EXHIBIT 10.2

 

THE GREATER BAY BANCORP

2005 EXECUTIVE INCENTIVE PLAN

 

1.    Purpose of Plan

 

1.1 The purpose of the Plan is to promote the success of the Company by
providing participating Executives of the Company and its Subsidiaries with
contingent annual incentive compensation tied to the achievement of annual
performance goals. In addition, the Plan is intended to ensure that any such
annual incentive compensation qualifies as “performance-based compensation”
within the meaning of Section 162(m) of the Code.

 

2.    Definitions and Construction

 

2.1 Accounting Terms.    Except as otherwise expressly provided or the context
otherwise requires, financial and accounting terms are used as defined for
purposes of, and shall be determined in accordance with, generally accepted
accounting principles, as from time to time in effect, as applied and included
in the consolidated financial statements of the Company, prepared in the
ordinary course of business.

 

2.2 Specific Terms.    The following words and phrases as used herein shall have
the following meanings unless a different meaning is plainly required by the
context:

 

(a)  “Award” means an award under this Plan of a conditional opportunity to
receive a Bonus if the applicable criteria is (are) satisfied in the applicable
Performance Period.

 

(b)  “Board” means the Board of Directors of the Company.

 

(c)  “Bonus” means a cash payment or a cash payment opportunity under the Plan,
as the context requires.

 

(d)  “Cause” with respect to a Participant shall mean any of the following that
has a material adverse effect upon the Company or any Subsidiary: (i) the
Participant’s deliberate violation of any state or federal banking or securities
law; or (ii) the Participant’s deliberate violation of the bylaws, rules,
policies, or resolutions of the Company or any Subsidiary; or (iii) the
Participant’s deliberate violation of the rules or regulations of the Federal
Deposit Insurance Corporation, the Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency or any other regulatory
agency or governmental authority having jurisdiction over the Company or any
Subsidiary; or (iv) the Participant’s conviction of any felony; or (v) the
Participant’s conviction of a crime involving moral turpitude, fraudulent
conduct, or dishonest conduct.

 

(e)  “Change in Control” means the occurrence of any of the following events:

 

(i)  Any “person” (as such term is used in sections 13 and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), becomes the
beneficial owner (as that term is used in section 13(d) of the Exchange Act),
directly or indirectly, of more than fifty percent (50%) of the capital stock of
the Company entitled to vote in the election of directors, other than a group of
two or more persons not (A) acting in concert for the purpose of acquiring,
holding or disposing of such stock or (B) otherwise required to file any form or
report with any governmental agency or regulatory authority having jurisdiction
over the Company which requires the reporting of any change in control. The
acquisition of additional stock by any person who immediately prior to such
acquisition already is the beneficial owner of more than fifty percent (50%) of
the capital stock of the Company or the Company entitled to vote in the election
of directors is not a Change in Control.

 

(ii)  During any period of not more than twelve (12) consecutive months during
which the Company continues in existence, not including any period prior to the
effective date of this Plan, individuals who, at the beginning of such period,
constitute the Board of the Company, and any new director (other than a director
designated by a person who has entered into an agreement with

 

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the Company to effect a transaction described in clause (i), (iii) or (iv) of
this Section 2.2(e)) whose appointment to such Board or nomination for election
to such Board was approved by a vote of a majority of the directors then still
in office, either were directors at the beginning of such period or whose
appointment or nomination for election was previously so approved, cease for any
reason to constitute at least a majority of such Board.

 

(iii)  The effective date of any consolidation or merger of the Company (after
all requisite shareholder, applicable regulatory and other approvals and
consents have been obtained), other than (A) a consolidation or merger of the
Company in which the holders of the voting capital stock of the Company
immediately prior to the consolidation or merger hold at least fifty percent
(50%) of the voting capital stock of the surviving entity immediately after the
consolidation or merger or (B) a consolidation or merger of the Company with one
or more other persons that are related to the Company immediately prior to the
consolidation or merger. For purposes of this provision, persons are “related”
if one of them owns, directly or indirectly, at least fifty percent (50%) of the
voting capital stock of the other or a third person owns, directly or
indirectly, at least fifty percent (50%) of the voting capital stock of each of
them.

 

(iv)  The sale or transfer of substantially all of the Company’s assets, to one
or more persons that are not related (as defined in clause (iii) of this Section
2.2(e)) to the Company immediately prior to the sale or transfer.

 

(f)  “Code” means the Internal Revenue Code of 1986, as amended.

 

(g)  “Committee” means the Section 162(m) subcommittee of the Board, its
compensation committee or such other committee as from time to time the Board
may designate to administer the Plan in accordance with Section 3.1 of the Plan
and Section 162(m). The Committee shall consist of at least three (3) members of
the Board who are “outside directors” within the meaning of Section 162(m).

 

(h)  “Company” means Greater Bay Bancorp, a California corporation, and any
business organization or corporation into which Greater Bay Bancorp may be
merged or consolidated or by which it may be succeeded.

 

(i)  “Disability” means a medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months and which:

 

(i)  Renders the Participant unable to engage in any substantial gainful
activity; or

 

(ii)  Results in the Participant receiving income replacement benefits for a
period of not less than three (3) months under any policy of long-term
disability insurance maintained by the Company for the benefit of its employees.

 

Whether or not a Participant meets either of the above conditions will be
determined by the Committee in its sole and absolute discretion.

 

(j)  “EIP Pool” means the pool of funds from which Awards may be paid to
Participants, as determined by the Committee. The EIP Pool shall be equal to the
Section 162(m) Pool less any reductions made at the Committee’s discretion.

 

(k)  “Executive” means an employee (including any officer) of the Company who is
(or in the opinion of the Committee may during the applicable Performance Period
become) a “covered employee” for purposes of Section 162(m). An Executive holds
one or more of the following corporate titles or management committee
designations:

 

President;

Chief Executive Officer;

Executive Vice President;

Senior Vice President; and

Other Senior Officers (nominated for Plan participation by the Chief Executive
Officer and approved by the Company’s Compensation Committee.)

 

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(l)  “Operating Cash Flow” means the consolidated cash flow of the Company and
all of its Subsidiaries from operating activities as determined by the Company
in accordance with generally accepted accounting principles, as from time to
time in effect.

 

(m)  “Participant” means an Executive selected to participate in the Plan by the
Committee.

 

(n)  “Performance Period” means the period with respect to which the Awards are
to be measured. Each Performance Period shall consist of one (1) calendar year.
A new Performance Period shall begin on each January 1.

 

(o)  “Plan” means this 2005 Executive Incentive Plan, as amended from time to
time.

 

(p)  “Restricted Stock” means Shares awarded to a Participant pursuant to the
Stock Plan that may be subject to specified restrictions and to risk of
forfeiture.

 

(q)  “Section 162(m)” means Section 162(m) of the Code, and the regulations
promulgated thereunder, all as amended from time to time.

 

(r)  “Section 162(m) Pool” means the maximum pool of funds available for Awards
for a Performance Period under the Plan. The Section 162(m) Pool will be equal
to two and one-half percent (2.5%) of the Operating Cash Flow of the Company for
the Performance Period.

 

(s)  “Shares” means shares of common stock of the Company or any securities or
property, including rights into which shares of Common Stock of the Company may
be converted by operation of law or otherwise.

 

(t)  “Stock Plan” means the Company’s 1996 Stock Option Plan, as amended, or any
other shareholder approved stock incentive plan of the Company.

 

(u)  “Subsidiary” means any corporation or other entity of which a majority of
the outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.

 

3.    Administration of the Plan

 

3.1 Powers of the Committee.    The Committee shall have the sole authority to
establish and administer the EIP Pool, determine the Executives who will
participate in and receive Awards under the Plan, and, subject to the terms of
the Plan, establish the amount of Restricted Stock or Shares under such Awards,
and the time or times at which and the form and manner in which Awards will be
paid (which may include elective or mandatory deferral alternatives), and shall
otherwise be responsible for the administration of the Plan, in accordance with
its terms. The Committee shall have the authority to construe and interpret the
Plan (except as otherwise provided herein) and any agreement or other document
relating to any Awards under the Plan, may adopt rules and regulations governing
the administration of the Plan, and shall exercise all other duties and powers
conferred on it by the Plan, or which are incidental or ancillary thereto.

 

3.2 Requisite Action.    A majority (but not fewer than two) of the members of
the Committee shall constitute a quorum. The vote of a majority of those present
at a meeting at which a quorum is present or the unanimous written consent of
the Committee shall constitute action by the Committee.

 

3.3 Express Authority (and Limitations on Authority) to Change Terms and
Conditions of Awards; Acceleration of Payment.    Without limiting the
Committee’s authority under other provisions of the Plan, but subject to any
express limitations of the Plan and compliance with Section 162(m), the
Committee shall have the authority to accelerate an Award and to waive
restrictive conditions for an Award, in such circumstances as the Committee
deems appropriate. In addition, and notwithstanding anything elsewhere in the
Plan to the contrary, the Committee shall have the authority to provide under
the terms of an Award that payment or vesting shall be accelerated upon the
death or disability of a Participant, a Change in Control of the Company, or
upon termination of the Participant’s employment without cause or as a
constructive termination, as and in the manner provided by the Committee. In no
event, however, may the Committee modify Awards such that the limitations on
Award values set forth in 4.1 and 4.3 are exceeded.

 

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4.    Awards

 

4.1 Provision for Awards.    All Awards under this Plan shall be based upon the
Section 162(m) Pool. Individual Awards shall be determined by the Committee, at
its discretion. In no event may the aggregate value of individual Awards exceed
the maximum value of the Section 162(m) Pool.

 

4.2 Establishment of EIP Pool.    The EIP Pool shall be established by the
Committee for each Performance Period as an amount equal to or less than the
Section 162(m) Pool. In making any reductions to the Section 162(m) Pool to
establish the EIP Pool, the Committee may consider such factors as it determines
are relevant for the Performance Period.

 

4.3 Maximum Individual Award.    Notwithstanding any provision hereof, no
Executive shall receive an Award for any one Performance Period in excess of one
percent (1%) of the Company’s Operating Cash Flow for the specific Performance
Period during which the Award is granted. The foregoing limits shall be subject
to adjustments consistent with Section 3.3 in the event of acceleration or
deferral.

 

4.4 Selection of Participants.    For each Performance Period, the Committee
shall determine those Executives who will participate in the Plan.

 

4.5 Effect of Mid-Year Change in Executive Status.    If services as an
Executive cease after the commencement of a Performance Period, but the
Participant remains employed with the Company, the Committee may grant a Bonus
that is proportionately adjusted based on the period of time during the
Performance Period that the Executive is a Participant; the amount of any Bonus
paid to such Participant shall not exceed that proportionate amount of the
applicable maximum individual Award under Section 4.3. In order to be eligible
to participate in the Plan, the Executive must be employed in an Executive
position for at least ninety (90) days during the Performance Period.

 

4.6 Committee Discretion to Determine Bonuses.    The Committee has the sole
discretion to determine the standard or formula pursuant to which reductions are
to be made to the Section 162(m) Pool in establishing the EIP Pool, the
calculation each Participant’s Bonus (in accordance with Sections 4.1, 4.2 and
4.3) from the EIP Pool, whether all or any portion of the amount so calculated
will be paid, and the specific amount (if any) to be paid to each Participant,
subject in all cases to the terms, conditions and limits of the Plan and of any
other written commitment authorized by the Committee. The Committee has the sole
discretion to reduce an Executive’s Bonus. The Committee may not, however,
increase an Executive’s Bonus based upon the reduction of another Executive’s
Bonus or otherwise. The Committee may at any time establish (and, once
established, rescind, waive or amend) additional conditions and terms of payment
of Bonuses (including but not limited to the achievement of other financial,
strategic or individual goals, which may be objective or subjective) as it may
deem desirable in carrying out the purposes of the Plan and may take into
account such other factors as it deems appropriate in administering any aspect
of the Plan. The Committee may not, however, increase the Section 162(m) Pool,
or the maximum amount permitted to be paid to any individual under Section 4.1
or 4.3 of the Plan for any Performance Period.

 

4.7 Committee Certification.    No Executive shall receive any payment under the
Plan unless the Committee has certified, by resolution or other appropriate
action in writing, that the amount thereof has been accurately determined in
accordance with the terms, conditions and limits of the Plan and that the
material terms previously established by the Committee or set forth in the Plan
were in fact satisfied.

 

4.8 Time of Payment; Deferred Amounts.    Any Bonuses under the Plan shall be
paid as soon as practicable (generally within seventy-five (75) days) following
the Committee’s determinations under this Section 4.8 and the certification of
the Committee’s findings under Section 4.7. Any such payment shall be in cash or
cash equivalent or in such other form of equal value on such payment date
(including Shares, Restricted Stock, or share equivalents as contemplated by
Section 4.9) as the Committee may approve or require, subject to applicable
withholding requirements (as provided in Section 4.10) and, if applicable,
Section 4.9. Notwithstanding the foregoing, the Committee, in its sole
discretion (but subject to compliance with Section

 

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162(m), to compliance with Section 409A of the Code, and to any prior written
commitments and to any conditions consistent with Sections 3.3, 4.9 and 6.10
that it deems appropriate), provide to Participants the opportunity to elect to
defer the payment of any Bonus under a nonqualified deferred compensation plan.

 

4.9 Share Payouts of Bonus.    Any Shares, Restricted Stock, or Share-related
stock unit payable under a Bonus shall be pursuant to a combined Award under the
Plan and the Stock Plan. The number of Shares, Restricted Stock, or stock units
(or similar deferred award representing a right to receive Shares) awarded in
lieu of all or any portion of a Bonus shall be equal to the largest whole number
of Shares which have an aggregate fair market value no greater than the amount
of cash otherwise payable as of the date the cash payment of the Bonus would
have been made. For this purpose, “fair market value” shall have the meaning set
forth in the Stock Plan. Any such Shares, Restricted Stock, or stock units (or
similar rights) shall thereafter be subject to adjustments for changes in
corporate capitalization as provided in the Stock Plan.

 

4.10 Tax Withholding.    The Company shall withhold from any amounts payable
under this Plan, or from any other compensation payable to the Participant, any
and all federal, state and local income taxes, the Participant’s share of FICA
and other employment taxes, and any other taxes that are required to be withheld
from such payment under applicable law.

 

4.11 Unpaid Leave of Absence.    If a Participant takes an unpaid leave of
absence from the Company or a Subsidiary, at the discretion of the Committee,
the Bonus may be proportionately adjusted based on the period of Participant’s
actual service during the Performance Period.

 

5.    Vesting and Termination of Awards

 

5.1 Vesting or Termination.    Except as otherwise set forth in the Plan, in the
event the Participant’s employment with the Company and its Subsidiaries
terminates during a Performance Period or thereafter prior to payment of Bonuses
relating thereto, each Award shall be vested or shall terminate on such terms
and conditions as the Committee shall establish- with respect to the Award.

 

5.2 Termination of Employment for Cause.    If a Participant’s employment with
the Company or a Subsidiary is terminated for Cause or if a Participant engages
in misconduct defined as Cause either before voluntary terminating employment or
after terminating employment, any Award held by such Participant shall terminate
immediately upon the Company giving notice to the Participant either that the
Participant has been terminated for Cause or that the Participant has engaged in
misconduct defined as Cause. The Committee shall be the sole judge of whether
the Participant’s employment is terminated for Cause or the Participant has
engaged in misconduct defined as Cause.

 

5.3 Termination of Employment due to Death and Disability.    If a Participant’s
employment with the Company or a Subsidiary is terminated due to death or
Disability, then the Participant shall be eligible to receive payment of a
pro-rated Award within ninety (90) days of the termination date, or such shorter
or longer time period as may be determined by the Committee, but only to the
extent that the Award was earned on the termination date. The pro-rated value of
the Award shall be calculated based upon the target value of the individual
Award, rather than the EIP Pool (as the EIP Pool may not be established prior to
the payment date.)

 

5.4 Termination of Employment due to Retirement.    If a Participant’s
employment with the Company or a Subsidiary is terminated due to retirement
after attaining age sixty-two (62) years, then the Participant shall be eligible
to receive a pro-rated Bonus based on actual performance at the end of the
Performance Period, or such shorter period as may be determined by the
Committee, in order to receive a pro-rated Bonus.

 

6.    General Provisions

 

6.1 No Right to Awards or Continued Employment.    Neither the establishment of
the Plan nor the provision for or payment of any amounts hereunder nor any
action of the Company (including, for purposes of this Section 6.1, any
predecessor or subsidiary), the Board or the Committee in respect of the Plan
shall be held

 

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or construed to confer upon any person any legal right to receive, or any
interest in, an Award or any other benefit under the Plan, or any legal right to
be continued in the employ of the Company. The Company expressly reserves any
and all rights to discharge an Executive in its sole discretion, without
liability of any person, entity or governing body under the Plan or otherwise.
Nothing in this Section 6.1, however, is intended to adversely affect any
express independent right of any person under a separate employment agreement.
Notwithstanding any other provision hereof and notwithstanding the fact that
criteria have been attained and/or the individual maximum amounts hereunder have
been calculated, the Company shall have no obligation to pay any Bonus hereunder
nor to pay the maximum amount so calculated or any prorated amount based on
service during the period, unless the Committee otherwise expressly provides by
written contract or other written commitment.

 

6.2 Subsequent Awards.    The designation of a Participant for a Performance
Period shall not in any manner entitle the Participant to receive an Award for
the Performance Period. Moreover, designation of a Participant for a particular
Performance Period shall not require designation of such Participant for any
subsequent Performance Period, and designation of one Participant for any
Performance Period shall not require designation of any other Participant in
such Performance Period or in any other Performance Period.

 

6.3 Discretion of Company, Board and Committee.    Any decision made or action
taken by the Company or by the Board or by the Committee arising out of or in
connection with the creation, amendment, construction, administration,
interpretation and effect of the Plan shall be within the absolute discretion of
such entity and shall be conclusive and binding upon all persons. No member of
the Committee shall have any liability for actions taken or omitted under the
Plan by the member or any other person.

 

6.4 Arbitration.    All claims, disputes and other matters in question arising
out of or relating to this Plan shall be resolved by binding arbitration before
an arbitrator, selected by the mutual agreement of the parties, from the
Judicial Arbitration and Mediation Services, Inc. (“JAMS”), in San Francisco,
California. In the event JAMS is unable or unwilling to conduct the arbitration
provided for under the terms of this paragraph, or has discontinued its
business, the parties agree that an arbitrator, selected by the mutual agreement
of the parties, from the American Arbitration Association (“AAA”), in San
Francisco, California, shall conduct the binding arbitration referred to in this
paragraph. Notice of the demand for arbitration shall be filed in writing with
the other party to the dispute and with JAMS (or AAA, if necessary). In no event
shall the demand for arbitration be made after the date when institution of
legal or equitable proceedings based on such claim, dispute or other matter in
question would be barred by the applicable statute of limitations. The
arbitration shall be subject to commercial rules and procedures used or
established by JAMS, or if there are none, the commercial rules and procedures
used or established by AAA. Notwithstanding anything to the contrary in the JAMS
(or AAA) rules and procedures, the arbitration shall provide for (i) written
discovery and depositions adequate to give the parties access to documents and
witnesses that are essential to the dispute and (ii) a written decision by the
arbitrator that includes the essential findings and conclusions upon which the
decision is based. Subject to Section 6.5 below, the parties shall bear their
own costs and attorneys’ fees incurred in conducting the arbitration, and shall
split equally the fees and administrative costs charged by the arbitrator and
JAMS (or AAA) unless required otherwise by applicable law. Any award rendered by
JAMS (or AAA) shall be final and binding upon the parties, and as applicable,
their respective heirs, Beneficiaries, legal representatives, agents, successors
and assigns, and may be entered in any court having jurisdiction thereof. Any
arbitration hereunder shall be conducted in Palo Alto, California, unless
otherwise agreed to by the parties.

 

6.5 Attorneys Fees.    In the event of any arbitration or litigation concerning
any controversy, claim or dispute arising out of or relating to this Plan, the
prevailing party shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys’ fees and costs incurred in connection therewith
or in the enforcement or collection of any judgment or award rendered therein.
The “prevailing party” means the party determined by the arbitrator(s) or court,
as the case may be, to have most nearly prevailed, even if such party did not
prevail in all matters, not necessarily the one in whose favor a judgment is
rendered.

 

6.6 No Funding of Plan.    The Company shall not be required to fund or
otherwise segregate any cash or any other assets which may at any time be paid
to Participants under the Plan. The Plan shall constitute an

 

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“unfunded” plan of the Company. The Company shall not, by any provisions of the
Plan, be deemed to be a trustee of any property, and any rights of any
Participant or former Participant shall be no greater than those of a general
unsecured creditor or shareholder of the Company, as the case may be.

 

6.7 Non-Transferability of Benefits and Interests.    Except as expressly
provided by the Committee, no benefit payable under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such attempted action shall be void and no such
benefit shall be in any manner liable for or subject to debts, contracts,
liabilities, engagements or torts of any Participant or former Participant. This
Section 6.7 shall not apply to an assignment of a contingency or payment due (i)
after the death of an Participant to the deceased Participant’s legal
representative or beneficiary or (ii) after the disability of a Participant to
the disabled Participant’s personal representative.

 

6.8 Law to Govern.    All questions pertaining to the construction, regulation,
validity and effect of the provisions of the Plan shall be determined in
accordance with the laws of the State of California.

 

6.9 Non-Exclusivity.    The Plan does not limit the authority of the Company,
the Board or the Committee, or any subsidiary of the Company to grant awards or
authorize any other compensation to any person under any other plan or
authority, including, without limitation, the issuance of restricted stock or
restricted stock units or any other awards under the Stock Plan.

 

6.10 Section 162(m) Conditions; Bifurcation of Plan.    It is the intent of the
Company that the Plan and Awards made hereunder satisfy and be interpreted in a
manner, that, in the case of Participants who are persons whose compensation is
subject to Section 162(m), satisfies any applicable requirements as
performance-based compensation. Any provision, application or interpretation of
the Plan inconsistent with this intent to satisfy the standards in Section
162(m) of the Code shall be disregarded. Notwithstanding anything to the
contrary in the Plan, the provisions of the Plan may at any time be bifurcated
by the Board or the Committee in any manner so that certain provisions of the
Plan or any Bonus intended (or required in order) to satisfy the applicable
requirements of Section 162(m) are only applicable to persons whose compensation
is subject to Section 162(m).

 

7.    Amendment, Suspension or Termination

 

7.1 Amendment, Suspensions, or Termination of the Plan.    The Board or the
Committee may from time to time amend, suspend or terminate in whole or in part,
and if suspended or terminated, may reinstate, any or all of the provisions of
the Plan. Notwithstanding the foregoing, no amendment shall be effective without
Board and/or shareholder approval if such approval is necessary to comply with
the applicable provisions of Section 162(m).

 

8.    Effective Date

 

8.1 Effective Date of the Plan.    The Plan shall be effective as of January 1,
2005, subject to the approval of the shareholders of the Company.

 

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