EXHIBIT 99.2
NATIONAL MERCANTILE BANCORP
1996 STOCK OPTION PLAN
FORM OF INCENTIVE STOCK OPTION AGREEMENT
This INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made as of the
____ day of __________, 19__ between NATIONAL MERCANTILE BANCORP, a California
corporation (the "Company"), and ___________________ (the "Optionee").
R E C I T A L S
---------------
A. The Board of Directors of the Company adopted the 1996 Stock Incentive
Plan (the "1996 Plan") on March 28, 1996 and April 25, 1997, and the 1996 Plan
was approved by the shareholders of the Company on June 18, 1997.
B. The 1996 Plan provides for the granting of options to purchase shares
of Common Stock of the Company to selected employees of the Company or any
subsidiary of the Company, as the Stock Option Committee (the "Committee")
appointed by the Board of Directors may from time to time determine, and,
pursuant to Section 10 of the 1996 Plan, to directors of the Company who are not
also employees of the Company.
C. The Committee has determined that it is in the best interests of the
Company and its shareholders to grant, pursuant to the 1996 Plan, an incentive
stock option to the Optionee to purchase ____________________ (_______) shares
of the Company's Common Stock on the terms and conditions hereinafter set forth.
D. The option granted hereby is intended to qualify as an "incentive
stock option" under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), to the extent possible.
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee as of the
---------------
date hereof (the "Date of Grant") an incentive stock option (the "Option") to
purchase, on the terms and conditions hereinafter set forth,
____________________ (_______) shares of the Company's Common Stock, no par
value (the "Option Shares"), at a purchase price of __________ per share.
2. VESTING. The Option shall vest and become exercisable in full
-------
_____________________; provided, however, that no portion of the Option may be
exercised by the Optionee to the extent that such exercise would cause an
ownership change to occur pursuant to Section 382 of the Code. Section 382 of
the Code provides, among other things, that utilization of net operating losses
will be restricted if there is a change in ownership of the loss corporation.
Changes in ownership are determined by reference to 5% shareholders.
1
3. EXPIRATION OF OPTION AND CERTAIN LIMITATIONS ON RIGHT TO EXERCISE.
-----------------------------------------------------------------
(a) The Option shall expire on the tenth anniversary of the Date of Grant
(the "Expiration Date"), except that (i) if the Optionee ceases, on or before
the Expiration Date, for any reason other than death or permanent disability, to
be employed by the Company or a subsidiary of the Company, the Option shall
expire as provided in Section 6 below, and (ii) if the Optionee ceases, on or
before the Expiration Date, to be employed by the Company or a subsidiary of the
Company, by reason of death or permanent disability, the Option shall expire as
provided in Section 7 below. The term "Employee" as used in this Option means
an officer or other employee of the Company or any subsidiary (including an
officer who is also a director of the Company or any subsidiary).
(b) The Option may be exercised in whole or in part from time to time on
or after _________________ until the Expiration Date (subject to the provisions
hereof), except that not less than one hundred (100) shares may be purchased at
any time unless the number of shares then purchasable hereunder shall be less
than one hundred.
(c) Except as provided in Sections 6 and 7 below, none of the Option
Shares may be purchased hereunder unless the Optionee, at the time he exercises
the Option, is employed by the Company or a subsidiary of the Company, since the
date hereof. A leave of absence approved in writing by the Committee shall not
be deemed a termination of employment for any purpose of this Option.
4. METHOD OF EXERCISE OF OPTION. The Option may be exercised only by
----------------------------
delivery to the Company of a written notice of exercise specifying the number of
Option Shares which the Optionee then elects to purchase, accompanied by payment
in full of the aggregate exercise price for such shares (the "Exercise Price"),
in cash or by check payable to the Company, or in shares of the Company's Common
Stock, represented by a certificate duly endorsed, transferring to the Company
good and valid title to such shares, such shares to be valued on the basis of
the aggregate Fair Market Value (as defined in the 1996 Plan) thereof on the
date of such exercise.
5. NON-TRANSFERABILITY OF OPTION. The Option shall not be transferable
-----------------------------
by the Optionee otherwise than by will or the laws of descent and distribution,
and it shall be exercisable, during the lifetime of the Optionee only by him or
by his guardian or legal representative regardless of any community property
interest therein of the spouse of the Optionee or such spouse's successors in
interest.
6. TERMINATION OF EMPLOYMENT.
-------------------------
(a) If the Optionee ceases to be employed by the Company or a subsidiary
of the Company for any reason other than death or permanent disability, the
Option shall expire three
2
(3) months after the date the Optionee ceases to be so employed, unless by its
terms it expires sooner. The Option may be exercised by the Optionee within
such three month period to the extent it was exercisable on the date of such
cessation of employment.
(b) The Option confers no right upon the Optionee with respect to the
continuation of his employment with the Company or any of its subsidiaries, and
shall not interfere with the right of the Company or a subsidiary, or of the
Optionee, to terminate his employment at any time.
7. DEATH OR PERMANENT DISABILITY OF OPTIONEE. If the Optionee ceases to
-----------------------------------------
be employed by the Company or a subsidiary of the Company by reason of death or
permanent disability, the Option shall expire one (1) year after the date of
such death or disability, unless by its terms it expires sooner. The Option may
be exercised only by the heirs of the Optionee within such one year period to
the extent it was exercisable on the date of such death or disability.
8. ADJUSTMENTS UPON THE OCCURRENCE OF CERTAIN EVENTS.
-------------------------------------------------
(a) If the outstanding shares of the Company's Common Stock are
increased, decreased, or exchanged for or converted into cash, property or a
different number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, merger, consolidation,
restructuring, stock dividend, stock split, reverse stock split or other similar
transaction, or if substantially all of the property and assets of the Company
are sold, then, unless the terms of such transaction provide otherwise, an
appropriate and proportionate adjustment shall be made in the Option Shares
pursuant to which the Options relate. Any such adjustment in the outstanding
Options shall be made without change in the aggregate purchase price applicable
to the unexercised portion of the Options but with a corresponding adjustment in
the price for each Option Share.
(b) No adjustment provided for in this Section 8 shall require the
Company to sell a fractional share under the Options.
9. DELIVERY OF STOCK CERTIFICATES. Upon the exercise of all or a portion
------------------------------
of the Option, the Company, as promptly as practicable, shall mail or deliver to
the Optionee a stock certificate or certificates representing the shares then
purchased, and will pay all stamp taxes payable in connection therewith. The
issuance of such shares and delivery of the certificate or certificates therefor
shall, however, be subject to any delay necessary to complete (a) the listing of
such shares on any stock exchange upon which shares of the same class are then
listed or quoted on the Nasdaq, (b) such registration or other qualification of
such shares under any state or federal law, rule, or regulation as the Company
may determine to be necessary or advisable, and (c) the making of provision for
the payment or withholding of any taxes required to be withheld pursuant to any
applicable law, in respect of the exercise of the Option or the receipt of such
shares.
3
10. NOTICES, ETC.
-------------
(a) Any notice hereunder by the Optionee shall be given to the Company in
writing and such notice and any payment by the Optionee hereunder shall be
deemed duly given or made only upon receipt thereof at the Company's corporate
offices at 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such
other address as the Company may designate by notice to the Optionee.
(b) Any notice or other communication to the Optionee shall be in writing
and any such communication and any delivery to the Optionee hereunder shall be
deemed duly given or made if mailed or delivered to the Optionee at such address
as the Optionee shall have on file with the Company or in care of the Company at
the address of its corporate offices indicated above.
11. WAIVER. The waiver by the Company of any provision of the Option
------
shall not operate as or be construed to be a waiver of the same provision or any
other provision hereof at any subsequent time or for any other purpose.
12. IRREVOCABILITY. The Option shall be irrevocable until it expires as
--------------
herein provided.
13. EFFECTIVE DATE. The Option shall be deemed granted and effective on
--------------
the Date of Grant.
14. INTERPRETATION AND CONSTRUCTION. The interpretation and construction
-------------------------------
of the Option by the Committee shall be final, binding and conclusive. The
section headings in this Agreement are for convenience of reference only and
shall not be deemed part of, or germane to the interpretation or construction
of, this Agreement.
NATIONAL MERCANTILE BANCORP
By:
----------------------------------
-------------------------------------
Optionee
4
By his or her signature below, the spouse of the Optionee agrees to be
bound by all of the terms and conditions of the foregoing Agreement.
-------------------------------------
5
