SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
OF COAST FEDERAL BANK
* * *
1996 RESTATEMENT
TABLE OF CONTENTS
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ARTICLE
AND
SECTION PROVISIONS PAGE
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I OVERVIEW............................. 1
II PARTICIPATION........................ 2
2.1 Selection for Participation.......... 2
2.2 Participation Classes................ 2
III BENEFITS............................. 3
3.1 Normal Retirement.................... 3
3.2 Early Retirement..................... 4
3.3 Rule of 80 Retirement................ 4
3.4 Termination After a Change in Control 4
3.5 Disability........................... 5
3.6 Death................................ 5
3.7 Termination for any Other Reason..... 6
3.8 Optional Benefit Forms............... 6
3.9 Application of Payments.............. 7
IV ADMINISTRATION OF THE PLAN........... 8
4.1 Duties of the Plan Administrator..... 8
4.2 Compensation, Expenses and Indemnity. 8
4.3 Claims Procedure..................... 9
4.4 Effect of Plan Administrator Action.. 11
V AMENDMENT AND TERMINATION OF THE PLAN 12
5.1 Amendments........................... 12
5.2 Termination of Plan.................. 12
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ARTICLE
AND
SECTION PROVISIONS PAGE
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VI MISCELLANEOUS PROVISIONS 13
6.1 Plan History......................... 13
6.2 Plan is Unfunded..................... 13
6.3 Adverse Tax Consequences............. 13
6.4 Business Succession.................. 13
6.5 Limitation on Rights of Employees.... 13
6.6 Benefits May not be Assigned......... 14
6.7 Withholding.......................... 14
6.8 Headings............................. 14
6.9 Counterparts......................... 14
6.10 Severability......................... 14
6.11 Governing Law........................ 14
VII DEFINITIONS.......................... 15
7.1 "Bank"............................... 15
7.2 "Board of Directors"................. 15
7.3 "Change in Control".................. 15
7.4 "Claimant"........................... 16
7.5 "Code"............................... 16
7.6 "Disability"......................... 16
7.7 "Equivalent"......................... 16
7.8 "Final Average Monthly Compensation". 16
7.9 "Normal Benefit Form"................ 16
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ARTICLE
AND
SECTION PROVISIONS PAGE
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7.10 "Optional Benefit Form".............. 16
7.11 "Participant"........................ 17
7.12 "Plan"............................... 17
7.13 "Plan Administrator"................. 17
7.14 "Resigns for Good Reason"............ 17
7.15 "Terminated Without Cause"........... 18
7.16 "Vested"............................. 19
7.17 "Year of Service".................... 19
EXHIBIT A List of Participants................. 20
EXHIBIT B Future Disputes Submissions Agreement 21
EXHIBIT C List of Vested Participants.......... 22
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EXHIBIT 10.8
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN OF
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COAST FEDERAL BANK
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ARTICLE I
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OVERVIEW
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Coast Federal Bank (the Bank) has adopted this Plan to provide
supplemental retirement benefits to its senior officers. This document restates
the Plan, effective as of the date it was signed.
The Plan is intended to be a nonqualified "top hat plan" subject to
the Employee Retirement Income Security Act of 1974.
Capitalized terms used in this Plan generally are defined in Article
VII. The Plan's history is described in Section 6.1.
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ARTICLE II
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PARTICIPATION
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2.1 Selection for Participation
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A person shall become a Participant when selected for participation by
the Bank's Chief Executive Officer, with Board of Directors' approval, but only
after executing a written participation agreement if required by the Plan
Administrator. Although only senior vice presidents or more senior officers may
become Participants in this Plan, such an officer does not have a right to
participate unless admitted to the Plan in accordance with this Section.
2.2 Participation Classes
---------------------
A new Participant shall be assigned to one of the following three
participation classes as follows:
If the Participant is He or she will be in
--------------------- --------------------
Chief Executive Officer
or Chief Operating Officer Class I
Executive Vice President Class II
Senior Vice President Class III
A Participant's final participation class determines his or her Plan benefits
(see Section 3.1). If an employee is promoted to a position in a higher
participation class after becoming a Participant, the Participant shall be
admitted into that higher participation class, but only if the Bank's Chief
Executive Officer, with Board of Directors' approval, elects to transfer the
Participant to that higher class. Before a Participant's benefit becomes
Vested, the Chief Executive Officer, with the approval of the Board of
Directors, may discontinue that individual's participation in the Plan. Exhibit
A lists each Participant and his or her participation class. The Plan
Administrator shall update this exhibit periodically.
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ARTICLE III
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BENEFITS
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3.1 Normal Retirement
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If a Participant terminates employment with the Bank after attaining
age 65, on the first working day of the next calendar month the Bank shall
commence paying the Participant a benefit in the Normal Benefit Form or the
Equivalent in an Optional Benefit Form (see Section 3.8). When payable in the
Normal Benefit Form, the Participant's benefit shall be the greater of
(a) 10, 20 or 30 percent of his or her Final Average Monthly
Compensation (for Class III, II or I Participants, respectively); or
(b) 65, 75 or 90 percent of his or her Final Average Monthly
Compensation (for Class III, II or I Participants, respectively) minus
the following:
(i) the Participant's benefit under the Bank's qualified defined
benefit plan and the Bank's Board of Directors' Supplemental
Retirement Plan. If either of these offsetting benefits is paid
or payable other than in the Normal Benefit Form or commences
before or after the Participant's benefit under this Plan, the
offset shall be the Equivalent of the offsetting benefit,
expressed as an amount payable in the Normal Benefit Form
commencing when the Participant's Plan benefit commences, and
(ii) his or her primary insurance amount actually received under
the Social Security Act. If the Participant's benefits are
payable in a joint and survivor annuity form, the offset rules
described above apply, except that the Participant's benefit is
offset by the Participant's Social Security benefit and the
spouse's benefit is offset by the spouse's Social Security
benefit. If the Participant elects the lump sum benefit under
the Plan, the offset shall be the Equivalent of the primary
insurance amount then payable under the Social Security Act or,
if no amount is then payable, the present value of
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the primary insurance amount under the Social Security Act
payable upon the Participant's attainment of age 65.
3.2 Early Retirement
----------------
If a Participant terminates employment with the Bank after attaining
age 60 and completing ten Years of Service, on the first working day of the next
calendar month the Bank shall commence paying the Participant a benefit in the
Normal Benefit Form in the amount determined under Section 3.1, or the
Equivalent of that amount if the Participant's benefit is payable in an Optional
Benefit Form (see Section 3.8). However, this benefit shall be reduced by three
percent times the number of years (rounded to the highest year) by which the
Participant's termination of active employment precedes his or her 65th
birthday, but this reduction shall not exceed the full actuarial reduction for
early commencement of this benefit using the assumptions in Section 7.7.
3.3 Rule of 80 Retirement
---------------------
If a Participant terminates employment with the Bank after attaining
age 55 and after completing 25 Years of Service, the sum of the number of such
Years of Service and the Participant's age is at least 80, on the first working
day of the next calendar month the Bank shall commence paying the Participant a
benefit in the Normal Benefit Form in the amount determined under Section 3.1,
or the Equivalent of that amount if the Participant's benefit is payable in an
Optional Benefit Form (see Section 3.8).
3.4 Termination After a Change in Control
-------------------------------------
(a) If a Participant is Terminated Without Cause or Resigns for Good
Reason before the third anniversary of a Change in Control, on the first working
day of the next calendar month following the Participant's termination of
employment, the Bank shall commence paying the Participant a benefit in the
Normal Benefit Form in the amount determined under Section 3.1, or the
Equivalent of that amount if the Participant's benefit is payable in an Optional
Benefit Form (see Section 3.8), reduced for any early commencement of this
benefit (if the Participant's termination of employment precedes his or her 65th
birthday) using the assumptions in Section 7.7. If the Participant is entitled
to a more generous benefit under another provision of this Plan, this Section
3.4 shall not apply.
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(b) Notwithstanding the provisions of Section 3.4(a), the aggregate
present value of all parachute payments payable to or for the benefit of a
Participant, whether payable pursuant to the Plan (or otherwise)(excluding those
payments made pursuant to an agreement with the Bank that specifically provides
otherwise), shall be limited to three times the Participant's base amount less
one dollar and, to the extent necessary, the special treatment described in
Section 3.4(a) shall be reduced or eliminated by the Committee in order that
this limitation not be exceeded; provided, however, that this provision shall
not apply if the Participant's written employment agreement provides otherwise.
For purposes of this Section 3.4(b), the terms "parachute payment," "base
amount" and "present value" shall have the meanings assigned thereto under Code
section 280G. It is the intention of this Section 3.4(b) to avoid excise taxes
on the Participant under Code section 4999 or the disallowance of a deduction to
the Bank pursuant to Code section 280G.
3.5 Disability
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If a Participant terminates active employment with the Bank due to a
Disability, on the first working day of the next calendar month the Bank shall
commence paying the Participant a benefit in the Normal Benefit Form in the
Vested amount then determined under Section 3.1 and this Section 3.5, or the
Equivalent of that amount if the Participant's benefit is payable in an Optional
Benefit Form (see Section 3.8). This benefit shall vest at a rate of ten
percent for each Year of Service at the time of the Participant's termination of
active employment due to Disability. However, this benefit shall be reduced by
three percent times the number of years (rounded to the highest year) by which
the Participant's termination of active employment precedes his or her 65th
birthday, but this reduction shall not exceed the full actuarial reduction for
early commencement of this benefit using the assumptions in Section 7.7.
3.6 Death
-----
If a Participant dies while employed by the Bank and is survived by
his or her spouse, on the first working day of the next calendar month the Bank
shall commence paying the surviving spouse the Equivalent (based upon the
spouse's age) of the Participant's vested benefit determined under Section 3.1
and this Section 3.6, reduced by three percent times the number of years
(rounded to the
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highest year) by which the Participant's death precedes his or her 65th
birthday, but this reduction shall not exceed the full actuarial reduction for
early commencement of this benefit using the assumptions in Section 7.7. This
benefit shall vest at a rate of ten percent for each Year of Service on the date
of the Participant's death. This benefit shall be paid in the Normal Benefit
Form, unless the Participant elected in writing to have a lump sum paid to his
or her spouse.
3.7 Termination for any Other Reason
--------------------------------
If a Participant's employment with the Bank terminates for any reason
other than ones specified in Sections 3.1 through 3.6, the Participant shall
forfeit his or her benefit under the Plan, with one exception: If a Participant
listed on Exhibit C terminates employment with the Bank and benefits are not
otherwise immediately payable, on the first working day of the calendar month
beginning after the Participant's 65th birthday, the Bank shall commence paying
the Participant a benefit in the Normal Benefit Form in the amount determined
under Section 3.1, or the Equivalent of that amount if the Participant's benefit
is payable in an Optional Benefit Form (see Section 3.8). If such a Participant
dies after attaining age 55 or before age 65, the death benefit provided for in
Section 3.6 shall be paid.
3.8 Optional Benefit Forms
----------------------
(a) A Participant's benefit under the Plan shall commence at the same
time and in the same form as the Participant's benefit under the Bank's
qualified defined benefit plan with the following two exceptions: (i) the
Participant may elect to receive a lump sum payment under this Plan, as provided
in Section 3.8(b) and (ii) the Participant's benefits under the Bank's qualified
defined benefit plan may commence, in accordance with its terms, earlier than
those under the Plan. The election to receive a lump sum payment must be made
in writing in accordance with the requirements of the Plan Administrator. An
election made more than thirty days after the Participant commenced Plan
participation shall be effective only if the Participant makes the election at
least one year before the benefits are to commence under this Plan.
(b) The Optional Benefit Forms available to a Participant are as
follows:
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Lump Sum: A cash lump sum Equivalent to the benefit otherwise payable
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to the Participant; or
Any Form Provided in the Bank's Qualified Defined Benefit Plan: A
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form of benefit payable to the Participant under the Bank's qualified
defined benefit plan.
3.9 Additional Tax-Related Payments
-------------------------------
The Bank shall pay gross-up payments to the Participant to make him or
her whole for any tax imposed under Code Section 3121(v) on his or her Plan
benefits, including the vesting of benefits, and shall cease to pay any gross-up
payments upon the Participant's commencement of benefits under the Plan. The
gross-up amount will be an amount which, after payment by the Participant of all
income and excise taxes on the gross-up payment, equals the taxes the
Participant must pay under Code Section 3121(v) with respect to the payments and
benefits for which the Participant is receiving the gross-up payment.
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ARTICLE IV
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ADMINISTRATION OF THE PLAN
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4.1 Duties of the Plan Administrator
--------------------------------
The Plan Administrator shall be responsible for the general
administration and management of the Plan. The Plan Administrator shall have
all powers and duties necessary to fulfill its responsibilities, including, but
not limited to, the following powers and duties:
(a) To determine all questions relating to the eligibility of persons
to participate;
(b) To determine the amount and kind of benefits payable to
Participants;
(c) To maintain all records necessary for the administration of the
Plan;
(d) To provide for disclosure of all information and filing or
provision of all reports and statements required by federal law;
(e) To administer the claims procedure set forth in Section 4.3;
(f) To delegate any power or duty to any firm or person; and
(g) To exercise all other powers or duties granted to the Plan
Administrator by other provisions of the Plan.
4.2 Compensation, Expenses and Indemnity
------------------------------------
(a) The Plan Administrator and any delegate who is employed by the
Bank shall serve without compensation for services to the Plan. The Bank shall
furnish the Plan Administrator or any such delegate with all clerical or other
assistance necessary in the performance of his or her duties. The Plan
Administrator is authorized to employ such legal counsel and advisors as it may
deem advisable to assist in the performance of its duties hereunder.
(b) All costs of administering the Plan (including the cost of legal
services described in subsection (a)) shall be paid by the Bank.
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(c) To the extent permitted by applicable law, the Bank shall
indemnify and save harmless the Board of Directors, the Plan Administrator and
any delegate employed by the Bank against any and all expenses, liabilities and
claims (including legal fees incurred to defend against such liabilities and
claims) arising out of their discharge in good faith of responsibilities under
or incident to the Plan. Expenses and liabilities arising out of willful
misconduct shall not be covered under this indemnity. This indemnity shall not
preclude such further indemnities as may be available under insurance purchased
by the Bank or provided by the Bank under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, as such indemnities are
permitted under applicable law. Payments with respect to any indemnity and
payment of expenses or fees shall be made only from assets of the Bank.
4.3 Claims Procedure
----------------
(a) Normally, a Participant need not present a formal claim for
benefits in order to qualify for rights or benefits under this Plan. If,
however, any person (a Claimant) is not granted the rights or benefits to which
the person believes himself or herself to be entitled, a formal claim for
benefits must be filed in accordance with this Section. A Claimant must file
his or her claim in writing with the Plan Administrator within two years after
the Claimant first knows or should know of the facts on which the claim is
based. A claims official appointed by the Plan Administrator shall, within a
reasonable time, consider the claim and shall issue his or her determination
thereon in writing within 90 days of the receipt by the Plan Administrator of
the claim or, if special circumstances require, and the Claimant is so notified
in writing, within 180 days of the receipt by the Plan Administrator of the
claim. If the claim is granted, the benefits claimed shall be paid. If the
claim is denied, the notice shall (i) set forth the specific reasons for the
denial of benefits; (ii) contain specific references of provisions of the Plan
relevant to the denial; (iii) describe any material and information, if any,
necessary for the claim to be allowed which the Plan Administrator does not
have; and (iv) advise the Claimant that any appeal of the adverse determination
must be made in writing to the Plan Administrator, within sixty days after
receipt of this notification, setting forth the facts upon which the appeal is
based. If a claim is not timely decided, the claim shall be deemed denied.
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(b) If a claim is denied, the Claimant may appeal the denial in
writing within 90 days after the actual or deemed denial. If the Claimant fails
to do so, the claim denial shall become final and the Claimant may not challenge
it thereafter.
(c) If the Claimant timely appeals a claim denial, the Plan
Administrator shall reexamine all issues relevant to the original denial of
benefits. The Plan Administrator may in addition, upon at least ten days
written notice, request the Claimant or his or her representative to personally
appear before it to make an oral presentation or answer questions that may have
been raised, or the Claimant or their representative may make a request to
personally appear before the Plan Administrator.
(d) The Plan Administrator shall advise the Claimant in writing of its
decision and the specific reasons on which such decision was based within 60
days after receipt of the written appeal, unless special circumstances require
an extension of not more than an additional 60 days. If such extension is
necessary, all parties shall be given written notice of the delay. If an appeal
is not timely decided, the appeal shall be deemed denied.
(e) If the Claimant disputes the Plan Administrator's appeal
determination, the Claimant's only recourse shall be to have the dispute
resolved by final and binding arbitration. The Claimant must initiate this
arbitration within one year after actual or deemed appeal denial; failure to
initiate arbitration within this one-year period shall constitute an absolute
bar to the institution of any new proceedings. In all other respects, the
arbitration shall be conducted in accordance with the terms of the Claimant's
then binding arbitration agreement with the Bank or, if none, in accordance with
the following arbitration rules: Arbitration shall take place in the local
offices of Judicial Arbitration & Mediation Services, Inc. ("JAMS"). The Bank
and the disputing party may agree on a retired judge from the JAMS panel. If
they are unable to agree, JAMS will provide a list of three judges and each
party may strike one. If two of the three judges are stricken, the remaining
judge will serve as the arbitrator. If two arbitrators remain, the first judge
listed shall serve as arbitrator. The aggrieved party can initiate arbitration
by sending written notice of an intention to arbitrate by registered or
certified mail to all parties and to JAMS. The notice must contain a
description of the dispute, the amount involved and the remedy sought. All
arbitration shall be subject to a Future Disputes Submission
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Agreement, a copy of which is attached hereto as Exhibit B and incorporated
herein.
4.4 Effect of Plan Administrator Action
-----------------------------------
(a) The Plan shall be interpreted by the Plan Administrator in
accordance with the terms of the Plan and their intended meanings. However, the
Plan Administrator shall have the discretion to make any findings of fact needed
in the administration of the Plan, and shall have the discretion to interpret or
construe ambiguous, unclear or implied (but omitted) terms in any fashion it
deems to be appropriate in its sole judgment. The validity of any such finding
of fact, interpretation, construction or decision shall not be given de novo
-- ----
review if challenged in court, by arbitration or in any other forum, and shall
be upheld unless clearly arbitrary or capricious.
(b) To the extent the Plan Administrator has been granted
discretionary authority under the Plan, the Plan Administrator's prior exercise
of such authority shall not obligate it to exercise its authority in a like
fashion thereafter.
(c) If, due to errors in drafting, any Plan provisions does not
accurately reflect its intended meaning, as demonstrated by consistent
interpretations or other evidence of intent, or as determined by the Plan
Administrator in its sole and exclusive judgment, the provision shall be
considered ambiguous and shall be interpreted by the Plan Administrator in a
fashion consistent with its intent, as determined by the Plan Administrator in
its sole discretion. The Plan Administrator, without the need for Board of
Directors' approval, or the Board of Directors, shall amend the Plan
retroactively to cure any such ambiguity.
(d) All actions taken and all determinations made in good faith by
the Plan Administrator or by Plan fiduciaries shall be final and binding upon
all persons claiming any interest in or under the Plan.
(e) This Section may not be invoked by any person to require the Plan
to be interpreted in a manner which is inconsistent with its interpretation by
the Plan Administrator. This Section shall cease to apply upon the occurrence
of a Change in Control and it shall thereafter never be reinstated in any way.
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ARTICLE V
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AMENDMENT AND TERMINATION OF THE PLAN
-------------------------------------
5.1 Amendments
----------
(a) The Bank reserves the right at any time to amend or restructure
the Plan in any way not expressly prohibited by the Plan. No amendment shall
reduce the value of a Participant's or surviving spouse's Vested benefit below
the present value Equivalent of that benefit.
(b) All amendments or other changes shall be adopted in writing by
resolution of the Board of Directors or, in the case of an amendment that does
not substantially alter the nature or expense of the Plan, by the Plan
Administrator without Board of Directors approval.
(c) If an improperly adopted written Plan amendment is retroactively
ratified by the Board of Directors, it shall be treated as having been properly
adopted and shall be valid as of its initial effective date.
(d) All rights under the Plan shall be determined under the terms of
the Plan as in effect at the time the determination is made.
5.2 Termination of Plan
-------------------
The Bank shall have the right at any time to terminate the Plan, in
which case all benefits that are not Vested shall be forfeited. Vested benefits
shall remain payable except to the extent the Plan Administrator elects to pay
the present value Equivalent of the remaining payments due to the person
entitled to the benefit.
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ARTICLE VI
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MISCELLANEOUS PROVISIONS
------------------------
6.1 Plan History
------------
The Bank adopted the Executive Supplemental Retirement Plan in 1984.
The plan was suspended in 1991 and amended and restated in 1993. In 1994 it was
submitted to the National Office of the Internal Revenue Service for a ruling,
amended and restated in 1995 in response to IRS comments from representatives of
that agency.
6.2 Plan is Unfunded
----------------
This Plan is an unfunded deferred compensation plan for a select group
of management employees. The Plan constitutes only a mere promise by the Bank
to make benefit payments in the future.
6.3 Adverse Tax Consequences
------------------------
To the extent that any benefit under the Plan is taxable to the
Participant prior to the Participant's actual receipt of payment for the Plan
(except as a result of the imposition of tax under Code section 3121(v)), the
Plan Administrator shall make payment to the Participant of the taxed benefit.
6.4 Business Succession
-------------------
The Bank may transfer its obligations under this Plan to a successor,
but the Bank shall remain secondarily liable for benefits due under the Plan to
any Participant or surviving spouse who does not consent to the transfer.
6.5 Limitation on Rights of Employees
---------------------------------
Except as otherwise required by law, nothing contained in the Plan
shall give any Participant the right to be retained in the service of the Bank
or to interfere with or restrict the right of the Bank, which is hereby
expressly reserved, to discharge or retire any Participant at any time, with or
without cause. Except as otherwise required by law, inclusion under the Plan
will not give any Participant any right or claim to any benefit hereunder except
to the extent such right has specifically become fixed under the terms of the
Plan. Each condition and
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provision, including numerical items, has been carefully considered and
constitutes the minimum limit on performance which will give rise to the
applicable right.
6.6 Benefits May not be Assigned
----------------------------
A Participant's or spouse's rights to benefits under the Plan are not
subject in any manner to anticipation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment by creditors.
6.7 Withholding
-----------
All amounts paid or accrued under the Plan shall be subject to
applicable federal, state and local withholding for taxes.
6.8 Headings
--------
Headings herein are for convenience only, are not a part hereof
and shall not be used in construing the Plan.
6.9 Counterparts
------------
The Plan may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute one instrument.
6.10 Severability
------------
Any provision of the Plan which is prohibited or unenforceable shall
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of the Plan
6.11 Governing Law
-------------
The Plan shall be interpreted, administered and enforced in accordance
with the Employee Retirement Security Act of 1974, and the rights of
Participants and all other persons shall be determined in accordance with this
law. To the extent that state law is applicable, however, the laws of the State
of California shall apply, without regard to the principles of the conflict of
laws thereof.
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ARTICLE VII
-----------
DEFINITIONS
-----------
The following terms, when capitalized, shall have the meaning
specified below unless the context clearly indicates to the contrary.
7.1 "Bank" means Coast Federal Bank, Federal Savings Bank, a
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federally chartered savings bank. To the extent the Plan Administrator
determines to be appropriate, the term Bank shall also include affiliates of the
Bank.
7.2 "Board of Directors" means the Board of Directors of the Bank.
------------------
7.3 "Change in Control" means a change in control as defined in the
-----------------
employee's written employment agreement. If the employee does not have a
written employment agreement or that agreement does not define "change in
control" or an analogous term, change in control means the acquisition by any
person or entity of control of the Bank, or any entity controlling the Bank,
within the meaning of Section 583.7 of the Regulations for Savings and Loan
Holding Companies of the Office of Thrift Supervision, provided, however, that
no change in control shall be deemed to occur in the event of any regulatory
action (A) by the Director of the Office of Thrift Supervision or his or her
designee, at the time the Federal Deposit Insurance Corporation or Resolution
Trust Corporation enters into an agreement to provide assistance to or on behalf
of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1823(c)); or (B) by the Director of the Office
of Thrift Supervision or his or her designee at the time such Director or his or
her designee approves a supervisory merger to resolve problems related to the
operation of the Bank or when the Bank is determined by such Director to be in
an unsafe and unsound condition, or in the event of any merger, consolidation,
or corporate reorganization in which the owners prior to said combination of the
capital stock entitled to vote in the election of directors of the Board
("Voting Stock") of the Bank or any organization controlling the Bank receive
75% or more of the resulting entity's Voting Stock. Without limitation of the
foregoing, a change in control shall be deemed to occur if any person or entity
directly or indirectly acquires ownership, control, power to vote, or proxies
representing more than 25 percent of the Voting Stock of the Bank or any entity
controlling the Bank, or
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obtains control of the election of a majority of the directors of the Bank or
any entity controlling the Bank.
7.4 "Claimant" shall have the meaning provided in Section 4.3(a).
--------
7.5 "Code" means the Internal Revenue Code of 1986, as amended.
----
7.6 "Disability" means the total disability of the Participant as
----------
determined under the Bank's group long-term disability plan, assuming for this
purpose, that the Participant was covered by such plan.
7.7 "Equivalent" means the actuarial equivalent of a given amount or
----------
benefit payable in another manner, at another time or by any other means,
determined conclusively by or under the direction of, the Plan Administrator in
accordance with actuarial principles, methods and assumptions which are found to
be appropriate by the Plan's actuary and which may not be adversely changed
following Change in Control. Lump Sum equivalencies shall be based on the
mortality assumptions set forth in the 1995 Buck Mortality Table and on an
interest assumption of the Pension Benefit Guaranty Corporation immediate
interest rate as of January 1st.
7.8 "Final Average Monthly Compensation" means the average monthly
----------------------------------
earnings payable to a Participant for the 36 consecutive calendar months in
which the Participant received the highest earnings during the 120 months
immediately preceding the Participant's termination of employment. This average
shall be computed by dividing the Participant's total "earnings" (as defined in
this Section) during that 36-month period by 36. A Participant's "earnings"
shall mean the base salary paid to the Participant during the months in
question, including any salary waived or deferred under any salary reduction
arrangement, but not including deferred fees, bonuses and similar forms of non-
salaried compensation and any accelerated payments of future salary.
7.9 "Normal Benefit Form" means the normal form of benefit under the
-------------------
Plan, which is a monthly life annuity.
7.10 "Optional Benefit Form" means any form of benefit available
---------------------
under the Plan, other than the Normal Benefit Form.
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7.11 "Participant" means any person who is included in the Plan
-----------
pursuant to Article III.
7.12 "Plan" means the 1995 Supplemental Executive Retirement Plan of
----
Coast Federal Bank, as restated in this document. The Plan's plan year is the
12-month period ending December 31st.
7.13 "Plan Administrator" means the Bank, acting through the
------------------
Compensation and Benefits Committee of the Board of Directors or such
Committee's delegate.
7.14 "Resigns for Good Reason" means that a Participant has resigned
-----------------------
after a Change in Control for good reason (or the analogous concept) set forth
in the Participant's written employment agreement. If the employee does not
have a written employment agreement or that agreement does not define "good
reason" or an analogous term, good reason shall mean the following as determined
by the Committee:
(a) Demotion: The Participant's duties and
--------
responsibilities are substantially and adversely altered from those in
effect immediately prior to the Change in Control, other than as a
result of the Bank or its parent ceasing to be a public company.
(b) Pay Cut: The Participant's annual base salary is reduced.
-------
(c) Relocation: The Participant's principal office is transferred to
----------
another location, which increases his or her one-way commute to work
by more than 30 minutes, based on the Participant's residence when the
transfer was announced or, if he or she consents to the transfer, the
Bank fails to pay (or reimburse for) all reasonable moving expenses
the Participant incurs in changing his or her principal residence in
connection with the relocation and to indemnify the Participant
against any loss upon the sale of principal residence in connection
with such relocation. For purposes of the preceding sentence, "loss"
shall be the difference between the actual sales price of the
residence and the higher of: (a) the Participant's aggregate
investment in the residence; or (b) the fair market value of the
residence as determined by a real estate appraiser
-17-
designated by the Participant and reasonably satisfactory to the Bank.
(d) Breach Of Promise: The Bank fails to pay to the Participant any
-----------------
present or deferred compensation within seven days after it is due.
(e) Discontinuance Of Compensation Plan: The Bank fails to continue,
-----------------------------------
or continue the Participant's participation in, any compensation plan
in which the Participant participated immediately prior to the Change
in Control which is material to his or her total compensation, unless
an equitable substitute arrangement has been adopted or made available
on a basis not materially less favorable to the Participant than the
plan in effect immediately prior to the Change in Control, both as to
the benefits the Participant receives and his or her level of
participation relative to other participants. The plans referred to
in the preceding sentence include such programs as the annual
incentive awards, the 1995 and 1996 Incentive Compensation Plan, the
1985 Stock Option and Stock Appreciation Rights Plan (as amended
through February 22, 1989), similar programs, and any substitute plans
adopted prior to the Change in Control.
(f) Discontinuance of Benefit Plan: The Bank stops providing the
------------------------------
Participant with benefits which, in the aggregate, are substantially
as valuable to the Participant as those he or she enjoyed immediately
before the Change in Control under the Bank's pension, life insurance,
medical, health, disability, accident, vacation, and fringe benefit
plans, programs and arrangements.
(g) Notice Of Prospective Action: The Participant is officially
----------------------------
notified or it is officially announced that the Bank will take any of
the actions listed above.
7.15 "Terminated Without Cause" means that a Participant has been
------------------------
discharged or laid off by the Bank after a Change in Control without cause. If
the Participant is employed under a written employment contract that defines
"cause," that definition shall apply. Otherwise, "cause" means the occurrence
of the following, as determined by the Committee
-18-
(a) the Participant's refusal to follow written, lawful directions or
the Participant's material failure to perform his or her duties, in
either case, after the Participant has been given notice and a
reasonable opportunity to cure;
(b) the Participant's material failure to comply with the Bank's
policies; or
(c) the Participant's engaging in conduct which is or may be unlawful
or disreputable, to the possible detriment of the Bank, any of its
affiliates, or the Participant's own reputation.
7.16 "Vested" means non-forfeitable. A Participant's benefit shall
------
become Vested when the Participant becomes eligible to terminate employment with
the Bank with an immediately commencing benefit under Article III. In addition,
a Participant's benefit shall be Vested if the Participant is listed on Exhibit
C.
7.17 "Year of Service" means the number of years from the date of the
---------------
Participant's most recently commenced employment with the Bank through the date
of his or her termination of employment from the Bank, rounding any partial year
of employment to the next highest year.
Adopted on February 28, 1996.
-----------
BY: /s/ RAY MARTIN
---------------------------------------------
Chairman of the Board of Directors and Chief
Executive Officer of Coast Federal Bank
BY: /s/ ROBERT L. HUNT II
---------------------------------------------
President and Chief Operating Officer of Coast
Federal Bank
-19-
EXHIBIT A
---------
COAST FEDERAL BANK
SENIOR MANAGEMENT
PARTICIPANTS IN EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
CORPORATE TITLE NAME
- --------------- ----
GROUP I
- -------
Chairman of the Board,
Chief Executive Officer Ray Martin
President, Chief Operating Officer Robert L. Hunt
GROUP II
- --------
Senior Executive Vice President Norman Raiden
Senior Executive Vice President James R. Boyle
Senior Executive Vice President James Barritt
GROUP III
- ---------
Senior Vice President Howard Bennett
Senior Vice President Richard Kremer
Senior Vice President Michael C. Pierce
Senior Vice President Gerald I. Rich
Senior Vice President Leon Scales
Senior Vice President Thelma Shouse
Senior Vice President Charles E. O'Neil
Senior Vice President Geoffrey Olsen
Senior Vice President Carolyn Philmon
Senior Vice President Mark Neal
Senior Vice President Rick Richardson
Senior Vice President Ron Fox
Senior Vice President Alan Orechwa
President, Coast Fed Services Bill Moody
EXHIBIT "B"
-----------
FUTURE DISPUTE SUBMISSION AGREEMENT
-----------------------------------
PRE-HEARING CONFERENCE
- ----------------------
The Arbitrator shall schedule a pre-hearing conference to reach agreement on
procedural matters, arrange for the exchange of information, obtain stipulation,
and attempt to narrow the issues.
DISCOVERY
- ---------
It is our objective to expedite the arbitration proceedings by eliminating
discovery as provided by the Discovery Act pursuant to Code of Civil Procedure
Section 1985, et seq. Instead of discovery, the parties agree to the following
exchange of information.
a. Either party can make a written demand of lists of the witnesses to be
called or the documents to be introduced at the hearing. The demand must be
received prior to the pre-hearing conference.
b. The lists must be served within fifteen (15) days of the demand.
c. No depositions may be taken for discovery.
THE HEARING
- -----------
1. The parties must file briefs with the arbitrator at least three (3) days
before the hearing, specifying the facts each intends to prove and analyzing the
applicable law.
2. The parties have the right to representation by legal counsel throughout the
arbitration proceedings.
3. Judicial rules of evidence and procedure relating to the conduct at the
hearing, examination of witnesses, and presentation of evidence do not apply.
Any relevant evidence, including hearsay, shall be admitted by the arbitrator if
it is the sort of evidence on which responsible persons are accustomed to rely
on the conduct of serious affairs, regardless of the admissibility of such
evidence in a court of law.
4. Within reasonable limitations, both sides at the hearing may call and
examine a witness for relevant testimony, introduce relevant exhibits or other
documents, cross-examine or impeach witnesses who shall have testified orally on
any matter relevant to
1
the issues, and otherwise rebut evidence as long as these rights are exercised
in an efficient and expeditious manner.
5. Any party desiring a stenographic record may secure a court reporter to
attend the proceedings. The requesting party must notify the other parties of
the arrangements in advance of the hearing and must pay the cost incurred.
6. Any party may request the oral evidence to be given under oath.
THE AWARD
- ---------
1. The decision shall be based on the evidence introduced at the hearing,
including all logical and reasonable inferences therefrom. The arbitrator may
grant any remedy or relief which is just and equitable. The arbitrator shall
apply the laws of the State of California in making its decision.
2. The award must be made in writing and signed by the arbitrator. It shall
contain a concise statement of the reasons in support of the decision.
3. The award can be judicially enforced (confirmed, corrected or vacated)
pursuant to Section 1285 et seq. of the Code of Civil Procedure. It is final and
binding and there is no direct appeal from the award on the grounds of error in
the application of the law.
FEES AND EXPENSES
- -----------------
Each party must pay its own witness fees, its pro rata share of the arbitrator's
fees, and its own attorney's fees and costs, unless the arbitrator's award is
greater than the Bank's best offer prior to arbitration. If the Arbitrator's
award is greater, the Bank will pay the Executive's reasonable attorney's fees
and costs. The reasonableness of the attorney's fees and costs will be
determined by the arbitrator.
2
EXHIBIT "C"
COAST FEDERAL BANK
VESTED PARTICIPANTS IN EXECUTIVE
SUPPLEMENTAL RETIREMENT PLAN
CORPORATE TITLE NAME
- --------------- ----
Chairman of the Board, Chief
Executive Officer Ray Martin
President, Chief Operating Officer Robert L. Hunt
Senior Executive Vice President Norm Raiden
Senior Executive Vice President James R. Boyle
Senior Executive Vice President James Barritt
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
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