PACIFIC CAPITAL BANCORP

                  1998 AMENDED AND RESTATED RETIREE HEALTH PLAN

                               (Non-Key Employees)


                                December 30, 1998


<PAGE>
                  1998 AMENDED AND RESTATED RETIREE HEALTH PLAN
                               (Non-Key Employees)

         THIS 1998  AMENDED  AND  RESTATED  RETIREE  HEALTH  PLAN is  adopted by
PACIFIC CAPITAL BANCORP, a California corporation ("Bancorp"), with reference to
the following facts:

         RECITALS:

         A. Santa Barbara Bank and Trust, a California  corporation ("SBBT"), is
a wholly owned subsidiary corporation of Bancorp.

         B. SBBT  originally  adopted this Plan effective  December 29, 1992, in
order to provide health and dental  insurance to retired  employees of SBBT, and
later  amended this Plan  pursuant to (i) that  certain  First  Amendment  dated
effective January 1, 1996 (the "First Amendment"),  and (ii) that certain Second
Amendment dated effective January 1, 1997 (the "Second Amendment").

         C. In a merger  transaction  (the  "Merger  Transaction")  that  closed
effective   December  30,  1998,  (i)  Pacific  Capital  Bancorp,  a  California
corporation  ("Target"),  was merged  with and into  Bancorp,  and (ii)  Bancorp
changed  its  name  to  "Pacific  Capital  Bancorp,"  and as a  result  of  that
transaction and name change Bancorp now owns all the  outstanding  capital stock
of not only SBBT but also other corporations.

         D.  Bancorp  desires to adopt this Plan in order to (i) adopt this Plan
for the benefit of all eligible employees of Bancorp and all of its wholly owned
subsidiary  corporations,  (ii) incorporate the terms of the First Amendment and
the Second Amendment, and (iii) reflect the Merger Transaction.

         PLAN:

         NOW,  THEREFORE,  the Bancorp,  intending to be legally  bound,  hereby
adopts the following Plan.

1.       DEFINITIONS

         For purposes of this Plan,  each of the following  terms shall have the
meaning set forth below:

         1.1  "Affiliate"  means  each  corporation  in  which  Bancorp  now  or
hereafter  owns  (directly or  indirectly  through  ownership of any  subsidiary
corporation) all the outstanding capital stock.

         1.2 "Bancorp" means PACIFIC CAPITAL BANCORP,  a California  corporation
formerly known as "SANTA BARBARA BANCORP."

         1.3  "Cause"  means  (a) any act of  personal  dishonesty  taken by the
Participant in connection  with his or her  responsibilities  as an Employee and
intended to result in substantial  personal  enrichment of the Participant,  (b)
the Participant's  conviction of a felony,  (c) a willful act by the Participant
which  constitutes  gross  misconduct  and  which  is  injurious  to  any of the
Retention Companies,  or (d) continued substantial violations by the Participant
of the  Participant's  employment  duties  which are  demonstrably  willful  and
deliberate  on the  Participant's  part after  there has been  delivered  to the
Participant a written demand for performance  which  specifically sets forth the
factual basis for the Retention  Company's  belief that the  Participant has not
substantially  performed  his or her duties.  Notwithstanding  the  foregoing or
anything in this Plan to the contrary:

                                      -1-
<PAGE>

                    1.3.1 Cause shall not be deemed to exist under clause (c) or
(d) of this Section  unless and until (i) there shall have been delivered to the
Participant  a written  notice  stating that the  Participant  was guilty of the
conduct  described  in such clause and  specifying  the  particulars  thereof in
detail and (ii) the  Participant  shall have been provided an  opportunity to be
heard by the Board  (with the  assistance  of the  Participant's  counsel if the
Participant so desires); and

                    1.3.2 No act or omission on the Participant's  part shall be
considered "willful" or "deliberate" unless the Participant has acted, or failed
to act,  with an absence of good faith and without a reasonable  belief that his
or her  action  or  failure  to act was in the best  interest  of the  Retention
Company.

         1.4      "Change of Control" means:

                    1.4.1  The occurrence of any of the following events:

                           A. An  acquisition  (other  than  directly  from  the
Retention  Company) of any voting  securities  of the  Retention  Company by any
person (as that term is used for purposes of Section  13(d) or Section  14(d) of
the Exchange Act),  immediately after which such person has beneficial ownership
(within  the  meaning  of Rule  13d-3  promulgated  under the  Exchange  Act) of
thirty-five  percent (35%) or more of the combined voting power of the Retention
Company's  then  outstanding  voting  securities;  provided that in  determining
whether a Change of Control has occurred,  voting  securities which are acquired
in a Non-Control  Acquisition  shall not constitute an  acquisition  which would
cause a Change of Control;

                           B. A  cumulative  change  in the  composition  of the
Board of  Directors  of the  Retention  Company  occurring  during any  two-year
period,  as a  result  of which  fewer  than a  majority  of the  directors  are
Incumbent  Directors;  provided  that  no  individual  shall  be  considered  an
Incumbent  Director if such individual  initially  assumed office as a result of
either an actual or  threatened  Election  Contest (as  described in Rule 14a-11
promulgated  under the Exchange Act) (an "Election  Contest") or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the  Board of  Directors  of the  Retention  Company  (a  "Proxy  Contest")
including  by reason of any  agreement  intended to avoid or settle any Election
Contest or Proxy Contest; or

                           C.  Approval  by the  shareholders  of the  Retention
Company of:

                                    (1)    A    merger,     consolidation     or
reorganization   involving   the   Retention   Company,   unless  such   merger,
consolidation or reorganization is or would be a Non-Control Transaction;

                                    (2) A complete liquidation or dissolution of
the  Retention  Company,  unless,  as  evidenced by  resolution  of the Board of
Directors of the Retention  Company,  (a) such  liquidation  or  dissolution  is
effected  primarily for the purpose of consolidating  the business and assets of
the liquidating or dissolving  Retention Company with those of one or more other
Retention  Companies  and (b)  the  principal  business  of the  liquidating  or
dissolving  Retention  Company is continued by the surviving  Retention  Company
immediately after such liquidation or dissolution; or

                                    (3) An  agreement  for  the  sale  or  other
disposition of all or substantially  all of the assets of the Retention  Company
to any person  other than one or more other  Retention  Companies or one or more
Subsidiaries of a Retention Company.

                                      -2-
<PAGE>

                    1.4.2  If any of the  events  described  in  Section  1.4.1,
above, occur:

                           A. With respect to Bancorp or SBBT,  then a Change of
Control  shall be deemed to have  occurred  with respect to all of the Retention
Companies; or

                           B. Only with respect to FNBCC or  Mortgage,  a Change
of  Control  shall be deemed to have  occurred  only  with  respect  to FNBCC or
Mortgage as appropriate.

                    1.4.3  Notwithstanding  the  foregoing,  a Change of Control
shall not be deemed to occur solely  because any person (the  "Subject  Person")
acquired  beneficial  ownership  of more than the  permitted  amount of the then
outstanding  voting  securities  of the  Retention  Company  as a result  of the
acquisition of voting securities by the Retention Company which, by reducing the
number of voting securities then outstanding,  increases the proportional number
of voting securities  beneficially owned by the Subject Person; provided that if
a Change of Control  would occur (but for the  operation of this  sentence) as a
result of the acquisition of voting  securities by the Retention  Company,  and,
after such acquisition by the Retention Company,  the Subject Person becomes the
beneficial owner of any additional  voting  securities of such Retention Company
which  increases  the  percentage  of the  then  outstanding  voting  securities
beneficially owned by the Subject Person, then a Change of Control shall occur.

         1.5 "Code" means the Internal Revenue Code of 1986, as amended.

         1.6 "Coverage" means, in each Plan Year,  coverage under a Group Health
Insurance Plan.

         1.7  "Covered Key  Employee"  means each person who (a) has been a "key
employee,"  as that term is defined  for  purposes of Code  Section  419A(d)(3),
during any plan year under any plan previously  maintained by Bancorp to provide
health insurance  coverage to retired employees,  (b) had terminated  employment
with Bancorp prior to adoption of this Plan on December 29, 1992,  and (c) as of
that date satisfied the  eligibility  requirements  set forth in Section 2.1.1A,
below.

         1.8  "Dependent"  means,  with respect to each Eligible  Retiree,  each
person  other  than a Spouse  who meets the  definition  of a  "dependent"  with
respect to the Eligible Retiree under a Group Health Insurance Plan.

         1.9 "Effective Date" means December 30, 1998.

         1.10 "Eligible Retiree" means each Former Employee (other than a person
who, in the current Plan Year or any  preceding  Plan Year, is or has been a Key
Employee)  who satisfies the  eligibility  criteria set forth in Section  2.1.1,
below.

         1.11  "Employee"  means each  person who is a common  law  employee  of
Bancorp or any Affiliate of Bancorp.

         1.12 "Employer" means Bancorp and each Affiliate of Bancorp.

         1.13 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

                                      -3-
<PAGE>

         1.14  "FNBCC"  means  First  National  Bank of  Central  California,  a
national banking organization and wholly owned subsidiary of Bancorp, one of the
branches of which operates under the name "South Valley  National Bank," as well
as each entity acquired by or merged with or into First National Bank of Central
California.

         1.15 "Former  Employee"  means each person who  previously  has been an
Employee but who, as of the time the  determination  of the person's  employment
status  is being  made,  no  longer  is an  Employee  as a result of an event or
circumstance other than the death of such person.

         1.16 "Group Health Insurance Plan" means, in each Plan Year, each group
medical  insurance plan and each group dental insurance plan under which Bancorp
offers medical or dental insurance coverage to Employees in such Plan Year.

         1.17 "Hour of  Service"  means each hour for which an  Employee  (a) is
directly or indirectly compensated or entitled to compensation from the Employer
for the performance of duties during the applicable  computation  period; (b) is
directly or indirectly  compensated or entitled to  compensation by the Employer
(irrespective of whether the initial employment relationship has terminated) for
reasons other than the performance of duties (e.g., such as vacation,  holidays,
sickness,  jury duty,  disability,  lay-off,  military duty or leave of absence)
during the  applicable  computation  period;  or (c) is awarded  back pay or for
which the  Employer  agrees to pay back pay  without  regard  to  mitigation  of
damages.

                    1.17.1 Period To Which Credited. All hours shall be credited
to the  Employee  for the  computation  period to which  the award or  agreement
concerning back pay pertains rather than to the computation  period in which the
award,  agreement,  or payment is made.  The same Hours of Service  shall not be
credited under (a) or (b), as the case may be, and under (c), above.

                    1.17.2   Limitations  on  Crediting.   Notwithstanding   any
provision  of this Plan to the  contrary,  (a) no more than 501 Hours of Service
shall be credited to an Employee on an account of any single  continuous  period
during which the Employee  performs no duties (whether or not such period occurs
in a single computation  period);  (b) an hour for which an Employee is directly
or indirectly  paid or entitled to payment,  on account of a period during which
no duties are performed,  is not required to be credited to the Employee if such
payment  is made or due  under  a plan  maintained  solely  for the  purpose  of
complying with applicable worker's compensation, or unemployment compensation or
disability  insurance,  laws;  and (c) Hours of Service  are not  required to be
credited  for a payment  which  solely  reimburses  an  Employee  for medical or
medically related expenses incurred by the Employee.

                    1.17.3  Regulations.  The  definition  of "Hours of Service"
shall be determined in accordance  with the definition of that term set forth in
Department  of Labor  Regulations  '2530.200b-2(b)&(c),  the  terms of which are
incorporated herein by this reference.

         1.18 "Incumbent Directors" for any Retention Company means Directors of
the Retention  Company who either (a) are Directors of the Retention  Company as
of the  Effective  Date, or (b) are elected,  or nominated for election,  to the
Board of the Retention Company by the affirmative vote of at least a majority of
the  Incumbent  Directors at the time of such election or  nomination;  provided
that, for purposes of clause (b) of this Section,  an individual  whose election
or  nomination  is effected in  connection  with an actual or  threatened  Proxy
Contest relating to the election of Directors to the Retention Company shall not
be considered an Incumbent Director.

                                      -4-
<PAGE>

         1.19 "Key  Employee"  means each  Employee  other than an Excluded  Key
Employee  who, at any time during any Plan Year under this Plan or any plan year
under any plan previously maintained by the Employer to provide health insurance
coverage to retired employees, meets the requirements of either Sections 1.16.1,
1.16.2, 1.16.3, or 1.16.4, below:

                    1.19.1  Is  an  officer  of  the  Employer   having   annual
compensation  greater than fifty  percent  (50.0%) of the limit on the amount of
benefits  payable  under a defined  benefit  plan,  as set forth in Code Section
415(b)(1)(A). For purposes of this Section 1.16.1, the term "officer" shall mean
only those  persons who have  officer-type  titles and  exercise  administrative
executive  authority,  and the  persons  who  qualify as  "officers"  under such
definition  shall be determined by the board of directors of the Employer or its
designee;

                    1.19.2 Is one of the ten (10)  employees of the Employer who
(a) has annual  compensation  from the  Employer in an amount  greater  than the
limitation  on  the  maximum   contributions   which  can  be  made  to  defined
contribution plans under Code Section  415(c)(1)(A),  and (b) owns (or by reason
of the  constructive  ownership  rules of Code Section 318) is deemed to own the
largest  portions of the  outstanding  shares of the  Employer's  common capital
stock;

                    1.19.3  Employee of the  Corporation who owns more than five
percent (5.0%) of the outstanding capital stock of the Employer or capital stock
possessing  more than five percent (5.0%) of the total combined  voting power of
all capital stock of the Employer; or

                    1.19.4  Employee of the  Corporation  who both (a) owns more
than one percent  (1.0%) of the  outstanding  capital stock of the Employer,  or
owns capital stock of the Employer  possessing  more than one percent  (1.0%) of
the total  combined  voting power of all  outstanding  shares of the  Employer's
capital stock, and (b) receives from the Employer  compensation of more than One
Hundred Fifty Thousand Dollars ($150,000) per year.

         1.20 "Merger  Transaction"  means that certain  merger  transaction  in
which Target merged with and into Bancorp effective as of December 30, 1998.

         1.21 "Non-Control  Acquisition"  means an  acquisition  of  any  voting
securities  of a Retention  Company by (a) an employee  benefit plan (or a trust
forming  a part  thereof)  maintained  by  Bancorp,  (b)  Bancorp  or any of its
Subsidiaries, or (c) any person in connection with a Non-Control Transaction.

         1.22 "Non-Control Transaction"  means:

                    1.22.1  A  merger,  consolidation  or  reorganization  of  a
Retention Company in which:

                           A.  The   shareholders  of  the  Retention   Company,
immediately before such merger,  consolidation or reorganization,  own, directly
or indirectly,  immediately after such merger,  consolidation or reorganization,
in substantially the same proportion as their ownership of the voting securities
of the  Retention  Company  immediately  before such  merger,  consolidation  or
reorganization, at least fifty-one percent (51%) of the combined voting power of
the outstanding  voting  securities of (i) the  corporation  resulting from such
merger,  consolidation or reorganization  (the "Surviving  Corporation") or (ii)
the immediate parent corporation of the Surviving Corporation; and

                                      -5-
<PAGE>

                           B. The  individuals  who were Incumbent  Directors of
the Retention  Company at the time of the  execution of the agreement  providing
for such merger,  consolidation or reorganization constitute at least two-thirds
(2/3) of the members of the board of directors of (i) the Surviving  Corporation
or (ii) a corporation beneficially owning, directly or indirectly, a majority of
the voting securities of the Surviving Corporation; and

                           C.  No  person  other  than  (i)  another   Retention
Company,  (ii) any employee  benefit plan (or any trust  forming a part thereof)
maintained  by  any  Retention  Company  or  the  Surviving  Corporation  or any
subsidiary  of a Retention  Company or the Surviving  Corporation,  or (iii) any
person who,  immediately  prior to such merger,  consolidation or reorganization
had  beneficial  ownership  of  thirty-five  percent  (35%)  or more of the then
outstanding voting securities of the effected Retention Company,  has beneficial
ownership of thirty-five  percent (35%) or more of the combined  voting power of
the Surviving Corporation's voting securities outstanding immediately after such
merger, consolidation or reorganization.

                    1.22.2 A merger,  consolidation or reorganization  involving
only  Retention  Companies  shall  be  considered  a  "Non-Control  Transaction"
regardless  of the  composition  of the  Board  of  Directors  of the  Retention
Companies immediately following such transaction.

                    1.22.3 A sale or transfer of all or substantially all of the
assets of a Retention Company to one or more other Retention  Companies shall be
considered  a  "Non-Control  Transaction"  regardless  of  whether  such sale or
transfer is as a result of liquidation of the Retention Company or otherwise.

         1.23 "Non-Key  Employee"  means each (a) Covered Key Employee,  and (b)
each other Employee who is not a Key Employee.

         1.24  "Participant"  means each person who  satisfies  the  eligibility
criteria set forth in Sections 2.1.1, 2.1.2, or 2.1.3, below.

         1.25  "Plan"  means this  Pacific  Capital  Bancorp  1998  Amended  and
Restated Retiree Health Plan, as amended from time to time.

         1.26  "Plan  Administrator"  means  Bancorp,  or such  other  person or
committee as Bancorp may appoint or retain from  time-to-time  to supervise  the
administration of this Plan.

         1.27 "Plan Year" means (a) the period that  commenced with the original
effective date of this Plan on December 29, 1992, and ended  September 30, 1993,
and (b) thereafter,  each twelve-month period commencing on October 1 and ending
on September 30 in the next subsequent calendar year.

         1.28  "Post-Retirement   Contribution"  means,  with  respect  to  each
Participant, the amount determined under Section 3.2, below, which shall be paid
under this Plan toward the cost of Coverage for such Participant.

         1.29  "Pre-Retirement Contribution" means, with respect to:

                    1.29.1  Grandfathered   Current  Retiree  and  Spouse.  Each
Eligible Retiree who satisfies the eligibility requirements set forth in Section
2.1.1A,  below, and such Retiree's Spouse,  subject to Section 3.2.2,



                                      -6-
<PAGE>

below, the amount which Bancorp was contributing toward the cost of Coverage for
each such Participant  immediately prior to the original  effective date of this
Plan on December 29, 1992; and

                    1.29.2  Other  Eligible  Retiree  and  Spouse.   Each  other
Eligible  Retiree and such retiree's  Spouse,  the amount,  determined as of the
calendar  month in which the Eligible  Retiree  becomes a Former  Employee,  the
Employer is obligated to contribute  (under its Group Health  Insurance Plan for
Employees)  in each month toward the cost of Coverage  for such Former  Employee
and Spouse.

         1.30 "Restricted Period" shall mean the period which:

                    1.30.1  Commencement.  Commences  on the date on  which  (a)
Bancorp  executes with another Person a written  agreement (the  "Reorganization
Agreement")  to acquire all or  substantially  all the assets of Bancorp,  or to
merge,  consolidate,  combine,  or otherwise  reorganize Bancorp with any one or
more other  Persons (as such term is defined for purposes of Section 13(d) or 14
of the  Securities  Exchange  Act of  1934)  in any  transaction  in  which  the
Reorganization Agreement contemplates that those Persons who are shareholders of
Bancorp as of the date such  Reorganization  Agreement is executed will own less
than  sixty-five  percent (65%) of the combined voting power of all common stock
and other  voting  securities  of the  surviving  entity  immediately  after the
effective   date  of  such   merger,   consolidation,   combination,   or  other
reorganization;  or (b) any Person other than Bancorp announces that such Person
intends to conduct a tender offer to acquire more than thirty-five percent (35%)
of the outstanding common stock and other voting securities of Bancorp; and

                    1.30.2 Expiration.  Expires on the last day of the period of
twenty-four  (24)  consecutive  calendar  months  commencing  on the date of any
Change of Control.

         1.31  "Retention  Company"  means  individually  any of, and "Retention
Companies" means  collectively all of, Bancorp,  SBBT, FNBCC and Mortgage.  When
used in  reference  to an Employee or  Participant,  "Retention  Company"  means
whichever  of  Bancorp,  SBBT,  FNBCC  and  Mortgage  employs  the  Employee  or
Participant.

         1.32 "SBBT" means SANTA BARBARA BANK & TRUST, a California corporation,
which is a wholly owned subsidiary of Bancorp.

         1.33 "Service"  means service as a common law employee of any Employer;
provided that,  for purposes of this Plan, the term "Service"  shall not include
(a) any service prior to January 1, 1999,  with either Target or any  subsidiary
corporation, all of whose outstanding capital stock was owned by Target, (b) any
service  with any Target  company  acquired by or merged with or into Bancorp or
any Affiliate prior to the effective date of such  acquisition or merger only if
such  employee is  entitled to credit for such  service  under  Section  1.32.5,
below,  or (c) any  Service  prior to the  occurrence  of a Break in Service (as
defined in Section 1.32.3, below).

         1.34  "Spouse"  means each person who  satisfies  the  requirements  of
Section 2.1.2, below.

         1.35  "Supplemental  Coverage"  shall mean,  for each  Participant  who
becomes  eligible  to receive  Medicare  coverage,  individual  or group  health
insurance  coverage (a) which  provides  coverage  supplementing  that available
under Medicare,  and (b) which, when considered  together with Medicare coverage
available  to the  Participant,  provides to the  Participant  health  insurance
coverage substantially equal to the


                                      -7-
<PAGE>

Coverage the Participant was receiving under this Plan immediately  prior to the
date on which the Participant became eligible for Medicare.

         1.36  "Target"  shall  mean  PACIFIC  CAPITAL  BANCORP,   a  California
corporation,  which  merged  with and into  Bancorp  in the  Merger  Transaction
effective December 30, 1998.

         1.37 "VEBA"  means the PACIFIC  CAPITAL  BANCORP  VOLUNTARY  EMPLOYEES'
BENEFICIARY  ASSOCIATION,  which has been adopted by Bancorp  concurrently  with
Bancorp's adoption of this Plan, as amended from time to time.

         1.38  "Year  of  Service"  means  each  computation  period  of  twelve
consecutive  months  during which an Employee has one thousand  (1,000) Hours of
Service.

                    1.38.1 Initial  Computation  Period. Each Employee's initial
computation  period shall be the  twelve-month  period  beginning on the date on
which the Employee first performs any Hour of Service.

                    1.38.2 Subsequent Computation Period. The computation period
shall shift to the Plan Year  beginning with the first day of the Plan Year that
includes the first annual  anniversary  of the date on which the Employee  first
performs an Hour of  Service.  An Employee  who is  credited  with one  thousand
(1,000)  Hours of Service in both the  initial  computation  period and the Plan
Year which includes such  anniversary  date shall be credited with two (2) Years
of Service as of the last day of such Plan Year.

                    1.38.3  Service  Prior to Break in Service.  For purposes of
this Plan,  Service  prior to a Break in Service shall not be taken into account
in determining  the Years of Service of an Employee or former  Employee with the
Employer.  For  purposes  of this Plan,  a "Break in  Service"  shall occur with
respect to any Employee or former Employee if (a) the employment of the Employee
with the Employer is terminated for any reason, and (b) the Employee  thereafter
is not re-employed with any Employer during the period of one (1) year following
the effective date of such termination of employment.

                    1.38.4  Reemployed  Employee.   If  an  Employee  terminates
employment  with the Employer and  subsequently  becomes an Employee,  then upon
reemployment  (a) the computation  period  initially  shall be the  twelve-month
period  commencing  with the day on which the Employee first performs an Hour of
Service upon  reemployment,  (b) the computation  period shall shift to the Plan
Year  beginning  with the first day of the Plan  Year  that  includes  the first
annual anniversary of the date on which the Employee resumed employment, and (c)
any such Employee who is credited with one thousand  (1,000) Hours of Service in
both the  initial  computation  period  and the Plan Year  which  includes  such
anniversary  shall be credited  with two (2) Years of Service as of the last day
of such Plan Year.

                    1.38.5 Prior  Service  Credit.  There shall be recognized as
"Years of Service" under this Plan (a) all Years of Service by the Employee with
Community  Bank of  Santa  Ynez  Valley;  and (b) all  Years of  Service  by the
Employee with any entity acquired by Bancorp or any Affiliate (as defined below)
if the terms and  conditions  of such  acquisition  expressly  require that such
prior Years of Service be credited as such under this Plan. For purposes of this
Section  1.25.4,  an entity  shall be deemed to be  "acquired  by Bancorp or any
Affiliate" if (i) that entity is merged into Bancorp or any  Affiliate,  or (ii)
Bancorp or any Affiliate purchases or otherwise acquires at least eighty percent
(80% of the outstanding voting equity interests in such entity, or (iii) Bancorp
or  any  Affiliate  acquires  substantially  all  the  assets  of  such  entity.
Notwithstanding the foregoing, in accordance with the definition of "Service" in
Section  1.26,  above,  no credit shall be


                                      -8-
<PAGE>

provided under this Plan for service prior to January 1, 1999, as an employee of
Target or any wholly owned subsidiary of Target.

2.       PARTICIPATION

         2.1  Eligibility  Criteria.  Each person who satisfies the criteria set
forth  in  Sections  2.1.1,  2.1.2,  or  2.1.3,  below,  shall  be  eligible  to
participate in this Plan.

                    2.1.1 Eligible Retirees. A person shall be deemed to satisfy
the  requirements  of this Section 2.1.1 if that person (a) is a Former Employee
who at all times  while  employed  by  Bancorp or its  Affiliates  was a Non-Key
Employee, and (b) satisfies the requirements of Paragraph A, B, or C below.

                           A. Grandfathered  Current Retiree. A person satisfies
the requirements of this Paragraph A if, as of the date this Plan originally was
adopted by SBBT on December 29, 1992, such person (i) was a Former Employee, and
(2) was eligible for coverage  under the terms of the retiree  health plan being
sponsored by SBBT immediately prior to the adoption of this Plan.

                           B.  Grandfathered  Future Retiree. A person satisfies
the  requirements of this Paragraph B if (i) the person became a Former Employee
during the period between the date on which this Plan  originally was adopted by
SBBT on December  29,  1992,  and October 1, 1993,  and (ii) as of the date such
person becomes a Former  Employee,  (x) such person has completed at least eight
(8)  Years of  Service,  (y)  such  person  has  attained  at  least  the age of
fifty-five  (55), and (z) the sum of the number of the person's Years of Service
plus the person's age is equal to at least seventy-five (75).

                           C. Other  Retirees.  Subject to the last  sentence of
this Paragraph C, a person  satisfies the  requirements of this Paragraph A only
if all of the following  requirements  are satisfied as of the effective date as
of which that person terminates employment with the Employer (i) that person has
completed at least eight (8) Years of Service,  (ii) that person has attained at
least  the age of  fifty-five  (55),  and  (iii)  the sum of the  number  of the
person's  Years  of  Service  plus  the  person's  age  is  equal  to  at  least
seventy-five   (75).  In   determining   whether  a  person  has  satisfied  the
requirements  of this  Paragraph  C, such  person (for all  purposes  under this
Paragraph  C) shall be  credited  with five (5) Years of Service in  addition to
such person's actual Years of Service,  and shall be deemed to be five (5) years
older than such  person's  actual  chronological  age, if during the  Restricted
Period  the  Employer   terminates  (or  delivers  to  Employee  notice  of  the
termination of) Employee's employment with the Employer other than for Cause.

                    2.1.2 Spouses of Eligible Retirees. A person shall be deemed
to be a Spouse satisfying the requirements of this Section 2.1.2 if either:

                           A. That  person is married to an  Employee  as of the
date such  Employee  becomes an Eligible  Retiree  (provided,  if such person is
treated as the  Spouse of the  Eligible  Retiree as of the date of the  Eligible
Retiree's death,  then such person thereafter will be deemed to continue to be a
Spouse after the date of the Eligible Retiree's death, without regard to whether
such Spouse subsequently remarries); or

                           B. That  person was  married to an Employee as of the
date of that  Employee's  death,  and such  Employee  died at a point in time at
which such Employee  would have been an Eligible  Retiree (as defined in Section
1.7, above) if that Employee had terminated  employment with the Employer


                                      -9-
<PAGE>

on the day prior to the day on which such Employee died (provided,  a person who
is treated as a Spouse under this Paragraph B will be deemed to continue to be a
Spouse without regard to whether such Spouse subsequently remarries).

                    2.1.3  Dependents  of Eligible  Retirees.  A person shall be
deemed to satisfy the requirements of this Section 2.1.3 if either:

                           A. That person is a Dependent; or

                           B. All of the  following  requirements  are satisfied
with respect to such person: (1) such person was treated as a dependent (under a
Group  Health  Insurance  Plan) of a  deceased  Employee  as of the date of that
Employee's  death;  (2) the  deceased  Employee  would  have been  treated as an
Eligible Retiree if that Employee had terminated employment with the Employer on
the day prior to the date of the Employee's  death; and (3) such person,  in the
event the  deceased  Employee  had  become an  Eligible  Retiree  as of such day
preceding  the date on which the  Employee  died,  would have been  treated as a
Dependent of such Eligible Retiree.

3.       BENEFITS AND COMPANY CONTRIBUTION

         3.1 Purchase of Coverage.  In each Plan Year, each Participant shall be
eligible to purchase Coverage.

                    3.1.1  Mandatory  Participant  Contribution.  If the cost of
Coverage  for  a   Participant   exceeds  the  amount  of  the   Post-Retirement
Contribution  which the  Participant is entitled to receive  pursuant to Section
3.2, below, then such Participant shall be eligible to purchase Coverage only if
that  Participant pays such excess amount at the time and in the manner required
by the Plan Administrator.

                    3.1.2 Dependents.  A Participant who is a Dependent shall be
eligible to purchase  Coverage  only under those Group  Health  Insurance  Plans
under which such person qualifies as a "dependent."

         3.2  Post-Retirement  Contribution.  Subject to Sections  3.3,  3.4 and
3.10, below, the amount of the Post-Retirement Contribution for each Participant
shall be determined  under this Section 3.2. In no event shall the amount of the
Post-Retirement  Contribution with respect to any Participant  exceed the actual
cost of Coverage for such Participant.

                    3.2.1 Eligible Retirees.  The  Post-Retirement  Contribution
for each Eligible Retiree shall be determined under this Section 3.2.1.

                           A.     Grandfathered     Current    Retirees.     The
Post-Retirement  Contribution  for  each  Eligible  Retiree  who  satisfies  the
eligibility criteria set forth in Section 2.1.1A, above, shall be:

                                    (1)  During the  period  beginning  with the
Effective  Date of this Plan and ending  September  30, 1993, an amount equal to
one hundred percent (100%) of the Pre-Retirement  Contribution for such Eligible
Retiree; and

                                      -10-
<PAGE>

                                    (2) Beginning  October 1, 1993,  such amount
as the Employer determined prior to October 1, 1993; provided, in no event shall
such amount be less than one hundred  percent (100%) of the cost of Coverage (as
of October 1, 1992) for the Eligible  Retiree under that Group Health  Insurance
Plan which (a) was being sponsored by SBBT as of the original  effective date of
this Plan,  and (b) under which the cost of Coverage  for the  Eligible  Retiree
would be the lowest of that for all Group Health Insurance Plans being sponsored
by SBBT as of such date.

                           B. Grandfathered Future Retirees. The Post-Retirement
Contribution  for each Eligible  Retiree who satisfies the eligibility  criteria
set forth in Section  2.1.1B,  above,  shall be an amount  equal to one  hundred
percent (100%) of the Eligible Retiree's Pre-Retirement Contribution.

                           C. Other Retirees.  The Post-Retirement  Contribution
for each Eligible  Retiree who satisfies the  eligibility  criteria set forth in
Section  2.1.1C,  above,  shall be an amount  determined by multiplying  (a) the
Pre-Retirement  Contribution  for such Eligible  Retiree,  as  determined  under
Section 1.20.2,  above, times (b) the percentage  determined under the table set
forth below in this Section 3.2.1.  For purposes of  interpreting  the following
table, the term  "Retirement"  shall mean the date on which the Eligible Retiree
becomes a Former Employee.

                                     EMPLOYEE'S                  PERCENTAGE OF
      EMPLOYEE'S AGE       COMPLETED YEARS OF SERVICE AT          CONTRIBUTION
      AT RETIREMENT                  RETIREMENT                 MADE BY EMPLOYER
      --------------                 ----------                 ----------------
          55-59                          20+                          80%

          55-59                         16-19                         60%

          60-64                          20+                          100%

          60-64                         16-19                         80%

          60-64                         11-15                         60%

          65-69                          16+                          100%

          65-69                         12-15                         80%

          65-69                         8-11                          60%

           70+                           12+                          100%

           70+                          8-11                          80%

                    3.2.2  Spouses of  Eligible  Retirees.  The  Post-Retirement
Contribution  for the Spouse of each Eligible  Retiree shall be determined under
this Section 3.2.2.

                           A. Spouse of Grandfathered Current Retirees.

                                    (1) During  the  lifetime  of each  Eligible
Retiree who  satisfies  the criteria  set forth in Section  2.1.1A,  above,  the
Post-Retirement  Contribution  for the Spouse of such Eligible  Retiree shall be
(a) during the period  beginning with the Effective Date of this Plan and ending
September  30,  1993,  an  amount  equal to one  hundred  percent  (100%) of the
Pre-Retirement Contribution for such Spouse, as


                                      -11-
<PAGE>

determined under Section 1.20.2,  above; and (b) beginning October 1, 1993, such
amount as the  Employer  determines  prior to October 1, 1993;  provided,  in no
event shall such amount be less than one hundred  percent  (100%) of the cost of
Coverage  (as of  October  1,  1992) for the  Spouse  under  that  Group  Health
Insurance Plan which (i) was being  sponsored by SBBT of the original  effective
date on which this Plan was  adopted by SBBT,  and (ii) under  which the cost of
Coverage  for the  Spouse  would  be the  lowest  of that for all  Group  Health
Insurance Plans being sponsored by SBBT as of such date.

                                    (2)  After   the  death  of  such   Eligible
Retiree, the Post-Retirement  Contribution for the surviving Spouse shall be one
hundred  percent (100%) of the lesser of (1) the actual cost of Coverage for the
Spouse, or (2) the amount of the  Post-Retirement  Contribution for the Eligible
Retiree immediately prior to the date of the Eligible Retiree's death.

                           B0 Spouse of Grandfathered  Future  Retirees.  During
the lifetime of each  Eligible  Retiree who  satisfies the criteria set forth in
Section 2.1.1B,  above, the Post-Retirement  Contribution for the Spouse of such
Eligible  Retiree shall be equal to one hundred  percent  (100%) of the Spouse's
Pre-Retirement  Contribution.  After  the  death of the  Eligible  Retiree,  the
Post-Retirement  Contribution  for the  surviving  Spouse  shall be one  hundred
percent  (100%) of the lesser of (1) the actual cost of Coverage for the Spouse,
or (2) the amount of the  Post-Retirement  Contribution for the Eligible Retiree
as of the date of the Eligible Retiree's death.

                           C0 Spouse of Other  Retirees.  During the lifetime of
each  Eligible  Retiree who  satisfies  the  eligibility  criteria  set forth in
Section  2.1.1C,  above,  the  Post-Retirement  Contribution  for such  Eligible
Retiree's  Spouse shall be the same  percentage of such Spouse's  Pre-Retirement
Contribution  as the  percentage  which such  Eligible  Retiree is  entitled  to
receive under Section 3.2.1C, above.

                                    (1)  After   the  death  of  such   Eligible
Retiree, the Post-Retirement  Contribution for the surviving Spouse shall be the
applicable  percentage  of the lesser of (a) the actual cost of Coverage for the
surviving Spouse, or (b) the amount of the Post-Retirement  Contribution for the
Eligible Retiree immediately prior to the date of the Eligible Retiree's death.

                                    (2) For  purposes of this  Paragraph  C, the
term "applicable  percentage" shall mean the lesser of (a) the percentage of the
Spouse's  Post-Retirement  Contribution which the Spouse was entitled to receive
immediately  prior  to the  date of the  Eligible  Retiree's  death,  or (b) the
percentage determined under the following table:

              AGE OF SURVIVING                  PERCENTAGE OF COST
          SPOUSE A RETIREE'S DEATH               PAID BY EMPLOYER
          ------------------------               ----------------

                  65 & over                            100%
                   60 - 64                              80%
                   55 - 59                              60%
                   50 - 54                              40%
                   46 - 49                              20%
                  45 & under                            -0-



                                      -12-
<PAGE>

                    3.2.3 Dependents. An Eligible Retiree's Dependents shall not
be entitled  to receive any  Post-Retirement  Contribution  under this Plan.  In
order for a Dependent to receive  Coverage  under this Plan,  the entire cost of
Coverage for such Dependent must be paid, at the time and in the manner that the
Plan  Administrator  shall  require,  by someone  other than the Employer or the
VEBA.

         3.3 Effect of Spouse's  Death.  Notwithstanding  any other provision of
this Plan to the  contrary,  (a) the death of the Spouse of an Eligible  Retiree
shall not affect the amount of the Post-Retirement Contribution for the Eligible
Retiree,  and (b) after the date of the Spouse's death,  the surviving  Eligible
Retiree  shall not be entitled  to receive  any  portion of the  Post-Retirement
Contribution  which the deceased  Spouse had been  entitled to receive  prior to
death.

         3.4  Effect of  Eligibility  for  Medicare.  If a  Participant  becomes
eligible for health  insurance  coverage under  Medicare,  then effective on the
first date as of which the Participant is eligible for that coverage, the amount
of the  Post-Retirement  Contribution  for the  Participant  under  Section 3.2,
above, shall not exceed the cost of Supplemental Coverage (as defined in Section
1.2.2,  above) for the  Participant  under a Group  Health  Insurance  Plan then
sponsored by the Employer.

         3.5 Deemed  Spouses  and  Dependents.  Each  person who is  eligible to
participate  in the Plan as a Spouse  under  Section  2.1.2(b),  above,  or as a
Dependent  under Section  2.1.3B,  above, by virtue of the death of an Employee,
shall be entitled to receive the same Coverage and Post-Retirement  Contribution
(if any) under this Plan which such person  would have been  entitled to receive
under Section 3.2,  above,  if the decedent had terminated  employment  with the
Employer on the day prior to the date of the decedent's death.

         3.6  Increases in  Post-Retirement  Contribution.  Bancorp may increase
from  time-to-time,  in its sole discretion,  the amount of the  Post-Retirement
Contribution payable under this Plan. In no event, however,  shall the amount of
any such Post-Retirement  Contribution in any Plan Year exceed by more than five
percent  (5%) the  amount of such  Post-Retirement  Contribution  payable in the
immediately preceding Plan Year.

         3.7  Funding  of  Post-Retirement  Contribution.  The  amount  of  each
Post-Retirement Contribution payable under this Plan:

                    3.7.1 Source. Shall be paid (a) first, from the VEBA, to the
extent of the assets  thereof,  and (b)  thereafter,  from the general assets of
Bancorp.

                    3.7.2 Advance or Reimbursement.  May be paid either directly
to the  insurance  company  providing the Group Health  Insurance  Plan, or as a
reimbursement  to the  Participant  for  such,  or in such  other  manner  as is
administratively convenient to Bancorp and the VEBA.

         3.8 Key  Employees.  No Key  Employee  shall  be  entitled  to  receive
Coverage or other benefits under this Plan or the VEBA.

                    3.8.1  Determination of Status. The determination of whether
an Employee is a Key Employee shall be made in each Plan Year.

                                      -13-
<PAGE>

                    3.8.2  Effect  of  Status.  If a  person  who  is a  Non-Key
Employee  becomes a Key Employee,  then  effective at the time of that change in
status, such person no longer shall be entitled to receive Coverage or any other
benefits under this Plan or the VEBA at any time.

                    3.8.3 Bancorp Contribution.  Bancorp shall not contribute to
the VEBA in any  Plan  Year  any  amount  attributable  to  funding  the cost of
Coverage for any Key Employee.

         3.9  Application for  Participation  and  Contribution.  In order to be
eligible  to  purchase  Coverage  and  receive  any  applicable  Post-Retirement
Contribution  under this Plan, each  Participant  shall submit an application to
Bancorp or the VEBA at such time, and in such manner, as the Plan  Administrator
shall  announce,  from  time-to-time,  in advance of the deadline for submitting
such applications.

         3.10 Purpose and Maximum Benefit.  This Plan is not intended to be, and
shall  not  operate  as,  a  plan  of   deferred   compensation.   Consequently,
notwithstanding any other provision of this Plan to the contrary:

                    3.10.1  No  Deferred  Compensation.  A  Participant  who  is
entitled to receive a  Post-Retirement  Contribution  under Section 3.2,  above,
shall be  entitled  to receive  such  Post-Retirement  Contribution  only if the
Participant timely elects to purchase Coverage under this Plan; and

                    3.10.2 Limit.  No  Participant  shall be entitled to receive
under  this Plan any  amount  which  exceeds  lesser of (a) the  Post-Retirement
Contribution payable for such Participant pursuant to Section 3.2, above, or (b)
the actual cost of Coverage for such Participant.

4.       ADMINISTRATION

         4.1  Duties  of  Plan  Administrator.   The  Plan  Administrator  shall
administer  the Plan in accordance  with its terms for the exclusive  benefit of
Participants and in a manner which satisfies the nondiscrimination  requirements
imposed upon voluntary employees' beneficiary associations by Section 505 of the
Code.

         4.2 Powers of Plan  Administrator.  The Plan  Administrator  shall have
full power and  authority  to  administer  and carry  into  effect the terms and
conditions of this Plan,  subject to applicable  requirements of law. Such power
shall include, but not be limited to, the power:

                    4.2.1  Rules  and  Regulations.  To make  and  enforce  such
reasonable  rules and regulations as the Plan  Administrator  deems necessary or
proper for the efficient administration of the Plan, including the establishment
of any claims procedures that may be required by applicable provisions of law;

                    4.2.2  Interpretation.  To interpret in good faith the terms
and conditions of this Plan;

                    4.2.3  Resolution.  To resolve all questions  concerning the
Plan and the eligibility of any Former Employee to participate in the same; and

                    4.2.4  Agents.  To appoint and retain such agents,  counsel,
accountants,  consultants,  and other persons as may be necessary or appropriate
to assist in the administration of the Plan.

                                      -14-
<PAGE>

         4.3 Records.  The Plan Administrator  shall establish and maintain such
records as are necessary or appropriate to the efficient  administration  of the
Plan.   Each   Participant,   upon   reasonable   advance  notice  to  the  Plan
Administrator,  shall be entitled to inspect such of those records as pertain to
that Participant.

         4.4 Appeals  Procedure.  If a claim for Coverage or a contribution from
Bancorp  is  partially  or  fully  denied  by the Plan  Administrator,  then the
Participant  may  request a review of that  decision by  submitting  to the Plan
Administrator, not later than sixty (60) days after receiving notice of the Plan
Administrator's  decision, a written request for review of the decision.  Within
sixty (60) days after receiving such request,  Bancorp shall review the request,
hold such hearings as Bancorp,  in its sole discretion,  deems appropriate,  and
advise the Participant,  in writing, of its decision.  If the decision on review
is not provided  within such sixty-day  period,  then the application for appeal
shall be deemed to be denied.

         4.5 Filing. The Plan Administrator shall timely file all forms required
to be filed  with  respect  to the Plan  pursuant  to the Code,  ERISA,  and all
counterpart provisions of California law.

         4.6 Indemnification. Bancorp shall indemnify, defend, and hold the Plan
Administrator  free and  harmless  from  and  against  any and all  liabilities,
damages, costs and expenses, including reasonable attorneys' fees, occasioned by
any actions which the Plan Administrator takes, or fails to take, reasonably and
in good faith, in connection with the administration of the Plan.

5.       PRIOR PLANS; AMENDMENT AND TERMINATION

         5.1 Prior Plans.  This Plan  supersedes the terms of any plan or policy
previously sponsored,  maintained,  or announced by Bancorp to provide health or
dental benefits to Former Employees of Bancorp.

         5.2  Amendment  and  Termination.  Bancorp shall have sole and absolute
discretion  to amend or modify this Plan in any regard,  and to  terminate  this
Plan altogether,  at any time;  provided,  notwithstanding  the foregoing or any
other provision of this Plan,  during any Restricted  Period Bancorp may not (a)
revoke the Plan, or (b) modify the provisions of Paragraph B of Section 2.1.1 of
the Plan,  or (c)  otherwise  modify or amend  the Plan in any  manner  (whether
directly  or  indirectly  such  as  by  amending  any  other  employee   benefit
arrangement  that  benefits  any person who is  affected  by the  provisions  of
Paragraph  B of Section  2.1.1,  above)  that has the effect of  eliminating  or
reducing the protections afforded by Paragraph B of Section 2.1.1 hereof.

6.       MISCELLANEOUS

         6.1 No Employment Rights.  Neither the adoption and maintenance of this
Plan, nor any express or implicit provision of this Plan, shall be deemed:

                    6.1.1  Contract.   To  constitute  a  contract  between  any
Employer and any other person,  or to be a consideration for or an inducement or
condition of, the employment of any person;

                    6.1.2 Right.  To give any person the right to be retained in
the employ of Bancorp or any Affiliate;

                    6.1.3 Discharge. To interfere with the right of any Employer
to discharge any Employee (including any Participant) at any time; or

                                      -15-
<PAGE>

                    6.1.4 Continuing Employment.  To give any Employer the right
to require an Employee to remain in the employ of such Employer, or to interfere
with an Employee's right to terminate his employment at any time.

         6.2  Enforceability;  Exclusive  Benefit.  Subject to the provisions of
Sections 5 and 6.1, above, Bancorp:

                    6.2.1  Legally  Enforceable.   Represents  that  the  rights
created  in this  Plan in favor  of  Participants  are  intended  to be  legally
enforceable; and

                    6.2.2 Exclusive Benefit.  Agrees to administer or cause this
Plan to be administered for the exclusive benefit of Participants.

         6.3 Interpretation.  As used in this Plan, the masculine, feminine, and
neuter  gender  and the  singular  and  plural  numbers  each shall be deemed to
include the other  whenever the context  indicates or requires.  The captions to
various  sections of this Plan are included in this Plan solely for  convenience
of reference,  and shall not affect in any way the meaning or  interpretation of
this Plan.

         6.4  Governing  Law. This Plan shall be  construed,  administered,  and
enforced  in  accordance  with the  Code,  ERISA,  and the laws of the  State of
California.

         6.5 Binding Effect.  This Plan shall be binding upon all successors and
assigns of Bancorp.

         IN  WITNESS  WHEREOF,  Bancorp  has  caused  this  Plan to be  adopted,
effective on the Effective Date as set forth above.




                                      PACIFIC CAPITAL BANCORP, a California
                                      corporation

---------------------------------     By
             Date                       ---------------------------------------
                                          Jay D. Smith, Senior Vice President

                                      -16-