EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made effective as of May 1,
2001 ("Effective Date"), by and between Monterey Bay Bancorp, Inc. ("Company"),
a corporation organized under the laws of the State of Delaware, with its
principal executive offices located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇; and Monterey Bay Bank ("Association"), a federally chartered
savings and loan association, a wholly-owned subsidiary of the Company, and ▇▇▇▇
▇. ▇▇▇▇▇▇ ("Executive"). This Agreement amends and supersedes the employment
agreements between the Company and Executive, and Association and Executive,
originally signed as of January 26, 2000.
WHEREAS, the Association wishes to obtain the services of Executive;
and
WHEREAS, Executive is willing to serve in the employ of the Association
on a full-time basis;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
SECTION 1. EMPLOYMENT, DUTIES, AND RESPONSIBILITIES
(a) The Company and Association (collectively "Companies") agree to employ the
Executive and the Executive agrees to be employed by the Companies. The
Executive shall serve as the Chief Financial Officer and Treasurer of the
Companies. The Executive shall be subject to an annual performance review
conducted by the Chief Executive Officer no later than May 1 of each year during
the term of this Agreement.
(b) Except for periods of absence occasioned by illness, reasonable vacation
periods, and reasonable leaves of absence, Executive agrees to perform such
duties as may be assigned by the Companies, to devote all of his working time to
the business of the Companies, and to use his best efforts to advance the
interests of the Companies and their stockholders including, without limitation,
the performance by the Executive of all necessary and reasonable services
consistent with his positions of Chief Financial Officer, and Treasurer, as the
Companies may request from time to time, membership in and service to such
organizations specified by the Companies. However, the expenditure of reasonable
amounts of time, for which Executive shall not be compensated by the Companies,
for educational, charitable, or professional activities shall not be deemed a
breach of this Agreement if those activities do not materially interfere with
the services required of Executive under this Agreement.
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SECTION 2. TERM OF AGREEMENT
(a) The Association agrees to employ the Executive, and the Executive
agrees to accept employment by the Association, in accordance with the terms and
provisions of this Agreement, for the period commencing on the Effective Date
and continuing for a period of twenty-four (24) full calendar months, ending on
the second anniversary of the Effective Date ("TERM").
(b) Commencing on the first anniversary date of the Agreement, and
continuing on each anniversary thereafter, the disinterested members of the
Board of Directors of the Companies shall extend the Agreement an additional
year such that the remaining term of the Agreement shall be two (2) years unless
the Executive or Board elects not to extend the term of this Agreement by giving
written notice to the other party in accordance with Section 7 and Section 9 of
this Agreement. If the Agreement is extended pursuant to this Section 2, the
"TERM" definition herein shall include the period of extension.
SECTION 3. COMPENSATION AND REIMBURSEMENT.
(a) During the TERM, the Executive shall receive a base salary, which
shall be paid in equal installments on a semi-monthly basis, at the annual rate
of not less than $135,000 per year ("Base Salary"). Base Salary shall include
any amounts of compensation deferred by Executive under any qualified or
non-qualified employee benefit plan maintained by the Association. During the
TERM, Executive's Base Salary shall be reviewed at least annually. Any increase
in Base Salary shall become the Base Salary for purposes of this Agreement.
(b) In addition to the Base Salary provided for by Section 3(a),
Executive will be entitled to participate in or receive benefits under any
employee benefit plans including but not limited to, retirement plans,
supplemental retirement plans, pension plans, employee stock option plans,
profit-sharing plans, health-and-accident plans, medical coverage, or any other
employee benefit plan or arrangement currently made available by the Association
or Company or made available in the future to its senior executives and key
management employees, subject to and on a basis consistent with the terms,
conditions, and overall administration of such plans and arrangements. Executive
will be entitled to incentive compensation and bonuses as provided in any plan
of the Association or Company in which Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) In addition to the Base Salary provided for by Section 3(a) and
other compensation provided for by Section 3(b), the Association shall pay or
reimburse Executive for all reasonable travel, auto allowance, and other
reasonable business related expenses incurred by Executive in performing his
obligations under this Agreement. Executive shall submit monthly to the
Association a request for reimbursement together with supporting documentation
and, if applicable, receipts.
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SECTION 4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) If the Association or Company terminates, actually or
constructively, the Executive's employment during the TERM for any reason other
than a termination governed by Section 5 hereof, or termination for Cause, as
defined in Section 7 hereof, the Association shall be obligated to pay Executive
within thirty (30) days after his termination, or, in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate, as the case
may be, in a lump sum amount equal to (i) the cost of providing medical and
dental coverage through COBRA continuation coverage, similar to the coverage in
effect at the time of Executive's termination, for a period of one year, (ii) an
amount equal to the then currently targeted annual bonus as defined in the Cash
Incentive Bonus Plan of the Association, regardless of the time of year such
termination occurs and in addition to any annual bonus earned but not yet paid
for Executive's services provided in a prior year, and (iii) the greater of an
amount equal to one times Executives then current year's Base Salary or the
Executive's pro-rata Base Salary for the remainder of the TERM of the Agreement.
Such payments shall not be reduced in the event Executive obtains other
employment following termination of employment. No payments under this Section
4(a) are to be "grossed up" or otherwise adjusted based upon the personal income
tax consequences to or status of Executive. No payments under this Section 4(a)
are to be discounted or "present valued" in any manner. If Executive voluntarily
resigns during the term of this Agreement, other than in the event of a Change
In Control or Threatened Change In Control as hereinafter defined, or in the
event of an actual or constructive termination as defined in this Section 4,
Executive shall not be entitled to receive any payments or benefits beyond those
earned through the date of such voluntary resignation. Constructive termination
under this Section will be deemed to occur if the Executive is forced to resign
his employment due to intolerable conditions as defined by California law or if
Executive terminates his employment due to (i) a reduction of the Executive's
title or status or resulting from a formal change in such title or status, (ii)
a material reduction in Executive's responsibilities, (iii) the assignment to
the Executive of any duties inconsistent with his title, duties or
responsibilities in effect, (iv) a material reduction in Executive's
compensation or benefits (with material in this regard defined as 5.0% or more),
(v) a relocation of Executive's principal place of employment by more than 30
miles from its location as of the date of this Agreement, or (vi) a significant
increase in the Executive's travel requirements such that Executive is required
to travel more than 30 business days per year.
(b) In the event the Association is not in compliance with its minimum
regulatory capital requirements or if such payments pursuant to Section 4(a)
would cause the Association's capital to be reduced below its minimum regulatory
capital requirements, such payments or parts thereof, shall be deferred until
such time as the Association or successor thereto is in capital compliance.
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SECTION 5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Association or Company shall mean an event of a nature that: (i) would be
required to be reported 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 ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇"); or (ii) results in a
Change in Control of the Association 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 Board
shall substitute its judgment for that of the OTS); or (iii) without limitation
such a Change in Control shall be deemed to have occurred at such time as (A)
any "person" (as the term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of voting securities of the Association
or the Company representing 25% or more of the Association's or the Company's
outstanding voting securities or the right to acquire such securities except for
any voting securities of the Association purchased by the Company in connection
with the conversion of the Association to the stock form and any securities
purchased by any tax qualified employee benefit plan of the Association or the
Company, or (B) individuals who constitute the Board 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 Board, or whose nomination for election by
the stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause "B", considered as though
he were a member of the Incumbent Board, or (C) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the
Association or the Company or similar transaction occurs in which the
Association 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.
(b) For purposes of this Agreement, the term Threatened Change in
Control ("Threatened Change in Control") shall mean any pending tender offer for
any class of the Association's or the Company's outstanding shares, or any
pending bona fide offer to acquire the Association or the Company by merger or
consolidation, or any other pending action or plan to effect, or which would
lead to, a Change in Control of the Association or the Company. A "Threatened
Change in Control Period" shall commence on the first day the action described
in the preceding sentence become manifest and shall end when such actions are
abandoned or the Change in Control occurs.
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(c) If a Change in Control or Threatened Change in Control has occurred
or the Board has determined that a Change in Control has occurred and the
Executive's employment is terminated by either a Voluntary or Involuntary
Termination: (i) within twenty-four (24) months following the date of the Change
in Control, (ii) within six (6) months prior to the date of the Change in
Control, or (iii) during a Threatened Change in Control Period, then the
benefits described in Section 5(d) below shall be paid or provided to the
Executive.
(d) Benefits to be Provided: If the Executive becomes eligible for
benefits under Section 5(c) above, the Association shall pay or provide to
Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, the compensation and benefits
("Severance Payments") set forth in this Section 5(d).
(i). Salary: The Executive will continue to receive his
current Base Salary, including auto allowance, (subject
to withholding of all applicable income and payroll
taxes) for a period of twenty-four (24) months from his
date of termination in the same manner as it was being
paid as of the date of termination; provided, however,
that the payments provided for hereunder shall be paid
in a single lump sum payment, to be paid not later than
30 days after his termination of employment.
(ii). Bonuses and Incentives: The Executive shall receive
bonus payments from the Association for the twenty-four
(24) months following the month in which his employment
is terminated in an amount for each month equal to
one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years
immediately preceding the year in which such termination
occurs. Any bonus amounts that the Executive had
previously earned from the Association but which may not
yet have been paid as of the date of termination shall
not be affected by this provision. Executive shall also
receive a prorated bonus of any uncompleted fiscal year
at the date of termination equal to the Average Bonus
multiplied by the number of days he worked in such year
divided by 365 days. The bonus amounts determined herein
(including the Average Bonus, any previously earned but
unpaid bonus, and the prorated bonus for any uncompleted
fiscal year) shall be paid in a single lump sum payment,
to be paid not later than 30 days after termination of
employment.
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(iii).Employee Stock Ownership Plan: The Executive shall
receive supplemental payments from the Association for
the twenty-four (24) months following the month in which
his employment is terminated in an amount for each month
equal to one-twelfth of the Association's annual
contribution to its Employee Stock Ownership Plan
("ESOP") made on his behalf for the Plan year ending
immediately preceding his date of termination. If, as of
the date of Executive's termination, the Executive is
not fully vested in his benefit under the ESOP, the
Association shall also pay to the Executive, an
additional payment equal to the amount of his account
under the ESOP which was forfeited as a result of his
termination. The supplemental payments determined herein
shall be paid in a lump sum payment, to be paid not
later than 30 days after termination of employment.
(iv). 401(k) Plan: The Executive shall receive supplemental
payments from the Association for the twenty-four (24)
months following the month in which his employment is
terminated in an amount for each month equal to
one-twelfth of the Association's annual matching
contribution to its 401(k) Plan ("401(k)") made on
Executive's behalf for the Plan year ending immediately
preceding his date of termination. If, as of the date of
Executive's termination, the Executive is not fully
vested in his benefit under the 401(k) Plan, the
Association shall also pay to the Executive, an
additional payment equal to the amount of his account
under the 401(k) Plan which was forfeited as a result of
his termination. The supplemental payments determined
herein shall be paid in a lump sum payment, to be paid
not later than 30 days after termination of employment.
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(v). Health, Dental, and Life Insurance Coverage: The health,
dental, and life insurance benefits coverage (including
any executive medical plan) provided to the Executive at
his date of termination shall be continued by the
Association at the Association's expense at the same
level and in the same manner as if his employment had
not terminated, beginning on the date of such
termination and ending on the date twenty-four (24)
months from the date of such termination. Any additional
coverages the Executive had at termination, including
dependent coverage, will also be continued for such
period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the
Executive was paying for such coverages at the time of
termination shall be paid by the Executive by separate
check payable to the Association each month in advance.
If the terms of any benefit plan referred to in this
Section do not permit continued participation by the
Executive, the Association will pay Executive its costs
for providing such coverage within thirty (30) days
prior to the conclusion of such coverage. The coverages
provided for in this Section shall be applied against
and reduce the period for which COBRA will be provided.
If the Executive is covered by a split-dollar or similar
life insurance program at the date of termination, he
shall have the option in his sole discretion to have
such policy transferred to him upon termination,
provided that the Association is paid at par value (no
premium or discount) for its interest in the life
insurance policy upon such transfer.
(vi). Stock Options: Upon the occurrence of a Change in
Control (whether or not Executive's employment is
terminated), all outstanding stock options (whether
incentive stock options, non-statutory stock options, or
other type(s) of stock options) granted to Executive
under the 1995 Stock Option Plan, as amended and
restated from time to time, and any such similar stock
option plans ("Stock Option Plans") of the Association
or Company shall become 100% vested and immediately
exercisable. To the extent necessary, the provisions of
this Section 5(d)(vi) shall constitute an amendment of
the Executive's stock option agreements under the Stock
Option Plans.
(vii).Stock Awards: Upon the occurrence of a Change in
Control (whether or not Executive's employment is
terminated), all outstanding stock awards granted to
Executive under the 1995 Performance Equity Plan, as
amended and restated from time to time, and any such
similar stock award plans ("Stock Award Plans") shall
become 100% vested and immediately distributed. To the
extent necessary, the provisions of this Section
5(d)(vii) shall constitute an amendment of the
Executive's stock award agreements under the Stock Award
Plans.
Page 7 of 23
(viii). Non-Qualified Plans: The Executive shall receive from
the Association the nominal financial equivalent of
twenty-four (24) months worth of the Association's
contributions to or payments under (for the exclusive
benefit of Executive) any non-qualified compensation or
benefit plan in effect at the date of a Change In
Control for which Executive was a participant or
beneficiary.
(ix). Employee Mortgage Loans: The Executive shall receive
from the Association or its successor or assign either a
continuation of any employee mortgage loan rate discount
in effect at the date of the loan origination for a
period of the lesser of twenty-four months or the
maturity of the mortgage loan, or a payment equal to the
employee loan rate discount in effect on the date of the
loan origination multiplied by two (2) multiplied by the
outstanding principal balance of the employee mortgage
loan on the date of a Change In Control.
(x). Vision, Short Term Disability, Long Term Disability: The
Association will have no obligation to Executive for
coverages for or payment for vision, short term
disability, or long term disability insurance under this
Section 5(d).
(e) In the event the Association is not in compliance with its minimum
capital requirements or if such payments would cause the Association's capital
to be reduced below its minimum regulatory capital requirements, such payments
or part thereof shall be deferred until such time as the Association or
successor thereto is in capital compliance. Any such payments under Section 5(d)
shall not be reduced in the event Executive obtains other employment following
termination. No payments under this Section 5(d) are to be "grossed up" or
otherwise adjusted based upon the personal income tax consequences to or status
of Executive. No payments under this Section 5(d) are to be discounted or
"present valued" in any manner.
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SECTION 6. LIMITATION AND ADJUSTMENT OF BENEFITS
(a) Notwithstanding anything in this Agreement to the contrary, if, in
the opinion of independent tax accountants or counsel selected and retained 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 are treated as an excess parachute payment
("Excess Severance Payments") as defined in Section 280G(b)(1) of the Internal
Revenue Code of 1986, as amended ("Internal Revenue 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 Internal Revenue
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 Severance Payments result and the
Excise Tax is not triggered. If the amount calculated under (ii) above is less
than 95% of 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 at least 95% of the amount calculated
under (i) above, then the total amount of compensation and benefits payable
under all such arrangements shall be reduced, as provided in Section 6(b) below,
such that Executive shall receive no Excess Severance Payments and shall have no
personal liability for Excise Tax.
(b) In the event that the amount of any Severance 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 6,
Executive shall direct which Severance Payments are to be modified or reduced,
including allocating a portion of such Severance Payments as compensation for
ongoing obligations by Executive pursuant to Section 11; provided, however, that
no increase in the amount of any payment or change in the timing of the payment
shall be made without the consent of the Companies.
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(c) This Section 6 shall be interpreted so as to maximize the net
after-tax dollar value to Executive. In determining whether any Excess Severance
Payments exist and the most advantageous outcome for Executive, the parties
shall take into account all provisions of Internal Revenue 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. Both the Company, Association, 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 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.
(d) 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 this Section 6, either (i) the amounts paid to Executive
unintentionally constituted Excess Severance Payments and triggered the Excise
Tax, even thought 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 6(c)
hereof. 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 Severance Payments 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 6(a) and (b) hereof. 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
Sections 6(a) and (b) hereof that Executive may receive without triggering the
Excise Tax.
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SECTION 7. TERMINATION FOR CAUSE.
(a) For purposes of this Agreement, the term "Cause" shall mean (i) fraud or
misappropriation with respect to the business or assets of the Association or
the Company; (ii) gross negligence or willful misconduct by Executive in the
performance of his duties; (iii) any habitual or repeated neglect of his duties
by Executive which Executive fails to cure upon ten (10) days written notice;
(iv) a material breach of this Agreement by Executive; (v) Executive's inability
as a result of physical or mental incapacity to substantially perform his duties
for the Companies on a full time basis for a period exceeding six (6) months;
(vi) violation of any law, rule, or regulation (excluding Vehicle Code
convictions, or marijuana convictions more than two years old) that has a
material adverse effect upon the Association or Company, (vii) violation of any
final cease-and-desist order; (viii) the use of drugs or alcohol that interferes
with the Executive's performance of his job duties; or (ix) any breach of
fiduciary duty involving personal profit; (x) any unlawful conduct by Executive
injurious to the interest, property, operations, business or reputation of the
Association, or (xi) conviction for any criminal felony.
(b) Executive shall not have the right to receive compensation or other benefits
for any period after Termination for Cause. Any unvested stock options and
related limited rights granted to Executive under any stock option plan or
unvested awards granted to Executive under any stock benefit plan of the
Association, the Company, or any subsidiary or affiliate thereof, shall become
null and void effective upon Executive's receipt of Notice of Termination for
Cause pursuant to Section 9 hereof, and shall not be exercisable by or delivered
to Executive at any time subsequent to such Termination for Cause.
SECTION 8. VOLUNTARY RESIGNATION
Nothing in this Agreement shall prevent or limit Executive's right and
ability to voluntarily resign and / or seek other gainful employment provided
that Executive gives not less than sixty (60) days prior written notice of
resignation to the Companies. If Executive determines to voluntarily resign (i)
other than in conjunction with a Change In Control or Threatened Change In
Control as defined and described in Section 5 hereto, or (ii) other than in
conjunction with an actual or constructive termination as defined and described
in Section 4 hereto, Executive shall be entitled to no additional compensation
beyond that generally available to all or substantially all of the full-time
employees of the Association at that time, and Executive shall only be entitled
to that compensation and benefits earned and vested at the date of such
voluntary resignation. In conjunction with such a voluntary resignation,
Executive shall have no obligation or requirement to return any compensation or
benefits earned or vested through the date of such voluntary resignation to the
Association.
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SECTION 9. NOTICE.
A termination for Cause by the Association or the Company of the
Executive's employment shall be effective upon receipt of a written notice
communicated to the Executive. A termination other than for Cause shall be
effective sixty (60) days after receipt of a written notice communicated to the
Executive.
SECTION 10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall
be subject to Executive's compliance with this Section 10 for one (1) full year
after the earlier of expiration of this Agreement or termination of Executive's
employment.
(b) Executive shall, upon reasonable notice, furnish such information
and assistance to the Companies as may reasonably be required by the Companies
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party. Executive's obligation under this
paragraph shall only be in effect if the Companies provide Executive with
liability insurance coverage and indemnification similar to that provided to
current senior management personnel and as described in Section 22.
(c) All written or printed materials, notebooks, and records used by
Executive in performing duties for the Companies, other than Executive's
personal notes and diaries, are and shall remain the sole property of the
Companies. Upon termination of employment, Executive shall promptly return all
such material (including all copies) to the Companies.
SECTION 11. NON-DISCLOSURE, NO-SOLICIATION AND UNFAIR COMPETITION.
(a) Executive agrees and acknowledges that during the performance of
his duties with the Companies, he will receive and have access to confidential,
proprietary, and/or trade secret information concerning the business activities
and plans for business activities of the Companies and affiliates thereof.
Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Companies and affiliates
thereof, as may exist from time to time, is a valuable, special and unique asset
of the business of the Companies. Executive will not, during or after the TERM,
disclose any knowledge of the past, present, planned or considered business
activities of the Companies or affiliates thereof to any person, firm,
corporation, or other entity for any reason or purpose whatsoever.
Notwithstanding the foregoing, Executive may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas, which are not
exclusively derived from the business plans, and activities of the Companies.
Further, Executive may disclose information regarding the business activities of
the Companies to the OTS, Federal Reserve, and the Federal Deposit Insurance
Corporation ("FDIC") pursuant to a formal regulatory request.
Page 12 of 23
(b) Executive further agrees and acknowledges that the Companies and
affiliates have invested substantial time, effort and expense in compiling its
confidential, trade secret information and in assembling its present staff of
personnel, and have an interest in preventing any unfair use of information
which the Executive has obtained solely through his employment with the
Companies. In order to protect the confidentiality of the Companies' proprietary
confidential information, Executive agrees that during his employment and for
one year thereafter, he shall not do the following: (1) approach, solicit, or
accept business from, or otherwise do business or communicate in any way with
any customer of the Association, utilizing information which the Executive has
obtained solely through his employment with the Association, for the purpose of
engaging in or assisting others in engaging in Competition (as defined herein)
with the Association; (2) approach, counsel or attempt to induce any person who
is then in the employ of the Association to leave the employ of the Association,
or employ or attempt to employ any such person or any person who at any time
during the preceding twelve (12) months or during the TERM of this Agreement was
in the employ of the Association, unless such person has initially and
voluntarily approached Executive or Executive's new employing entity of his or
her own accord; or (3) aid, assist or counsel any other person, firm or counsel
any other person, firm or corporation to do any of the above. For the purpose of
this Agreement, a person or business is in Competition with the business of the
Association if the business involves the solicitation for, sale or distribution
of financial products and services anywhere within the Association's primary
service area. The provisions of this paragraph do not apply in the event of a
Change of Control.
(c) Executive agrees that in addition to any and all remedies available
at law or equity (including money damages), the Companies may seek injunctive
relief and/or a decree for specific performance to prevent any breach or
threatened breach by the Executive or any other person acting for, along with or
under the direction of the Executive of this Section 11, where such breach or
threatened breach will result in irreparable and continuing damage to the
Companies for which there will be no adequate remedy at law. The Companies shall
be entitled to seek such equitable relief in any forum, including a court of
law, notwithstanding the provision of Section 20 and the arbitration provision
referenced therein. The Companies may pursue any of the remedies described
herein concurrently or consecutively in any order as to any such breach or
violation, and the pursuit of one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any of the other
such remedies.
Page 13 of 23
SECTION 12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Company, however,
unconditionally guarantees payment and provision of all amounts and benefits due
hereunder to Executive and, if such amounts and benefits due from the
Association are not timely paid or provided by the Association, such amounts and
benefits shall be paid or provided by the Company.
SECTION 13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Company or
Association or any predecessor of the Company or Association, and Executive,
except that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of a kind elsewhere provided. No provision of
this Agreement shall be interpreted to mean that Executive is subject to
receiving fewer benefits than those available to him without reference to this
Agreement.
SECTION 14. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Association and Company and their respective successors and
assigns.
SECTION 15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
Page 14 of 23
SECTION 16. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time,
but any termination by the Association, other than Termination for Cause, shall
not prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 7
hereinabove.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Association'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 Association's obligations under this
contract shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may in its discretion (i) pay Executive all or part of the
compensation withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association'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 Association under this contract
shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the Association 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 Association under this contract shall terminate as of the date of default,
but this paragraph shall not affect any vested rights of the contracting
parties.
(e) All obligations of the Association under this contract shall be
terminated, except to the extent determined that continuation of the contract 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 Association 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 Association or when the Association 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.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12
U.S.C.ss.1828(k) and 12 C.F.R.ss.545.121 and any rules and regulations
promulgated thereunder.
Page 15 of 23
SECTION 17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
SECTION 18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
SECTION 19. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of California, but only to
the extent not superseded by federal law.
SECTION 20. ARBITRATION.
In the event there is any dispute arising out of Executive's
employment, the termination of that employment, or arising out of this
Agreement, the Executive and Association and Company agree to submit such
dispute to binding arbitration in accordance with the terms of the Alternative
Dispute Resolution Agreement set forth in Appendix A to this Agreement and
incorporated herein.
SECTION 21. PAYMENT OF COSTS AND LEGAL FEES.
All reasonable costs and legal fees paid or incurred by Executive
pursuant to any dispute or question of interpretation relating to this Agreement
shall be paid or reimbursed by the Association if Executive is successful on the
merits pursuant to a legal judgment, arbitration, or settlement.
Page 16 of 23
SECTION 22. INDEMNIFICATION.
(a) The Association and Company shall provide Executive (including his
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy as approved by the Board of Directors,
at its expense, and to the extent not otherwise provided through such insurance
policy, shall indemnify Executive (and his heirs, executors and administrators)
to the fullest extent permitted under federal law against all expenses and
liabilities reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his having
been a director or officer of the Association or Company (whether or not he
continues to be a director or officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to,
judgments, court costs, and attorneys' fees, and the cost of reasonable
settlements.
(b) Any payments made to Executive pursuant to this Section are subject
to and conditioned upon compliance with 12 C.F.R.ss.545.121 and any rules or
regulations promulgated thereunder.
SECTION 23. SUCCESSOR TO THE ASSOCIATION OR COMPANY.
The Companies shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation, or otherwise, to all or
substantially all the business or assets of the Association or Company,
expressly and unconditionally to assume and agree to perform all obligations
under this Agreement, in the same manner and to the same extent that the
Companies would be required to perform if no such succession or assignment had
taken place.
Page 17 of 23
IN WITNESS WHEREOF, Monterey Bay Bank and Monterey Bay Bancorp, Inc.
have caused this Agreement to be executed and their seals to be affixed hereunto
by their duly authorized officers and directors, and Executive has signed this
Agreement, on the first day of May, 2001.
ATTEST: MONTEREY BAY BANK
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------- -----------------------
Assistant Corporate Secretary ▇▇▇▇▇▇▇▇ ▇▇▇▇
Chairman of the Board
[SEAL]
ATTEST: MONTEREY BAY BANCORP, INC.
(Guarantor)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------- -----------------------
Assistant Corporate Secretary ▇▇▇▇▇▇▇▇ ▇▇▇▇
Chairman of the Board
[SEAL]
WITNESS: EXECUTIVE:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ --------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer and
Treasurer
Page 18 of 23
APPENDIX A
ALTERNATIVE DISPUTE RESOLUTION
I. Agreement To Arbitrate
In the event that any employment dispute arises between Monterey Bay
Bank ("Association") and ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive"), the parties
involved will make all efforts to resolve any such dispute through
informal means. If these informal attempts at resolution fail and if
the dispute arises out of or is related to a breach of the parties'
Employment Agreement, the termination of employment or alleged unlawful
discrimination, Association and Executive will submit the dispute to
final and binding arbitration.
By accepting employment with the Association, Executive agrees that
arbitration is the exclusive remedy for all such arbitrable disputes;
with respect to such disputes, no other action may be brought in court
or any other forum (except actions to compel arbitration hereunder).
THIS ADR AGREEMENT IS A WAIVER OF THE PARTIES' RIGHTS TO A CIVIL COURT
ACTION FOR A DISPUTE RELATING TO TERMINATION OF EMPLOYMENT OR ALLEGED
UNLAWFUL DISCRIMINATION, WHICH INCLUDES RETALIATION OR SEXUAL OR OTHER
UNLAWFUL HARASSMENT; ONLY AN ARBITRATOR, NOT A JUDGE OR JURY, WILL
DECIDE THE DISPUTE.
Employment disputes arising out of or related to termination of
employment or alleged unlawful discrimination, including retaliation,
sexual or other unlawful harassment, shall include, but not be limited
to, the following: alleged violations of federal, state and/or local
constitutions, statutes or regulations; claims based on any purported
breach of contractual obligation, including breach of the covenant of
good faith and fair dealing; and claims based on any purported breach
of duty arising in tort, including violations of public policy.
Disputes related to workers' compensation and unemployment insurance
are not arbitrable hereunder. Claims for benefits covered by a separate
benefit plan that provides for arbitration are not covered by this ADR
Agreement. Claims that are filed with or are being processed by the
U.S. Equal Employment Opportunity Commission ("EEOC"), or that are
brought under Title VII of the Civil Rights Act of 1964, as amended,
are not arbitrable under this Agreement, except that the parties may
agree in writing to do so with respect to each such dispute that may
arise.
II. Arbitration PROCEDURES
(a) Attempt At Informal Resolution Of Disputes
Prior to submission of any dispute to arbitration, Association and
Executive shall attempt to resolve the dispute informally through
mediation. Association and Executive will select a mediator from a list
provided by the State Mediation and Conciliation Service or other
similar agency who will assist the parties in attempting to reach a
settlement of the dispute. The mediator may make settlement suggestions
to the parties but shall not have the power to impose a settlement upon
them. If the dispute is resolved in mediation, the matter shall be
deemed closed. If the dispute is not resolved in mediation and goes to
the next step (binding arbitration), any proposals or compromises
suggested by either of the parties or the mediator shall not be
referred to or have any bearing on the arbitration procedure. The
mediator cannot also serve as the arbitrator in the subsequent
proceeding unless all parties expressly agree in writing.
(b) Request for Arbitration
Should Association or Executive wish to pursue arbitration of any
arbitrable dispute, Association, Executive or its/his representative
must submit a written "Request For Arbitration" to the other party with
(1) year of the alleged conduct giving rise to the dispute. If the
"Request for Arbitration" is not submitted in accordance with the
aforementioned time limitations, the party will not be able to bring
its/his claims to this or any other forum. Unless otherwise required by
law, the "Request For Arbitration" shall clearly state it is "Request
For Arbitration" at the beginning of the first page and includes the
following information: (1) a factual description of the dispute in
Page 19 of 23
sufficient detail to advise the other party of the nature of the
dispute, (2) the date when the dispute first arose, and (3) the relief
requested by requesting party.
A Request for Arbitration must be mailed to the other party's last
known address or hand-delivered to that party. The party to whom the
Request for Arbitration is directed will respond within thirty (30)
days so that the parties can begin the process of selecting an
Arbitrator. Such response may include any counterclaims.
(c) Selection Of The Arbitrator
All disputes will be resolved by a single Arbitrator, selected through
and under the American Arbitration Association's "National Rules for
the Resolution of Employment Disputes" as amended and effective June 1,
1997.
(d) The Arbitrator's Authority
The Arbitrator shall have the powers enumerated below:
1. Ruling on motions regarding discovery, and ruling on
procedural and evidentiary issues arising during the
arbitration.
2. Ruling on motions to dismiss and/or motions for summary
judgment applying the standards governing such motions under
the Federal Rules of Civil Procedure.
3. Issuing protective orders on the motion of any party or third
party witness, such protective orders may include, but are not
limited to, sealing the record of the arbitration, in whole or
in part (including discovery proceedings and motions,
transcripts, and the decision and award), to protect the
privacy or other constitutional or statutory rights of parties
and/or witnesses.
4. Determining only the issue(s) submitted to him/her. The
issue(s) must be identifiable in the "Request For Arbitration"
or counterclaim(s). Except as required by law, any issue(s)
not identifiable in those documents is outside the scope of
the Arbitrator's jurisdiction and any award involving such
issue(s), upon motion by a party, shall be vacated.
(e) Discovery
The discovery process shall proceed and be governed, consistent with
the standards of the Federal Rules of Civil Procedure, as follows:
1. Unless otherwise required by law, parties may obtain discovery
by any of the following methods:
a. Depositions of non-expert witnesses upon oral
examination, five (5) per side as of right, with more
permitted if leave is obtained from the Arbitrator;
b. Written interrogatories, up to a maximum combined
total of twenty (20), with the responding party
having twenty (20) days to respond;
c. Request for production of documents or things or
permission to enter upon land or other property for
inspection, with the responding party having twenty
(20) days to produce the documents and allow entry or
to file objections to the request;
d. Physical and mental examination, in accordance with
Federal Rule of Civil Procedure 35(a); and
Page 20 of 23
e. Any motion to compel production, answers to
interrogatories or entry onto land or property must
be made to the Arbitrator within fifteen (15) days of
receipt of objections.
2. To the extent permitted by the Federal Arbitration Act or
applicable California law, each party shall have the right to
subpoena witnesses and documents during discovery and for the
arbitration.
3. All discovery requests shall be submitted no less than sixty
(60) days before the hearing date.
4. The scope of discoverable evidence shall be in accordance with
Federal Rule of Civil Procedure 26(b)(1).
5. The Arbitrator shall have the power to enforce the
aforementioned discovery rights and obligations by the
imposition of the same terms, conditions, consequences,
liabilities, sanctions and penalties as can or may be imposed
in like circumstances in a civil action by a federal court
under the Federal Rules of Civil Procedure.
(f) Hearing Procedure
The hearing shall proceed according to the American Arbitration
Association's "National Rules for the Resolution of Employment
Disputes" as amended and effective June 1, 1997, with the following
amendments:
1. The Arbitrator shall rule at the outset of the
arbitration on procedural issues that bear on whether
the arbitration is allowed to proceed.
2. Each party has the burden of proving each element of
its claims or counterclaims, and each party has the
burden of proving any of its affirmative defenses.
3. In addition to, or in lieu of closing argument,
either party shall have the right to present a
post-hearing brief, and the due date for exchanging
any post-hearing briefs shall be mutually agreed on
by the parties and the Arbitrator.
(g) Substantive Law
1. The parties agree that they will be afforded the
identical legal equitable, and statutory remedies as
would be afforded them were they to bring an action
in a court of competent jurisdiction.
2. The applicable substantive law shall be the law of
the State of California or federal law. If both
federal and state law are applicable to a cause of
action, Executive shall have the right to elect his
choice of law. Choice of substantive law in no way
affects the procedural aspects of the arbitration,
which are exclusively governed by the provisions of
this ADR Agreement.
(h) Opinion And Award
The Arbitrator shall issue a written opinion and award, in conformance
with the following requirements:
1. The opinion and award must be signed and dated by the
Arbitrator.
2. The Arbitrator's opinion and award shall decide all
issues submitted.
3. The Arbitrator's opinion and award shall set forth
the legal principles supporting each part of the
opinion.
Page 21 of 23
4. The Arbitrator shall have the same authority to award
remedies, damages and costs as provided to a judge
and/or jury under parallel circumstances.
(i) Enforcement Of Arbitrator's Award
Following the issuance of the Arbitrator's decision, any party may
petition a court to confirm, enforce, correct or vacate the
Arbitrator's opinion and award under the Federal Arbitration Act,
and/or applicable California law.
(j) Fees And Costs
Unless otherwise required by law, fees and costs shall be allocated in
the following manner:
1. Each party shall be responsible for its own
attorneys' fees, except as otherwise provided by law.
2. The Association shall pay the entire cost of the
arbitrator's services, the facility in which the
arbitration is to be held, and any similar costs,
except that Executive shall contribute toward these
costs an amount equal to the then-current filing fee
in California Superior Court charged for filing a
complaint or for first appearing, whichever is lower.
3. The Association shall pay the entire cost of a court
reporter to transcribe the arbitration proceedings.
Each party shall advance the cost for said party's
transcript of the proceedings. Each party shall
advance its own costs for witness fees, service and
subpoena charges, copying, or other incidental costs
that each party would bear during the course of a
civil lawsuit.
4. Each party shall be responsible for its costs
associated with discovery, except as required by law
or court order.
Page 22 of 23
III. Severability
In the event that any provision of this ADR Agreement is determined by
a court of competent jurisdiction to be illegal, invalid or
unenforceable to any extent, such term or provision shall be enforced
to the extent permissible under the law and all remaining terms and
provisions of this ADR Agreement shall continue in full force and
effect.
EXECUTIVE:
DATED: May 1, 2001 /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
MONTEREY BAY BANK
DATED: May 1, 2001 By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇
Chairman of the Board
MONTEREY BAY BANCORP, INC.
(Guarantor)
DATED: May 1, 2001 By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇
Chairman of the Board
