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                                                                    EXHIBIT 10.4

                                    TOO, INC.

                           FIRST AMENDED AND RESTATED
                1999 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
                             (AMENDED MAY 10, 2000)

                                    ARTICLE 1

                            ESTABLISHMENT AND PURPOSE

SECTION 1.1. Establishment and Effective Date. Too, Inc., a Delaware corporation
(the "COMPANY"), hereby establishes a stock incentive plan to be known as the
"Too, Inc. 1999 Stock Option and Performance Incentive Plan" (the "PLAN"). The
Plan shall become effective on the date The Limited, Inc. distributes (the
"DISTRIBUTION") to its shareholders the Company's common stock, par value $.01
per share (the "COMMON STOCK").

SECTION 1.2. Purpose. The Company desires to attract and retain the best
available executive and key management associates for itself and its
subsidiaries and to encourage the highest level of performance by such
associates in order to serve the best interests of the Company and its
stockholders. The Plan is expected to contribute to the attainment of these
objectives by offering eligible associates the opportunity to acquire stock
ownership interests in the Company, and other rights with respect to stock of
the Company, and to thereby provide them with incentives to put forth maximum
efforts for the success of the Company and its subsidiaries.

                                    ARTICLE 2

                                     AWARDS

SECTION 2.1. Form of Awards. Awards under the Plan may be granted in any one or
all of the following forms: (i) incentive stock options ("INCENTIVE STOCK
OPTIONS") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "CODE"); (ii) nonstatutory stock options ("NONSTATUTORY
STOCK OPTIONS") (unless otherwise indicated, references in the Plan to "OPTIONS"
shall include both Incentive Stock Options and Nonstatutory Stock Options);
(iii) stock appreciation rights ("STOCK APPRECIATION RIGHTS"), as described in
Article 7, which may be awarded either in tandem with Options ("TANDEM STOCK
APPRECIATION RIGHTS") or on a stand-alone basis ("NONTANDEM STOCK APPRECIATION
RIGHTS"); (iv) shares of Common Stock which are restricted as provided in
Article II ("RESTRICTED SHARES"); (v) units representing shares of Common Stock,
as described in Article 12 ("PERFORMANCE SHARES"); (vi) units which do not
represent shares of Common Stock but which may be paid in the form of Common
Stock, as described in Article 13 ("PERFORMANCE UNITS"); (vii) shares of
unrestricted Common Stock ("UNRESTRICTED SHARES"); and (viii) tax offset
payments ("TAX OFFSET PAYMENTS"), as described in Article 15.

SECTION 2.2. Maximum Shares Available. The maximum aggregate number of shares of
Common Stock available for award under the Plan is 3,750,000 subject to
adjustment pursuant to Article 16. In addition, Tax Offset Payments which may be
awarded under the Plan will not exceed the number of shares available for
issuance under the Plan. Shares of Common Stock issued pursuant to the Plan may
be either authorized but unissued shares or issued shares reacquired by the
Company. In the event that prior to the end of the period during which Options
may be granted under the Plan, any Option or any Nontandem

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Stock Appreciation Right under the Plan expires unexercised or is terminated,
surrendered or canceled (other than in connection with the exercise of a Stock
Appreciation Right) without being exercised in whole or in part for any reason,
or any Restricted Shares, Performance Shares or Performance Units are forfeited,
or if such awards are settled in cash in lieu of shares of Common Stock, then
such shares or units may, at the discretion of the Committee (as defined below)
to the extent permissible under Rule 16b-3 under the Securities Exchange Act of
1934 (the "ACT"), be made available for subsequent awards under the Plan, upon
such terms as the Committee may determine.

SECTION 2.3. Return of Prior Awards. As a condition to any subsequent award, the
Committee shall have the right, at its discretion, to require associates to
return to the Company awards previously granted under this Plan. Subject to the
provisions of this Plan, such new award shall be upon such terms and conditions
as are specified by the Committee at the time the new award is granted to the
extent permitted by Rule 16b-3 under the Act.

                                    ARTICLE 3

                                 ADMINISTRATION

SECTION 3.1. Committee. The Plan shall be administered by a Committee (the
"COMMITTEE") appointed by the Board and consisting of not less than two (2)
members of the Board. Each member of the Committee shall be an "outside
director" (within the meaning of Section 162(m) of the Code) and a "non-employee
director" (within the meaning of Rule l6b-3(b)(3)(i) under the Act).

SECTION 3.2. Powers of Committee. Subject to the express provisions of the Plan,
the Committee shall have the power and authority (i) to grant Options and to
determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option; (ii) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options and to determine which Options, if any, shall be accompanied by
Tandem Stock Appreciation Rights; (iii) to grant Tandem Stock Appreciation
Rights and Nontandem Stock Appreciation Rights and to determine the terms and
conditions of such rights; (iv) to grant Restricted Shares and to determine the
term of the restricted period and other conditions and restrictions applicable
to such shares; (v) to grant Performance Shares and Performance Units and to
determine the performance objectives, performance periods and other conditions
applicable to such shares or units; (vi) to grant Unrestricted Shares; (vii) to
determine the amount of, and to make, Tax Offset Payments; and (viii) to
determine the associates to whom, and the time or times at which, Options, Stock
Appreciation Rights, Restricted Shares, Performance Shares, Performance Units
and Unrestricted Shares shall be granted.

SECTION 3.3. Delegation. The Committee may delegate to one or more of its
members or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation will cause (i) transactions under
the Plan to fail to comply with Section 16 of the Act or (ii) the Committee to
fail to qualify as "outside directors" under Section 162(m) of the Code. The
Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.

SECTION 3.4. Interpretations. The Committee shall have sole discretionary
authority to interpret the terms of the Plan, to adopt and revise rules,
regulations and policies to administer the Plan and to make any other factual
determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Company, all associates who have received awards under the Plan and all
other interested persons.

SECTION 3.5. Liability; Indemnification. No member of the Committee, nor any
person to whom duties have been delegated, shall be personally liable for any
action, interpretation or determination made with respect to the Plan or awards
made thereunder, and each member of the Committee shall be fully indemnified and
protected by the Company with respect to any

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liability he or she may incur with respect to any such action, interpretation or
determination, to the extent permitted by applicable law and to the extent
provided in the Company's Certificate of Incorporation and Bylaws, as amended
from time to time.

                                    ARTICLE 4

                                   ELIGIBILITY

Awards shall be limited to executive and key management associates who are
regular, full-time associates of the Company and its present and future
subsidiaries. In determining the associates to whom awards shall be granted and
the number of shares to be covered by each award, the Committee shall take into
account the nature of the services rendered by such associates, their present
and potential contributions to the success of the Company and its subsidiaries
and such other factors as the Committee in its sole discretion shall deem
relevant. As used in this Plan, the term "SUBSIDIARY" shall mean any corporation
which at the time qualifies as a subsidiary of the Company under the definition
of "subsidiary corporation" set forth in Section 424(f) of the Code, or any
successor provision hereafter enacted. No associate may be granted in any
calendar year awards covering more than 1,100,000 shares of Common Stock.

                                    ARTICLE 5

                                  STOCK OPTIONS

SECTION 5.1. Grant of Options. Options may be granted under this Plan for the
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.

SECTION 5.2. Option Price. The option price of each Option to purchase Common
Stock shall be determined by the Committee at the time of the grant, but shall
not be less than 100 percent of the fair market value of the Common Stock
subject to such Option at the time of grant. The option price so determined
shall also be applicable in connection with the exercise of any Tandem Stock
Appreciation Right granted with respect to such Option. The exercise price of an
option previously granted under the Plan shall not thereafter be reduced other
than pursuant to the provisions of Article 17 or Article 18.

SECTION 5.3. Term of Options. The term of each Option granted under the Plan
shall not exceed ten (10) years from the date of grant, subject to earlier
termination as provided in Articles 9 and 10, except as otherwise provided in
Section 6.1 with respect to ten (10) percent stockholders of the Company.

SECTION 5.4. Exercise of Options. An Option may be exercised, in whole or in
part, at such time or times as the Committee shall determine. The Committee may,
in its discretion, accelerate the exercisability of any Option at any time.
Options may be exercised by an associate by giving written notice to the
Committee stating the number of shares of Common Stock with respect to which the
Option is being exercised and tendering payment therefor. Payment for the Common
Stock issuable upon exercise of the Option shall be made in full in cash or by
certified check or, if the Committee, in its sole discretion, permits, in shares
of Common Stock (valued at fair market value on the date of exercise). As soon
as reasonably practicable following such exercise, a certificate representing
the shares of Common Stock purchased, registered in the name of the associate,
shall be delivered to the associate.

SECTION 5.5. Cancellation of Stock Appreciation Rights. Upon exercise of all or
a portion of an Option, the related Tandem Stock Appreciation Rights shall be
canceled with respect to an equal number of shares of Common Stock.

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                                    ARTICLE 6

               SPECIAL RULES APPLICABLE TO INCENTIVE STOCK OPTIONS

SECTION 6.1. Ten Percent Stockholder. Notwithstanding any other provision of
this Plan to the contrary, no associate may receive an Incentive Stock Option
under the Plan if such associate, at the time the award is granted, owns (after
application of the rules contained in Section 424(d) of the Code) stock
possessing more than ten (10) percent of the total combined voting power of all
classes of stock of the Company or its subsidiaries, unless (i) the option price
for such Incentive Stock Option is at least 110 percent of the fair market value
of the Common Stock subject to such Incentive Stock Option on the date of grant
and (ii) such Option is not exercisable after the date five (5) years from the
date such Incentive Stock Option is granted.

SECTION 6.2. Limitation on Grants. The aggregate fair market value (determined
with respect to each Incentive Stock Option at the time such Incentive Stock
Option is granted) of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an associate during any
calendar year (under this Plan or any other plan of the Company or a subsidiary)
shall not exceed $100,000.

SECTION 6.3. Limitations on Time of Grant. No grant of an Incentive Stock Option
shall be made under this Plan more than ten (10) years after the earlier of the
date of adoption of the Plan by the Board or the date the Plan is approved by
stockholders.

                                    ARTICLE 7

                            STOCK APPRECIATION RIGHTS

SECTION 7.1. Grants of Stock Appreciation Rights. Tandem Stock Appreciation
Rights may be awarded by the Committee in connection with any Option granted
under the Plan, either at the time the Option is granted or thereafter at any
time prior to the exercise, termination or expiration of the Option. Nontandem
Stock Appreciation Rights may also be granted by the Committee at any time. At
the time of grant of a Nontandem Stock Appreciation Right, the Committee shall
specify the number of shares of Common Stock covered by such right and the base
price of shares of Common Stock to be used in connection with the calculation
described in Section 7.04 below. The base price of a Nontandem Stock
Appreciation Right shall be not less than 100 percent of the fair market value
of a share of Common Stock on the date of grant. Stock Appreciation Rights shall
be subject to such terms and conditions not inconsistent with the other
provisions of this Plan as the Committee shall determine.

SECTION 7.2. Limitations on Exercise. A Tandem Stock Appreciation Right shall be
exercisable only to the extent that the related Option is exercisable and shall
be exercisable only for such period as the Committee may determine (which period
may expire prior to the expiration date of the related Option). Upon the
exercise of all or a portion of Tandem Stock Appreciation Rights, the related
Option shall be canceled with respect to an equal number of shares of Common
Stock. Shares of Common Stock subject to Options, or portions thereof,
surrendered upon exercise of a Tandem Stock Appreciation Right, shall not be
available for subsequent awards under the Plan. A Nontandem Stock Appreciation
Right shall be exercisable during such period as the Committee shall determine.

SECTION 7.3. Surrender or Exchange of Tandem Stock Appreciation Rights. A Tandem
Stock Appreciation Right shall entitle the associate to surrender to the Company
unexercised the related option, or any portion thereof, and to receive from the
Company in exchange therefor that number of shares of Common Stock having an
aggregate fair market value equal to (A) the excess of (i) the fair market value
of one (1) share of Common Stock as of the date the Tandem Stock Appreciation
Right is exercised over (ii) the option price per share specified in such
Option, multiplied by (B) the number of shares of Common Stock subject to the
Option, or portion thereof, which is surrendered. Cash shall be delivered in
lieu of any fractional shares.

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SECTION 7.4. Exercise of Nontandem Stock Appreciation Rights. The exercise of a
Nontandem Stock Appreciation Right shall entitle the associate to receive from
the Company that number of shares of Common Stock having an aggregate fair
market value equal to (A) the excess of (i) the fair market value of one (1)
share of Common Stock as of the date on which the Nontandem Stock Appreciation
Right is exercised over (ii) the base price of the shares covered by the
Nontandem Stock Appreciation Right, multiplied by (B) the number of shares of
Common Stock covered by the Nontandem Stock Appreciation Right, or the portion
thereof being exercised. Cash shall be delivered in lieu of any fractional
shares.

SECTION 7.5. Settlement of Stock Appreciation Rights. As soon as is reasonably
practicable after the exercise of a Stock Appreciation Right, the Company shall
(i) issue, in the name of the associate, stock certificates representing the
total number of full shares of Common Stock to which the associate is entitled
pursuant to Section 7.03 or 7.04 hereof, and cash in an amount equal to the fair
market value, as of the date of exercise, of any resulting fractional shares,
and (ii) if the Committee causes the Company to elect to settle all or part of
its obligations arising out of the exercise of the Stock Appreciation Right in
cash pursuant to Section 7.06, deliver to the associate an amount in cash equal
to the fair market value, as of the date of exercise, of the shares of Common
Stock it would otherwise be obligated to deliver.

SECTION 7.6. Cash Settlement. The Committee, in its discretion, may cause the
Company to settle all or any part of its obligation arising out of the exercise
of a Stock Appreciation Right by the payment of cash in lieu of all or part of
the shares of Common Stock it would otherwise be obligated to deliver in an
amount equal to the fair market value of such shares on the date of exercise.

                                    ARTICLE 8

           NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS

No Option or Stock Appreciation Right may be transferred, assigned, pledged or
hypothecated (whether by operation of law or otherwise), except as provided by
will or the applicable laws of descent and distribution, and no Option or Stock
Appreciation Right shall be subject to execution, attachment or similar process.
Any attempted assignment, transfer, pledge, hypothecation or other disposition
of an Option or a Stock Appreciation Right not specifically permitted herein
shall be null and void and without effect. An Option or Stock Appreciation Right
may be exercised by an associate only during his or her lifetime, or following
his or her death pursuant to Article 10.

                                    ARTICLE 9

                            TERMINATION OF EMPLOYMENT

SECTION 9.1. Exercise after Termination of Employment. Except as the Committee
may at any time provide, in the event that the employment of an associate to
whom an Option or Stock Appreciation Right has been granted under the Plan shall
be terminated (for reasons other than death or total disability), such Option or
Stock Appreciation Right may be exercised (to the extent that the associate was
entitled to do so at the termination of his employment) at any time within three
(3) months after such termination of employment.

SECTION 9.2. Total Disability. In the event that an associate to whom an Option
or Stock Appreciation Right has been granted under the Plan shall become totally
disabled, except as the Committee may at anytime provide, such Option or Stock
Appreciation Right may be exercised at any time during the first nine (9) months
that the associate receives benefits under the Company's Long-Term Disability
Plan (THE "DISABILITY PLAN"). For purposes hereof, "total disability" shall have
the definition set forth in the Disability Plan, which definition is hereby
incorporated by reference.

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                                   ARTICLE 10

                               DEATH OF ASSOCIATE

If an associate to whom an Option or Stock Appreciation Right has been granted
under the Plan shall die while employed by the Company or one of its
subsidiaries or within three (3) months after the termination of such
employment, except as the Committee may at anytime provide, such Option or Stock
Appreciation Right may be exercised to the extent that the associate was
entitled to do so at the time of his or her death, by the associate's estate or
by the person who acquires the right to exercise such Option or Stock
Appreciation Right upon his or her death by bequest or inheritance. Such
exercise may occur at any time within one (1) year after the date of the
associate's death or such other period as the Committee may at anytime provide,
but in no case later than the date on which the Option or Stock Appreciation
Right terminates.

                                   ARTICLE 11

                                RESTRICTED SHARES

SECTION 11.1. Grant of Restricted Shares. The Committee may from time to time
cause the Company to grant Restricted Shares under the Plan to associates,
subject to such restrictions, conditions and other terms as the Committee may
determine.

SECTION 11.2. Restrictions. At the time a grant of Restricted Shares is made,
the Committee shall establish a period of time (the "RESTRICTED PERIOD")
applicable to such Restricted Shares. Each grant of Restricted Shares may be
subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a grant is made, prescribe restrictions in addition to
or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which shall be
applicable to all or any portion of the Restricted Shares. Except with respect
to grants of Restricted Shares intended to qualify as performance based
compensation for purposes of Section 162(m) of the Code, the Committee may also,
in its sole discretion, shorten or terminate the Restricted Period or waive any
other restrictions applicable to all or a portion of such Restricted Shares.
None of the Restricted Shares may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restricted Period or prior to the
satisfaction of any other restrictions prescribed by the Committee with respect
to such Restricted Shares.

SECTION 11.3. Restricted Stock Certificates. If the Committee deems it necessary
or appropriate, the Company may issue, in the name of each associate to whom
Restricted Shares have been granted, stock certificates representing the total
number of Restricted Shares granted to the associate, provided that such
certificates bear an appropriate legend or other restriction on transfer. The
Secretary of the Company shall hold such certificates, properly endorsed for
transfer, for the associate's benefit until such time as the Restricted Shares
are forfeited to the Company, or the restrictions lapse.

SECTION 11.4. Rights of Holders of Restricted Shares. Except as determined by
the Committee either at the time Restricted Shares are awarded or any time
thereafter prior to the lapse of the restrictions, holders of Restricted Shares
shall not have the right to vote such shares or the right to receive any
dividends with respect to such shares. All distributions, if any, received by an
associate with respect to Restricted Shares as a result of any stock split-up,
stock distribution, a combination of shares, or other similar transaction shall
be subject to the restrictions of this Article 11.

SECTION 11.5. Forfeiture. Except as the Committee may at any time provide, any
Restricted Shares granted to an associate pursuant to the Plan shall be
forfeited if the associate terminates employment with the Company or its
subsidiaries prior to the expiration or termination of the Restricted Period and
the satisfaction of any other conditions applicable to such Restricted Shares.
Upon such forfeiture, the Secretary of the Company shall either cancel or retain
in its treasury the Restricted Shares that are forfeited to the Company.

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SECTION 11.6. Delivery of Restricted Shares. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee, the restrictions applicable to the Restricted Shares shall
lapse and a stock certificate for the number of Restricted Shares with respect
to which the restrictions have lapsed shall be delivered, free of all such
restrictions, to the associate or the associate's beneficiary or estate, as the
case may be.

SECTION 11.7. Performance-based Objectives. At the time of the grant of
Restricted Shares to an associate, and prior to the beginning of the performance
period to which performance objectives relate, the Committee may establish
performance objectives based on any one or more of the following: price of
Company Common Stock or the stock of any affiliate, shareholder return, return
on equity, return on investment, return on capital, sales productivity,
comparable store sales growth, economic profit, economic value added, net
income, operating income, gross margin, sales, free cash flow, earnings per
share, operating company contribution or market share. These factors shall have
a minimum performance standard below which, and a maximum performance standard
above which, no payments will be made. These performance goals may be based on
an analysis of historical performance and growth expectations for the business,
financial results of other comparable businesses, and progress towards achieving
the long-range strategic plan for the business. These performance goals and
determination of results shall be based entirely on financial measures. The
Committee may not use any discretion to modify award results except as permitted
under Section 162(m) of the Code.

                                   ARTICLE 12

                               PERFORMANCE SHARES

SECTION 12.1. Award of Performance Shares. For each Performance Period (as
defined in Section 12.2), Performance Shares may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. Each Performance Share shall be deemed to be equivalent to one (1)
share of Common Stock. Performance Shares granted to an associate shall be
credited to an account (a "PERFORMANCE SHARE ACCOUNT") established and
maintained for such associate.

SECTION 12.2. Performance Period. "PERFORMANCE PERIOD" shall mean such period of
time as shall be determined by the Committee in its sole discretion. Different
Performance Periods may be established for different associates receiving
Performance Shares. Performance Periods may run consecutively or concurrently.

SECTION 12.3. Right to Payment of Performance Shares. With respect to each award
of Performance Shares under this Plan, the Committee shall specify performance
objectives (the "PERFORMANCE OBJECTIVES") which must be satisfied in order for
the associate to vest in the Performance Shares which have been awarded to him
or her for the Performance Period. If the Performance Objectives established for
an associate for the Performance Period are partially but not fully met, the
Committee may, nonetheless, in its sole discretion, determine that all or a
portion of the Performance Shares have vested. If the Performance Objectives for
a Performance Period are exceeded, the Committee may, in its sole discretion,
grant additional, full vested Performance Shares to the associate. The Committee
may also determine, in its sole discretion, that Performance Shares awarded to
an associate shall become partially or fully vested upon the associate's death,
total disability (as defined in Article 9) or retirement, or upon the
termination of the associate's employment prior to the end of the Performance
Period.

SECTION 12.4. Payment for Performance Shares. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 12.3). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Shares shall be granted to the
associate pursuant to Section 12.3. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine at the
time of grant, the Company shall pay to the associate an amount with respect to
each vested Performance Share equal to the fair market value of a share of
Common Stock on such payment date or, if the Committee shall so specify at the
time of grant, an amount equal to (i) the fair market value of a share of Common
Stock on the payment date less (ii) the fair market value of a share of Common
Stock on the date

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of grant of the Performance Share. Payment shall be made entirely in cash,
entirely in Common Stock (including Restricted Shares) or in such combination of
cash and Common Stock as the Committee shall determine.

SECTION 12.5. Voting and Dividend Rights. Except as the Committee may otherwise
provide, no associate shall be entitled to any voting rights, to receive any
dividends, or to have his or her Performance Share Account credited or increased
as a result of any dividends or other distribution with respect to Common Stock.
Notwithstanding the foregoing, within sixty (60) days from the date of payment
of a dividend by the Company on its shares of Common Stock, the Committee, in
its discretion, may credit an associate's Performance Share Account with
additional Performance Shares having an aggregate fair market value equal to the
dividend per share paid on the Common Stock multiplied by the number of
Performance Shares credited to his or her account at the time the dividend was
declared.

                                   ARTICLE 13

                                PERFORMANCE UNITS

SECTION 13.1. Award of Performance Units. For each Performance Period (as
defined in Section 12.2), Performance Units may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. The award agreement covering such Performance Units shall specify a
value for each Performance Unit or shall set forth a formula for determining the
value of each Performance Unit at the time of payment (the "ENDING VALUE"). If
necessary to make the calculation of the amount to be paid to the associate
pursuant to Section 13.3, the Committee shall also state in the award agreement
the initial value of each Performance Unit (the "INITIAL VALUE"). Performance
Units granted to an associate shall be credited to an account (a "PERFORMANCE
UNIT ACCOUNT") established and maintained for such associate.

SECTION 13.2. Right to Payment of Performance Units. With respect to each award
of Performance Units under this Plan, the Committee shall specify Performance
Objectives which must be satisfied in order for the associate to vest in the
Performance Units which have been awarded to him or her for the Performance
Period. If the Performance Objectives established for an associate for the
Performance Period are partially but not fully met, the Committee may,
nonetheless, in its sole discretion, determine that all or a portion of the
Performance Units have vested. If the Performance Objectives for a Performance
Period are exceeded, the Committee may, in its sole discretion, grant
additional, fully vested Performance Units to the associate. The Committee may
also determine, in its sole discretion, that Performance Units awarded to an
associate shall become partially or fully vested upon the associate's death,
total disability (as defined in Article 9) or retirement, or upon the
termination of employment of the associate by the Company.

SECTION 13.3. Payment for Performance Units. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 13.2). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Units shall be granted to the associate
pursuant to Section 13.2. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine, the
Company shall pay to the associate an amount with respect to each vested
Performance Unit equal to the Ending Value of the Performance Unit or, if the
Committee shall so specify at the time of grant, an amount equal to (i) the
Ending Value of the Performance Unit less (ii) the Initial Value of the
Performance Unit. Payment shall be made entirely in cash, entirely in Common
Stock (including Restricted Shares) or in such combination of cash and Common
Stock as the Committee shall determine.

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                                   ARTICLE 14

                               UNRESTRICTED SHARES

SECTION 14.1. Award of Unrestricted Shares. The Committee may cause the Company
to grant Unrestricted Shares to associates at such time or times, in such
amounts and for such reasons as the Committee, in its sole discretion, shall
determine. No payment shall be required for Unrestricted Shares.

SECTION 14.2. Delivery of Unrestricted Shares. The Company shall issue, in the
name of each associate to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
associate, and shall deliver such certificates to the associate as soon as
reasonably practicable after the date of grant or on such later date as the
Committee shall determine at the time of grant.

                                   ARTICLE 15

                               TAX OFFSET PAYMENTS

The Committee shall have the authority at the time of any award under this Plan
or anytime thereafter to make Tax Offset Payments to assist associates in paying
income taxes incurred as a result of their participation in this Plan. The Tax
Offset Payments shall be determined by multiplying a percentage established by
the Committee by all or a portion (as the Committee shall determine) of the
taxable income recognized by an associate upon (i) the exercise of a
Nonstatutory Stock Option or a Stock Appreciation Right, (ii) the disposition of
shares received upon exercise of an Incentive Stock Option, (iii) the lapse of
restrictions on Restricted Shares, (iv) the award of Unrestricted Shares, or (v)
payments for Performance Shares or Performance Units. The percentage shall be
established, from time to time, by the Committee at that rate which the
Committee, in its sole discretion, determines to be appropriate and in the best
interests of the Company to assist associates in paying income taxes incurred as
a result of the events described in the preceding sentence. Tax Offset Payments
shall be subject to the restrictions on transferability applicable to Options
and Stock Appreciation Rights under Article 8.

                                   ARTICLE 16

                               CHANGES IN CONTROL

Upon the occurrence of a Change in Control (as defined below), the following
shall occur:

         (1)      Options. At the date of such Change in Control, all
                  outstanding and unvested stock options granted under the Plan
                  shall immediately and fully vest and become exercisable.

         (2)      Stock Appreciation Rights. At the date of such Change in
                  Control, all outstanding and unvested Stock Appreciation
                  Rights granted under the Plan shall immediately vest and
                  become exercisable.

         (3)      Restricted Shares. At the date of such Change in Control,
                  Restricted Shares granted under the Plan shall be deemed to be
                  fully vested and the Restricted Period shall be deemed to
                  expire.

         (4)      Performance Shares and Performance Units. At the date of such
                  Change in Control, Performance Shares and Performance Units
                  granted under the Plan shall be deemed to be fully vested and
                  payable.

"Change in Control" means the occurrence of any of the following:

                                       76
<PAGE>   10

         (1)      Any "Person" (as such term is used in Sections 13(d) and 14(d)
                  of the Securities Exchange Act of 1934, as amended (the
                  "Exchange Act")) is or becomes the "Beneficial Owner" (as
                  defined in Rule 13d-3 under the Exchange Act), directly or
                  indirectly, of securities of the Corporation representing 25%
                  or more of the combined voting power of the Corporation's then
                  outstanding securities (a "25% Shareholder") provided however,
                  that the term 25% Shareholder shall not include any Person if
                  such Person would not otherwise be a 25% Shareholder but for a
                  reduction in the number of outstanding voting shares resulting
                  from a stock repurchase program or other similar plan of the
                  Company or from a self-tender offer of the Company, which plan
                  or tender offer commenced on or after the date hereof,
                  provided, however, that the term "25% Shareholder" shall
                  include such Person from and after the first date upon which
                  (A) such Person, since the date of the commencement of such
                  plan or tender offer, shall have acquired Beneficial Ownership
                  of, in the aggregate, a number of voting shares of the Company
                  equal to 1% or more of the voting shares of the Company then
                  outstanding, and (B) such Person, together with all affiliates
                  and associates of such Person, shall Beneficially Own 25% or
                  more of the voting shares of the Company then outstanding. In
                  calculating the percentage of the outstanding voting shares
                  that are Beneficially Owned by a Person for purposes of this
                  subsection (1), voting Shares that are Beneficially Owned by
                  such Person shall be deemed outstanding, and voting shares
                  that are not Beneficially Owned by such Person and that are
                  subject to issuance upon the exercise or conversion of
                  outstanding conversion rights, exchange rights, rights,
                  warrants or options shall not be deemed outstanding.
                  Notwithstanding the foregoing, if the Board of Directors of
                  the Company determines in good faith that a Person that would
                  otherwise be a 25% Shareholder pursuant to the foregoing
                  provisions of this subsection (1) has become such
                  inadvertently, and such Person (a) promptly notifies the Board
                  of Directors of such status and (b)as promptly as practicable
                  thereafter, either divests of a sufficient number of voting
                  shares so that such Person would no longer be a 25%
                  Shareholder, or causes any other circumstance, such as the
                  existence of an agreement respecting voting shares, to be
                  eliminated such that such Person would no longer be a 25%
                  Shareholder as defined pursuant to this subsection (1), then
                  such Person shall not be deemed to be a 25% Shareholder for
                  any purposes of this Plan. Any determination made by the Board
                  of Directors of the Company as to whether any Person is or is
                  not a 25% Shareholder shall be conclusive and binding; or

         (2)      A change in composition of the Board of Directors of the
                  Corporation occurring any time during a consecutive two-year
                  period as a result of which fewer than a majority of the Board
                  of Directors are Continuing Directors (for purposes of this
                  section, the term "Continuing Director" means a director who
                  was either (A) first elected or appointed as a Director prior
                  to May 10, 2000; or (B) subsequently elected or appointed as a
                  director if such director was nominated or appointed by at
                  least a majority of the then Continuing Directors); or

         (3)      Any of the following occurs:

                  (A)      a merger or consolidation of the Corporation, other
                           than a merger or consolidation in which the voting
                           securities of the Corporation immediately prior to
                           the merger or consolidation continue to represent
                           (either by remaining outstanding or being converted
                           into securities of the surviving entity) 60% or more
                           of the combined voting power of the Corporation or
                           surviving entity immediately after the merger or
                           consolidation with another entity;

                  (B)      a sale, exchange, or other disposition (in a single
                           transaction or a series of related transactions) of
                           all or substantially all of the assets of the
                           Corporation which shall include, without limitation,
                           the sale of assets aggregating more than 50% of the
                           assets of the Corporation on a consolidated basis;

                  (C)      a liquidation or dissolution of the Corporation;

                  (D)      a reorganization, reverse stock split, or
                           recapitalization of the Corporation which would
                           result in any of the foregoing; or

                                       77
<PAGE>   11

                  (E)      a transaction or series of related transactions
                           having, directly or indirectly, the same effect as
                           any of the foregoing.

                                   ARTICLE 17

                    ADJUSTMENT UPON CHANGES IN CAPITALIZATION

Notwithstanding any other provision of the Plan, the Committee may at any time
make or provide for such adjustments to the Plan, to the number and class of
shares available thereunder or to any outstanding Options, Stock Appreciation
Rights, Restricted Shares or Performance Shares as it shall deem appropriate to
prevent dilution or enlargement of fights, including adjustments in the event of
changes in the number of shares of outstanding Common Stock by reason of stock
dividends, extraordinary cash dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and the like.

                                   ARTICLE 18

                            AMENDMENT AND TERMINATION

The Board may suspend, terminate, modify or amend the Plan, provided that any
amendment that would (i) materially increase the aggregate number of shares
which may be issued under the Plan or (ii) reduce the exercise price of options
previously granted under the Plan shall be subject to the approval of the
Company's stockholders, except that any such increase or modification that may
result from adjustments authorized by Article 16 does not require such approval.
If the Plan is terminated, the terms of the Plan shall, notwithstanding such
termination, continue to apply to awards granted prior to such termination. No
suspension, termination, modification or amendment of the Plan may, without the
consent of the associate to whom an award shall theretofore have been granted,
adversely affect the fights of such associate under such award.

                                   ARTICLE 19

                                WRITTEN AGREEMENT

Each award of Options, Stock Appreciation Rights, Restricted Shares, Performance
Shares, Performance Units, Unrestricted Shares and Tax Offset Payments shall be
evidenced by a written agreement, executed by the associate and the Company, and
containing such restrictions, terms and conditions, if any, as the Committee may
require. In the event of any conflict between a written agreement and the Plan,
the terms of the Plan shall govern.

                                   ARTICLE 20

                            MISCELLANEOUS PROVISIONS

SECTION 20.1. Fair Market Value. For purposes of this Plan, "FAIR MARKET VALUE"
will be determined in accordance with procedures established in good faith by
the Committee.
                                       78
<PAGE>   12

SECTION 20.2. Tax Withholding. The Company shall have the right to require
associates or their beneficiaries or legal representatives to remit to the
Company an amount sufficient to satisfy federal, state and local withholding tax
requirements, or to deduct from all payments under this Plan, including Tax
Offset Payments, amounts sufficient to satisfy all withholding tax requirements.
Whenever payments under the Plan are to be made to an associate in cash, such
payments shall be net of any amounts sufficient to satisfy all federal, state
and local withholding tax requirements. The Committee may, in its discretion,
permit an associate to satisfy his or her tax withholding obligation either by
(i) surrendering shares owned by the associate or (ii) having the Company
withhold from shares otherwise deliverable to the associate. Shares surrendered
or withheld shall be valued at their fair market value as of the date on which
income is required to be recognized for income tax purposes. In the case of an
award of Incentive Stock Options, the foregoing fight shall be deemed to be
provided to the associate at the time of such award.

SECTION 20.3. Compliance with Section 16(b) and Section 162(m). In the case of
associates who are or may be subject to Section 16 of the Act, it is the intent
of the corporation that the Plan and any award granted hereunder satisfy and be
interpreted in a manner that satisfies the applicable requirements of Rule
16b-3, so that such persons will be entitled to the benefits of Rule 16b-3 or
other exemptive rules under Section 16 of the Act and will not be subjected to
liability thereunder. If any provision of the Plan or any award would otherwise
conflict with the intent expressed herein, that provision, to the extent
possible, shall be interpreted and deemed amended so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such intent, such
provision shall be deemed void as applicable to associates who are or may be
subject to Section 16 of the Act. If any award hereunder is intended to qualify
as performance-based for purposes of Section 162(m) of the Code, the Committee
shall not exercise any discretion to increase the payment under such award
except to the extent permitted by Section 162(m) and the regulations thereunder.

SECTION 20.4. Successors. The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and businesses of the Company. In the event of any of the foregoing, the
Committee may, at its discretion prior to the consummation of the transaction,
cancel, offer to purchase, exchange, adjust or modify any outstanding awards, at
such time and in such manner as the Committee deems appropriate and in
accordance with applicable law.

SECTION 20.5. General Creditor Status. Associates shall have no right, title, or
interest whatsoever in or to any investments which the Company may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any associate or beneficiary or legal representative of such associate. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the fight of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan.

SECTION 20.6. No Right to Employment. Nothing in the Plan or in any written
agreement entered into pursuant to Article 18, nor the grant of any award, shall
confer upon any associate any right to continue in the employ of the Company or
a subsidiary or to be entitled to any remuneration or benefits not set forth in
the Plan or such written agreement or interfere with or limit the right of the
Company or a subsidiary to modify the terms of or terminate such associate's
employment at any time.

SECTION 20.7. Notices. Notices required or permitted to be made under the Plan
shall be sufficiently made if sent by registered or certified mail addressed (a)
to the associate at the associate's address set forth in the books and records
of the Company or its subsidiaries, or (b) to the Company or the Committee at
the principal office of the Company.

SECTION 20.8. Severability. In the event that any provision of the Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

                                       79
<PAGE>   13

SECTION 20.9. Governing Law. To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.

SECTION 20.10. Term of Plan. Unless earlier terminated pursuant to Article 18
hereof, the Plan shall terminate on the tenth anniversary of the Distribution.

IN WITNESS WHEREOF, the Company has caused this First Amended and Restated 1999
Stock Option and Performance Incentive Plan to be executed by its duly
authorized officer this 10th day of May, 2000.

                                    TOO, INC.

                                    By:___________________________________

                                    Name:_________________________________

                                    Title:________________________________

                                       80<PAGE>

                                                                     Exhibit 4.8
================================================================================

                SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT

                              GREATER BAY BANCORP

                         Dated as of __________, 2000

================================================================================

<PAGE>

                               TABLE OF CONTENTS
                               -----------------
<TABLE>
<CAPTION>                                                                             Page
                                                                                      ----
<S>                                                                                   <C>
ARTICLE I        DEFINITIONS AND INTERPRETATION......................................    2
     SECTION 1.1 Definitions and Interpretation......................................    2
ARTICLE II       TRUST INDENTURE ACT.................................................    6
     SECTION 2.1 Trust Indenture Act; Application....................................    6
     SECTION 2.2 Lists of Holders of Securities......................................    6
     SECTION 2.3 Reports by the Capital Securities Guarantee Trustee.................    6
     SECTION 2.4 Periodic Reports....................................................    6
     SECTION 2.5 Evidence of Compliance with Conditions Precedent....................    7
     SECTION 2.6 Waiver of Events of Default.........................................    7
     SECTION 2.7 Notice of Events of Default.........................................    7
     SECTION 2.8 Conflicting Interests...............................................    8
ARTICLE III      POWERS, DUTIES AND RIGHTS OF CAPITAL SECURITIES GUARANTEE TRUSTEE...    8
     SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee.......    8
     SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee..............    10
     SECTION 3.3 Not Responsible for Recitals or Issuance of
          Series B Capital Securities Guarantee......................................    12
ARTICLE IV       CAPITAL SECURITIES GUARANTEE TRUSTEE................................    12
     SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility...................    12
     SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
          Guarantee Trustee..........................................................    12
ARTICLE V        GUARANTEE...........................................................    13
     SECTION 5.1 Guarantee...........................................................    13
     SECTION 5.2 Waiver of Notice and Demand.........................................    14
     SECTION 5.3 Obligations Not Affected............................................    14
     SECTION 5.4 Rights of Holders...................................................    15
     SECTION 5.5 Guarantee of Payment................................................    15
     SECTION 5.6 Subrogation.........................................................    15
     SECTION 5.7 Independent Obligations.............................................    15
ARTICLE VI       LIMITATION OF TRANSACTIONS; SUBORDINATION...........................    16
     SECTION 6.1 Limitation of Transactions..........................................    16
</TABLE>

                                       i
<PAGE>

                         TABLE OF CONTENTS (continued)
                         -----------------
<TABLE>
<CAPTION>
                                                                   Page
                                                                   ----
<S>                                                                <C>
     SECTION 6.2 Ranking..........................................   16
ARTICLE VII      TERMINATION......................................   17
     SECTION 7.1 Termination......................................   17
ARTICLE VIII     INDEMNIFICATION..................................   17
     SECTION 8.1 Exculpation......................................   17
     SECTION 8.2 Compensation and Indemnification.................   17
ARTICLE IX       MISCELLANEOUS....................................   18
     SECTION 9.1 Successors and Assigns...........................   18
     SECTION 9.2 Amendments.......................................   18
     SECTION 9.3 Notices..........................................   18
     SECTION 9.4 Benefit..........................................   20
     SECTION 9.5 Governing Law....................................   20
</TABLE>

                                      ii
<PAGE>

                             CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
Section of Trust                                            Section of Guarantee
Indenture Act of                                                  Agreement
1939, as amended                                                  ---------
----------------
<S>                                                         <C>
    310(a)       ..........................................        4.1(a)
    310(b)       ..........................................      2.8, 4.1(c)
    310(c)       ..........................................          N/A
    311(a)       ..........................................        2.2(b)
    311(b)       ..........................................        2.2(b)
    311(c)       ..........................................          N/A
    312(a)       ..........................................        2.2(a)
    312(b)       ..........................................        2.2(b)
    312(c)       ..........................................          N/A
    313          ..........................................          2.3
    314(a)       ..........................................          2.4
    314(b)       ..........................................          N/A
    314(c)       ..........................................          2.5
    314(d)       ..........................................          N/A
    314(e)       ..........................................     1.1, 2.5, 3.2
    314(f)       ..........................................       2.1, 3.2
    315(a)       ..........................................    3.1(d), 3.2(a)
    315(b)       ..........................................          2.7
    315(c)       ..........................................        3.1(c)
    315(d)       ..........................................  3.1(d), 3.2(a), 8.1
    315(e)       ..........................................          N/A
    316(a)       ..........................................     1.1, 2.6, 5.4
    316(b)       ..........................................       5.3, 5.4
    316(c)       ..........................................          9.2
    317(a)       ..........................................          N/A
    317(b)       ..........................................          N/A
    318(a)       ..........................................        2.1(a)
    318(b)       ..........................................        2.1(b)
    318(c)       ..........................................        2.1(b)
</TABLE>

_________________________

*    This Cross-Reference Table does not constitute part of this Guarantee
     Agreement and shall not affect the interpretation of any of its terms or
     provisions.

                                      iii
<PAGE>

                SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT

     This SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT (the "Series B Capital
Securities Guarantee"), dated as of _________________, 2000 is executed and
delivered by GREATER BAY BANCORP, a California corporation (the "Guarantor"),
and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee (the
"Capital Securities Guarantee Trustee" or "Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Series B Capital Securities
(as defined herein) of GBB CAPITAL IV, a Delaware statutory business trust (the
"Issuer").

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of May 19, 2000, by and among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the Holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
(i) issued on May 19, 2000 41,000 capital securities, having an aggregate
liquidation amount of $41,000,000, such capital securities being designated the
10.75% Capital Securities, Series A (collectively the "Series A Capital
Securities") and (ii) in connection with an Exchange Offer (as defined in the
Declaration), hereby executes and delivers the Series B Capital Securities
Guarantee (as defined in the Declaration) for the benefit of Holders of the
Series B Capital Securities (as defined in the Declaration).

     WHEREAS, the Series A Capital Securities issued by the Issuer and proceeds
thereof, together with proceeds from the issuance of the Issuers Common
Securities (as defined herein) were used to purchase the Junior Subordinated
Debentures due June 1, 2030 (the "Series A Junior Subordinated Debentures") of
the Guarantor which were deposited with the Trustee as Property Trustee under
the Trust Agreement, as trust assets;

     WHEREAS, as incentive for the Holders to purchase the Series A Capital
Securities, the Guarantor irrevocably and unconditionally agreed, to the extent
set forth in the Series A Capital Securities Guarantee dated as of May 19, 2000,
to pay the Holders of the Series A Capital Securities the Guarantee Payments (as
defined therein) and to make certain other payments on the terms and conditions
set forth therein.

     WHEREAS, in connection with the offer of the Series A Capital Securities,
the Guarantor, the Issuer and Sandler O'Neill & Partners, L.P., as
representative of the initial purchasers named therein, executed the
Registration Rights Agreement dated May 16, 2000 (the "Registration Rights
Agreement");

     WHEREAS, the Issuer, in order to satisfy its obligations under the
Registration Rights Agreement, intends to offer up to $41,000,000 aggregate
Liquidation Amount of its Floating Rate Capital Securities, Series B, which have
been registered under the Securities Act of 1933, as amended, pursuant to a
registration statement in exchange for a like Liquidation Amount of Series A
Capital Securities;

     WHEREAS, pursuant to the Exchange Offer, the Guarantor is also exchanging
up to $41,000,000 aggregate principal amount of the Series A Junior Subordinated
Debentures for up to $41,000,000 aggregate principal of the Series B Junior
Subordinated Debentures due June 1, 2030 (the "Series B Junior Subordinated
Debentures") of the Guarantor;

                                       1
<PAGE>

     WHEREAS, pursuant to the Exchange Offer, the Guarantor is required to
execute this Series B Capital Securities Guarantee and exchange the Series A
Capital Securities Guarantee for this Series B Capital Securities Guarantee
Agreement; and

     WHEREAS, the Guarantor also executed and delivered the Common Securities
Guarantee Agreement, dated as of May 19, 2000 (the "Common Securities
Guarantee"), for the benefit of the holders of the Common Securities (as defined
herein), the terms of which provide that if an Event of Default (as defined in
the Declaration) has occurred and is continuing, the rights of holders of the
Common Securities to receive Guarantee Payments under the Common Securities
Guarantee are subordinated, to the extent and in the manner set forth in the
Common Securities Guarantee, to the rights of Holders of Series A Capital
Securities and the Series B Capital Securities to receive Guarantee Payments
under the Series A Capital Securities Guarantee and this Series B Capital
Securities Guarantee, as the case may be.

     NOW, THEREFORE, in consideration of the exchange by each Holder of the
Series A Capital Securities for the Series B Capital Securities, which exchange
the Guarantor hereby acknowledges shall benefit the Guarantor, (or in the event
certain Holders do not exchange their Series A Capital Securities, in order to
fulfill its obligations to such Holders under the Series A Capital Securities
Guarantee) and intending to be legally bound hereby, the Guarantor executes and
delivers this Series B Capital Securities Guarantee Agreement for the benefit of
the Holders from time to time of the Trust Securities (as defined herein).

                                   ARTICLE I

                        DEFINITIONS AND INTERPRETATION

     SECTION 1.1    Definitions and Interpretation
                    ------------------------------

     In this Series B Capital Securities Guarantee, unless the context otherwise
requires:

     (a) capitalized terms used in this Series B Capital Securities Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;

     (b) terms defined in the Declaration as in effect at the date of execution
of this Series B Capital Securities Guarantee have the same meaning when used in
this Series B Capital Securities Guarantee unless otherwise defined in this
Series B Capital Securities Guarantee;

     (c) a term defined anywhere in this Series B Capital Securities Guarantee
has the same meaning throughout;

     (d) all references to "the Series B Capital Securities Guarantee" or "this
Series B Capital Securities Guarantee" are references to this Series B Capital
Securities Guarantee as modified, supplemented or amended from time to time;

     (e) all references in this Series B Capital Securities Guarantee to
Articles and Sections are references to Articles and Sections of this Series B
Capital Securities Guarantee, unless otherwise specified;

                                       2
<PAGE>

     (f) a term defined in the Trust Indenture Act has the same meaning when
used in this Series B Capital Securities Guarantee, unless otherwise defined in
this Series B Capital Securities Guarantee or unless the context otherwise
requires; and

     (g) a reference to the singular includes the plural and vice versa.

     "Affiliate" has the same meaning as given to that term in Rule 405 under
      ---------
the Securities Act of 1933, as amended, or any successor rule thereunder.

     "Business Day" shall mean any day other than a Saturday, a Sunday, or a day
      ------------
on which banking institutions in Wilmington, Delaware, San Francisco, California
or New York, New York  are authorized or required by law or executive order to
remain closed.

     "Capital Securities Guarantee Trustee" shall mean Wilmington Trust Company,
      ------------------------------------
as Trustee under the Series B Capital Securities Guarantee, until a Successor
Capital Securities Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Series B Capital Securities Guarantee
and thereafter means each such Successor Capital Securities Guarantee Trustee.

     "Common Securities" shall mean the securities representing common undivided
      -----------------
beneficial interests in the assets of the Issuer.

     "Corporate Trust Office" shall mean the office of the Capital Securities
      ----------------------
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is located
at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-
0001, Attention: Corporate Trust Administration.

     "Covered Person" shall mean any Holder or beneficial owner of Series B
      --------------
Capital Securities.

     "Debentures" shall mean the series of subordinated debt securities of the
      ----------
Guarantor designated the 10.75% Junior Subordinated Deferrable Interest
Debentures due June 1, 2030, Series B, held by the Property Trustee (as defined
in the Declaration) of the Issuer.

     "Event of Default" shall mean a default by the Guarantor on any of its
      ----------------
payment or other obligations under this Series B Capital Securities Guarantee;
provided, however, that, except with respect to default in respect of any
--------  -------
Guarantee Payment, no default by the Guarantor hereunder shall constitute an
Event of Default unless the Guarantor shall have received written notice of the
default and shall not have cured such default within 60 days after receipt
thereof.

     "Guarantee Payments" shall mean the following payments or distributions,
      ------------------
without duplication, with respect to the Series B Capital Securities, to the
extent not paid or made by or on behalf of the Issuer: (i) any accumulated and
unpaid Distributions (as defined in the Declaration) that are required to be
paid on such Series B Capital Securities, to the extent the Issuer has funds
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Issuer has funds legally available
therefor at such time, with respect to any Series B

                                       3
<PAGE>

Capital Securities called for redemption, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Series B Capital Securities or in connection with the redemption of the Series B
Capital Securities, in each case as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Series B Capital Securities to the date of payment, to the
extent the Issuer has funds legally available therefor at such time, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
after satisfaction of liabilities to creditors of the Issuer as required by
applicable law (in either case, the "Liquidation Distribution"). If an Event of
Default has occurred and is continuing, no Guarantee Payments under the Common
Securities Guarantee with respect to the Common Securities or any guarantee
payment under the Common Securities Guarantee or any Other Common Securities
Guarantee shall be made until the Holders of the Series B Capital Securities
shall be paid in full the Guarantee Payments to which they are entitled under
this Series B Capital Securities Guarantee.

     "Holder" shall mean any holder, as registered on the books and records of
      ------
the Issuer, of any Series B Capital Securities; provided, however, that, in
                                                --------  -------
determining whether the holders of the requisite percentage of Series B Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Person actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee to be an Affiliate of the
Guarantor.

     "Indemnified Person" shall mean the Capital Securities Guarantee Trustee
      ------------------
(including in its individual capacity), any Affiliate of the Capital Securities
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Capital
Securities Guarantee Trustee.

     "Indenture" shall mean the Indenture, dated as of May 19, 2000, between
      ---------
Greater Bay Bancorp, as issuer of Debentures (the "Debenture Issuer"), and
Wilmington Trust Company, as trustee, pursuant to which the Debentures are to be
issued to the Property Trustee of the Issuer.

     "Majority in Liquidation Amount of the Series B Capital Securities" shall
      -----------------------------------------------------------------
mean, except as provided by the Trust Indenture Act, a vote by Holder(s) of the
Series B Capital Securities, voting separately as a class, of more than 50% of
the aggregate liquidation amount (including the amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to but excluding the date upon which the voting percentages are determined) of
all outstanding Series B Capital Securities, excluding Series B Capital
Securities held by the Guarantor, the Issuer or any Affiliate thereof.

     "Officers' Certificate" shall mean, with respect to any Person, a
      ---------------------
certificate signed by the Chairman, the Chief Executive Officer, the President,
an Executive or Senior Vice President, a Vice President, the Chief Financial
Officer and the Secretary or an Assistant Secretary. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Series B Capital Securities Guarantee shall include:

     (a) a statement that each officer signing the Officers' Certificate has
read the covenants or conditions and the definitions relating thereto;

                                       4
<PAGE>

     (b) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

     (c) a statement as to whether or not, in the opinion of each such officer,
such condition or covenant has been complied with.

     "Other Common Securities Guarantees" shall have the same meaning as "Other
      ----------------------------------
Guarantees" in the Common Securities Guarantee.

     "Other Debentures" shall mean all junior subordinated debentures, other
      ----------------
than the Debentures and the Series B Debentures (as defined in the Indenture),
issued by the Guarantor, from time to time and sold to trusts other than the
Issuer to be established by the Guarantor (if any), in each case similar to the
Issuer.

     "Other Guarantees" shall mean all guarantees, other than this Series B
      ----------------
Capital Securities Guarantee and the Series B Capital Securities Guarantee, to
be issued by the Guarantor with respect to capital securities (if any) similar
to the Series B Capital Securities, issued by trusts other than the Issuer to be
established by the Guarantor (if any), in each case similar to the Issuer.

     "Person" shall mean a legal person, including any individual, corporation,
      ------
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

     "Registration Rights Agreement" shall mean the Registration Rights
      -----------------------------
Agreement, dated as of May 16, 2000, by and among the Guarantor, the Issuer and
the Initial Purchasers named therein, as such agreement may be amended, modified
or supplemented from time to time.

     "Responsible Officer" shall mean, with respect to a Person, any officer
      -------------------
with direct responsibility for the administration of any matters relating to
this Series B Capital Securities Guarantee.

     "Successor Capital Securities Guarantee Trustee" shall mean a successor
      ----------------------------------------------
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.1.

     "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
      -------------------
amended.

     "Trust Securities" shall mean the Common Securities and the Series A
      ----------------
Capital Securities and Series B Capital Securities, collectively.

                                       5
<PAGE>

                                  ARTICLE II

                              TRUST INDENTURE ACT

     SECTION 2.1 Trust Indenture Act; Application
                 --------------------------------

     (a) This Series B Capital Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Series B Capital
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.

     (b) If and to the extent that any provision of this Series B Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control. If any provision of this Series B Capital Securities Guarantee
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the modified or excluded provision of the Trust Indenture
Act shall be deemed to apply to this Series B Capital Securities Guarantee as so
modified or excluded, as the case may be.

     SECTION 2.2 Lists of Holders of Securities
                 ------------------------------

     (a) The Guarantor shall provide the Capital Securities Guarantee Trustee
(unless the Capital Securities Guarantee Trustee is otherwise the registrar of
the Series B Capital Securities) with a list, in such form as the Capital
Securities Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Series B Capital Securities ("List of Holders") as of such
date, (i) within fourteen (14) days after each record date for payment of
Distributions (as defined in the Declaration), and (ii) at any other time within
30 days of receipt by the Guarantor of a written request for a List of Holders
as of a date no more than 14 days before such List of Holders is given to the
Capital Securities Guarantee Trustee; provided, however, that the Guarantor
                                      --------  -------
shall not be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Capital Securities Guarantee Trustee by the Guarantor. The Capital Securities
Guarantee Trustee may destroy any List of Holders previously given to it upon
receipt of a new List of Holders.

     (b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 31l(a), 31l(b) and Section 312(b) of the Trust
Indenture Act.

     SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
                 ---------------------------------------------------

     By July 31 of each year, commencing July 31, 2001, the Capital Securities
Guarantee Trustee shall provide to the Holders of the Series B Capital
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Capital Securities Guarantee Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.

     SECTION 2.4 Periodic Reports
                 ----------------

     The Guarantor shall provide to the Capital Securities Guarantee Trustee
such documents, reports and information as are required by Section 314 (if any)
and the compliance certificate

                                       6
<PAGE>

required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act. Delivery of
such reports, information and documents to the Capital Securities Guarantee
Trustee is for informational purposes only and the Capital Securities Guarantee
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Guarantor's compliance with any of its covenants
hereunder (as to which the Capital Securities Guarantee Trustee is entitled to
rely exclusively on Officers' Certificates).

     SECTION 2.5 Evidence of Compliance with Conditions Precedent
                 ------------------------------------------------

     The Guarantor shall provide to the Capital Securities Guarantee Trustee
such evidence of compliance with the conditions precedent, if any, provided for
in this Series B Capital Securities Guarantee that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.

     SECTION 2.6 Waiver of Events of Default
                 ---------------------------

     The Holders of a Majority in Liquidation Amount of the Series B Capital
Securities may, by vote, on behalf of the Holders of all of the Series B Capital
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Series B Capital Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

     SECTION 2.7 Notice of Events of Default
                 ---------------------------

     (a) The Capital Securities Guarantee Trustee shall, within 10 Business Days
after the occurrence of an Event of Default with respect to this Series B
Capital Securities Guarantee actually known to a Responsible Officer of the
Capital Securities Guarantee Trustee, transmit by mail, first class postage
prepaid, to all Holders of the Series B Capital Securities, notices of all such
Events of Default, unless such Events of Default have been cured before the
giving of such notice; provided, however, that, except in the case of an Event
                       --------  -------
of Default arising from the non-payment of any Guarantee Payment, the Capital
Securities Guarantee Trustee shall be protected in withholding such notice if
and so long as a Responsible Officer of the Capital Securities Guarantee Trustee
in good faith determines that the withholding of such notice is in the interests
of the Holders of the Series B Capital Securities.

     (b) The Capital Securities Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Capital Securities Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Capital Securities Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge, of such Event of Default.

                                       7
<PAGE>

     SECTION 2.8 Conflicting Interests
                 ---------------------

     The Declaration shall be deemed to be specifically described in this Series
B Capital Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.

                                  ARTICLE III

                         POWERS, DUTIES AND RIGHTS OF
                     CAPITAL SECURITIES GUARANTEE TRUSTEE

     SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
                 -------------------------------------------------------------

     (a) This Series B Capital Securities Guarantee shall be held by the Capital
Securities Guarantee Trustee for the benefit of the Holders of the Series B
Capital Securities, and the Capital Securities Guarantee Trustee shall not
transfer this Series B Capital Securities Guarantee to any Person except a
Holder of the Series B Capital Securities exercising his or her rights pursuant
to Section 5.4(b) or to a Successor Capital Securities Guarantee Trustee on
acceptance by such Successor Capital Securities Guarantee Trustee of its
appointment to act as Successor Capital Securities Guarantee Trustee. The right,
title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.

     (b) If an Event of Default actually known to a Responsible Officer of the
Capital Securities Guarantee Trustee has occurred and is continuing, the Capital
Securities Guarantee Trustee shall enforce this Series B Capital Securities
Guarantee for the benefit of the Holders of the Series B Capital Securities.

     (c) The Capital Securities Guarantee Trustee, before the occurrence of any
Event of Default (of which, other than a default in respect of any Guarantee
Payment, a Responsible Officer of the Property Trustee has actual knowledge) and
after the curing of all such Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Series B Capital Securities Guarantee, and no implied covenants or obligations
shall be read into this Series B Capital Securities Guarantee against the
Capital Securities Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and is actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee, the
Capital Securities Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Series B Capital Securities Guarantee, and use the
same degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.

     (d) No provision of this Series B Capital Securities Guarantee shall be
construed to relieve the Capital Securities Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

                                       8
<PAGE>

          (i)   prior to the occurrence of any Event of Default (of which, other
     than a default in respect of any Guarantee Payment, a Responsible Officer
     of the Property Trustee has actual knowledge) and after the curing or
     waiving of all such Events of Default that may have occurred:

          (A)   the duties and obligations of the Capital Securities Guarantee
     Trustee shall be determined solely by the express provisions of this Series
     b Capital Securities Guarantee, and the Capital Securities Guarantee
     Trustee shall not be liable except for the performance of such duties and
     obligations as are specifically set forth in this Series b Capital
     Securities Guarantee, and no implied covenants or obligations shall be read
     into this Series b Capital Securities Guarantee against the Capital
     Securities Guarantee Trustee; and

          (B)   in the absence of bad faith on the part of the Capital
     Securities Guarantee Trustee, the Capital Securities Guarantee Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon any certificates or opinions furnished
     to the Capital Securities Guarantee Trustee and conforming to the
     requirements of this Series b Capital Securities Guarantee; provided,
                                                                 --------
     however, that in the case of any such certificates or opinions that by any
     -------
     provision hereof are specifically required to be furnished to the Capital
     Securities Guarantee Trustee, the Capital Securities Guarantee Trustee
     shall be under a duty to examine the same to determine whether or not on
     their face they conform to the requirements of this Series B Capital
     Securities Guarantee;

          (ii)  the Capital Securities Guarantee Trustee shall not be liable for
     any errors of judgment made in good faith by a Responsible Officer of the
     Capital Securities Guarantee Trustee, unless it shall be proved that the
     Capital Securities Guarantee Trustee or such Responsible Officer was
     negligent in ascertaining the pertinent facts upon which such judgment was
     made;

          (iii) the Capital Securities Guarantee Trustee shall not be liable
     with respect to any actions taken or omitted to be taken by it in good
     faith in accordance with the direction of the Holders of a Majority in
     Liquidation Amount of the Series B Capital Securities relating to the time,
     method and place of conducting any proceeding for any remedy available to
     the Capital Securities Guarantee Trustee, or exercising any trust or power
     conferred upon the Capital Securities Guarantee Trustee under this Series B
     Capital Securities Guarantee; and

          (iv)  no provision of this Series B Capital Securities Guarantee shall
     require the Capital Securities Guarantee Trustee to expend or risk its own
     funds or otherwise incur personal financial liability in the performance of
     any of its duties or in the exercise of any of its rights or powers, if the
     Capital Securities Guarantee Trustee shall have reasonable grounds for
     believing that the repayment of such funds or liability is not reasonably
     assured to it under the terms of this Series B Capital Securities Guarantee
     or indemnity, reasonably satisfactory to the Capital Securities Guarantee
     Trustee, against such risk or liability is not reasonably assured to it.

                                       9
<PAGE>

     SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
                 ------------------------------------------------------

     (a)  Subject to the provisions of Section 3.1:

          (i)   the Capital Securities Guarantee Trustee may conclusively rely,
     and shall be fully protected in acting or refraining from acting, upon any
     resolution, certificate, statement, instrument, opinion, report, notice,
     request, direction, consent, order, bond, debenture, note, other evidence
     of indebtedness or other paper or document believed by it to be genuine and
     to have been signed, sent or presented by the proper party or parties;

          (ii)  any direction or act of the Guarantor contemplated by this
     Series B Capital Securities Guarantee may be sufficiently evidenced by an
     Officers' Certificate;

          (iii) whenever, in the administration of this Series B Capital
     Securities Guarantee, the Capital Securities Guarantee Trustee shall deem
     it desirable that a matter be proved or established before taking,
     suffering or omitting any action hereunder, the Capital Securities
     Guarantee Trustee (unless other evidence is herein specifically prescribed)
     may, in the absence of bad faith on its part, request and conclusively rely
     upon an Officers' Certificate, which, upon receipt of such request, shall
     be promptly delivered by the Guarantor;

          (iv)  the Capital Securities Guarantee Trustee shall have no duty to
     see to any recording, filing or registration of any instrument or other
     document (or any rerecording, refiling or registration thereof);

          (v)   the Capital Securities Guarantee Trustee may consult with
     counsel of its selection, and the advice or opinion of such counsel with
     respect to legal matters shall be full and complete authorization and
     protection in respect of any action taken, suffered or omitted by it
     hereunder in good faith and in accordance with such advice or opinion; and
     such counsel may be counsel to the Guarantor or any of its Affiliates and
     may include any of its employees; and the Capital Securities Guarantee
     Trustee shall have the right at any time to seek instructions concerning
     the administration of this Series B Capital Securities Guarantee from any
     court of competent jurisdiction;

          (vi)  the Capital Securities Guarantee Trustee shall be under no
     obligation to exercise any of the rights or powers vested in it by this
     Series B Capital Securities Guarantee at the request or direction of any
     Holder, unless such Holder shall have provided to the Capital Securities
     Guarantee Trustee such security and indemnity, reasonably satisfactory to
     the Capital Securities Guarantee Trustee, against the costs, expenses
     (including attorneys' fees and expenses and the expenses of the Capital
     Securities Guarantee Trustee's agents, nominees or custodians) and
     liabilities that might be incurred by it in complying with such request or
     direction, including such reasonable advances as may be requested by the
     Capital Securities Guarantee Trustee, provided, however, that nothing
                                           --------  -------
     contained in this Section 3.2(a)(vi) shall be taken to relieve the Capital
     Securities Guarantee Trustee, upon the occurrence of an Event of Default,
     of its obligation to exercise the rights and powers vested in it by this
     Series B Capital Securities Guarantee;

                                       10
<PAGE>

          (vii)  the Capital Securities Guarantee Trustee shall have no
     obligation to make any investigation into the facts or matters stated in
     any resolution, certificate, statement, instrument, opinion, report,
     notice, request, direction, consent, order, bond, debenture, note, other
     evidence of indebtedness or other paper or document, but the Capital
     Securities Guarantee Trustee, in its discretion, may make such further
     inquiry or investigation into such facts or matters as it may see fit;

          (viii) the Capital Securities Guarantee Trustee may execute any of
     the trusts or powers hereunder or perform any duties hereunder either
     directly or by or through agents, nominees, custodians or attorneys, and
     the Capital Securities Guarantee Trustee shall not be responsible for any
     misconduct or negligence on the part of any such person appointed with due
     care by it hereunder;

          (ix)   any action taken by the Capital Securities Guarantee Trustee or
     its agents hereunder shall bind the Holders of the Series B Capital
     Securities, and the signature of the Capital Securities Guarantee Trustee
     or its agents alone shall be sufficient and effective to perform any such
     action; and no third party shall be required to inquire as to the authority
     of the Capital Securities Guarantee Trustee to so act or as to its
     compliance with any of the terms and provisions of this Series B Capital
     Securities Guarantee, both of which shall be conclusively evidenced by the
     Capital Securities Guarantee Trustee's or its agent's taking such action;

          (x)    whenever in the administration of this Series B Capital
     Securities Guarantee the Capital Securities Guarantee Trustee shall deem it
     desirable to receive instructions with respect to enforcing any remedy or
     right or taking any other action hereunder, the Capital Securities
     Guarantee Trustee (i) may request instructions from the Holders of a
     Majority in Liquidation Amount of the Series B Capital Securities, (ii) may
     refrain from enforcing such remedy or right or taking such other action
     until such instructions are received, and (iii) shall be protected in
     conclusively relying on or acting in accordance with such instructions; and

          (xi)   the Capital Securities Guarantee Trustee shall not be liable
     for any action taken, suffered, or omitted to be taken by it in good faith,
     without negligence, and reasonably believed by it to be authorized or
     within the discretion or rights or powers conferred upon it by this Series
     B Capital Securities Guarantee.

     (b)  No provision of this Series B Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Capital Securities Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Capital Securities Guarantee
Trustee shall be construed to be a duty.

                                       11
<PAGE>

     SECTION 3.3 Not Responsible for Recitals or Issuance of Series B Capital
                 ------------------------------------------------------------
                 Securities Guarantee
                 --------------------

     The recitals contained in this Series B Capital Securities Guarantee shall
be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Securities Guarantee Trustee makes no representation as to the validity
or sufficiency of this Series B Capital Securities Guarantee.

                                  ARTICLE IV

                     CAPITAL SECURITIES GUARANTEE TRUSTEE

     SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
                 -------------------------------------------------

     (a)  There shall at all times be a Capital Securities Guarantee Trustee
     that shall

          (i)  not be an Affiliate of the Guarantor; and

          (ii) be a corporation or other Person organized and doing business
     under the laws of the United States of America or any state or territory
     thereof or of the District of Columbia, or a corporation or other Person
     permitted by the Securities and Exchange Commission to act as an indenture
     trustee under the Trust Indenture Act, authorized under such laws to
     exercise corporate trust powers, having a combined capital and surplus of
     at least fifty million U.S. dollars ($50,000,000), and subject to
     supervision or examination by federal, state, territorial or District of
     Columbia authority; it being understood that if such corporation or other
     Person publishes reports of condition at least annually, pursuant to law or
     to the requirements of the supervising or examining authority referred to
     above, then, for the purposes of this Section 4.1(a)(ii) and to the extent
     permitted by the Trust Indenture Act, the combined capital and surplus of
     such corporation shall be deemed to be its combined capital and surplus as
     set forth in its most recent report of condition so published.

     (b)  If at any time the Capital Securities Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Capital Securities Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).

     (c)  If the Capital Securities Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

     SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
                 ----------------------------------------------------------
                 Guarantee Trustee
                 -----------------

     (a)  Subject to Section 4.2(b), the Capital Securities Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor except
during an Event of Default.

                                       12
<PAGE>

     (b) The Capital Securities Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Securities Guarantee Trustee and
delivered to the Guarantor.

     (c) The Capital Securities Guarantee Trustee shall hold office until a
Successor Capital Securities Guarantee Trustee shall have been appointed,
subject to Section 4.1, or until its removal or resignation. The Capital
Securities Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the Capital
Securities Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Capital Securities Guarantee Trustee has
been appointed, subject to Section 4.1, and has accepted such appointment by
instrument in writing executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor and the resigning Capital Securities
Guarantee Trustee.

     (d) If no Successor Capital Securities Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of removal or resignation, the Capital
Securities Guarantee Trustee resigning or being removed may petition any court
of competent jurisdiction for appointment of a Successor Capital Securities
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Capital Securities Guarantee
Trustee.

     (e) No Capital Securities Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Capital Securities Guarantee Trustee.

     (f) Upon termination of this Series B Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.

                                   ARTICLE V

                                   GUARANTEE
                                   ---------

     SECTION 5.1 Guarantee
                 ---------

     The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor fully, knowingly
and unconditionally waives any right the Guarantor may have to revoke this
Guarantee under Section 2815 of the California Civil Code or otherwise. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

                                       13
<PAGE>

     SECTION 5.2 Waiver of Notice and Demand
                 ---------------------------

     The Guarantor hereby waives notice of acceptance of this Series B Capital
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.

     SECTION 5.3 Obligations Not Affected
                 ------------------------

     The obligations, covenants, agreements and duties of the Guarantor under
this Series B Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:

     (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Series B Capital Securities to be
performed or observed by the Issuer;

     (b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Series B Capital Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Series B Capital Securities;

     (c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;

     (d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;

     (e) any invalidity of, or defect or deficiency in, the Series B Capital
Securities;

     (f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or

     (g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor;

it being the intent of this Section 5.3 that the obligations of the Guarantor
with respect to the Guarantee Payments shall be absolute and unconditional under
any and all circumstances.

     There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

                                       14
<PAGE>

     SECTION 5.4 Rights of Holders
                 -----------------

     (a) The Holders of a Majority in Liquidation Amount of the Series B Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Capital Securities Guarantee Trustee
in respect of this Series B Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Securities Guarantee Trustee under this
Series B Capital Securities Guarantee.

     (b) If the Capital Securities Guarantee Trustee fails to enforce this
Series B Capital Securities Guarantee, any Holder of the Series B Capital
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Capital Securities Guarantee Trustee's rights under this Series B
Capital Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Capital Securities Guarantee Trustee or any other person
or entity. The Guarantor waives any right or remedy to require that any action
be brought first against the Issuer or any other person or entity before
proceeding directly against the Guarantor.

     SECTION 5.5 Guarantee of Payment
                 --------------------

     This Series B Capital Securities Guarantee creates a guarantee of payment
and not of collection.

     SECTION 5.6 Subrogation
                 -----------

     The Guarantor shall be subrogated to all (if any) rights of the Holders of
Series B Capital Securities against the Issuer in respect of any amounts paid to
such Holders by the Guarantor under this Series B Capital Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
--------  -------
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Series B Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series B Capital Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.

     SECTION 5.7 Independent Obligations
                 -----------------------

     The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Series b Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Series B
Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.

                                       15
<PAGE>

                                  ARTICLE VI

                   LIMITATION OF TRANSACTIONS; SUBORDINATION

     SECTION 6.1 Limitation of Transactions
                 --------------------------

     So long as any Capital Securities remain outstanding, the Guarantor shall
not (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Guarantor's
capital stock, (ii) make any payment of principal of, or interest, if any, on or
repay, repurchase or redeem any debt securities of the Guarantor (including
Other Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Debentures (other than (a) dividends or distributions
in shares of, or options, warrants, rights to subscribe for or purchase shares
of, common stock of the Guarantor, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under this Series B
Capital Securities Guarantee and the Series A Capital Securities Guarantee, (d)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases of common stock related
to the issuance of common stock or rights under any of the Guarantor's benefit
or compensation plans for its directors, officers or employees or any of the
Guarantor's dividend reinvestment plans) if at such time (l) there shall have
occurred any event of which the Guarantor has actual knowledge that (A) is a
Default or Event of Default (each as defined in the Indenture) and (B) in
respect of which the Guarantor shall not have taken reasonable steps to cure,
(2) if the Debentures are held by the Property Trustee, the Guarantor shall be
in default with respect to its payment of any obligations under this Series B
Capital Securities Guarantee or (3) the Guarantor shall have given notice of its
election of the exercise of its right to commence an Extended Interest Payment
Period as provided in the Indenture and shall not have rescinded such notice,
and such Extended Interest Payment Period, or an extension thereof, shall have
commenced and be continuing.

     SECTION 6.2 Ranking
                 -------

     This Series B Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all Allocable Amounts (as defined in the Indenture) in respect of
Senior Indebtedness (as defined in the Indenture), to the same extent and in the
same manner that the Debentures are subordinated to Senior Indebtedness pursuant
to the Indenture, it being understood that the terms of Article XV of the
Indenture shall apply to the obligations of the Guarantor under this Series B
Capital Securities Guarantee as if such Article XV were set forth herein in
full, (ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Guarantor and with the Series B Capital Securities
Guarantee, any Other Guarantee and, except to the extent set forth therein, the
Common Securities Guarantee, any Other Common Securities Guarantee, and any
guarantee

                                       16
<PAGE>

now or hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.

                                  ARTICLE VII

                                  TERMINATION

     SECTION 7.1 Termination
                 -----------

     This Series B Capital Securities Guarantee shall terminate and be of no
further force and effect upon (i) full payment of the Redemption Price of all
Series B Capital Securities, (ii) dissolution, winding up or liquidation of the
Issuer, immediately following the full payment of the amounts payable in
accordance with the Declaration, or (iii) the distribution of all of the
Debentures to the Holders of the Trust Securities. Notwithstanding the
foregoing, this Series B Capital Securities Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
of the Series B Capital Securities must restore payment of any sums paid under
the Series B Capital Securities or under this Series B Capital Securities
Guarantee.

                                 ARTICLE VIII

                                INDEMNIFICATION

     SECTION 8.1 Exculpation
                 -----------

     (a)  No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Series B Capital
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Series B Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.

     (b)  An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Series B Capital Securities might properly be
paid.

     SECTION 8.2 Compensation and Indemnification
                 --------------------------------

     The Guarantor agrees to pay to the Capital Securities Guarantee Trustee
such compensation for its services as shall be mutually agreed upon by the
Guarantor and the Capital Securities Guarantee Trustee. The Guarantor shall
reimburse the Capital Securities Guarantee

                                       17
<PAGE>

Trustee upon request for all reasonable out-of-pocket expenses incurred by it,
including the reasonable compensation and expenses of the Capital Securities
Guarantee Trustee's agents and counsel, except any expense as may be
attributable to the negligence or bad faith of the Capital Securities Guarantee
Trustee.

     The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any and all loss, liability, damage,
action, suit, claim or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The provisions of this
Section 8.2 shall survive the termination of this Series B Capital Securities
Guarantee and shall survive the resignation or removal of the Capital Securities
Guarantee Trustee.

                                  ARTICLE IX

                                 MISCELLANEOUS

     SECTION 9.1 Successors and Assigns
                 ----------------------

     All guarantees and agreements contained in this Series B Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Series B Capital Securities then outstanding.  Except in connection with
any merger or consolidation of the Guarantor with or into another entity
permitted by Section 10.01 of the Indenture or any sale, transfer, conveyance or
other disposition of the property of the Guarantor permitted by Section 10.01 of
the Indenture, the Guarantor may not assign its rights or delegate its
obligations under this Capital Securities Guarantee.

     SECTION 9.2 Amendments
                 ----------

     Except with respect to any changes that do not materially adversely affect
the rights of Holders of the Series B Capital Securities (in which case no
consent of such Holders will be required), this Series B Capital Securities
Guarantee may only be amended with the prior approval of the Holders of a
Majority in Liquidation Amount of the Series B Capital Securities. The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Trust Securities apply to the giving of such approval. This
Series B Capital Securities Guarantee may not be amended, and no amendment
hereof that affects the Capital Securities Guarantee Trustee's rights, duties or
immunities hereunder or otherwise, shall be effective, unless such amendment is
executed by the Capital Securities Guarantee Trustee (which shall have no
obligation to execute any such amendment, but may do so in its sole discretion).

     SECTION 9.3 Notices
                 -------

     All notices provided for in this Series B Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:

                                       18
<PAGE>

     (a) If given to the Issuer, in care of the Administrative Trustee at the
Issuer's mailing address set forth below (or such other address as the Issuer
may give notice of to the Capital Securities Guarantee Trustee and the Holders
of the Series B Capital Securities):

               GBB CAPITAL IV

               2860 West Bayshore Road
               Palo Alto, California 94303
               Attention: Steven C. Smith
               Telephone:  (650) 813-8200
               Telecopier: (650) 494-9193

     (b) If given to the Capital Securities Guarantee Trustee, at the Capital
Securities Guarantee Trustee's mailing address set forth below (or such other
address as the Capital Securities Guarantee Trustee may give notice of to the
Holders of the Series B Capital Securities):

               WILMINGTON TRUST COMPANY

               Rodney Square North
               1100 North Market Street
               Wilmington, Delaware 19890-0001
               Attention: Corporate Trust Administration
               Telephone:  (302) 651-1000
               Telecopier: (302) 651-8882

     (c) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Capital
Securities Guarantee Trustee and the Holders of the Series B Capital
Securities):

               GREATER BAY BANCORP

               2860 West Bayshore Road
               Palo Alto, California 94303
               Attention: Steven C. Smith
               Telephone:  (650) 813-8200
               Telecopier: (650) 494-9193

     (d) If given to any Holder of the Series B Capital Securities, at the
address set forth on the books and records of the Issuer.

     All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

                                       19
<PAGE>

     SECTION 9.4 Benefit
                 -------

     This Series B Capital Securities Guarantee is solely for the benefit of the
Holders of the Series B Capital Securities and, subject to Section 3.1(a), is
not separately transferable from the Series B Capital Securities.

     SECTION 9.5 Governing Law
                 -------------

     THIS SERIES B CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.

                                       20
<PAGE>

     This Series B Capital Securities Guarantee is executed as of the day and
year first above written.

                              GREATER BAY BANCORP
                              as Guarantor

                              By:_________________________________
                                 Name:
                                 Title:

                              WILMINGTON TRUST COMPANY,
                              as Capital Securities Guarantee Trustee

                              By:_________________________________
                                 Name:
                                 Title:

                                       21

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