Document:

<PAGE>

EXHIBIT 10.2

                             EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 17th day of March, 1999 by and between FRANCHISE MORTGAGE ACCEPTANCE
CORPORATION, a Delaware corporation ("FMAC") (which, together with BAY VIEW
FRANCHISE MORTGAGE ACCEPTANCE CORPORATION (as hereinafter defined), the ultimate
successor to all or substantially all of the assets of FMAC following the Merger
(as defined below), is hereinafter referred to as the "Corporation"), and WAYNE
J. KNYAL (the "Executive").

                             W I T N E S S E T H:

     WHEREAS, this Agreement has been offered to the Executive by the
Corporation pursuant to an Agreement and Plan of Merger and Reorganization (the
"Plan") dated as of March 10, 1999, by and between the Corporation and BAY VIEW
CAPITAL CORPORATION, a Delaware corporation ("BVCC"), pursuant to which the
Corporation will merge with and into BVCC (the "Merger") and substantially all
of its assets and liabilities (including this "Agreement") will be contributed
to BAY VIEW BANK ("BVB"), a wholly-owned first tier subsidiary of BVCC followed
by the subsequent contribution thereof to a newly formed wholly-owned subsidiary
of BVB ("BAY VIEW FRANCHISE MORTGAGE ACCEPTANCE CORPORATION");

     WHEREAS, the Executive has been employed by the Corporation as its
President and Chief Executive Officer and has unique skill, experience and
knowledge;

     WHEREAS, as BVCC desires to acquire the services and unique skill,
experience and knowledge of the Executive in connection with the Plan, the
execution of this Agreement is a condition to and inducement for BVCC to enter
into the Plan;

     WHEREAS, the Executive has agreed herein to certain covenants, including a
covenant not to engage in certain solicitation activities;

     WHEREAS, the Executive acknowledges and agrees that the restrictive
covenants applicable to the Executive in this Agreement

                                       1
<PAGE>

are reasonable and essential to the business and goodwill of the Corporation;

     WHEREAS, the Executive is desirous of committing himself to serve on the
terms herein provided; and

     WHEREAS, the Executive is willing to terminate the Executive's Employment
and Non-Competition Agreement, dated August 26, 1997, between the Executive and
the Corporation (the "Old Employment Agreement"), upon the effectiveness of this
Agreement.

          NOW, THEREFORE, in consideration of the foregoing recitals and the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:

          1.   Executive's Employment, Title, Duties and Authority and Time
               ------------------------------------------------------------
Commitment.
----------

               a.   Employment. The Corporation hereby agrees to employ the
                    ----------
Executive, and the Executive hereby agrees to serve the Corporation, on the
terms and conditions set forth herein.

               b.   Title.  The Executive's position and title with the
                    -----
Corporation shall be President and Chief Executive Officer.

               c.   Duties and Authority.  The Executive's duties and authority
                    --------------------
shall be consistent with those of a President and Chief Executive Officer.  In
addition, the Executive shall perform such other executive duties consistent
with his position as the Board of Directors of the Corporation (the "Board"), or
its authorized representative, may from time to time reasonably require. During
the Term of Executive's employment with the Corporation, the Executive shall be
(1) elected as a member of the Board of Directors of BVCC for a term to expire
at the annual shareholders meeting in 2000, (2) shall be nominated to the
management slate of directors at that shareholders meeting, (3) and shall be
elected as a member of the Board of Directors of the Corporation; provided,
however, that the obligations in subsections 2 and 3 shall be subject to the
fiduciary duties of the management and Board of Directors of BVCC.

               d.   Time Commitment.  The Executive acknowledges that the
                    ---------------
Executive's duties are of such a dimension that they will

                                       2
<PAGE>

require the Executive's full business time and attention. During the term of the
Executive's employment with the Corporation, unless the Executive has obtained
the prior written consent of the Board, or its authorized representative:

                    (1)  Except for the directorships the Executive holds as of
the date hereof, the Executive shall not, directly or indirectly, render
personal services to any other person or entity for or without compensation,
either as an executive, consultant, director, officer, agent or partner. The
Executive shall remain free to engage in community, charitable, political and
personal pursuits which do not interfere with the Executive's performance under
this Agreement; and

                    (2)  The Executive shall not establish or engage in any
business, trade or occupation that (i) is similar to, (ii) is competitive with
or (iii) provides products or services to any aspect of business in which BVCC,
the Corporation or any of their affiliates is engaged or contemplates engaging.

               e.   Location; Office. The principal workplace of the Executive
                    ----------------
shall be located at all times at the executive offices of the Corporation.
During the Term and prior to a change in control (as defined in Section 10), the
executive offices shall not be moved without Executive's consent, which shall
not be unreasonably withheld, more than ten (10) miles from their present
location (1888 Century Park East, Los Angeles, California). At all times during
the Term of this Agreement, the Corporation will provide to the Executive office
space and secretarial services equivalent to that which has been provided to him
prior to the date hereof.

          2.   Compensation.  The Corporation agrees to pay the Executive during
               ------------
the Term a base salary as follows: $400,000 per annum, or at such greater rate
as the Board, or a designated Committee of the Board shall from time to time
determine. Salary increases are not guaranteed or automatic, but shall be
reviewed at least annually by the Board or a designated Committee of the Board
for possible increase. The base salary shall be payable semi-monthly in
accordance with the practices of the Corporation.

                                       3
<PAGE>

          3.   Annual Bonus.
               ------------

               a.   For each of calendar years 1999, 2000 and 2001, the
Corporation will pay the Executive a minimum bonus of $82,000 per year. Such
minimum bonus shall be paid on January 1, 2000, January 1, 2001 and January 1,
2002 and shall be paid on such dates notwithstanding Executive's termination of
employment or any other provisions of this Agreement to the contrary. Each of
the minimum bonus payments shall be applied to the payments to be made under the
promissory note owing to the Corporation by the Executive in the original
principal amount of $410,000 (the outstanding balance of which is $242,000 as of
the date hereof).

               b.   In addition to the minimum bonus provided for in Paragraph
3(a), the Corporation shall provide the Executive with an opportunity to earn an
annual bonus (the "Annual Bonus") with a targeted payment of $600,000 for each
calendar year during the Term (as defined in Section 6) beginning with the 1999
calendar year. The Annual Bonus for 1999 shall be guaranteed to be paid at
$600,000 if the Executive is employed by the Corporation on December 31, 1999.
For years subsequent to 1999, the bonus criteria shall be established in
consultation with the Executive. Any Annual Bonus payment shall be made no later
than March 31 following the applicable calendar year, and shall be deemed earned
if he is employed by the Corporation on the last day of the applicable calendar
year. The Executive shall also participate in long-term incentive bonus plans
for FMAC executives as specified in Exhibit A attached hereto.

          4.   Stock Options. At the close of business on the Effective Date (as
               -------------
defined in Section 7), the Executive shall be granted options to purchase 75,000
shares of BVCC Common Stock (the "Options") at an exercise price equal to the
fair market value of BVCC Common Stock as of the Effective Date. The Options
shall become vested as follows: 30% on the first anniversary of the Effective
Date if he is then employed as an employee of the Corporation; 30% on the second
anniversary of the Effective Date if he is then employed as an employee of the
Corporation; and 40% on the third anniversary of the Effective date if he is
then employed as an employee of the Corporation. The Options shall otherwise be
governed by the terms and conditions of the BVCC Option Plan. The Executive
shall be eligible, from time to time, to receive additional awards of stock
options or other equity incentives, as

                                       4
<PAGE>

determined by the Stock Option Committee of BVCC in its discretion, after taking
into account recommendations from the Board.

          5.   Additional Benefits.
               -------------------

               a.   Participation in Executive Benefit Plans.  The Executive
                    ----------------------------------------
shall be entitled to participate in any plan of the Corporation, as such plan
may from time to time provide, relating to pension, thrift, deferred profit
sharing, group insurance coverage, healthcare, or education benefit that the
Corporation has adopted or adopts for the benefit of its executives generally,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plan.

               b.   Fringe Benefits.  The Executive shall be entitled to
                    ---------------
participate in other Corporation programs which are or become applicable to the
Corporation's executives, as such programs may from time to time provide,
including a reasonable expense account and the payment of reasonable expenses
for attending educational seminars and annual and periodic meetings of trade
associations, subject to and on a basis consistent with the terms, conditions
and overall administration of such programs.

               c.   Other Benefits.  The Corporation shall pay the Executive a
                    --------------
monthly automobile allowance of $1,000 to be applied in the Executive's
discretion.

               d.   Split Dollar Agreement.  The Corporation shall continue to
                    ----------------------
perform all of its obligations under the Split Dollar Agreement (the "Split
Dollar Agreement") dated June 16, 1998 among the Corporation, Michael L.
Matkins, Trustee of the Knyal Joint and Survivor Irrevocable Trust (the
"Trust"), Executive and Carol J. Knyal. The Corporation agrees that if a change
of control (as defined in Section 10) occurs during the Term, or any extension
thereof, and while the Executive is employed by the Corporation, then, at the
option of the Executive exercisable within 120 days after the change of control,
(i) the Corporation shall assign its rights under the Split Dollar Agreement
(including any of its rights to receive repayment of the amounts which the Trust
(as defined in the Split Dollar Agreement) may be obligated to repay to the
Corporation under the Split Dollar Agreement) to such person or entity as the

                                       5
<PAGE>

Executive may designate, and(ii) the Corporation shall assign the Collateral
Assignment of the Policy referred to in the Split Dollar Agreement to such
person or entity as the Executive may designate.  The Split Dollar Agreement
shall be deemed to be automatically amended as of the Effective Date to provide
for all of the foregoing, but at the request of the Executive, the Corporation
will execute such documents as the Executive may reasonably request to confirm
or further memorialize such amendment.

          6.   Initial Term and Automatic Extensions.  The initial term of
               -------------------------------------
employment under this Agreement (the "Term") shall be for a period commencing on
the Effective Date and ending on December 31, 2002. The Term of this Agreement
shall be automatically extended for a one year period unless written notice of
non-extension is provided by either party to the other party at least 90 days
prior to the expiration of the Term.

          7.   Termination of Old Employment Agreement.  At the Effective Time
               ---------------------------------------
(as defined in the Plan), the Old Employment Agreement shall terminate and this
Agreement shall supersede and replace the Old Employment Agreement without any
liability or obligation of BVCC, the Corporation or any of their affiliates;
provided, however, that the Corporation shall be obligated to pay and perform
all obligations which have accrued prior to such termination under the Old
Employment Agreement.  As used herein, the term "Effective Date" shall mean the
date on which the Effective Time shall occur.  If the Plan is terminated prior
to the consummation of the Merger, then this Agreement shall automatically
terminate and be of no further force and effect.

          8.   Voluntary Absences.  At such reasonable times as the Board, or
               ------------------
its authorized representative, shall in its discretion permit, the Executive
shall be entitled, without loss of pay, to absent himself voluntarily from the
performance of the Executive's employment under this Agreement. All such
voluntary absences shall count as holidays, vacation time, floating holidays,
sick leave, compensatory time or other paid time off as specified in Corporation
policy, provided that:

               a.   Vacation Entitlement.  The Executive shall be entitled to an
                    --------------------
annual paid vacation of 20 days per year.  In the event that the Executive is
employed hereunder during a calendar year for less than all of that year, he
shall be entitled in that year to a number of paid vacation days which shall be
prorated in accordance with the number of days on which he is so employed in
that year.

                                       6
<PAGE>

               b.   Timing of Vacation.  Vacations shall be scheduled in a
                    ------------------
reasonable manner by the Executive and subject to the Corporation's needs.

          9.   Termination of Employment.
               -------------------------

               a.   Termination for Cause.  The Executive's employment under
                    ---------------------
this Agreement may be terminated at any time by the Board for "cause."  For
purposes of this Agreement, the Corporation shall be deemed to have "cause" to
terminate the Executive's employment hereunder upon:

                    (1)  The commission by the Executive of an act of willful
misconduct in any material respect (including, but not limited to, the willful
violation of any material law, rule, regulation or cease and desist order
applicable to the Executive or the Corporation (other than a law, rule or
regulation relating to a minor traffic violation or similar offense)), or an act
which constitutes a breach of a fiduciary duty owed by the Executive involving
personal profit;

                    (2)  The Executive's material breach of this Agreement
(which is not cured within 10 days after written notice; provided this cure
provision is required of the Corporation only once in any calendar year),
dishonesty related to the performance of stated duties, habitual unexcused
absence from work, willful failure to perform stated duties in any material
respect (other than any such failure resulting from the Executive's incapacity
due to physical or mental illness or disability), or gross negligence in the
performance of stated duties resulting in damage or injury to the Corporation,
its reputation or goodwill; or

                    (3)  Any felony criminal conviction of the Executive or any
criminal conviction involving dishonesty, fraud or breach of trust (other than
for a minor traffic violation or similar offense), whether or not in the line of
duty; or

     For purposes of this Section 9a, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
Executive's action or omission was in the best interests of the Corporation.

                                       7
<PAGE>

     In the event of termination for cause under this Section 9a, the
Corporation shall pay to the Executive the Executive's base salary through the
Date of Termination (as defined in Section 9f) at the rate in effect at the time
the Notice of Termination (as defined in Section 9f) is given and the
Corporation shall have no further obligation to the Executive under this
Agreement.  In the event an arbitrator appointed pursuant to Section 15 of this
Agreement determines that a purported termination for cause was in fact without
proper cause, the termination shall nonetheless be effective, but the Executive
shall be entitled to the lump sum severance payment pursuant to Section 9b
hereof.

               b.   Termination Without Cause.  The Executive's employment under
                    -------------------------
this Agreement may be terminated at any time by the Board other than pursuant to
Section 9a, Section 9d or Section 9e.  In the event of such termination, but
subject in all respects to a termination subject to Section 10, prior to the
expiration of the Term or any extension thereof, the Corporation shall pay to
the Executive, on the eighth day following execution of a Severance Agreement
and Mutual Release in the form of Exhibit B hereto (the "Release"), absent
revocation of the Release, a lump sum severance payment equal to (1) 1.5 times
the Executive's then-current annual base salary plus (2) $600,000, and shall
have no further obligation to the Executive under this Agreement (except
pursuant to the terms of any other applicable bonus plan, employee benefit plan
or the Split Dollar Agreement, as amended hereby, or as otherwise provided
herein); provided, however, the severance provided herein shall not apply if the
Executive is entitled to severance under Section 10 hereof, it being understood
that there shall be no duplication of benefits. In addition to and at the time
of payment of the foregoing severance payment, the Corporation shall pay to the
Executive any unpaid annual bonus amount for any completed calendar year.

               c.   Termination by the Executive.  The Executive may terminate
                    ----------------------------
the Executive's employment under this Agreement at any time upon 30 days written
notice to the Corporation or upon such shorter period as may be agreed upon
between the Executive and the Board. In the event of such termination, but
subject in all respects to a termination subject to Section 10, the Corporation
shall pay to the Executive the Executive's base salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is given
and the Corporation shall have no further obligation to the Executive under this
Agreement (except pursuant

                                       8
<PAGE>

to the terms of any applicable bonus plan or employee benefit plan or the Split
Dollar Agreement, as amended hereby, or as otherwise provided herein).

               d.   Termination by the Executive Under Specified Circumstances.
The Executive may terminate the Executive's employment under this Agreement at
any time pursuant to the following circumstances by giving the Corporation
notice of the effective date of such termination (which effective date may be
the date of such notice): (i) the Corporation commits a breach of any material
term of this Agreement and, if such breach is capable of being cured, fails to
cure such breach within 10 business days of receipt of written notice of such
breach; (ii) the Corporation removes Executive from the position of Chief
Executive Officer of the Corporation or the Corporation effects any diminution
of the powers, duties or authority of the Executive; or (iii) there is a
material reduction in the benefits provided to the Executive.

     If the Executive terminates his employment under (i), (ii), or (iii) above,
then the Corporation shall pay to the Executive on the eighth day following
execution of a Severance Agreement and Mutual Release in the form of Exhibit B
hereto (the "Release"), absent revocation of the Release, a lump sum severance
payment equal to (1) 1.5 times the Executive's then-current annual base salary
plus (2) $600,000, and shall have no further obligation to the Executive under
this Agreement (except pursuant to the terms of any other applicable bonus plan,
employee benefit plan or the Split Dollar Agreement, as amended hereby, or as
otherwise provided herein); provided, however, the severance provided herein
shall not apply if the Executive is entitled to severance under Section 10
hereof, it being understood that there shall be no duplication of benefits. In
addition to and at the time of payment of the foregoing severance payment, the
Corporation shall pay to the Executive any unpaid annual bonus amount for any
completed calendar year.

               e.   Termination by Death.  In the event of the death of the
                    --------------------
Executive, the Executive's employment under this Agreement shall terminate.  In
the event of such termination, the Corporation shall pay to the Executive's
estate, or such person as the Executive may have previously designated in
writing for group insurance purposes, the base salary due the Executive through
the last day of the calendar month in which the Executive's death shall have
occurred and the Corporation shall have no further obligation to the Executive
under this Agreement (except pursuant to the terms

                                       9
<PAGE>

of any applicable bonus plan or employee benefit plan or the Split Dollar
Agreement, as amended hereby, or as otherwise provided herein).

               f.   Termination for Disability.  If the Board shall have
                    --------------------------
determined in good faith that the Executive shall have become disabled or
incapacitated to the extent that he is unable to perform the essential functions
of the Executive's employment position with reasonable accommodation for a
period of 90 consecutive days, and within 30 days after a written notice is
given to the Executive by the Corporation asserting a disability, the Executive
shall not have returned to the performance of the Executive's duties hereunder
on a full-time basis, the Executive's employment under this Agreement may be
terminated by the Board for "disability."  In the event of such termination, the
Corporation shall pay to the Executive the Executive's base salary until 90 days
after the Date of Termination at the rate in effect at the time the Notice of
Termination is given and, subject to the following sentence, shall have no
further obligation to the Executive under this Agreement (except pursuant to the
terms of any applicable bonus plan or employee benefit plan or the Split Dollar
Agreement, as amended hereby, or as otherwise provided herein). After such 90-
day period, the Executive shall be entitled to receive disability benefits of
the type provided for other senior executives of the Corporation.  For purposes
of this Section 9e, the Executive's "base salary" shall not be deemed to include
any disability payment otherwise payable by or pursuant to any plan provided by
the Corporation.

               g.   Notice of Termination; Date of Termination.  Any termination
                    ------------------------------------------
by the Corporation pursuant to Section 9a, Section 9b or Section 9f, or by the
Executive pursuant to Section 9c or Section 9d hereof, shall be communicated by
a written "Notice of Termination" to the other party hereto.  For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon, if
any, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.

          For purposes  of this Agreement, "Date of Termination" shall mean: (i)
if the Executive's employment is terminated pursuant to Section 9f hereof, 30
days after the Notice of Termination is given, (ii) if the Executive's
employment is

                                       10
<PAGE>

terminated pursuant to Section 9b, Section 9c, or Section 9d hereof, the date
specified in the Notice of Termination, and (iii) if the Executive's employment
is terminated for any other reason (except by reason of death), the date on
which the Notice of Termination is given.

          10.  Change in Control.  If during the Term, or any extension thereof
               -----------------
and while the Executive is employed by the Corporation, there is a "change in
control" of the Corporation, as hereinafter defined, the Corporation shall pay
to the Executive on the eighth day following execution of the Release, absent
revocation of the Release, a lump sum severance payment in the event the
Executive's employment is terminated by the Corporation pursuant to Section 9b
or by the Executive for good reason (as defined below), prior to the expiration
of the Term or any extension thereof.  The amount of this payment shall equal
200% of (1) the Executive's annual base salary as of the Date of Termination
plus (2)$600,000, being the amount of Executive's annual targeted bonus and
shall be in lieu of any severance payment that would be due the Executive under
Section 9b. In addition to and at the time of payment of the foregoing severance
payment, the Corporation shall pay to the Executive any unpaid annual bonus
amount for any completed calendar year. For purposes hereof, "good reason" means
that there has been a material diminution of or interference with the
Executive's duties, responsibilities and benefits as President and Chief
Executive Officer of the Corporation. By way of example and not by way of
limitation, any of the following actions shall constitute such diminution or
interference unless consented to in writing by the Executive: (i) a change in
the principal workplace of the Executive to a location which increases the
Executive's one-way commuting distance by more than 25 highway miles; (ii) a
reduction in the salary or material reduction in the benefits which had
theretofore been provided to the Executive; or (iii) a material diminution of or
interference with the Executive's duties, authority or responsibilities as
President and Chief Executive Officer of the Corporation.

          The term "change in control" is defined solely as (1) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act")), other than a trustee or other fiduciary holding
securities under an employee benefit plan of BVCC or any of its subsidiaries, is
or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly of securities of BVCC representing more than

                                       11
<PAGE>

25% of the combined voting power of BVCC then outstanding securities, and the
Board of Directors of BVCC (the "BVCC Board") has opposed such purchases above
25%; (2) individuals who are members of the BVCC Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least a majority of the
directors comprising the Incumbent Board, or whose nomination for election by
BVCC stockholders was approved by the nominating committee serving under an
Incumbent Board, shall be considered a member of the Incumbent Board; (3) a
merger or consolidation of BVCC with any other corporation or other business
entity, other than a merger or consolidation which would result in the combined
voting power of the BVCC securities outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 40% of the combined
voting power of the securities of BVCC or such surviving entity outstanding
immediately after such merger or consolidation, or a sale or disposition by BVCC
of all or substantially all of BVCC assets; or (4) a sale or disposition of all
or substantially all of the assets or capital stock of the Corporation, except
for a merger of the Corporation into BVB, whereupon the business and assets of
the Corporation become a separate division of BVB.

          11.  Successors.
               ----------

               a.   Agreement Enforceable. This Agreement shall be binding upon
                    ---------------------
the parties hereto and upon their heirs, administrators, representatives,
executors and successors (including successors to all or substantially all of
the assets of the Corporation) and shall inure to the benefit of said parties
and each of them and to their heirs, administrators, representatives, executors
and successors.

          12.  Indemnification.
               ---------------

               a.   The Corporation shall indemnify, defend and hold harmless
the Executive against all losses, claims, damages, costs, expenses, liabilities
or judgments, or amounts that are paid in settlement with the approval of the
Corporation (which approval shall not be unreasonably withheld), of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that the

                                       12
<PAGE>

Executive is or was a director, officer or employee of the Corporation, BVCC or
any direct or indirect subsidiary of BVCC, in each case to the full extent the
Corporation would have been permitted under Delaware law and its Certificate of
Incorporation and Bylaws to indemnify the Executive (and the Corporation shall
pay expenses in advance of the final disposition of any such action or
proceeding to the Executive to the full extent permitted by law upon receipt of
any undertaking required by Section 145(e) of the Delaware General Corporation
Law).

               b.   The Corporation shall purchase (or cause BVCC to purchase)
and keep in force directors' and officers' liability insurance to provide
coverage for acts or omissions of the type and in the amount currently covered
by the Corporation's existing directors' and officers' liability insurance.

               c.   The Corporation shall indemnify, defend and hold harmless
the Executive against all losses, claims, damages, costs, expenses, liabilities
or judgments, or amounts that are paid in settlement with the approval of the
Corporation (which approval shall not be unreasonably withheld), of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of any of the agreements
described in Exhibit C under which the Executive has assumed personal liability
(and the Corporation shall pay expenses in advance of the final disposition of
any such action or proceeding to the Executive to the full extent permitted by
law upon receipt of any undertaking required by Section 145(e) of the Delaware
General Corporation Law).

          13.  Excise Taxes.
               ------------

               a.   In the event it shall be determined that any payment or
distribution by the Corporation or its affiliates to or for the benefit of the
Executive and/or the Trust(whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement, the Split Dollar
Agreement, or otherwise, or pursuant to the Merger or any future change in
control or other event, but determined without regard to any additional payments
required under this Section 13) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code (the "Code") or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter

                                       13
<PAGE>

collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive and/or the Trust of all federal, state
and local taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitations, any income taxes and employment
taxes(and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

               b.   All determinations required to be made under this Section
13, including whether and when a Gross-Up Payment is required, the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm as shall
be designated jointly by the Executive and the Corporation (the "Accounting
Firm") which shall be permitted to designate an independent counsel to advise it
for this purpose.  The Accounting Firm shall provide detailed supporting
calculations both to the Corporation and the Executive within 15 business days
of the receipt of notice from the Executive or the Corporation that there has
been a Payment, or such earlier time as is requested by the Corporation.  All
fees and expenses of the Accounting Firm and its legal counsel shall be paid by
the Corporation.  Any Gross-Up Payment, as determined pursuant to this Section
13, shall be paid by the Corporation to the Executive (or to the Internal
Revenue Service on Executive's behalf) within five days of the receipt of the
Accounting Firm's determination.  All determinations made by the Accounting Firm
shall be binding upon the Corporation and the Executive; provided that following
any payment of a Gross-Up Payment to Executive (or to the Internal Revenue
Service on Executive's behalf), the Corporation may require Executive to sue for
a refund of all or any portion of the Excise Taxes paid on Executive's behalf,
in which event the provisions of paragraph (c) below shall apply.  As a result
of the uncertainty regarding the application of Section 4999 of the Code
hereunder, it is possible that the Internal Revenue Service may assert that
Excise Taxes are due that were not included in the Accounting Firm's calculation
of the Gross-Up Payments (an "Underpayment").  In the event that the Corporation
exhausts its remedies pursuant to this Section 13 and the Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any additional
Gross-Up Payments that are due as a

                                       14
<PAGE>

result thereof shall be promptly paid by the Corporation to the Executive (or to
the Internal Revenue Service on Executive's behalf).

               c.   The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment.  Such notification shall be
given as soon as practicable but no later then ten business days after the
Executive receives written notification of such claim and shall apprise the
Corporation of the nature of such claim and the date on which such claim is
requested to be paid.  The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such notice
to the Corporation (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due).  If the Corporation notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall: (i) give the Corporation all
information reasonably requested by the Corporation relating to such claim; (ii)
take such action in connection with contesting such claim as the Corporation
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Corporation and ceasing all efforts to
contest such claim; (iii) cooperate with the Corporation in good faith in order
to effectively contest such claim; and (iv) permit the Corporation to
participate in any proceeding relating to such claim; provided, however, that
                                                      --------  -------
the Corporation shall bear and pay directly all reasonable costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax, employment tax  or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expense. Without limiting the foregoing provisions of
this Section 13, the Corporation shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the

                                       15
<PAGE>

Corporation shall determine and direct; provided, however, that if the
                                        --------  -------
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax employment tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the Executive's taxable year with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Corporation's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

               d.   If, after the Executive's receipt of an amount advanced by
the Corporation pursuant to this Section 13, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Corporation the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto).  If, after the Executive's
receipt of an amount advanced by the Corporation pursuant to this Section 13, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Corporation does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after the Corporation's receipt of notice of such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of Gross-
Up Payment required to be paid.

               e.   The provisions of this Section 13 shall survive the
expiration of the Term, with respect to any payments, benefits or other
compensatory rights of the Executive arising during the Term.

     14.  Confidential Information; Non-Solicitation.
          ------------------------------------------

          a.   Non-Disclosure.  The Executive hereby agrees that, during the
               ---------------
Term including any extension thereof and thereafter, he shall not without the
written consent of the Board or a person

                                       16
<PAGE>

authorized thereby or in connection with his performance of duties hereunder,
disclose to any person, other than an employee of the Corporation, or otherwise
use or exploit any of the material proprietary or confidential information or
knowledge, including without limitation, trade secrets, processes, records of
research, proposals, reports, methods, techniques, customer lists and customers,
computer software or programming, budgets or financial information, or other
material proprietary or confidential information and/or trade secrets, regarding
BVCC, the Corporation, or any of their affiliates, businesses, properties or
affairs, obtained by the Executive at any time prior to or subsequent to the
execution of this Agreement, except to the extent reasonably necessary or
appropriate in connection with the Executive's performance assigned duties for
the Corporation. The Executive understands that proprietary or confidential
information does not include any of the foregoing items which have become
publicly known or made generally available through no wrongful act of the
Executive. During the Term or any extension thereof: (i) the Executive agrees to
disclose to the Corporation the identity and nature of any contacts with any
person or entity soliciting from the Executive disclosure of any such material
proprietary or confidential information or soliciting the Executive's
involvement in any business venture competitive with BVCC, the Corporation or
any of their affiliates; and (ii) the Executive shall not conceal from or fail
to disclose to the Corporation, or divert or exploit for the Executive's own
personal profit or that of others, any business opportunity or other opportunity
to acquire an interest in or a contractual relationship with any person or
entity where such person or entity is in BVCC, the Corporation's or any of their
subsidiaries' lines of business or where the Corporation's Board of Directors
reasonably determines that such contractual relationship would have been a
feasible and advantageous opportunity for the Corporation.

               b.   Non-Solicitation.  The Executive hereby agrees that, during
                    ----------------
the Executive's service with the Corporation  (as an employee or director) and
for a period of 18 months from the date on which the Executive ceases all forms
of service with the Corporation (pursuant to a termination of employment
hereunder or otherwise), the Executive shall not:

                    (1)  Directly or indirectly, solicit or recruit in any way
any person employed by BVCC, the Corporation or any of their subsidiaries to
change his or her employment;

                                       17
<PAGE>

                    (2)  Divulge, publish or otherwise reveal, either directly
or indirectly, or through another, to any person, firm or corporation, for
competitive purposes, the names of customers and others who have relationships
with BVCC, the Corporation or any of their subsidiaries, or other confidential
information and/or trade secrets used by BVCC, the Corporation or any of their
subsidiaries in the operation of their businesses; or

                    (3)  Directly or indirectly solicit customers or others who
have relationships with BVCC, the Corporation or any of their subsidiaries.

               c.   Return of Materials.  Upon termination of employment, the
                    -------------------
Executive shall deliver to the Corporation all tangible displays and
repositories of process, records of research, proposals, reports, memoranda,
computer software and programming, budgets and other financial information, and
other materials or records or writings of any type (including any copies
thereof), whether hard copy or electronic, made, used or obtained by the
Executive in connection with the Executive' employment by the Corporation;
provided, however, that documents relating to the Executive' employment
arrangements with the Corporation or the Executive' personal affairs shall be
excluded from the provisions herein.

               d.   Disclosure.  The Executive hereby agrees to disclose this
                    ----------
Agreement to any prospective employer.

               e.   Injunctive Relief.  The Executive acknowledges that the
                    -----------------
restrictions contained in this Section 14, in view of the nature of the
businesses in which BVCC, the Corporation and their subsidiaries are engaged,
are reasonable and necessary in order to protect the legitimate interests of
BVCC and the Corporation and their subsidiaries, and that any violation thereof
would result in irreparable and substantial harm to BVCC and the Corporation for
which BVCC and the Corporation do not have an adequate remedy at law, and the
Executive therefore acknowledges that, in the event of the Executive's actual or
threatened violations of any of these restrictions, BVCC or the Corporation
shall be entitled to obtain from any court of competent jurisdiction temporary,
preliminary and permanent injunctive relief as well as damages and equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to

                                       18
<PAGE>

any other rights or remedies to which BVCC or the Corporation may be entitled.

               f.   Survival. Notwithstanding anything to the contrary, the
                    --------
provisions of this Section 14 shall survive any termination of employment
hereunder or any termination or cancellation of this Agreement.

          15.  Arbitration.  The parties hereby agree that any controversy or
               -----------
dispute arising out of or relating to this Agreement, other than with respect to
injunctive relief requested under Section 14c, shall be resolved pursuant to
this Section 15.

               a.   Agreement to Negotiate.  Prior to submitting any
                    ----------------------
controversy, dispute or claim arising out of, or relating to, this Agreement to
arbitration, the parties hereto agree to observe the following procedures:

                    (1)  The party desiring to submit any such controversy,
dispute or claim to arbitration (the "claimant") first shall give written notice
thereof to the other party (the "recipient") setting forth in detail the
pertinent facts and circumstances relating to such controversy, dispute or
claim;

                    (2)  The recipient shall have a period of five days after
receipt of written notice in which to consider the controversy, dispute or claim
which is the subject of the notice and to furnish in writing to the claimant a
written statement of the recipient's position; and

                    (3)  Within seven days of claimant's receipt of recipient's
written statement, the parties shall meet in an effort to resolve amicably any
differences which may exist and, failing such resolution, either or both of the
parties shall have the right to submit the matter to arbitration.

               b.   Procedure for Arbitration.
                    -------------------------

                    (1)  The parties hereby agree that any controversy, dispute
or claim arising out of, or relating to, this Agreement, or breach of this
Agreement, including disputes concerning termination of this Agreement, shall be
settled by arbitration in San Francisco, California. This agreement to arbitrate
shall be specifically enforceable. Judgment upon any

                                       19
<PAGE>

award rendered by an arbitrator may be entered in any court having jurisdiction;

                    (2)  The parties shall comply with all applicable procedures
of the Employment Dispute Resolution Rules of the American Arbitration
Association regarding the selection of an arbitrator;

                    (3)  The arbitrator shall not extend, modify or suspend any
of the terms of this Agreement;

                    (4)  The decision of the arbitrator within the scope of the
submission shall be final and binding on all parties, and any right to judicial
action on any matter subject to arbitration hereunder is hereby waived (unless
otherwise provided by applicable law), except suit to enforce this arbitration
award;

                    (5)  The Executive agrees that such arbitration shall be the
exclusive forum for any controversy, dispute or claim arising out of or relating
to this Agreement, or breach or termination of this Agreement, and shall provide
the sole remedy therefore (other than with respect to injunctive relief
requested under Section 14c);

                    (6)  Each party shall pay such party's own attorney or other
representative, and the expenses of such party's witnesses and all other
expenses connected with the Executive's case.  Other costs of the arbitration,
including the cost of any record or transcript of the arbitration,
administrative fees, arbitrator's fees, and all other fees and costs, shall be
split equally between the parties; provided, however, that at the discretion of
the arbitrator, and upon a preponderance of the evidence that one of the parties
has engaged in malice, fraud or oppression relating to the termination of, or
not proceeded in good faith with respect to, the Executive's employment,
reasonable attorney's fees and costs may be awarded to the other party; and

                    (7)  The arbitrator shall follow the laws of the State of
California and federal law, as appropriate.

          16.  No Mitigation.  So long as the Executive is in compliance with
               -------------
Section 14 above, the parties hereto agree that the Executive shall not be
required to mitigate damages in respect of any termination benefit due under
Section 9 or 10 hereof or in

                                       20
<PAGE>

respect of any damage award as a result of the Company's breach of this
Agreement, nor shall any such benefit or award be offset by any future
compensation or income received by the Executive from any other source.

          17.  General Provisions.
               ------------------

               a.   Notices.  Any notice, request, demand or other communication
                    -------
required or permitted hereunder shall be deemed to be properly received when
personally served in writing or when deposited in the United States mail,
registered or certified, postage prepaid, addressed to the party at the last
address supplied to the sending party by the addressed party, except that a
notice of change of address shall be effective only upon receipt.

               b.   Waiver.  The waiver by any party of a breach of any
                    ------
provision of this Agreement by the other shall not operate or be construed as a
waiver of any subsequent breach of the same provision or any other provision of
this Agreement.

               c.   Entire Agreement.  Except as provided herein (including with
                    ----------------
respect to Exhibit B), this Agreement contains the entire agreement of the
parties with respect to the subject matter hereof.  It supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the employment of the Executive by the Corporation.  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 (other than with respect to
Exhibit A and the amendment of the Split Dollar Agreement, as provided herein),
and that no other agreement, statement or promise not contained in this
Agreement shall be valid and binding.

               d.   Amendments.  No amendments or additions to this Agreement
                    ----------
shall be binding unless in writing and signed by both parties, except as herein
otherwise provided.

               e.   Paragraph Headings.  The paragraph headings used in this
                    ------------------
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.

                                       21
<PAGE>

               f.   Severability.  The provisions of this Agreement shall be
                    ------------
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.  The
parties acknowledge that a court of competent jurisdiction or arbitrator may
revise certain provisions of this Agreement to render then enforceable,
including revising any of the time periods herein if any such time periods
should be adjudicated as unenforceable.

               g.   Governing Law.  Except where federal law governs, this
                    -------------
Agreement is to be governed by and construed under the internal substantive laws
of the State of California (and not under conflict of law principles) as such
laws apply to contracts made and to be performed entirely in the State of
California.

               h.   No Conflicts.  The Executive represents and warrants that he
                    ------------
is not subject to any agreement, instrument, order, judgment, or decree of any
kind, or any other restrictive agreement of any character which would prevent
him from entering into this Agreement or which would be breached by the
Executive upon his performance of his duties pursuant to this Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first hereinabove written.

                         FRANCHISE MORTGAGE ACCEPTANCE CORPORATION

                         /s/ H. Wayne Snavely
                         ---------------------
                         H. Wayne Snavely
                         Chairman of the Board

                         THE EXECUTIVE

                         /s/ Wayne J. Knyal
                         ------------------
                         Wayne J. Knyal

                                       22<PAGE>

                                                                    Exhibit 10.3

                             EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this
9th day of November,1999 by and between Bay View Capital Corporation (the
"Corporation"), a Delaware Corporation, and Douglas J. Wallis (the "Executive").

                               R E C I T A L S:

     A.   The parties desire to enter into this Agreement setting forth the
terms and conditions of the employment relationship between the Corporation and
the Executive.

     B.   The Board of Directors of the Corporation (or "Board") believes it is
in the best interests of the Corporation to enter into this Agreement with the
Executive in order to assure continuity of management of the Corporation, and
has approved and authorized the execution by the Corporation of this Agreement.

          NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises herein contained, the parties hereto agree as follows:

          1.  Executive's Title, Duty, Authority and Time Commitment.
              ------------------------------------------------------

              a.   Title.    The Executive's position and title with the
                   -----
Corporation shall be that of Executive Vice President, General Counsel and
Corporate Secretary of Bay View Bank. Executive's title shall be changed to
Executive Vice President, General Counsel and Corporate Secretary of Bay View
Capital Corporation effective January 28, 2000.

              b.   Duties and Authority.    The Executive's duties and authority
                   --------------------
shall be consistent with those of an Executive Vice President, General Counsel
and Corporate Secretary. The Executive shall render such administrative and
management services to the Corporation as are customarily performed by persons
employed in the banking and financial services industry in a similar executive
capacity. In addition, the Executive shall perform such other duties as the
Board, or its authorized representative, may from time to time require. All
duties performed by the Executive hereunder shall be in accordance with such
reasonable standards as are established from time to time by the Board, or its
authorized representative, and performance evaluations shall be conducted by or
under the direction of the Board and reviewed with the Executive annually.

              c.   Time Commitment.    During the "Term of this Agreement", as
                   ---------------
defined in Section 5 of this Agreement, unless the Executive has obtained the
prior written consent of the Board, or its authorized representative.
<PAGE>

                   (1)  The Executive shall render his full productive time and
services to the Corporation, keeping normal business hours, but is authorized to
engage in such banking trade association and related activities during normal
business hours which, in his judgment, with the concurrence of his immediate
supervisor, are in the business interests of the Corporation; and

                   (2)  The Executive shall not render personal services to any
other person or entity for compensation, either as an Executive, consultant,
director or officer, if such services would conflict with the Executive's duty
to the Corporation or adversely affect the Executive's judgment in the
performance of his responsibilities. Executive shall remain free to engage in
community, charitable, political and personal pursuits which do not interfere
with his performance under this Agreement.

          2.  Compensation. The Corporation agrees to pay the Executive during
              ------------
the Term of this Agreement a base salary as follows: $225,000 per annum, with
the salary to be reviewed annually on each July 1st during the Term of this
Agreement. Salary increases are not guaranteed or automatic. The salary provided
for in this Agreement shall be payable semi-monthly in accordance with the
practices of the Corporation.

          3.  Discretionary Bonuses. Beginning in 2000, the Executive shall be
              ---------------------
entitled to participate in discretionary bonuses and incentive payments which
are now or become authorized and declared by the Board or its authorized
representative. Executive shall be entitled to an annual performance bonus of up
to forty percent (40%) of base salary depending upon the achievement of specific
goals set by the Company's Board of Directors.

          4.  Additional Benefits.
              -------------------

              a.   Participation in Executive Benefit Plans. The Executive shall
                   ----------------------------------------
be entitled to participate in any plan of the Corporation, as such plan may from
time to time provide, relating to stock options, stock purchases, pension,
thrift, deferred profit sharing, group insurance coverage, education or
retirement or other supplemental Executive benefits that the Corporation has
adopted or adopts for the benefit of its Executives.

              b.   Fringe Benefits. The Executive shall be entitled to
                   ---------------
participate in any other program which is or becomes applicable to the
Corporation's executives, as such program may from time to time provide
including a reasonable expense account, the payment of reasonable expenses for
attending educational seminars and annual and periodic meetings of trade
associations, and other benefits which are commensurate with the
responsibilities and functions to be performed by the Executive under this
Agreement.

          5.  Term.
              ----

              a.   Initial Term and Automatic Extension. The initial term of
                   ------------------------------------
employment under this Agreement shall be for a period commencing on November 9,
1999 and

                                       2
<PAGE>

ending on December 31, 2000. On January 1, 2001 and on each January 1st
thereafter, the Term of this Agreement shall be extended automatically by one
additional year beyond the then current expiration date, unless either the
Corporation or the Executive gives contrary written notice to the other not less
than 45 days in advance of the date on which this Agreement would otherwise be
extended. Reference herein to the "Term of this Agreement" shall refer to the
term as so extended. Section 9, entitled "Change in Control," shall survive the
expiration of this Agreement for a period of one (1) year so long as Executive
is employed by the Corporation. If Executive is terminated by the Corporation
without cause pursuant to Section 7a(2), said Section 9 shall survive this
Agreement for a period of one (1) year from the date of termination of
employment.

              b.   Consequences of Non-Extension. If this Agreement is not
                   -----------------------------
extended, on the expiration of the Term of this Agreement, the Executive shall
be deemed to be employed by the Corporation for no specific term and the
Executive's rights as an Executive of the Corporation shall be no less than
those provided by the laws of the State of California and the laws of the United
States; provided, however, that such post expiration employment may be
terminated at any time by the Executive or by the Board, or its authorized
representative, with or without cause by delivery to the Executive of a written
notice (the "Termination Notice") of such termination.

          6.  Voluntary Absences.  At such reasonable times as the Board, or its
              ------------------
authorized representative, shall in its discretion permit, the Executive shall
be entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment under this Agreement. All such voluntary absences
shall count as holidays, vacation time, floating holidays, sick leave,
compensatory time or other paid time off as specified in Corporation policy,
provided that:

              a.   Vacation Entitlement. The Executive shall be entitled to an
                   --------------------
annual paid vacation of 20 days per year in accordance with the Corporation's
vacation policy.

              b.  Timing of Vacation. Vacations shall be scheduled in a
                  ------------------
reasonable manner by the Executive and subject to the Corporation's needs,
except that the Executive shall take not less than ten (10) days vacation
consecutively in each calendar year.

          7.  Termination of Employment.
              -------------------------

              a.   Termination by Corporation. The Executive's employment under
                   --------------------------
this Agreement may be terminated, with or without cause, at any time by the
Board, or its authorized representative, by delivery to the Executive of a
written notice (the "Termination Notice") of such termination. The Termination
Notice shall state the effective date of such termination and whether such
termination is for "cause," as defined in Section 7a(1), or without cause
pursuant to Section 7a(2). Unless the Termination Notice states that the
termination is for cause and states with reasonable particularity the cause, the
termination shall be deemed to be without cause pursuant to Section 7a(2). In
the event an arbitrator appointed pursuant to Section 13 of this Agreement
determines that a purported termination for cause was in fact without proper

                                       3
<PAGE>

cause, the termination shall nonetheless be effective, but the Executive shall
be entitled to the severance payment pursuant to Section 7a(2) hereof.

                   (1)  Termination by Corporation for Cause. The Executive's
                        ------------------------------------
employment under this Agreement may be terminated at any time by the Board, or
its authorized representative, for "cause," which shall include, but not be
limited to the following:

                        (a)  The commission by the Executive of an act of
misconduct (including, but not limited to, the violation of any law, rule,
regulation or cease and desist order applicable to the Executive or the
Corporation or its insured subsidiaries), or an act which constitutes a breach
of a fiduciary duty owed by the Executive involving personal profit;

                        (b)  The Executive's material breach of this Agreement,
dishonesty, incompetence, willful misconduct, habitual unexcused absence from
work, intentional failure to perform duties, or gross negligence in the
performance of stated duties;

                        (c)  The Executive's becoming physically or mentally
incapable of performing the essential functions of his employment position, with
or without reasonable accommodation, for a period in excess of the applicable
leave entitlement mandated by Federal or State law; or

                        (d)  Any criminal conviction of the Executive (other
than for a minor traffic violation or similar offense), whether or not in the
line of duty.

In the event of termination for cause under this Section 7a(1), the Executive
shall have no right to receive compensation or other benefits under this
Agreement for any period after such termination.

                   (2)  Termination by Corporation Without Cause. The
                        ----------------------------------------
Executive's employment under this Agreement may be terminated at any time by the
Board, or its authorized representative, without cause; provided, however, that
unless the termination of this Agreement is for "cause," as set forth in Section
7a(1), or pursuant to Sections 7b, 7c, or 9, then, upon such termination, in
addition to any benefits that had accrued to the date of termination but in lieu
of any rights or benefits that would have accrued following such termination,
the Executive shall be entitled, upon execution of a Severance Agreement and
Release acceptable to the Board, to a lump sum severance payment of eighteen
(18) months salary.

          b.  Termination by the Executive. This Agreement may be terminated by
              ----------------------------
the Executive at any time upon 30 days written notice to the Corporation or upon
such shorter period as may be agreed upon between the Executive and the Board
subject, however, to the provisions contained in Section 13.

          c.  Termination by Death. In the event of the death of the Executive
              --------------------
during the Term of this Agreement, the Executive's estate, or such person as the
Executive may

                                       4
<PAGE>

have previously designated in writing for group insurance purposes, shall be
entitled to receive the salary due the Executive through the last day of the
calendar month in which his death shall have occurred.

          8.  Disability.  If the Executive shall become disabled or
              ----------
incapacitated to the extent that he is unable to perform the essential functions
of his employment position, with or without reasonable accommodation, he shall
be entitled to receive disability benefits of the type provided for other
employees of the Corporation. In such event, 90 days after the last day the
Executive worked, any rights of the Executive to receive the salary provided in
Section 2 of this Agreement shall be suspended until the Executive is able to
resume performance of his duties.

          9.  Change in Control. If during the Term of this Agreement, or within
              -----------------
one (1) year following the expiration of this Agreement and if Executive is
employed by the Corporation, there is a "change in control," of the Corporation,
as hereinafter defined, the Executive shall be entitled, upon execution of a
Severance Agreement and Release as provided in Exhibit A, to a severance payment
in the event the Executive's employment is terminated, other than for "cause" as
set forth in Section 7a(1) or pursuant to Sections 7b (except as provided
below), or 7c, within twenty-four (24) months after the change in control. The
amount of this payment shall equal two hundred percent (200%) of the Executive's
annual salary as of the date of termination and shall be in lieu of any
severance payment that would be due Executive under Section 7a(2). Except as
provided above, such termination or severance payment shall be in addition to
all other amounts payable to the Executive pursuant to this Agreement. This
termination or severance payment shall also be made in the case of a termination
of employment by the Executive pursuant to Section 7b of this Agreement within
twenty-four (24) months after a change in control because during such twenty-
four (24) month period there has been a material diminution of or interference
with the Executive's duties, responsibilities and benefits as Executive Vice
President, General Counsel and Corporate Secretary. By way of example and not by
way of limitation, any of the following actions, if unreasonable or materially
adverse to the Executive, shall constitute such diminution or interference
unless consented to in writing by the Executive: (i) a change in the principal
workplace of the Executive to a location more than 25 highway miles from the
Executive's current office location; (ii) a reduction or adverse change in the
salary or benefits which had theretofore been provided to the Executive, other
than as part of an overall program applied uniformly and with equitable effect
to all members of senior management of the Corporation; or (iii) a change in
Executive's title.

          Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.

          The term "change in control" as applied to the Corporation is defined
solely as any acquisition of control of the Corporation (other than pursuant to
the acquisition by a trustee or other fiduciary holding securities under an
Executive benefit plan of the Corporation), as defined in 12 C.F.R. Section
574.4, or any successor regulation, which would require the filing of an
application for acquisition of control or notice of change in control as set
forth in 12 C.F.R. Section 574.3, or

                                       5
<PAGE>

any successor regulation.

          10. Successors and Assigns. The terms, provisions, covenants, and
              ----------------------
conditions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that the Executive may not sell, assign, pledge, hypothecate or
otherwise transfer this Agreement or any part thereof without the prior written
consent of the Corporation, which consent may be withheld by the Corporation for
any reason it deems appropriate. "Successors and assigns" shall mean, in the
case of the Corporation, any successor pursuant to a merger, consolidation or
sale or transfer of all or substantially all of the assets of the Corporation.

          11. Indemnification. The Corporation hereby agrees that the
              ---------------
Corporation shall indemnify the Executive to the fullest extent permitted by the
Corporation's Bylaws and by Delaware corporate law.

          12. Excise Taxes. In the event it shall be determined that any payment
              ------------
or distribution by the Corporation or its affiliates to or for the benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of the Agreement or otherwise, but determined without regard to any
additional payments required under this Section 12) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
(the "Code") or any interest or penalties are incurred by the Executive with
respect to such excise (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitations, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.

          13.  Confidential Information
               ------------------------

              a.   Non-Disclosure. Employee hereby agrees that, during the Term
                   --------------
of this Agreement and thereafter, he will not disclose to any person, or
otherwise use or exploit any of the proprietary or confidential information or
knowledge, including without limitation, trade secrets, processes, records of
research, proposals, reports, methods, techniques, customer lists and customers,
computer software or programming, budgets or financial information, or other
confidential information and/or trade secrets, regarding the Corporation, its
businesses, properties or affairs obtained by him at any time prior to or
subsequent to the execution of this Agreement, except to the extent required by
his performance or assigned duties for the Corporation. Executive understands
that proprietary or confidential information does not include any of the
foregoing items which (i) have become publicly known or made generally available
through no wrongful act of Executive or of others who were under confidentiality
obligations as to the item or items involved, or (ii) are independently
developed by the Executive without the use of proprietary or confidential
information. In addition, Employee agrees not to divulge, publish or otherwise
reveal, during the

                                       6
<PAGE>

Term of this Agreement or thereafter, either directly or indirectly, or through
another, to any person, firm or corporation, for competitive purposes, any
knowledge or information or any facts concerning the methods and techniques used
by the Corporation to conduct business, the names of customers and others who
have relationships with the Company, or other confidential information and/or
trade secrets used by the Corporation in the operation of its business. During
the Term of this Agreement: (i) Employee agrees to disclose to the Corporation
the identity and nature of any contacts with any person or entity soliciting
from Employee disclosure of any such information or soliciting Employee's
involvement in any business venture competitive with the Corporation; and (ii)
Employee shall not conceal from or fail to disclose to the Corporation, or
divert or exploit for his own personal profit or that of others, any business
opportunity or other opportunity to acquire an interest in or a contractual
relationship with any person or entity where such person or entity is in the
Corporation's line of business or where such contractual relationship would be
considered a feasible and advantageous opportunity for the Corporation.

              b.  Return of Materials. Upon termination of employment, Employee
                  -------------------
will deliver to the Corporation all tangible displays and repositories of
process, records of research, proposals, reports, memoranda, computer software
and programming, budgets and other financial information, and other materials or
records or writings of any type (including any copies thereof) made, used or
obtained by Employee in connection with his employment by the Corporation;
provided, however, that documents relating to Employee's employment arrangements
with the Corporation or his personal affairs shall be excluded from the
provisions herein. Notwithstanding the foregoing, Employee will be entitled to
have reasonable access to such property as is necessary for and in order to
prosecute or defend any legal action or proceeding or to respond to a court or
arbitration order.

          c.  The Employee acknowledges that the restrictions contained in the
foregoing paragraphs of this Section 13, in view of the nature of the businesses
in which the Corporation is engaged, are reasonable and necessary in order to
protect the legitimate interests of the Corporation, and that any violation
thereof would result in irreparable and substantial harm to the Corporation for
which the Corporation does not have an adequate remedy at law, and the Employee
therefore acknowledges that, in the event of his actual or threatened violations
of any of these restrictions, the Corporation shall be entitled to obtain from
any court of competent jurisdiction temporary, preliminary and permanent
injunctive relief as well as damages and equitable accounting of all earnings,
profits and other benefits arising from such violation, which rights shall be
cumulative and in addition to any other rights or remedies to which the
Corporation may be entitled.

          d.  In the event that the Corporation believes that it is entitled to
relief under this Section 13, the Corporation will provide written notice to
Employee specifying the nature of any alleged breach of this section. The
Corporation shall be obligated to discuss with Employee in good faith whether
such breach has occurred and, if so, whether such breach can be cured. If
Employee cures such breach within fifteen (15) days from the date of such
notice, Employee shall not be deemed to be in breach of this Section 13.

                                       7
<PAGE>

          14. Arbitration. The parties hereby agree that any controversy or
              -----------
dispute arising out of or relating to this Agreement shall be resolved pursuant
to this Section 14.

              a.   Agreement to Negotiate. Prior to submitting any controversy,
                   ----------------------
dispute or claim arising out of, or relating to, this Agreement to arbitration,
the parties hereto agree to observe the following procedures:

              (1)  The party desiring to submit any such controversy, dispute or
claim to arbitration (the "claimant") first shall give written notice thereof to
the other party (the "recipient") setting forth in detail the pertinent facts
and circumstances relating to such controversy, dispute or claim;

              (2)  The recipient shall have a period of fifteen (15) days after
receipt of written notice in which to consider the controversy, dispute or claim
which is the subject of the notice and to furnish in writing to the claimant a
written statement of the recipient's position;

              (3)  Within seven (7) days of claimant's receipt of recipient's
written statement, the parties shall meet in an effort to resolve amicably any
differences which may exist and, failing such resolution, either or both of the
parties shall have the right to submit the matter to arbitration.

              b.  Procedure for Arbitration.
                  -------------------------

              (1)  The parties hereby agree that any controversy, dispute or
claim arising out of, or relating to, this Agreement, or breach of this
Agreement, including disputes concerning termination of this Agreement, shall be
settled by arbitration in San Mateo, California. This agreement to arbitrate
shall be specifically enforceable. Judgment upon any award rendered by an
arbitrator may be entered in any court having jurisdiction.

              (2)  Any demand for arbitration must be served on the other party
within forty-five (45) days of the act or omission giving rise to the
controversy, dispute or claim.

              (3)  There shall be one impartial arbitrator chosen by the parties
from a list procured from the California Mediation and Conciliation Service.

              (4)  The arbitrator shall not extend, modify or suspend any of the
terms of this Agreement.

              (5)  The decision of the Arbitrator within the scope of the
submission shall be final and binding on all parties, and any right to judicial
action on any matter subject to arbitration hereunder is hereby waived (unless
otherwise provided by applicable law), except suit to enforce this arbitration
award.

                                       8
<PAGE>

              (6)  Executive agrees that such arbitration shall be the exclusive
forum for any controversy, dispute or claim arising out of or relating to this
Agreement, or breach or termination of this Agreement. Executive further
expressly agrees that in arbitration his exclusive remedy shall be a money award
not to exceed the amount of wages he would have earned under this Agreement but
for the alleged violation and the Executive shall not be entitled to any other
remedy, at law or in equity, including but not limited to reinstatement, other
money damages, punitive damages and/or injunctive relief.

              (7)  Each party shall pay such party's own attorney or other
representative, and the expenses of such party's witnesses and all other
expenses connected with his case. Other costs of the arbitration, including the
cost of any record or transcript of the arbitration, administrative fees,
arbitrator's fees, and all other fees and costs, shall be borne by the
Corporation; provided, however, that at the discretion of the Arbitrator, and
upon a preponderance of the evidence that one of the parties has engaged in
malice, fraud or oppression relating to the termination of the Executive's
employment, reasonable attorney's fees and costs may be awarded to the other
party.

          15. General Provisions.
              ------------------

              a.   Notices. Any notice, request, demand or other communication
                   -------
required or permitted hereunder shall be deemed to be properly given when
personally served in writing and when deposited in the United States mail,
registered or certified, postage prepaid, addressed to the party at the last
address supplied to the sending party by the addressed party.

              b.   Waiver. The waiver by any party of a breach of any provision
                   ------
of this Agreement by the other shall not operate or be construed as a waiver of
any subsequent breach of the same provision or any other provision of this
Agreement.

              c.   Entire Agreement. Except as provided herein, this Agreement
                   ----------------
contains 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 the Executive by the Corporation. 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 and binding.

              d.   Amendments. No amendments or additions to this Agreement
                   ----------
shall be binding unless in writing and signed by both parties, except as herein
otherwise provided.

              e.   Paragraph Headings. The paragraph headings used in this
                   ------------------
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.

              f.   Severability. The provisions of this Agreement shall be
                   ------------
deemed

                                       9
<PAGE>

severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.

              g.   Governing Law. Except where federal law governs, this
                   -------------
Agreement is to be governed by and construed under the internal substantive laws
of the State of California (and not under conflict of law principles) as such
laws apply to contracts made and to be performed entirely in the State of
California.

          IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first hereinabove written.

                               BAY VIEW CAPITAL CORPORATION,

                               /s/ Edward H. Sondker
                               -----------------------------------------
                                   Edward H. Sondker
                                   President and Chief Executive Officer

                               THE EXECUTIVE

                                /s/ Douglas J. Wallis
                               -------------------------------
                                    Douglas J. Wallis

                                       10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]