<PAGE> 143
                EMPLOYMENT AGREEMENT



     THIS AGREEMENT is made and entered into on May 20, 1999
by and between SARATOGA NATIONAL BANK, a national banking
association ("Employer"), and Richard L. Mount ("Employee") and is
effective as of January 1, 1999.

                      RECITALS

     WHEREAS, Employer and Employee desire to enter into an
agreement for the purposes of engaging the services of Employee by
reason of his experience, training and ability in the commercial banking
industry;

     WHEREAS, Employer is the wholly-owned subsidiary of Saratoga
Bancorp, a California corporation, for which Employee provides services
without direct compensation and currently holds positions as the Chairman
of the Board of Directors, President and Chief Executive Officer; and

     WHEREAS, unless expressly stated or the context otherwise
requires, any reference in this Agreement to "Employer" shall include
Saratoga Bancorp.

     NOW, THEREFORE, in consideration of the mutual covenants
and agreements contained herein, the Employer and Employee agree as
follows:

                     AGREEMENT

     1.   Termination of Existing Agreements/Term of Employment.
Employer and Employee acknowledge and agree that this Agreement shall
supercede and replace (i) the existing employment agreement between
Employer and Employee dated August 30, 1995, effective January 1,
1995, and as amended February 22, 1996, (ii) the Management Continuity
Agreement dated July 9, 1990 and (iii) the deferred benefit entitlement
under the Chief Executive Officer Incentive Compensation Plan dated
August 30, 1995 and effective as of January 1, 1995, which are each
hereby terminated effective with the date of this Agreement.  Pursuant to
this Agreement, Employer employs Employee and Employee hereby
accepts employment with Employer, upon the terms and conditions
hereinafter set forth, for a period of three (3) years from the effective date
hereof.  Upon the occurrence of the third annual anniversary of the
effective date of this Agreement, and on each anniversary date thereafter,
the term of this Agreement shall be deemed automatically extended for an
additional one (1) year term, subject to the termination provisions of
paragraph 16.

     2.   Duties and Obligations of Employee.  Employee shall serve
as the President and Chief Executive Officer of Employer and shall
perform the customary duties of such office in the commercial banking
industry as may from time to time be reasonably requested of him by the
Board of Directors of Employer in addition to the following:


<PAGE> 144
          (a)  Voting as a member of the Board of Directors of
Employer and such committees thereof as the Board of Directors of
Employer shall designate;

          (b)  Providing leadership in planning and implementing
the conduct of business and the affairs of the Employer;

          (c)  Participating in community affairs which are
beneficial to the Employer;

          (d)  Maintaining a good relationship with Employer's
Board of Directors, management officers and shareholders;

          (e)  Maintaining a good relationship with regulatory
agencies and governmental authorities having jurisdiction over Employer;
and

          (f)  Hiring and firing of all employees other than
               executive officers of the Employer, subject at all
               times to the policies and directives set by the
               Employer's Board of Directors.

     3.   Devotion to Employer's Business.

          (a)  Employee shall devote his full business time,
ability, and attention to the business of Employer during the term of this
Agreement and shall not during the term of this Agreement, without the
prior written consent of Employer's Board of Directors, engage in any
other business activities, duties, or pursuits whatsoever, or directly or
indirectly render any services of a business, commercial, or professional
nature to any other person or organization, whether for compensation or
otherwise, which are in conflict with Employer's business.  However, the
expenditure of reasonable amounts of time for educational, charitable, or
professional activities shall not be deemed a breach of this Agreement if
those activities do not materially interfere with the services required of
Employee under this Agreement.  Nothing in this Agreement shall be
interpreted to prohibit Employee from making passive personal
investments.  However, Employee shall not directly or indirectly acquire,
hold, or retain any material interest in any business competing with or
similar in nature to the business of Employer.

          (b)  Employee agrees to conduct himself at all times
with due regard to public conventions and morals.  Employee further
agrees not to do or commit any act that will reasonably tend to shock or
offend the community, or to prejudice Employer or the banking industry
in general.

          (c)  Employee hereby represents and agrees that the
services to be performed

<PAGE> 145
under the terms of this Agreement are of a
special, unique, unusual, extraordinary, and intellectual character that
gives them a peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in an action at law.  Employee
therefore expressly agrees
that Employer, in addition to any other rights or remedies that Employer
may possess, shall be

entitled to injunctive and other equitable relief to prevent or remedy a
breach of this Agreement by Employee.

     4.   Noncompetition by Employee.  Employee shall not, during
the term of this Agreement, directly or indirectly, either as an employee,
employer, consultant, agent, principal, stockholder, officer, director, or in
any other individual or representative capacity, engage or participate in
any competitive banking or financial services business.

     5.   Indemnification.

          (a)  Employee shall indemnify and hold Employer
harmless from all liability for loss, damage, or injury to persons or
property resulting from the gross negligence or intentional misconduct of
the Employee.

          (b)  To the extent permitted by law, Employer shall
indemnify Employee if he was or is a party or is threatened to be made a
party in any action brought by a third party against Employee (whether or
not Employer is joined as a party defendant) against expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with said action if Employee acted in good faith and in a
manner Employee reasonably believed to be in the best interest of
Employer (and with respect to a criminal proceeding if Employee had no
reasonable cause to believe his conduct was unlawful), provided that the
alleged conduct of Employee arose out of and was within the course and
scope of his employment as an officer or employee of Employer.  Any
conflict or inconsistency between this indemnification provision and the
terms of any Indemnification Agreement between Employer and Employee
shall be resolved in favor of the terms of such Indemnification Agreement.

     6.   Disclosure of Information.  Employee shall not, either
before or after termination of this Agreement, without the prior written
consent of Employer's Board of Directors or except as required by law to
comply with legal process including, without limitation, by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process, disclose to anyone any financial
information, trade or business secrets, customer lists, computer software
or other information not otherwise publicly available concerning the
business or operations of Employer.  Employee further recognizes and
acknowledges that any financial information concerning any customers of
Employer, as it may exist from time to time, is strictly confidential and is
a valuable, special and unique asset of Employer's business.  Employee
shall not, either before or after

<PAGE> 146
termination of this Agreement, without
such consent or except as required by law, disclose to anyone said
financial information or any part thereof, for any reason or purpose
whatsoever.  In the event Employee is required by law to disclose such
information described in this paragraph 6, Employee will provide
Employer and its respective counsel with immediate notice of such request
so that they may consider seeking a protective order.  If in the absence of
a protective order or the receipt of a waiver hereunder, Employee is
nonetheless, in the written opinion of knowledgeable counsel, compelled
to disclose any of such information to any tribunal or any other party or
else stand liable for contempt or suffer other material censure or material
penalty, then Employee may disclose (on an 'as needed" basis only)

such information to such tribunal or other party without liability
hereunder.  This paragraph 6 shall survive the expiration or termination of
this Agreement.

     7.   Written, Printed or Electronic Material.  All written,
printed or electronic material, notebooks and records, including, without
limitation, computer disks used by Employee in performing duties for
Employer, other than Employee's personal notes and diaries, are and shall
remain the sole property of Employer.  Upon termination of employment,
Employee shall promptly return all such material (including all copies,
extracts and summaries thereof) to Employer.  This paragraph 7 shall
survive expiration or termination of this Agreement.

     8.   Surety Bond.  Employee agrees that he will furnish all
information and take any other steps necessary from time to time to enable
Employer to obtain or maintain a fidelity bond conditional on the
rendering of a true account by Employee of all monies, goods, or other
property which may come into the custody, charge, or possession of
Employee during the term of his employment.  The surety company
issuing the bond and the amount of the bond must be acceptable to
Employer.  All premiums on the bond shall be paid by Employer.
Employer shall have no obligation to pay severance benefits to Employee
in accordance with paragraph 16 (d) of this Agreement in the event that
the Employee's employment is terminated in connection with the
Employee's failure to qualify for a surety bond at any time during the
term of this Agreement and such failure to qualify results from an
occurrence described in paragraph 16(a) (5), (7), (8), (9), (10) or (11, to
the extent of an Employee breach).

     9.   Base Salary.  In consideration for the services to be
performed hereunder, Employee shall receive a salary at the rate of One
Hundred Forty Thousand Dollars ($140,000.00) per annum, payable in
installments during the term of this Agreement of approximately Five
Thousand Eight Hundred Thirty-Three Dollars and Thirty-Three Cents
($5,833.33) on the fifteenth and last day of each month, subject to
applicable adjustments for withholding taxes and prorations for any partial
employment period.  Employee shall receive such annual adjustments in
salary, if any, as may be determined by Employer's Board of Directors, in
its sole discretion, resulting from the Board of Directors annual review of
Employee's compensation each year during the term of this Agreement.

<PAGE> 147
     10.  Salary Continuation During Disability.  If Employee for
any reason (except as expressly provided below) becomes temporarily or
permanently disabled so that he is unable to perform the duties under this
Agreement, Employer agrees to pay Employee the base salary otherwise
payable to Employee pursuant to paragraph 9 of this Agreement, reduced
by the amounts received by Employee from state disability insurance, or
worker's compensation or other similar insurance benefits through policies
provided by Employer, for a period of six (6) months from the date of
disability.

     For purposes of this paragraph 10, "disability" shall be defined as
provided in Employer's disability insurance program.  Notwithstanding
anything herein to the contrary, Employer shall have no obligation to
make payments for a disability resulting from the deliberate, intentional
actions of Employee, such as, but not limited to, attempted suicide or
chemical dependence of Employee.

     11.  Incentive Compensation.  Employee currently participates
in the Chief Executive Officer Incentive Compensation Plan effective as
of  January 1, 1995 (the "Incentive Plan").  Under the Incentive Plan,
Employee is entitled to receive annual cash bonus payments and certain
deferred bonus payments in the future.  Employee has agreed to waive his
entitlement to the deferred bonus payments in consideration for benefits
provided under this Agreement, but remains entitled to receive the annual
cash bonus payments pursuant to the Incentive Plan.   In addition,
Employee shall be entitled to receive any other bonus or incentive
compensation that the Board of Directors, in its sole discretion,
determines to be appropriate following review of Employee's performance
and Employer's results of operations each year during the term of this
Agreement.  Under no circumstance shall a right to receive bonus or
incentive compensation other than pursuant to the Incentive Plan, exist in
favor of or accrue to or for the benefit of Employee prior to actual
receipt.

     12.  Stock Options.  Employer has previously granted stock
options to Employee.  Employer may, but is not obligated to, grant
additional stock options to Employee in the future which grants, if any,
shall be within the sole discretion of the Board of Directors of Employer
and subject to the terms and provisions of Employer's stock option plan
pursuant to which such grants are effected.  Any such grants shall be
evidenced by a stock option agreement entered into between Employer and
Employee pursuant to such stock option plan and a copy of each such
stock option agreement shall be attached to this Agreement as an exhibit.
Notwithstanding any provision of any such stock option plan or any such
stock option agreement to the contrary, no rights of employment shall be
conferred upon Employee or result from any such stock option plan or any
stock option agreement entered into between Employer and Employee.
Any employment rights and corresponding duties of Employee pursuant to
his employment by Employer shall be limited to and interpreted solely in
accordance with the terms and provisions of this Agreement.

     13.  Other Benefits.  Employee shall be entitled to those
employee benefits adopted by Employer for all employees of Employer,
subject to applicable qualification requirements

<PAGE> 148
and regulatory approval
requirements, if any.  Employee shall be further entitled to the following
additional benefits which shall supplement or replace, to the extent
duplicative of any part or all of the general employee benefits, the benefits
otherwise provided to Employee:

          (a)  Vacation.  Employee shall be entitled to five (5)
weeks annual vacation leave at his then existing rate of full salary each
year during the term of this Agreement.  Employee may be absent from
his employment for vacation as long as such leave is reasonable and does
not jeopardize his responsibilities and duties specified in this Agreement.
The length of vacation should not exceed two (2) weeks without the
approval of Employer's Executive Committee of the Board of Directors.
Vacation time will accrue in accordance with Employer's personnel
policies.

          (b)  Automobile and Insurance.  Employer shall (i)
provide to Employee an automobile for his business and personal use,
suitable to his position; (ii) reimburse Employee for costs to maintain it in
good condition and repair; (iii) maintain public liability insurance and
property damage insurance policies with insurer(s) acceptable to Employer
and Employe with such coverages in such amounts as may be acceptable
to Employer and Employee from time to time; and (iv) cause Employee to
be named as an additional insured on such policies.

          (c)  Personal Insurance.  Employer shall provide during
the term of this Agreement at Employer's sole cost, a policy or policies of
term life insurance in the amount of Five Hundred Thousand Dollars
($500,000) and group life, health (including medical, dental and
hospitalization), accident and disability insurance coverage for Employee
and his dependents  through a policy or policies provided by insurer(s)
selected by Employer in its sole discretion.

          (d)  Supplemental Compensation.  Employer and
Employee have entered into an agreement which provides supplemental
compensation benefits to Employee payable upon retirement or as
otherwise set forth in such agreement.

     14.  Annual Physical Examination.  Employer shall pay or
reimburse Employee for the cost of an annual physical examination
conducted by a California licensed physician selected by Employee and
reasonably acceptable to Employer.

     15.  Business Expenses.  Employee shall be reimbursed for all
ordinary and necessary expenses incurred by Employee in connection with
his employment.  Employee shall also be reimbursed for reasonable
expenses incurred in activities associated with promoting the business of
Employer, including expenses for entertainment, travel, conventions,
educational programs, club memberships and similar items.  Employer
will pay for or will reimburse Employee for such expenses upon
presentation by Employee from time to time of receipts or other
appropriate evidence of such expenditures.

     16.  Termination of Agreement.
<PAGE> 149
          (a)  Automatic Termination.  This Agreement shall
terminate automatically without further act of the parties and immediately
upon the occurrence of any one of the following events, subject to either
party's right, without any obligation whatsoever, to waive an event
reasonably susceptible of waiver, and the obligation of Employer to pay
the amounts which would otherwise be payable to Employee under this
Agreement through the end of the month in which the event occurs,
except that only in the event of termination based upon subparagraphs (1),
(4) or (11, to the extent of Employer's breach) below shall Employee be
entitled to receive severance payments based upon automatic termination
pursuant to paragraph 16 (d) of this Agreement:

               (1)  The occurrence of circumstances that make it
                    impossible or impractical for Employer to
                    conduct or continue its business.

               (2)  The death of Employee.

               (3)  The loss by Employee of legal capacity.

               (4)  The loss by Employer of legal capacity to
                    contract.
               (5)  The willful, intentional and material breach or
                    the habitual and continued neglect by the
                    Employee of his employment responsibilities
                    and duties;

               (6)  The continuous mental or physical incapacity
                    of the Employee, subject to disability rights
                    under this Agreement;

               (7)  The Employee's willful and intentional
                    violation of any federal banking or securities
                    laws, or of the Bylaws, rules, policies or
                    resolutions of Employer, or the rules or
                    regulations of the Board of Governors of the
                    Federal Reserve System, Federal Deposit
                    Insurance Corporation, Office of the
                    Comptroller of the Currency, or other
                    regulatory agency or governmental authority
                    having jurisdiction over the Employer, which
                    has a material adverse effect upon the
                    Employer;

               (8)  The written determination by a state or federal
                    banking agency or governmental authority
                    having jurisdiction over the Employer that
                    Employee is not suitable to act in the capacity
                    for which he is employed by Employer;

               (9)  The Employee's conviction of (i) any felony or
                    (ii) a crime involving moral turpitude, or the
                    Employee's willful and intentional commission
                    of a fraudulent or dishonest act; or
<PAGE> 150
               (10) The Employee's willful and intentional
                    disclosure, without authority, of any secret or
                    confidential information concerning Employer
                    or taking any action which the Employer's
                    Board of Directors determines, in its sole
                    discretion and subject to good faith, fair
                    dealing and reasonableness, constitutes unfair
                    competition with or induces any customer to
                    breach any contract with the Employer.

               (11) Either party breaches the terms or provisions
                    of this Agreement.

          (b)  Termination by Employer.  Employer may, at its
election and in its sole discretion, terminate this Agreement for any
reason, or for no reason, by giving not less than thirty (30) days' prior
written notice of termination to Employee, without prejudice to any other
remedy to which Employer may be entitled either at law, in equity or
under this Agreement.  Upon such termination, Employee shall be entitled
to receive any employment benefits which shall have accrued prior to such
termination and the severance pay specified in paragraph 16 (d) below.

          (c)  Termination by Employee.  This Agreement may be
terminated by Employee for any reason, or no reason, by giving not less
than thirty (30) days' prior written notice of termination to Employer.
Upon such termination, all rights and obligations accruing to Employee
under this Agreement shall cease, except that such termination shall not
prejudice Employee's rights regarding employment benefits which shall
have accrued prior to such termination and any other remedy which
Employee may have at law, in equity or under this Agreement, which
remedy accrued prior to such termination.

          (d)  Severance Pay - Termination by Employer.  In the
event of termination by Employer pursuant to paragraph 16 (b) or
automatic termination based upon paragraph 16 (a) (1), (4) or (11, to the
extent of Employer's breach) of this Agreement, Employee shall be
entitled to receive severance pay equal to one-half  (1/2) Employee's
aggregate annual compensation during the year the termination occurs
(including salary and any bonus, director's fees, deferred compensation,
incentive or other payments due Employee), payable in twenty-four (24)
substantially equal installments on the fifteenth and last day of each month
following such termination.  Notwithstanding the foregoing, in the event
of a "change in control" as defined in subparagraph (e) below, Employee
shall not be entitled to severance pay pursuant to this subparagraph (d) and
any rights of Employee to severance pay shall be limited to such rights as
are specified in subparagraph (e) below.  Employee acknowledges and
agrees that severance pay pursuant to this subparagraph (d) is in lieu of all
damages, payments and liabilities on account of the early termination of
this Agreement and the sole and exclusive remedy for Employee
terminated at the will of Employer pursuant to paragraph 16 (b) or
pursuant to certain provisions of paragraph 16 (a) described herein.

          (e)  Severance Pay - Change in Control.  In the event of
a "change in

<PAGE> 151
control" as defined herein and within a period of one and
one-half (1and 1/2) years following consummation of such a change in
control (i) Employee's employment is terminated; or (ii) without
Employee's consent there occurs (A) any adverse change in the nature and
scope of Employee's position, responsibilities, duties, salary, benefits or
location of employment, or (B) any event which reasonably constitutes a
demotion, significant diminution or constructive termination (by
resignation or otherwise) of Employee's employment, then Employee shall
be entitled to receive severance pay in addition to any salary, bonus or
incentive compensation payments due Employee.  Any such severance pay
due Employee shall be in an amount equal to one and one-half (1 and 1/2)
times Employee's average annual compensation for the five (5) years
immediately preceding the change in control.  Employee's average annual
compensation shall be the average of the aggregate compensation paid by
Employer to Employee (including salary and any bonus, director's fees,
amounts deferred during the year at the election of the Employee,
incentive and other payments paid to Employee) for each of the five (5)
tax years ending immediately prior to the change in control divided by the
number five (5).  If the Employee was employed by Employer for fewer
than five (5) years immediately preceding the change in control,
Employee's average annual compensation shall be determined by the same
procedure described above, provided that in lieu of using five (5) years in
such calculation, the number equal to the years that Employee was
employed by Employer immediately prior to the change in control shall be
used.

               In addition to the "change in control" severance
payment rights of Employee described in this paragraph (e), and
notwithstanding any other provisions of this Agreement, Employee shall
be entitled to receive the severance payments specified in this paragraph
(e) in the event that Employee voluntarily terminates his employment with
Employer or its successor effective as of a date within the period of
twelve (12) months immediately following a change in control, provided
that Employee has given written notice to Employer, delivered within the
period of six (6) months immediately following a change in control, of his
intention to terminate employment, which notice shall specify the effective
date of termination.

               If all or any portion of the amounts payable to the
Employee under this Agreement, either alone or together with other
payments which the Employee has the right to receive from the Employer,
constitute "excess parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), that are
subject to the excise tax imposed by Section 4999 of the Code (or similar tax
and/or assessment), the Employee shall be responsible for the payment of
such excise tax and the Employer (and its successor) shall be responsible for
any loss of deductibility related thereto.  If, at a later date, it is
determined (pursuant to final regulations or published rulings of the Internal
Revenue Service, final judgment of a court of competent jurisdiction, or
otherwise) that the amount of excise taxes payable by the Employee is greater
than the amount initially so determined, then the Employee shall pay an amount
equal to the sum of such additional excise taxes and any interest, fines and
penalties resulting from such underpayment.  The determination of the
amount of any such excise taxes shall be made by the independent
accounting firm employed by the Employer immediately prior to the change
in control, subject to the mutual agreement of the Employer and Employee.

<PAGE> 152
          Any such severance shall be payable in thirty-six (36)
substantially equal installments on the fifteenth and last day of each month
following such termination.  Such severance payment, if any, shall be in
lieu of all damages, payments and liabilities on account of the events
described above for which such severance payment, if any, may be due
Employee and any severance payment rights of Employee under paragraph
16 (d) of this Agreement.  This subparagraph (e) shall be binding upon
and inure to the benefit of the parties and any successors or assigns of
Employer or any "person" as defined herein.

          Notwithstanding the foregoing, Employee shall not be
entitled to receive nor shall Employer, its successors, assigns or any
"person" as defined herein be obligated to pay severance payments
pursuant to this subparagraph (e) in the event of an occurrence described
in paragraph 16 (a), subparagraphs (5), (7), (8), (9), (10) or (11, to the
extent of an Employee breach), or in the event Employee terminates
employment in accordance with paragraph 16 (c) and the termination is
not a result of or based upon the occurrence of any event described in
paragraph 16 (e)(ii) above or a voluntary termination within the thirty (30)
day period immediately after the expiration of the sixth (6th) month
following a change in control as described above.

          A "change in control" of Employer for purposes of this
Agreement and subparagraph (e) shall mean the occurrence of any of the
following events with respect to Employer (with the term "Employer"
being defined for such a change in control to include any parent bank
holding company):   (i) a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or in response to any other form or report to
the regulatory agencies or governmental authorities having jurisdiction over
the Employer or any stock exchange on which the Employer's shares are
listed which requires the reporting of a change in control; (ii) any merger,
consolidation or reorganization of the Employer in which the Employer does
not survive; (iii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) of any assets
of the Employer having an aggregate fair market value of fifty percent (50%)
of the total value of the assets of the Employer, reflected in the most recent
balance sheet of the Employer; (iv) a transaction whereby any "person" (as
such term is used in the Exchange Act) or any individual, corporation,
partnership, trust or any other entity is or becomes the beneficial owner,
directly or indirectly, of securities of the Employer representing twenty-five
percent (25%) or more of the combined voting power of the Employer's then
outstanding securities; or (v) a situation where, in any one-year period,
individuals who at the beginning of such period constitute the Board of
Directors of the Employer cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by the
Employer's shareholders, of each new director is approved by a vote of at
least three-quarters (3/4) of the directors then still in office who were
directors at the beginning of the period.

     17.  Notices.  Any notices to be given hereunder by either party
to the other shall be in writing and may be transmitted by personal
delivery or by U.S. mail, registered or certified,

<PAGE> 153
postage prepaid with
return receipt requested.  Mailed notices shall be addressed to the parties
at the addresses listed as follows:

     Employer: Principal place of business

     Employee: Principal place of business as shown in Employer's
               Personnel Records and Employee's personal file.

Each party may change the address for receipt of notices by written notice
in accordance with this paragraph 17.  Notices delivered personally shall
be deemed communicated as of the date of actual receipt; mailed notices
shall be deemed communicated as of three (3) days after the date of
mailing.

     18.  Arbitration.  All claims, disputes and other matters in
question arising out of or relating to this Agreement or the breach or
interpretation thereof, other than those matters which are to be determined
by the Employer in its sole and absolute discretion, shall be resolved by
binding arbitration before a representative member, selected by the mutual
agreement of the parties, of the Judicial Arbitration and Mediation
Services, Inc. ("JAMS"), presently located in San Francisco, California,
in accordance with the rules and procedures of JAMS then in effect.  In
the event JAMS is unable or unwilling to conduct such arbitration, or has
discontinued its business, the parties agree that a representative member,
selected by the mutual agreement of the parties, of the American
Arbitration Association ("AAA"), presently located in San Francisco,
California, shall conduct such binding arbitration in accordance with the
rules and procedures of the AAA then in effect.  Notice of the demand for
arbitration shall be filed in writing with the other party to this Agreement
and with JAMS (or AAA, if necessary).  In no event shall the demand for
arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question
would be barred by the applicable statute of limitations.  Any award
rendered by JAMS or AAA shall be final and binding upon the parties,
and as applicable, their respective heirs, beneficiaries, legal
representatives, agents, successors and assigns, and may be entered in any
court having jurisdiction thereof.  The obligation of the parties to arbitrate
pursuant to this clause shall be specifically enforceable in accordance
with, and shall be conducted consistently with, the provisions of Title 9 of
Part 3 of the California Code of Civil Procedure.  Any arbitration
hereunder shall be conducted in Saratoga, California, unless otherwise
agreed to by the parties.

<PAGE> 154
     19.  Attorneys' Fees and Costs.  In the event of litigation,
arbitration or any other action or proceeding between the parties to
interpret or enforce this Agreement or any part thereof or otherwise
arising out of or relating to this Agreement, the prevailing party shall be
entitled to recover its costs related to any such action or proceeding and its
reasonable fees of attorneys, accountants and expert witnesses incurred by
such party in connection with any such action or proceeding.  The
prevailing party shall be deemed to be the party which obtains
substantially the relief sought by final resolution, compromise or
settlement, or as may otherwise be determined by order of a court of
competent jurisdiction in the event of litigation, an award or decision of
one or more arbitrators in the event of arbitration, or a decision of a
comparable official in the event of any other action or proceeding.  Every
obligation to indemnify under this Agreement includes the obligation to
pay reasonable fees of attorneys, accountants and expert witnesses
incurred by the indemnified party in connection with matters subject to
indemnification.

     20.  Entire Agreement.  This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties with
respect to the employment of Employee by Employer and contains all of
the covenants and agreements between the parties with respect to the
employment of Employee by Employer.  Each party to this Agreement
acknowledges that no other 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 set forth herein, and that no
other agreement, statement, or promise not contained in this Agreement
shall be valid or binding on either party.

     21.  Modifications.  Any modification of this Agreement will be
effective only if it is in writing and signed by a party or its authorized
representative.

     22.  Waiver.  The failure of either party to insist on strict
compliance with any of the terms, provisions, covenants, or conditions of
this Agreement by the other party shall not be deemed a waiver of any
term, provision, covenant, or condition, individually or in the aggregate,
unless such waiver is in writing, nor shall any waiver or relinquishment of
any right or power at any one time or times be deemed a waiver or
relinquishment of that right or power for all or any other times.

     23.  Partial Invalidity.  If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall nevertheless continue in full
force and effect without being impaired or invalidated in any way.

     24.  Interpretation.  This Agreement shall be construed without
regard to the party responsible for the preparation of the Agreement and
shall be deemed to have been prepared jointly by the parties.  Any
ambiguity or uncertainty existing in this Agreement shall not be
interpreted against either party, but according to the application of other
rules of contract interpretation, if an ambiguity or uncertainty exists.

<PAGE> 155
     25.  Governing Law and Venue.  The laws of the State of
California, other than those laws denominated choice of law rules, shall
govern the validity, construction and effect of this Agreement.  Any
action which in any way involves the rights, duties and obligations of the
parties hereunder shall be brought in the courts of the State of California
and venue for any action or proceeding shall be in Santa Clara County or
in the United States District Court for the Northern District of California,
and the parties hereby submit to the personal jurisdiction of said courts.

     26.  Payments Due Deceased Employee.  If Employee dies prior
to the expiration of the term of his employment, any payments that may
be due Employee from Employer under this Agreement as of the date of
death shall be paid to Employee's executors, administrators, heirs,
personal representatives, successors, or assigns.


     IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written in the City of Saratoga,
County of Santa Clara, State of California.


EMPLOYER:                          EMPLOYEE:

SARATOGA NATIONAL BANK


By:______________________________       __________________________
   V. Ronald Mancuso                      Richard L.Mount
   Compensation Committee Chairman


SARATOGA BANCORP


By:______________________________
      V. Ronald Mancuso
      Compensation Committee Chairman