FORM OF
                        NON-QUALIFIED STOCK OPTION AWARD
                         PURSUANT TO THE ISLANDS BANCORP
                            2002 STOCK INCENTIVE PLAN

     THIS  AWARD is made as of the Grant Date by ISLANDS BANCORP (the "Company")
to  __________________  (the  "Optionee").

     Upon  and  subject  to  the  Terms  and  Conditions  attached  hereto  and
incorporated herein by reference, the Company hereby awards as of the Grant Date
to  Optionee a non-qualified stock option (the "Option"), as described below, to
purchase  the  Option  Shares.

     A.   Grant Date: _______________.

     B.   Type of Option: Non-Qualified Stock Option.

     C.   Plan under which granted: Islands Bancorp 2002 Stock Incentive Plan.

     D.   Option  Shares: All or any part of ________ shares of the Company's no
          par  value common stock (the "Common Stock"), subject to adjustment as
          provided  in  the  attached  Terms  and  Conditions.

     E.   Exercise  Price: $_______ per share, subject to adjustment as provided
          in  the  attached  Terms  and  Conditions.

     F.   Option  Period:  The  Option  may  be exercised only during the Option
          Period  which  commences on the Grant Date and ends, generally, on the
          earlier  of (a) the tenth (10th) anniversary of the Grant Date; or (b)
          ninety  (90)  days  following  the  date  the  Optionee ceases to be a
          director  of  the  Company for any reason; provided, however, that the
          Option  may  be exercised as to no more than the vested Option Shares,
          determined  pursuant  to  the  Vesting  Schedule.  Note  that  other
          limitations  to  exercising  the  Option, as described in the attached
          Terms  and  Conditions,  may  apply.

     G.   Vesting  Schedule: The Option Shares shall become vested in accordance
          with  Schedule  1  hereto.

     IN  WITNESS  WHEREOF,  the Company has executed and sealed this Award as of
the  Grant  Date  set  forth  above.


                                         ISLANDS BANCORP

                                         By:
                                            ------------------------------------
                                         Title:
                                               ---------------------------------


<PAGE>
                              TERMS AND CONDITIONS
                                     TO THE
                        NON-QUALIFIED STOCK OPTION AWARD
                         PURSUANT TO THE ISLANDS BANCORP
                            2002 STOCK INCENTIVE PLAN


     1.     Exercise of Option.  Subject to the provisions provided herein or in
            ------------------
the Award made pursuant to the Islands Bancorp 2002 Stock Incentive Plan:

          (a)     the Option may be exercised with respect to all or any portion
     of  the  vested  Option  Shares at any time during the Option Period by the
     delivery  to  the Company, at its principal place of business, of a written
     notice  of exercise in substantially the form attached hereto as Exhibit 1,
     which  shall  be  actually  delivered to the Company no earlier than thirty
     (30)  days  and  no  later  than ten (10) days prior to the date upon which
     Optionee desires to exercise all or any portion of the Option; and

          (b)     payment to the Company of the Exercise Price multiplied by the
     number  of Option Shares being purchased (the "Purchase Price") as provided
     in Section 2.

          (c)     Notwithstanding  any other provision of this Agreement, in the
     event  that the capital of the Company falls below the minimum requirements
     determined  by  the  primary  federal  regulator  of  the  Company  (the
     "Regulator"),  the Regulator may direct the Company to require the Optionee
     to  exercise,  or otherwise forfeit, the Option in whole or in part. If the
     Regulator gives such direction, the Company will notify the Optionee within
     forty-five  (45)  days  from the date the Regulator notifies the Company in
     writing  that  the Optionee must exercise, or otherwise forfeit, the Option
     in  whole  or  in  part.  If  the  Optionee does not exercise the Option in
     accordance  with the Company's direction within twenty-one (21) days of the
     Company's  notification  to the Optionee, the Committee may provide for the
     cancellation of the Option.

Upon  acceptance  of  such notice and receipt of payment in full of the Purchase
Price,  the  Company  shall  cause  to  be issued a certificate representing the
     Option Shares purchased.

     2.     Purchase Price.  Payment of the Purchase Price for all Option Shares
            --------------
purchased  pursuant  to  the  exercise  of  an  Option  shall be made in cash or
certified  check  or,  subject  to  applicable law, if and when the Common Stock
becomes  traded  by  brokers,  whether  on  a  national  securities  exchange or
otherwise,  by  receipt  of  the Purchase Price in cash from a broker, dealer or
other  "creditor" as defined by Regulation T issued by the Board of Governors of
the  Federal  Reserve System following delivery by the Optionee to the Committee
of instructions in a form acceptable to the Committee regarding delivery to such
broker, dealer or other creditor of that number of Option Shares with respect to
which the Option is exercised.

     3.     Rights  as Shareholder.  Until the stock certificates reflecting the
            ----------------------
Option Shares accruing to the Optionee upon exercise of the Option are issued to
the Optionee, the Optionee shall have no rights as a shareholder with respect to
such  Option  Shares.  The Company shall make no adjustment for any dividends or
distribu-tions  or  other  rights  on  or  with  respect  to  Option  Shares for

                                        2
<PAGE>
which the record date is prior to the issuance of that stock certificate, except
as the Plan or the attached Award otherwise provides.

     4.     Restriction  on Transfer of Option and of Option Shares.  The Option
            -------------------------------------------------------
evidenced  hereby  is  nontransferable other than by will or the laws of descent
and  distribution  and  shall be exercisable during the lifetime of the Optionee
only  by  the  Optionee  (or  in  the  event  of his Disability, by his personal
representative)  and after his death, only by his legatee or the executor of his
estate.

     5.     Changes in Capitalization.
            -------------------------

          (a)     If  the number of shares of Common Stock shall be increased or
     decreased  by  reason  of  a subdivision or combination of shares of Common
     Stock,  the  payment  of  a stock dividend in shares of Common Stock or any
     other  increase  or  decrease  in  the  number  of  shares  of Common Stock
     outstanding  effected  without  receipt of consideration by the Company, an
     appropriate  adjustment  shall  be  made  by  the  Committee,  in  a manner
     determined  in its sole discretion, in the number and kind of Option Shares
     and in the Exercise Price.

          (b)     If  the  Company  shall  be  the  surviving corporation in any
     merger, consolidation, reorganization, extraordinary dividend, spin-off, or
     other  change  in capital structure of the Company or its Common Stock, the
     Optionee  shall  be entitled to purchase the number and class of securities
     to  which  a  holder of the number of shares of Common Stock subject to the
     Option  at  the time of the transaction would have been entitled to receive
     as  a  result  of  such  transaction, and a corresponding adjustment, where
     appropriate,  shall  be  made  in  the  Exercise  Price.  In the event of a
     corporate  transaction  pursuant  to which the Company is not the surviving
     entity,  the  Committee may provide for the assumption of the Option by the
     surviving  entity or the substitution of a new option, adjusted in a manner
     similar  to  that  contemplated  by  the  immediately  preceding  sentence;
     however,  if  the  surviving  entity  does  not  agree to the assumption or
     substitution of the Option, the Committee may elect to terminate the Option
     Period  as  of  the  effective  date  of  such  corporate  transaction  in
     consideration  of  the payment to the Optionee of the sum of the difference
     between  the  then  Fair  Market Value of the Common Stock and the Exercise
     Price  for  each vested Option Share which has not been exercised as of the
     effective  date of such corporate transaction. A dissolution or liquidation
     of  the  Company  shall  cause  the  Option  to terminate as to any portion
     thereof  not  exercised  as  of  the  effective  date of the dissolution or
     liquidation.

          (c)     The  existence  of the Plan and the Option granted pursuant to
     this  Agreement  shall  not  affect  in  any  way the right or power of the
     Company  to  make  or  authorize  any  adjustment,  reclassification,
     reorganization  or  other  change in its capital or business structure, any
     merger  or  consolidation  of  the  Company,  any  issue  of debt or equity
     securities  having  preferences or priorities as to the Common Stock or the
     rights  thereof, the dissolution or liquidation of the Company, any sale or
     transfer  of  all  or  any  part  of  its  business or assets, or any other
     corporate  act  or  proceeding. Any adjustment pursuant to this Section may
     provide, in the Committee's discretion, for the elimination without payment
     therefor  of  any  fractional shares that might otherwise become subject to
     any Option.

     6.     Special Limitation on Exercise.  No purported exercise of the Option
            ------------------------------
shall  be effective without the approval of the Committee, which may be withheld
to the extent that the


                                        3
<PAGE>
exercise,  either individually or in the aggregate together with the exercise of
other previously exercised stock options and/or offers and sales pursuant to any
prior  or  contemplated  offering of securities, would, in the sole and absolute
judgment  of  the Committee, require the filing of a registration statement with
the  United  States  Securities  and  Exchange Commission or with the securities
commission of any state.  If a registration statement is not in effect under the
Securities  Act  of  1933 or any applicable state securities law with respect to
shares  of  Common  Stock purchasable or otherwise deliverable under the Option,
the  Optionee  (a)  shall  deliver  to the Company, prior to the exercise of the
Option  or  as  a  condition  to  the  delivery  of Common Stock pursuant to the
exercise of an Option exercise, such information, representations and warranties
as  the  Company  may  reasonably request in order for the Company to be able to
satisfy  itself that the Option Shares are being acquired in accordance with the
terms  of  an applicable exemption from the securities registration requirements
of  applicable  federal  and  state securities laws and (b) shall agree that the
shares of Common Stock so acquired will not be disposed of except pursuant to an
effective  registration  statement,  unless  the  Company shall have received an
opinion  of  counsel that such disposition is exempt from such requirement under
the Securities Act of 1933 and any applicable state securities law.

     7.     Legend  on  Stock  Certificates.  Certificates evidencing the Option
            -------------------------------
Shares, to the extent appropriate at the time, shall have noted conspicuously on
the  certificates  a  legend  intended  to  give  all persons full notice of the
existence  of  the  conditions,  restrictions,  rights and obligations set forth
herein and in the Plan.

     8.     Governing  Laws.  This  Award  and the Terms and Conditions shall be
            ---------------
construed, administered and enforced according to the laws of the State of South
Carolina.

     9.     Successors.  This  Award  and  the  Terms  and  Conditions  shall be
            ----------
binding  upon  and  inure  to  the  benefit of the heirs, legal representatives,
successors and permitted assigns of the Optionee and the Company.

     10.     Notice.  Except  as  otherwise  specified  herein,  all notices and
             ------
other communications under this Award shall be in writing and shall be deemed to
have  been  given  if personally delivered or if sent by registered or certified
United  States mail, return receipt requested, postage prepaid, addressed to the
proposed  recipient  at  the last known address of the recipient.  Any party may
designate  any  other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.

     11.     Severability.  In  the event that any one or more of the provisions
             ------------
or  portion  thereof contained in the Award and these Terms and Conditions shall
for  any  reason be held to be invalid, illegal or unenforceable in any respect,
the  same  shall  not invalidate or otherwise affect any other provisions of the
Award  and  these  Terms  and  Conditions,  and  the  Award  and these Terms and
Conditions  shall  be  construed  as  if  the  invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.

     12.     Entire Agreement.  Subject to the terms and conditions of the Plan,
             ----------------
the  Award  and the Terms and Conditions express the entire understanding of the
parties with respect to the Option.


                                        4
<PAGE>
     13.     Violation.  Any  transfer,  pledge,  sale,  assignment,  or
             ---------
hypothecation  of  the Option or any portion thereof shall be a violation of the
terms  of  the Award or these Terms and Conditions and shall be void and without
effect.

     14.     Headings  and  Capitalized Terms.  Section headings used herein are
             --------------------------------
for  convenience of reference only and shall not be considered in construing the
Award  or  these Terms and Conditions.  Capitalized terms used, but not defined,
in  either  the  Award  or  the  Terms and Conditions shall be given the meaning
ascribed to them in the Plan.

     15.     Specific  Performance.  In  the  event  of any actual or threatened
             ---------------------
default  in,  or  breach  of, any of the terms, conditions and provisions of the
Award  and  these  Terms  and  Conditions,  the party or parties who are thereby
aggrieved  shall  have  the  right  to  specific  performance  and injunction in
addition  to  any and all other rights and remedies at law or in equity, and all
such rights and remedies shall be cumulative.

     16.     No  Right to Continued Retention.  Neither the establishment of the
             --------------------------------
Plan  nor  the award of Option Shares hereunder shall be construed as giving the
Optionee the right to continued service with the Company or any affiliate in any
capacity.

     17.     Definition  of  Change  in Control. As used in the Vesting Schedule
             ----------------------------------
attached to this Award, the term "Change in Control" shall have the same meaning
as  ascribed  to  the term in the warrants issued to directors of the Company in
connection with the organization of the Company.


                                        5
<PAGE>
                                    EXHIBIT 1
                                    ---------

                              NOTICE OF EXERCISE OF
                            STOCK OPTION TO PURCHASE
                                 COMMON STOCK OF
                                 ISLANDS BANCORP


                                      Name
                                           ---------------------------------
                                      Address
                                              ------------------------------

                                      --------------------------------------
                                      Date
                                           ---------------------------------

Islands Bancorp
2348 Boundary Street
Beaufort, S.C. 29902
Attn: President


Re:  Exercise of Non-Qualified Stock Option


Gentlemen:

     Subject  to  acceptance  hereof  by  Islands  Bancorp  (the  "Company") and
pursuant to the provisions of the Islands Bancorp 2002 Stock Incentive Plan (the
"Plan"),  I  hereby give notice of my election to exercise options granted to me
to  purchase  ______________  shares  of  Common  Stock of the Company under the
Non-Qualified  Stock  Option  Award (the "Award") dated as of ____________.  The
purchase  shall  take  place  as  of  __________,  200__  (the "Exercise Date").

     On or before the Exercise Date, I will pay the applicable purchase price as
follows:


          [ ]  by  delivery  of  cash or  a certified check for $___________ for
               the  full purchase price payable to the order of Islands Bancorp.

          [ ]  by  delivery  of the purchase price by _________________________,
               a  broker,  dealer or other "creditor" as defined by Regulation T
               issued by the Board of Governors of the Federal Reserve System. I
               hereby authorize the Company to issue a stock certificate for the
               number  of  shares  indicated  above  in the name of said broker,
               dealer  or other creditor or its nominee pursuant to instructions
               received  by  the  Company  and to deliver said stock certificate
               directly  to  that  broker,  dealer or other creditor (or to such
               other party specified in the instructions received by the Company
               from  the  broker,  dealer or other creditor) upon receipt of the
               purchase  price.


                            Exhibit 1 - Page 1 of 3
<PAGE>
     As  soon  as the stock certificate is registered in my name, please deliver
it  to  me  at  the  above  address.

     If  the  Common  Stock being acquired is not registered for issuance to and
resale  by  the Optionee pursuant to an effective registration statement on Form
S-8  (or successor form) filed under the Securities Act of 1933, as amended (the
"1933  Act"),  I hereby represent, warrant, covenant, and agree with the Company
as  follows:

     The shares of the Common Stock being acquired by me will be acquired for my
     own  account without the participation of any other person, with the intent
     of  holding  the  Common  Stock  for  investment  and without the intent of
     participating,  directly  or  indirectly,  in  a distribution of the Common
     Stock  and  not  with  a  view  to,  or  for resale in connection with, any
     distribution  of  the  Common Stock, nor am I aware of the existence of any
     distribution  of  the  Common  Stock;

     I  am not acquiring the Common Stock based upon any representation, oral or
     written, by any person with respect to the future value of, or income from,
     the Common Stock but rather upon an independent examination and judgment as
     to  the  prospects  of  the  Company;

     The  Common  Stock  was not offered to me by means of publicly disseminated
     advertisements  or  sales  literature, nor am I aware of any offers made to
     other  persons  by  such  means;

     I am able to bear the economic risks of the investment in the Common Stock,
     including  the  risk  of  a  complete  loss  of  my  investment  therein;

     I  understand and agree that the Common Stock will be issued and sold to me
     without  registration  under  any state law relating to the registration of
     securities  for  sale,  and  will  be  issued  and  sold in reliance on the
     exemptions  from registration under the 1933 Act, provided by Sections 3(b)
     and/or  4(2)  thereof and the rules and regulations promulgated thereunder;

     The  Common  Stock  cannot  be  offered for sale, sold or transferred by me
     other than pursuant to: (A) an effective registration under the 1933 Act or
     in  a  transaction  otherwise  in  compliance  with  the  1933 Act; and (B)
     evidence  satisfactory  to  the  Company  of compliance with the applicable
     securities  laws  of  other jurisdictions. The Company shall be entitled to
     rely  upon  an  opinion  of  counsel  satisfactory  to  it  with respect to
     compliance  with  the  above  laws;

     The  Company will be under no obligation to register the Common Stock or to
     comply  with  any  exemption available for sale of the Common Stock without
     registration  or  filing,  and  the  information or conditions necessary to
     permit  routine sales of securities of the Company under Rule 144 under the
     1933  Act  are not now available and no assurance has been given that it or
     they  will  become  available. The Company is under no obligation to act in
     any  manner  so  as  to  make Rule 144 available with respect to the Common
     Stock;

     I  have  and  have had complete access to and the opportunity to review and
     make  copies  of  all  material  documents  related  to the business of the
     Company,  including,  but  not limited to, contracts, financial statements,
     tax  returns,  leases,  deeds  and other books and records. I have examined
     such  of  these documents as I wished and am familiar with the business and
     affairs


                            Exhibit 1 - Page 2 of 3
<PAGE>
     of  the  Company.  I  realize  that  the  purchase of the Common Stock is a
     speculative investment and that any possible profit therefrom is uncertain;

     I have had the opportunity to ask questions of and receive answers from the
     Company  and  any  person  acting  on its behalf and to obtain all material
     information  reasonably  available  with  respect  to  the  Company and its
     affairs.  I  have  received  all  information  and data with respect to the
     Company  which  I  have  requested  and  which  I  have  deemed relevant in
     connection  with the evaluation of the merits and risks of my investment in
     the  Company;

     I have such knowledge and experience in financial and business matters that
     I  am  capable  of  evaluating  the merits and risks of the purchase of the
     Common  Stock  hereunder  and  I  am able to bear the economic risk of such
     purchase;  and

     The agreements, representations, warranties and covenants made by me herein
     extend  to and apply to all of the Common Stock of the Company issued to me
     pursuant  to  this  Award. Acceptance by me of the certificate representing
     such  Common  Stock  shall  constitute  a  confirmation by me that all such
     agreements, representa-tions, warranties and covenants made herein shall be
     true  and  correct  at  that  time.

     I  understand that the certificates representing the shares being purchased
     by  me  in accordance with this notice shall bear a legend referring to the
     foregoing  covenants,  representations  and  warranties and restrictions on
     transfer,  and  I  agree  that a legend to that effect may be placed on any
     certificate  which may be issued to me as a substitute for the certificates
     being  acquired  by me in accordance with this notice. I further understand
     that  capitalized  terms used in this Notice of Exercise without definition
     shall  have  the  meanings  given  to  them  in  the  Plan.

                                             Very truly yours,

                                             -----------------------------

AGREED TO AND ACCEPTED:

ISLANDS BANCORP


By:
   --------------------------------
Title:
      -----------------------------
Number of Shares
Exercised:
          -------------------------

Number of Shares
Remaining:                                Date:
          -------------------------            ------------------------------


                            Exhibit 1 - Page 3 of 3
<PAGE>
                                   SCHEDULE 1
                                VESTING SCHEDULE
                        NON-QUALIFIED STOCK OPTION AWARD
                             ISSUED PURSUANT TO THE
                                 ISLANDS BANCORP
                            2002 STOCK INCENTIVE PLAN


A.   The  Option  Shares  shall  become  vested  Option  Shares  following  the
     Optionee's  completion of the years of service as a director of the Company
     as  indicated  in  the  schedule  below.

<TABLE>
<CAPTION>
                    Percentage of Option Shares   Years of Service
                    Which are Vested Shares       after the Grant Date
                    ----------------------------  --------------------
<S>                                               <C>
</TABLE>

B.   Notwithstanding  Part  A,  in  the event of a Change in Control, the Option
     will  be  fully vested as of a date determined by the Committee which is no
     less  than  ten  (10)  days  prior  to  the effective date of the Change in
     Control.

C.   For  purposes  of the Vesting Schedule, Optionee shall be granted a year of
     service  for  each twelve-consecutive-month period following the Grant Date
     and  during  which  Optionee  continues, at all times, as a director of the
     Company.


                            Schedule 1 - Page 1 of 1