Exhibit 10.2


 


EMPLOYMENT
AGREEMENT


 


This Agreement is made and entered into on December 5, 2008, by
and among Manhattan Bancorp (“MB”),
Bank of Manhattan, N.A. (the “Bank”)
and Jeffrey M. Watson (“Executive”)
for the purposes set forth hereinafter (“Agreement”).


 


W
I T N E S S E T H


 


WHEREAS, MB is a California corporation and bank holding company
registered under the Bank Holding Company Act of 1956, as amended, subject to
the supervision and regulation of the Board of Governors of the Federal Reserve
System (“FRB”);


 


WHEREAS, MB is the parent holding company for the Bank, which is a
national banking association and wholly-owned subsidiary of MB, subject to the
supervision and regulation of the Office of the Comptroller of the Currency (“OCC”);


 


WHEREAS, Executive is currently the President and Chief Executive
Officer of the Bank pursuant to an Employment Agreement dated August 15,
2007 between the Bank and Executive (the “Prior
Agreement”);


 


WHEREAS, Executive also serves as the President and Chief Executive
Officer of MB and as a director of the Bank and MB; and


 


WHEREAS, it is the intention of the parties to enter into an employment
agreement for the purposes of assuring the continued services of Executive as
the President and Chief Officer of the Bank and as the President and Chief
Executive Officer of MB.


 


NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, MB, the Bank and Executive agree as follows:


 


A.                                   TERM OF EMPLOYMENT


 


The term of this Agreement (“Term”)
shall commence August 15, 2007, the date the Bank opened for business (the
“Effective Date”), and end three (3) years
thereafter, subject, however, to prior termination of this Agreement as
hereinafter provided.  Where used herein,
“Term” shall refer to the entire period of employment of Executive by the Bank
hereunder, whether for the period provided above, or whether terminated earlier
as hereinafter provided.  The Prior
Agreement is hereby terminated and replaced by this Agreement.  This does not replace or impair the Stock
Option Agreement between MB and Executive dated August 10, 2007 and September 27,
2007 (the “Stock Option Agreements”),
which shall remain in full force and effect.


 


B.                                     DUTIES OF EXECUTIVE


 


1.                                       Duties. 
Executive shall perform the duties of President and Chief Executive
Officer of the Bank and MB, reporting directly to the Board of Directors (the


 


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“Board”) of the Bank and
MB, and subject, at all times, to the powers vested by law in the Board of the
Bank and MB and their respective shareholders. 
Executive shall also serve as a member of the Boards of MB and Bank
throughout the Term.  During the Term,
Executive shall perform the services herein contemplated to be performed by
Executive faithfully, diligently and to the best of Executive’s ability,
consistent with the highest and best standards of the banking industry and in
compliance with all applicable laws and the Bank’s and MB’s Articles of
Association or Incorporation, Bylaws and internal written policies.


 


2.                                       Conflicts of Interest.  Except as permitted by the prior written
consent of the Board of MB or Bank, Executive shall devote Executive’s entire
productive time, ability and attention to the business of the Bank and MB
during the Term and Executive shall not directly or indirectly render any
services of a business, commercial or professional nature, to any other person,
firm or corporation, whether for compensation or otherwise, which are in
conflict with the Bank’s or MB’s interests. 
Notwithstanding the foregoing, Executive may make investments of a
passive nature in any business or venture, provided that such business or
venture is not in competition, directly or indirectly, in any manner with the
Bank or MB.


 


C.                                     COMPENSATION


 


1.                                       Salary. 
For Executive’s services hereunder, the Bank or MB shall pay or cause to
be paid as annual base salary (the “Base
Salary”) to Executive not less than Two Hundred Thousand Dollars
($200,000) for the first year of the Term, with annual increases in the discretion
of the Boards or the Bank’s and MB’s Compensation Committees.  Base Salary shall be payable in equal
installments in conformity with the Bank’s normal payroll period.


 


2.                                       Bonuses. Any bonuses shall be as
determined by the Boards of the Bank and MB, in their sole discretion.


 


D.                                    EXECUTIVE BENEFITS


 


1.                                       Vacation.  Executive shall be entitled to vacation
during each year of the Term consistent with the Bank’s approved vacation
schedule and policy, which shall provide Executive with not less than four (4) weeks
vacation for each year of the Term. 
Executive is encouraged to use all accrued vacation benefits and will be
expected to take vacation in the year it is earned.  Accrual of any unused vacation shall be
determined in accordance with the Bank’s Personnel Policy as in effect from
time to time and shall be subject to any limitations set forth therein.


 


2.                                       Group Medical and Other Insurance Benefits.  The Bank shall provide for Executive, at the
Bank’s expense, group medical and other insurance benefits in accordance with
the Bank’s Personnel Policy as in effect from time to time.  All coverage under this paragraph shall be in
existence or shall take effect as of the Effective Date hereof.  The Bank’s and MB’s liability to Executive
for any breach of this paragraph shall be limited to the amount of premiums
required hereunder to be payable by the Bank to obtain or maintain, as
applicable, the coverage contemplated herein.


 


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3.                                       Stock Option.  MB has granted Executive under the Stock
Option Agreement an option to purchase 124,382 of shares of MB’s authorized but
unissued Common Stock equal to five percent (5.0%) of the amount of shares of
MB’s Common Stock issued and outstanding immediately prior to the Effective
Date, at the fair market value of the stock on the date of grant which equals
the price at which such shares were sold by MB prior to the Effective
Date.  Such option has a term of ten (10) years
and shall vest in three installments of 33.33% per year over a period of three (3) years,
with the first such installment to vest one year from the date of grant, and
with subsequent installments vesting two and three years thereafter.  To the maximum extent permitted by law, the
option will qualify as an “incentive stock option” within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.  Such stock option has been granted to
Executive, pursuant to MB’s Stock Option Plan (the “Plan”) and the Stock Option Agreement.


 


In addition to the foregoing option, MB shall grant to Executive
options (the “Additional Options”)
to purchase a number of shares of MB’s authorized but unissued Common Stock
equal to five percent (5.0%) of the amount of MB’s Common Stock sold in the MB’s
first subsequent non-underwritten public offering following its initial public
offering at the fair market value of such stock at the time of the closing of
such subsequent offering.  The right of
Executive to receive Additional Options upon the closing of such non-underwritten
public offering shall terminate on the commencement of an offering underwritten
pursuant to a firm commitment.  Each
Additional Option shall be for a term of ten (10) years, and will vest in
three installments of 331/3%
per year over a period of three (3) years, with the first such installment
to vest one year from the date of grant, and with subsequent installments
vesting two and three years thereafter. 
As used herein the term “non-underwritten public offering” shall include
a public offering in which all underwriters participate on a best efforts basis
only.


 


4.                                       Auto Allowance.  During the Term, Executive shall be entitled
to receive One Thousand Dollars ($1,000) per month as a car allowance.


 


5.                                       Club Membership.  Executive shall be provided with an executive
membership at Palos Verdes Country Club at the Bank’s expense.  The Bank shall pay or reimburse Executive for
all dues associated with such membership and reimburse Executive for all
business expenses in accordance with Bank’s reimbursement policies.


 


E.                                      REIMBURSEMENT FOR BUSINESS EXPENSES


 


Executive shall be entitled to reimbursement by the Bank or MB for any
ordinary and necessary business expenses incurred by Executive in the
performance of Executive’s duties in accordance with the Bank’s and MB’s
reimbursement policies in effect from time to time, provided that each such
expenditure is of a nature qualifying it as a proper deduction on the federal
and state income tax returns of the Bank and MB as a business expense and not
as deductible compensation to Executive; and Executive furnishes to the Bank
and MB adequate records and other documentary evidence required by federal and
state statutes and regulations issued by the appropriate taxing authorities for
the substantiation of such expenditures as deductible business expenses of the
Bank and not as deductible compensation to Executive.


 


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F.                                      TERMINATION


 


1.                                       Termination for Cause.  The Bank or MB may terminate this Agreement
at any time by action of its Board for cause (“Cause”).  For purposes
of this Agreement termination for “Cause” shall mean termination because of
Executive’s personal dishonesty, incompetence, willful misconduct, any breach
of fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order or
material breach of any provision of this Agreement.  For purposes of this Agreement, no act, or
the failure to act, on Executive’s part shall be considered “willful” unless
done, or omitted to be done, not in good faith and without reasonable belief
that the action or omission was in the best interests of the Bank or MB.  Termination under this Paragraph shall not
prejudice any remedy that the Bank or MB may have at law, in equity, or under
this Agreement.


 


2.                                       Death or Disability.  In the event of Executive’s death or if
Executive is found to be physically or mentally disabled (as hereinafter
defined) by the Board of Bank or MB in good faith, this Agreement shall
terminate without any further liability or obligation by the Bank to
Executive.  For purposes of this
Agreement only, physical or mental disability shall be defined as Executive
having been unable to fully perform under this Agreement for a continuous
period of ninety (90) days or a cumulative period of one-hundred eighty (180)
days in any calendar year, or, if applicable, such other periods as may be
defined in the Bank’s Personnel Policy or in applicable disability insurance
policies as in effect from time to time. 
If there should be a dispute between the Bank or MB and Executive as to
Executive’s physical or mental disability for purposes of this Agreement, the
question shall be settled by the opinion of an impartial reputable physician or
psychiatrist agreed upon by the parties or their representatives, or if the
parties cannot agree within ten (10) days after a request for designation
of such party, then by a physician or psychiatrist designated by the Los
Angeles County Medical Association.  The
certification of such physician or psychiatrist as to the question in dispute
shall be final and binding upon the parties hereto.  The Bank or MB shall bear the costs of such
physician or psychiatrist selected to determine such matter.


 


3.                                       Supervisory Matters.  If Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Bank’s affairs by notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1818(e)(3) and (g)(1)), the Bank’s
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. 
If the charges in the notice are dismissed, the Bank may in its
discretion:  (i) pay Executive all
or part of the compensation withheld while its obligations under this Agreement
were suspended; and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.  If
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under Section 8(e)(3) or
i(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. Section 1818(e)(3) or
(g)(1)), all obligations of the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the parties shall not be
affected.  If the Bank is in default (as
defined in Section 3(x)(1) of the Federal Deposit Insurance Act (12
U.S.C. Section 1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the parties shall not
be affected.  All obligations under this
Agreement shall be terminated, except to


 


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the extent that it is determined that continuation of the Agreement is
necessary for the continued operation of the Bank; (i) by the Federal
Deposit Insurance Corporation at the time that the Federal Deposit Insurance
Corporation enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in Section 11 of the Federal
Deposit Insurance Act (12 U.S.C. Section 1821); or (ii) by the
Federal Deposit Insurance Corporation or the United States Comptroller of the
Currency or his or her designee, at the time that the Federal Deposit Insurance
Corporation or the United States Comptroller of the Currency or his or her
designee approves a supervisory merger to resolve problems related to the
operation of the Bank or when the Bank is in an unsafe or unsound
condition.  All rights of the parties
that have already vested, however, shall not be affected by such action.


 


4.                                       Termination Without Cause.  Notwithstanding anything to the contrary
contained herein, it is agreed by the parties hereto that the Bank or MB may at
any time without Cause and for any reason immediately terminate this Agreement
and Executive’s employment by the Bank by action of their respective
Boards.  Upon such termination by the
Bank or MB all benefits provided by the Bank or MB hereunder to Executive shall
thereupon cease, except as provided in this Subparagraph F.4 or Subparagraph
F.5, and Executive shall be deemed to have voluntarily resigned as a director,
officer and employee of the Bank and MB and any corporation, partnership,
venture, limited liability company or other entity controlled by, controlling
or under common control with the Bank or MB, and shall deliver such written
resignation as Bank or MB may request. 
Notwithstanding the foregoing, it is agreed that in the event of such
termination without Cause by the Bank or MB upon the delivery to the Bank by
Executive of a waiver and release in substantially the form of Attachment “A”
to this Agreement, and Executive’s compliance with the terms thereof, Executive
shall be entitled to, upon the effective date of termination, payment of a lump
sum equivalent to twelve (12) months’ base salary as such base salary is in
effect on the date of termination of employment, plus continuation of Executive’s
medical benefits for a period of twelve (12) months following such termination,
with Bank continuing to pay Executive’s share of premiums and associated costs
as if Executive continued to be employed with the Bank and MB; provided,
however, that the Bank’s and MB’s obligation to provide such coverage shall be
terminated if Executive is eligible to receive comparable substitute coverage
from another employer at any time during such twelve-month period.  Executive agrees to advise the Bank and MB
immediately if such comparable substitute coverage is available from another
employer.  Notwithstanding any provision
to the contrary in this Subparagraph F.4, no severance benefits shall be
payable to Executive hereunder if Executive’s employment is terminated for any
of the reasons delineated in Subparagraphs F.1, F.2 or F.3 hereof or while
grounds for termination under such Subparagraphs exist, and no severance
benefits shall be payable to Executive under this Subparagraph F.4 if payments
are required to be made to Executive under Subparagraph F.5 hereof.


 


5.                                       Termination Following Change in Control.


 


(a)                                  In
the event a Change in Control of the Bank or MB occurs (as defined below) and
Executive’s employment as President and Chief Executive Officer of the Bank or
MB is terminated without Cause by the Bank or MB, then Executive shall be
entitled, upon such termination of employment and upon delivery to the Bank of
an executed waiver and release in substantially the form of Attachment “A” to
this Agreement, to payment of a lump


 


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sum equivalent to two (2) times the highest annual cash
compensation amount paid to Executive by the Bank or MB within the three years’
preceding the Change in Control and to the continuation of Executive’s coverage
under the group medical care provided at the time of termination for a period
of twenty four (24) months following such termination; provided, however, that
the Bank’s obligation to provide such coverage shall be terminated if Executive
obtains comparable substitute coverage from another employer at any time during
such 24-month period.  Executive agrees
to advise the Bank and MB immediately if such comparable substitute coverage is
obtained from another employer. 
Notwithstanding any provision to the contrary in this Subparagraph F.5,
no severance benefits shall be payable to Executive hereunder if Executive’s
employment is terminated for any of the reasons delineated in Subparagraphs
F.1, F.2 or F.3 hereof or while grounds for termination under such
Subparagraphs exist.


 


(b)                                 A
“Change in Control” of the Bank
occurs upon the effective date of the first to occur of the following events:


 


(i)                                     Merger,
Consolidation, and Other Transactions. 
Any (A) merger where the Bank or MB, or a corporation in which the
Bank’s or MB’s shareholders as constituted immediately prior to the merger do
not own at least 50% of such corporation’s common stock or 50% of the common
stock of the parent of such corporation following such merger in the same
proportions as their ownership interests in the Bank or MB prior to such
transaction, is not the surviving corporation; (B) a transfer of all or a
substantial portion (50% or more) of the assets of the Bank or MB to another
corporation or other person in which the Bank’s or MB’s shareholders as
constituted immediately prior to such transfer do not own at least 50% of the
common stock or 50% of the common stock of the parent of such corporation (or
an equivalent economic interest in the case of a transferee that is not a
corporation) following such transfer in the same proportions as their ownership
interests in the Bank or MB prior to such transaction; or (C) the
liquidation or dissolution of the Bank or MB, except for a liquidation or
dissolution in which the assets and liabilities of the Bank or MB are
transferred to a transferee in which the owners of the Bank’s or MB’s common
stock as constituted immediately prior to the transaction own at least 50% of
the common stock or 50% of the common stock of the parent of the transferee (or
an equivalent economic interest in the case of a transferee that is not a
corporation) following such liquidation or dissolution in the same proportions
as their ownership interests in the Bank or MB prior to such transaction; or


 


(ii)                                  Majority
Stockholder.  Any person (as such term is
used in Section 13(d) of the securities Exchange Act of 1934, as
amended (the “Exchange Act”)),
together with its affiliates (but excluding the Bank’s employee benefit plans
and the individuals who were the Bank’s or MB’s officers or directors on the
date of this Agreement or their affiliates), becomes the beneficial owner
(within the meaning of Rule 13(d)(3) under the Exchange Act) of more
than 50% of the Bank’s or MB’s outstanding common stock.


 


(iii)                               Regulatory
Exception.  Notwithstanding anything else
to the contrary set forth herein, a “Change in Control” shall not include any
sale of stock or securities, merger, transfer of assets, consolidation,
liquidation, reorganization or other transaction instituted by or at the
request of the OCC, FRB or the Federal Deposit Insurance Corporation to resolve
any supervisory concerns respecting the Bank or MB.


 


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(c)                                  Notwithstanding
anything to the contrary in this Subparagraph F.5, no severance benefits shall
be payable to Executive hereunder if Executive’s employment is terminated for
any of the reasons delineated in Subparagraphs F.1, F.2 or F.3 hereof or while
grounds for termination under such Subparagraphs exist.


 


6.                                       Golden Parachute Limitation.  Severance compensation under Subparagraphs
F.4 and F.5 hereof will be reduced as provided below to avoid the penalties
imposed on “parachute payments” under the Internal Revenue Code of 1986 (the “Code”).


 


(a)                                  If
the present value of all Executive’s severance compensation provided by MB or
the Bank under Subparagraph F.4 or F.5 hereof and outside this Agreement is
high enough to cause any such payment to be a “parachute payment” (as defined
in Section 280G(b)(2) of the Code), then one or more of such payments
will be reduced by the minimum amount required to prevent the severance
compensation under this Agreement from being a “parachute payment.”


 


(b)                                 Executive
may direct the Bank and MB regarding the order of reducing severance
compensation and other payments from the Bank or MB to comply with this
Subparagraph F.6.


 


7.                                       Section 409A Limitation.  It is the intention of Employer and Executive
that the severance and other benefits payable to Executive under this Agreement
either be exempt from, or otherwise comply with, Section 409A (“Section 409A”) of the Internal Revenue
Code of 1986, as amended. 
Notwithstanding any other term or provision of this Agreement, to the
extent that any provision of this Agreement is determined by Employer, with the
advice of its independent accounting firm or other tax advisors, to be subject
to and not in compliance with Section 409A, including, without limitation,
the definition of “Change in Control” or the timing of commencement and
completion of severance benefit and/or other benefit payments to Executive
hereunder in connection with a merger, recapitalization, sale of shares or
other “Change in Control”, or the amount of any such payments, such provisions
shall be interpreted in the manner required to comply with Section 409A.  Employer and Executive acknowledge and agree
that such interpretation could, among other matters, (i) limit the
circumstances or events that constitute a “change in control;” (ii) delay
for a period of six (6) months or more, or otherwise modify the
commencement of severance and/or other benefit payments; and/or (iii) modify
the completion date of severance and/or other benefit payments.  Employer and Executive further acknowledge
and agree that if, in the judgment of Employer, with the advice of its
independent accounting firm or other tax advisors, amendment of this Agreement
is necessary to comply with Section 409A, Employer and Executive will
negotiate reasonably and in good faith to amend the terms of this Agreement to
the extent necessary so that it complies (with the most limited possible
economic effect on Employer and Executive) with Section 409A.  For example, if this Agreement is subject to Section 409A
and it requires that severance and/or other benefit payments must be delayed
until at least six (6) months after Executive terminates employment, then
Employer and Executive would delay payments and/or promptly seek a written
amendment to this Agreement that would, if permissible under Section 409A,
eliminate any such payments otherwise payable during the first six (6) months
following Executive’s termination of employment and substitute therefor a lump
sum payment or an initial installment


 


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payment, as applicable, at the
beginning of the seventh (7th) month following Executive’s termination of
employment which in the case of an initial installment payment would be equal
in the aggregate to the amount of all such payments thus eliminated.


 


G.                                     GENERAL PROVISIONS


 


1.                                       Trade Secrets.  During the Term, Executive will have access
to and become acquainted with what Executive and the Bank and MB acknowledge
are trade secrets, to wit, knowledge or data concerning the Bank and MB,
including their operations and methods of doing business, and the identity of
customers of the Bank and MB, including knowledge of their financial condition
and their financial needs.  Executive
shall not disclose any of the aforesaid trade secrets, directly or indirectly,
or use them in any way either during the Term or thereafter, except as required
in the course of Executive’s employment with the Bank or MB.


 


2.                                       Indemnification.  To the extent permitted by law, applicable
statutes and the Bylaws or resolutions of the Bank in effect from time to time,
the Bank and MB shall indemnify Executive against liability or loss arising out
of Executive’s actual or asserted misfeasance or non-feasance in the
performance of Executive’s duties or out of any actual or asserted wrongful act
against, or by, the Bank or MB including but not limited to judgments, fines,
settlements and legal and other expenses incurred in the defense of actions,
proceedings and appeals therefrom. 
However, the Bank and MB shall have no duty to indemnify Executive with
respect to any claim, issue or matter as to which Executive has been adjudged
to be liable to the Bank or MB in the performance of his duties, unless and
only to the extent that the court in which such action was brought shall
determine upon application that, in view of all of the circumstances of the
case, Executive is fairly and reasonably entitled to indemnification for the
expenses which such court shall determine. 
The Bank and MB shall endeavor to apply for and obtain Directors and
Officers Liability Insurance to indemnify and insure the Bank, MB and Executive
from and against the aforesaid liabilities. 
The provisions of this paragraph shall apply to the estate, executor,
administrator, heirs, legatees or devisees of Executive.  The obligations of the Bank and MB under this
Subparagraph G.2 shall continue through and after the Term of this Agreement.


 


3.                                       Return of Documents.  Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used and/or
developed by Executive during the Term are solely the property of the Bank and
MB, and that Executive has no right, title or interest therein.  Upon termination of this Agreement, Executive
or Executive’s representative shall promptly deliver possession of all of said
property to the Bank in good condition.


 


4.                                       Non-solicitation.  During the Term and for a period of one year
thereafter, Executive shall not, directly or indirectly, engage or participate
in the solicitation or any attempt to solicit employees of the Bank or MB to
work for any person, firm or business.


 


5.                                       Controlling Law.  This Agreement is to be governed by and
construed in accordance with the laws of the United States and, to the extent
not inconsistent therewith, the laws of the State of California.


 


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6.                                       Invalid Provisions.  Should any provision of this Agreement for
any reason be declared invalid, void, or unenforceable by a court of competent
jurisdiction, the validity and binding effect of any remaining portion shall
not be affected, and the remaining portions of this Agreement shall remain in
full force and effect as if this Agreement had been executed with said
provision eliminated.


 


7.                                       Entire Agreement.  This Agreement and the Stock Option Agreement
contain the entire agreement of the parties. 
It supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Executive by the
Bank and MB.  Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, oral or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not embodied herein, and that no other
agreement, statement, or promise not contained in this Agreement shall be valid
or binding.  This Agreement may not be
modified or amended by oral agreement, but only by an agreement in writing
signed by both the Bank and MB, and Executive.


 


8.                                       Notice. 
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
personally delivered or (unless otherwise specified) mailed by United States
mail, or sent by facsimile, provided that the facsimile cover sheet contains a
notation of the date and time of transmission, and shall be deemed
received:  (i) if personally
delivered, upon the date of delivery to the address of the person to receive
such notice, (ii) if mailed in accordance with the provisions of this
Subparagraph G.8, three (3) business days after the date placed in the
United States mail, or (iii) if given by facsimile, when sent.  Notices shall be addressed to the Bank and MB
at their main office and to Executive at the address then maintained by the
Bank and MB in its records for Executive, or to such other respective addresses
as the parties hereto shall designate to the other by like notice.


 


9.                                       Arbitration.  Any dispute or controversy arising under
or in connection with this Agreement, the inception or termination of Executive’s
employment, or any alleged discrimination or statutory or tort claim related to
such employment, including issues raised regarding the Agreement’s formation,
interpretation or breach, shall be settled exclusively by binding arbitration
in Los Angeles, California in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association (“AAA”). 
Without limiting the foregoing, the following potential claims by Executive
could be subject to arbitration under the Arbitration Agreement:  claims for wages or other compensation due;
claims for breach of any contract or covenant (express or implied) under which
Executive believes he would be entitled to compensation or benefits; tort
claims related to such employment; claims for discrimination and harassment
(including, but not limited to, race, sex, religion, national origin, age,
marital status or medical condition, disability, sexual orientation, or any
other characteristic protected by federal, state or local law); claims for
benefits (except where an employee benefit or pension plan specifies that its
claims procedure shall culminate in an arbitration or other procedure different
from this one); and claims for violation of any public policy, federal, state
or other governmental law, statute, regulation or ordinance.  The arbitration will be conducted in Los
Angeles County.  The arbitration shall
provide for written discovery and depositions adequate to give the parties
access to documents and witnesses that are essential to the dispute.


 


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The arbitrator shall have no authority to add to or to modify this
Agreement, shall apply all applicable law, and shall have no lesser and no
greater remedial authority than would a court of law resolving the same claim
or controversy.  The arbitrator shall
issue a written decision that includes the essential findings and conclusions
upon which the decision is based, which shall be signed and dated.  Executive and the Bank and MB shall each bear
his or their own costs and attorneys’ fees incurred in conducting the
arbitration and, except in such disputes where Executive assets a claim
otherwise under a state or federal statute prohibiting discrimination in
employment (“a  Statutory Claim”), or unless required
otherwise by applicable law, shall split equally the fees and administrative
costs charged by the arbitrator and AAA between Executive, on the one hand, and
Bank and MB on the other hand.  In
disputes where Executive asserts a Statutory Claim against the Bank or MB,
Executive shall be required to pay only the AAA filing fee to the extent such
filing fee does not exceed the fee to file a complaint in state or federal
court.  Executive shall pay the balance
of the arbitrator’s fees and administrative costs.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction.


 


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IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year first
above written.


 


	
   

  	
  BANK OF MANHATTAN, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Harry W.
  Chenoweth 

  
	
   

  	
   

  	
  Harry W.
  Chenoweth,

  
	
   

  	
   

  	
  Chairman,
  Compensation Committee

  
	
         /s/
  Jeffrey M. Watson

  	
   

  	
   

  
	
  Jeffrey M. Watson

  	
  MANHATTAN BANCORP 

  
	
  (“Executive”)

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Harry W.
  Chenoweth 

  
	
   

  	
   

  	
  Harry W.
  Chenoweth,

  
	
   

  	
   

  	
  Chairman,
  Compensation Committee

  
				



 


11

















 


WAIVER
AND RELEASE AGREEMENT


 


This Waiver and Release Agreement (the “Waiver Agreement”) is entered into by and between Jeffrey M.
Watson (“Employee”) and Bank of
Manhattan, N.A. and Manhattan Bancorp on their behalf and on behalf of their
parents, subsidiaries, affiliates and successors-in-interest (collectively, “Employer”).


 


RECITALS


 


A.                                   Employee
and Employer have entered into an Employment Agreement dated as of December 5,
2008 (the “Agreement”).


 


B.                                     A
condition precedent to certain of Employer’s obligations under the Agreement is
the execution of this Waiver Agreement.


 


NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties, intending to be legally bound, agree and covenant as follows:


 


RELEASE


 


In consideration for the payment of severance and other compensation
under the Agreement, Employee agrees unconditionally and forever to release and
discharge Employer its parents, subsidiaries, affiliates,
successors-in-interest, and their respective officers, directors, managers,
employees, members, shareholders, representatives, attorneys, agents and
assigns from any and all claims, actions, causes of action, demands, rights or
damages of any kind or nature which Employee may now have, or ever have,
whether known or unknown, that arise out of or in any way relate to Employee’s
employment with, or separation from, Employer on or before the date of
execution of this Waiver Agreement. 
Employee also confirms his resignation as a director, officer and
employee of Employer and any corporation, partnership, venture, limited
liability company or other entity controlled by, controlling or under common
control with Employer.


 


This release specifically includes, but is not limited to, any claims
for discrimination and/or violation of any statutes, rules, regulations or
ordinances, whether federal, state or local, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, age claims under the Age
Discrimination in Employment Act of 1967, as amended by the Older Workers
Benefits Protection Act of 1990, the Employee Retirement Income Security Act of
1974, as amended, the California Fair Employment and Housing Act, the
California Labor Code, the Equal Pay Act, the Americans With Disabilities Act,
the Rehabilitation Act of 1973, the Racketeer Influenced and Corrupt
Organizations Act, the Financial Reform Recovery and Enforcement Act of 1989,
and/or Section 1981 of Title 42 of the United State Code.


 


Employee further agrees knowingly to waive the provisions and
protections of Section 1542 of the California Civil Code, which reads:


 


Attachment A


 

















 


A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which, if known by him, must have materially affected his settlement with the
debtor.


 


REPRESENTATIONS
OF EMPLOYEE


 


Employee represents and agrees that, prior to the execution of this
Waiver Agreement, Employee has had the opportunity to discuss the terms of this
Waiver Agreement with legal counsel of Employee’s choosing.


 


Employee affirms that no promise or inducement was made to cause
Employee to enter into this Waiver Agreement other than the inducements
provided in the Agreement.  Employee further
confirms that Employee has not relied upon any other statement or
representation by anyone other than what is in this Waiver Agreement as a basis
for Employee’s agreement.


 


MISCELLANEOUS


 


Except for the Agreement and any other employee benefit plans expressly
referred to in the Agreement as continuing following Employee’s termination of
employment with Employer, this Waiver Agreement sets forth the entire agreement
between Employee and Employer, and shall be binding on both party’s heirs,
representatives and successors.  This
Waiver Agreement shall be construed under the laws of the State of California,
both procedurally and substantively.  If
any portion of this Waiver Agreement is found to be illegal or unenforceable,
such action shall not affect the validity or enforceability of the remaining
paragraphs or subparagraphs of this Waiver Agreement.


 


Employee acknowledges that Employee has been advised that Employee has
twenty-one (21) days to consider this Waiver Agreement, and that Employee was
informed that Employee has the right to consult with counsel regarding this
Waiver Agreement.  To the extent Employee
has taken less than twenty-one (21) days to consider this Waiver Agreement,
Employee acknowledges that Employee has had sufficient time to consider the
Waiver Agreement and to consult with counsel, and that Employee does not desire
additional time.


 


This Waiver Agreement is revocable by Employee for a period of seven (7) days
following Employee’s execution of this Waiver Agreement. The revocation by
Employee of this Waiver Agreement must be in writing, must specifically revoke
this Waiver Agreement and must be received by Employer prior to the eighth
(8th) day following the execution of this Waiver Agreement by Employee.  This Waiver Agreement becomes effective,
enforceable and irrevocable on the eighth (8th) day following Employee’s
execution of the Waiver Agreement.  No
payment will be made to the undersigned until such date.


 

















 


The undersigned agree to the terms of this Waiver Agreement and voluntarily
enters into it with the intent to be bound hereby.


 


 


	
  DATED:

  	
   

  
	
   

  	
   

  
	
   

  	
  Jeffrey M.
  Watson

  
	
   

  	
   

  
	
  DATED:

  	
   

  
	
   

  	
  Bank of
  Manhattan, N.A.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Harry W.
  Chenoweth,

  
	
   

  	
   

  	
  Chairman,
  Compensation Committee

  
	
   

  	
   

  	
   

  
	
  DATED:

  	
  Manhattan
  Bancorp

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Harry W.
  Chenoweth,

  
	
   

  	
   

  	
  Chairman,
  Compensation Committee