**Exhibit 10.4**

 

# **NATIONALMERCANTILE BANCORP**

 

**1996 Stock Option Plan**

**Incentive Stock Option Agreement**

 

This INCENTIVE STOCK OPTIONAGREEMENT (the “Agreement”) is made as of the xxth day of Month, 200x betweenNATIONAL MERCAN­TILE BANCORP, a California corporation (the “Company”), andOPTIONEE  (the “Optionee”).

 

RE C I T A L S

 

A.            The Board of Directors of theCompany adopted the 1996 Stock Incentive Plan (the “1996 Plan”) on March 28,1996 and April 25, 1997, and the 1996 Plan was approved by the shareholders ofthe Company on June 18, 1997 and amendments to the 1996 Plan were approved byshareholders on April 23, 1998, April 29, 1999, April 26, 2001, June 6, 2002and May 29, 2003.

 

B.            The1996 Plan provides for the granting of options to purchase shares of CommonStock of the Company to directors, officers, employees or independentcontractors of the Company or any subsidiary of the Company, as the StockOption Committee (the “Committee”) appointed by the Board of Directors may fromtime to time determine, and, pursuant to Section 10 of the 1996 Plan, anautomatic grant to new directors of the Company who are not also employees ofthe Company.

 

C.            TheCommittee has determined that it is in the best interests of the Company andits shareholders to grant, pursuant to the 1996 Plan, an incentive stock optionto the Optionee to purchase NUMBER OF SHARES (xxx) shares of the Company’sCommon Stock on the terms and conditions hereinafter set forth.

 

D.            Theoption granted hereby is intended to qualify as an “incentive stock option”under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”),to the extent possible.

 

NOW, THEREFORE, the partieshereto agree as follows:

 

1.             GRANTOF OPTION.  The Company hereby grantsto the Optionee as of the date hereof (the “Date of Grant”) an incentive stockoption (the “Option”) to purchase, on the terms and conditions hereinafter setforth, NUMBER OF SHARES (xxx) shares of the Company’s Common Stock, no parvalue (the “Option Shares”), at a purchase price of $xx.xx per share.

 

2.             VESTING. The Option shall vest and become exercisable as follows:

 

xxxshares on or after DATE

 

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*provided*,*however*, that noportion of the Option may be exercised by the Optionee to the extent that suchexercise would cause an ownership change to occur pursuant to Section 382 ofthe Code.  Section 382 of the Codeprovides, among other things, that utilization of net operating losses will berestricted if there is a change in ownership of the loss corporation.  Changes in ownership are determined byreference to 5% shareholders.

 

3.             EXPIRATION OF OPTION AND CERTAIN LIMITATIONS ON RIGHTTO EXERCISE.

 

(a)           The Option shall expire on the tenth anniversary of theDate of Grant (the “Expiration Date”), except that (i) if the Optionee ceases,on or before the Expiration Date, for any reason other than death or permanentdisability, to be employed by the Company or a subsidiary of the Company, theOption shall expire as provided in Section 6 below, and (ii) if theOptionee ceases, on or before the Expiration Date, to be employed by theCompany or a subsidiary of the Company, by reason of death or permanentdisability, the Option shall expire as provided in Section 7 below.  The term “Employee” as used in this Optionmeans an officer or other employee of the Company or any subsidiary (includingan officer who is also a director of the Company or any subsid­iary).

 

(b)           The Option may be exercised in whole or in part from timeto time on or after December 30, 2004 until the Expiration Date (subject to theprovisions hereof), except that not less than one hundred (100) shares may bepurchased at any time unless the number of shares then purchasable hereundershall be less than one hundred.

 

(c)           Except as provided in Sections 6 and 7 below, none ofthe Option Shares may be purchased hereunder unless the Optionee, at the timehe exercises the Option, is employed by the Company or a subsidiary of the Company,since the date hereof.  A leave ofabsence approved in writing by the Committee shall not be deemed a terminationof employment for any purpose of this Option.

 

4              METHOD OF EXERCISE OF OPTION.  The Option may be exercised only by deliveryto the Company of a written notice of exercise specifying the number of OptionShares which the Optionee then elects to purchase, accompanied by payment infull of the aggregate exercise price for such shares (the “Exercise Price”), incash or by check payable to the Company, or in shares of the Company’s CommonStock, represented by a certificate duly endorsed, transferring to the Companygood and valid title to such shares, such shares to be valued on the basis ofthe aggregate Fair Market Value (as defined in the 1996 Plan) thereof on thedate of such exercise.

 

5              NON-TRANSFERABILITY OF OPTION.  The Option shall not be transferable by theOptionee otherwise than by will or the laws of descent and distribution, and itshall be exercisable, during the lifetime of the Optionee only by him or by hisguardian or legal representative regardless of any community property interesttherein of the spouse of the Optionee or such spouse’s successors in interest.

 

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6.             TERMINATION OF EMPLOYMENT.

 

(a)            If the Optionee ceases to beemployed by the Company or a subsidiary of the Company for any reason otherthan death or permanent disability, the Option shall expire three (3) monthsafter the date the Optionee ceases to be so employed, unless by its terms itexpires sooner.  The Option may beexercised by the Optionee within such three month period to the extent it wasexercisable on the date of such cessation of employment.

 

(b)            The Option confers no right upon theOptionee with respect to the continuation of his employment with the Company orany of its subsidiaries, and shall not interfere with the right of the Companyor a subsidiary, or of the Optionee, to terminate his employ­ment at any time.

 

7.             DEATH OR PERMANENT DISABILITY OF OPTIONEE.  If the Optionee ceases to be employed by theCompany or a subsidiary of the Company by reason of death or permanentdisability, the Option shall expire one (1) year after the date of such deathor disability, unless by its terms it expires sooner.  The Option may be exercised only by the heirsof the Optionee within such one year period to the extent it was exercisable onthe date of such death or disability.

 

8.             ADJUSTMENTS UPON THE OCCURRENCE OF CERTAIN EVENTS.

 

(a)           If theoutstanding shares of the Company’s Common Stock are increased, decreased, orexchanged for or converted into cash, property or a different number or kind ofshares or securities of the Company through reorganization, recapitalization,reclassification, merger, consolidation, restructuring, stock dividend, stocksplit, reverse stock split or other similar transaction, or if substantiallyall of the property and assets of the Company are sold, then, unless the termsof such transaction provide otherwise, an appropriate and proportionateadjustment shall be made in the Option Shares pursuant to which the Optionsrelate.  Any such adjustment in theoutstanding Options shall be made without change in the aggregate purchaseprice applicable to the unexercised portion of the Options but with a correspondingadjustment in the price for each Option Share.

 

(b)           No adjustmentprovided for in this Section 8 shall require the Company to sell a fractionalshare under the Options.

 

9.             DELIVERY OF STOCK CERTIFICATES.  Upon the exercise of all or a portion of theOption, the Company, as promptly as practicable, shall mail or deliver to theOptionee a stock certificate or certificates representing the shares thenpurchased, and will pay all stamp taxes payable in connection therewith.  The issuance of such shares and delivery ofthe certificate or certificates therefor shall, however, be subject to anydelay necessary to complete (a) the listing of such shares on any stockexchange upon which shares of the same class are then listed or quoted on theNasdaq, (b) such registration or other qualification of such shares under anystate or federal law, rule, or regulation as the Company may determine to benecessary or advisable, and (c) the making of provision for the payment orwithholding of any taxes required to be withheld pursuant to any applicablelaw, in respect of the exercise of the Option or the receipt of such shares.

 

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10.           NOTICES, ETC.

 

(a)           Any notice hereunder by theOptionee shall be given to the Company in writing and such notice and anypayment by the Optionee hereunder shall be deemed duly given or made only uponreceipt thereof at the Company’s corporate offices at 1840 Century Park East,Los Angeles, California 90067, or at such other address as the Company maydesignate by notice to the Optionee.

 

(b)            Any notice or other communication tothe Optionee shall be in writing and any such communication and any delivery tothe Optionee hereunder shall be deemed duly given or made if mailed ordelivered to the Optionee at such address as the Optionee shall have on filewith the Company or in care of the Company at the address of its corporateoffices indicated above.

 

11.           WAIVER.  Thewaiver by the Company of any provision of the Option shall not operate as or beconstrued to be a waiver of the same pro­vision or any other provision hereofat any subsequent time or for any other purpose.

 

12.           IRREVOCABILITY. The Option shall be irrevocable until it expires as herein provided.

 

13.           EFFECTIVE DATE. The Option shall be deemed granted and effec­tive on the Date of Grant.

 

14.           INTERPRETATION AND CONSTRUCTION.  The interpretation and construction of theOption by the Committee shall be final, binding and conclu­sive.  The section headings in this Agreement arefor convenience of reference only and shall not be deemed part of, or germaneto the interpretation or construction of, this Agreement.

 

 
|   | NATIONAL MERCANTILE  BANCORP |
|--------|------------------------------|
|   |                         |   |
|   |                         |   |
|   | By:                          |   |   |
|   |                         | Scott A. Montgomery |
|   |                         | President & CEO |
|   |                         |   |
|   |                         |   |
|   |                         |   |
|   |                         |
|   |                         | Optionee |
|        |                              |  |  |  |

 

By his or her signature below, the spouse ofthe Optionee agrees to be bound by all of the terms and conditions of theforegoing Agreement.

 
|   |   |               |
|--------|--------|--------------------|
|   |   | Spouse of Optionee |
|        |        |                    |  |

 

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