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EXHIBIT 10.3: FORM OF INCENTIVE STOCK OPTION AWARD AGREEMENT
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FORM OF
INCENTIVE STOCK OPTION AWARD AGREEMENT
FOR THE FIRST SOUTH BANCORP, INC. 2008 EQUITY INCENTIVE PLAN
This Award Agreement is provided to ________________ (the
"Participant") by First South Bancorp, Inc. (the "Company") as of _________ (the
"Grant Date"), the date the Compensation Committee of the Board of Directors
(the "Committee") granted the Participant the right and option to purchase
Shares pursuant to the First South Bancorp, Inc. 2008 Equity Incentive Plan (the
"2008 Plan"), subject to the terms and conditions of the 2008 Plan and this
Award Agreement:
1. OPTION GRANT: You have been granted an INCENTIVE
STOCK OPTION (referred to in this
Agreement as your "Option").
2. NUMBER OF SHARES
SUBJECT TO YOUR OPTION: ___________ shares of Common Stock
("Shares"), subject to adjustment
as may be necessary pursuant to
Article 10 of the 2008 Plan.
3. GRANT DATE: ___________
4. EXERCISE PRICE: You may purchase Shares covered by
your Option at a price of $_______
per share.
Unless sooner vested in accordance with Section 2 of the Terms and
Conditions (attached hereto) or otherwise in the discretion of the Committee,
the Options shall vest (become exercisable) in accordance with the following
schedule:
Continuous Status Percentage of Option Number of Shares
as a Participant Vested/Number of Available for
after Grant Date Shares Exercise Vesting Date
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IN WITNESS WHEREOF, First South Bancorp, Inc., acting by and through
the Committee, has caused this Award Agreement to be executed as of the Grant
Date set forth above.
FIRST SOUTH BANCORP, INC.
By:
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On behalf of the Compensation Committee
ACCEPTED BY PARTICIPANT:
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[Name]
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Date
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TERMS AND CONDITIONS
1. GRANT OF OPTION. The Grant Date, Exercise Price and number of Shares
subject to your Option are stated on page 1 of this Award Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the 2008 Plan. The Company intends
this grant to qualify as an Incentive Stock Option under Section 422 of
the Internal Revenue Code of 1986, as amended.
2. VESTING OF OPTIONS. The Option shall vest (become exercisable) in
accordance with the vesting schedule shown on page 1 of this Award
Agreement. Notwithstanding the vesting schedule on page 1, the Option
will also vest and become exercisable:
(a) Upon your death or Disability during your Continuous Status
as a Participant; or
(b) Upon a Change in Control (as defined in the 2008 Plan).
3. TERM OF OPTIONS AND LIMITATIONS ON RIGHT TO EXERCISE. The term of the
Option will be for a period of ten (10) years, expiring at 5:00 p.m.,
Eastern Time, on the tenth anniversary of the Grant Date (the
"Expiration Date"). To the extent not previously exercised, the vested
portion of your Option will lapse prior to the Expiration Date upon the
earliest to occur of the following circumstances:
(a) Three (3) months after the termination of your Continuous
Status as a Participant for any reason other than your death
or Disability.
(b) Twelve (12) months after termination of your Continuous Status
as a Participant by reason of Disability.
(c) Twelve (12) months after the date of your death, if you die
while employed, or during the three-month period described in
subsection (a) above or during the twelve-month period
described in subsection (b) above and before the Option would
otherwise lapse. Upon your death, your beneficiary (designated
pursuant to the terms of the 2008 Plan) may exercise your
Option.
(d) At the end of the remaining original term of the Option, if
your employment is involuntarily or constructively terminated
within twelve (12) months of a Change in Control. Options
exercised more than three (3) months after your termination
date will be treated as Non-Statutory Stock Options for tax
purposes.
The Committee may, prior to the lapse of your Option under the
circumstances described in paragraphs (a), (b), (c) or (d) above,
extend the time to exercise your Option as determined by the Committee
in writing and subject to federal regulations. If you return to
employment with the Company during the designated post-termination
exercise period, then you will be restored to the status as a
Participant that you held prior to termination, but no vesting credit
will be earned for any period you were not in Continuous Status as a
Participant. If you or your beneficiary exercises an Option after your
termination of service, the Option may be exercised only with respect
to the Shares that were otherwise vested on the date of your
termination of service.
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4. EXERCISE OF OPTION. You may exercise your Option by providing:
(a) a written notice of intent to exercise to [NAME] at the address
and in the form specified by the Committee from time to time;
and
(b) payment to the Company in full for the Shares subject to the
exercise (unless the exercise is a cashless exercise). Payment
for such Shares can be made in cash, Company common stock
("stock swap"), a combination of cash and Company common stock
or by means of "cashless exercise" (if permitted by the
Committee).
5. BENEFICIARY DESIGNATION. You may, in the manner determined by
the Committee, designate a beneficiary to exercise your rights
under the 2008 Plan and to receive any distribution with respect
to this Option upon your death. A beneficiary, legal guardian,
legal representative, or other person claiming any rights under
the 2008 Plan is subject to all terms and conditions of this
Award Agreement and the 2008 Plan, and to any additional
restrictions deemed necessary or appropriate by the Committee.
If you have not designated a beneficiary or none survives you,
the Option may be exercised by the legal representative of your
estate, and payment will be made to your estate. You may change
or revoke a beneficiary designation at any time, provided the
change or revocation is filed with the Company.
6. WITHHOLDING.
(A) EXERCISE OF INCENTIVE
STOCK OPTION: There are no regular federal or
state income or employment tax
liabilities upon the exercise of an
Incentive Stock Option (SEE
INCENTIVE STOCK OPTION HOLDING
PERIOD), although the excess, if
any, of the Fair Market Value of the
shares of Common Stock on the date
of exercise over the Exercise Price
will be treated as income for
alternative minimum tax ("AMT")
purposes and may subject you to AMT
in the year of exercise. PLEASE
CHECK WITH YOUR TAX ADVISOR.
(B) DISQUALIFYING DISPOSITION:
In the event of a disqualifying
disposition (described below), you
may be required to pay First South
Bancorp or its Affiliates (based on
the federal and state regulations in
place at the time of exercise) an
amount sufficient to satisfy all
federal, state and local tax
withholding.
(C) INCENTIVE STOCK OPTION
HOLDING PERIOD:
In order to receive Incentive Stock
Option tax treatment under Section
422 of the Code, you may not dispose
of Shares acquired under an
Incentive Stock Option Award (i) for
two (2) years from the Date of Grant
and (ii) for one (1) year after the
date you exercise your Incentive
Stock Option. YOU MUST NOTIFY THE
COMPANY WITHIN TEN (10) DAYS OF AN
EARLY DISPOSITION OF COMMON STOCK
(I.E., A "DISQUALIFYING
DISPOSITION").
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7. LIMITATION OF RIGHTS. This Option does not confer on you or your
beneficiary any rights as a shareholder of the Company unless and until
Shares are in fact issued in connection with the Option exercise.
Nothing in this Award Agreement will interfere with or limit in any way
the right of the Company or any Affiliate to terminate your service at
any time, nor confer upon you any right to continue in the service of
the Company or any Affiliate.
8. STOCK RESERVE. The Company shall, at all times during the term of this
Award Agreement, reserve and keep available a sufficient number of
Shares to satisfy the requirements of this Award Agreement.
9. RESTRICTIONS ON TRANSFER AND PLEDGE. You may not pledge, encumber, or
hypothecate your rights or interests in this Option to or in favor of
any party other than the Company or an Affiliate, and the Option shall
not be subject to any lien, obligation, or liability of the Participant
to any other party other than the Company or an Affiliate. You may not
assign or transfer the Option, other than by will or the laws of
descent and distribution or pursuant to a domestic relations order that
would satisfy Section 414(p)(1)(A) of the Code, if such Section applied
to an Option under the 2008 Plan. Only you or a permitted transferee
may exercise the Option during your lifetime.
10. PLAN CONTROLS. The terms contained in the 2008 Plan are incorporated
into and made a part of this Award Agreement and this Award Agreement
shall be governed by and construed in accordance with the 2008 Plan. In
the event of any actual or alleged conflict between the provisions of
the 2008 Plan and the provisions of this Award Agreement, the
provisions of the 2008 Plan will control.
11. SUCCESSORS. This Award Agreement shall be binding upon any successor of
the Company, in accordance with the terms of this Award Agreement and
the 2008 Plan.
12. SEVERABILITY. If any one or more of the provisions contained in this
Award Agreement is invalid, illegal or unenforceable, the other
provisions of this Award Agreement will be construed and enforced as if
the invalid, illegal or unenforceable provision had never been included
in the Award Agreement.
13. NOTICE. Notices and communications under this Award Agreement must be
in writing and either personally delivered or sent by registered or
certified United States mail, return receipt requested, postage
prepaid. Notices to the Company must be addressed to:
First South Bancorp, Inc.
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Attn: Compensation Committee
or any other address designated by the Company in a written notice to
the Participant. Notices to you will be directed to your address, then
currently on file with the Company, or to any other address that you
provide in a written notice to the Company.
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