Document:

Exhibit 10.1

 

FIRST AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

This First Amended and
Restated Agreement is made and entered into on March 26, 2009 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”).

 

WITNESSETH

 

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 and MB pursuant
to an Employment Agreement dated January 1, 2009 between the Bank and
Executive (the “Prior Agreement”),
which Prior Agreement shall be amended and restated in its entirety by this
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 amended and restated employment
agreement for the purposes of amending certain provisions of the Prior
Agreement, and 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 Agreements between MB and Executive dated August 10, 

 

 

2007, September 27, 2007 and December 18,
2008 (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 “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.

 

3.             Stock Option. MB has granted Executive
under the Stock Option Agreements options to purchase up to 174,382 shares of
MB’s authorized but unissued Common Stock, at the fair market value of the
stock on the date of the grants of such options.  Such options have terms of ten (10) years
from the respective dates of the granting thereof 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
options will qualify as “incentive stock options” 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 Agreements.

 

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 MB and not as deductible compensation to Executive.

 

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 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 or MB 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
resignations 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 and MB of an
executed waiver and release in substantially the form of Attachment “A” to this
Agreement, to payment of a lump 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 or MB 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.

 

 

(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 Bank, MB 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 Bank and MB, 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.  Bank, MB 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.  Bank, MB and Executive further acknowledge
and agree that if, in the judgment of Bank and MB, with the advice of its
independent accounting firm or other tax advisors, amendment of this Agreement
is necessary to comply with Section 409A, Bank, MB 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 Bank, MB 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
Bank, MB 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 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.

 

8.             EESA Provisions.

 

(a)           MB has entered into
agreements with the U.S. Treasury Department (“UST”)
under which Manhattan Bancorp issued preferred shares (“Preferred
Shares”) and other securities to the UST as part of the Troubled
Assets Relief Program Capital Purchase Program (“CPP”)
established under the Emergency Economic Stabilization Act of 2008 (“EESA”).  Executive is
a Senior Executive Officer (as such term is defined under EESA), has determined
that MB’s participation in the CPP is of material benefit to Executive,
approved MB’s participation in the CPP, requested that MB participate in the
CPP and agrees to abide by all existing and future terms of EESA, and any
regulations thereunder, restricting payment of compensation to Executive.

 

(b)           EESA imposes certain
restrictions on employment agreements, severance, bonus and incentive
compensation, stock options and awards, and other compensation and benefit
plans and arrangements (“Plans”)
maintained by MB, Bank and their affiliates and requires that such restrictions
remain in place for so long as the UST holds any debt or equity securities
issued by MB or Bank.  The parties hereby
agree that all Plans providing benefits to Executive shall be construed and
interpreted at all times that the UST maintains any debt or equity investment
in MB or Bank in a manner consistent with EESA, and all such Plans shall be
deemed to have been amended as determined by MB and Bank so as to comply with
the restrictions imposed by EESA. 
Executive recognizes that such changes may result in the reduction or
elimination of benefits otherwise provided to Executive under this Agreement or
any other Plan.  Notwithstanding any
other terms of this Agreement or any other Plan providing benefits to
Executive, to the extent that any provision of this Agreement or any other Plan
is determined by MB or Bank, to be subject to and not in compliance with EESA,
including the timing, amount or entitlement of Executive to any payment of
severance, bonus or any other amounts, such provisions shall be interpreted and
deemed to have been amended to comply with the terms of EESA.  Without limiting the foregoing, any “golden
parachute payment” or other severance payments due in connection with
termination of Executive’s employment with MB or Bank provided under this
Agreement or any other Plan, as defined for purposes of EESA and Section 280(G)(e) of
the Internal Revenue Code of 1986, as amended (“Code”),
including any benefits payable under Subparagraphs F.4 and F.5, shall be
prohibited if such termination occurs while the Preferred Shares remain
outstanding and held by the UST.  The
parties hereto further agree that (i) Executive shall at no time be
entitled to receive any compensation based upon incentives that encourage
Executive to take unnecessary and excessive risks on behalf of Bank or MB; (ii) Executive
shall promptly repay Bank, MB or any other affiliated entity compensating
Executive, within thirty (30) days of demand, the amount of any bonus or
incentive compensation paid to Executive based upon statements of earnings,
gains or other criteria that are later determined to be materially inaccurate;
and (iii) all golden parachute payments to Executive are prohibited.

 

 

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.

 

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
Agreements 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.  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.

 

 

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 Chenoweth

  
	
   

  	
   

  	
   

  	
  Harry Chenoweth,

  
	
   

  	
   

  	
   

  	
  Chairman, Compensation Committee

  
	
  /s/ Jeffrey
  M. Watson

  	
   

  	
   

  	
   

  
	
  Jeffrey M. Watson

  	
   

  	
  MANHATTAN BANCORP

  
	
  (“Executive”)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry Chenoweth

  
	
   

  	
   

  	
   

  	
  Harry Chenoweth,

  
	
   

  	
   

  	
   

  	
  Chairman, Compensation Committee

  

 

 

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 March 26, 2009 (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:

 

 

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:

  	
   

  
	
   

  	
   

  	
  Kyle Ransford, Chairman of the Board

  
	
   

  	
   

  	
   

  
	
  DATED:

  	
  Manhattan Bancorp

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kyle Ransford, Chairman of the BoardExhibit 10.2

 

FIRST AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

This First Amended and
Restated Employment Agreement is made and entered into on March 26, 2009,
by and among Manhattan Bancorp (“MB”),
Bank of Manhattan, N.A. (the “Bank”) and Dean Fletcher (“Executive”) for the purposes set forth
hereinafter (“Agreement”).

 

WITNESSETH

 

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 Executive Vice President and Chief 
Financial Officer of the Bank and MB pursuant to an Employment Agreement
dated December 5, 2008 between the Bank and Executive (the “Prior Agreement”), which Prior Agreement
shall be amended and restated in its entirety by this Agreement;

 

WHEREAS, Executive also
serves as Executive Vice President and Chief Financial Officer of MB; and

 

WHEREAS, it is the
intention of the parties to enter into an amended and restated employment
agreement for the purposes of amending certain provisions of the Prior
Agreement and assuring the continued services of Executive as Executive Vice
President and Chief Financial Officer of the Bank and as  Executive Vice President and Chief Financial
Officer of MB.

 

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

 

H.            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
Agreements between MB and Executive dated August 10, 

 

 

2007, September 27,
2007 and November 20, 2008 (the “Stock
Option Agreements”), which shall remain in full force and effect.

 

I.              DUTIES OF EXECUTIVE

 

1.             Duties. 
Executive shall perform the duties of Executive Vice President and Chief
Financial Officer of the Bank and MB, reporting directly to the President and
Chief Executive Officer 
of the Bank and MB, and subject, at all times, to the powers
vested by law in the Board (the “Board”) of the
Bank and MB and their respective shareholders.  
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.

 

J.             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 One Hundred Sixty Five Thousand
Dollars ($165,000) 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.

 

K.            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.

 

3.             Stock Option. MB has granted Executive
under the Stock Option Agreements options to purchase up to 44,814 of shares of
MB’s authorized but unissued
Common Stock, at the fair market value of such stock at the date of the grants
of such options.  Such options have terms
of ten (10) years from the respective dates of the granting thereof 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
options will qualify as “incentive stock options” 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.

 

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

 

L.             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 MB and not as deductible
compensation to Executive.

 

M.           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 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 or MB 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
resignations 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
12-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 Executive Vice President and Chief Financial 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 and MB of an executed waiver and release in substantially the form of
Attachment “A” to this Agreement, to payment of a lump sum equivalent to one (1) 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 twelve (12) 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 12-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 or
MB 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.

 

(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 Bank, MB 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 Bank and MB, 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.  Bank, MB 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.  Bank, MB and Executive further acknowledge
and agree that if, in the judgment of Bank and MB, with the advice of its
independent accounting firm or other tax advisors, amendment of this Agreement
is necessary to comply with Section 409A, Bank, MB 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 Bank, MB 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
Bank, MB 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
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.

 

8.             EESA Provisions.

 

(a)           MB
has entered into agreements with the U.S. Treasury Department (“UST”) under which Manhattan Bancorp issued preferred shares
(“Preferred Shares”) and other securities
to the UST as part of the Troubled Assets Relief Program Capital Purchase
Program (“CPP”)
established under the Emergency Economic Stabilization Act of 2008 (“EESA”).  Executive is a Senior Executive Officer (as
such term is defined under EESA),

 

 

has
determined that MB’s participation in the CPP is of material benefit to Executive, approved MB’s participation in the CPP,
requested that MB participate in the CPP and agrees
to abide by all existing and future terms of EESA,
and any regulations thereunder, restricting payment
of compensation to Executive.

 

(b)           EESA imposes certain restrictions on employment agreements,
severance, bonus and incentive compensation, stock options and awards, and
other compensation and benefit plans and arrangements (“Plans”)
maintained by MB, Bank and their affiliates and requires that such restrictions
remain in place for so long as the UST holds any debt or equity securities
issued by MB or Bank.  The parties hereby
agree that all Plans providing benefits to Executive shall be construed and
interpreted at all times that the UST maintains any debt or equity investment
in MB or Bank in a manner consistent with EESA, and
all such Plans shall be deemed to have been amended as determined by MB and
Bank so as to comply with the restrictions imposed by EESA.  Executive recognizes that such changes may
result in the reduction or elimination of benefits otherwise provided to
Executive under this Agreement or any other Plan.  Notwithstanding any other terms of this
Agreement or any other Plan providing benefits to Executive, to the extent that
any provision of this Agreement or any other Plan is determined by MB or Bank,
to be subject to and not in compliance with EESA,
including the timing, amount or entitlement of Executive to any payment of
severance, bonus or any other amounts, such provisions shall be interpreted and
deemed to have been amended to comply with the terms of EESA.  Without limiting the foregoing, any “golden
parachute payment” or other severance payments due in connection with
termination of Executive’s employment with MB or Bank provided under this
Agreement or any other Plan, as defined for purposes of EESA
and Section 280(G)(e) of the Internal Revenue Code of 1986, as
amended (“Code”), including any benefits payable
under Subparagraphs F.4 and F.5, shall be prohibited if such termination occurs
while the Preferred Shares remain outstanding and held by the UST.  The parties hereto further agree that (i) Executive shall at no time be entitled to receive
any compensation based upon incentives that encourage Executive to take
unnecessary and excessive risks on behalf of Bank or MB; (ii) Executive
shall promptly repay Bank, MB or any other affiliated entity compensating
Executive, within thirty (30) days of demand, the amount of any bonus or
incentive compensation paid to Executive based upon statements of earnings,
gains or other criteria that are later determined to be materially inaccurate;
and (iii) all golden parachute payments to Executive are prohibited.

 

N.            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.

 

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.  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.

 

 

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/ Jeffrey M. Watson

  
	
   

  	
   

  	
   

  	
       Jeffrey M. Watson

  
	
   

  	
   

  	
   

  	
  President & Chief Executive Officer

  
	
  /s/ Dean Fletcher

  	
   

  	
   

  	
   

  
	
  Dean Fletcher

  	
   

  	
   

  	
  MANHATTAN BANCORP

  
	
  (“Executive”)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Jeffrey M. Watson

  
	
   

  	
   

  	
   

  	
       Jeffrey M. Watson

  
	
   

  	
   

  	
   

  	
  President & Chief Executive Officer

  

 

 

WAIVER AND RELEASE AGREEMENT

 

This Waiver and Release
Agreement (the “Waiver Agreement”)
is entered into by and between Dean Fletcher (“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 March 26, 2009 (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:

 

 

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:

  	
   

  
	
   

  	
  Dean Fletcher

  
	
   

  	
   

  
	
  DATED:

  	
   

  
	
   

  	
  Bank of Manhattan, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Jeffrey M. Watson

  
	
   

  	
  President & Chief Executive Officer

  
	
   

  	
   

  
	
  DATED:

  	
  Manhattan Bancorp

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Jeffrey M. Watson

  
	
   

  	
  President & Chief Executive Officer

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