Exhibit 10.3

 

   Name:  

 

   Total No. of Shares Covered by Option:  

 

HQ SUSTAINABLE MARITIME INDUSTRIES, INC.

NON-QUALIFIED STOCK OPTION

HQ SUSTAINABLE MARITIME INDUSTRIES, INC. (the “Company”) is pleased to grant to
the person signing below (“you” or “Participant”) the non-qualified stock option
described below under the HQ Sustainable Maritime Industries, Inc. 2010 Stock
Incentive Plan (the “Plan”). For tax law purposes, this Option shall be treated
as a Non-Qualified Stock Option. This Option is not intended to be and shall not
be treated as an Incentive Stock Option for tax law purposes.

 

Grant Date:  

 

   Exercise Price per Share:   $  

 

   Option Expiration Date:  

 

   Number of Shares of Common Stock Covered by Option  

 

   (the “Shares”)

Vesting Schedule: Subject to the Plan and this Agreement, this Option may be
exercised in whole or in part in accordance with the following schedule,
provided you remain continuously employed with the Company from the Grant Date
until such time(s):

 

Date   Number of Shares

The Additional Terms and Conditions and the Plan described below are
incorporated in this Agreement by reference and contain important information
about your Option. Copies of all of the documents set forth below are being
provided to you concurrently with this Agreement. Please review them carefully
and contact HQ Sustainable Maritime Industries, Inc. Human Resources if you have
any questions.

Additional Terms and Conditions describes how to exercise your Option, what
happens if you cease to remain employed with the Company before you exercise
your Option, and where to send notices;

The Plan contains the detailed terms that govern your Option. If anything in
this Agreement or the other attachments is inconsistent with the Plan, the terms
of the Plan, as amended from time to time, will control; all terms used herein
that are not defined herein but that are defined in the Plan have the same
meaning given them in the Plan;

Plan Prospectus; and

2009 Annual Report on Form 10-K of HQ Sustainable Maritime Industries, Inc. for
the Year Ended December 31, 2009.

Please sign in the space provided below to show that you accept the Option on
these terms, keep a copy of this Agreement for your records, and return both
originals to HQ Sustainable Maritime Industries, Inc. Human Resources.

 

Participant:         HQ SUSTAINABLE MARITIME INDUSTRIES, INC.

 

      By:   

 

Print Your Name:

 

 

      Name:   

 

Your Residence Address:

      Its:   

 

 

        

 

        

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ADDITIONAL TERMS AND CONDITIONS

HOW TO EXERCISE YOUR OPTION.

 

•  

This Option must be exercised for whole shares only and in increments of at
least [100] shares per exercise or, if less, all of the remaining shares to
which the Option is subject.

 

•  

The Plan is administered on behalf of the Committee by Human Resources. Human
Resources is responsible for assisting you in the exercise of your Option and
maintaining the records of the Plan. If you have questions about your Option,
how you go about exercising the vested portion of your Option or how the Plan
works, please contact Human Resources at                     .

 

•  

The exercise date of your Option is the date of delivery to Human Resources of
your notice of exercise. The notice must be accompanied by payment of the Option
price and any applicable tax withholding in full. You may pay the Option price
and any applicable tax withholding (i) in cash, (ii) by certified or bank
cashier’s check, or (iii) by such other medium of payment as the Committee in
its sole discretion may permit. You will need to contact Human Resources before
you exercise your Option to determine the amount of any required tax
withholding.

 

•  

Except as provided herein and in the Plan, this Option is non-transferable. This
Option may be transferred by will or the laws of descent and distribution and,
notwithstanding the foregoing, during the Participant’s lifetime may be
transferred by the Participant to any of the Participant’s “family members” (as
such term is defined in the general instructions to the Form S-8 Registration
Statement under the Securities Act of 1933). Any such transfer will be permitted
only if (i) the Participant does not receive any consideration for the transfer
and (ii) the Committee expressly approves the transfer. Any transferee to whom
this Option is transferred shall be bound by the same terms and conditions,
including with respect to vesting, that govern the Option in the hands of the
Participant; provided, however, that the transferee may not transfer this Option
except by will or the laws of descent and distribution. No right or interest of
the Participant or any transferee in this Option shall be subject to any lien,
obligation or liability of the Participant or any transferee.

EFFECT OF TERMINATION OF EMPLOYMENT. All of your unvested Options will terminate
immediately upon the termination of your employment for any reason.

 

1. Termination of Employment Due to Death or Disability. If your employment with
the Company terminates by reason of your death or Disability (see below for
definition), you (or your estate) may exercise the vested portion of your Option
at any time within the earlier of (a) the one-year anniversary of the date of
termination of your employment by reason of your death or Disability or (b) the
Option Expiration Date. After such earlier date, any remaining unexercised
portion of your vested Option shall terminate.

 

2. Termination of Employment Due to Retirement. If your employment with the
Company terminates by reason of your Retirement (see below for definition), you
may exercise the vested portion of your Option at any time within the earlier of
(a) the one-year anniversary of the date of termination of your employment by
reason of your Retirement or (b) the Option Expiration Date. After such earlier
date, any remaining unexercised portion of your vested Option shall terminate.

 

3. Other Termination of Employment. If your employment with the Company
terminates for any reason other than your death, Disability or Retirement,
unless your employment is terminated for Cause (as defined below), you will have
the right, within the earlier of (a) the 90th day after the date of termination
of your employment or (b) the Option Expiration Date, to exercise any vested
portion of your Option. After such earlier date, any remaining unexercised
portion of your vested Option shall terminate. If your employment is terminated
for Cause, both the vested and unvested portion of your Option will terminate on
notice of termination of your employment for Cause.

 

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4. Employment. For purposes of this Agreement, employment with the Company or
any Affiliate of the Company will be considered employment with the other.

[CHANGE IN CONTROL. Upon a “Change in Control,” as such term is defined in the
Plan, all of your unvested Options shall immediately vest and become
exercisable, provided you have remained in continuous employment with Company
from the Grant Date until the time of the Change in Control.]

NOTICES. All notices pursuant to this Agreement will be in writing and either
(i) delivered by hand, (ii) mailed by United States certified mail, return
receipt requested, postage prepaid, or (iii) sent by an internationally
recognized courier which maintains evidence of delivery and receipt. All notices
or other communications will be directed to the following addresses (or to such
other addresses as either of us may designate by notice to the other):

 

To Company:    HQ Sustainable Maritime Industries, Inc.    1511 3rd Avenue   
Suite 788    Seattle, Washington 98101 To you:    The address set forth on page
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MISCELLANEOUS. The Participant has received a copy of the Plan, has read and
understands the terms of the Plan and this Agreement, and agrees to be bound by
their terms and conditions. Failure by you or the Company at any time or times
to require performance by the other of any provisions in this Agreement will not
affect the right to enforce those provisions. Any waiver by you or the Company
of any condition or the breach of any term or provision in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall apply only
to that instance and will not be deemed to waive conditions or breaches in the
future. If any court of competent jurisdiction holds that any term or provision
of this Agreement is invalid or unenforceable, the remaining terms and
provisions will continue in full force and effect, and this Agreement shall be
deemed to be amended automatically to exclude the offending provision. This
Agreement may be executed in multiple copies and each executed copy shall be an
original of this Agreement. This Agreement shall be subject to and governed by
the laws of the State of Delaware. No change or modification of this Agreement
shall be valid unless it is in writing and signed by the party against which
enforcement is sought. This Agreement shall be binding upon, and inure to the
benefit of, the permitted successors, assigns, heirs, executors and legal
representatives of the parties hereto. The headings of each Section of this
Agreement are for convenience only. This Agreement contains the entire Agreement
of the parties hereto and no representation, inducement, promise, or agreement
or otherwise between the parties not embodied herein shall be of any force or
effect, and no party will be liable or bound in any manner for any warranty,
representation, or covenant except as specifically set forth herein.

 

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