-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BFtee3zXX+WH7XA8n/C3l6SuMhPFRVI5uu5JE9dLdRhqaHb3iHtap+MLflMhH7FU fOiWgp+fXw8mZxGIGwAsxg== 0000929624-98-000533.txt : 19980312 0000929624-98-000533.hdr.sgml : 19980312 ACCESSION NUMBER: 0000929624-98-000533 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980311 EFFECTIVENESS DATE: 19980311 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREATER BAY BANCORP CENTRAL INDEX KEY: 0000775473 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 942952485 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-47747 FILM NUMBER: 98563712 BUSINESS ADDRESS: STREET 1: 2860 WEST BAYSHORE ROAD CITY: PALO ALTO STATE: CA ZIP: 94303 BUSINESS PHONE: 4153751555 MAIL ADDRESS: STREET 1: 2860 BAYSHORE CITY: PALO ALTO STATE: CA ZIP: 943011504 FORMER COMPANY: FORMER CONFORMED NAME: MID PENINSULA BANCORP DATE OF NAME CHANGE: 19941031 FORMER COMPANY: FORMER CONFORMED NAME: SAN MATEO COUNTY BANCORP DATE OF NAME CHANGE: 19920703 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on March 11, 1998 Registration No. 333- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20005 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GREATER BAY BANCORP (Exact name of registrant as specified in its charter) CALIFORNIA 77-0387041 (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) 2860 WEST BAYSHORE ROAD PALO ALTO, CALIFORNIA 94303 (Address of principal executive offices) (Zip Code) GREATER BAY BANCORP 1996 STOCK OPTION PLAN (Full title of the plan) DAVID L. KALKBRENNER Chief Executive Officer Greater Bay Bancorp 2860 West Bayshore Road Palo Alto, California 94303 (Name and address of agent for service) (650) 813-8200 (Telephone number, including area code, of agent for service) WITH A COPY TO: T. HALE BOGGS Manatt, Phelps & Phillips, LLP 11355 West Olympic Boulevard Los Angeles, California 90064 This registration statement shall hereafter become effective in accordance with Rule 462 promulgated under the Securities Act of 1933, as amended.
Calculation of Registration Fee - ----------------------------------------------------------------------------------------- Proposed Proposed Title of Amount maximum maximum Amount securities to to be re- offering price aggregate of registra- be registered gistered/1/ per unit/2/ offering price/2/ tion fee - ----------------------------------------------------------------------------------------- 1996 Stock Option Plan Common Stock 456,326 $52.69 $24,043,817 $7093 - -----------------------------------------------------------------------------------------
/1/ In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plan described herein and such indeterminate number of shares as may become available as a result of the adjustment provisions thereof. /2/ Estimated pursuant to Rule 457(c) solely for purposes of calculating the registration fee based upon the average of the high and low prices of the Common Stock as reported on the National Association of Securities Dealers Automated Quotations System on March 4, 1998. PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Greater Bay Bancorp, Inc. (the "Registrant") hereby files this Registration Statement on Form S-8 with the Securities and Exchange Commission (the "Commission") to register 456,326 shares of the Registrant's Common Stock for issuance pursuant to the Registrant's 1996 Employee Stock Option Plan (the "Plan"), and such indeterminate number of shares as may become available under the Plan as a result of the adjustment provisions thereof. Item 3. Incorporation of Certain Documents by Reference ----------------------------------------------- The following documents filed by the Registrant with the Commission are incorporated in this Registration Statement by reference: (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) All other reports filed by the Registrant pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the document referred to in (a) above. (c) The description of the class of securities which is contained in the Registrant's Registration Statement on Form 8-A, as amended, including any amendment or report filed for the purpose of updating such information. All other documents filed by the Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Registration Statement and prior to the filing of a post-effective amendment to this Registration Statement which indicate that all securities offered have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. Any statement made in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which is also incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. Item 4. Description of Securities ------------------------- Not applicable. Item 5. Interests of Named Experts and Counsel -------------------------------------- Not applicable. Item 6. Indemnification of Directors and Officers ----------------------------------------- The Registrant's Articles of Incorporation provide that the liability of the directors for monetary damages shall be eliminated to the fullest extent permissible under California law. Pursuant to California law, the Registrant's directors shall not be liable for monetary damages for breach of the directors' fiduciary duty of care to the Registrant and its shareholders. However, this provision does not eliminate the duty of care, and in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under California law. In addition, each director will continue to be subject to liability for (i) acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) acts or omissions that a director believes to be contrary to the best interests of the Registrant or its shareholders or that involve the absence of good faith on the part of the director, (iii) any transaction from which a director derived an improper personal benefit, (iv) acts or omissions that show a reckless disregard for the director's duty to the Registrant or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of serious injury to the Registrant or its shareholders, (v) acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the Registrant or its shareholders, (vi) any transaction that constitutes an illegal distribution or dividend under California law, and (vii) any transaction involving an unlawful conflict of interest between the director and the Registrant under California law. The provision also does not affect a director's responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. Item 7. Exemption from Registration Claimed ----------------------------------- Not applicable. Item 8. Exhibits -------- See Exhibit Index. Item 9. Undertakings ------------ The undersigned Registrant hereby undertakes: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (a) To include any prospectus required by Section 10(a)(3) of the Securities Act; (b) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (c) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. Provided, however, that paragraphs 1(a) and 1(b) do not apply if the Registration Statement is on Form S-3 or Form S-8 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement. 2. That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13 or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person the prospectus is sent or given, the latest Annual Report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing of Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California on March 10, 1998. GREATER BAY BANCORP By /s/ David L. Kalkbrenner --------------------------------- David L. Kalkbrenner, Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David L. Kalkbrenner and Steven C. Smith, and each or any one of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement, and to file the same with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in- fact and agents or any of them, or their or his substitutes, or substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on March 10, 1998. Signature Title /s/ David L. Kalkbrenner - --------------------------- Chief Executive Officer, David L. Kalkbrenner President and Director (Principal Executive Officer) /s/ Steven C. Smith - --------------------------- Executive Vice President, Chief Steven C. Smith Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer) /s/ John M. Gatto - --------------------------- Director John M. Gatto /s/ James E. Jackson - --------------------------- Director James E. Jackson /s/ Rex D. Lindsay - --------------------------- Director Rex D. Lindsay /s/ Duncan L. Matteson - --------------------------- Director Duncan L. Matteson /s/ Glen McLaughlin - --------------------------- Director Glen McLaughlin /s/ Dick J. Randall - --------------------------- Director Dick J. Randall /s/ Donald H. Seiler - --------------------------- Director Donald H. Seiler /s/ Warren R. Thoits - --------------------------- Director Warren R. Thoits /s/ Edwin E. Van Bronkhorst - --------------------------- Director Edwin E. Van Bronkhorst EXHIBIT INDEX 5.1 Opinion of Manatt, Phelps & Phillips, LLP. 23.1 Consent of Manatt, Phelps & Phillips, LLP (included in Exhibit 5.1). 23.2 Consent of Coopers & Lybrand LLP. 25.1 Power of Attorney (included on signature page hereof). 99.1 Greater Bay Bancorp 1996 Stock Option Plan, as amended effective December 23, 1997. 99.2 Form of Incentive Stock Option Agreement. 99.3 Form of Non-Qualified Stock Option Agreement. EX-5.1 2 OPINION OF MANATT, PHELPS & PHILLIPS, LLP Exhibit 5.1 Opinion of Manatt, Phelps & Phillips, LLP [MANATT, PHELPS & PHILLIPS, LLP LETTERHEAD] March 11, 1998 Greater Bay Bancorp 2860 West Bayshore Road Palo Alto, California 94303 RE: GREATER BAY BANCORP REGISTRATION STATEMENT ON FORM S-8 REGISTERING SHARES ISSUABLE UNDER THE GREATER BAY BANCORP 1996 STOCK OPTION PLAN Ladies and Gentlemen: At your request, we have examined the Registration Statement on Form S-8 (the "Registration Statement") being filed by Greater Bay Bancorp ("the Company") with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of up to 456,326 shares of the Common Stock, without par value, of the Company which may be issued pursuant to the exercise of options granted under the Greater Bay Bancorp 1996 Stock Option Plan (the "Plan"). We have examined all instruments, documents and records which we deemed relevant and necessary for the basis of our opinion hereinafter expressed. In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity to the originals of all documents submitted to us as copies. Based on such examination, we are of the opinion that the 456,326 shares of Common Stock which may be issued upon exercise of options granted under the Plan are duly authorized shares of the Company's Common Stock, and, when issued against payment of the purchase price therefor in accordance with the provisions of the Plan, will be validly issued, fully paid and non-assessable. This opinion is issued to you solely for use in connection with the Registration Statement on Form S-8 and is not to be quoted or otherwise referred to in any financial statements of the Company or related document, nor is it to be filed with or furnished to any government agency or other person, without the prior written consent of this Firm. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement on Form S-8 which is being filed on behalf of the Company in connection with the registration of the aforementioned shares of Common Stock under the Securities Act of 1933, as amended. Very truly yours, /s/ Manatt, Phelps & Phillips, LLP MANATT, PHELPS & PHILLIPS, LLP EX-23.2 3 CONSENT OF COOPERS & LYBRAND LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this Form S-8 of our report dated February 27, 1997 on our audits of the consolidated financial statements of Greater Bay Bancorp and Subsidiaries as of December 31, 1996 and 1995, and for the three years in the period ended December 31, 1996, appearing in the Annual Report on Form 10-K of Greater Bay Bancorp for 1996. /s/Coopers & Lybrand LLP San Francisco, California March 11, 1998 EX-99.1 4 GREATER BAY BANCORP 1996 STOCK OPTION PLAN EXHIBIT 99.1 GREATER BAY BANCORP 1996 STOCK OPTION PLAN, AS AMENDED EFFECTIVE DECEMBER 23, 1997 TABLE OF CONTENTS ----------------- PAGE ---- 1. PURPOSE............................................................... 2 2. DEFINITIONS........................................................... 2 (a) "Board of Directors"................................................ 2 (b) "Change in Control"................................................. 2 (c) "Code............................................................... 2 (d) "Committee.......................................................... 2 (e) "Company............................................................ 3 (f) "Employee........................................................... 3 (g) "Exchange Act....................................................... 3 (h) "Exercise Price..................................................... 3 (i) "Fair Market Value.................................................. 3 (j) "ISO................................................................ 4 (k) "Nonstatutory Option................................................ 4 (l) "Option............................................................. 4 (m) "Optionee........................................................... 4 (n) "Plan............................................................... 4 (o) "Service............................................................ 4 (p) "Share.............................................................. 4 (q) "Stock.............................................................. 4 (r) "Stock Option Agreement............................................. 4 (s) "Subsidiary......................................................... 4 (t) "Substitute Option.................................................. 4 (u) "Total and Permanent Disability..................................... 4 3. ADMINISTRATION........................................................ 5 (a) Committee Membership................................................ 5 (b) Committee Procedures................................................ 5 4. ELIGIBILITY........................................................... 6 (a) General Rules....................................................... 6 (b) Ten-Percent Stockholders............................................ 6 (c) Attribution Rules................................................... 6 (d) Outstanding Stock................................................... 7 5. STOCK SUBJECT TO PLAN................................................. 7 (a) Basic Limitation.................................................... 7 (b) Additional Shares................................................... 7 i PAGE ---- 6. TERMS AND CONDITIONS OF OPTIONS....................................... 7 (a) Stock Option Agreement.............................................. 7 (b) Number of Shares.................................................... 7 (c) Exercise Price...................................................... 7 (d) Withholding Taxes................................................... 8 (e) Exercisability...................................................... 8 (f) Term................................................................ 8 (g) Transferability..................................................... 9 (h) No Rights as a Stockholder.......................................... 9 (i) Modification, Extension and Renewal of Options...................... 9 (j) Substitute Options.................................................. 9 7. PAYMENT FOR SHARES.................................................... 10 (a) General Rule........................................................ 10 (b) Surrender of Stock.................................................. 10 (c) Exercise/Sale....................................................... 10 (d) Exercise/Pledge..................................................... 10 8. ADJUSTMENT OF SHARES.................................................. 10 (a) General............................................................. 10 (b) Reorganizations..................................................... 11 (c) Reservation of Rights............................................... 11 9. SECURITIES LAWS....................................................... 11 10. NO RETENTION RIGHTS................................................... 11 11. DURATION AND AMENDMENTS............................................... 12 (a) Term of the Plan.................................................... 12 (b) Right to Amend or Terminate the Plan................................ 12 (c) Effect of Amendment or Termination.................................. 12 ii GREATER BAY BANCORP 1996 STOCK OPTION PLAN ------------------------------------------ AS AMENDED EFFECTIVE DECEMBER 23, 1997 1. PURPOSE. ------- The purpose of the Plan is to offer selected employees, directors and consultants an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by purchasing Shares of the Company's Common Stock. The Plan provides both for the grant of Nonstatutory Options as well as ISOs intended to qualify under Section 422 of the Code. 2. DEFINITIONS. ----------- (a) "Board of Directors" shall mean the Board of Directors of the Company, ------------------ as constituted from time to time. (b) "Change in Control" shall mean the occurrence of either of the ----------------- following events: (i) A change in the composition of the Board of Directors, as a result of which fewer than one-half of the incumbent directors are directors who either: (A) Had been directors of the Company (including prior service as a director of either Mid-Peninsula Bancorp or Cupertino National Bancorp) 24 months prior to such change; or (B) Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the directors who had been directors of the Company at the Effective Time of the Merger of Mid-Peninsula Bancorp and Cupertino National Bancorp or 24 months prior to such change (whichever is later) and who were still in office at the time of the election or nomination; or (ii) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) by the acquisition or aggregation of securities is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50 percent or more of the combined voting power of the Company's then outstanding securities. For purposes of this Paragraph (ii), the term "person" shall not include an employee benefit plan maintained by the Company. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended. ---- (d) "Committee" shall mean a committee of the Board of Directors, as --------- described in Section 3(a), or in the absence of such a committee, the Board of Directors. 2 (e) "Company" shall mean Greater Bay Bancorp, a California corporation, ------- formerly known as Mid-Peninsula Bancorp, a California corporation. (f) "Employee" shall mean: -------- (i) Any individual who is a common-law employee of the Company or of a Subsidiary; (ii) A member of the Board of Directors; and (iii) An independent contractor who performs services for the Company or a Subsidiary and who is not a member of the Board of Directors. Service as an independent contractor or member of the Board of Directors shall be considered employment for all purposes of the Plan, except as provided in Section 4(a). (g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as ------------ amended. (h) "Exercise Price" shall mean the amount for which one Share may be -------------- purchased upon exercise of an Option, as specified by the Committee in the applicable Stock Option Agreement. (i) "Fair Market Value" shall mean the market price of Stock, determined ----------------- by the Committee as follows: (i) If Stock was traded over-the-counter on the date in question but was not traded on the Nasdaq system or the Nasdaq National Market System, then the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which Stock is quoted or, if Stock is not quoted on any such system, by the "Pink Sheets" published by the National Quotation Bureau, Inc.; (ii) If Stock was traded over-the-counter on the date in question and was traded on the Nasdaq system or the Nasdaq National Market System, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by the Nasdaq system or the Nasdaq National Market System; (iii) If Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; and (iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate. 3 In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons. (j) "ISO" shall mean an employee incentive stock option described in --- Section 422(b) of the Code. (k) "Nonstatutory Option" shall mean a stock option not described in ------------------- Sections 422(b) or 423(b) of the Code. (l) "Option" shall mean an ISO or Nonstatutory Option granted under the ------ Plan and entitling the holder to purchase Shares. (m) "Optionee" shall mean an individual who holds an Option. -------- (n) "Plan" shall mean this Greater Bay Bancorp 1996 Stock Option Plan, as ---- it may be amended from time to time. (o) "Service" shall mean service as an Employee. ------- (p) "Share" shall mean one share of Stock, as adjusted in accordance with ----- Section 8 (if applicable). (q) "Stock" shall mean the Common Stock of the Company. ----- (r) "Stock Option Agreement" shall mean the agreement between the Company ---------------------- and an Optionee which contains the terms, conditions and restrictions pertaining to his or her Option. (s) "Subsidiary" shall mean any corporation, if the Company and/or one or ---------- more other Subsidiaries own not less than 50 percent of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. (t) "Substitute Option" shall mean an option described in Section 6(j). ----------------- (u) "Total and Permanent Disability" shall mean that the Optionee is ------------------------------ unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. 4 3. ADMINISTRATION. -------------- (a) Committee Membership. The Board of Directors shall have the authority -------------------- to administer the Plan but may delegate its administrative powers under the Plan, in whole or in part, to one or more committees of the Board of Directors. With respect to the participation of Employees who are subject to Section 16 of the Exchange Act, the Plan may be administered by a committee composed solely of two or more members of the Board of Directors who qualify as "nonemployee directors" as defined in Securities and Exchange Commission Rule 16b-3 under the Exchange Act. With respect to the participation of Employees who may be considered "covered employees" under Section 162(m) of the Code, the Plan may be administered by a committee composed solely of two or more members of the Board of Directors who qualify as "outside directors" as defined by the Internal Revenue Service for plans intended to qualify for an exemption under Section 162(m)(4)(C) of the Code. If the committee members meet both such qualifications, then one committee may administer the Plan both with respect to Employees who are subject to Section 16 of the Exchange Act or who are considered to be "covered employees" under Section 162(m) of the Code. The Board of Directors may appoint a separate committee, consisting of one or more members of the Board of Directors who do not meet such qualifications. Such committee may administer the Plan with respect to Employees who are not officers of the Company or members of the Board of Directors, may grant Options under the Plan to such Employees and may determine the timing, number of Shares and other terms of such grants. (b) Committee Procedures. The Board of Directors shall designate one of -------------------- the members of any Committee appointed under paragraph (a) as chairman. Any such Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing by all Committee members, shall be valid acts of the Committee. (c) Committee Responsibilities. Subject to the provisions of the Plan, -------------------------- any such Committee shall have full authority and discretion to take the following actions: (i) To interpret the Plan and to apply its provisions; (ii) To adopt, amend or rescind rules, procedures and forms relating to the Plan; (iii) To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; (iv) To determine when Options are to be granted under the Plan; (v) To select the Optionees; (vi) To determine the number of Shares to be made subject to each Option; 5 (vii) To prescribe the terms and conditions of each Option, including (without limitation) the Exercise Price, to determine whether such Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the Stock Option Agreement relating to such Option; (vii) To amend any outstanding Stock Option Agreement, subject to applicable legal restrictions and to the consent of the Optionee who entered into such agreement; (ix) To prescribe the consideration for the grant of each Option under the Plan and to determine the sufficiency of such consideration; and (x) To take any other actions deemed necessary or advisable for the administration of the Plan. All decisions, interpretations and other actions of the Committee shall be final and binding on all Optionees, and all persons deriving their rights from an Optionee. No member of the Committee shall be liable for any action that he or she has taken or has failed to take in good faith with respect to the Plan or any Option. 4. ELIGIBILITY. ----------- (a) General Rules. Only Employees shall be eligible for designation as ------------- Optionees by the Committee. In addition, only Employees who are common-law employees of the Company or a Subsidiary shall be eligible for the grant of ISOs. (b) Ten-Percent Stockholders. An Employee who owns more than 10 percent ------------------------ of the total combined voting power of all classes of outstanding stock of the Company or any of its Subsidiaries shall not be eligible for the grant of an ISO unless: (i) The Exercise Price is at least 110 percent of the Fair Market Value of a Share on the date of grant; and (ii) Such ISO by its terms is not exercisable after the expiration of five years from the date of grant. (c) Attribution Rules. For purposes of Subsection (b) above, in ----------------- determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee's brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries. Stock with respect to which such Employee holds an option shall not be counted. 6 (d) Outstanding Stock. For purposes of Subsection (b) above, "outstanding ----------------- stock" shall include all stock actually issued and outstanding immediately after the grant. "Outstanding stock" shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person. 5. STOCK SUBJECT TO PLAN. --------------------- (a) Basic Limitation. Shares reserved for issuance pursuant to the ---------------- exercise of Options granted under the Plan shall be authorized but unissued Shares. The aggregate number of Shares which may be issued pursuant to the exercise of Options granted under the Plan shall be 1,207,890, all of which may be issued pursuant to the exercise of ISOs or Nonstatutory Options granted under the Plan. The number of Shares which are subject to Options outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. (b) Additional Shares. In the event that any outstanding option granted ----------------- under this Plan, including Substitute Options, or the Prior Plan, for any reason expires or is cancelled or otherwise terminated, the Shares allocable to the unexercised portion of such option shall become available for the purposes of this Plan. 6. TERMS AND CONDITIONS OF OPTIONS. ------------------------------- (a) Stock Option Agreement. Each grant of an Option under the Plan shall ---------------------- be evidenced by a Stock Option Agreement executed by the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. (b) Number of Shares. Each Stock Option Agreement shall specify the ---------------- number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 8. Options granted to any Optionee in a single calendar year shall in no event cover more than 30,000 ------ Shares, subject to adjustment in accordance with Section 8. The Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option. (c) Exercise Price. Each Stock Option Agreement shall specify the -------------- Exercise Price. The Exercise Price of an Option shall not be less than 100 percent of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(b) with respect to ISO's and Section 6(i) with respect to Substitute Options. The Exercise Price shall be payable in a form described in Section 7. 7 (d) Withholding Taxes. As a condition to the exercise of an Option, the ----------------- Optionee shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that arise in connection with such exercise. The Optionee shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option. The Committee may permit the Optionee to satisfy all or part of his or her tax obligations related to the Option by having the Company withhold a portion of any Shares that otherwise would be issued to him or her or by surrendering any Shares that previously were acquired by him or her. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. The payment of taxes by assigning Shares to the Company, if permitted by the Committee, shall be subject to such restrictions as the Committee may impose. (e) Exercisability. Each Stock Option Agreement shall specify the date -------------- when all or any installment of the Option is to become exercisable. The vesting of any Option shall be determined by the Committee at its sole discretion; provided however, that: (i) Each Stock Option Agreement shall provide for immediate exercisability of the entire Option in the event of a Change in Control. (ii) In the In the event that an Optionee's Service terminates, the Option shall be exercisable only to the extent the Option was vested as of the date of such termination, unless otherwise specified in the Optionee's Stock Option Agreement. (f) Term. Each Stock Option Agreement shall specify the term of the ---- Option. The term of an ISO shall not exceed 10 years from the date of grant, except as otherwise provided in Section 4(b). Subject to the preceding sentence, the Committee at its sole discretion shall determine when an Option is to expire. 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 (or such other period specified in the Optionee's Stock Option Agreement) after such death or Total and Permanent Disability but not later than the original expiration date specified in the Stock Option Agreement. (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 Employee, but not later than the original expiration date specified in the Stock Option Agreement. For purposes of this Paragraph (ii), "cause" shall mean an act of embezzlement, 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 of any conduct which constitutes unfair competition with the Company, the removal of Optionee from office by any court or bank regulatory agency, or 8 such other similar acts which the Committee in its discretion determine 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 (or such other period specified in the Optionee's Stock Option Agreement) after such termination, but not later than the original expiration date specified in the Stock Option Agreement. (g) Transferability. During an Optionee's lifetime, such Optionee's --------------- ISO(s) shall be exercisable only by him or her and shall not be transferable. An Optionee's Nonstatutory Options shall also not be transferable during the Optionee's lifetime, except to the extent otherwise permitted in the Optionee's Stock Option Agreement. Subject to prior permitted transfers, in the event of an Optionee's death, such Optionee's Option(s) shall not be transferable other than by will, by written beneficiary designation or by the laws of descent and distribution. (h) No Rights as a Stockholder. An Optionee, or a transferee of an -------------------------- Optionee, shall have no rights as a stockholder with respect to any Shares covered by his or her Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 8. (i) Modification, Extension and Renewal of Options. Within the ---------------------------------------------- limitations of the Plan, the Committee may modify, extend or renew outstanding Options or may accept the cancellation of outstanding Options (to the extent not previously exercised) in return for the grant of new Options at the same or a different price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair such Optionee's rights or increase his or her obligations under such Option. (j) Substitute Options. If the Company at any time should succeed to the ------------------ business of another corporation through merger or consolidation, or through the acquisition of stock or assets of such corporation, Options may be granted under the Plan in substitution of options previously granted by such corporation to purchase shares of its stock which options are outstanding at the date of the succession ("Surrendered Options"). It is specifically intended that this section of the Plan shall authorize the granting and issuance of Substitute Options pursuant to the terms of the Amended and Restated Agreement and Plan of Reorganization by and between Mid-Peninsula Bancorp and Cupertino National Bancorp dated June 26, 1996. The Committee shall have discretion to determine the extent to which such Substitute Options shall be granted, the persons to receive such Substitute Options, the number of Shares to be subject to such Substitute Options, and the terms and conditions of such Substitute Options which shall, to the extent permissible within the terms and conditions of the Plan, be equivalent to the terms and conditions of the Surrendered Options. The Exercise Price may be determined without regard to Section 6(c); provided however, that the Exercise Price of each Substitute Option shall be an amount such that, in the sole and absolute judgment of the Committee (and if the Substitute Options are to be ISO's, in compliance with Section 424(a) of the Code), the 9 economic benefit provided by such Substitute Option is not greater than the economic benefit represented by the Surrendered Option as of the date of the succession. 7. PAYMENT FOR SHARES. ------------------ (a) General Rule. The entire Exercise Price of Shares issued under the ------------ Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as follows: (i) ISOs. In the case of an ISO granted under the Plan, payment ---- shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. However, the Committee (at its sole discretion) may specify in the Stock Option Agreement that payment may be made pursuant to Subsections (b), (c) or (d) below. (ii) Nonstatutory Options. In the case of a Nonstatutory Option -------------------- granted under the Plan, the Committee (at its sole discretion) may accept payment pursuant to Subsections (b), (c), or (d) below. (b) Surrender of Stock. To the extent that this Subsection (b) is ------------------ applicable, payment may be made all or in part with Shares which have already been owned by the Optionee or his or her 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 under the Plan. (c) Exercise/Sale. To the extent that this Subsection (c) is applicable, ------------- 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. (d) Exercise/Pledge. To the extent that this Subsection (d) is --------------- applicable, 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. 8. ADJUSTMENT OF SHARES. -------------------- (a) General. In the event of a subdivision of the outstanding Stock, 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 Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spinoff or a similar occurrence, the Committee shall make appropriate adjustments in one or more of: 10 (i) The number of Shares available under Section 5 for future grants; (ii) The limit set forth in Section 6(b); (iii) The number of Shares covered by each outstanding Option; or (iv) The Exercise Price under each outstanding Option. (b) Reorganizations. In the event that the Company is a party to a merger --------------- or other reorganization, outstanding Options shall be subject to the agreement of merger or reorganization. Subject to the provisions of Section 6(e)(i), such agreement may provide, without limitation, for the assumption of 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 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 their exercisability followed by the cancellation of Options 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. (c) Reservation of Rights. Except as provided in this Section 8, an --------------------- Optionee or Offeree 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 an Option. The grant of an 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. 9. SECURITIES LAWS. --------------- Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange on which the Company's securities may then be listed. 10. NO RETENTION RIGHTS. ------------------- Neither the Plan nor any Option shall be deemed to give any individual 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 a written employment agreement (if any). 11 11. DURATION AND AMENDMENTS. ----------------------- (a) Term of the Plan. The Plan, as set forth herein, shall become ---------------- effective as of the Effective Date, provided that the Plan has been approved by the shareholders of the Company in the manner required by applicable law or regulation. The Plan, if not extended, shall terminate automatically ten years after the Effective Date, except that any ISO's granted under the Plan must be granted by September 18, 2006, ten years after the Plan was adopted by the Board of Directors. It may be terminated on any earlier date pursuant to Subsection (b) below. (b) Right to Amend or Terminate the Plan. The Board of Directors may ------------------------------------ amend, suspend or terminate the Plan at any time and for any reason. An amendment of the Plan shall be subject to the approval of the Company's shareholders only to the extent required by applicable laws or regulations. (c) Effect of Amendment or Termination. No Shares shall be issued or sold ---------------------------------- under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously granted under the Plan. 12 EX-99.2 5 FORM OF INCENTIVE STOCK OPTION AGREEMENT 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: ------------------------- Steven C. Smith 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: ---------------------- --------------------------------- Optionee EX-99.3 6 FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT EXHIBIT 99.3 GREATER BAY BANCORP NONSTATUTORY STOCK OPTION AGREEMENT 1. GRANT. Greater Bay Bancorp, a California corporation (the "Company"), hereby grants to ___________ (the "Optionee"), an option (the "Option") to purchase a total of __________ shares of common stock of the Company, at the price determined as provided herein, and in all respects 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 by the Company and the Optionee to be a nonstatutory stock option and does not qualify for any special tax benefits to the Optionee. This option is NOT an Incentive Stock Option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. 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. TERM OF OPTION. Subject to earlier termination as provided in the Plan, this Option shall terminate on __________, and may be exercised during such term only in accordance with the Plan and the terms of this Option. 5. EXERCISE OF OPTION. This Option shall be exercisable during its term in accordance with the provision 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 ______ months after the Grant Date as follows: ______%, additional ______% 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 whole 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 as specified below. 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. a) 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 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 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 delivery all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes. a) TERMINATION OF SERVICE. In the event that the Optionee's Service as an Employee 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 4 above. 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 4 above. 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 beak 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 above. Neither the Plan nor this Option shall be deemed to give Optionee a right to remain an Employee or consultant of the Company or 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. 1. 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 assigned of the Optionee. 2. 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 the provisions of Section 6(e)(i) of the Plan, 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 optionee's 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 or any dividend or any other increase or decrease in the number of share 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, an 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 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. 1. TAXATION UPON EXERCISE OF OPTION. Optionee understands that upon exercise of this Option, he will generally recognize income for tax purposes in an amount equal to the excess of the then Fair Market Value of the Shares over the exercise price. The Company will be required to withhold tax from Optionee's current compensation with respect to such income; to the extent that Optionee's current compensation is insufficient to satisfy the withholding tax liability, the Company may require the Optionee to make a cash payment to cover such liability as a condition of exercise of this Option. The Optionee may elect to pay such tax by (i) requesting the Company to withhold a sufficient number of shares from the shares otherwise due upon exercise or (ii) by delivering a sufficient number of shares of the Company's common stock which have been previously held by the Optionee for such a period of time as the Committee may require. The aggregate value of the shares withhold or delivered, as determined by the Committee must be sufficient to satisfy all such applicable taxes, except as otherwise permitted by the Committee. If the Optionee is subject to Section 16 of the Securities Exchange Act of 1934, as amended, the Optionee's election must be made in compliance with rules and procedures established by the Committee. Grant Date: --------------- GREATER BAY BANCORP By: --------------------------- Steven C. Smith Executive Vice President Chief Operating Officer and Chief Financial 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 decision, or interpretations of the Board of Directors or its duly appointed Committee upon any questions arising under the Plan. Dated: ---------------------- ----------------------------- Optionee ADDENDUM TO NONSTATUTORY STOCK OPTION AGREEMENT This Addendum to Nonstatutory Stock Option Agreement ("addendum") is hereby entered into between Greater Bay Bancorp, a California corporation (the "Company"), and ______________ ("Optionee") pursuant to the following recitals: WHEREAS, the Company and the Optionee entered into a Nonstatutory Stock Option Agreement dated as of _____________ (the "Agreement"); WHEREAS, the Agreement is a standard form nonqualified stock option agreement utilized by the Company (the "Option"); WHEREAS, Section 6 of the Agreement restricts transferability of the Option by the Optionee; and WHEREAS, the Company and the Optionee wish to amend Section 6 of the Agreement to increase transferability of the Option. NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises of the parties, and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the Company and the Optionee hereby agree as follows: i) Section 6. of the Agreement is hereby amended to provide as follows; 6. Non-Transferability of Option (a) Except as provided below, this Option may not be transferred in any manner other 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. (b) Optionee may transfer this Option in whole or in part to the following persons (and only the following persons): (i) Optionee's spouse, former spouse, children (including adopted children), step children, grandchildren, parents, grandparents, brothers, sisters, aunts, uncles, nieces, nephews, first cousins, mother-in-law, father-in-law, brothers-in-law, or sisters-in-law ("Family Members"), or such other persons as may be approved in writing by the Committee in its sole and absolute discretion ("Approved Transferees"), or (ii) a trust or trusts for the exclusive benefit of any such Family Members or Approved Transferees. (c) In order to effectuate a transfer pursuant to 9b) above, the transfer must be in writing in an instrument submitted to the Company within ten (10) business days after its execution. The Company may grant or withhold its consent to the transfer or the terms of the transfer in its sole and absolute discretion. In the event the Company does not notify Optionee in writing of its disapproval of the transfer or its terms within ten (10) business days of receipt by the Company of a copy of the written transfer instrument from the Optionee, the transfer shall be deemed approved. (d) Transfers of this Option under (b) above may not be a transfer for consideration (for example, sales or exchanges of the Option are not permitted). (e) Family Members and Approved Transferees may not retransfer this Option in whole or in part other than by will or by the laws of descent and distribution, and a transferred Option may be exercised during the lifetime of the transferee only by such transferee. (f) Following any transfer hereunder, the Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer. The term "Optionee" shall be deemed to refer to the transferee. The events of termination of employment of Section 5(e) shall continue to be applied with respect to the original Optionee rather than the transferee, following which the Option shall be exercisable by the transferee only to the extent and for the periods specified in Section 5(e). 2. Except as provided in Section 1 above, the original terms of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date set forth below. Dated: OPTIONEE ----------------------------- GREATER BAY BANCORP a California Corporation By: ----------------------------- Compensation Committee Member -----END PRIVACY-ENHANCED MESSAGE-----