<PAGE>

                                                                    EXHIBIT 10.8
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================


                           EFFECTIVE JANUARY 1, 1997

                               COPYRIGHT (C) 1996

                      BY COMPENSATION RESOURCE GROUP, INC.

                              ALL RIGHTS RESERVED
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

                                            TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>            <C>                                                                           <C>
Purpose 1       
 
ARTICLE 1      Definitions................................................................      1
 
ARTICLE 2      Selection, Enrollment, Eligibility.........................................      5
      2.2      Enrollment Requirements....................................................      5
      2.1      Selection by Committee.....................................................      5
      2.3      Eligibility; Commencement of Participation.................................      5
      2.4      Termination of Participation and/or Deferrals..............................      5
 
ARTICLE 3      Deferral Commitments/Crediting/Taxes.......................................      5
      3.1      Minimum Deferral...........................................................      5
      3.2      Maximum Deferral...........................................................      6
      3.3      Election to Defer; Effect of Election Form.................................      6
      3.4      Withholding of Annual Deferral Amounts.....................................      7
      3.5      Investment of Trust Assets.................................................      7
      3.6      Vesting....................................................................      7
      3.7      Crediting/Debiting of Account Balances.....................................      7
      3.8      FICA, Withholding and Other Taxes..........................................      8
      3.9      Distributions..............................................................      8
 
ARTICLE 4      Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election      9
      4.1      Short-Term Payout..........................................................      9
      4.2      Other Benefits Take Precedence Over Short-Term Payout......................      9
      4.3      Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies......      9
      4.4      Withdrawal Election........................................................      9
 
ARTICLE 5      Retirement Benefit.........................................................     10
      5.1      Retirement Benefit.........................................................     10
      5.2      Payment of Retirement Benefit..............................................     10
      5.3      Death Prior to Completion of Retirement Benefit............................     10
ARTICLE 6      Pre-Retirement Survivor Benefit............................................     10
      6.1      Pre-Retirement Survivor Benefit............................................     10
      6.2      Payment of Pre-Retirement Survivor Benefit.................................     10
</TABLE>

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                                      -i-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
<TABLE>
<C>          <S>                                                   <C>
ARTICLE  7   Termination Benefit................................   11
       7.1   Termination Benefit................................   11
       7.2   Payment of Termination Benefit.....................   11
 
ARTICLE  8   Disability Waiver and Benefit......................   11
       8.1   Disability Waiver..................................   11
       8.2   Continued Eligibility; Disability Benefit..........   11
 
ARTICLE  9   Beneficiary Designation............................   12
       9.1   Beneficiary........................................   12
       9.2   Beneficiary Designation; Change; Spousal Consent...   12
       9.3   Acknowledgment.....................................   12
       9.4   No Beneficiary Designation.........................   12
       9.5   Doubt as to Beneficiary............................   12
       9.6   Discharge of Obligations...........................   12
 
ARTICLE 10   Leave of Absence...................................   12
      10.1   Paid Leave of Absence..............................   12
      10.2   Unpaid Leave of Absence............................   12
 
ARTICLE 11   Termination, Amendment or Modification.............   13
      11.1   Termination........................................   13
      11.2   Amendment..........................................   13
      11.3   Plan Agreement.....................................   14
      11.4   Effect of Payment..................................   14
 
ARTICLE 12   Administration.....................................   14
      12.1   Committee Duties...................................   14
      12.2   Agents.............................................   14
      12.3   Binding Effect of Decisions........................   14
      12.4   Indemnity of Committee.............................   14
      12.5   Employer Information...............................   14
 
ARTICLE 13   Other Benefits and Agreements......................   14
      13.1   Coordination with Other Benefits...................   14
</TABLE>

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                                     -ii-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================


<TABLE>
<C>          <S>                                                       <C>
ARTICLE 14   Claims Procedures......................................   15
      14.1   Presentation of Claim..................................   15
      14.2   Notification of Decision...............................   15
      14.3   Review of a Denied Claim...............................   15
      14.4   Decision on Review.....................................   15
      14.5   Legal Action...........................................   16
 
ARTICLE 15   Trust..................................................   16
      15.1   Establishment of the Trust.............................   16
      15.2   Interrelationship of the Plan and the Trust............   16
      15.3   Distributions From the Trust...........................   16
 
ARTICLE 16   Miscellaneous..........................................   16
      16.1   Status of Plan.........................................   16
      16.2   Unsecured General Creditor.............................   16
      16.3   Employer's Liability...................................   17
      16.4   Nonassignability.......................................   17
      16.5   Not a Contract of Employment...........................   17
      16.6   Furnishing Information.................................   17
      16.7   Terms..................................................   17
      16.8   Captions...............................................   17
      16.9   Governing Law..........................................   17
     16.10   Notice.................................................   17
     16.11   Successors.............................................   17
     16.12   Spouse's Interest......................................   18
     16.13   Validity...............................................   18
     16.14   Incompetent............................................   18
     16.15   Court Order............................................   18
     16.16   Distribution in the Event of Taxation..................   18
     16.17   Insurance..............................................   18
     16.18   Legal Fees To Enforce Rights After Change in Control...   18
</TABLE>

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                                     -iii-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

                          BAY VIEW CAPITAL CORPORATION

                           DEFERRED COMPENSATION PLAN

                           Effective January 1, 1997

                                    PURPOSE
                                    -------

     The purpose of this Plan is to provide specified benefits to a select group
of management and highly compensated Employees who contribute materially to the
continued growth, development and future business success of Bay View Capital
Corporation, a Delaware corporation, and its subsidiaries, if any, that sponsor
this Plan.  This Plan shall be unfunded for tax purposes and for purposes of
Title I of ERISA.

                                   ARTICLE 1

                                  DEFINITIONS
                                  -----------

     For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:


1.1  "Account Balance" shall mean, with respect to a Participant, a credit on
     the records of the Employer equal to the Deferral Account balance. The
     Account Balance, and each other specified account balance, shall be a
     bookkeeping entry only and shall be utilized solely as a device for the
     measurement and determination of the amounts to be paid to a Participant,
     or his or her designated Beneficiary, pursuant to this Plan.

1.2  "Annual Bonus" shall mean any compensation, in addition to Base Annual
     Salary relating to services performed during any calendar year, whether or
     not paid in such calendar year or included on the Federal Income Tax Form
     W-2 for such calendar year, payable to a Participant as an Employee under
     any Employer's annual bonus and cash incentive plans, excluding stock
     options.

1.3  "Annual Deferral Amount" shall mean that portion of a Participant's Base
     Annual Salary and Annual Bonus that a Participant elects to have, and is
     deferred, in accordance with Article 3, for any one Plan Year. In the event
     of a Participant's Retirement, Disability (if deferrals cease in accordance
     with Section 8.1), death or a Termination of Employment prior to the end of
     a Plan Year, such year's Annual Deferral Amount shall be the actual amount
     withheld prior to such event.

1.4  "Base Annual Salary" shall mean the annual cash compensation relating to
     services performed during any calendar year, whether or not paid in such
     calendar year or included on the Federal Income Tax Form W-2 for such
     calendar year, excluding bonuses, commissions, overtime, fringe benefits,
     stock options, relocation expenses, incentive payments, non-monetary
     awards, directors fees and other fees, automobile and other allowances paid
     to a Participant for employment services rendered (whether or not such
     allowances are included in the Employee's gross income). Base Annual Salary
     shall be calculated before reduction for compensation voluntarily deferred
     or contributed by the Participant pursuant to all qualified or non-
     qualified plans of any Employer and shall be calculated to include amounts
     not otherwise included in the Participant's gross income under Code
     Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by
     any Employer; provided, however, that all such amounts will be included in
     compensation only to the extent that, had there been no such plan, the
     amount would have been payable in cash to the Employee.

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                                      -1-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

1.5  "Beneficiary" shall mean one or more persons, trusts, estates or other
     entities, designated in accordance with Article 9, that are entitled to
     receive benefits under this Plan upon the death of a Participant.

1.6  "Beneficiary Designation Form" shall mean the form established from time to
     time by the Committee that a Participant completes, signs and returns to
     the Committee to designate one or more Beneficiaries.

1.7  "Board" shall mean the board of directors of the Company.

1.8  "Change in Control" shall mean the first to occur of any of the following
     events:

(a)  Any "person" (as that term is used in Section 13 and 14(d)(2) of the
     Securities Exchange Act of 1934 ("Exchange Act")) becomes the beneficial
     owner (as that term is used in Section 13(d) of the Exchange Act), directly
     or indirectly, of 50% or more of the Company's capital stock entitled to
     vote in the election of directors;

(b)  During any period of not more than two consecutive years, not including any
     period prior to the adoption of this Plan, individuals who at the beginning
     of such period constitute the board of directors of the Company, and any
     new director (other than a director designated by a person who has entered
     into an agreement with the Company to effect a transaction described in
     clause (a), (c), (d) or (e) of this Section 1.8) whose election by the
     board of directors or nomination for election by the Company's stockholders
     was approved by a vote of at least three-fourths (3/4ths) of the directors
     then still in office who either were directors at the beginning of the
     period or whose election or nomination for election was previously so
     approved, cease for any reason to constitute at least a majority thereof;

(c)  The shareholders of the Company approve any consolidation or merger of the
     Company, other than a consolidation or merger of the Company in which the
     holders of the common stock of the Company immediately prior to the
     consolidation or merger hold more than 50% of the common stock of the
     surviving corporation immediately after the consolidation or merger;

(d)  The shareholders of the Company approve any plan or proposal for the
     liquidation or dissolution of the Company; or

(e)  The shareholders of the Company approve the sale or transfer of all or
     substantially all of the assets of the Company to parties that are not
     within a "controlled group of corporations" (as defined in Code Section
     1563) in which the Company is a member.

1.9  "Claimant" shall have the meaning set forth in Section 14.1.

1.10 "Code" shall mean the Internal Revenue Code of 1986, as it may be amended
     from time to time.

1.11 "Committee" shall mean the committee described in Article 12.

1.12 "Company" shall mean Bay View Capital Corporation, a Delaware corporation,
     and any successor to all or substantially all of the Company's assets or
     business.

1.13 "Deduction Limitation" shall mean the following described limitation on a
     benefit that may otherwise be distributable pursuant to the provisions of
     this Plan. Except as otherwise provided, this limitation shall be applied
     to all distributions that are "subject to the Deduction Limitation" under
     this Plan. If an Employer determines in good faith prior to a Change in
     Control that there is a reasonable likelihood that any compensation paid to
     a Participant for a taxable year of the Employer would not be deductible by
     the Employer solely by reason of the limitation under Code Section 162(m),

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                                      -2-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

     then to the extent deemed necessary by the Employer to ensure that the
     entire amount of any distribution to the Participant pursuant to this Plan
     prior to the Change in Control is deductible, the Employer may defer all or
     any portion of a distribution under this Plan. Any amounts deferred
     pursuant to this limitation shall continue to be credited/debited with
     additional amounts in accordance with Section 3.7 below, even if such
     amount is being paid out in installments. The amounts so deferred and
     amounts credited thereon shall be distributed to the Participant or his or
     her Beneficiary (in the event of the Participant's death) at the earliest
     possible date, as determined by the Employer in good faith, on which the
     deductibility of compensation paid or payable to the Participant for the
     taxable year of the Employer during which the distribution is made will not
     be limited by Section 162(m), or if earlier, the effective date of a Change
     in Control. Notwithstanding anything to the contrary in this Plan, the
     Deduction Limitation shall not apply to any distributions made after a
     Change in Control.

1.14 "Deferral Account" shall mean (i) the sum of all of a Participant's Annual
     Deferral Amounts, plus (ii) amounts credited in accordance with all the
     applicable crediting provisions of this Plan that relate to the
     Participant's Deferral Account, less (iii) all distributions made to the
     Participant or his or her Beneficiary pursuant to this Plan that relate to
     his or her Deferral Account.

1.15 "Disability" shall mean a period of disability during which a Participant
     qualifies for permanent disability benefits under the Participant's
     Employer's long-term disability plan, or, if a Participant does not
     participate in such a plan, a period of disability during which the
     Participant would have qualified for permanent disability benefits under
     such a plan had the Participant been a participant in such a plan, as
     determined in the sole discretion of the Committee.  If the Participant's
     Employer does not sponsor such a plan, or discontinues to sponsor such a
     plan, Disability shall be determined by the Committee in its sole
     discretion.

1.16 "Disability Benefit" shall mean the benefit set forth in Article 8.

1.17 "Election Form" shall mean the form established from time to time by the
     Committee that a Participant completes, signs and returns to the Committee
     to make an election under the Plan.

1.18 "Employee" shall mean a person who is an employee of any Employer.

1.19 "Employer(s)" shall mean the Company and/or any of its subsidiaries (now in
     existence or hereafter formed or acquired) that have been selected by the
     Board to participate in the Plan and have adopted the Plan as a sponsor.

1.20 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
     it may be amended from time to time.

1.21 "First Plan Year" shall mean the period beginning January 1, 1997 and
     ending December 31, 1997.

1.22 "Monthly Installment Method" shall be a monthly installment payment over
     the number of months selected by the Participant in accordance with this
     Plan, calculated as follows: The Account Balance of the Participant shall
     be calculated as of the close of business three business days prior to the
     last business day of the month. The monthly installment shall be calculated
     by multiplying this balance by a fraction, the numerator of which is one,
     and the denominator of which is the remaining number of monthly payments
     due the Participant. By way of example, if the Participant elects a 120
     month Monthly Installment Method, the first payment shall be 1/120 of the
     Account Balance, calculated as described in this definition. The following
     month, the payment shall be 1/119 of the Account Balance, calculated as
     described in this definition. Each monthly installment shall be paid on or
     as soon as practicable after the last business day of the applicable month.

1.23 "Participant" shall mean any Employee  (i) who is selected to participate
     in the Plan, (ii) who elects to participate in the Plan, (iii) who signs a
     Plan Agreement, and an Election Form (iv) whose signed Plan Agreement and
     Election Form and Beneficiary Designation Form are accepted by the
     Committee, (v) who commences participation in the Plan, and 

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                                      -3-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

      (vi) whose Plan Agreement has not terminated. A spouse or former spouse of
      a Participant shall not be treated as a Participant in the Plan or have an
      account balance under the Plan, even if he or she has an interest in the
      Participant's benefits under the Plan as a result of applicable law or
      property settlements resulting from legal separation or divorce.

1.24  "Plan" shall mean the Company's Deferred Compensation Plan, which shall be
      evidenced by this instrument and by each Plan Agreement, as they may be
      amended from time to time.

1.25  "Plan Agreement" shall mean a written agreement, as may be amended from
      time to time, which is entered into by and between an Employer and a
      Participant. Each Plan Agreement executed by a Participant and the
      Participant's Employer shall provide for the entire benefit to which such
      Participant is entitled under the Plan; should there be more than one Plan
      Agreement, the Plan Agreement bearing the latest date of acceptance by the
      Employer shall supersede all previous Plan Agreements in their entirety
      and shall govern such entitlement. The terms of any Plan Agreement may be
      different for any Participant, and any Plan Agreement may provide
      additional benefits not set forth in the Plan or limit the benefits
      otherwise provided under the Plan; provided, however, that any such
      additional benefits or benefit limitations must be agreed to by both the
      Employer and the Participant.

1.26  "Plan Year" shall mean a period beginning on January 1 of each calendar
      year and continuing through December 31 of such calendar year.

1.27  "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
      Article 6.

1.28  "Retirement", "Retire(s)" or "Retired" shall mean severance from
      employment from all Employers for any reason other than a leave of
      absence, death or Disability on or after the earlier of the attainment of
      (a) age sixty-five (65) or (b) age fifty-five (55) with ten (10) Years of
      Service.

1.29  "Retirement Benefit" shall mean the benefit set forth in Article 5.

1.30  "Short-Term Payout" shall mean the payout set forth in Section 4.1.

1.31  "Termination Benefit" shall mean the benefit set forth in Article 7.

1.32  "Termination of Employment" shall mean the severing of employment with all
      Employers voluntarily or involuntarily, for any reason other than
      Retirement, Disability, death or an authorized leave of absence.

1.33  "Trust" shall mean one or more trusts established pursuant to that certain
      Master Trust Agreement, dated as of January 1, 1997 between the Company
      and the trustee named therein, as amended from time to time.

1.34  "Unforeseeable Financial Emergency" shall mean an unanticipated emergency
      that is caused by an event beyond the control of the Participant that
      would result in severe financial hardship to the Participant resulting
      from (i) a sudden and unexpected illness or accident of the Participant or
      a dependent of the Participant, (ii) a loss of the Participant's property
      due to casualty, or (iii) such other extraordinary and unforeseeable
      circumstances arising as a result of events beyond the control of the
      Participant, all as determined in the sole discretion of the Committee.


                                   ARTICLE 2

                       SELECTION, ENROLLMENT, ELIGIBILITY
                       ----------------------------------

2.1  SELECTION BY COMMITTEE.  Participation in the Plan shall be limited to a
     ----------------------
select group of management and highly compensated Employees of the Employers, as
determined by the Committee in its sole discretion.  From that group, the
Committee shall select, in its sole discretion, employees to participate in the
Plan.

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                                      -4-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

2.2  ENROLLMENT REQUIREMENTS.  As a condition to participation, each selected
     -----------------------
     Employee shall complete, execute and return to the Committee a Plan
     Agreement, an Election Form and a Beneficiary Designation Form, all within
     30 days after he or she is selected to participate in the Plan. In
     addition, the Committee shall establish from time to time such other
     enrollment requirements as it determines in its sole discretion are
     necessary.

2.3  ELIGIBILITY; COMMENCEMENT OF PARTICIPATION.  Provided an Employee  selected
     ------------------------------------------
     to participate in the Plan has met all enrollment requirements set forth in
     this Plan and required by the Committee, including returning all required
     documents to the Committee within the specified time period, that Employee
     shall commence participation in the Plan on the first day of the month
     following the month in which the Employee completes all enrollment
     requirements. If an Employee fails to meet all such requirements within the
     period required, in accordance with Section 2.2, that Employee shall not be
     eligible to participate in the Plan until the first day of the Plan Year
     following the delivery to and acceptance by the Committee of the required
     documents.

2.4  TERMINATION OF PARTICIPATION AND/OR DEFERRALS.  If the Committee determines
     ---------------------------------------------
     in good faith that a Participant no longer qualifies as a member of a
     select group of management or highly compensated employees, as membership
     in such group is determined in accordance with Sections 201(2), 301(a)(3)
     and 401(a)(1) of ERISA, the Committee shall have the right, in its sole
     discretion, to (i) terminate any deferral election the Participant has made
     for the remainder of the Plan Year in which the Participant's membership
     status changes, (ii) prevent the Participant from making future deferral
     elections and/or (iii) immediately distribute the Participant's then
     Account Balance as a Termination Benefit and terminate the Participant's
     participation in the Plan.



                                   ARTICLE 3

                      DEFERRAL COMMITMENTS/CREDITING/TAXES
                      ------------------------------------

3.1   Minimum Deferrals.
      -----------------

      (a)  BASE ANNUAL SALARY, ANNUAL BONUS AND DIRECTOR'S FEES.  For each Plan
           ----------------------------------------------------
           Year, a Participant may elect to defer, as his or her Annual Deferral
           Amount, Base Annual Salary and/or Annual Bonus s in the following
           minimum amounts for each deferral elected:
<TABLE> 
<CAPTION> 
                                                         Minimum
      Deferral                                           Amount 
      --------                                           ------
   <S>                                                   <C> 
   Base Annual Salary                                       $0
   Annual Bonus                                             $0
</TABLE> 
 
          If an election is made for less than stated minimum amounts, or if no
          election is made, the amount deferred shall be zero.

     (b)  SHORT PLAN YEAR. Notwithstanding the foregoing, if a Participant first
          ---------------
          becomes a Participant after the first day of a Plan Year, the minimum
          Base Annual Salary deferral shall be an amount equal to the minimum
          set forth above, multiplied by a fraction, the numerator of which is
          the number of complete months remaining in the Plan Year and the
          denominator of which is 12.

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                                      -5-
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BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

3.2  MAXIMUM DEFERRAL.
     ----------------

     (a)  Base Annual Salary, Annual Bonus and Director's Fees.  For each Plan
          ----------------------------------------------------    
          Year, a Participant may elect to defer, as his or her Annual Deferral
          Amount, Base Annual Salary and/or Annual Bonus in the following
          maximum amounts for each deferral elected:
<TABLE>
<CAPTION>
                                    Maximum
                Deferral            Amount
                --------            --------
          <S>                        <C>
           Base Annual Salary           10%
           Annual Bonus                100%
</TABLE>

     (b)  Notwithstanding the foregoing, if a Participant first becomes a
          Participant after the first day of a Plan Year, or in the case of the
          first Plan Year of the Plan itself, the maximum Annual Deferral
          Amount, with respect to Base Annual Salary and Annual Bonus shall be
          limited to the amount of compensation not yet earned by the
          Participant as of the date the Participant submits a Plan Agreement
          and Election Form to the Committee for acceptance.

3.3  Election to Defer; Effect of Election Form.
     ------------------------------------------

     (a)  FIRST PLAN YEAR.  In connection with a Participant's commencement of
          ---------------                                                     
          participation in the Plan, the Participant shall make an irrevocable
          deferral election for the Plan Year in which the Participant commences
          participation in the Plan, along with such other elections as the
          Committee deems necessary or desirable under the Plan. For these
          elections to be valid, the Election Form must be completed and signed
          by the Participant, timely delivered to the Committee (in accordance
          with Section 2.2 above) and accepted by the Committee.

     (b)  Subsequent Plan Years. For each succeeding Plan Year, an irrevocable
          deferral election for that Plan Year, and such other elections as the
          Committee deems necessary or desirable under the Plan, shall be made
          by timely delivering to the Committee, in accordance with its rules
          and procedures, before the end of the Plan Year preceding the Plan
          Year for which the election is made, a new Election Form. If no such
          Election Form is timely delivered for a Plan Year, the Annual Deferral
          Amount shall be zero for that Plan Year.

     3.4  WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS.  For each Plan Year, the Base
          --------------------------------------
Annual Salary portion of the Annual Deferral Amount shall be withheld from each
regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted
from time to time for increases and decreases in Base Annual Salary.  The Annual
Bonus  portion of the Annual Deferral Amount shall be withheld at the time the
Annual Bonus is or otherwise would be paid to the Participant, whether or not
this occurs during the Plan Year itself.

     3.5  INVESTMENT OF TRUST ASSETS.  The Trustee of the Trust shall be
          --------------------------
authorized, upon written instructions received from the Committee or investment
manager appointed by the Committee, to invest and reinvest the assets of the
Trust in accordance with the applicable Trust Agreement, including the
disposition of stock and reinvestment of the proceeds in one or more investment
vehicles designated by the Committee.

     3.6  VESTING. A Participant shall at all times be 100% vested in his or 
          -------
her Deferral Account.

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                                      -6-
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BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
                                                                    
  3.7 CREDITING/DEBITING OF ACCOUNT BALANCES.  In accordance with, and subject
      --------------------------------------    
to, the rules and procedures that are established from time to time by the
Committee, in its sole discretion, amounts shall be credited or debited to a
Participant's Account Balance in accordance with the following rules:

      (a)      ELECTION OF MEASUREMENT FUNDS.   A Participant, in connection 
               -----------------------------         
               with his or her initial deferral election in accordance with
               Section 3.3(a) above, shall elect, on the Election Form, one or
               more Measurement Fund(s) (as described in Section 3.7(c) below)
               to be used to determine the additional amounts to be credited to
               his or her Account Balance for the first calendar quarter or
               portion thereof in which the Participant commences participation
               in the Plan and continuing thereafter for each subsequent
               calendar quarter in which the Participant participates in the
               Plan, unless changed in accordance with the next sentence.
               Commencing with the first calendar quarter that follows the
               Participant's commencement of participation in the Plan and
               continuing thereafter for each subsequent calendar quarter in
               which the Participant participates in the Plan, no later than the
               next to last business day of the calendar quarter, the
               Participant may (but is not required to) elect, by submitting an
               Election Form to the Committee that is accepted by the Committee,
               to add or delete one or more Measurement Fund(s) to be used to
               determine the additional amounts to be credited to his or her
               Account Balance, or to change the portion of his or her Account
               Balance allocated to each previously or newly elected Measurement
               Fund. If an election is made in accordance with the previous
               sentence, it shall apply to the next calendar quarter and
               continue thereafter for each subsequent calendar quarter in which
               the Participant participates in the Plan, unless changed in
               accordance with the previous sentence.

      (b)      PROPORTIONATE ALLOCATION.  In making any election described in
               ------------------------                                      
               Section 3.7(a) above, the Participant shall specify on the
               Election Form, in increments of five percentage points (5%), the
               percentage of his or her Account Balance to be allocated to a
               Measurement Fund (as if the Participant was making an investment
               in that Measurement Fund with that portion of his or her Account
               Balance).

      (c)      MEASUREMENT FUNDS.  The Participant may elect one or more of the
               -----------------                                               
               following measurement funds, based on certain mutual funds (the
               "Measurement Funds"), for the purpose of crediting or debiting
               amounts to his or her Account Balance:

                   - T. Rowe Price Equity Index Fund
 
                   - T. Rowe Price International Stock Fund
        
                   - T. Rowe Price Corporate Income Fund

               As necessary, the Committee may, in its sole discretion,
               discontinue, substitute or add a Measurement Fund. Each such
               action will take effect as of the first day of the calendar
               quarter that follows by thirty (30) days the day on which the
               Committee gives Participants advance written notice of such
               change.

      (d)      CREDITING OR DEBITING METHOD.  The performance of each selected
               ----------------------------                                   
               Measurement Fund (either positive or negative) will be determined
               by the Committee, in its sole discretion, based on the
               performance of the Measurement Funds themselves.  A Participant's
               Account Balance shall be credited or debited on a daily basis
               based on the performance of each Measurement Fund selected by the
               Participant, as determined by the Committee in its sole
               discretion, as though (i) a Participant's Account Balance were
               invested in the Measurement Fund(s) selected by the Participant,
               in the percentages applicable to such calendar quarter, as of the
               close of business on the first business day of such calendar
               quarter, at the closing price on such date; (ii) the portion of
               the Annual Deferral Amount that was actually deferred during any
               calendar quarter were invested in the Measurement 

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                                      -7-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

               Fund(s) selected by the Participant, in the percentages
               applicable to such calendar quarter, no later than the close of
               business on the third business day after the day on which such
               amounts are actually deferred from the Participant's Base Annual
               Salary through reductions in his or her payroll, at the closing
               price on such date; and (iii) any distribution made to a
               Participant that decreases such Participant's Account Balance
               shall cease being invested in the Measurement Fund(s), in the
               percentages applicable to such calendar quarter, no earlier than
               three business days prior to the distribution, at the closing
               price on such date.

      (e)      NO ACTUAL INVESTMENT.  Notwithstanding any other provision of 
               --------------------   
               this Plan that may be interpreted to the contrary, the
               Measurement Funds are to be used for measurement purposes only,
               and a Participant's election of any such Measurement Fund, the
               allocation to his or her Account Balance thereto, the calculation
               of additional amounts and the crediting or debiting of such
               amounts to a Participant's Account Balance shall not be
               considered or construed in any manner as an actual investment of
               his or her Account Balance in any such Measurement Fund. In the
               event that the Company or the Trustee (as that term is defined in
               the Trust), in its own discretion, decides to invest funds in any
               or all of the Measurement Funds, no Participant shall have any
               rights in or to such investments themselves. Without limiting the
               foregoing, a Participant's Account Balance shall at all times be
               a bookkeeping entry only and shall not represent any investment
               made on his or her behalf by the Company or the Trust; the
               Participant shall at all times remain an unsecured creditor of
               the Company.

3.8       FICA AND OTHER TAXES. For each Plan Year in which an Annual 
          --------------------
          Deferral Amount is being withheld from a Participant, the
          Participant's Employer(s) shall withhold from that portion of the
          Participant's Base Annual Salary and Bonus that is not being deferred,
          in a manner determined by the Employer(s), the Participant's share of
          FICA and other employment taxes on such Annual Deferral Amount. If
          necessary, the Committee may reduce the Annual Deferral Amount in
          order to comply with this Section 3.8.

3.9       DISTRIBUTIONS.  The Participant's Employer(s), or the trustee of the
          -------------                                                       
          Trust, shall withhold from any payments made to a Participant under
          this Plan all federal, state and local income, employment and other
          taxes required to be withheld by the Employer(s), or the trustee of
          the Trust, in connection with such payments, in amounts and in a
          manner to be determined in the  sole discretion of the Employer(s) and
          the trustee of the Trust.

                                   ARTICLE 4
  SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL ELECTION
  ---------------------------------------------------------------------------

4.1       SHORT-TERM PAYOUT.  In connection with each election to defer an
          -----------------                                               
          Annual Deferral Amount, a Participant may irrevocably elect to receive
          a future "Short-Term Payout" from the Plan with respect to such Annual
          Deferral Amount.  Subject to the Deduction Limitation, the Short-Term
          Payout shall be a lump sum payment in an amount that is equal to the
          Annual Deferral Amount plus amounts credited or debited in the manner
          provided in Section 3.7 above on that amount, determined at the time
          that the Short-Term Payout becomes payable (rather than the date of a
          Termination of Employment).  Subject to the Deduction Limitation and
          the other terms and conditions of this Plan, each Short-Term Payout
          elected shall be paid out during a period beginning 1 day and ending
          60 days after the last day of any Plan Year designated by the
          Participant that is at least five Plan Years after the Plan Year in
          which the Annual Deferral Amount is actually deferred.  By way of
          example, if a five year Short-Term Payout is elected for Annual
          Deferral Amounts that are deferred in the Plan Year commencing January
          1, 1997, the five year Short-Term Payout would become payable during a
          60 day period commencing January 1, 2003.

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                                      -8-
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BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

4.2       OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM.  Should an event
          ----------------------------------------------                  
          occur that triggers a benefit under Article 5, 6, 7 or 8, any Annual
          Deferral Amount, plus amounts credited or debited thereon, that is
          subject to a Short-Term Payout election under Section 4.1 shall not be
          paid in accordance with Section 4.1 but shall be paid in accordance
          with the other applicable Article.

4.3       WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL
          ---------------------------------------------------------
          EMERGENCIES.  If the Participant experiences an Unforeseeable
          -----------
          Financial Emergency, the Participant may petition the Committee to (i)
          suspend any deferrals required to be made by a Participant and/or (ii)
          receive a partial or full payout from the Plan.  The payout shall not
          exceed the lesser of the Participant's Account Balance, calculated as
          if such Participant were receiving a Termination Benefit, or the
          amount reasonably needed to satisfy the Unforeseeable Financial
          Emergency.  If, subject to the sole discretion of the Committee, the
          petition for a suspension and/or payout is approved, suspension shall
          take effect upon the date of approval and any payout shall be made
          within 60 days of the date of approval.  Following approval of a
          payout under this Section 4.3, a Participant shall not be permitted to
          resume participation in the Plan for the later of 6 months following
          such withdrawal or the first day of the following Plan Year.  If the
          Participant petitions the Committee only to suspend deferrals and the
          Committee approves such suspension, the participant shall not be
          permitted to resume participation in the Plan until the first day of
          the following Plan Year. The payment of any amount under this Section
          4.3 shall be subject to the Deduction Limitation.

4.4       WITHDRAWAL ELECTION.  A Participant (or, after a Participant's death,
          -------------------                                                  
          his or her Beneficiary) may elect, at any time, to withdraw all of his
          or her Account Balance, calculated as if there had occurred a
          Termination of Employment as of the day of the election, less a
          withdrawal penalty equal to 10% of such amount (the net amount shall
          be referred to as the "Withdrawal Amount").  This election can be made
          at any time, before or after Retirement, Disability, death or
          Termination of Employment, and whether or not the Participant (or
          Beneficiary) is in the process of being paid pursuant to an
          installment payment schedule.  If made before Retirement, Disability
          or death, a Participant's Withdrawal Amount shall be his or her
          Account Balance calculated as if there had occurred a Termination of
          Employment as of the day of the election.  No partial withdrawals of
          the Withdrawal Amount shall be allowed.  The Participant (or his or
          her Beneficiary) shall make this election by giving the Committee
          advance written notice of the election in a form determined from time
          to time by the Committee.  The Participant (or his or her Beneficiary)
          shall be paid the Withdrawal Amount within 60 days of his or her
          election.  Once the Withdrawal Amount is paid, the Participant's
          participation in the Plan shall terminate and the Participant shall
          not be eligible to participate in the Plan in the future.  The payment
          of this Withdrawal Amount shall be subject to the Deduction
          Limitation.

                                   ARTICLE 5
                               RETIREMENT BENEFIT
                               ------------------
5.1       RETIREMENT BENEFIT.  Subject to the Deduction Limitation, a
          ------------------                                         
          Participant who Retires shall receive, as a Retirement Benefit, his or
          her Account Balance.

5.2       PAYMENT OF RETIREMENT BENEFIT.  A Participant, in connection with his
          -----------------------------                                        
          or her commencement of participation in the Plan, shall elect on an
          Election Form to receive the Retirement Benefit in a lump sum or
          pursuant to a Monthly Installment Method of 60, 120 or 180 months.
          The Participant may annually change his or her election to an
          allowable alternative payout period by submitting a new Election Form
          to the Committee, provided that any such Election Form shall apply
          only to subsequent deferrals under the Plan.  If a Participant does
          not make any election with respect to the payment of the Retirement
          Benefit, then such benefit shall be payable in a lump sum.  The lump
          sum payment shall be made, or installment payments shall commence, no
          later than 60 days after the date the Participant Retires.  Any
          payment made shall be subject to the Deduction Limitation.

5.3       DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT.  If a Participant
          -----------------------------------------------                   
          dies after Retirement but before the Retire ment Benefit is paid in
          full, the Participant's unpaid Retirement Benefit payments shall
          continue and shall be 

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                                      -9-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

          paid to the Participant's Beneficiary (a) over the remaining number of
          months and in the same amounts as that benefit would have been paid to
          the Participant had the Participant survived, or (b) in a lump sum, if
          requested by the Beneficiary and allowed in the sole discretion of the
          Committee, that is equal to the Participant's unpaid remaining Account
          Balance.

                                   ARTICLE 6
                        PRE-RETIREMENT SURVIVOR BENEFIT
                        -------------------------------

6.1       PRE-RETIREMENT SURVIVOR BENEFIT.  Subject to the Deduction
          -------------------------------                           
          Limitation, the Participant's Beneficiary shall receive a Pre-
          Retirement Survivor Benefit equal to the Participant's Account Balance
          if the Participant dies before he or she Retires, experiences a
          Termination of Employment or suffers a Disability.

6.2       PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT.  A Participant, in
          ------------------------------------------                    
          connection with his or her commencement of participation in the Plan,
          shall elect on an Election Form whether the Pre-Retirement Survivor
          Benefit shall be received by his or her Beneficiary in a lump sum or
          pursuant to a Monthly Installment Method of 60, 120 or 180 months.
          The Participant may annually change this election to an allowable
          alternative payout period by submitting a new Election Form to the
          Committee, which form must be accepted by the Committee in its sole
          discretion.  The Election Form most recently accepted by the Committee
          prior to the Participant's death shall govern the payout of the
          Participant's Pre-Retirement Survivor Benefit.  If a Participant does
          not make any election with respect to the payment of the Pre-
          Retirement Survivor Benefit, then such benefit shall be paid in a lump
          sum.  Despite the foregoing, if the Participant's Account Balance at
          the time of his or her death is less than $25,000, payment of the Pre-
          Retirement Survivor Benefit may be made, in the sole discretion of the
          Committee, in a lump sum or pursuant to a Monthly Installment Method
          of not more than 60 months.  The lump sum payment shall be made, or
          installment payments shall commence, no later than 60 days after the
          date the Committee is provided with proof that is satisfactory to the
          Committee of the Participant's death.  Any payment made shall be
          subject to the Deduction Limitation.

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                                      -10-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================


                                   ARTICLE 7
                              TERMINATION BENEFIT
                              -------------------

7.1       TERMINATION BENEFIT.  Subject to the Deduction Limitation, the
          -------------------                                           
          Participant shall receive a Termination Benefit, which shall be equal
          to the Participant's Account Balance if a Participant experiences a
          Termination of Employment prior to his or her Retirement, death or
          Disability.

7.2       PAYMENT OF TERMINATION BENEFIT. The Termination Benefit shall be paid
          ------------------------------                                       
          in a lump sum.  The lump sum payment shall be made no later than 60
          days after the date  of the Participant's Termination of Employment.
          Any payment made shall be subject to the Deduction Limitation.

                                   ARTICLE 8
                         DISABILITY WAIVER AND BENEFIT
                         -----------------------------

8.1       DISABILITY WAIVER.
          ----------------- 

          (a)  WAIVER OF DEFERRAL.  A Participant who is determined by the 
               ------------------         
               Committee to be suffering from a Disability shall be excused from
               fulfilling that portion of the Annual Deferral Amount commitment
               that would otherwise have been withheld from a Participant's Base
               Annual Salary and/or Annual Bonus  for the Plan Year during which
               the Participant first suffers a Disability.  During the period of
               Disability, the Participant shall not be allowed to make any
               additional deferral elections, but will continue to be considered
               a Participant for all other purposes of this Plan.

           (b) RETURN TO WORK.  If a Participant returns to employment with an
               --------------                                                 
               Employer, after a Disability ceases, the Participant may elect to
               defer an Annual Deferral Amount for the Plan Year following his
               or her return to employment or service and for every Plan Year
               thereafter while a Participant in the Plan; provided such
               deferral elections are otherwise allowed and an Election Form is
               delivered to and accepted by the Committee for each such election
               in accordance with Section 3.3 above.

8.2       CONTINUED ELIGIBILITY; DISABILITY BENEFIT.  A Participant suffering a
          -----------------------------------------                            
          Disability shall, for benefit purposes under this Plan, continue to be
          considered to be employed and shall be eligible for the benefits
          provided for in Articles 4, 5, 6 or 7 in accordance with the
          provisions of those Articles.  Notwithstanding the above, the
          Committee shall have the right to, in its sole and absolute discretion
          and for purposes of this Plan only, and must in the case of a
          Participant who is otherwise eligible to Retire, deem the Participant
          to have experienced a Termination of Employment, or in the case of a
          Participant who is eligible to Retire, to have Retired, at any time
          (or in the case of a Participant who is eligible to Retire, as soon as
          practicable) after such Participant is determined to be suffering a
          Disability, in which case the Participant shall receive a Disability
          Benefit equal to his or her Account Balance at the time of the
          Committee's determination; provided, however, that should the
          Participant otherwise have been eligible to Retire, he or she shall be
          paid in accordance with Article 5.  The Disability Benefit shall be
          paid in a lump sum within 60 days of the Committee's exercise of such
          right.  Any payment made shall be subject to the Deduction Limitation.

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                                      -11-
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BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

                                   ARTICLE 9
                            BENEFICIARY DESIGNATION
                            -----------------------

9.1       BENEFICIARY.  Each Participant shall have the right, at any time, to
          -----------                                                         
          designate his or her Beneficiary(ies) (both primary as well as
          contingent) to receive any benefits payable under the Plan to a
          beneficiary upon the death of a Participant.  The Beneficiary
          designated under this Plan may be the same as or different from the
          Beneficiary designation under any other plan of an Employer in which
          the Participant participates.

9.2       BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT.  A Participant
          ------------------------------------------------                
          shall designate his or her Beneficiary by completing and signing the
          Beneficiary Designation Form, and returning it to the Committee or its
          designated agent.  A Participant shall have the right to change a
          Beneficiary by completing, signing and otherwise complying with the
          terms of the Beneficiary Designation Form and the Committee's rules
          and procedures, as in effect from time to time.  If the Participant
          names someone other than his or her spouse as a Beneficiary, a spousal
          consent, in the form designated by the Committee, must be signed by
          that Participant's spouse and returned to the Committee.  Upon the
          acceptance by the Committee of a new Beneficiary Designation Form, all
          Beneficiary designations previously filed shall be canceled.  The
          Committee shall be entitled to rely on the last Beneficiary
          Designation Form filed by the Participant and accepted by the
          Committee prior to his or her death.

9.3       ACKNOWLEDGMENT.  No designation or change in designation of a
          --------------                                               
          Beneficiary shall be effective until received and acknowledged in
          writing by the Committee or its designated agent.

9.4       NO BENEFICIARY DESIGNATION.  If a Participant fails to designate a
          --------------------------                                        
          Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
          designated Beneficiaries predecease the Participant or die prior to
          complete distribution of the Participant's benefits, then the
          Participant's designated Beneficiary shall be deemed to be his or her
          surviving spouse.  If the Participant has no surviving spouse, the
          benefits remaining under the Plan to be paid to a Beneficiary shall be
          payable to the executor or personal representative of the
          Participant's estate.

9.5       DOUBT AS TO BENEFICIARY.  If the Committee has any doubt as to the
          -----------------------                                           
          proper Beneficiary to receive payments pursuant to this Plan, the
          Committee shall have the right, exercisable in its discretion, to
          cause the Participant's Employer to withhold such payments until this
          matter is resolved to the Committee's satisfaction.

9.6       DISCHARGE OF OBLIGATIONS.  The payment of benefits under the Plan to
          ------------------------                                            
          a Beneficiary shall fully and completely discharge all Employers and
          the Committee from all further obligations under this Plan with
          respect to the Participant, and that Participant's Plan Agreement
          shall terminate upon such full payment of benefits.

                                   ARTICLE 10
                                LEAVE OF ABSENCE
                                ----------------

10.1      PAID LEAVE OF ABSENCE.  If a Participant is authorized by the
          ---------------------                                        
          Participant's Employer for any reason to take a paid leave of absence
          from the employment of the Employer, the Participant shall continue to
          be considered employed by the Employer and the Annual Deferral Amount
          shall continue to be withheld during such paid leave of absence in
          accordance with Section 3.3.

10.2      UNPAID LEAVE OF ABSENCE.  If a Participant is authorized by the
          -----------------------                                        
          Participant's Employer for any reason to take an unpaid leave of
          absence from the employment of the Employer, the Participant shall
          continue to be 

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                                      -12-
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BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
          considered employed by the Employer and the Participant shall be
          excused from making deferrals until the earlier of the date the leave
          of absence expires or the Participant returns to a paid employment
          status. Upon such expiration or return, deferrals shall resume for the
          remaining portion of the Plan Year in which the expiration or return
          occurs, based on the deferral election, if any, made for that Plan
          Year. If no election was made for that Plan Year, no deferral shall be
          withheld.

                                   ARTICLE 11
                     TERMINATION, AMENDMENT OR MODIFICATION
                     --------------------------------------

11.1      TERMINATION.  Although each Employer anticipates that it will
          -----------                                                  
          continue the Plan for an indefinite period of time, there is no
          guarantee that any Employer will continue the Plan or will not
          terminate the Plan at any time in the future.  Accordingly, each
          Employer reserves the right to discontinue its sponsorship of the Plan
          and/or to terminate the Plan at any time with respect to any or all of
          its participating Employees  by action of its board of directors.
          Upon the termination of the Plan with respect to any Employer, the
          Plan Agreements of the affected Participants who are employed by that
          Employer shall terminate and their Account Balances, determined as if
          they had experienced a Termination of Employment on the date of Plan
          termination or, if Plan termination occurs after the date upon which a
          Participant was eligible to Retire, then with respect to that
          Participant as if he or she had Retired on the date of Plan
          termination, shall be paid to the Participants as follows:  Prior to a
          Change in Control, if the Plan is terminated with respect to all of
          its Participants, an Employer shall have the right, in its sole
          discretion, and notwithstanding any elections made by the Participant,
          to pay such benefits in a lump sum or pursuant to a Monthly
          Installment Method of up to 15 years, with amounts credited and
          debited during the installment period as provided herein.  If the Plan
          is terminated with respect to less than all of its Participants, an
          Employer shall be required to pay such benefits in a lump sum.  After
          a Change in Control, the Employer shall be required to pay such
          benefits in a lump sum.  The termination of the Plan shall not
          adversely affect any Participant or Beneficiary who has become
          entitled to the payment of any benefits under the Plan as of the date
          of termination; provided however, that the Employer shall have the
          right to accelerate installment payments without a premium or
          prepayment penalty by paying the Account Balance in a lump sum or
          pursuant to a Monthly Installment Method using fewer months.

11.2      AMENDMENT.  Any Employer may, at any time, amend or modify the Plan
          ---------                                                          
          in whole or in part with respect to that Employer by the action of its
          board of directors; provided, however, that no amendment or
          modification shall be effective to decrease or restrict the value of a
          Participant's Account Balance in existence at the time the amendment
          or modification is made, calculated as if the Participant had
          experienced a Termination of Employment as of the effective date of
          the amendment or modification or, if the amendment or modification
          occurs after the date upon which the Participant was eligible to
          Retire, the Participant had Retired as of the effective date of the
          amendment or modification.  The amendment or modification of the Plan
          shall not affect any Participant or Beneficiary who has become
          entitled to the payment of benefits under the Plan as of the date of
          the amendment or modification; provided, however, that the Employer
          shall have the right to accelerate installment payments by paying the
          Account Balance in a lump sum or pursuant to a Monthly Installment
          Method using fewer months (provided that the present value of all
          payments that will have been received by a Participant at any given
          point of time under the different payment schedule shall equal or
          exceed the present value of all payments that would have been received
          at that point in time under the original payment schedule).

11.3      PLAN AGREEMENT.  Despite the provisions of Sections 11.1 and 11.2
          --------------                                                   
          above, if a Participant's Plan Agreement contains benefits or
          limitations that are not in this Plan document, the Employer may only
          amend or terminate such provisions with the consent of the
          Participant.

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                                      -13-
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BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

11.4      EFFECT OF PAYMENT.  The full payment of the applicable benefit under
          -----------------                                                   
          Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
          obligations to a Participant and his or her designated Beneficiaries
          under this Plan and the Participant's Plan Agreement shall terminate.

                                   ARTICLE 12
                                 ADMINISTRATION
                                 --------------

12.1      COMMITTEE DUTIES.  This Plan shall be administered by a Committee
          ----------------                                                 
          which shall consist of the Board, or such committee as the Board shall
          appoint.  Members of the Committee may be Participants under this
          Plan.  The Committee shall also have the discretion and authority to
          (i) make, amend, interpret, and enforce all appropriate rules and
          regulations for the administration of this Plan and (ii) decide or
          resolve any and all questions including interpretations of this Plan,
          as may arise in connection with the Plan.  Any individual serving on
          the Committee who is a Participant shall not vote or act on any matter
          relating solely to himself or herself. When making a determination or
          calculation, the Committee shall be entitled to rely on information
          furnished by a Participant or the Company.

12.2      AGENTS.  In the administration of this Plan, the Committee may, from
          ------                                                              
          time to time, employ agents and delegate to them such administrative
          duties as it sees fit (including acting through a duly appointed
          representative) and may from time to time consult with counsel who may
          be counsel to any Employer.

12.3      BINDING EFFECT OF DECISIONS.  The decision or action of the Committee
          ---------------------------                                          
          with respect to any question arising out of or in connection with the
          administration, interpretation and application of the Plan and the
          rules and regulations promulgated hereunder shall be final and
          conclusive and binding upon all persons having any interest in the
          Plan.

12.4      INDEMNITY OF COMMITTEE.  All Employers shall indemnify and hold
          ----------------------                                         
          harmless the members of the Committee, and any Employee to whom the
          duties of the Committee may be delegated, against any and all claims,
          losses, damages,  expenses or liabilities arising from any action or
          failure to act with respect to this Plan, except in the case of
          willful misconduct by the Committee or any of its members or any such
          Employee.

12.5      EMPLOYER INFORMATION.  To enable the Committee to perform its
          --------------------                                         
          functions, each Employer shall supply full and timely information to
          the Committee on all matters relating to the compensation of its
          Participants, the date and circumstances of the Retirement,
          Disability, death or Termination of Employment of its Participants,
          and such other pertinent information as the Committee may reasonably
          require.

                                   ARTICLE 13
                         OTHER BENEFITS AND AGREEMENTS
                         -----------------------------

13.1      COORDINATION WITH OTHER BENEFITS.  The benefits provided for a
          --------------------------------                              
          Participant and Participant's Beneficiary under the Plan are in
          addition to any other benefits available to such Participant under any
          other plan or program for employees of the Participant's Employer.
          The Plan shall supplement and shall not supersede, modify or amend any
          other such plan or program except as may otherwise be expressly
          provided.

                                   ARTICLE 14
                               CLAIMS PROCEDURES
                               -----------------

14.1      PRESENTATION OF CLAIM.  Any Participant or Beneficiary of a deceased
          ---------------------                                               
          Participant (such Participant or Beneficiary being referred to below
          as a "Claimant") may deliver to the Committee a written claim for a
          determination with respect to the 

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                                      -14-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

          amounts distributable to such Claimant from the Plan. If such a claim
          relates to the contents of a notice received by the Claimant, the
          claim must be made within 60 days after such notice was received by
          the Claimant. All other claims must be made within 180 days of the
          date on which the event that caused the claim to arise occurred. The
          claim must state with particularity the determination desired by the
          Claimant.

14.2      NOTIFICATION OF DECISION.  The Committee shall consider a Claimant's
          ------------------------                                            
          claim within a reasonable time, and shall notify the Claimant in
          writing:

          (a)  that the Claimant's requested determination has been made, and
               that the claim has been allowed in full; or

          (b)  that the Committee has reached a conclusion contrary, in whole or
               in part, to the Claimant's requested determination, and such
               notice must set forth in a manner calculated to be understood by
               the Claimant:

               (i)   the specific reason(s) for the denial of the claim, or any
                     part of it;

               (ii)  specific reference(s) to pertinent provisions of the Plan
                     upon which such denial was based;

               (iii) a description of any additional material or information
                     necessary for the Claimant to perfect the claim, and an
                     explanation of why such material or information is
                     necessary; and

               (v)   an explanation of the claim review procedure set forth in
                     Section 14.3 below.

14.3      REVIEW OF A DENIED CLAIM.  Within 60 days after receiving a notice
          ------------------------                                          
          from the Committee that a claim has been denied, in whole or in part,
          a Claimant (or the Claimant's duly authorized representative) may file
          with the Committee a written request for a review of the denial of the
          claim.  Thereafter, but not later than 30 days after the review
          procedure began, the Claimant (or the Claimant's duly authorized
          representative):

          (a)  may review pertinent documents;

          (b)  may submit written comments or other documents; and/or

          (c)  may request a hearing, which the Committee, in its sole
               discretion, may grant.

14.4      DECISION ON REVIEW.  The Committee shall render its decision on
          ------------------                                             
          review promptly, and not later than 60 days after the filing of a
          written request for review of the denial, unless a hearing is held or
          other special circumstances require additional time, in which case the
          Committee's decision must be rendered within 120 days after such date.
          Such decision must be written in a manner calculated to be understood
          by the Claimant, and it must contain:

          (a)  specific reasons for the decision;

          (b)  specific reference(s) to the pertinent Plan provisions upon which
               the decision was based; and

          (c)  such other matters as the Committee deems relevant.

14.5      LEGAL ACTION.  A Claimant's compliance with the foregoing provisions
          ------------                                                        
          of this Article 14 is a mandatory prerequisite to a Claimant's right
          to commence any legal action with respect to any claim for benefits
          under this Plan.

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                                      -15-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

                                   ARTICLE 15
                                     TRUST
                                     -----
15.1      ESTABLISHMENT OF THE TRUST.  The Company shall establish the Trust,
          --------------------------                                         
          and each Employer shall, at each pay period, transfer over to the
          Trust such  cash as the Participant elected to defer under the Plan.

15.2      INTERRELATIONSHIP OF THE PLAN AND THE TRUST.  The provisions of the
          -------------------------------------------                        
          Plan and the Plan Agreement shall govern the rights of a Participant
          to receive distributions pursuant to the Plan.  The provisions of the
          Trust shall govern the rights of the Employers, Participants and the
          creditors of the Employers to the assets transferred to the Trust.
          Each Employer shall at all times remain liable to carry out its
          obligations under the Plan.

15.3      DISTRIBUTIONS FROM THE TRUST.  Each Employer's obligations under the
          ----------------------------                                        
          Plan may be satisfied with Trust assets distributed pursuant to the
          terms of the Trust, and any such distribution shall reduce the
          Employer's obligations under this Plan.

                                   ARTICLE 16
                                 MISCELLANEOUS
                                 -------------

16.1      STATUS OF PLAN.  The Plan is intended to be a plan that is not 
          --------------                                       
          qualified within the meaning of Code Section 401(a) and that
          "is unfunded and is maintained by an employer primarily for the
          purpose of providing deferred compensation for a select group of
          management or highly compensated employees" within the meaning of
          ERISA Sections 201(2), 301(a)(3) and 401(a)(1).  The Plan shall be
          administered and interpreted to the extent possible in a manner
          consistent with that intent.

16.2      UNSECURED GENERAL CREDITOR.  Participants and their Beneficiaries,
          --------------------------                                        
          heirs, successors and assigns shall have no legal or equitable rights,
          interests or claims in any property or assets of an Employer.  For
          purposes of the payment of benefits under this Plan, any and all of an
          Employer's assets shall be, and remain, the general, unpledged
          unrestricted assets of the Employer.  An Employer's obligation under
          the Plan shall be merely that of an unfunded and unsecured promise to
          pay money in the future.

16.3      EMPLOYER'S LIABILITY.  An Employer's liability for the payment of
          --------------------                                             
          benefits shall be defined only by the Plan and the Plan Agreement, as
          entered into between the Employer and a Participant.  An Employer
          shall have no obligation to a Participant under the Plan except as
          expressly provided in the Plan and his or her Plan Agreement.

16.4      NONASSIGNABILITY.  Neither a Participant nor any other person shall
          ----------------                                                   
          have any right to commute, sell, assign, transfer, pledge, anticipate,
          mortgage or otherwise encumber, transfer, hypothecate, alienate or
          convey in advance of actual receipt, the amounts, if any, payable
          hereunder, or any part thereof, which are, and all rights to which are
          expressly declared to be, unassignable and non-transferable.  No part
          of the amounts payable shall, prior to actual payment, be subject to
          seizure, attachment, garnishment or sequestration for the payment of
          any debts, judgments, alimony or separate maintenance owed by a
          Participant or any other person, be transferable by operation of law
          in the event of a Participant's or any other person's bankruptcy or
          insolvency or be transferable to a spouse as a result of a property
          settlement or otherwise.

16.5      NOT A CONTRACT OF EMPLOYMENT.  The terms and conditions of this Plan
          ----------------------------                                        
          shall not be deemed to constitute a contract of employment between any
          Employer and the Participant.  Such employment is hereby acknowledged
          to be an "at will" employment relationship that can be terminated at
          any time for any reason, or no reason, with or without cause, and with
          or without notice, unless expressly provided in a written employment
          agreement.  Nothing in this Plan shall be 

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                                      -16-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

          deemed to give a Participant the right to be retained in the service
          of any Employer, either as an Employee or a Director, or to interfere
          with the right of any Employer to discipline or discharge the
          Participant at any time.

16.6      FURNISHING INFORMATION.  A Participant or his or her Beneficiary will
          ----------------------                                               
          cooperate with the Committee by furnishing any and all information
          requested by the Committee and take such other actions as may be
          requested in order to facilitate the administration of the Plan and
          the payments of benefits hereunder, including but not limited to
          taking such physical examinations as the Committee may deem necessary.

16.7      TERMS.  Whenever any words are used herein in the masculine, they
          -----                                                            
          shall be construed as though they were in the feminine in all cases
          where they would so apply; and whenever any words are used herein in
          the singular or in the plural, they shall be construed as though they
          were used in the plural or the singular, as the case may be, in all
          cases where they would so apply.

16.8      CAPTIONS.  The captions of the articles, sections and paragraphs of
          --------                                                           
          this Plan are for convenience only and shall not control or affect the
          meaning or construction of any of its provisions.

16.9      GOVERNING LAW.  Subject to ERISA, the provisions of this Plan shall
          -------------                                                      
          be construed and interpreted according to the internal laws of the
          State of California without regard to its conflicts of laws
          principles.

16.10     NOTICE.  Any notice or filing required or permitted to be given to
          ------                                                            
          the Committee under this Plan shall be sufficient if in writing and
          hand-delivered, or sent by registered or certified mail, to the
          address below:

                          Director of Human Resources
                             Bay View Federal Bank
                            2121 So. El Camino Real
                            San Mateo, CA 94403-1897

          Such notice shall be deemed given as of the date of delivery or, if
          delivery is made by mail, as of the date shown on the postmark on the
          receipt for registration or certification.

          Any notice or filing required or permitted to be given to a
          Participant under this Plan shall be sufficient if in writing and 
          hand-delivered, or sent by mail, to the last known address of the
          Participant.

16.11     SUCCESSORS.  The provisions of this Plan shall bind and inure to the
          ----------                                                          
          benefit of the Participant's Employer and its successors and assigns
          and the Participant and the Participant's designated Beneficiaries.

16.12     SPOUSE'S INTEREST.  The interest in the benefits hereunder of a
          -----------------                                              
          spouse of a Participant who has predeceased the Participant shall
          automatically pass to the Participant and shall not be transferable by
          such spouse in any manner, including but not limited to such spouse's
          will, nor shall such interest pass under the laws of intestate
          succession.

16.13     VALIDITY.  In case any provision of this Plan shall be illegal or
          --------                                                         
          invalid for any reason, said illegality or invalidity shall not affect
          the remaining parts hereof, but this Plan shall be construed and
          enforced as if such illegal or invalid provision had never been
          inserted herein.

16.14     INCOMPETENT.  If the Committee determines in its discretion that a
          -----------                                                       
          benefit under this Plan is to be paid to a minor, a person declared
          incompetent or to a person incapable of handling the disposition of
          that person's property, the Committee may direct payment of such
          benefit to the guardian, legal representative or person having the
          care and custody of such minor, incompetent or incapable person.  The
          Committee may require proof of minority, incompetence, incapacity or
          guardianship, as it may deem appropriate prior to distribution of the
          benefit.  Any payment 

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                                      -17-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================

          of a benefit shall be a payment for the account of the Participant and
          the Participant's Beneficiary, as the case may be, and shall be a
          complete discharge of any liability under the Plan for such payment
          amount.

16.15     COURT ORDER.  The Committee is authorized to make any payments
          -----------                                                   
          directed by court order in any action in which the Plan or the
          Committee has been named as a party.  In addition, if a court
          determines that a spouse or former spouse of a Participant has an
          interest in the Participant's benefits under the Plan in connection
          with a property settlement or otherwise, the Committee, in its sole
          discretion, shall have the right, notwithstanding any election made by
          a Participant, to immediately distribute the spouse's or former
          spouse's interest in the Participant's benefits under the Plan to that
          spouse or former spouse.

16.16     DISTRIBUTION IN THE EVENT OF TAXATION.
          ------------------------------------- 

          (a)  IN GENERAL. If, for any reason, all or any portion of a 
               ----------
               Participant's benefits under this Plan becomes taxable to the
               Participant prior to receipt, a Participant may petition the
               Committee before a Change in Control, or the trustee of the Trust
               after a Change in Control, for a distribution of that portion of
               his or her benefit that has become taxable. Upon the grant of
               such a petition, which grant shall not be unreasonably withheld
               (and, after a Change in Control, shall be granted), a
               Participant's Employer shall distribute to the Participant
               immediately available funds in an amount equal to the taxable
               portion of his or her benefit (which amount shall not exceed a
               Participant's unpaid Account Balance under the Plan). If the
               petition is granted, the tax liability distribution shall be made
               within 90 days of the date when the Participant's petition is
               granted. Such a distribution shall affect and reduce the benefits
               to be paid under this Plan.

          (b)  TRUST.  If the Trust terminates in accordance with Section 
               -----      
               3.6(e) of the Trust and benefits are distributed from the Trust
               to a Participant in accordance with that Section, the
               Participant's benefits under this Plan shall be reduced to the
               extent of such distributions.

16.17     INSURANCE. The Employers, on their own behalf or on behalf of the
          ---------
          trustee of the Trust, and, in their sole discretion, may apply for and
          procure insurance on the life of the Participant, in such amounts and
          in such forms as they may choose. The Employers or the trustee of the
          Trust, as the case may be, shall be the sole owner and beneficiary of
          any such insurance. The Participant shall have no interest whatsoever
          in any such policy or policies, and at the request of the Employers
          shall submit to medical examinations and supply such information and
          execute such documents as may be required by the insurance company or
          companies to whom the Employers have applied for insurance.

16.18     LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The
          ----------------------------------------------------
          Company and each Employer is aware that upon the occurrence of a
          Change in Control, the Board or the board of directors of a
          Participant's Employer (which might then be composed of new members)
          or a shareholder of the Company or the Participant's Employer, or of
          any successor corporation might then cause or attempt to cause the
          Company, the Participant's Employer or such successor to refuse to
          comply with its obligations under the Plan and might cause or attempt
          to cause the Company or the Participant's Employer to institute, or
          may institute, litigation seeking to deny Participants the benefits
          intended under the Plan. In these circumstances, the purpose of the
          Plan could be frustrated. Accordingly, if, following a Change in
          Control, it should appear to any Participant that the Company, the
          Participant's Employer or any successor corporation has failed to
          comply with any of its obligations under the Plan or any agreement
          thereunder or, if the Company, such Employer or any other person takes
          any action to declare the Plan void or unenforceable or institutes any
          litigation or other legal action designed to deny, diminish or to
          recover from any Participant the benefits intended to be provided,
          then the Company and the Participant's Employer irrevocably authorize
          such Participant to retain counsel of his or her choice at the expense
          of the Company and the Participant's Employer (who shall be jointly
          and severally liable) to represent such Participant in connection with
          the initiation or defense of any litigation or other legal action,
          whether by or against the Company, the Participant's Employer or any
          director, officer, shareholder or other person affiliated with the
          Company, the Participant's Employer or any successor thereto in any
          jurisdiction.

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                                      -18-
<PAGE>
 
BAY VIEW CAPITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================


           IN WITNESS WHEREOF, the Company has signed this Plan document as of
           December 31, 1996.
           ----------------- 
                              "Company"

                              Bay View Capital Corporation, a Delaware
                              corporation

                              By:  /s/ Edward H. Sondker
                                   ---------------------
                              Title: President
                                     ----------



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                                     -19-