EXHIBIT 99.2
GREATER BAY BANCORP
INCENTIVE STOCK OPTION AGREEMENT
1. GRANT. Greater Bay Bancorp, a California corporation (the "Company"),
hereby grants to "Title" (the "Optionee"), on ______________, an option (the
"Option") to purchase a total of "shares" shares of common stock of the Company,
at the price of ____________, which in all respects are subject to the terms,
definitions and provisions of the Greater Bay Bancorp 1996 Stock Option Plan
(the "Plan"). The capitalized terms defined in the Plan shall have the same
defined meanings herein.
2. NATURE OF THE OPTION. This Option is intended to qualify as an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). However, the Company does not represent or
warrant that this Option qualifies as an incentive stock option. Optionee
acknowledges that Optionee is responsible to consult with Optionee's own tax
advisor regarding the tax effects of the Option and the requirements necessary
to obtain income tax treatment under Section 422 of the Code, including, but not
limited to, holding period requirements.
Optionee further understands that, if Optionee disposes of any Shares
received under this Option within two (2) years after the Grant Date of the
Option specified below or within one (1) year after such Shares are transferred
to him, Optionee will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount generally
measured by the difference between the Exercise Price and the lower of the Fair
Market Value of the Shares at the date of the exercise or the Fair Market Value
of the Shares at the date of disposition. Optionee understands that, if
Optionee disposes of such Shares at any time after the expiration of such two-
year and one-year holding periods, any gain on such sale will be taxed as long-
term capital gain. OPTIONEE AGREES TO NOTIFY THE COMPANY IN WRITING WITHIN 5
DAYS AFTER THE DATE OF ANY SUCH DISPOSITION.
Optionee further understands that: (a) if Optionee is unable to continue
employment with the Company as a result of a Total and Permanent Disability (as
defined in Section 22(e)(3) of the Code), and if the other requirements for
incentive stock option treatment contained in Section 422 of the Code are
satisfied, Optionee will be entitled to exercise the Option within twelve (12)
months of such termination without defeating incentive stock option treatment;
but (b) if Optionee is unable to continue employment with the Company as a
result of disability which is not Total and Permanent (as defined in Section
22(e)(3) of the Code), the Option will not qualify as an incentive stock option
unless it is exercised within three (3) months of the date of termination (I.E.,
while the Option may be exercised for a period of twelve (12) months after such
termination, the exercise more than three (3) months following termination will
result in the Option being taxed as a non-qualified stock option).
Optionee acknowledges, and the Company affirms, that the methodology by
which the Fair Market Value of the Shares has been determined by the Company
represents a good faith attempt,
as defined in the Code and the regulations thereunder, at reaching an accurate
appraisal of the Fair Market Value of the Shares; and the Company shall not be
responsible for any additional tax liability incurred by Optionee in the event
that the Internal Revenue Service were to determine that the Option does not
qualify as an incentive stock option for any reason.
3. EXERCISE PRICE. The Exercise Price is ___________ for each share of
Common Stock, which price is not less than the Fair Market Value per share of
the common stock of the Company on the Grant Date.
4. EXERCISE OF OPTION. This Option shall be exercisable during its term in
accordance with the provisions of Section 6 of the Plan as follows:
(a) RIGHT TO EXERCISE. This Option shall vest cumulatively from the
date of grant of the Option, exercisable during a period of FIVE YEARS after the
Grant Date as follows: 20% of the Shares subject to the Option shall be vested
on the first anniversary of the Grant Date, and an additional 20% of the Shares
subject to the Option shall vest on each anniversary of the Grant Date
thereafter.
(b) MINIMUM EXERCISE. This Option may not be exercised for less than
10 Shares nor for a fraction of a Share.
(c) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise the Option and specify the
number of Shares in respect of which the Option is being exercised. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company accompanied by payment of
the Exercise Price specified in Section 2 above.
No Shares will be issued pursuant to the exercise of the Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange or inter-dealer quotation system upon
which the shares of the Company's common stock may then be listed or quoted.
Assuming such compliance, the Shares shall be considered transferred to the
Optionee on the date on which the Option is exercised with respect to such
Shares. An Optionee shall have no rights as a shareholder of the Company with
respect to any Shares until the issuance of a stock certificate to the Optionee
for such Shares.
(d) METHOD OF PAYMENT. The entire Exercise Price of Shares issued
under this Option shall be payable in cash or by certified check, official bank
check, or the equivalent thereof acceptable to the Company at the time when such
Shares are purchased. Such payment also shall include the amount of any
withholding tax obligation which may arise in connection with the exercise, as
determined by the Company. In addition, payment may be made in any of the
following forms as indicated by an "x" in the preceding parenthesis:
(X) SURRENDER OF STOCK. Payment of all or part of the Exercise
Price and any withholding taxes may be made all or in part with Shares which
have already been owned by the Optionee or Optionee's representative for more
than 6 months and which are surrendered to the
Company in good form for transfer. Such Shares shall be valued at their Fair
Market Value on the date when the new Shares are purchased pursuant to exercise
of the Option.
(X) EXERCISE/SALE. Payment may be made by the delivery (on a
form prescribed by the Company) of an irrevocable direction to a securities
broker approved by the Company to sell Shares and to deliver all or part of the
sales proceeds to the Company in payment of all or part of the Exercise Price
and any withholding taxes.
(X) EXERCISE/PLEDGE. Payment may be made by the delivery (on a
form prescribed by the Company) of an irrevocable direction to pledge Shares to
a securities broker or lender approved by the Company, as security for a loan,
and to deliver all or part of the loan proceeds to the Company in payment of all
or part of the Exercise Price and any withholding taxes.
(e) TERMINATION OF SERVICE. In the event that the Optionee's Service
terminates:
(i) As a result of such Optionee's death or Total and Permanent
Disability, the term of the Option shall expire twelve months after such death
or Total and Permanent Disability but not later than the expiration date
specified in Section 5 below.
(ii) As a result of termination by the Company for cause, the term of
the Option shall expire thirty days after the Company's notice or advice of such
termination is dispatched to Optionee, but not later than the expiration date
specified in Section 5 below. For purposes of this paragraph (ii), "cause"
shall mean an act of embezzlement, fraud, dishonesty, breach of fiduciary duty
to the Company, or the deliberate disregard of rules of the Company which
results in loss, damage or injury to the Company, the unauthorized disclosure of
any of the secrets or confidential information of the Company, the inducement of
any client or customer of the Company to break any contract with the Company, or
the inducement of any principal for whom the Company acts as agent to terminate
such agency relationship, the engagement in any conduct which constitutes unfair
competition with the Company, the removal of Optionee from office by any court
or bank regulatory agency, or such other similar acts which the Committee in its
discretion determines to constitute good cause for termination of Optionee's
Service. As used in this paragraph (ii), Company includes Subsidiaries of the
Company.
(iii) As a result of termination for any reason other than Total and
Permanent Disability, death or cause, the term of the Option shall expire three
months after such termination, but not later than the original expiration date
specified in Section 5 below.
Neither the Plan nor this Option shall be deemed to give Optionee a right to
remain an employee or consultant of the Company or a Subsidiary. The Company
and its Subsidiaries reserve the right to terminate the service of any employee
or consultant at any time, with or without cause, subject to applicable laws and
the terms of any written employment agreement.
5. TERM OF OPTION. Subject to earlier termination as provided in the Plan,
this Option shall terminate TEN (10) YEARS from the Grant Date of this Option,
and may be exercised during
such term only in accordance with the Plan and the terms of this Option.
6. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will, by written beneficiary designation or by the
laws of descent and distribution, and may be exercised during the lifetime of
Optionee only by Optionee. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.
7. ADJUSTMENT OF SHARES. In the event of a subdivision of the outstanding
shares of common stock of the Company, a declaration of a dividend payable in
Shares, a declaration of a dividend payable in a form other than Shares in an
amount that has a material effect on the value of Shares, a combination or
consolidation of the outstanding shares of common stock (by reclassification or
otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a
similar occurrence, the Company shall make appropriate adjustments in the number
of Shares covered by the Option and in the Exercise Price of the Option.
In the event that the Company is a party to a merger or other
reorganization, the Option shall be subject to the agreement of merger or
reorganization. Subject to Section 6(e)(i) of the Plan which provides that the
entire option shall be immediately exercisable in the event of a change of
control, such agreement may provide, without limitation, for the assumption of
all outstanding options by the surviving corporation or its parent, for their
continuation by the Company (if the Company is a surviving corporation), for
payment of a per-Share cash settlement equal to the difference between the
amount to be paid for one Share under such agreement and the Exercise Price, or
for the acceleration of the exercisability followed by the cancellation of any
option not exercised, in all cases without the optionees' consent. Any
cancellation shall not occur until after such acceleration is effective and
optionees have been notified of such acceleration and have had reasonable
opportunity to exercise their options.
Except as provided in this Section, Optionee shall have no rights by reason
of any subdivision or consolidation of shares of stock of any class, the payment
of any dividend or any other increase or decrease in the number of shares of
stock of any class. Any issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to the Option. The grant of this Option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
GREATER BAY BANCORP
By:
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Xxxxxx X. Xxxxx
Executive Vice President
Chief Operating Officer
Optionee represents that Optionee is familiar with the terms and provisions
of this Option and hereby accepts the same subject to all the terms and
provisions hereof. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board of Directors or its duly
appointed Committee upon any questions arising under the Plan.
Dated:
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Optionee
