is an ISO, then all shares of
Option Stock purchased upon the exercise of the Option shall be held by the Bank
in escrow for a period ending on the later of (I) two years from the Date of
Grant of the Option, or (II) one year after issuance of the stock upon exercise
of the Option, for the sole purpose of informing the Bank of a disqualifying
disposition within the meaning of Section 422 of the Internal Revenue Code of
1986. During any such escrow period, the Optionee shall have all rights of a
shareholder with respect to the Option Stock purchased, including but not
limited to the right to vote, receive dividends on and to sell such stock.
Additionally, notwithstanding anything contained herein to the contrary, no
shares of Option Stock purchased upon the exercise of the Option may be sold or
otherwise transferred by the Optionee until at least six months and one day have
elapsed since the Date of Grant.
7. PAYMENT. The Exercise Price of Option Stock being purchased upon
an exercise of the Option (in part or in whole) shall be paid by the Optionee in
full at the time of such exercise. Such payment shall be made in the manner
described in the Omnibus Plan and shall accompany the Notice of Exercise. The
Option shall not be considered to have been properly exercised as to any Option
Stock, and no Option Stock shall be issued or delivered, until full payment of
the Exercise Price therefor has been made.
8. EXPIRATION OR TERMINATION.
(A) EXPIRATION DATE. Notwithstanding anything contained herein
to the contrary, to the extent the Option shall not previously have been
exercised in the manner required by or otherwise terminated as provided in the
Omnibus Plan or this Agreement, it shall expire and terminate at 5:00 P.M. on
the "Expiration Date" which, for purposes of this Agreement, shall be (check
one):
[ ] __________, 20_____, which is the date 10 years following the Date
of Grant
[ ] Other: ___________________________________________________________________
(B) OTHER TERMINATION. The Option otherwise shall terminate
prior to the Expiration Date in the events and upon the occurrences described in
the Option Plan.
(C) EFFECT OF TERMINATION OR EXPIRATION OF OPTION. Upon the
expiration or termination of all or any portion of the Option, it shall, without
any further act by the Bank or the Optionee, no longer be exercisable or of any
force or effect and shall no longer confer any rights to any person to purchase
shares of Common Stock under the Omnibus Plan or this Agreement.
9. EFFECT ON EMPLOYMENT STATUS OF OPTIONEE. Neither the Omnibus
Plan, this Agreement nor the grant of the Option, is intended or shall be deemed
or interpreted to constitute an employment agreement or to confer upon the
Optionee any right of employment with the Bank, including without limitation any
right to continue in the employ of or to provide any other services to the Bank,
or to interfere with, restrict or otherwise limit in any way the right of the
Bank to discharge or terminate the employment of the Optionee at any time for
any reason whatsoever, with or without cause.
10. RIGHTS AS A SHAREHOLDER. Neither the Optionee nor any other
person shall have any rights as a stockholder with respect to any shares of
Option Stock until the Option has been validly exercised in the manner described
in the Omnibus Plan and this Agreement, full payment of the Exercise Price has
been made for such shares, and a stock certificate representing the Option Stock
purchased upon such exercise has been registered on the Bank's stock records in
the name of and delivered to the Optionee or other person entitled thereto.
Except to the extent of adjustments made as described in the Omnibus Plan, no
adjustment on behalf of the Optionee shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property), distributions or
other rights for which the record date for determining the shareholders entitled
to receive the same is prior to the date of registration and delivery of the
stock certificate(s) representing the Option Stock.
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11. PAYMENT OF TAXES. The Optionee shall be responsible for all
federal, state, local or other taxes of any nature as shall be imposed pursuant
to any law or governmental regulation or ruling on the Option or the exercise
thereof or on any income which the Optionee is deemed to recognize in connection
with the Option. If the Bank shall determine to its reasonable satisfaction that
the Bank is required to pay or withhold the whole or any part of any estate,
inheritance, income, or other tax with respect to or in connection with the
Option or the exercise thereof, then the Bank shall have the full power and
authority to withhold and pay such tax out of any shares of Option Stock being
purchased by the Optionee or from the Optionee's salary or any other funds
otherwise payable to the Optionee, or, prior to and as a condition of exercising
such Option, the Bank may require that the Optionee pay to it in cash the amount
of any such tax which it, in good faith, deems itself required to withhold.
12. LIMITS ON GRANT OF ISOS. Notwithstanding anything contained in
this Agreement to the contrary (including the number of shares of Option Stock
provided for herein), if the Option is intended to be an ISO, then the aggregate
Fair Market Value (determined as of the Date of Grant) of the Option Stock for
which the Option may be exercised for the first time in any calendar year
(including ISOs granted under all option plans of the Bank) shall not exceed
$100,000; and, if this Agreement covers a number of shares of Option Stock, or
if such Option becomes exercisable in a manner, such as would result in the
Option exceeding that limitation, then the Option shall constitute a
Non-qualified Stock Option as to all such excess shares of Option Stock.
13. NONTRANSFERABILITY. The Option shall not be assignable or
transferable except by will or by the laws of descent and distribution, and,
during the lifetime of the Optionee, may be exercised only by him or her. More
particularly, but without limiting the generality of the foregoing, the Option
may not be sold, assigned, transferred (except as noted herein), pledged or
hypothecated in any way and shall not be subject to execution, attachment or
similar process.
14. NOTICES. Except as otherwise provided herein, any notice which
the Bank or the Optionee may be required or permitted to give to the other under
the Omnibus Plan or this Agreement shall be in writing and shall be deemed duly
given when delivered personally or deposited in the United States mail, first
class postage prepaid, and properly addressed. Notice, if to the Bank, shall be
sent to its President at the address of the Bank's then current corporate
office. Any notice sent by mail by the Bank to the Optionee shall be sent to the
most current address of the Optionee as reflected on the records of the Bank or
its Subsidiaries as of the time said notice is required. If the Optionee has
died, any such notice shall be given to the Optionee's personal representative
if such representative has delivered to the Bank evidence satisfactory to the
Bank of such representative's status as such and has informed the Bank of the
address of such representative by notice pursuant to this Paragraph 14.
Notwithstanding anything contained herein to the contrary, a
Notice of Exercise shall be effective only upon actual receipt thereof by the
Bank as provided in Paragraph 6 above.
15. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be valid and enforceable
under applicable law, but, in the event that any provision hereof shall be held
to be invalid or unenforceable, the remaining provisions shall continue to be in
full force and effect and this Agreement shall continue to be binding on the
parties hereto as if such invalid or unenforceable provision or part hereof had
not been included herein.
16. MODIFICATION OF AGREEMENT; WAIVER. Except as otherwise provided
herein, this Agreement may be modified, amended, suspended, or terminated, and
any terms or conditions may be waived, but only by written instrument signed by
each of the parties hereto. No waiver hereunder shall constitute a waiver with
respect to any subsequent occurrence or other transaction hereunder or of any
other provision hereof.
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17. CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or in construction of this Agreement. As used herein,
the masculine gender shall include the feminine and neuter, the singular number
the plural, and vice versa, whenever such meanings are appropriate.
18. GOVERNING LAW; VENUE AND JURISDICTION. The validity,
interpretation and administration of this Agreement, and the rights of any and
all persons having or claiming to have any interest hereunder, shall be
determined exclusively in accordance with the laws of the State of North
Carolina. Without limiting the generality of the foregoing, the period within
which any action in connection with this Agreement must be commenced shall be
governed by the laws of the State of North Carolina, without regard to the place
where the act or omission complained of took place, the residence of any party
to such action, or the place where the action may be brought or maintained. The
parties hereto agree that any suit or action relating to this Agreement shall be
instituted and prosecuted in the courts of Hyde County, North Carolina, and each
party hereby does waive any right or defense relating to such jurisdiction and
venue.
19. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the Bank, its successors and assigns, and shall be
binding upon and inure to the benefit of the Optionee, his heirs, legatees,
personal representatives, executors, and administrators.
20. ENTIRE AGREEMENT. This Agreement (which incorporates the terms
and conditions of Articles I, II and III of the Omnibus Plan) constitutes and
embodies the entire understanding and agreement of the parties hereto and,
except as otherwise provided hereunder, there are no other agreements or
understandings, written or oral, in effect between the parties hereto relating
to the matters addressed herein.
21. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Bank, has caused this instrument to be
executed in its corporate name by its President, or one of its Vice Presidents,
and attested by its Secretary or one of its Assistant Secretaries, and its
corporate seal to be hereto affixed, all by authority of its Board of Directors
first duly given, and the Optionee has hereunto set his or her hand and adopted
as his or her seal the typewritten word "SEAL" appearing beside his or her name,
all done this the day and year first above written.
THE EAST CAROLINA BANK
[CORPORATE SEAL]
ATTEST: By: _________________________________
_____________________________ _________________________________
Secretary
___________________________ , Optionee
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EXHIBIT A
NOTICE OF EXERCISE OF
EMPLOYEE STOCK OPTION
TO: The Incentive Committee of
the Board of Directors of
The East Carolina Bank
The undersigned hereby elects to purchase shares of Common Stock of The
East Carolina Bank (the "Bank") pursuant to the Option granted to the
undersigned pursuant to the Omnibus Stock Ownership and Long Term Incentive Plan
(the "Omnibus Plan") and that certain Stock Option Agreement between the Bank
and the undersigned dated ________________________, _________________.
The undersigned elects to purchase _____________________ whole shares of Common
Stock having an aggregate Exercise Price of $______________________________
which is tendered herewith.
This the _____________ day _________________ of, _________________________,____
___________________________
Optionee
