Exhibit 10.2

 

LIFE INSURANCE

 

ENDORSEMENT METHOD SPLIT DOLLAR PLAN

 

AGREEMENT

 

THIS AGREEMENT is made and entered into effective the 21st day of June, 2005, by
and between Greater Bay Bank N.A., a national association (the “Employer”), and
James S. Westfall (the “Insured”), and replaces and restates any and all prior
agreements and understandings on the subject hereof. This Agreement applies to
the following life insurance policies:

 

Insurer:

   Security Life of Denver Insurance Company      New York Life Insurance
Company      Lincoln Benefit Life Insurance Company

Policy Number:

   911572655      56609164      01N1207070

Policy Owner:

   Greater Bay Bank N.A.

Insured:

   James S. Westfall

Relationship of Insured to Policy Owner:

   Employee

Date of Policy:

   September 29, 2004      September 29 2004      September 29, 2004

Trust:

   Rabbi Trust for the Employee Supplemental Compensation Benefits Agreement and
the Life Insurance Endorsement Method Split Dollar Plan Agreement

 

The respective rights and duties of the Employer and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below. This
Agreement and the terms set forth below also shall apply to any other life
insurance policy that the Employer designates as being subject to this Agreement
in addition to, substitution for or replacement of the above-referenced policy.

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I. DEFINITIONS

 

Refer to the policy contract for the definition of terms not otherwise defined
in this Agreement.

 

II. POLICY TITLE AND OWNERSHIP

 

Title and ownership of the policy shall reside in the Employer or in the Trustee
for the Rabbi Trust for the Employee Supplemental Compensation Benefits
Agreement and the Life Insurance Endorsement Method Split Dollar Plan Agreement
for the use of the Trust, the Insured and the Employer all in accordance with
this Agreement. The Employer or the Trustee at the direction of the Employer
may, to the extent of the Employer’s or the Trust’s interest, exercise the right
to borrow or withdraw on the policy cash values. Where the Employer and the
Insured (or assignee, with the consent of the Insured) mutually agree to
increase life insurance coverage on the Insured under this Agreement either by
the exercise of the right to increase the coverage under the subject policies or
by the purchase of a new policy, then, in such event, the rights, duties and
benefits of the parties to such increased coverage shall be subject to the terms
of this Agreement. The Employer or the Trustee at the direction of the Employer
may sell, surrender or transfer ownership of the policy to the Insurer or any
third party, provided that, in the event of any such sale, surrender or transfer
prior to the termination of this Agreement, the Employer or the Trustee at the
direction of the Employer replaces the policy with a life insurance policy or
policies on the life of the Insured providing death benefits that are at least
as much as that of the policy being replaced. The rights, duties and benefits of
the Trust, the Employer and the Insured with respect to any such replacement
policy shall be subject to the terms of this Agreement. At the request of the
Employer, the Insured shall take any and all actions that the Employer
determines may be reasonably necessary for the sale, surrender or transfer of
the policy; the issuance of a replacement policy or policies; and the subjecting
of the replacement policy or policies to the terms of this Agreement.

 

III. BENEFICIARY DESIGNATION RIGHTS

 

The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive the Insured’s share of the proceeds
payable upon the death of the Insured, and to elect and change a payment option
for such beneficiary, subject to any right or interest the Employer may have in
such proceeds, as provided in this Agreement.

 

IV. PREMIUM PAYMENT METHOD

 

The Employer or the Trustee at the direction of the Employer shall pay an amount
equal to the planned premiums and any other premium payments that might become
necessary to keep the policy in force. If the policy contains a premium waiver
provision, any such waived amounts shall be considered for all purposes of this
Agreement to have been paid by the Employer.

 

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V. TAXABLE BENEFIT

 

Annually the Insured will receive a taxable benefit equal to the assumed cost of
insurance as required by the Internal Revenue Service. The Employer or the
Trustee at the direction of the Employer will report to the Insured the amount
of imputed income each year on Form W-2 or its equivalent.

 

VI. DIVISION OF DEATH PROCEEDS

 

Subject to Paragraphs VII and IX herein, the division of the death proceeds of
the policy is as follows:

 

  A. If the Insured is employed by the Employer at the time of death, the
Insured’s beneficiary(ies), designated in accordance with Paragraph III, shall
be entitled to an amount equal to the lesser of One Million Five Hundred
Thousand Dollars ($1,500,000) or one hundred percent (100%) of the net-at-risk
insurance portion of the proceeds from the policy. The net-at-risk insurance
portion is the total proceeds of the policy less the cash value of the policy.

 

  B. If the Insured’s employment with the Employer has terminated by reason of
the Insured’s Disability prior to the Insured’s death, the Insured’s
beneficiary(ies), designated in accordance with Paragraph III, shall be entitled
to the portion of the proceeds described in Subparagraph VI.A above. The term
“Disability” means a medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months and which:

 

  (a) Renders the Participant unable to engage in any substantial gainful
activity; or

 

  (b) Results in the Participant receiving income replacement benefits for a
period of not less than three (3) months under any policy of long-term
disability insurance maintained by a Participating Company for the benefit of
its employees.

 

  C. If the Insured’s employment with the Employer has terminated in connection
with a Change in Control prior to the Insured’s death, the Insured’s
beneficiary(ies), designated in accordance with Paragraph III, shall be entitled
to the portion of the proceeds described in Subparagraph VI.A above. A
termination is “in connection with a Change in Control” if, within two (2) years
following the occurrence of a Change in Control (as defined in Paragraph XV):
(a) the Insured’s employment with the Employer is terminated by the Employer
other than a termination for Cause; or (b) by reason of the Employer’s actions,
any adverse and material change occurs in the scope of the Employee’s position,
responsibilities, duties, salary, benefits or location of employment; or (c) the
Employer causes an event to

 

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occur which reasonably constitutes or results in a demotion, a significant
diminution of responsibilities or authority, or a constructive termination (by
forcing a resignation or otherwise) of the Employee’s employment.

 

  D. If the Insured’s employment with the Employer has been terminated prior to
the Insured’s death, either by the Employer without Cause and not in connection
with a Change in Control or by the Insured after the earlier of the Insured’s
attaining age fifty-nine and one-half (59 1/2) or the date on which the
Applicable Percentage (as defined below) becomes one hundred percent (100%), the
Insured’s beneficiary(ies), designated in accordance with Paragraph III, shall
be entitled to the Applicable Percentage of the portion of the proceeds
described in Subparagraph VI.A above. The term “Applicable Percentage” shall
mean that percentage listed on Schedule “A” attached hereto that is adjacent to
the last calendar year end through which the Insured has remained in continuous
active employment with the Employer immediately prior to the Insured’s
termination of employment with the Employer following the date of this
Agreement.

 

  E. If the Insured’s employment with the Employer has terminated under
circumstances that would not entitle the Insured’s beneficiary(ies) to any
proceeds from the policy pursuant to Subparagraph VI.A, B, C or D above and the
Employer continues to maintain the policy after such termination (and the
Employer shall have no obligation to maintain the policy after such
termination), then the Insured’s beneficiary(ies), designated in accordance with
Paragraph III, shall be entitled to an amount equal to the lesser of Fifty
Thousand Dollars ($50,000) or one hundred percent (100%) of the net-at-risk
insurance portion of the proceeds from the policy. The net-at-risk insurance
portion is the total proceeds of the policy less the cash value of the policy.

 

  F. The Employer shall be entitled to the remainder of such proceeds.

 

  G. The Employer and the Insured (or assignees) shall share in any interest due
on the death proceeds on a pro rata basis as the proceeds due each respectively
bears to the total proceeds, excluding any such interest.

 

VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY

 

The Employer or the Trust shall at all times be entitled to an amount equal to
the policy’s cash value, as that term is defined in the policy contract, less
any policy loans and unpaid interest or cash withdrawals previously incurred by
the Employer or the Trust and any applicable surrender charges.

 

VIII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS

 

In the event the policy involves an endowment or annuity element, the Employer’s
right and interest in any endowment proceeds or annuity benefits shall be
determined under the

 

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provisions of this Agreement by regarding such endowment proceeds or the
commuted value of such annuity benefits as the policy’s cash value. Such
endowment proceeds or annuity benefits shall be considered to be like death
proceeds for the purposes of division under this Agreement.

 

IX. TERMINATION OF AGREEMENT

 

This Agreement shall terminate upon the occurrence of any one of the following:

 

  A. The Insured voluntarily terminates his or her employment with the Employer,
other than by reason of Disability or a termination in connection with a Change
in Control, prior to the earlier of (i) the date on which the Insured attains
age fifty-nine and one-half (59 1/2) years and (ii) the date on which the
Applicable Percentage (as defined in VI.D above) becomes one hundred percent
(100%).

 

  B. The Employer terminates the Insured’s employment with the Employer for
Cause. The term “Cause” shall mean any of the following that has a material
adverse effect upon the Employer: (i) the Insured’s deliberate violation of any
state or federal banking or securities law; or (ii) the Insured’s deliberate
violation of the Bylaws, rules, policies or resolutions of the Employer; or
(iii) the Insured’s deliberate violation of the rules or regulations of the
California Department of Financial Institutions, the Federal Deposit Insurance
Corporation, the Federal Reserve Board of Governors, the Office of the
Comptroller of the Currency or any other regulatory agency or governmental
authority having jurisdiction over the Employer; or (iv) the Insured’s
conviction of any felony; or (v) the Insured’s conviction of a crime involving
moral turpitude, fraudulent conduct or dishonest conduct.

 

Upon such termination, the Insured (or assignee) shall have a ninety (90) day
option to receive from the Employer or the Trustee at the direction of the
Employer an absolute assignment of the policy in consideration of a cash payment
to the Employer, whereupon this Agreement shall terminate. Such cash payment
referred to hereinabove shall be the greater of:

 

  A. The Employer’s and Trustee’s shares of the cash value of the policy on the
date of such assignment, as defined in this Agreement; or

 

  B. The amount of the premiums that have been paid by the Employer or the
Trustee at the direction of the Employer prior to the date of such assignment.

 

If, within said ninety (90) day period, the Insured fails to exercise said
option, fails to procure the entire aforestated cash payment, or dies, then the
option shall terminate and the Insured (or assignee) agrees that all of the
Insured’s rights, interest and claims in the policy shall terminate as of the
date of the termination of this Agreement. Notwithstanding the foregoing, if the
Employer continues to maintain the policy after the termination of this
Agreement (and the Employer shall have no obligation to maintain the

 

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policy after the termination of this Agreement), then, upon the Insured’s death,
the Insured’s beneficiary(ies), designated in accordance with Paragraph III,
shall be entitled to the portion of the proceeds described in Subparagraph VI.E
above, and this Agreement shall continue in effect only for the limited purpose
of providing such benefit. The Insured expressly agrees that this Agreement
shall constitute sufficient written notice to the Insured of the Insured’s
option to receive an absolute assignment of the policy as set forth herein.

 

Except as provided above, this Agreement shall terminate upon distribution of
the death benefit proceeds in accordance with Paragraph VI above.

 

X. INSURED’S OR ASSIGNEE’S ASSIGNMENT RIGHTS

 

The Insured may not, without the written consent of the Employer, assign to any
individual, trust or other organization, any right, title or interest in the
subject policy nor any rights, options, privileges or duties created under this
Agreement.

 

XI. AGREEMENT BINDING UPON THE PARTIES

 

This Agreement shall bind the Insured and the Employer, their heirs, successors,
personal representatives and assigns.

 

XII. ERISA PROVISIONS

 

The following provisions are part of this Agreement and are intended to meet the
requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”):

 

  A. Named Fiduciary and Plan Administrator.

 

The “Named Fiduciary and Plan Administrator” of this Endorsement Method Split
Dollar Agreement shall be Greater Bay Bancorp until its resignation or removal
by the Employer’s Board of Directors. As Named Fiduciary and Plan Administrator,
Greater Bay Bancorp shall be responsible for the management, control, and
administration of the Split Dollar Plan established herein. The Named Fiduciary
and Plan Administrator may delegate to others certain aspects of the management
and operation responsibilities of the Plan, including the employment of advisors
and the delegation of any ministerial duties to qualified individuals.

 

  B. Funding Policy.

 

The funding policy for this Split Dollar Plan shall be to maintain the subject
policy in force by paying, when due, all premiums required.

 

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  C. Basis of Payment of Benefits.

 

Direct payment by the Insurer is the basis of payment of benefits under this
Agreement, with those benefits in turn being based on the payment of premiums as
provided in this Agreement.

 

  D. Claim Procedures.

 

Claim forms or claim information as to the subject policy can be obtained by
contacting Benmark, Inc. (800-544-6079). When the Named Fiduciary or a
beneficiary has a claim which may be covered under the provisions described in
the insurance policy, he or she should contact the office named above, and they
will either complete a claim form and forward it to an authorized representative
of the Insurer or advise the Named Fiduciary or beneficiary what further
requirements are necessary. The Insurer will evaluate and make a decision as to
payment. If the claim is payable, a benefit check or checks will be issued in
accordance with the terms of this Agreement.

 

In the event that a claim is not eligible under the policy, the Insurer will
notify the Named Fiduciary or the beneficiary of the denial pursuant to the
requirements under the terms of the policy. If the Named Fiduciary or the
beneficiary is dissatisfied with the denial of the claim and wishes to contest
such claim denial, it should contact the office named above and they will assist
in making an inquiry to the Insurer. All objections to the Insurer’s actions
should be in writing and submitted to the office named above for transmittal to
the Insurer.

 

XIII. GENDER

 

Whenever in this Agreement words are used in the masculine or neuter gender,
they shall be read and construed as in the masculine, feminine or neuter gender,
whenever they should so apply.

 

XIV. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

 

The Insurer shall not be deemed a party to this Agreement, but will respect the
rights of the parties as herein developed upon receiving an executed copy of
this Agreement. Payment or other performance in accordance with the policy
provisions shall fully discharge the Insurer from any and all liability.

 

XV. CHANGE IN CONTROL

 

The term “Change in Control” shall mean the first to occur of any of the
following events:

 

  A. Any “person” (as such term is used in sections 13 and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),

 

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becomes the beneficial owner (as that term is used in section 13(d) of the
Exchange Act), directly or indirectly, of more than fifty percent (50%) of the
capital stock of the Employer or of the Employer’s parent bank holding company
Greater Bay Bancorp entitled to vote in the election of directors, other than
(a) Greater Bay Bancorp or any successor to Greater Bay Bancorp by means of a
transaction that is not a Change in Control pursuant to clause (C) of this
Paragraph XV, or (b) a group of two or more persons not (1) acting in concert
for the purpose of acquiring, holding or disposing of such stock or (2)
otherwise required to file any form or report with any governmental agency or
regulatory authority having jurisdiction over the Employer which requires the
reporting of any change in control. The acquisition of additional stock by any
person who immediately prior to such acquisition already is the beneficial owner
of more than fifty percent (50%) of the capital stock of the Employer entitled
to vote in the election of directors is not a Change in Control.;

 

  B. During any period of not more than twelve (12) consecutive months during
which Greater Bay Bancorp continues in existence, not including any period prior
to the effective date of this Agreement, individuals who, at the beginning of
such period, constitute the Board of Directors of Greater Bay Bancorp, and any
new director (other than a director designated by a person who has entered into
an agreement with Greater Bay Bancorp to effect a transaction described in
clause (A), (C) or (D) of this Paragraph XV) whose appointment to such Board of
Directors or nomination for election to such Board of Directors was approved by
a vote of a majority of the directors then still in office, either were
directors at the beginning of such period or whose appointment or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority of such Board of Directors;

 

  C. The effective date of any consolidation or merger of the Employer or
Greater Bay Bancorp (after all requisite shareholder, applicable regulatory and
other approvals and consents have been obtained), other than (a) a consolidation
or merger of the Employer or Greater Bay Bancorp in which the holders of the
voting capital stock of the Employer or Greater Bay Bancorp (whichever entity is
participating in the consolidation or merger) immediately prior to the
consolidation or merger hold more than fifty percent (50%) of the voting capital
stock of the surviving entity immediately after the consolidation or merger or
(b) a consolidation or merger of the Employer with one or more other persons
that are related to the Employer immediately prior to the consolidation or
merger. For purposes of this provision, persons are “related” if one of them
owns, directly or indirectly, at least fifty percent (50%) of the voting capital
stock of the other or a third person owns, directly or indirectly, at least
fifty percent (50%) of the voting capital stock of each of them.

 

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  D. The sale or transfer of substantially all of the Employer’s assets to one
or more persons that are not related (as defined in clause (C) of this Paragraph
XV) to the Employer immediately prior to the sale or transfer.

 

XVI. AMENDMENT OR REVOCATION

 

It is agreed by and between the parties hereto that, during the lifetime of the
Insured, this Agreement may be amended or revoked at any time or times, in whole
or in part, by the mutual written consent of the Insured and the Employer.

 

XVII. EFFECTIVE DATE

 

The Effective Date of this Agreement shall be June 21, 2005.

 

XVIII. SEVERABILITY AND INTERPRETATION

 

If a provision of this Agreement is held to be invalid or unenforceable, the
remaining provisions shall nonetheless be enforceable according to their terms.
Further, in the event that any provision is held to be overbroad as written,
such provision shall be deemed amended to narrow its application to the extent
necessary to make the provision enforceable according to law and enforced as
amended.

 

XIX. APPLICABLE LAW

 

The validity and interpretation of this Agreement shall be governed by the laws
of the State of California, other than those laws denominated choice of law
rules and except to the extent that state law is preempted by ERISA or other
federal law, and, where applicable, shall be governed by the rules and
regulations of the California Department of Financial Institutions, the Federal
Deposit Insurance Corporation, the Federal Reserve Board of Governors and the
Office of the Comptroller of the Currency.

 

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Executed at Palo Alto, California this 21st day of June, 2005.

 

    GREATER BAY BANK N.A.

/s/ John M. Gatto

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  By:  

/s/ Byron A. Scordelis

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Witness

      Byron A. Scordelis         President and Chief Executive Officer

/s/ Peggy Hiraoka

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/s/ James S. Westfall

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Witness

      James S. Westfall

 

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SCHEDULE A

 

End of Year

Prior to Termination

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Applicable

Percentage

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12/31/04

  0%

12/31/05

  0%

12/31/06

  0%

12/31/07

  0%

12/31/08

  0%

12/31/09

  20%

12/31/10

  40%

12/31/11

  60%

12/31/12

  80%

12/31/13

  100%

 

 

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BENEFICIARY DESIGNATION FORM

FOR THE LIFE INSURANCE ENDORSEMENT METHOD SPLIT

DOLLAR PLAN AGREEMENT

 

I. PRIMARY DESIGNATION

(You may refer to the beneficiary designation information prior to completion.)

 

  A. Person(s) as a Primary Designation:

(Please indicate the percentage for each beneficiary.)

 

Name                                      
                                        
                                Relationship     
                                      /                %
Address:                                     
                                        
                                        
                                                                    

                                       
     (Street)                                  
                                        
  (City)                (State)                     (Zip)

Name                                      
                                        
                                Relationship     
                                      /                %
Address:                                     
                                        
                                        
                                                                      

                                       
     (Street)                                  
                                        
  (City)                (State)                     (Zip)

Name                                      
                                        
                                Relationship     
                                      /                %
Address:                                     
                                        
                                        
                                                                      
                                       
     (Street)                                  
                                        
  (City)                (State)                     (Zip)
Name                                      
                                        
                                Relationship     
                                      /                %
Address:                                     
                                        
                                        
                                                                      
                                       
     (Street)                                  
                                        
  (City)                (State)                     (Zip)

 

  B. Estate as a Primary Designation:

 

My Primary Beneficiary is The Estate of                                         
as set forth in the last will and testament dated the      day of
                    ,              and any codicils thereto.

 

  C. Trust as a Primary Designation:

 

Name of the Trust:                                     
                                        
                                        
                                             

 

Execution Date of the Trust:              /              /                     

 

Name of the Trustee:                                      
                                        
                                                                                

 

Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):

 

___________________________________________________________________________________________________

 
___________________________________________________________________________________________________

 

Is this an Irrevocable Life Insurance Trust?              Yes              No

(If yes and this designation is for a Split Dollar agreement, an Assignment of
Rights form should be completed.)

 

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II. SECONDARY (CONTINGENT) DESIGNATION

 

  A. Person(s) as a Secondary (Contingent) Designation:

(Please indicate the percentage for each beneficiary.)

 

Name                                      
                                        
                                Relationship     
                                      /                %
Address:                                     
                                        
                                        
                                                                    

                                       
     (Street)                                  
                                        
  (City)                (State)                     (Zip)

Name                                      
                                        
                                Relationship     
                                      /                %
Address:                                     
                                        
                                        
                                                                      

                                       
     (Street)                                  
                                        
  (City)                (State)                     (Zip)

Name                                      
                                        
                                Relationship     
                                      /                %
Address:                                     
                                        
                                        
                                                                      
                                       
     (Street)                                  
                                        
  (City)                (State)                     (Zip)
Name                                      
                                        
                                Relationship     
                                      /                %
Address:                                     
                                        
                                        
                                                                      
                                       
     (Street)                                  
                                        
  (City)                (State)                     (Zip)

 

  B. Estate as a Secondary (Contingent) Designation:

 

My Secondary Beneficiary is The Estate of
                                         as set forth in my last will and
testament dated the      day of                     ,              and any
codicils thereto.

 

  C. Trust as a Secondary (Contingent) Designation:

 

Name of the Trust:                                     
                                        
                                        
                                             

 

Execution Date of the Trust:              /              /                     

 

Name of the Trustee:                                      
                                        
                                                                                

 

Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):

 

___________________________________________________________________________________________________

 
___________________________________________________________________________________________________

 

All sums payable under the Amended and Restated Life Insurance Endorsement
Method Split Dollar Plan Agreement by reason of my death shall be paid to the
Primary Beneficiary(ies), if he or she survives me, and if no Primary
Beneficiary(ies) shall survive me, then to the Secondary (Contingent)
Beneficiary(ies). This beneficiary designation is valid until the participant
notifies the Employer in writing.

 

 

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James S. Westfall

  Date

 

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