**Exhibit 10.(ii)A(10)**

 

MONTEREY COUNTY BANK

Supplemental Life InsuranceAgreement

 

**MONTEREYCOUNTY BANK**

**SUPPLEMENTAL****LIFE INSURANCE AGREEMENT**

 

**EFFECTIVE **October 26,2006

 

THISSUPPLEMENTAL LIFE INSURANCE AGREEMENT (the “Agreement”) is adopted this 26thday of October, 2006, by and between MONTEREY COUNTY BANK, a state-charteredcommercial bank located in Monterey, California (the “Bank”), and CHARLES T.CHRIETZBERG (the “Executive”).

 

The purpose ofthis Agreement is to retain and reward the Executive, by dividing the deathproceeds of certain life insurance policies which are owned by the Bank on thelife of the Executive with the designated beneficiary of the Executive. TheBank will pay the life insurance premiums from its general assets.

 

**Article 1**

**Definitions**

 

Whenever usedin this Agreement, the following terms shall have the meanings specified:

 

1.1           “Agreement 1” refers to the SurvivorIncome Agreement between the Bank and the Executive and the Split Dollaraddendum thereto, all dated December 31, 1993.

 

1.2           “Agreement 2” refers to the LifeInsurance Agreement Endorsement Method Split Dollar Plan Agreement between theBank and the Executive, effective October 12, 1999, and the two amendmentsthereto dated August 15, 2001 and August 16, 2001, respectively.

 

1.3           Bank’sInterest” means the benefit set forth in Section 2.1.

 

1.4           “Beneficiary” means each designatedperson, or the estate of the deceased Executive, entitled to benefits, if any,upon the death of the Executive.

 

1.5           “Beneficiary Designation Form” meansthe form established from time to time by the Plan Administrator that theExecutive completes, signs and returns to the Plan Administrator to designateone or more Beneficiaries.

 

1.6           “Board”means the Board of Directors of the Bank as from time to time constituted.

 

1.7           “Code”means the Internal Revenue Code of 1986, as amended.

 

1.8           “Executive’sInterest” means the benefit set forth in Section 2.2.

 

1.9           “Insurer”means the insurance company issuing the Policy on the life of the Executive.

 

1.10         “Net Death Proceeds” means the totaldeath proceeds of the Policy minus the greater of (i) the cash surrendervalue or (ii) the aggregate premiums paid by the Bank.

 

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1.11        “Plan Administrator” means the plan administratordescribed in Article 12.

 

1.12        “Policy” or “Policies” means theindividual insurance policy or policies adopted by the Bank for purposes ofinsuring the Executive’s life under this Agreement.

 

1.13        “Separation from Service” means thetermination of the Executive’s employment with the Bank for reasons other thandeath. Whether a Separation from Service takes place is determined based on thefacts and circumstances surrounding the termination of the Executive’semployment and whether the Bank and the Executive intended for the Executive toprovide significant services for the Bank following such termination. Atermination of employment will not be considered a Separation from Service if:

 

(a)           the Executive continues to provide servicesas an employee of the Bank at an annual rate that is twenty percent (20%) ormore of the services rendered, on average, during the immediately precedingthree full calendar years of employment (or, if employed less than three years,such lesser period) and the annual remuneration for such services is twentypercent (20%) or more of the average annual remuneration earned during thefinal three full calendar years of employment (or, if less, such lesserperiod), or

 

(b)           the Executive continues to provide servicesto the Bank in a capacity other than as an employee of the Bank at an annualrate that is fifty percent (50%) or more of the services rendered, on average,during the immediately preceding three full calendar years of employment (or ifemployed less than three years, such less period) and the annual remunerationfor such services is fifty percent (50%) or more of the average annualremuneration earned during the final three full calendar years of employment(or if less, such lesser period).

 

1.14        “Vested InsuranceBenefit” means the Bank will provide the Executive with continued insurancecoverage from the date of vesting until death, subject to the forfeiture provisionsdetailed in Section 3.2 and Article 6. Article 3 explains howthe Executive achieves vested status.

 

**Article 2**

**PolicyOwnership/Interests**

 

2.1           Bank’s Interest. The Bank shall ownthe Policies and shall have the right to exercise all incidents of ownershipand, subject to Article 4, the Bank may terminate a Policy withoutthe consent of the Executive. The Bank shall be the beneficiary of theremaining death proceeds of the Policies after the Executive’s Interest isdetermined according to Section 2.2 below.

 

2.2           Executive’s Interest. The Executive,or the Executive’s assignee, shall have the right to designate the Beneficiaryof an amount of death proceeds as specified in Section 2.2.1 or 2.2.2. TheExecutive shall also have the right to elect and change settlement options withrespect to the Executive’s Interest by providing written notice to the Bank andthe Insurer.

 

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2.2.1        Death Prior to Separation from Service.If the Executive dies while employed by the Bank, the Executive’s Beneficiaryshall be entitled to a benefit equal to one hundred percent (100%) of the NetDeath Proceeds minus the benefit amounts paid to the Executive’s beneficiarypursuant to Agreement 1 and Agreement 2.

 

2.2.2        Death After Separation from Service. If,pursuant to Article 3, the Executive has a Vested Insurance Benefit at thedate of death, the Executive’s Beneficiary shall be entitled to a benefit equalto the Net Death Proceeds minus the benefit amounts paid to the Executive’sbeneficiary pursuant to Agreement 1 and Agreement 2. If the Executive has notachieved a Vested Insurance Benefit on the date of death, the Beneficiary willnot be entitled to a benefit under this Agreement.

 

**Article 3**

**Vesting**

 

3.1           Vested InsuranceBenefit. The Executive shall have a Vested Insurance Benefit equal to theamount specified in Section 2.2 at the earliest of the following events:

 

3.1.1       Attainment of age sixty-five (65) while in theemploy of the Bank; or

 

3.1.2        Adoption, by the Board at its discretion, of aresolution entitling the Executive to the Vested Insurance Benefit in Section 2.2under circumstances not otherwise addressed in this Section 3.1.

 

3.2           Forfeiture ofBenefit. Notwithstanding the provisions of Section 3.1, the Executivewill forfeit his Vested Insurance Benefit if: (i) the Executive violatesany of the provisions detailed in Article 6; or (ii) the Executiveprovides written notice to the Bank declining further participation in theAgreement.

 

**Article 4**

**ComparableCoverage**

 

4.1           Insurance Policies. If the Executivehas a Vested Insurance Benefit, the Bank may provide such benefit throughthe Policies purchased at the commencement of this Agreement, or may providecomparable insurance coverage to the Executive through whatever means the Bankdeems appropriate. If the Executive waives or forfeits his right to the VestedInsurance Benefit, the Bank shall choose to cancel the Policies on theExecutive, or may continue such coverage and become the direct beneficiaryof the entire death proceeds.

 

4.2           Offer to Purchase. If the Bankdiscontinues a Policy while the Executive is employed by the Bank at the dateof discontinuance or while the Executive has a Vested Insurance Benefit thathas not been forfeited, the Bank shall give the Executive at least thirty (30)days to purchase such Policy. The purchase price shall be the fair market valueof the Policy, as determined under Treasury Reg. §1.61-22(g)(2) or anysubsequent applicable

 

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authority.Such notification shall be in writing.

 

**Article 5**

**Premiumsand Imputed Income**

 

5.1           PremiumPayment. The Bank shall pay all premiums due on all Policies.

 

5.2           Economic Benefit. The Bank shalldetermine the economic benefit attributable to the Executive based on the lifeinsurance premium factor for the Executive’s age multiplied by the aggregate deathbenefit payable to the Beneficiary hereunder. The “life insurance premiumfactor” is the minimum factor applicable under guidance published pursuant toTreasury Reg. § 1.61-22(d)(3)(ii) or any subsequent authority.

 

5.3           Imputed Income. The Bank shall imputethe economic benefit to the Executive on an annual basis, by adding theeconomic benefit to the Executive’s W-2, or if applicable, Form 1099.

 

**Article 6**

**GeneralLimitations**

 

6.1           Excess Parachute or Golden ParachutePayment. If the payments and benefits pursuant to this Agreement, eitheralone or together with other payments and benefits which the Executive has theright to receive from the Bank, would constitute an “excess parachute payment”under Section 280G of the Code, or would be a prohibited golden parachutepayment pursuant to 12 C.F.R. §359.2 and for which the appropriate federalbanking agency has not given written consent to pay pursuant to 12 C.F.R.§359.4, the payments and benefits pursuant to this Agreement shall be reduced,in the manner determined by the Executive in the case of the application of Section 280Gof the Code, by the amount, if any, which is the minimum necessary to result in(i) no portion of the payments and benefits under this Agreement beingnon-deductible to the Bank pursuant to Section 280G of the Code andsubject to the excise tax imposed under Section 4999 of the Code, and (ii) noadverse consequence to the Bank under or pursuant to such banking regulations.All benefits payable under this Agreement shall also be subject to limitationsor prohibitions imposed by subsequent changes or amendments to the cited lawsand regulations except to the extent that any benefits payable under thisAgreement are grandfathered or otherwise exempt or excluded from the change oramendment.

 

6.2           Termination for Cause.Notwithstanding any provision of this Agreement to the contrary, the Executiveshall forfeit any right to a benefit under this Agreement if the Bankterminates the Executive’s employment for cause. Termination of the Executive’semployment for “Cause” shall mean termination because of personal dishonesty,willful misconduct, breach of fiduciary duty involving personal profit,intentional failure to perform stated duties, willful violation of anylaw, rule or regulation (other than traffic violations or similaroffenses) or final cease-and-desist order or material breach of any provisionof the Agreement. For purposes of this paragraph, no act or failure to act onthe Executive’s part shall be considered “willful” unless done, or omittedto be done, by the Executive not in good faith and without reasonable beliefthat the Executive’s action or omission was in the best interest of the Bank.

 

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6.3           Removal. Notwithstanding any provisionof this Agreement to the contrary, the Executive’s rights in the Agreementshall terminate if the Executive is subject to a final removal or prohibitionorder issued by an appropriate federal banking agency pursuant to Section 8(e) ofthe Federal Deposit Insurance Act (“FDIA”).

 

6.4           Suicide or Misstatement. No benefitsshall be payable if the Executive commits suicide within two years after thedate of this Agreement, or if the insurance company denies coverage (i) formaterial misstatements of fact made by the Executive on any application forlife insurance purchased by the Bank, or (ii) for any other reason;provided, however that the Bank shall evaluate the reason for the denial, andupon advice of legal counsel and in its sole discretion, consider judiciallychallenging any denial.

 

**Article **7

**Beneficiaries**

 

7.1           Beneficiary. TheExecutive shall have the right, at any time, to designate a Beneficiary to receiveany benefits payable under the Agreement upon the death of the Executive. The Beneficiarydesignated under this Agreement may be the same as or different from the beneficiarydesignation under any other Agreement of the Bank in which the Executive participates.

 

7.2           Beneficiary****Designation; Change. TheExecutive shall designate a Beneficiary by completing and signing theBeneficiary Designation Form, and delivering it to the Bank or its designatedagent. The Executive’s beneficiary designation shall be deemed automaticallyrevoked if the Beneficiary predeceases the Executive or if the Executive namesa spouse as Beneficiary and the marriage is subsequently dissolved. TheExecutive shall have the right to change a Beneficiary by completing, signingand otherwise complying with the terms of the Beneficiary Designation Form andthe Bank’s rules and procedures, as in effect from time to time. Upon theacceptance by the Bank of a new Beneficiary Designation Form, all Beneficiarydesignations previously filed shall be cancelled. The Bank shall be entitled torely on the last Beneficiary Designation Form filed by the Executive andaccepted by the Bank prior to the Executive’s death.

 

7.3           Acknowledgment. No designation orchange in designation of a Beneficiary shall be effective until received,accepted and acknowledged in writing by the Bank or its designated agent.

 

7.4           No Beneficiary Designation. If theExecutive dies without a valid designation of beneficiary, or if all designatedBeneficiaries predecease the Executive, then the Executive’s surviving spouseshall be the designated Beneficiary. If the Executive has no surviving spouse,the benefits shall be made payable to the personal representative of theExecutive’s estate.

 

7.5           Facility of Payment. If the Bankdetermines in its discretion that a benefit is to be paid to a minor, to aperson declared incompetent, or to a person incapable of handling thedisposition of that person’s property, the Bank may direct payment of suchbenefit to the guardian, legal representative or person having the care orcustody of such minor,

 

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incompetentperson or incapable person. The Bank may require proof of incompetence,minority or guardianship as it may deem appropriate prior to distributionof the benefit. Any payment of a benefit shall be a payment for the account ofthe Executive and the Executive’s Beneficiary, as the case may be, andshall be a complete discharge of any liability under the Agreement for suchpayment amount.

 

**Article 8**

**Assignment**

 

The Executive may irrevocablyassign without consideration all of the Executive’s Interest in this Agreementto any person, entity, or trust. In the event the Executive shall transfer allof the Executive’s Interest, then all of the Executive’s Interest in thisAgreement shall be vested in the Executive’s transferee, who shall besubstituted as a party hereunder, and the Executive shall have no furtherinterest in this Agreement.

 

**Article 9**

**Insurer**

 

The Insurershall be bound only by the terms of its given Policy. The Insurer shall not bebound by or deemed to have notice of the provisions of this Agreement. TheInsurer shall have the right to rely on the Bank’s representations with regardto any definitions, interpretations or Policy interests as specified under thisAgreement.

 

**Article 10**

**Claims AndReview Procedure**

 

10.1         Claims Procedure.The Executive or Beneficiary (“claimant”) who has not received benefits underthe Agreement that he or she believes should be paid shall make a claim forsuch benefits as follows:

 

10.1.1     Initiation – Written Claim. The claimantinitiates a claim by submitting to the Plan Administrator a written claim forthe benefits. If such a claim relates to the contents of a notice received bythe claimant, the claim must be made within sixty (60) days after such noticewas received by the claimant. All other claims must be made within one hundredeighty (180) days of the date on which the event that caused the claim to ariseoccurred. The claim must state with particularity the determination desired bythe claimant.

 

10.1.2     Timing of Bank Response. The Bank shallrespond to such claimant within 90 days after receiving the claim. If the Bankdetermines that special circumstances require additional time for processingthe claim, the Bank can extend the response period by an additional 90 days bynotifying the claimant in writing, prior to the end of the initial 90-dayperiod, that an additional period is required. The notice of extension must setforth the special circumstances and the date by which the Bank expects to renderits decision.

 

10.1.3     Notice of Decision. If the Bank denies part orall of the claim, the Bank shall notify the claimant in writing of such denial.The Bank shall write the

 

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notificationin a manner calculated to be understood by the claimant. The notification shallset forth:

 

(a)           The specific reasons for the denial;

 

(b)           A reference to the specific provisions ofthe Agreement on which the denial is based;

 

(c)           A description of any additional informationor material necessary for the claimant to perfect the claim and an explanationof why it is needed;

 

(d)           An explanation of the Agreement’s reviewprocedures and the time limits applicable to such procedures; and

 

(e)           A statement of the claimant’s right to bringa civil action under ERISA Section 502(a) following an adversebenefit determination on review.

 

10.2         Review Procedure.If the Bank denies part or all of the claim, the claimant shall have theopportunity for a full and fair review by the Bank of the denial, as follows:

 

10.2.1     Initiation – Written Request. To initiatethe review, the claimant, within 60 days after receiving the Bank’s notice ofdenial, must file with the Bank a written request for review.

 

10.2.2     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 Bank shallalso provide the claimant, upon request and free of charge, reasonable accessto, and copies of, all documents, records and other information relevant (asdefined in applicable ERISA regulations) to the claimant’s claim for benefits.

 

10.2.3     Considerations on Review. In consideringthe review, the Bank shall take into account all materials and information theclaimant submits relating to the claim, without regard to whether suchinformation was submitted or considered in the initial benefit determination.

 

10.2.4     Timing of Bank’s Response. The Bank shallrespond in writing to such claimant within 60 days after receiving the requestfor review. If the Bank determines that special circumstances requireadditional time for processing the claim, the Bank can extend the responseperiod by an additional 60 days by notifying the claimant in writing, prior tothe 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 dateby which the Bank expects to render its decision.

 

10.2.5     Notice of Decision. The Bank shall notifythe claimant in writing of its decision on review. The Bank shall write thenotification in a manner calculated to be understood by the claimant. Thenotification shall set forth:

 

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(a)           The specific reasons for the denial;

 

(b)           A reference to the specific provisions ofthe Agreement on which the denial is based;

 

(c)           A statement that the claimant is entitled toreceive, upon request and free of charge, reasonable access to, and copies of,all documents, records and other information relevant (as defined in applicableERISA regulations) to the claimant’s claim for benefits; and

 

(d)           A statement of the claimant’s right to bringa civil action under ERISA Section 502(a).

 

**Article 11**

**AmendmentsAnd Termination**

 

11.1         Non-Vested Insurance Benefit. Unlessthe Executive has a Vested Insurance Benefit pursuant to Section 3.1, theBank may amend or terminate the Agreement at any time, or may amendor terminate the Executive’s rights under the Agreement at any time prior tothe Executive’s death, by providing written notice of such to the Executive. Inthe event that the Bank decides to maintain the Policy after termination of theAgreement, the Bank shall be the direct beneficiary of the entire deathproceeds of the Policy.

 

11.2         Vested Insurance Benefit. If theExecutive has a Vested Insurance Benefit, the Bank may amend or terminatethe Agreement only if: (i) continuation of the Agreement would causesignificant financial harm to the Bank, (ii) the Executive agrees to suchaction, or (iii) the Bank’s banking regulator(s) issues a writtendirective to amend or terminate the Agreement.

 

**Article 12**

**Administration**

 

12.1         Plan Administrator Duties. ThisAgreement shall be administered by a Plan Administrator which shall consist ofthe Board, or such committee or persons as the Board may choose. The PlanAdministrator shall also have the discretion and authority to (i) make,amend, interpret and enforce all appropriate rules and regulations for theadministration of this Agreement and (ii) decide or resolve any and allquestions including interpretations of this Agreement, as may arise inconnection with this Agreement.

 

12.2         Agents. In the administration of thisAgreement, the Plan Administrator may employ agents and delegate to themsuch administrative duties as it sees fit, (including acting through a dulyappointed representative), and may from time to time consult with counselwho may be counsel to the Bank.

 

12.3         Binding Effect of Decisions. Thedecision or action of the Plan Administrator with respect to any questionarising out of or in connection with the administration, interpretation andapplication of this Agreement and the rules and regulations

 

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promulgatedhereunder shall be final and conclusive and binding upon all persons having anyinterest in this Agreement.

 

12.4         Indemnity of Plan Administrator. TheBank shall indemnify and hold harmless the members of the Plan Administratoragainst any and all claims, losses, damages, expenses or liabilities arisingfrom any action or failure to act with respect to this Agreement, except in thecase of willful misconduct by the Plan Administrator or any of its members.

 

12.5         Information. To enable the PlanAdministrator to perform its functions, the Bank shall supply full andtimely information to the Plan Administrator on all matters relating to theBase Salary of the Executive, the date and circumstances of the retirement,Disability, death or Separation from Service of the Executive, and such otherpertinent information as the Plan Administrator may reasonably require.

 

**Article 13**

**Miscellaneous**

 

13.1         Binding Effect. This Agreement shallbind the Executive and the Bank, their beneficiaries, survivors, executors,administrators and transferees and any Beneficiary.

 

13.2         No Guarantee of Employment. ThisAgreement is not an employment policy or contract. It does not give theExecutive the right to remain an Executive of the Bank, nor does it interferewith the Bank’s right to discharge the Executive. It also does not require theExecutive to remain an Executive nor interfere with the Executive’s right toterminate employment at any time.

 

13.3         Applicable Law. The Agreement and allrights hereunder shall be governed by and construed according to the laws ofthe State of California, except to the extent preempted by the laws of theUnited States of America.

 

13.4         Reorganization. The Bank shall notmerge or consolidate into or with another company, or reorganize, or sellsubstantially all of its assets to another company, firm or person unless suchsucceeding or continuing company, firm or person agrees to assume and dischargethe obligations of the Bank under this Agreement. Upon the occurrence of suchevent, the term “Bank” as used in this Agreement shall be deemed to refer tothe successor or survivor company.

 

13.5         Notice. Any notice or filing requiredor permitted to be given to the Bank under this Agreement shall be sufficientif in writing and hand-delivered, or sent by registered or certified mail, tothe address below:

 

MontereyCounty Bank

601 MunrasAvenue

Monterey, CA93942

 

Such noticeshall be deemed given as of the date of delivery or, if delivery is made bymail, as of the date shown on the postmark or the receipt for registration orcertification.

 

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Any notice orfiling required or permitted to be given to the Executive under this Agreementshall be sufficient if in writing and hand-delivered, or sent by mail, to thelast known address of the Executive.

 

13.6         Entire Agreement.This Agreement, along with the Executive’s Beneficiary Designation Form,constitutes the entire agreement between the Bank and the Executive as to thesubject matter hereof. No rights are granted to the Executive under thisAgreement other than those specifically set forth herein.

 

 

IN WITNESSWHEREOF, the parties have executed this Agreement as of the date indicatedabove.

 
| **EXECUTIVE:**             |       | **MONTEREY COUNTY BANK** |
|----------------------------|------------|--------------------------|
|                       |       |                     |
| /s/ Charles T. Chrietzberg | ** ** | By                       | /s/ Bruce N.  Warner |
| **Charles T. Chrietzberg** |       |                     |  Bruce  N. Warner |
|                       |       | Title                    |  Executive Vice President |
|                            |            |                          |  |  |

 

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MONTEREY COUNTY BANK

Supplemental Life Insurance Agreement

BENEFICIARY DESIGNATION FORM

 

o            New Designation

x           Change in Designation

 

I, CHARLES T.CHRIETZBERG, designate the following as Beneficiary under the Agreement:

 
| **Primary:**                                                                      |   | 100    | %      |
|-----------------------------------------------------------------------------------|--------|--------|--------|
| The Charles  T. and Sandra G. Chrietzberg 1994 Revocable Living Trust dtd 8/30/94 |   |   | %      |
| Charles T.  Chrietzberg, Jr. and Sandra Gail Chrietzberg, CO-TTEES           |   |   | %      |
| **Contingent:**                                                                   |   |   |   |
|                                                                              |   |   | %      |
|                                                                              |   |   | %      |
|                                                                              |   |   | %      |

 

**Notes:**

 

**•****      Please PRINT CLEARLY or TYPEthe names of the beneficiaries.**

**•****      To name a trust asbeneficiary, please provide the name of the trustee(s) and the exactname and date of the trust agreement.**

**•****      To name your estate asbeneficiary, please write “Estate of [your name]  ”.**

**•****      Be aware that none of thecontingent beneficiaries will receive anything unless ALL of the primarybeneficiaries predecease you.**

 

I understandthat I may change these beneficiary designations by delivering a newwritten designation to the Plan Administrator, which shall be effective onlyupon receipt and acknowledgment by the Plan Administrator prior to my death. Ifurther understand that the designations will be automatically revoked if thebeneficiary predeceases me, or, if I have named my spouse as beneficiary andour marriage is subsequently dissolved.

 
| Name:      | Charles T. Chrietzberg, Jr.     |   |
|------------|--------------------------------------|--------|
|       |                                 |
| Signature: | /s/ Charles T. Chrietzberg, Jr. |   | Date: | October |  26,  2006 |

 

**SPOUSALCONSENT (Required if Spouse not named beneficiary):**

 

I consent to the beneficiary designationabove, and acknowledge that if I am named beneficiary and our marriage issubsequently dissolved, the designation will be automatically revoked.

 
| Spouse Name: | Sandra Gail Chrietzberg     |   |
|--------------|-----------------------------|--------|
|         |                        |
| Signature:   | /s/ Sandra Gail Chrietzberg |   | Date: | October |  26,  2006 |

 

Received by the Plan Administratorthis                     dayof                  ,  2     

 
| By:    |   |   |
|--------|--------|--------|
|   |
| Title: |   |   |

 

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