EXHIBIT 10.8
DEFERRED COMPENSATION PLAN
--------------------------
ARTICLE 1. ELIGIBLE EMPLOYEES
------------------
All officers of Coast Federal Bank (the "Bank") who are designated as
being eligible to participate in this Deferred Compensation Plan ("Plan") either
by the Board of Directors of the Bank, or by such party or parties as may be
appointed from time to time by the Board with authority to administer the Plan
("Administrators") shall be identified as "Eligible Participants" for purposes
of this Plan. An Eligible Participant may elect to participate in this Plan by
filing a written and signed notice of election in the form prescribed by the
Board of Directors or the Administrators. Said written notice must be filed
with the Bank or with the Bank subsidiary for which the Participant performs
services. Any reference to Plan Year and Calendar Year shall be deemed to have
the same meaning.
ARTICLE 2. ELECTION TO DEFER RECEIPT OF COMPENSATION
-----------------------------------------
(A) An Eligible Participant in the Plan may elect, from year-to-year
to defer a portion of his/her compensation (including bonuses) that otherwise
would be payable on a current basis. Except as provided for hereafter, an
election to defer compensation
1
shall be delivered to the Bank prior to the first day of the calendar year in
which the compensation to be deferred would otherwise be earned for services to
be performed after such election. An election by an Eligible Participant for
deferral of compensation referable to a particular year of employment shall not
constitute an election to defer compensation referable to employment in any
other year except as otherwise specified by the Eligible Participant. An
Eligible Participant who elects to defer receipt of compensation under the terms
of this Plan is identified as a "Participant" for purposes of this Plan.
(B) With regard to calendar year 1995, the year in which this Plan is
adopted and implemented, an Eligible Participant may make an election to defer
compensation for services to be performed in 1995 subsequent to his/her
election, provided that such election must be delivered within 30 days after the
date that the Plan is effective.
(C) In the first year in which a party becomes an Eligible
Participant, such newly Eligible participant may make an election to defer
compensation for services to be performed during that calendar year at a time
subsequent to the election, provided that such election must be delivered within
30 days after the date such party first becomes an Eligible Participant.
(D) An election to be an Eligible Participant (or any other notice(s)
to the Bank from a Participant (or any other notice(s) to the Bank from an
Eligible Participant or a Participant made pursuant to the notice provision of
this Plan) will be deemed
2
delivered for purposes of the Plan on the date that a signed writing is
personally delivered to the Secretary of the Bank, or two business days after
such signed writing is deposited by registered or certified mail (with
appropriate prepaid postage and delivery instructions) to the Secretary of the
Bank.
ARTICLE 3. AMOUNT THAT MAY BE DEFERRED
---------------------------
A Participant may designate the percentage of compensation otherwise
earned by him/her for services performed in a particular calendar year which
shall be deferred. A Participant may designate different deferral percentages
with regard to his/her regular compensation or bonuses, and may also specify a
maximum total amount that shall be deferred in a particular calendar year.
Notwithstanding the foregoing, the maximum total amount that may be deferred in
a particular calendar year shall not exceed fifty percent (50%) of the sum of a
Participant's regularly scheduled compensation and bonuses otherwise payable
with regard to that calendar year (or a greater amount approved from time-to-
time by the Bank's Board of Directors or the Plan's Administrators).
ARTICLE 4. DEFERRED COMPENSATION ACCOUNT
-----------------------------
Subject to the terms and conditions of Article 5, all compensation
deferred hereunder will be credited by the Bank to a Deferred Compensation
Account maintained in the name of the Participant. The amount deferred will be
credited to the account of the Participant as of the day that such amount would
otherwise be payable as compensation or as a bonus to that Participant, or such
earlier date as specified by the Administrator. Each
3
Participant shall be annually provided with a statement of the balance in his or
her Deferred Compensation Account.
ARTICLE 5. INVESTMENT OF AMOUNTS DEFERRED
------------------------------
(A) Unless the Administrators elect to make investment options
available in accordance with paragraphs (B), (C) or (D) of this Plan, deferrals
under this Plan will be credited with interest at a rate which shall be
determined in the sole discretion of the Administrators.
(B) In connection with their respective Deferred Compensation Account,
each Participant may select from among the investment options offered from time-
to-time by the Plan Administrators described hereinafter, provided further that
absent a Participant selection, the Plan Administrators shall make the
selection. A Participant's Deferred Compensation Account shall be credited or
charged on at least an annual basis with the earnings or losses that are
referable to the investment option elected by said Participant.
(C) A Participant may elect, subject to the approval of the Bank and
to the conditions of this Section (B), to have all or a portion of the amounts
credited to the Participant's Deferred Compensation Account treated as a deemed
investment in a specified life insurance policy insuring the life of the
Participant. In the event that the Bank approves any such election, then the
Bank may, at its sole option, apply for and purchase such specified life
insurance policy, and in such event all premium payments and
4
related costs and expenses shall be charged to the credit balances in the
Participant's Deferred Compensation Account.
(D) In the event that the Bank elects to purchase a life insurance
policy on the life of a Participant, then notwithstanding the deemed investment
of the Participant in the policy described herein, such policy shall for all
purposes be owned by and be the sole property of the Bank, all policy proceeds
shall be payable to and be the sole property of the Bank, and the Bank shall
have sole authority to determine and make all elections and options provided for
in the policy, including but not limited to the right to the receipt of all
dividends and other amounts declared thereon, and the right to receive policy
loans.
ARTICLE 6. DISTRIBUTION OF DEFERRED COMPENSATION ACCOUNT
---------------------------------------------
(A) At such time as a Participant provides the Bank with a timely
election, in the manner specified in Article 2, to defer compensation for a
particular year of service, such Participant shall specify in writing the manner
in which amounts credited to the Participant's Deferred Compensation Account for
that forthcoming year of service shall be distributed by the Bank; provided
further that the Administrators have the sole discretion to determine the
benefit payment options available to a Participant and may limit the period or
periods during which equal yearly installments may be made, such as to a choice
of three periods of equal yearly installments payable over 5 years, 10 years or
15 years. The Administrators shall determine in their sole discretion the
manner in which deemed interest is to be credited on amounts
5
held in a Participant's Deferred Compensation Account during the installment
payment period.
(B) In the event of a termination of employment with the Bank for any
reason other than a leave of absence approved by the Administrators of the Plan,
the benefits will be paid to the participant in a lump sum distribution.
Payments will be made within 60 days of termination.
(C) In the event a Participant's employment with the Bank is
terminated by the Bank following a "change in control," as defined in paragraph
(D) below, or the Participant terminates employment because his/her
responsibilities or overall compensation benefits are materially reduced
following such a change in control, then the Bank agrees to pay the Participant
a lump sum distribution. Payments will be made on or after January 1st of the
year following the year of termination and before January 31st of the year
following the year of termination.
(D) For the purpose of this Agreement a change in control of the Bank
shall mean 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, as amended, provided, however, that no change in control shall be
deemed to occur in the event of any regulatory action specified in Section
563.39 (b) (5) of the Regulations of the Office of Thrift Supervision, as
amended, or in the event of any merger, consolidation, or corporate
reorganization in which the owners
6
prior to said combination of the capital stock entitled to vote in the election
of Directors ("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 obtains control of the election of a
majority of the directors of the Bank or any entity controlling the Bank.
(E) In the event of the death of a Participant while in the employ of
the Bank, and in the further event that the election described in Article 5(B)
is in effect at the time of such death, then the Participant's Deferred
Compensation Account shall be credited with a deemed investment amount equal to
the full face amount of the life insurance policy.
(F) All distributions made by the Bank under the provisions of this
Article 6 shall be paid to the Participant; provided that in the event that the
Bank receives delivery of a certified copy of a death certificate pertaining to
Participant, then the Bank shall make all remaining payments to the estate of
the Participant, or to such other party as has been designated as a beneficiary
in a writing delivered to the Bank by a Participant prior to his/her death.
Payments made to the designated beneficiary or estate shall be made in
accordance with the Participant's installment payment elections in effect at the
time
7
of the Participant's death or in such manner as determined in the sole
discretion of the Administrators.
ARTICLE 7. DISTRIBUTION DUE TO AN UNFORESEEN EMERGENCY
-------------------------------------------
(A) In the event that a Participant, or a beneficiary of the
Participant who has vested rights to receive distributions under the terms of
the Plan, requests immediate distribution of all or any portion of the amounts
credited to a Participant's Deferred Compensation Account, and provides proof to
the satisfaction of the Administrators of the existence of an unforeseeable
emergency, then the Administrators shall have the right, but not the obligation,
to provide for an early withdrawal of amounts that would otherwise continue to
be deferred under the terms of this Plan. The Administrators shall have total
discretion with regard to its option hereunder, including but not limited to the
discretion to refuse to provide for an early distribution in one or more
instances without regard to the existence of an unforeseeable emergency.
Notwithstanding anything herein to the contrary, if the Administrators approve
of an early withdrawal hereunder, the amount of any such early withdrawal shall
be limited to the amount necessary to meet the emergency in issue.
(B) The term "unforeseeable emergency" shall for purposes of this Plan
be defined as an unanticipated emergency that is caused by an event beyond the
control of the Participant or beneficiary, which event would result in severe
financial hardship to the individual if an early withdrawal were not permitted.
In this regard it is the intent of this Plan that the Administrators
8
comply with the early withdrawal requirements set forth in the Revenue Procedure
92-65 and all relevant further announcements, rulings and regulations of the
Internal Revenue Service, inclusive of subsequent amendments to such
requirements, if any.
ARTICLE 8. INTERPRETATION OF PLAN PROVISIONS
---------------------------------
(A) The Participants in the Plan are aware of the fact that issues
relating to the interpretation of the provisions of this Plan may arise from
time to time, including but not limited to ambiguities, if any, relating to the
application of the terms and conditions of this Plan to the facts and
circumstances of a particular Participant. As a condition to being selected as
an Eligible Participant in the Plan, it is understood that each Participant
agrees that the Board of Directors and the Plan Administrators appointed by the
Board from time to time shall have broad discretion to interpret the terms and
provisions of this Plan in accordance with the intent and purpose of the Plan,
and to make binding determinations and resolve ambiguities in accordance with
such interpretations. In this regard the Board of Directors and the Plan
Administrators may, from time to time, issue rulings regarding the proper
interpretation of the terms and provisions of this Plan, which rulings shall be
final and determinative for all purposes. To the extent permitted by applicable
law and regulation, the Bank shall indemnify and hold harmless the members of
the Board of Directors and the Plan Administrators from and against any and all
liabilities, costs and expenses incurred by such persons as a result of any act
or omission to act in
9
connection with performance under the Plan, other than liabilities, costs and
expenses as may result from gross negligence, bad faith, willful misconduct, or
criminal act of such persons.
ARTICLE 9. DEFERRAL OF NON-DEDUCTIBLE PAYMENTS
-----------------------------------
A. It is agreed and understood that it is the intent of this Plan
that all distributions by the Bank hereunder shall qualify for a corporate tax
deduction for both federal and state income tax purposes during the calendar
year in which any such distribution is made. In the event that the Board of
Directors or the Administrators determine in good faith that any provision of
the Internal Revenue Code or the California Bank and Corporation Tax Law may
preclude an immediate deduction for any proposed distribution scheduled to be
made pursuant to the provisions of Article 6 then the Board of Directors or the
Administrators may, at their option, require that all or any portion of such
distribution shall be further deferred until the taxable period(s) in which it
can be determined in good faith by the Bank that such distribution(s) would be
fully deductible by the Bank for federal and state income tax purposes. In the
event of any further deferral under the terms of this Article 9, the unpaid
amounts in the Participant's Deferred Compensation Account shall continue to
accrue earnings, if any, through the date of actual distribution. In the event
of any conflict between the provisions of this Article 9 and any of the other
provisions of this Plan, then the provisions of this Article 9 shall be
controlling.
10
ARTICLE 10. NATURE OF RIGHT TO RECEIVE PAYMENTS
-----------------------------------
The Participants in the Plan have the status of general unsecured
creditors of the Bank and the Plan constitutes a mere promise by the Bank to
make benefit payments in the future. Accordingly, all amounts credited to a
Participant's Deferred Compensation Account, as well as the ownership and the
proceeds of any insurance policies purchased by the Bank due to its purchase
option hereunder, constitute general assets of the Bank and shall be subject to
claims by the Bank's creditors.
ARTICLE 11. NO RIGHT TO ASSIGN, ENCUMBER OR OTHERWISE ALIENATE
--------------------------------------------------
(A) A Participant's rights to benefit payments under this Plan are not
subject in any manner to alienation, anticipation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or the Participant's beneficiary.
(B) In the event that prior to a Participant's death or the date that
a Participant or the Bank provides notice of intent to terminate employment, the
Bank determines in good faith that it would be materially adverse to the
financial interests of the Bank to continue to own one or more life insurance
policies on the life of a Participant previously purchased by the Bank pursuant
to the provisions of Article 5, the Bank shall have the discretion to terminate
one or more of such policies and credit the Participant's Deferred Compensation
Account with an amount equal to the cash surrender value of the policy, plus all
other amounts therefore received by the Bank with regard to the policy,
including, but not
11
limited to dividend and interest payments and policy loan proceeds, less
premiums, if any, advanced by the Bank at times when the Participant's Deferred
Compensation Account was insufficient to pay policy premiums. Nothing contained
herein shall be construed to require the Bank to purchase a life insurance
policy on the life of a Participant in the event the Bank approves an election
by a Participant to have all or a portion of the amounts credited to a
Participant's Deferred Compensation Plan Account treated as a deemed investment
in a specified life insurance policy.
ARTICLE 12. MISCELLANEOUS
-------------
(A) All notices provided in the Plan to the Bank shall be addressed
to Coast Federal Bank, 8433 Fallbrook Avenue, West Hills, California 91304,
Attention: Director of Human Resources. All notices and distributions by the
Bank provided in the Plan to a Participant or a beneficiary may be addressed to
the last home address that has theretofore been provided to the Bank by the
Participant.
(B) All section headings herein have been inserted for convenience of
reference only and shall in no way modify, restrict or otherwise affect the
meaning or interpretation of any of the terms or provisions of this Plan.
(C) If any provision of this Plan is determined to be invalid and
unenforceable, then the Board of Directors shall determine if such invalidity
does not materially undermine the purpose and intent of this Plan, and if such
is the case, then it may carry into effect the remaining provisions of this
Plan.
12
(D) It is the intent of the Bank to obtain a ruling from the Internal
Revenue Service stating in effect that a Participant in this Plan shall not
recognize taxable income with regards to amounts deferred hereunder until the
date of distribution of amounts from his/her Deferred Compensation Account. In
the event that such a ruling is not obtained within nine months after date of
the adoption of this Plan, then the Bank, at its option, may terminate this Plan
and provide for the immediate distribution of all balances in the Deferred
Compensation Account of the Participants.
(E) It is the intent of this Board of Directors that this Plan shall
constitute an unfunded plan for purposes of the Internal Revenue Code and the
California Bank and Corporation Tax Code, as well as for purposes of Title I of
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). However,
the Administrators may elect in their sole discretion to establish a funding
vehicle for the Plan, however, any such funding vehicle shall continue for all
purposes to be a part of the general assets of the Bank and no person other than
the Bank shall by virtue of the provisions of this Plan have any interest in
such assets.
(F) The Board of Directors reserves the right, at any time and from
time to time to modify, amend or terminate any or all of the provisions of this
Plan, except that in the absence of a written agreement to the contrary, a
Participant or his/her successors shall be deemed vested with all amounts
credited to their respective Deferred Compensation Account, and such vested
13
benefits shall not be diminished or otherwise affected by any such modification,
amendment or termination. If the Plan is terminated, the Bank reserves the
right to pay each Participant the amount credited to his Deferred Compensation
Account in a lump sum.
(G) This Plan shall be subject to all rules and restrictions imposed
by the Bank's governing regulatory authorities dealing with the adoption,
implementation and termination of non-qualified deferred compensation plans.
(H) All amounts paid or deferred pursuant to this Plan shall be
subject to applicable federal, state and local withholding for taxes.
(I) Normally, a Participant need not present a formal claim for
payment in order to qualify for rights or receive payment under the Plan.
However, if any person has a claim under the Plan, the formal claim must be
pursued by procedures adopted by the Administrators in accordance with Section
503 of ERISA. Following exhaustion of a Participant's remedies under the claims
procedures adopted by the Administrators and if the claim was denied, a claimant
may pursue his or her claims in arbitration as provided in the arbitration
agreement entered into by each Participant with the Bank. In no event will any
claim be subject to resolution by any means (such as in a court of law) other
than this claims procedure or arbitration.
ARTICLE 13. PROCEDURE FOR APPEAL OR DENIAL OF BENEFITS
------------------------------------------
(A) The Committee shall provide notice in writing to the Participant's
spouse or successor if applicable (hereinafter
14
individually and collectively referred to as "Claimant") if a claim for benefits
under this 1995 Plan has been denied in whole or in part. Such notice shall be
made within 90 days of the receipt by the Committee of the claim or, if special
circumstances require, and the Claimant is so notified in writing, within 180
days of the receipt by the Committee of the claim. The notice shall (i) set
forth the specific reasons for the denial of benefits; (ii) contain specific
references of provisions of the 1995 Plan relative to the denial; (iii) describe
any material and information, if any, necessary for the claim for benefits to be
allowed, which had been requested, but not received by the Committee; and (iv)
advise the Claimant that any appeal of the Committee's adverse determination
must be made in writing to the Committee, within 60 days after receipt of this
notification, setting forth the facts upon which the appeal is based.
(B) If the Claimant fails to appeal the Committee's denial of benefits
in writing and within 9 days, the Committee's determination shall become final
and conclusive.
(C) If the Claimant timely appeals the Committee's denial of benefits,
the Committee shall reexamine all issues relevant to the original denial of
benefits. The Committee may in addition, upon at least 10 days written notice,
request the Claimant or his/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 Committee.
15
(D) The Committee shall advise the Claimant in writing of its decision
and the specific reasons on which such decision was based within 60 days of
receipt of the written appeal, or personal appearance of the Claimant or his/her
representative, unless special circumstances require an extension of 60 day
period for not more than an additional 60 days. Where such extension is
necessary, all parties shall be given written notice of the delay.
(E) If the decision of the Committee remains in dispute, then all such
disputes under this Plan will be resolved by submission to binding arbitration
at 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. All arbitration must be initiated
within one year after the written decision of the Committee and the failure to
initiate arbitration within the one-year period constitutes an absolute bar to
the institution of any new proceedings. 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
description of the dispute, the amount involved, and the remedy sought. All
arbitration shall be subject to a Future Disputes Submission Agreement, a copy
of which is attached hereto as Exhibit "C" and
16
incorporated herein. Exhibit "C" sets forth the rights of the parties if the
case is arbitrated and rules and procedures to be followed at the arbitration
hearing.
ARTICLE 14. NOTICES, STATEMENTS AND REPORTS
-------------------------------
The Committee shall be the "administrator" of the Agreement as defined
in Section 3 (16)(A) of ERISA for purposes of the reporting and disclosure
requirements imposed by ERISA and the Internal Revenue Code of 1986, as amended.
ARTICLE 15. INDEMNIFICATION
---------------
To the extent permitted by applicable law and regulation, the Bank
shall indemnify and hold harmless the members of the Board of Directors of the
Bank and the members of the Committee from and against any and all liabilities,
costs, and expenses incurred by such persons as a result of any act, or omission
to act, in connection with the performance of such persons' duties,
responsibilities, and obligations under this Plan, other than such liabilities,
costs and expenses as may result from gross negligence, bad faith, willful
misconduct, or criminal acts of such persons.
17