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                     EXECUTIVE SALARY CONTINUATION AGREEMENT

         THIS EXECUTIVE SALARY CONTINUATION AGREEMENT ("Agreement") is made
and entered into this 23rd day of July, 1999, by and between Coast Bancorp, a
California corporation and Coast Commercial Bank, a California banking
corporation on the one hand (collectively the "Bank"), their successors or
assigns, and Bruce H. Kendall on the other hand (the "Executive").

                              W I T N E S S E T H:

         WHEREAS, the Executive is employed by the Bank as its Senior Vice
President and Chief Financial Officer; and

         WHEREAS, the experience of the Executive, his knowledge of the
affairs of the Bank, and his reputation and contact in the banking industry
are so valuable that assurance of his continued service is essential for the
future growth and profitability of the Bank and it is in the best interests
of the Bank to arrange terms of continued employment for the Executive so as
to reasonably assure his remaining in the Bank's employment during his
lifetime or until the age of retirement; and

         WHEREAS, it is the desire of the Bank that the Executive's services
be retained as herein provided; and

         WHEREAS, the Executive is willing to continue in the employ of the
Bank provided the Bank agrees to pay the Executive or his beneficiaries
certain benefits in accordance with the terms and conditions hereinafter set
forth;

         NOW, THEREFORE, in consideration of the services to be performed in the
future as


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well as the mutual promises and convenants herein contained, it is hereby
agreed as follows:

                                   ARTICLE 1.

         1.1 BENEFICIARY. The term Beneficiary shall mean the person or
persons whom the Executive shall designate in writing to receive the benefits
provided hereunder.

         1.2. DISABILITY. If the Executive is covered by a Bank-sponsored
disability insurance policy, the definition of disability shall be as defined
in such policy without regard to any waiting period. If Executive is not
covered by a Bank-sponsored disability policy, the term disability shall mean
the inability of the Executive to perform the duties and responsibilities of
his position with the Bank in a normal and regular manner, due to mental or
physical illness or injury, for a period of ninety (90) consecutive days, or
for fifty percent (50%) or more of the normal working days during a period of
one hundred eighty (180) consecutive days. Determination of the Executive's
disability shall be made by the Bank's Board of Directors, which
determination shall not be unreasonable or arbitrary and shall be supported
by medical opinion. In the event Executive is also a director of the Bank,
the Executive shall be ineligible to participate in such disability
determination. Executive shall, if requested by the Bank's Board of
Directors, submit to a mental or physical examination to assist the Board of
Directors in making its determination of disability hereunder. The
psychiatrist or physician performing such examination shall be selected by
the Bank and Executive, or the Executive's representative if Executive is not
able to participate in such selection.

         1.3 NAMED FIDUCIARY AND PLAN ADMINISTRATOR. The Named Fiduciary and
Plan Administrator of this plan shall be the Bank.


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         1.4 CHANGE OF CONTROL. A "Change of Control" shall be deemed to have
occurred if (i) a tender offer shall be made and consummated for the
ownership of 25% or more of the outstanding voting securities of the Bank;
(ii) the Bank shall be merged or consolidated with another bank or
corporation and as a result of such merger or consolidation less then 75% of
the outstanding voting securities of the surviving or resulting bank or
corporation shall be owned in the aggregate by the former shareholders of the
Bank, other than affiliates (within the meaning of the Securities Exchange
Act of 1934) of the party to such merger or consolidation, as the same shall
have existed immediately prior to such merger or consolidation; (iii) the
Bank shall sell substantially all of its assets to another bank or
corporation which is not a wholly owned subsidiary; or (iv) a person, within
the meaning of Section 3 (a)(9) or of Section 13(d)(3) (as in effect on the
date hereof) of the Securities Exchange Act of 1934, shall acquire 25% or
more of the outstanding voting securities of the Bank (whether directly,
indirectly, beneficially or of record). For purposes hereof, ownership of
voting securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(1)(I) (as in effect on
the date hereof) pursuant to the Securities Exchange Act of 1934.

         1.5 CAUSE. The term "Cause" shall mean any act of personal
dishonesty, willful misconduct, embezzlement, fraud, intentional failure to
comply with the Bank's policies, willful violation of any banking law, rule
or regulation, or material breach of any provision of this Agreement.

                                   ARTICLE 2.

         2.1 EMPLOYMENT. The Bank agrees to employ the Executive in such
capacity as the Bank may determine from time to time. The Executive will
continue in the employ of the Bank in such capacity and with such duties and
responsibilities as may be assigned to him, and with


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such compensation as may be determined from time to time by the Board of
Directors of the Bank.

         2.2 FULL EFFORTS. Executive shall devote his full business time and
efforts to the business and affairs of the Bank or the successor to the Bank
by which Executive is then employed pursuant to this Agreement; provided,
however, this provision shall not preclude Executive from serving as a
director or member of a committee of any other organization involving no
conflict of interest with the interests of the Bank, from engaging in
charitable and community activities, and from managing his personal
investments, provided that such activities do not materially interfere with
the regular performance of his duties and responsibilities under this
Agreement.

         2.3 FRINGE BENEFIT. The salary continuation benefits provided by
this Agreement are granted by the Bank as a fringe benefit to the Executive
and are not part of any salary reduction plan or any arrangement deferring a
bonus or salary increase. The Executive has no option to take any current
payment or bonus in lieu of these salary continuation benefits.

                                   ARTICLE 3.

         3.1 RETIREMENT. Executive shall be entitled to receive the benefit
set forth in Section 3.2 of this Agreement beginning on the first day of the
month next following his attainment of age sixty-two (62) or upon such later
date as may be mutually agreed upon by the Executive and the Bank
("Retirement Date").

         3.2 PAYMENT. The Bank agrees that upon such Retirement Date it will
pay to the Executive the annual sum of Fifty Thousand Dollars ($50,000),
payable in equal monthly installments on the first day of each month
following such Retirement Date until the Executive


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dies, subject to the conditions and limitations set forth in this Agreement.
This amount shall be adjusted upward annually on the anniversary of the first
payment at the rate of two percent (2%) per year based upon the previous
year's amount.

         3.3 VESTING. Executive shall become vested immediately as to thirty
percent (30%) of the benefit and shall vest at the rate of an additional ten
percent (10%) each year on December 31st while in the Bank's employ beginning
on December 31, 2000 until vested in full.

         3.4 EARLY RETIREMENT. Executive shall be entitled to early
retirement anytime after he attains age fifty-five (55), if fully vested. In
the event of Executive's early retirement, he shall be entitled to receive
the benefit set for the in Section 3.2, reduced by five percent (5%) for each
year that Executive elects to receive the benefit prior to the Retirement
Date.

                                   ARTICLE 4.

         4.1 DEATH PRIOR TO OR AFTER RETIREMENT. In the event the Executive
should at any time after the date of this Agreement but prior to his
Retirement Date, or upon the Executive's death after her Retirement Date, the
Bank shall pay to the Executive's designated Beneficiary an amount equal to
the accumulated salary continuation obligation on the books of the Bank for
the benefit of the Executive. Said amount shall be paid to the Executive's
designated Beneficiary an a lump sum within three (3) months of the
Executive's date of death. If a valid Beneficiary Designation is not in
effect, the payments shall be made to the Executive's surviving spouse or, if
none, said payments shall be made to the duly qualified personal
representative, executor or administrator of Executive's estate. Provided,
however, that anything hereinabove to the contrary notwithstanding, no death
benefit shall be payable hereunder if it is determined that the Executive has
made any material misstatement of fact on any application for life insurance


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purchased by the Bank.

         4.2 DISABILITY PRIOR TO RETIREMENT. In the event the Executive
should become disabled while actively employed by the Bank at any time after
the date of this Agreement but prior to his Retirement Date, the Executive
shall become fully vested. In the event of disability, Executive then may
elect to receive payments either pursuant to the provisions of Section 3.2
regarding retirement or Section 3.4 regarding early retirement.

                                   ARTICLE 5.

         5.1 TERMINATION OF EMPLOYMENT. The Bank reserves the right to
terminate the employment of the Executive at any time prior to his Retirement
Date. In the event that Executive's employment is terminated for cause, as
defined above, then Executive shall not be entitled to any benefits pursuant
to this Agreement. In the event that the employment of the Executive's
disability, death or cause, then Executive shall be entitled to the vested
portion of the benefit pursuant to Article 3 of this Agreement.

         5.2 TERMINATION OF EMPLOYMENT DUE TO A CHANGE OF CONTROL. Anything
hereinabove the contrary notwithstanding, if, within two (2) years after a
change of control: (i) the Executive's employment with the Bank is
terminated; (ii) Executive's annual compensation and benefits are reduced
from their levels on the date of a Change of Control of the Bank; (iii)
Executive's duties, responsibilities and authority are reduced from those of
his then position on the date of a Change of Control of the Bank; or (iv) the
situs of Executive's employment is changed more than 50 miles, then in such
event, Executive shall become fully vested.

                                   ARTICLE 6.

         6.2 NONASSIGNABLE. Neither the Executive, her spouse, nor any other
beneficiary


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under this Agreement shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify, or otherwise encumber in
advance any of the benefits hereunder, nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments, alimony or
separate maintenance, owed by the Executive or his beneficiary or any of
them, or be transferable by operation of law in the event of a bankruptcy,
insolvency or otherwise.

                                   ARTICLE 7.

         7.1 CLAIMS PROCEDURE. The Bank shall notify the Executive or
Executive's beneficiary in writing, within sixty (60) days of written
application for benefits, of eligibility or non-eligibility for benefits
under the Agreement. If the Bank determines that the Executive or Executive's
beneficiary is not eligible for benefits or full benefits, a notice shall be
sent setting forth: (1) the specific reasons for denial; (2) a specific
reference to the provisions of the Agreement on which the denial is based;
(3) a description of any additional information or material necessary for the
claimant to perfect his claim, and a description of why it is needed; and (4)
an explanation of the Agreement's claim review procedure and other
appropriate information as to the steps to be taken if the Executive or
Executive's beneficiary wishes to have the claim reviewed. If the Bank
determines that there are special circumstances requiring additional time to
make a decision, the Bank shall notify the Executive or Executive's
beneficiary of the special circumstances and the date by which a decision is
expected to be made, and may extend the time for up to one additional period
of up to sixty (60) days.

         7.2 REVIEW PROCEDURE. If Executive or Executive's beneficiary is
determined by the Bank not to be eligible for benefits, or if the Executive
or Executive's beneficiary believes that he is entitled to greater or
different benefits, the Executive or Executive's beneficiary shall have


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the opportunity to have such claim reviewed by the Bank by filing a petition
for review with the Bank within sixty (60) days after receipt of the notice
issued by the Bank. Said petition shall state the specific reasons which the
Executive or Executive's beneficiary believes, entitle her to benefits or to
greater or different benefits. Within sixty (60) days after receipt by the
Bank of the petition, the Bank shall afford the Executive or Executive's
beneficiary (and counsel, if any) an opportunity to present his position to
the Bank orally or in writing, and the Executive or Executive's beneficiary
(or counsel) shall have the right to review the pertinent documents. The Bank
shall notify the Executive or Executive's beneficiary of its decision in
writing within the sixty (60) day period, stating specifically the basis of
its decision, written within the sixty (60) day period, stating specifically
the basis of its decision, written in a manner calculated to be understood by
the Executive or Executive's beneficiary and the specific provisions of the
Agreement on which the decision is based. If, because of the need for a
hearing, the sixty (60) day period is not sufficient, the decision may be
deferred for one additional period of up to sixty (60) days at the election
of the Bank, but notice of this deferral shall be given to the Executive or
Executive's beneficiary.

                                   ARTICLE 8.

         8.1 UNSECURED GENERAL CREDITOR. The Executive's rights are limited
to the right to receive payments as provided in this Agreement and the
Executive's position with respect thereto is that of a general unsecured
creditor of the Bank.

                                   ARTICLE 9.

         9.1 REORGANIZATION. The Bank shall not voluntarily engage in a Change
of Control of the Bank unless and until such succeeding or continuing
corporation, bank, firm, or person


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agrees to assume and discharge the obligations of the Bank under this
Agreement. Upon the occurrence of such event, the term "Bank" as used in this
Agreement shall be deemed to refer to such successor or survivor corporation,
bank, firm or person.

                                   ARTICLE 10.

         10.1 NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be
deemed to constitute a contract of employment between the parties hereto, nor
shall any provision hereof restrict the right of the Bank to discharge the
Executive, or restrict the right of the Executive to terminate his employment.

                                   ARTICLE 11.

         11.1 LIQUIDATED DAMAGES. The parties hereto, before entering into
this Agreement, have been concerned with the fact that substantial damages
will be suffered by the Executive in the event that the Bank shall fail to
perform according to this Agreement. In the event of nonperformance by the
Bank for a period of thirty (30) days or more from the time any such payment
was scheduled to be made pursuant to this Agreement, executive shall
immediately be entitled to liquidated damages of Five Thousand Dollars
($5,000.) for each payment not made on a timely basis. This provision shall
not be applicable in the event that such nonpayment is the result of
prohibition of such payment by law, regulation or order of a banking
regulatory agency.

                                   ARTICLE 12.

         12.1 SUCCESSORS AND ASSIGNS; ASSIGNMENT. The rights and obligations
of this Agreement shall be binding upon and inure to the benefit of the
successors, assigns, heirs and personal representative of the parties hereto.
Executive may not assign this Agreement or any of the Executive's rights
hereunder except with the prior written consent of the Bank.


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         12.2 SEVERABILITY. If any provision of this Agreement, as applied to
either party or to any circumstance, is judged by a court to be void or
unenforceable, in whole or in part, the same shall in no way affect any other
provision of this Agreement, the application of such provision in any other
circumstances, or the validity or enforceability of this Agreement.

         12.3 APPLICABLE LAW; JURISDICTION AND VENUE. This Agreement and all
matters or issues collateral hereto shall be governed by the laws of the
State of California applicable to contracts performed entirely therein.
Executive and Bank each consent to the jurisdiction of, and any action
concerning this Agreement shall be brought and tried in, the United States
District Court for the Northern District of California or the Superior or
Municipal Court for the County of Santa Cruz.

         12.4 WAIVER. A waiver by either party of any of the terms or
conditions of this Agreement in any one instance shall not be deemed or
construed to be a waiver of such terms or conditions for the future, or of
any subsequent breach thereof. All remedies, rights, undertakings,
obligations, and agreements contained in this Agreement shall be cumulative,
and none of them shall be in limitation of any other remedy, right,
undertaking, obligation or agreement of either party.

         12.5. (a) ATTORNEY'S FEES. If any legal action or other proceeding
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees an other costs
incurred in that action or proceeding, in addition to any other relief to
which it or they may be entitled.


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         12.5 (b) WAIVER OF JURY TRIAL. THE BANK AND EXECUTIVE EACH HEREBY
MUTUALLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH MAY
HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON OR ARISING
OUT OF OR UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OR
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTION
OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES
ENTERING INTO THIS AGREEMENT.

         12.6 HEADINGS. The headings in this Agreement are for convenience
only and shall not in any manner affect the interpretation or construction of
the Agreement or any of its provisions.

         12.7. NOTICE. Any notice or other communication to be given under
this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if personally served, or if mailed, upon deposit
in the United States mail, first class postage prepaid, express or certified,
return receipt requested, and properly addressed to the parties as follows:
if to Executive at his last address shown in the Bank's records, if to Bank:

                             Coast Commercial Bank
                             740 Front Street, Suite 240
                             Santa Cruz, CA  95060
                             Attn: Chairman

Either party may designate a new address for purposes of this Section 12.7 by
giving the other notice of the new address as provided herein.


                             Signature page follows.


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         IN WITNESS WHEREOF, the Bank has caused this Agreement to be duly
executed by its proper officer and the Executive has hereunto set his hand at
Santa Cruz, California, the day and year first above written.


COAST COMMERCIAL BANK                       EXECUTIVE

BY: /s/ DAVID HEALD
   --------------------------------
ITS: EXECUTIVE VICE PRESIDENT & CBO         /s/ BRUCE H. KENDALL
                                            ------------------------------
                                            Bruce H. Kendall


COAST BANCORP

BY: /s/ DAVID HEALD
   --------------------------------
ITS: EXECUTIVE VICE PRESIDENT & CBO




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