EXHIBIT 10(b)
Dear Mr. _________:
Summit Bancorp hereby grants to you a non-qualified option (the "Option") to
purchase _______ shares of Summit Bancorp Common Stock, par value $.80 per share
("Summit Stock") subject to the terms and conditions set forth in this grant
letter. This Option grant and the Option are contingent, and shall take effect
only, upon your commencement of employment with Summit Bank in accordance with
your employment or retention agreement, as applicable, with Summit Bank dated
September___, 2000 ("Agreement"). The exercise price of your Option is the
average of the high and low sale prices of a share of Summit Bancorp Common
Stock today on the NYSE Composite Transactions List (as reported in The Wall
Street Journal or, in the absence thereof, as reported by another authoritative
source), or, if no share of Summit Stock is traded today, the last day on which
one share of Summit Stock was traded.
Your Option is called "non-qualified" because it is not intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended ("Code").
When Your Option Can Be Exercised & Expiration Date
Your Option becomes exercisable on January 1, 2002 ("First Exercise Date"). Once
your Option has become exercisable it can be exercised at any time in whole or
in part until (and including) the tenth anniversary date of this grant letter
(the "Expiration Date"). Any part of this Option which is not exercised on or
before the Expiration Date will automatically and without further notice to you
immediately terminate.
Notwithstanding the foregoing paragraph:
(i) Upon the occurrence of a Change in Control (as defined at Section 3(c)(4)
of the Agreement), your Option will become immediately exercisable in
full;
(ii) If your employment with Summit and its affiliates terminates prior to the
First Exercise Date pursuant to Section 3(a)(7) of the Agreement, other
than following the occurrence of a Change in Control, your Option shall
terminate at the earlier to occur of your last day of employment or the
Termination Date (as defined at Section 3(a) of the Agreement);
(iii) If your employment with Summit and its affiliates terminates prior to the
First Exercise Date pursuant to Sections 3(a)(1) (employment agreements
only), 3(a)(2), 3(a)(3), 3(a)(5), 3(a)(6) or 3(a)(8) of the Agreement,
your Option becomes exercisable in accordance with Section 3(b)(2)(iv) of
the Agreement;
(iv) If your employment with Summit and its affiliates terminates at any time
pursuant to Section 3(a)(4) of the Agreement, your Option shall terminate
at the earlier to occur of your last day of employment or the Termination
Date; and
(v) The Compensation Committee of Summit Bancorp (the "Committee"), in its
discretion, may determine that upon the occurrence of a Change in Control
your Option shall terminate, notwithstanding the date upon
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which it otherwise would terminate, within a specified number of days (but
not less than five (5) days) after notice of such termination is given to
you, and that you shall receive in respect of such termination, with
respect to each share of Summit Stock subject to any portion of your
Option which has not theretofore been exercised, cash in an amount equal
to the excess of (i) the fair market value of such share immediately prior
to the date of termination over (ii) the exercise price per share of your
Option; provided, however, that the date of termination of your Option
shall not be earlier than five (5) days after the public announcement of
the material terms of the Change in Control transaction, as determined in
good faith by the Committee. The provisions contained in the preceding
sentence shall be inapplicable to your Option if a Change in Control
should occur within six (6) months of the date of this grant letter and
you are a director or executive officer of Summit Bancorp or a beneficial
owner of Summit Stock who is described in Section 16(a) of the Exchange
Act unless an exemption under Section 16(b) is otherwise available; it
being understood, however, that such provisions shall be applicable to the
legal representative or permitted successor of a director or executive
officer who has died or become disabled (as defined in Section 22(e)(3) of
the Code) during such six-month period.
Nontransferability of the Option
This Option is not transferable other than by will or the laws of inheritance,
descent and distribution. This means that during your lifetime this Option may
be exercised only by you. This Option may also not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and is not
subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions of this grant letter, or the levy of any attachment
or similar proceeding upon the Option, shall be null and void and without
effect.
How To Exercise
Any exercise of this Option must be in a writing addressed to the Corporate
Secretary of Summit Bancorp at its principal place of business substantially in
the form of Attachment A. The notice of exercise must specify the number of
shares to be purchased and must specify a business day, which can be the same
day as the date of the notice but may not be more than fifteen (15) days from
the date of the notice, for payment of the full purchase price. For purposes of
the Option, an exercise is effective on the date that both the notice of
exercise and full payment of the purchase price have been received by the
Corporate Secretary of Summit Bancorp and certificates representing the shares
so purchased (the "Purchased Shares") will bear that date.
Methods of Paying the Purchase Price
Payment for the Purchased Shares may be made by any one or more of the following
methods:
(i) By delivering a certified, bank cashier's or bank treasurer's check
payable to the order of Summit Bancorp ("Cash Exercise Method"). You are
not permitted to borrow from Summit Bancorp or any direct or indirect
subsidiary of Summit Bancorp for the purpose of exercising this Option in
whole or in part (except that "cashless exercises" through Summit
Bancorp's securities broker affiliate, Summit Financial Services Group,
Inc., as described in (iii) below are permitted);
(ii) Subject to certain restrictions and certain conditions discussed below, by
delivering shares of Summit Common Stock (in proper form for transfer and
accompanied by any required stock transfer stamps or equivalent cash
amount) ("Stock Exercise Method"). Summit Stock delivered in payment of
all or any portion of the purchase price will be valued at its "fair
market value." For all purposes under this Option, "fair market value"
will be determined as follows: If Summit Stock is listed on one or more
national
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securities exchanges in the United States or admitted to trading on one or
more national securities exchanges in the Unites States pursuant to
unlisted trading privileges granted by such exchanges (and approved by the
U.S. Securities and Exchange Commission) on the date as of which fair
market value must be or is to be determined (a "determination date"), fair
market value shall be deemed to be the average of the high and low
quotations at which Summit Stock is sold on such national securities
exchanges, considered on a composite basis, on the determination date. If
Summit Stock is listed on one or more national securities exchanges in the
United States or admitted to trading on one or more national securities
exchanges in the United States pursuant to unlisted trading privileges
granted by such exchanges (and approved by U.S. Securities and Exchange
Commission) on such determination date, but Summit Stock is not traded on
any of such exchanges on such date, or none of such national securities
exchanges are open for business on such date, fair market value shall be
determined as of the closest preceding date on which any of such exchanges
shall have been open for business and Summit Stock shall have been traded.
Notwithstanding any of the foregoing, the Committee shall at all times
retain the power to establish fair market value in the event that, in its
discretion, it determines that extraordinary circumstances or conditions
have affected trading in Summit Stock on one or more such exchanges such
that, in its judgement, the fair market value determined in accordance
with the foregoing does not reflect the true fair market value of Summit
Stock on such determination date. For all purposes under this Option, the
determination by the Committee of the fair market value shall be
conclusive; or
(iii) Subject to certain restrictions discussed below, by arranging for a
"cashless exercise" of the Option through a securities broker such as
Summit Bancorp's securities broker affiliate, Financial Services Group,
Inc., and instructing the securities broker to forward full payment of the
purchase price to the Corporate Secretary of Summit Bancorp.
Restrictions. As noted in clauses (ii) and (iii) above, certain restrictions
apply to the use of the Stock Exercise Method for exercising this Option and to
"cashless exercises" of this Option. In particular, certain employees of Summit
Bancorp will not be able to use the Stock Exercise Method to pay any part of the
purchase price of the Option, or to arrange for a "cashless exercise" of the
Option, during trading "blackout" periods imposed by Summit Bancorp to comply
with the Federal securities laws. Additionally, no employee possessing material
inside information about Summit Bancorp may use the Stock Exercise Method to pay
any part of the purchase price of the Option, or to arrange for a "cashless
exercise" of the Option, while in possession of the material inside information.
The Cash Exercise Method of exercising this Option will always be available even
during a "blackout" period when these restrictions might apply. At the time you
wish to exercise this Option, the Summit Corporate Secretary Department will
advise you whether any such restrictions apply to you.
Conditions. As noted in clause (ii) above, certain conditions must be satisfied
before Summit Stock can be used to pay for any part of the purchase price of the
Option. In particular, Summit Stock must be held for six months before it can be
used to pay for any exercise of the Option. "Ownership" of any Summit Stock
acquired through an award of stock under one of Summit's stock compensation
plans does not begin until all transfer restrictions applicable to the
particular stock, if any, have lapsed.
Conditions on the Exercise of the Option
Certificate Legends and Compliance with Securities Laws. Summit Bank has agreed
at Section 4(e) of the Agreement to maintain an effective registration statement
under the Securities Act of 1933, as amended (the "Act"), and applicable state
securities laws. Without there occurring a waiver of your rights under that
provision:
(i) If Summit Bancorp in its sole discretion determines that it is necessary
in order to comply with applicable securities laws, the certificate or
certificates representing the Purchased Shares will bear a legend in form
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and substance determined to be appropriate by Summit Bancorp under such
laws.
(ii) In addition, you hereby promise and agree with Summit Bancorp that if, at
the time of exercise of this Option, there does not exist a Registration
Statement on an appropriate form under the Act, which Registration
Statement shall have become effective and shall include a prospectus which
is current with respect to the shares being purchased, as a condition
precedent to your right to exercise the Option you will represent and
warrant to Summit Bancorp (i) that you are purchasing the shares for your
own account and not with a view to the resale or distribution thereof and
(ii) that any subsequent offer for sale or sale of any such shares shall
be made either pursuant to (x) a Registration Statement on an appropriate
form under the Act, which Registration Statement shall have become
effective and shall be current with respect to the shares being offered
and sold, or (y) a specific exemption from the registration requirements
of the Act, but in claiming such exemption, you shall, prior to any offer
for sale or sale of such shares, obtain a favorable written opinion, in
form and substance satisfactory to Summit Bancorp from counsel for or
approved by Summit Bancorp as to the availability of such exemption.
Payment of Taxes. Certain federal and state laws require Summit Bancorp or the
subsidiary corporation by which you are employed, at the time or times that you
may exercise this Option, to collect from you an amount of money which in the
aggregate satisfies all applicable federal and state withholding tax
requirements and the federal Social Security tax requirement (unless your earned
income is not subject to Social Security tax at the time of exercise or the
federal Social Security tax requirement is otherwise not applicable to you)
calculated on basis of the excess of (i) the aggregate market value on the date
of exercise of the Purchased Shares (the average of the high and low sale prices
on such date times the number of Purchased Shares) over (ii) the aggregate
exercise price of such Purchased Shares. You promise and agree to pay such taxes
to Summit Bancorp. Summit Bancorp is required to collect certain minimum amounts
from employees pursuant to Federal and State requirements (currently about 38%)
regardless of an employee's personal tax situation.
Withholding taxes are due from you at the withholding rate you elect on
Attachment B. You may pay as follows:
(i) By delivering a certified, bank cashier's or bank treasurer's check
payable to the order of Summit Bancorp using existing personal funds
("Cash Tax Method");
(ii) Subject to certain restrictions discussed below, by arranging for proceeds
from a full or partial "cashless exercise" of the Option to be forwarded
to the Summit Bancorp Corporate Secretary Department by the securities
broker handling the cashless exercise;
(iii) If you elect the minimum withholding rate on Attachment B, subject to
certain restrictions discussed below, by instructing Summit Bancorp to
withhold Purchased Shares at this minimum rate; or
(iv) If you elect a withholding rate on Attachment B which is higher than the
minimum withholding rate, subject to certain restrictions discussed below,
by: (a) instructing Summit to withhold Purchased Shares at the minimum
withholding rate; and (b) paying for the balance of the tax owed at the
higher withholding rate through a method described at
clause (i) or clause (ii) above.
If you choose to pay the tax obligation which arises upon an exercise of this
Option by the Cash Tax Method (clause (i) above), you need do nothing at the
time of exercise other than properly complete Attachments A and B and return
them to the Summit Bancorp Corporate Secretary Department. After receiving
Attachments A and B from you, Summit Bancorp will calculate the amount of taxes
you owe and notify you by letter of this amount. You agree that promptly upon
receiving this notice from Summit Bancorp you will forward full payment to
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Summit Bancorp. In the event that Summit Bancorp does not promptly receive such
payment, you agree that Summit Bancorp or the subsidiary corporation by which
you are employed shall have the authority to withhold from any cash compensation
payable or paid to you, or on your behalf, enough to pay all tax liabilities
arising on account of the exercise. You agree that Summit Bancorp may, in its
discretion, (i) hold the stock certificate to which you are entitled by virtue
of an exercise of this Option as security for the payment of the previously
mentioned tax liabilities, until enough cash to pay the liabilities has been
collected, and (ii) pay your tax liabilities by selling such stock if (a)
payment is not promptly received, (b) in Summit Bancorp's judgement, enough cash
cannot be withheld from future compensation to pay such taxes or (c) both
circumstances (a) and (b) exist.
If you elect to pay your taxes by having Purchased Shares withheld (under either
clause (iii) or (iv) above), the election must be made on Attachment B and the
properly completed Attachment B must be received by the Corporate Secretary
Department of Summit Bancorp on or before the date the exercise of the Option is
effective. The Summit Stock used to pay your tax obligation will be valued at
its fair market value on the effective date of the exercise of the Option. An
election to pay your tax withholding obligation by having Summit withhold
Purchased Shares cannot be changed. The election is also subject to the approval
of the Compensation Committee.
Restrictions. As noted in clauses (ii), (iii) and (iv) above, certain
restrictions could apply to you if you elect to pay your tax withholding
obligation by having proceeds of a cashless exercise of the Option paid to
Summit Bancorp or by directing Summit Bancorp to withhold Purchased Shares. In
particular, certain employees of Summit Bancorp will not be able to have
Purchased Shares withheld to pay their tax liabilities, or to arrange for a
"cashless exercise" of the Option, during trading "blackout" periods imposed by
Summit Bancorp to comply with the Federal securities laws or to ensure
pooling-of-interest accounting treatment for certain of its acquisitions.
Additionally, no employee possessing material inside information about Summit
Bancorp will be able to have Purchased Shares withheld to pay their tax
liabilities, or to arrange for a "cashless exercise" of the Option, while in
possession of the material inside information. The Cash Tax Method of paying
withholding tax liabilities will always be available during any "blackout"
period when these restrictions might apply. At the time you wish to exercise
this Option, the Summit Corporate Secretary Department will advise you whether
any such restrictions apply to you.
In addition, you acknowledge and agree that Summit Bancorp shall at all times
have the right to modify, restrict or end (i) any method for exercising this
Option other than the Cash Exercise Method, and (ii) any method for paying tax
liabilities arising in connection with the exercise of this Option other than
the Cash Tax Method.
Adjustments of Shares; Effect of Certain Transactions
In the event of any change in the outstanding shares of Summit Bancorp. through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, split-off, spin-off, combination of shares, or other like change in
capital structure of Summit Bancorp., an adjustment shall be made to each
outstanding Option such that each such Option shall thereafter be exercisable
for such securities or other property as would have been received in respect of
the shares subject to such Option had such Option been exercised in full
immediately prior to such change, and such an adjustment shall be made
successively each time any such change shall occur. In addition, in the event of
any such change, the Committee shall make any further adjustment as may be
appropriate to the number of shares and price per share subject to outstanding
Options as shall be equitable to prevent dilution or enlargement of rights under
such Options and the determination of the Committee as to these matters shall be
conclusive. All adjustments shall be rounded down to the next lower full share.
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Amendment
The Board of Directors may, from time to time, amend the Options (including
amendments which accelerate the exercisability of Options) in conjunction with
an amendment of all options outstanding under all option plans of Summit
Bancorp, provided that no amendment shall adversely affect the rights and
obligations under the Options without the consent of the holder of the Option.
In addition, interpretations of administrative provisions of the stock option
plans of Summit Bancorp by the Board of Directors of Summit Bancorp or the
Committee shall apply to like administrative provisions of this Option.
Governing Law
The Options and related matters shall be governed by, and construed and enforced
in accordance with, the laws of the State of New Jersey.
On Behalf of Summit Bancorp,
Please indicate you acceptance of this option grant
on the terms provided for herein by signing below:
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Executive Vice President (Signature)
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(Name of Executive)
Attachments:
A - Notice of Option Exercise
B - Tax Election Form
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