Exhibit 10.26
MONTEREY BAY BANK
FORM OF SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is adopted this first day of January, 2003, by and among
Monterey Bay Bancorp, Inc. (the "Parent Company"), a corporation organized under
the laws of the State of Delaware, located in Watsonville, California; Monterey
Bay Bank (the "Company"), a federally chartered savings and loan association
organized under the laws of the United States of America, located in
Watsonville, California; and * (the "Executive").
INTRODUCTION
The Company is willing to provide salary continuation benefits to the
Executive and the Parent Company is willing to guarantee the performance of the
Company in providing such salary continuation benefits to the Executive in
recognition of Executive's importance to the success of the Company. The salary
continuation benefits described herein are not intended to be provided in
accordance with any tax qualified plan, and are thus commonly referred to as
"non-qualified benefits".
This Agreement provides for Executive to be 100% vested in his right to
receive salary continuation benefits as of the proper execution of this
Agreement. Executive's right to receive salary continuation benefits is
forfeitable only in the event of specific limited circumstances as defined and
described herein.
The Company will pay the salary continuation benefits from its general
assets. Nothing in this Agreement is intended to provide Executive with any
lien, claim, or encumbrance upon any specific Company assets, revenues, or cash
flows. In regards to benefits receivable under this Agreement, Executive is
intended to be a general creditor of the Company.
AGREEMENT
The Parent Company and the Company (collectively the "Companies") and
the Executive agree as follows:
Page 1 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall
have the meanings specified:
1.1 "Change of Control" means an event of a nature that: (i) would be
required to be reported by the Parent Company or the Company in response to Item
I of the Current Report on Form 8-K, as in effect on the date hereof, pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"); or (ii) results in a change in control of the Parent Company or the
Company within the meaning of the Home Owners' Loan Act of 1933 and / or the
Rules and Regulations promulgated by the Office of Thrift Supervision ("OTS")
(or its predecessor agency), as in effect on the date hereof (provided, that in
applying the definition of change in control as set forth under the rules and
regulations of the OTS, the Company Board of Directors shall substitute its
judgment for that of the OTS); or (iii) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Parent Company, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of voting securities of the Parent Company or the
Company representing 25% or more of the Parent Company's or the Company's
outstanding voting securities or the right to acquire such securities except for
any securities purchased by any tax qualified employee benefit plan of the
Parent Company or the Company; or (iv) individuals who constitute the Parent
Company's Board of Directors on the date hereof (the "Incumbent Board") cease
for any reason to constitute at least a majority thereof, provided that any
person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Parent Company Board, or whose nomination for election by the
stockholders was approved by the same Nominating Committee serving under an
Incumbent Parent Company Board, shall be, for purposes of this clause (iv),
considered as though he were a member of the Incumbent Parent Company Board; or
(v) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Parent Company or the Company or similar
transaction occurs in which the Parent Company or the Company is not the
resulting entity, provided, however, that such an event listed above will be
deemed to have occurred or to have been effectuated upon the receipt of all
required regulatory and stockholder approvals not including the lapse of any
statutory waiting periods.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Disability" means if the Executive is covered by a
Company-sponsored or paid disability policy, permanent total disability as
defined in such policy. If the Executive is not covered by such a policy,
Disability means the Executive's suffering a sickness, accident, or injury that,
in the judgment of a physician who is satisfactory to both the Executive and the
Company, prevents the Executive from performing substantially all of the
Executive's normal duties for the Company.
Page 2 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
1.4 "Early Termination" means the Termination of Employment before
Normal Retirement Age for reasons other than death, Disability, Termination for
Cause, or following a Change of Control.
1.5 "Early Termination Date" means the month, day, and year in which
Early Termination occurs.
1.6 "Effective Date" means January 1, 2003.
1.7 "Normal Retirement Age" means the Executive attaining 65 years of
age.
1.8 "Normal Retirement Date" means the later of Normal Retirement Age
or Termination of Employment.
1.9 "Plan Year" means a twelve-month period commencing on January 1 and
ending on December 31 of each calendar year.
1.10 "Termination for Cause" See Article 5.
1.11 "Termination of Employment" means that the Executive ceases to be
employed by the Company as * for any reason, other than by reason of a leave of
absence approved by the Company.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. Upon Termination of Employment on or
after Normal Retirement Age for reasons other than death, the Company shall pay
to the Executive the annual benefit described in this Section 2.1, in lieu of
any benefit under any other Section of Article 2 of this Agreement.
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Monterey Bay Bank Salary Continuation Agreement
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
**. The annual benefit under this Section 2.1 may not be decreased without the
consent of Executive.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in twelve (12) equal monthly installments on the first of each
month commencing with the month following the Executive's Normal Retirement
Date, and continuing through the month in which the Executive dies, at which
time such monthly payments shall cease.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, at its sole discretion, may increase the benefit.
2.2 Early Termination Benefit. Upon Early Termination, the Company
shall pay to the Executive the annual benefit described in this Section 2.2, in
lieu of any benefit under any other Section of Article 2 of this Agreement.
2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is
**. The annual benefit under this Section 2.2 may not be decreased without the
consent of Executive.
2.2.2 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in twelve (12) equal monthly installments on the first of each
month commencing with the month following Normal Retirement Age, and continuing
through the month in which the Executive dies, at which time such monthly
payments shall cease.
2.2.3 Benefit Increases. Benefit payments may be increased as provided
in Section 2.1.3.
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Monterey Bay Bank Salary Continuation Agreement
2.3 Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age and following the Company's purchase
of an initial disability policy prior to March 31, 2003 covering Executive with
a lump sum benefit of at least $1,000,000, the Company shall pay to the
Executive the benefit described in this Section 2.3, in lieu of any benefit
under any other Section of Article 2 of this Agreement. The Company shall not be
obligated at any time to maintain a disability policy covering Executive.
However, the absence of such a disability policy shall not relieve the Company
of its financial obligation to Executive under this Section of this Agreement
once the initial disability policy covering Executive is purchased by the
Company prior to March 31, 2003.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is ***.
2.3.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in a lump sum within sixty (60) days following twelve (12) consecutive
months of Disability, with such twelve consecutive month period commencing on
the date of Termination of Employment due to Disability.
2.4 Change of Control Benefit. Upon a Change of Control, followed
within twenty-four (24) months by the Executive's Termination of Employment
prior to Normal Retirement Age for reasons other than death or Disability, the
Company shall pay to the Executive the annual benefit described in this Section
2.4, in lieu of any benefit under any other Section of Article 2 of this
Agreement. The parties to this Agreement acknowledge that the "Change of Control
Benefit" is identical to the "Normal Retirement Benefit" provided under Section
2.1 and the "Early Termination Benefit" provided under Section 2.2, and thus the
obligations of the Companies and the benefit to the Executive are not impacted
by a Change of Control.
2.4.1 Amount of Benefit. The annual benefit under this Section 2.4 is
**. The annual benefit under this Section 2.4 may not be decreased without the
consent of Executive.
2.4.2 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in twelve (12) equal monthly installments on the first of each
month commencing with the month following the Normal Retirement Age, and
continuing through the month in which the Executive dies, at which time such
monthly payments shall cease.
2.4.3 Benefit Increases. Benefit payments may be increased as provided
in Section 2.1.3.
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Monterey Bay Bank Salary Continuation Agreement
2.4.4 Excess Parachute Payment. Notwithstanding any provision of this
Agreement to the contrary, if, in the opinion of independent tax accountants or
counsel selected, retained, and paid for by the Companies and reasonably
acceptable to the Executive ("Tax Counsel"), any of the compensation or benefits
payable, or to be provided, to Executive by the Companies under this Agreement
would be treated as an excess parachute payment ("Excess Payment") as defined in
Section 280G(b)(1) of the Code (whether alone or in conjunction with payments or
benefits by the Companies outside of this Agreement), the Companies shall direct
Tax Counsel to determine and compare (i) Executive's net income after
Executive's payment of all federal, state, and local taxes assuming that all of
the compensation and benefits payable by the Companies under this Agreement and
all such other arrangements are paid to Executive and Executive pays the "Excise
Tax" (as imposed under Code Section 4999); and (ii) Executive's net income after
payment of all federal, state and local taxes assuming that the total amount of
compensation and benefits payable by the Companies under this Agreement and all
such other arrangements is reduced such that no Excess Payment results and the
Excise Tax is not triggered. If the amount calculated under (ii) above is less
than the amount calculated under (i) above, then the full amount due from the
Companies under all such arrangements shall be payable to Executive. If the
amount calculated under (ii) above is not less than the amount calculated under
(i) above, then the total amount of compensation and benefits payable under all
such arrangements shall be reduced, as provided below, such that Executive shall
receive no Excess Payment and shall have no personal liability for Excise Tax.
In the event that the amount of any payments, including any benefits, which
would be payable to or for the benefit of Executive under this Agreement must be
modified or reduced to comply with this Section 2.4.4, Executive shall direct
which payments are to be modified or reduced. This Section 2.4.4 shall be
interpreted so as to maximize the net after-tax dollar value to Executive. In
determining whether any Excess Payment exists and the most advantageous outcome
for Executive, the parties shall take into account all provisions of Code
Section 280G, and the Regulations thereunder, including making appropriate
adjustments to such calculations for amounts established to be "Reasonable
Compensation" as provided in Section 280G(b)(4) of the Code. The Companies and
Executive shall cooperate fully with Tax Counsel and provide Tax Counsel with
all compensation and benefit amounts, personal tax information, and other
information necessary or helpful in calculation of such net after-tax amounts.
In the event of any Internal Revenue Service examination, audit, or other
inquiry, the Companies and Executive agree to take action to provide, and to
cooperate in providing, evidence to the Internal Revenue Service (and, if
applicable, the state revenue department) to achieve this goal.
Page 6 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
2.4.5 Correction of Excess Parachute Payment Adjustment. If it is
established pursuant to a final determination of a court or an Internal Revenue
Service proceeding, or pursuant to an opinion of Tax Counsel, that
notwithstanding the good faith of the Companies and Executive in applying the
terms of Section 2.4.4, either (i) the amounts paid to Executive unintentionally
constituted Excess Payment and triggered the Excise Tax, even though the
payments to Executive were reduced in an effort to avoid such result; or (ii)
the amounts paid to Executive were reduced by more than was necessary to avoid
triggering the Excise Tax, then the parties shall make the applicable correction
that will achieve the goal described in Section 2.4.4. In the event the error
referred to in clause (i) hereof occurs, Executive is hereby required to repay
to the Companies, within 15 days after the error is discovered, the amount
necessary to avoid the Excise Tax; provided, however, that if Executive, based
on advice from Tax Counsel and Executive's own tax advisor, determines that the
return of such amounts will not serve to eliminate the Excess Payment and the
Excise Tax, the Companies then shall be obligated to pay to Executive, within 15
days after Executive notifies the Companies of Executive's determination, the
total amount by which the original amount of Executive's compensation and
benefits were reduced pursuant to the terms of Section 2.4.4. In the event the
error referred to in clause (ii) hereof occurs, the Companies are hereby
required to repay to Executive, within 30 days after the error is discovered,
the maximum amount of the compensation and benefits that were reduced pursuant
to the terms of Section 2.4.4 that Executive may receive without triggering the
Excise Tax.
Article 3
Death Benefits
3.1 Death During Active Service. Upon the Executive's death while in
the active service of the Company, the Company shall pay to the Executive's
beneficiary the benefit described in the Split Dollar Agreement between the
Company and the Executive of even date herewith (the "Split Dollar Agreement"),
subject to Article 5 and Article 7 hereof, and no benefits shall be payable
under Article 2 of this Agreement.
3.2 Death During Payment of a Lifetime Benefit. If the Executive dies
after receiving any Lifetime Benefit payments pursuant to Article 2 Sections
2.1, 2.2, or 2.4 of this Agreement, the payments under Article 2 shall cease,
and the Executive's beneficiary shall receive the benefit described in the Split
Dollar Agreement, subject to Article 5 and Article 7 hereof.
3.3 Death After Termination of Employment But Before Payment of a
Lifetime Benefit Commences. If the Executive has a Termination of Employment
that would entitle him to a Lifetime Benefit under Article 2 of this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay to the Executive's beneficiary the benefit described in the Split Dollar
Agreement, subject to Article 5 and Article 7 hereof, and no benefits shall be
payable under Article 2 of this Agreement.
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Monterey Bay Bank Salary Continuation Agreement
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a
beneficiary by filing a written designation with the Company. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will be effective only if signed by the Executive and
received by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names his spouse as beneficiary
and the marriage is subsequently dissolved, or if the Executive names someone
other than his spouse as beneficiary and he subsequently marries. If the
Executive dies without a valid beneficiary designation, all payments shall be
made to the Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative, or person having the care or custody of such
minor, incompetent person, or incapable person. The Company may require proof of
incompetence, minority, or guardianship, as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.
Page 8 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
Article 5
General Limitations
5.1 Termination for Cause. Notwithstanding any provision of this
Agreement to the contrary, the Company shall not pay any benefit under this
Agreement if the Company terminates the Executive's employment for any one or
more of the following reasons ("Termination for Cause"):
(a) Gross negligence or gross neglect of duties to the Company in
connection with the Executive's employment that has a material
adverse effect on the Company; or
(b) Conviction of a criminal felony; or
(c) Any breach of fiduciary duty to the Company involving personal
profit; or
(d) Fraud, disloyalty, dishonesty, or willful violation of any law
or significant Company policy committed in connection with the
Executive's employment that has a material adverse effect on
the Company.
5.2 Suicide or Misstatement. The Company shall not pay any death
benefit under Article 3 of this Agreement if the Executive commits suicide after
the date of this Agreement, if such suicide prevents the Company from collecting
the full amount of proceeds from any and all life insurance policies issued in
connection with the Split Dollar Agreement of even date herewith. In addition,
the Company shall not pay any death benefit under Article 3 of this Agreement if
the Executive has made any material misstatement of fact on any application for
a life insurance policy issued in connection with the Split Dollar Agreement
that prevents the Company from collecting the full amount of proceeds from such
policy.
Page 9 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
5.3 Regulatory Restrictions. The following provisions shall apply to
the benefits to be provided to Executive under this Agreement, provided that, as
set forth in subsections (b), (c), and (d) below, Executive's vested benefits
under this Agreement shall not be affected by the provisions of such
subsections.
(a) If Executive is suspended from office and / or temporarily prohibited
from participating in the conduct of the Company's affairs by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. ss.1818(e)(3) or (g)(1); the Companies'
obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Company may in its discretion (i) pay
Executive all or part of any payments under this Agreement that were
withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were
suspended.
(b) If Executive is removed and / or permanently prohibited from
participating in the conduct of the Company's affairs by an order
issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all obligations of
the Companies under this contract shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall
not be affected.
(c) If the Company is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. ss.1813(x)(1) all obligations
of the Companies under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the
contracting parties.
(d) All obligations of the Company under this Agreement shall be
terminated, except to the extent determined that continuation of the
Agreement is necessary for the continued operation of the institution,
(i) by the Director of the OTS (or his designee) or the FDIC, at the
time the FDIC enters into an agreement to provide assistance to or on
behalf of the Company under the authority contained in Section 13(c) of
the Federal Deposit Insurance Act, 12 U.S.C.ss.1823(c); or (ii) by the
Director of the OTS (or his designee) at the time the Director (or his
designee) approves a supervisory merger to resolve problems related to
the operations of the Company or when the Company is determined by the
Director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by
such action.
(e) Any payments made to Executive pursuant to this Agreement are subject
to and conditioned upon compliance with 12 U.S.C. ss.1828(k), 12 C.F.R.
ss.545.121, FDIC regulation 12 CFR Part 359, Golden Parachute and
Indemnification Payments, and any rules and regulations promulgated
thereunder.
Page 10 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
Article 6
Claims and Review Procedure
6.1 Claims Procedure. An Executive or beneficiary ("Claimant") who has
not received benefits under this Agreement that he or she believes should be
paid shall make a claim for such benefits as follows:
6.1.1 Initiation--Written Claim. The Claimant initiates a claim by
submitting to the Company a written claim for the benefits.
6.1.2 Timing of Company Response. The Company shall respond to such
Claimant within a 90-day period after receiving the claim. If the Company
determines that special circumstances require additional time for processing the
claim, the Company can extend the response period by an additional 90 days by
notifying the Claimant in writing, prior to the end of the initial 90-day
period, that an additional period is required. The notice of extension must set
forth the special circumstances and the date by which the Company expects to
render its decision.
6.1.3 Notice of Decision. If the Company denies all or any part of the
claim, the Company shall notify the Claimant in writing of such denial. The
Company shall write the notification in a manner calculated to be understood by
the Claimant. The notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of this Agreement on
which the denial is based;
(c) A description of any additional information or material
necessary for the Claimant to perfect the claim and an
explanation of why it is needed;
(d) An explanation of this Agreement's review procedures and the
time limits applicable to such procedures; and
(e) A statement of the Claimant's right to bring a civil action
under ERISA Section 502(a) following an adverse benefit
determination on review.
Page 11 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
6.2 Review Procedure. If the Company denies all or any part of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:
6.2.1 InitiationWritten Request. To initiate the review, the
Claimant, within 60 days after receiving the Company's notice of denial, must
file with the Company a written request for review.
6.2.2 Additional Submissions--Information Access. The Claimant shall
then have the opportunity to submit written comments, documents, records, and
other information relating to the claim. The Company shall also provide the
Claimant, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the Claimant's claim
for benefits.
6.2.3 Considerations on Review. In considering the review, the Company
shall take into account all materials and information the Claimant submits
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.
6.2.4 Timing of Company Response. The Company shall respond in writing
to such Claimant within 60 days after receiving the request for review. If the
Company determines that special circumstances require additional time for
processing the claim, the Company can extend the response period by an
additional 60 days by notifying the Claimant in writing, prior to the end of the
initial 60-day period, that an additional period is required. The notice of
extension must set forth the special circumstances and the date by which the
Company expects to render its decision.
6.2.5 Notice of Decision. The Company shall notify the Claimant in
writing of its decision on review. The Company shall write the notification in a
manner calculated to be understood by the Claimant. The notification shall set
forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of this Agreement on
which the denial is based;
(c) A statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant to
the Claimant's claim for benefits; and
(d) A statement of the Claimant's right to bring a civil action
under ERISA Section 502(a).
Page 12 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
Article 7
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company, the Parent Company, and the Executive; however, this
Agreement will automatically terminate if no further benefit is payable to the
Executive or any Beneficiary due to the Executive's Termination for Cause,
suicide, or material misstatement as set forth in Article 5.
Article 8
Miscellaneous
8.1 Binding Effect. Subject to the provisions of Sections 8.3 and 8.4,,
this Agreement shall bind the Executive and the Companies, and their
beneficiaries, survivors, executors, successors, assigns, administrators, and
transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's right to
discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached, or encumbered in any manner.
8.4 Reorganization. In the event that the Parent Company or the Company
shall merge or consolidate into or with another entity, or reorganize, or sell
substantially all of its assets to another entity, then the Parent Company and
the Company shall obtain the agreement of such succeeding or continuing entity
to assume, honor, and discharge the obligations of the Companies under this
Agreement. Upon the occurrence of such event, the terms "Company", "Parent
Company", and "Companies" as used in this Agreement shall be deemed to refer to
the successor or survivor entity or entities.
8.5 Tax Withholding. The Company shall withhold and pay to the
applicable tax authorities (and the benefits payable shall be reduced by) any
taxes that are required to be withheld from the benefits provided under this
Agreement.
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Monterey Bay Bank Salary Continuation Agreement
8.6 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of California, except to the extent preempted
by the laws of the United States of America.
8.7 Unfunded Arrangement. The Executive and any beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Executive's life is a general
asset of the Company to which the Executive and beneficiary have no preferred or
secured claim.
8.8 Parent Company Guarantee. The Parent Company unconditionally
guarantees the performance of the Company in regards to its obligations under
this Agreement. If amounts or benefits due from the Company to the Executive or
his beneficiary are not timely paid or provided by the Company, such amounts and
benefits shall be paid or provided by the Parent Company.
8.9 Entire Agreement. This Agreement constitutes the entire agreement
between the Companies and the Executive as to the subject matter hereof.
However, this Agreement is in addition to, and shall not supercede or nullify
any of, Executive's Employment Agreement with the Parent Company and the Company
dated May 1, 2002, the Split Dollar Agreement of even date herewith, and the
Executive Bonus Agreement of even date herewith. No rights are granted to the
Executive by virtue of this Agreement other than those specifically set forth
herein.
8.10 Administration. The Company shall have full power, authority, and
discretion to administer this Agreement, including, but not limited to, the full
power, authority, and discretion to:
(a) Interpret the provisions of the Agreement;
(b) Hear and decide any and all claims made under this Agreement;
(c) Establish and revise the method of accounting for this
Agreement;
(d) Maintain a record of benefit payments; and
(e) Establish rules and prescribe any forms necessary or desirable
to administer this Agreement.
Page 14 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
8.11 Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. The named fiduciary may delegate to
others certain aspects of the management and operational responsibilities
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Executive, the Parent Company, and the Company
have signed this Agreement.
EXECUTIVE MONTEREY BAY BANK
- -------------------------------------- ----------------------------------
* McKenzie Moss
Chairman of the Board of Directors
WITNESS MONTEREY BAY BANCORP, INC.
- -------------------------------------- ----------------------------------
Mary Anne Carson McKenzie Moss
Chairman of the Board of Directors
Page 15 of 36 Pages
Monterey Bay Bank Salary Continuation Agreement
FORM OF BENEFICIARY DESIGNATION
I designate the following as beneficiary of any death benefits under this Salary
Continuation Agreement:
Primary: ______________________________________________________________________
________________________________________________________________________________
Contingent: ___________________________________________________________________
________________________________________________________________________________
Note: To name a trust as beneficiary, please provide the name of the
trustee(s) and the exact name and date of the trust agreement.
I understand that I may change these beneficiary designations at any time prior
to my death by filing a new written designation with the Company. I further
understand that the designations will be automatically revoked if:
A. the beneficiary predeceases me, or,
B. I have named my spouse as beneficiary and our marriage is subsequently
dissolved; or,
C. I name someone other than my spouse as beneficiary and I subsequently
remarry.
Signature ____________________________________
Date ____________________________________
Acknowledged by the Company this ______ day of _________________, 2003.
By ____________________________________
Name: ____________________________________
Title ____________________________________
Page 16 of 36 Pages
MONTEREY BAY BANK
FORM OF SPLIT DOLLAR AGREEMENT
THIS AGREEMENT is adopted this first day of January, 2003, by and among
Monterey Bay Bancorp, Inc. (the "Parent Company"), a corporation organized under
the laws of the State of Delaware, located in Watsonville, California; Monterey
Bay Bank (the "Company"), a federally chartered savings and loan association
organized under the laws of the United States of America, located in
Watsonville, California; and * (the "Executive"). This Agreement shall append
the Split Dollar Endorsement entered into on even date herewith or as
subsequently amended, by and among the aforementioned parties.
INTRODUCTION
The Company is willing to divide the death benefit proceeds of a
Company owned life insurance policy on the Executive's life with the Executive
and the Parent Company is willing to guarantee the performance of the Company in
dividing such death benefit proceeds with the Executive in recognition of
Executive's importance to the success of the Company. The Company will pay life
insurance premiums for the Company owned life insurance policy on the
Executive's life from its general assets.
This Agreement provides for Executive to be 100% vested in his right to
receive a portion of the death benefit proceeds as enumerated herein as of the
proper execution of this Agreement. Executive's right to these death benefit
proceeds is forfeitable only in the event of specific limited circumstances as
defined and described herein.
AGREEMENT
The Parent Company and the Company (collectively the "Companies") and
the Executive agree as follows:
Article 1
General Definitions
The following terms shall have the meanings specified:
1.1 "Insured" means the Executive.
Page 17 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
1.2 "Insurer" means each life insurance carrier in which there is a
Split Dollar Policy Endorsement attached to this Agreement.
1.3 "Policy" means the specific life insurance policy or policies
issued by the Insurer.
1.4 "Termination for Cause" means the Company terminating the
Executive's employment for any one or more of the following reasons:
(a) Gross negligence or gross neglect of duties to the Company in
connection with the Executive's employment that has a material
adverse effect on the Company; or
(b) Conviction of a criminal felony; or
(c) Any breach of fiduciary duty to the Company involving personal
profit; or
(d) Fraud, disloyalty, dishonesty, or willful violation of any law
or significant Company policy committed in connection with the
Executive's employment that has a material adverse effect on
the Company.
1.5 "Termination of Employment" means that the Executive ceases to be
employed by the Company as * for any reason, other than by reason of a leave of
absence approved by the Company.
Article 2
Policy Ownership / Interests / Restrictions
2.1 Company Ownership. The Company is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership. The Company shall
be the beneficiary of the remaining death benefit proceeds of the Policy after
the Interest of the Executive or the Executive's transferee has been paid
according to Section 2.2 below.
2.2 Executive's Interest. The Executive shall have the right to
designate the beneficiary of death benefit proceeds of the Policy in the amount
of ***. The Executive shall also have the right to elect and change settlement
options that may be permitted.
2.3 Option to Purchase. The Company shall not sell, surrender, or
transfer ownership of the Policy while this Agreement is in effect without first
giving the Executive or the Executive's transferee the option to purchase the
Policy for a period of 60 days from written notice of such intention. The
purchase price shall be an amount equal to the cash surrender value of the
Policy. This provision shall not impair the right of the Company to terminate
this Agreement.
Page 18 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
2.4 Regulatory Restrictions. The following provisions shall apply to
the benefits to be provided to Executive under this Agreement, provided that, as
set forth in subsections (b), (c), and (d) below, Executive's vested benefits
under this Agreement shall not be affected by the provisions of such
subsections.
(a) If Executive is suspended from office and / or temporarily prohibited
from participating in the conduct of the Company's affairs by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. ss.1818(e)(3) or (g)(1); the Companies'
obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Company may in its discretion (i) pay
Executive all or part of any payments under this Agreement that were
withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were
suspended.
(b) If Executive is removed and / or permanently prohibited from
participating in the conduct of the Company's affairs by an order
issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all obligations of
the Companies under this contract shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall
not be affected.
(c) If the Company is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. ss.1813(x)(1) all obligations
of the Companies under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the
contracting parties.
(d) All obligations of the Company under this Agreement shall be
terminated, except to the extent determined that continuation of the
Agreement is necessary for the continued operation of the institution,
(i) by the Director of the OTS (or his designee) or the FDIC, at the
time the FDIC enters into an agreement to provide assistance to or on
behalf of the Company under the authority contained in Section 13(c) of
the Federal Deposit Insurance Act, 12 U.S.C.ss.1823(c); or (ii) by the
Director of the OTS (or his designee) at the time the Director (or his
designee) approves a supervisory merger to resolve problems related to
the operations of the Company or when the Company is determined by the
Director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by
such action.
(e) Any payments made to Executive pursuant to this Agreement are subject
to and conditioned upon compliance with 12 U.S.C. ss.1828(k), 12 C.F.R.
ss.545.121, FDIC regulation 12 CFR Part 359, Golden Parachute and
Indemnification Payments, and any rules and regulations promulgated
thereunder.
Page 19 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
Article 3
Premiums
3.1 Premium Payment. The Company shall pay any premiums due on the
Policy.
3.2 Economic Benefit. The Company shall determine the economic benefit
attributable to the Executive based on the amount of the current term rate for
the Executive's age multiplied by the aggregate death benefit payable to the
Executive's beneficiary. The "current term rate" is the minimum amount required
to be imputed under IRS Notice 2002-59, or any subsequent applicable authority.
The Company shall perform all tax information reporting required by federal,
state, and local taxation authorities in conjunction with reporting the economic
benefit described in this Section 3.2 as additional taxable income of Executive.
Article 4
Assignment
The Executive may assign without consideration all of the Executive's
interests in the Policy and Executive's rights under this Agreement to any
person, entity, or trust. In the event the Executive transfers all of the
Executive's interest in the Policy, then all of the Executive's interest in the
Policy and rights under the Agreement shall be vested in the Executive's
transferee, who shall be substituted as a party hereunder, and the Executive
shall have no further interest in the Policy or rights under this Agreement, but
the Executive shall not be relieved of any obligations hereunder.
Article 5
Insurer
The Insurer shall be bound only by the terms of the Policy. Any payments
the Insurer makes or actions it takes in accordance with the Policy shall fully
discharge it from all claims, suits, and demands of all entities or persons. The
Insurer shall not be bound by or be deemed to have notice of the provisions of
this Agreement.
Page 20 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
Article 6
Claims and Review Procedure
6.1 Claims Procedure. An Executive or beneficiary ("Claimant") who has
not received benefits under this Agreement that he or she believes should be
paid shall make a claim for such benefits as follows:
6.1.1 Initiation - Written Claim. The Claimant initiates a claim
by submitting to the Company a written claim for the benefits.
6.1.2 Timing of Company Response. The Company shall respond to
such claimant within a 90-day period after receiving the claim. If the
Company determines that special circumstances require additional time for
processing the claim, the Company can extend the response period by an
additional 90 days by notifying the claimant in writing, prior to the end
of the initial 90-day period, that an additional period is required. The
notice of extension must set forth the special circumstances and the date
by which the Company expects to render its decision.
6.1.3 Notice of Decision. If the Company denies all or any part of
the claim, the Company shall notify the Claimant in writing of such
denial. The Company shall write the notification in a manner calculated
to be understood by the Claimant. The notification shall set forth:
(a) The specific reasons for the denial,
(b) A reference to the specific provisions of this Agreement on
which the denial is based;
(c) A description of any additional information or material
necessary for the Claimant to perfect the claim and an
explanation of why it is needed;
(d) An explanation of this Agreement's review procedures and the
time limits applicable to such procedures; and
(e) A statement of the Claimant's right to bring a civil action
under ERISA Section 502(a) following an adverse benefit
determination on review.
Page 21 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
6.2 Review Procedure. If the Company denies all or any part of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:
6.2.1 Initiation - Written Request. To initiate the review, the
Claimant, within 60 days after receiving the Company's notice of denial,
must file with the Company a written request for review.
6.2.2 Additional Submissions - Information Access. The Claimant
shall then have the opportunity to submit written comments, documents,
records, and other information relating to the claim. The Company shall
also provide the Claimant, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information
relevant to the Claimant's claim for benefits.
6.2.3 Considerations on Review. In considering the review, the
Company shall take into account all materials and information the
Claimant submits relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit
determination.
6.2.4 Timing of Company Response. The Company shall respond in
writing to such Claimant within a 60-day period after receiving the
request for review. If the Company determines that special circumstances
require additional time for processing the claim, the Company can extend
the response period by an additional 60 days by notifying the Claimant in
writing, prior to the end of the initial 60-day period, that an
additional period is required. The notice of extension must set forth the
special circumstances and the date by which the Company expects to render
its decision.
6.2.5 Notice of Decision. The Company shall notify the Claimant in
writing of its decision on review. The Company shall write the
notification in a manner calculated to be understood by the Claimant. The
notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of this Agreement on
which the denial is based;
(c) A statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant to
the Claimant's claim for benefits; and
(d) A statement of the Claimant's right to bring a civil action
under ERISA Section 502(a).
Page 22 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
Article 7
Amendment and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company, the Parent Company, and the Executive; however, this
Agreement will automatically terminate if no further benefit is payable to the
Executive or any Beneficiary due to the Executive's Termination for Cause, or in
the event the Insurer refuses to pay the Policy according to the terms of the
Policy. If the Insurer refuses to pay the Policy following the death of the
Executive and the Company receives no death benefit proceeds from the Policy
following the death of the Executive, then Executive's Interest as defined in
Section 2.2 shall be zero.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the
Companies, and their beneficiaries, survivors, successors, executors,
administrators, and transferees, and any Policy beneficiary.
8.2 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's right to
discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.
8.3 Applicable Law. The Agreement and all rights hereunder shall be
governed by and construed according to the laws of the State of California,
except to the extent preempted by the laws of the United States of America.
8.4 Reorganization. In the event that the Parent Company or the Company
shall merge or consolidate into or with another company, or reorganize, or sell
substantially all of its assets to another entity, then the Parent Company and
the Company shall obtain the agreement of such succeeding or continuing entity
to assume, honor, and discharge the obligations of the Companies under this
Agreement. Upon the occurrence of such event, the terms "Company", "Parent
Company", and "Companies" as used in this Agreement shall be deemed to refer to
the successor or survivor entity or entities.
8.5 Notice. Any notice, consent, or demand required or permitted to be
given under the provisions of this Split Dollar Agreement by one party to
another shall be in writing, shall be signed by the party giving or making the
same, and may be given either by delivering the same to such other party
personally, or by mailing the same, by United States certified mail, postage
prepaid, to such party, addressed to his or her last known address as shown on
the records of the Company. The date of such mailing shall be deemed the date of
such mailed notice, consent, or demand.
Page 23 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
8.6 Entire Agreement. This Agreement constitutes the entire agreement
between the Companies and the Executive as to the subject matter hereof.
However, this Agreement is in addition to, and shall not supercede or nullify
any of, Executive's Employment Agreement with the Parent Company and the Company
dated May 1, 2002, the Salary Continuation Agreement of even date herewith, and
the Executive Bonus Agreement of even date herewith. No rights are granted to
the Executive by virtue of this Agreement other than those specifically set
forth herein.
8.7 Parent Company Guarantee. The Parent Company unconditionally
guarantees the performance of the Company in regards to its obligations under
this Agreement. If amounts or benefits due from the Company to the Executive or
his beneficiary are not timely paid or provided by the Company, such amounts and
benefits shall be paid or provided by the Parent Company.
8.8 Administration. The Company shall have full power, authority, and
discretion to administer this Agreement, including, but not limited to, the full
power, authority, and discretion to:
(a) Interpret the provisions of this Agreement;
(b) Hear and decide any and all claims made under this Agreement;
(c) Establish and revise the method of accounting for this
Agreement;
(d) Maintain a record of benefit payments; and
(e) Establish rules and prescribe any forms necessary or desirable
to administer this Agreement.
8.9 Tax Withholding. The Company shall withhold and pay to the
applicable tax authorities (and the benefits payable shall be reduced by) any
taxes that are required to be withheld from the benefits provided under this
Agreement.
Page 24 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
8.10 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under the Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.
IN WITNESS WHEREOF, the Executive, the Parent Company, and the Company
have signed this Agreement.
EXECUTIVE MONTEREY BAY BANK
- -------------------------------------- ----------------------------------
* McKenzie Moss
Chairman of the Board of Directors
WITNESS MONTEREY BAY BANCORP, INC.
- -------------------------------------- ----------------------------------
Mary Anne Carson McKenzie Moss
Chairman of the Board of Directors
Page 25 of 36 Pages
FPRM OF SPLIT DOLLAR POLICY ENDORSEMENT (various insurance companies)
MONTEREY BAY BANK SPLIT DOLLAR AGREEMENT
Insurer: Insured: *
Policy Number: Owner: Monterey Bay Bank
Pursuant to the terms of the MONTEREY BAY BANK SPLIT DOLLAR AGREEMENT
dated January 1, 2003, the undersigned Owner requests that the above-referenced
policy issued by the above named Insurer provide for the following beneficiary
designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of its interest in the
policy. It is hereby provided that the Insurer may rely solely upon a statement
from the Owner as to the amount of proceeds it is entitled to receive under this
paragraph.
2. Any proceeds at the death of the Insured in excess of the amount paid
under the provisions of the preceding paragraph shall be paid in one sum to:
- --------------------------------------------------------------------------------
PRIMARY BENEFICIARY, RELATIONSHIP / SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
CONTINGENT BENEFICIARY, RELATIONSHIP / SOCIAL SECURITY NUMBER
The exclusive right to change the beneficiary for the proceeds payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this paragraph which are available under the terms of the policy and to
assign all rights and interests granted under this paragraph are hereby granted
to the Insured. The sole signature of the Insured shall be sufficient to
exercise said rights. The Owner retains all contract rights not granted to the
Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.
4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.
The undersigned for the Owner is signing in a representative capacity and
warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.
Signed at Watsonville, California this 19th day of December, 2002.
INSURED OWNER / MONTEREY BAY BANK
- ------------------------------------- ----------------------------------
* McKenzie Moss
Chairman of the Board of Directors
Page 26 of 36 Pages
Monterey Bay Bank Split Dollar Agreement
MONTEREY BAY BANK
FORM OF EXECUTIVE BONUS AGREEMENT
THIS AGREEMENT is adopted this first day of January, 2003, by and among
Monterey Bay Bancorp, Inc. (the "Parent Company"), a corporation organized under
the laws of the State of Delaware, located in Watsonville, California; Monterey
Bay Bank (the "Company"), a federally chartered savings and loan association
organized under the laws of the United States of America, located in
Watsonville, California; and * (the "Executive").
INTRODUCTION
The Company is willing to provide bonus compensation to the Executive
and the Parent Company is willing to guarantee the performance of the Company in
providing such bonus compensation to the Executive in recognition of Executive's
importance to the success of the Company.
This Agreement provides for Executive to be 100% vested in his right to
receive bonus compensation as of the proper execution of this Agreement.
Executive's right to receive bonus compensation is forfeitable only in the event
of specific limited circumstances as defined and described herein.
The Company will pay the bonus compensation from its general assets.
Nothing in this Agreement is intended to provide Executive with any lien, claim,
or encumbrance upon any specific Company assets, revenues, or cash flows. In
regards to benefits receivable under this Agreement, Executive is intended to be
a general creditor of the Company.
AGREEMENT
The Parent Company and the Company (collectively the "Companies") and
the Executive agree as follows:
Page 27 of 36 Pages
Monterey Bay Bank Executive Bonus Agreement
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall
have the meanings specified:
1.1 "Bonus Award" means only the bonus compensation paid to the
Executive or on behalf of the Executive pursuant to this Agreement for a Plan
Year and does not include any salary or any other compensation or benefit.
1.2 "Plan Year" means the calendar year.
1.3 "Termination for Cause" means the Company terminating the
Executive's employment for any one or more of the following reasons:
(a) Gross negligence or gross neglect of duties to the Company in
connection with the Executive's employment that has a material
adverse effect on the Company; or
(b) Conviction of a criminal felony; or
(c) Any breach of fiduciary duty to the Company involving personal
profit; or
(d) Fraud, disloyalty, dishonesty, or willful violation of any law
or significant Company policy committed in connection with the
Executive's employment that has a material adverse effect on
the Company.
Page 28 of 36 Pages
Monterey Bay Bank Executive Bonus Agreement
Article 2
Bonus Award / Restrictions
2.1 Bonus Award. The Company shall pay the Executive or his Beneficiary
a Bonus Award for each Plan Year until the Plan Year that commences following
the date of the Executive's death. The amount of the Bonus Award shall be equal
to the amount calculated under paragraph (a) less the amount calculated under
paragraph (b), below:
(a) The Executive's economic benefit under a separate Split Dollar
Agreement among the Executive and the Companies of even date herewith
(the "Split Dollar Agreement"), as determined by the Company pursuant
to Section 3.2 of the Split Dollar Agreement, divided by one minus the
Company's combined marginal statutory (as differentiated from
effective) federal and state income tax rate, as estimated by the
Company for each such Plan Year.
LESS
(b) The Executive's economic benefit under a separate Split Dollar
Agreement among the Executive and the Companies of even date herewith,
as determined by the Company pursuant to Section 3.2 of the Split
Dollar Agreement.
Example
Assumptions:
Amount of Executive's economic benefit: $6,000.00
Company's combined marginal statutory federal and state income
tax rate: 40.0%
Bonus Award Calculation:
Bonus Award = (($6,000 / (1-0.40)) - $6,000) = $4,000.00
Page 29 of 36 Pages
Monterey Bay Bank Executive Bonus Agreement
2.2 Payment of Bonus Award. Subject to Article 3, the Company shall pay
the Bonus Award to the Executive or his Beneficiary for each Plan Year on or
before December 31 of such Plan Year. The Company shall continue to pay the
Bonus Award to the Executive or his Beneficiary each Plan Year, including each
Plan Year following the termination of the Executive's employment with the
Company, until the Plan Year that commences following the date of the
Executive's death; provided, however, upon the Executive's Termination for Cause
or if this Agreement is otherwise terminated pursuant to Article 3 herein, the
Bonus Award shall cease.
2.3 Regulatory Restrictions. The following provisions shall apply to
the benefits to be provided to Executive under this Agreement, provided that, as
set forth in subsections (b), (c), and (d) below, Executive's vested benefits
under this Agreement shall not be affected by the provisions of such
subsections.
(a) If Executive is suspended from office and / or temporarily prohibited
from participating in the conduct of the Company's affairs by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. ss.1818(e)(3) or (g)(1); the Companies'
obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Company may in its discretion (i) pay
Executive all or part of any payments under this Agreement that were
withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were
suspended.
(b) If Executive is removed and / or permanently prohibited from
participating in the conduct of the Company's affairs by an order
issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all obligations of
the Companies under this contract shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall
not be affected.
(c) If the Company is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. ss.1813(x)(1) all obligations
of the Companies under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the
contracting parties.
Page 30 of 36 Pages
Monterey Bay Bank Executive Bonus Agreement
(d) All obligations of the Company under this Agreement shall be
terminated, except to the extent determined that continuation of the
Agreement is necessary for the continued operation of the institution,
(i) by the Director of the OTS (or his designee) or the FDIC, at the
time the FDIC enters into an agreement to provide assistance to or on
behalf of the Company under the authority contained in Section 13(c) of
the Federal Deposit Insurance Act, 12 U.S.C.ss.1823(c); or (ii) by the
Director of the OTS (or his designee) at the time the Director (or his
designee) approves a supervisory merger to resolve problems related to
the operations of the Company or when the Company is determined by the
Director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by
such action.
(e) Any payments made to Executive pursuant to this Agreement are subject
to and conditioned upon compliance with 12 U.S.C. ss.1828(k), 12 C.F.R.
ss.545.121, FDIC regulation 12 CFR Part 359, Golden Parachute and
Indemnification Payments, and any rules and regulations promulgated
thereunder.
Article 3
Amendment and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company, the Parent Company, and the Executive; however, this
Agreement will automatically terminate if no further benefit is payable to the
Executive or any Beneficiary due to the Executive's Termination for Cause or
upon termination of the Split Dollar Agreement executed on even date herewith
pursuant to its terms.
Article 4
Parent Company Guarantee
The Parent Company unconditionally guarantees the performance of the
Company in regards to its obligations under this Agreement. If amounts or
benefits due from the Company to the Executive or his beneficiary are not timely
paid or provided by the Company, such amounts and benefits shall be paid or
provided by the Parent Company.
Page 31 of 36 Pages
Monterey Bay Bank Executive Bonus Agreement
Article 5
Claims and Review Procedure
5.1 Claims Procedure. An Executive or beneficiary ("Claimant") who has
not received benefits under this Agreement that he or she believes should be
paid shall make a claim for such benefits as follows:
5.1.1 Initiation - Written Claim. The Claimant initiates a claim
by submitting to the Company a written claim for the benefits.
5.1.2 Timing of Company Response. The Company shall respond to
such Claimant within a 90-day period after receiving the claim. If the
Company determines that special circumstances require additional time for
processing the claim, the Company can extend the response period by an
additional 90 days by notifying the Claimant in writing, prior to the end
of the initial 90-day period, that an additional period is required. The
notice of extension must set forth the special circumstances and the date
by which the Company expects to render its decision.
5.1.3 Notice of Decision. If the Company denies all or any part of
the claim, the Company shall notify the Claimant in writing of such
denial. The Company shall write the notification in a manner calculated
to be understood by the Claimant. The notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of this Agreement on
which the denial is based;
(c) A description of any additional information or material
necessary for the Claimant to perfect the claim and an
explanation of why it is needed;
(d) An explanation of this Agreement's review procedures and the
time limits applicable to such procedures; and
(e) A statement of the Claimant's right to bring a civil action
under ERISA Section 502(a) following an adverse benefit
determination on review.
Page 32 of 36 Pages
Monterey Bay Bank Executive Bonus Agreement
5.2 Review Procedure. If the Company denies all or any part of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:
5.2.1 Initiation - Written Request. To initiate the review,
the Claimant, within 60 days after receiving the Company's notice of
denial, must file with the Company a written request for review.
5.2.2 Additional Submissions - Information Access. The
Claimant shall then have the opportunity to submit written comments,
documents, records, and other information relating to the claim. The
Company shall also provide the Claimant, upon request and free of
charge, reasonable access to, and copies of, all documents, records and
other information relevant to the Claimant's claim for benefits.
5.2.3 Considerations on Review. In considering the review, the
Company shall take into account all materials and information the
Claimant submits relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit
determination.
5.2.4 Timing of Company Response. The Company shall respond in
writing to such Claimant within a 60-day period after receiving the
request for review. If the Company determines that special
circumstances require additional time for processing the claim, the
Company can extend the response period by an additional 60 days by
notifying the Claimant in writing, prior to the end of the initial
60-day period, that an additional period is required. The notice of
extension must set forth the special circumstances and the date by
which the Company expects to render its decision.
5.2.5 Notice of Decision. The Company shall notify the
Claimant in writing of its decision on review. The Company shall write
the notification in a manner calculated to be understood by the
Claimant. The notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of this Agreement
on which the denial is based;
(c) A statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to, and
copies of, all documents, records and other information
relevant to the Claimant's claim for benefits; and
(d) A statement of the Claimant's right to bring a civil
action under ERISA Section 502(a).
Page 33 of 36 Pages
Monterey Bay Bank Executive Bonus Agreement
Article 6
Miscellaneous
6.1 Binding Effect. This Agreement shall bind the Executive and the
Companies and their beneficiaries, survivors, executors, successors, assigns,
administrators, and transferees.
6.2 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's right to
discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.
6.3 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of California, except to the extent preempted
by the laws of the United States of America.
6.4 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
6.5 Tax Withholding. The Company shall withhold and pay to the
applicable tax authorities (and the benefits payable shall be reduced by) any
taxes that are required to be withheld from the Bonus Award under this
Agreement.
6.6 Reorganization. In the event that the Parent Company or the Company
shall merge or consolidate into or with another entity, or reorganize, or sell
substantially all of its assets to another entity, then the Parent Company and
the Company shall obtain the agreement of such succeeding or continuing entity
to assume and discharge the obligations of the Companies under this Agreement.
Upon occurrence of such event, the terms "Company", "Parent Company", and
"Companies" as used in this Agreement shall be deemed to refer to the successor
or survivor entity or entities.
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Monterey Bay Bank Executive Bonus Agreement
6.7 Entire Agreement. This Agreement constitutes the entire agreement
between the Companies and the Executive as to the subject matter hereof.
However, this Agreement is in addition to, and shall not supercede or nullify
any of, Executive's Employment Agreement with the Parent Company and the Company
dated May 1, 2002, the Salary Continuation Agreement of even date herewith, and
the Split Dollar Agreement of even date herewith. No rights are granted to the
Executive by virtue of this Agreement other than those specifically set forth
herein.
6.8 Facility of Payment. If the Executive is declared to be
incompetent, or incapable of handling the disposition of his or her property,
the Company may pay such benefit to the duly appointed guardian, legal
representative, or person having the care or custody of the Executive. The
Company may require proof of incompetence, minority, or guardianship as it may
deem appropriate prior to distribution of the benefit. Such distribution shall
completely discharge the Company from all liability with respect to such
benefit.
6.9 Administration. The Company shall have full power, authority, and
discretion to administer this Agreement, including but not limited to, the full
power, authority, and discretion to:
(a) Interpret the provisions of this Agreement;
(b) Hear and decide any and all claims made under this Agreement;
(c) Establish and revise the method of accounting for this
Agreement;
(d) Maintain a record of Bonus Award payments; and
(e) Establish rules and prescribe any forms necessary or desirable
to administer this Agreement.
6.10 Tax Withholding. The Company shall withhold and pay to the
applicable tax authorities (and the benefits payable shall be reduced by) any
taxes that are required to be withheld from the benefits provided under this
Agreement.
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Monterey Bay Bank Executive Bonus Agreement
6.11 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.
IN WITNESS WHEREOF, the Executive, the Parent Company, and the Company
have signed this Agreement.
EXECUTIVE MONTEREY BAY BANK
- ---------------------------------------- -----------------------------------
* McKenzie Moss
Chairman of the Board of Directors
WITNESS MONTEREY BAY BANCORP, INC.
- ---------------------------------------- -----------------------------------
Mary Anne Carson McKenzie Moss
Chairman of the Board of Directors
- --------------------------------------------------------------------------------
Footnotes:
* Executive Participants C. Edward Holden Mark R. Andino
Chief Executive Officer Chief Financial Officer
President Treasurer
** Amount Of Salary Continuation Benefit $120,000 $90,000
*** Amount Of Death Benefit, Disability Benefit $1,521,568 $1,141,175
Page 36 of 36 Pages