Exhibit 10.26

                                MONTEREY BAY BANK
                      FORM OF SALARY CONTINUATION AGREEMENT


         THIS AGREEMENT is adopted this first day of January, 2003, by and among
Monterey Bay Bancorp, Inc. (the "Parent Company"), a corporation organized under
the laws of the State of Delaware, located in Watsonville,  California; Monterey
Bay Bank (the  "Company"),  a federally  chartered  savings and loan association
organized  under  the  laws  of  the  United  States  of  America,   located  in
Watsonville, California; and * (the "Executive").


                                  INTRODUCTION

         The Company is willing to provide salary  continuation  benefits to the
Executive and the Parent Company is willing to guarantee the  performance of the
Company in  providing  such salary  continuation  benefits to the  Executive  in
recognition of Executive's  importance to the success of the Company. The salary
continuation  benefits  described  herein are not  intended  to be  provided  in
accordance  with any tax qualified  plan,  and are thus commonly  referred to as
"non-qualified benefits".

         This Agreement provides for Executive to be 100% vested in his right to
receive  salary  continuation  benefits  as of  the  proper  execution  of  this
Agreement.   Executive's  right  to  receive  salary  continuation  benefits  is
forfeitable only in the event of specific  limited  circumstances as defined and
described herein.

         The Company will pay the salary continuation  benefits from its general
assets.  Nothing in this  Agreement  is intended to provide  Executive  with any
lien, claim, or encumbrance upon any specific Company assets,  revenues, or cash
flows.  In regards to benefits  receivable  under this  Agreement,  Executive is
intended to be a general creditor of the Company.


                                    AGREEMENT

         The Parent Company and the Company  (collectively  the "Companies") and
the Executive agree as follows:

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Monterey Bay Bank Salary Continuation Agreement



                                    Article 1
                                   Definitions

         Whenever used in this Agreement,  the following words and phrases shall
have the meanings specified:

         1.1 "Change of Control"  means an event of a nature that:  (i) would be
required to be reported by the Parent Company or the Company in response to Item
I of the Current  Report on Form 8-K, as in effect on the date hereof,  pursuant
to Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 (the  "Exchange
Act");  or (ii)  results in a change in  control  of the  Parent  Company or the
Company  within the  meaning of the Home  Owners'  Loan Act of 1933 and / or the
Rules and Regulations  promulgated by the Office of Thrift  Supervision  ("OTS")
(or its predecessor agency), as in effect on the date hereof (provided,  that in
applying  the  definition  of change in control as set forth under the rules and
regulations  of the OTS, the Company  Board of Directors  shall  substitute  its
judgment  for that of the OTS);  or (iii) any  "person"  (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Parent Company, is
or becomes the  "beneficial  owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly,  of voting securities of the Parent Company or the
Company  representing  25% or  more of the  Parent  Company's  or the  Company's
outstanding voting securities or the right to acquire such securities except for
any  securities  purchased  by any tax  qualified  employee  benefit plan of the
Parent  Company or the Company;  or (iv)  individuals  who constitute the Parent
Company's  Board of Directors on the date hereof (the  "Incumbent  Board") cease
for any reason to  constitute  at least a majority  thereof,  provided  that any
person  becoming a director  subsequent  to the date hereof  whose  election was
approved by a vote of at least  three-quarters  of the directors  comprising the
Incumbent  Parent  Company  Board,  or  whose  nomination  for  election  by the
stockholders  was approved by the same  Nominating  Committee  serving  under an
Incumbent  Parent  Company  Board,  shall be, for  purposes of this clause (iv),
considered as though he were a member of the Incumbent  Parent Company Board; or
(v)  a  plan  of  reorganization,   merger,   consolidation,   sale  of  all  or
substantially  all the  assets of the Parent  Company or the  Company or similar
transaction  occurs  in which  the  Parent  Company  or the  Company  is not the
resulting  entity,  provided,  however,  that such an event listed above will be
deemed to have  occurred  or to have been  effectuated  upon the  receipt of all
required  regulatory  and  stockholder  approvals not including the lapse of any
statutory waiting periods.

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

         1.3   "Disability"   means   if  the   Executive   is   covered   by  a
Company-sponsored  or paid  disability  policy,  permanent  total  disability as
defined  in such  policy.  If the  Executive  is not  covered  by such a policy,
Disability means the Executive's suffering a sickness, accident, or injury that,
in the judgment of a physician who is satisfactory to both the Executive and the
Company,  prevents  the  Executive  from  performing  substantially  all  of the
Executive's normal duties for the Company.

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Monterey Bay Bank Salary Continuation Agreement



         1.4 "Early  Termination"  means the  Termination  of Employment  before
Normal Retirement Age for reasons other than death, Disability,  Termination for
Cause, or following a Change of Control.

         1.5 "Early  Termination  Date" means the month,  day, and year in which
Early Termination occurs.

         1.6 "Effective Date" means January 1, 2003.

         1.7 "Normal  Retirement Age" means the Executive  attaining 65 years of
age.

         1.8 "Normal  Retirement Date" means the later of Normal  Retirement Age
or Termination of Employment.

         1.9 "Plan Year" means a twelve-month period commencing on January 1 and
ending on December 31 of each calendar year.

         1.10 "Termination for Cause" See Article 5.

         1.11  "Termination of Employment" means that the Executive ceases to be
employed by the Company as * for any reason,  other than by reason of a leave of
absence approved by the Company.


                                    Article 2
                                Lifetime Benefits

         2.1 Normal  Retirement  Benefit.  Upon  Termination of Employment on or
after Normal  Retirement Age for reasons other than death, the Company shall pay
to the  Executive the annual  benefit  described in this Section 2.1, in lieu of
any benefit under any other Section of Article 2 of this Agreement.

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Monterey Bay Bank Salary Continuation Agreement


         2.1.1 Amount of Benefit.  The annual  benefit under this Section 2.1 is
**. The annual  benefit under this Section 2.1 may not be decreased  without the
consent of Executive.

         2.1.2 Payment of Benefit.  The Company shall pay the annual  benefit to
the  Executive in twelve (12) equal  monthly  installments  on the first of each
month  commencing  with the month following the  Executive's  Normal  Retirement
Date,  and  continuing  through the month in which the Executive  dies, at which
time such monthly payments shall cease.

         2.1.3 Benefit  Increases.  Commencing on the first  anniversary  of the
first benefit  payment,  and  continuing  on each  subsequent  anniversary,  the
Company's Board of Directors, at its sole discretion, may increase the benefit.

         2.2 Early  Termination  Benefit.  Upon Early  Termination,  the Company
shall pay to the Executive the annual benefit  described in this Section 2.2, in
lieu of any benefit under any other Section of Article 2 of this Agreement.

         2.2.1 Amount of Benefit.  The annual  benefit under this Section 2.2 is
**. The annual  benefit under this Section 2.2 may not be decreased  without the
consent of Executive.

         2.2.2 Payment of Benefit.  The Company shall pay the annual  benefit to
the  Executive in twelve (12) equal  monthly  installments  on the first of each
month commencing with the month following Normal  Retirement Age, and continuing
through  the month in which  the  Executive  dies,  at which  time such  monthly
payments shall cease.

         2.2.3 Benefit Increases.  Benefit payments may be increased as provided
in Section 2.1.3.
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Monterey Bay Bank Salary Continuation Agreement


         2.3 Disability Benefit. If the Executive  terminates  employment due to
Disability prior to Normal  Retirement Age and following the Company's  purchase
of an initial  disability policy prior to March 31, 2003 covering Executive with
a lump  sum  benefit  of at  least  $1,000,000,  the  Company  shall  pay to the
Executive  the benefit  described  in this  Section  2.3, in lieu of any benefit
under any other Section of Article 2 of this Agreement. The Company shall not be
obligated  at any time to  maintain  a  disability  policy  covering  Executive.
However,  the absence of such a disability  policy shall not relieve the Company
of its financial  obligation to Executive  under this Section of this  Agreement
once the initial  disability  policy  covering  Executive  is  purchased  by the
Company prior to March 31, 2003.

         2.3.1 Amount of Benefit. The benefit under this Section 2.3 is ***.

         2.3.2  Payment of  Benefit.  The  Company  shall pay the benefit to the
Executive in a lump sum within sixty (60) days following twelve (12) consecutive
months of Disability,  with such twelve  consecutive  month period commencing on
the date of Termination of Employment due to Disability.

         2.4  Change of  Control  Benefit.  Upon a Change of  Control,  followed
within  twenty-four  (24) months by the  Executive's  Termination  of Employment
prior to Normal  Retirement Age for reasons other than death or Disability,  the
Company shall pay to the Executive the annual benefit  described in this Section
2.4,  in lieu of any  benefit  under  any  other  Section  of  Article 2 of this
Agreement. The parties to this Agreement acknowledge that the "Change of Control
Benefit" is identical to the "Normal Retirement  Benefit" provided under Section
2.1 and the "Early Termination Benefit" provided under Section 2.2, and thus the
obligations  of the  Companies and the benefit to the Executive are not impacted
by a Change of Control.

         2.4.1 Amount of Benefit.  The annual  benefit under this Section 2.4 is
**. The annual  benefit under this Section 2.4 may not be decreased  without the
consent of Executive.

         2.4.2 Payment of Benefit.  The Company shall pay the annual  benefit to
the  Executive in twelve (12) equal  monthly  installments  on the first of each
month  commencing  with the month  following  the  Normal  Retirement  Age,  and
continuing  through the month in which the  Executive  dies,  at which time such
monthly payments shall cease.

         2.4.3 Benefit Increases.  Benefit payments may be increased as provided
in Section 2.1.3.

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Monterey Bay Bank Salary Continuation Agreement

         2.4.4 Excess Parachute Payment.  Notwithstanding  any provision of this
Agreement to the contrary,  if, in the opinion of independent tax accountants or
counsel  selected,  retained,  and  paid  for by the  Companies  and  reasonably
acceptable to the Executive ("Tax Counsel"), any of the compensation or benefits
payable,  or to be provided,  to Executive by the Companies under this Agreement
would be treated as an excess parachute payment ("Excess Payment") as defined in
Section 280G(b)(1) of the Code (whether alone or in conjunction with payments or
benefits by the Companies outside of this Agreement), the Companies shall direct
Tax  Counsel  to  determine  and  compare  (i)   Executive's  net  income  after
Executive's payment of all federal,  state, and local taxes assuming that all of
the  compensation and benefits payable by the Companies under this Agreement and
all such other arrangements are paid to Executive and Executive pays the "Excise
Tax" (as imposed under Code Section 4999); and (ii) Executive's net income after
payment of all federal,  state and local taxes assuming that the total amount of
compensation  and benefits payable by the Companies under this Agreement and all
such other  arrangements  is reduced such that no Excess Payment results and the
Excise Tax is not triggered.  If the amount  calculated under (ii) above is less
than the amount  calculated  under (i) above,  then the full amount due from the
Companies  under all such  arrangements  shall be payable to  Executive.  If the
amount  calculated under (ii) above is not less than the amount calculated under
(i) above,  then the total amount of compensation and benefits payable under all
such arrangements shall be reduced, as provided below, such that Executive shall
receive no Excess  Payment and shall have no personal  liability for Excise Tax.
In the event that the amount of any  payments,  including  any  benefits,  which
would be payable to or for the benefit of Executive under this Agreement must be
modified or reduced to comply with this Section  2.4.4,  Executive  shall direct
which  payments  are to be  modified  or reduced.  This  Section  2.4.4 shall be
interpreted  so as to maximize the net after-tax  dollar value to Executive.  In
determining whether any Excess Payment exists and the most advantageous  outcome
for  Executive,  the  parties  shall take into  account all  provisions  of Code
Section 280G,  and the  Regulations  thereunder,  including  making  appropriate
adjustments  to such  calculations  for amounts  established  to be  "Reasonable
Compensation"  as provided in Section  280G(b)(4) of the Code. The Companies and
Executive  shall  cooperate  fully with Tax Counsel and provide Tax Counsel with
all  compensation  and benefit  amounts,  personal  tax  information,  and other
information  necessary or helpful in calculation of such net after-tax  amounts.
In the  event of any  Internal  Revenue  Service  examination,  audit,  or other
inquiry,  the Companies and  Executive  agree to take action to provide,  and to
cooperate  in  providing,  evidence to the Internal  Revenue  Service  (and,  if
applicable, the state revenue department) to achieve this goal.


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Monterey Bay Bank Salary Continuation Agreement



         2.4.5  Correction  of Excess  Parachute  Payment  Adjustment.  If it is
established  pursuant to a final determination of a court or an Internal Revenue
Service   proceeding,   or  pursuant  to  an  opinion  of  Tax   Counsel,   that
notwithstanding  the good faith of the  Companies  and Executive in applying the
terms of Section 2.4.4, either (i) the amounts paid to Executive unintentionally
constituted  Excess  Payment  and  triggered  the Excise  Tax,  even  though the
payments to Executive  were  reduced in an effort to avoid such result;  or (ii)
the amounts paid to Executive  were reduced by more than was  necessary to avoid
triggering the Excise Tax, then the parties shall make the applicable correction
that will achieve the goal  described in Section  2.4.4.  In the event the error
referred to in clause (i) hereof occurs,  Executive is hereby  required to repay
to the  Companies,  within 15 days  after the error is  discovered,  the  amount
necessary to avoid the Excise Tax; provided,  however, that if Executive,  based
on advice from Tax Counsel and Executive's own tax advisor,  determines that the
return of such amounts will not serve to  eliminate  the Excess  Payment and the
Excise Tax, the Companies then shall be obligated to pay to Executive, within 15
days after Executive  notifies the Companies of Executive's  determination,  the
total  amount  by which the  original  amount of  Executive's  compensation  and
benefits were reduced  pursuant to the terms of Section 2.4.4.  In the event the
error  referred  to in clause  (ii)  hereof  occurs,  the  Companies  are hereby
required to repay to  Executive,  within 30 days after the error is  discovered,
the maximum amount of the  compensation  and benefits that were reduced pursuant
to the terms of Section 2.4.4 that Executive may receive without  triggering the
Excise Tax.


                                    Article 3
                                 Death Benefits

         3.1 Death During Active Service.  Upon the  Executive's  death while in
the active  service of the  Company,  the Company  shall pay to the  Executive's
beneficiary  the benefit  described  in the Split Dollar  Agreement  between the
Company and the Executive of even date herewith (the "Split Dollar  Agreement"),
subject  to Article 5 and  Article 7 hereof,  and no  benefits  shall be payable
under Article 2 of this Agreement.

         3.2 Death During Payment of a Lifetime  Benefit.  If the Executive dies
after  receiving any Lifetime  Benefit  payments  pursuant to Article 2 Sections
2.1, 2.2, or 2.4 of this  Agreement,  the payments  under Article 2 shall cease,
and the Executive's beneficiary shall receive the benefit described in the Split
Dollar Agreement, subject to Article 5 and Article 7 hereof.

         3.3 Death  After  Termination  of  Employment  But Before  Payment of a
Lifetime  Benefit  Commences.  If the Executive has a Termination  of Employment
that would entitle him to a Lifetime  Benefit under Article 2 of this Agreement,
but dies prior to the commencement of said benefit  payments,  the Company shall
pay to the  Executive's  beneficiary  the benefit  described in the Split Dollar
Agreement,  subject to Article 5 and Article 7 hereof,  and no benefits shall be
payable under Article 2 of this Agreement.

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Monterey Bay Bank Salary Continuation Agreement



                                    Article 4
                                  Beneficiaries

         4.1   Beneficiary   Designations.   The  Executive  shall  designate  a
beneficiary by filing a written designation with the Company.  The Executive may
revoke  or  modify  the  designation  at any time by  filing a new  designation.
However,  designations  will be effective  only if signed by the  Executive  and
received  by the  Company  during  the  Executive's  lifetime.  The  Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases  the Executive,  or if the Executive names his spouse as beneficiary
and the marriage is  subsequently  dissolved,  or if the Executive names someone
other  than his  spouse  as  beneficiary  and he  subsequently  marries.  If the
Executive dies without a valid  beneficiary  designation,  all payments shall be
made to the Executive's estate.

         4.2  Facility  of  Payment.  If a benefit is  payable to a minor,  to a
person  declared  incompetent,   or  to  a  person  incapable  of  handling  the
disposition  of his or her  property,  the Company  may pay such  benefit to the
guardian,  legal  representative,  or person  having the care or custody of such
minor, incompetent person, or incapable person. The Company may require proof of
incompetence,  minority,  or guardianship,  as it may deem appropriate  prior to
distribution of the benefit.  Such distribution  shall completely  discharge the
Company from all liability with respect to such benefit.

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Monterey Bay Bank Salary Continuation Agreement



                                    Article 5
                               General Limitations

         5.1  Termination  for  Cause.  Notwithstanding  any  provision  of this
Agreement  to the  contrary,  the Company  shall not pay any benefit  under this
Agreement if the Company  terminates the  Executive's  employment for any one or
more of the following reasons ("Termination for Cause"):

            (a)   Gross  negligence or gross neglect of duties to the Company in
                  connection with the Executive's employment that has a material
                  adverse effect on the Company; or

            (b)   Conviction of a criminal felony; or

            (c)   Any breach of fiduciary duty to the Company involving personal
                  profit; or

            (d)   Fraud, disloyalty, dishonesty, or willful violation of any law
                  or significant Company policy committed in connection with the
                  Executive's  employment that has a material  adverse effect on
                  the Company.

         5.2  Suicide  or  Misstatement.  The  Company  shall  not pay any death
benefit under Article 3 of this Agreement if the Executive commits suicide after
the date of this Agreement, if such suicide prevents the Company from collecting
the full amount of proceeds from any and all life insurance  policies  issued in
connection with the Split Dollar  Agreement of even date herewith.  In addition,
the Company shall not pay any death benefit under Article 3 of this Agreement if
the Executive has made any material  misstatement of fact on any application for
a life  insurance  policy issued in connection  with the Split Dollar  Agreement
that prevents the Company from  collecting the full amount of proceeds from such
policy.

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Monterey Bay Bank Salary Continuation Agreement


         5.3 Regulatory  Restrictions.  The following  provisions shall apply to
the benefits to be provided to Executive under this Agreement, provided that, as
set forth in subsections  (b), (c), and (d) below,  Executive's  vested benefits
under  this  Agreement   shall  not  be  affected  by  the  provisions  of  such
subsections.

     (a) If Executive is suspended from office and / or  temporarily  prohibited
         from  participating in the conduct of the Company's affairs by a notice
         served  under  Section  8(e)(3)  or  8(g)(1)  of  the  Federal  Deposit
         Insurance  Act,  12 U.S.C.  ss.1818(e)(3)  or  (g)(1);  the  Companies'
         obligations  under this Agreement  shall be suspended as of the date of
         service,  unless stayed by appropriate  proceedings.  If the charges in
         the notice are  dismissed,  the Company may in its  discretion  (i) pay
         Executive all or part of any payments  under this  Agreement  that were
         withheld  while their  contract  obligations  were  suspended  and (ii)
         reinstate  (in  whole or in part)  any of the  obligations  which  were
         suspended.

     (b) If  Executive  is  removed  and  /  or  permanently   prohibited   from
         participating  in the  conduct  of the  Company's  affairs  by an order
         issued  under  Section  8(e)(4)  or  8(g)(1)  of  the  Federal  Deposit
         Insurance Act, 12 U.S.C.  ss.1818(e)(4)  or (g)(1),  all obligations of
         the Companies  under this contract shall  terminate as of the effective
         date of the order,  but vested rights of the contracting  parties shall
         not be affected.

     (c) If the  Company is in  default  as  defined  in Section  3(x)(1) of the
         Federal Deposit Insurance Act, 12 U.S.C.  ss.1813(x)(1) all obligations
         of the Companies under this Agreement shall terminate as of the date of
         default,  but this paragraph  shall not affect any vested rights of the
         contracting parties.

     (d) All   obligations  of  the  Company  under  this  Agreement   shall  be
         terminated,  except to the extent  determined that  continuation of the
         Agreement is necessary for the continued  operation of the institution,
         (i) by the Director of the OTS (or his  designee)  or the FDIC,  at the
         time the FDIC enters into an agreement to provide  assistance  to or on
         behalf of the Company under the authority contained in Section 13(c) of
         the Federal Deposit Insurance Act, 12 U.S.C.ss.1823(c);  or (ii) by the
         Director of the OTS (or his  designee) at the time the Director (or his
         designee)  approves a supervisory merger to resolve problems related to
         the  operations of the Company or when the Company is determined by the
         Director  to be in an unsafe or  unsound  condition.  Any rights of the
         parties that have  already  vested,  however,  shall not be affected by
         such action.

     (e) Any payments made to Executive  pursuant to this  Agreement are subject
         to and conditioned upon compliance with 12 U.S.C. ss.1828(k), 12 C.F.R.
         ss.545.121,  FDIC  regulation  12 CFR Part 359,  Golden  Parachute  and
         Indemnification  Payments,  and any rules and  regulations  promulgated
         thereunder.

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Monterey Bay Bank Salary Continuation Agreement



                                    Article 6
                           Claims and Review Procedure

         6.1 Claims Procedure. An Executive or beneficiary  ("Claimant") who has
not received  benefits under this  Agreement  that he or she believes  should be
paid shall make a claim for such benefits as follows:

         6.1.1  Initiation--Written  Claim.   The Claimant  initiates a claim by
submitting to the Company a written claim for the benefits.

         6.1.2 Timing of Company  Response.  The Company  shall  respond to such
Claimant  within a 90-day  period  after  receiving  the claim.  If the  Company
determines that special circumstances require additional time for processing the
claim,  the Company can extend the response  period by an  additional 90 days by
notifying  the  Claimant  in  writing,  prior to the end of the  initial  90-day
period, that an additional period is required.  The notice of extension must set
forth the special  circumstances  and the date by which the  Company  expects to
render its decision.

         6.1.3 Notice of Decision.  If the Company denies all or any part of the
claim,  the Company  shall notify the  Claimant in writing of such  denial.  The
Company shall write the notification in a manner  calculated to be understood by
the Claimant. The notification shall set forth:

            (a)   The specific reasons for the denial;

            (b)   A reference to the specific  provisions  of this  Agreement on
                  which the denial is based;

            (c)   A  description  of  any  additional  information  or  material
                  necessary  for  the  Claimant  to  perfect  the  claim  and an
                  explanation of why it is needed;

            (d)   An explanation of this Agreement's  review  procedures and the
                  time limits applicable to such procedures; and

            (e)   A statement  of the  Claimant's  right to bring a civil action
                  under  ERISA  Section  502(a)  following  an  adverse  benefit
                  determination on review.

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Monterey Bay Bank Salary Continuation Agreement



         6.2  Review  Procedure.  If the  Company  denies all or any part of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

         6.2.1  InitiationWritten  Request.  To  initiate  the  review,  the
Claimant,  within 60 days after receiving the Company's  notice of denial,  must
file with the Company a written request for review.

         6.2.2 Additional  Submissions--Information  Access.  The Claimant shall
then have the opportunity to submit written comments,  documents,  records,  and
other  information  relating to the claim.  The Company  shall also  provide the
Claimant, upon request and free of charge,  reasonable access to, and copies of,
all documents,  records,  and other information relevant to the Claimant's claim
for benefits.

         6.2.3  Considerations on Review. In considering the review, the Company
shall take into account all  materials  and  information  the  Claimant  submits
relating to the claim,  without regard to whether such information was submitted
or considered in the initial benefit determination.

         6.2.4 Timing of Company Response.  The Company shall respond in writing
to such Claimant within 60 days after  receiving the request for review.  If the
Company  determines  that  special  circumstances  require  additional  time for
processing  the  claim,  the  Company  can  extend  the  response  period  by an
additional 60 days by notifying the Claimant in writing, prior to the end of the
initial  60-day  period,  that an additional  period is required.  The notice of
extension  must set forth the  special  circumstances  and the date by which the
Company expects to render its decision.

         6.2.5  Notice of  Decision.  The Company  shall  notify the Claimant in
writing of its decision on review. The Company shall write the notification in a
manner calculated to be understood by the Claimant.  The notification  shall set
forth:

            (a)   The specific reasons for the denial;

            (b)   A reference to the specific  provisions  of this  Agreement on
                  which the denial is based;

            (c)   A statement  that the  Claimant  is entitled to receive,  upon
                  request and free of charge,  reasonable  access to, and copies
                  of, all documents,  records and other information  relevant to
                  the Claimant's claim for benefits; and

            (d)   A statement  of the  Claimant's  right to bring a civil action
                  under ERISA Section 502(a).

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Monterey Bay Bank Salary Continuation Agreement


                                    Article 7
                           Amendments and Termination

         This Agreement may be amended or terminated only by a written agreement
signed by the Company,  the Parent  Company,  and the Executive;  however,  this
Agreement will  automatically  terminate if no further benefit is payable to the
Executive  or any  Beneficiary  due to the  Executive's  Termination  for Cause,
suicide, or material misstatement as set forth in Article 5.


                                    Article 8
                                  Miscellaneous

         8.1 Binding Effect. Subject to the provisions of Sections 8.3 and 8.4,,
this  Agreement   shall  bind  the  Executive  and  the  Companies,   and  their
beneficiaries,  survivors, executors, successors, assigns,  administrators,  and
transferees.

         8.2 No Guarantee of  Employment.  This  Agreement is not an  employment
policy  or  contract.  It does not give the  Executive  the  right to  remain an
employee of the  Company,  nor does it  interfere  with the  Company's  right to
discharge  the  Executive.  It also does not require the  Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.

         8.3 Non-Transferability.  Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached, or encumbered in any manner.

         8.4 Reorganization. In the event that the Parent Company or the Company
shall merge or consolidate into or with another entity,  or reorganize,  or sell
substantially  all of its assets to another entity,  then the Parent Company and
the Company shall obtain the agreement of such  succeeding or continuing  entity
to assume,  honor,  and discharge the  obligations  of the Companies  under this
Agreement.  Upon the  occurrence  of such event,  the terms  "Company",  "Parent
Company",  and "Companies" as used in this Agreement shall be deemed to refer to
the successor or survivor entity or entities.

         8.5  Tax  Withholding.  The  Company  shall  withhold  and  pay  to the
applicable tax  authorities  (and the benefits  payable shall be reduced by) any
taxes that are  required to be withheld  from the benefits  provided  under this
Agreement.

                                                             Page 13 of 36 Pages
<PAGE>


Monterey Bay Bank Salary Continuation Agreement



         8.6  Applicable  Law. The Agreement and all rights  hereunder  shall be
governed by the laws of the State of California,  except to the extent preempted
by the laws of the United States of America.

         8.7 Unfunded Arrangement. The Executive and any beneficiary are general
unsecured  creditors  of the  Company  for the  payment of  benefits  under this
Agreement.  The benefits  represent  the mere promise by the Company to pay such
benefits.  The rights to benefits are not subject in any manner to anticipation,
alienation,  sale, transfer,  assignment,  pledge,  encumbrance,  attachment, or
garnishment  by creditors.  Any insurance on the  Executive's  life is a general
asset of the Company to which the Executive and beneficiary have no preferred or
secured claim.

         8.8  Parent  Company  Guarantee.  The  Parent  Company  unconditionally
guarantees the  performance of the Company in regards to its  obligations  under
this Agreement.  If amounts or benefits due from the Company to the Executive or
his beneficiary are not timely paid or provided by the Company, such amounts and
benefits shall be paid or provided by the Parent Company.

         8.9 Entire Agreement.  This Agreement  constitutes the entire agreement
between  the  Companies  and the  Executive  as to the  subject  matter  hereof.
However,  this  Agreement is in addition to, and shall not  supercede or nullify
any of, Executive's Employment Agreement with the Parent Company and the Company
dated May 1, 2002,  the Split Dollar  Agreement of even date  herewith,  and the
Executive  Bonus  Agreement of even date herewith.  No rights are granted to the
Executive by virtue of this Agreement  other than those  specifically  set forth
herein.

         8.10 Administration.  The Company shall have full power, authority, and
discretion to administer this Agreement, including, but not limited to, the full
power, authority, and discretion to:

            (a)   Interpret the provisions of the Agreement;

            (b)   Hear and decide any and all claims made under this Agreement;

            (c)   Establish  and  revise  the  method  of  accounting  for  this
                  Agreement;

            (d)   Maintain a record of benefit payments; and

            (e)   Establish rules and prescribe any forms necessary or desirable
                  to administer this Agreement.

                                                             Page 14 of 36 Pages
<PAGE>


Monterey Bay Bank Salary Continuation Agreement



              8.11 Named Fiduciary. The Company shall be the named fiduciary and
plan  administrator  under this  Agreement.  The named fiduciary may delegate to
others  certain  aspects  of the  management  and  operational  responsibilities
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.



         IN WITNESS WHEREOF, the Executive,  the Parent Company, and the Company
have signed this Agreement.



EXECUTIVE                                     MONTEREY BAY BANK




--------------------------------------        ----------------------------------
*                                             McKenzie Moss
                                              Chairman of the Board of Directors



WITNESS                                       MONTEREY BAY BANCORP, INC.




--------------------------------------        ----------------------------------
Mary Anne Carson                              McKenzie Moss
                                              Chairman of the Board of Directors


                                                             Page 15 of 36 Pages
<PAGE>


Monterey Bay Bank Salary Continuation Agreement



                         FORM OF BENEFICIARY DESIGNATION



I designate the following as beneficiary of any death benefits under this Salary
Continuation Agreement:

Primary:  ______________________________________________________________________

________________________________________________________________________________

Contingent:  ___________________________________________________________________

________________________________________________________________________________

Note:    To  name a  trust  as  beneficiary,  please  provide  the  name  of the
         trustee(s) and the exact name and date of the trust agreement.

I understand that I may change these beneficiary  designations at any time prior
to my death by filing a new  written  designation  with the  Company.  I further
understand that the designations will be automatically revoked if:

A. the beneficiary predeceases me, or,
B. I have  named my spouse  as  beneficiary  and our  marriage  is  subsequently
dissolved;  or,
C. I name  someone  other  than my  spouse  as  beneficiary  and I  subsequently
remarry.


Signature ____________________________________


Date      ____________________________________


Acknowledged by the Company this ______ day of _________________, 2003.


By                 ____________________________________

Name:              ____________________________________

Title              ____________________________________


                                                             Page 16 of 36 Pages
<PAGE>


                                MONTEREY BAY BANK
                         FORM OF SPLIT DOLLAR AGREEMENT


         THIS AGREEMENT is adopted this first day of January, 2003, by and among
Monterey Bay Bancorp, Inc. (the "Parent Company"), a corporation organized under
the laws of the State of Delaware, located in Watsonville,  California; Monterey
Bay Bank (the  "Company"),  a federally  chartered  savings and loan association
organized  under  the  laws  of  the  United  States  of  America,   located  in
Watsonville,  California;  and * (the "Executive").  This Agreement shall append
the  Split  Dollar  Endorsement  entered  into  on  even  date  herewith  or  as
subsequently amended, by and among the aforementioned parties.


                                  INTRODUCTION

         The  Company  is  willing to divide  the death  benefit  proceeds  of a
Company owned life insurance  policy on the Executive's  life with the Executive
and the Parent Company is willing to guarantee the performance of the Company in
dividing  such death  benefit  proceeds  with the  Executive in  recognition  of
Executive's  importance to the success of the Company. The Company will pay life
insurance   premiums  for  the  Company  owned  life  insurance  policy  on  the
Executive's life from its general assets.

         This Agreement provides for Executive to be 100% vested in his right to
receive a portion of the death benefit  proceeds as enumerated  herein as of the
proper  execution of this  Agreement.  Executive's  right to these death benefit
proceeds is forfeitable only in the event of specific  limited  circumstances as
defined and described herein.


                                    AGREEMENT

         The Parent Company and the Company  (collectively  the "Companies") and
the Executive agree as follows:


                                    Article 1
                               General Definitions

         The following terms shall have the meanings specified:

         1.1 "Insured" means the Executive.


                                                             Page 17 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement


         1.2  "Insurer"  means each life  insurance  carrier in which there is a
Split Dollar Policy Endorsement attached to this Agreement.

         1.3  "Policy"  means the  specific  life  insurance  policy or policies
issued by the Insurer.

         1.4  "Termination   for  Cause"  means  the  Company   terminating  the
Executive's employment for any one or more of the following reasons:

            (a)   Gross  negligence or gross neglect of duties to the Company in
                  connection with the Executive's employment that has a material
                  adverse effect on the Company; or

            (b)   Conviction of a criminal felony; or

            (c)   Any breach of fiduciary duty to the Company involving personal
                  profit; or

            (d)   Fraud, disloyalty, dishonesty, or willful violation of any law
                  or significant Company policy committed in connection with the
                  Executive's  employment that has a material  adverse effect on
                  the Company.

         1.5  "Termination of Employment"  means that the Executive ceases to be
employed by the Company as * for any reason,  other than by reason of a leave of
absence approved by the Company.


                                    Article 2
                   Policy Ownership / Interests / Restrictions

         2.1 Company Ownership.  The Company is the sole owner of the Policy and
shall have the right to exercise all incidents of  ownership.  The Company shall
be the beneficiary of the remaining  death benefit  proceeds of the Policy after
the  Interest  of the  Executive  or the  Executive's  transferee  has been paid
according to Section 2.2 below.

         2.2  Executive's  Interest.  The  Executive  shall  have  the  right to
designate the beneficiary of death benefit  proceeds of the Policy in the amount
of ***. The Executive  shall also have the right to elect and change  settlement
options that may be permitted.

         2.3 Option to  Purchase.  The  Company  shall not sell,  surrender,  or
transfer ownership of the Policy while this Agreement is in effect without first
giving the Executive or the  Executive's  transferee  the option to purchase the
Policy  for a period  of 60 days from  written  notice  of such  intention.  The
purchase  price  shall be an  amount  equal to the cash  surrender  value of the
Policy.  This  provision  shall not impair the right of the Company to terminate
this Agreement.


                                                             Page 18 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement




         2.4 Regulatory  Restrictions.  The following  provisions shall apply to
the benefits to be provided to Executive under this Agreement, provided that, as
set forth in subsections  (b), (c), and (d) below,  Executive's  vested benefits
under  this  Agreement   shall  not  be  affected  by  the  provisions  of  such
subsections.

     (a) If Executive is suspended from office and / or  temporarily  prohibited
         from  participating in the conduct of the Company's affairs by a notice
         served  under  Section  8(e)(3)  or  8(g)(1)  of  the  Federal  Deposit
         Insurance  Act,  12 U.S.C.  ss.1818(e)(3)  or  (g)(1);  the  Companies'
         obligations  under this Agreement  shall be suspended as of the date of
         service,  unless stayed by appropriate  proceedings.  If the charges in
         the notice are  dismissed,  the Company may in its  discretion  (i) pay
         Executive all or part of any payments  under this  Agreement  that were
         withheld  while their  contract  obligations  were  suspended  and (ii)
         reinstate  (in  whole or in part)  any of the  obligations  which  were
         suspended.

     (b) If  Executive  is  removed  and  /  or  permanently   prohibited   from
         participating  in the  conduct  of the  Company's  affairs  by an order
         issued  under  Section  8(e)(4)  or  8(g)(1)  of  the  Federal  Deposit
         Insurance Act, 12 U.S.C.  ss.1818(e)(4)  or (g)(1),  all obligations of
         the Companies  under this contract shall  terminate as of the effective
         date of the order,  but vested rights of the contracting  parties shall
         not be affected.

     (c) If the  Company is in  default  as  defined  in Section  3(x)(1) of the
         Federal Deposit Insurance Act, 12 U.S.C.  ss.1813(x)(1) all obligations
         of the Companies under this Agreement shall terminate as of the date of
         default,  but this paragraph  shall not affect any vested rights of the
         contracting parties.

     (d) All   obligations  of  the  Company  under  this  Agreement   shall  be
         terminated,  except to the extent  determined that  continuation of the
         Agreement is necessary for the continued  operation of the institution,
         (i) by the Director of the OTS (or his  designee)  or the FDIC,  at the
         time the FDIC enters into an agreement to provide  assistance  to or on
         behalf of the Company under the authority contained in Section 13(c) of
         the Federal Deposit Insurance Act, 12 U.S.C.ss.1823(c);  or (ii) by the
         Director of the OTS (or his  designee) at the time the Director (or his
         designee)  approves a supervisory merger to resolve problems related to
         the  operations of the Company or when the Company is determined by the
         Director  to be in an unsafe or  unsound  condition.  Any rights of the
         parties that have  already  vested,  however,  shall not be affected by
         such action.

     (e) Any payments made to Executive  pursuant to this  Agreement are subject
         to and conditioned upon compliance with 12 U.S.C. ss.1828(k), 12 C.F.R.
         ss.545.121,  FDIC  regulation  12 CFR Part 359,  Golden  Parachute  and
         Indemnification  Payments,  and any rules and  regulations  promulgated
         thereunder.



                                                             Page 19 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement




                                    Article 3
                                    Premiums

         3.1 Premium  Payment.  The Company  shall pay any  premiums  due on the
Policy.

         3.2 Economic Benefit.  The Company shall determine the economic benefit
attributable  to the Executive  based on the amount of the current term rate for
the  Executive's  age multiplied by the aggregate  death benefit  payable to the
Executive's beneficiary.  The "current term rate" is the minimum amount required
to be imputed under IRS Notice 2002-59, or any subsequent  applicable authority.
The Company shall  perform all tax  information  reporting  required by federal,
state, and local taxation authorities in conjunction with reporting the economic
benefit described in this Section 3.2 as additional taxable income of Executive.


                                    Article 4
                                   Assignment

       The Executive may assign  without  consideration  all of the  Executive's
interests  in the Policy and  Executive's  rights  under this  Agreement  to any
person,  entity,  or  trust.  In the event the  Executive  transfers  all of the
Executive's  interest in the Policy, then all of the Executive's interest in the
Policy  and  rights  under the  Agreement  shall be  vested  in the  Executive's
transferee,  who shall be  substituted as a party  hereunder,  and the Executive
shall have no further interest in the Policy or rights under this Agreement, but
the Executive shall not be relieved of any obligations hereunder.


                                    Article 5
                                     Insurer

       The Insurer shall be bound only by the terms of the Policy.  Any payments
the Insurer makes or actions it takes in accordance  with the Policy shall fully
discharge it from all claims, suits, and demands of all entities or persons. The
Insurer  shall not be bound by or be deemed to have notice of the  provisions of
this Agreement.


                                                             Page 20 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement



                                    Article 6
                           Claims and Review Procedure

       6.1 Claims  Procedure.  An Executive or beneficiary  ("Claimant") who has
not received  benefits under this  Agreement  that he or she believes  should be
paid shall make a claim for such benefits as follows:

              6.1.1 Initiation - Written Claim.  The Claimant  initiates a claim
       by submitting to the Company a written claim for the benefits.

              6.1.2 Timing of Company  Response.  The Company  shall  respond to
       such claimant  within a 90-day period after  receiving the claim.  If the
       Company determines that special circumstances require additional time for
       processing  the claim,  the Company can extend the response  period by an
       additional 90 days by notifying the claimant in writing, prior to the end
       of the initial 90-day period, that an additional period is required.  The
       notice of extension must set forth the special circumstances and the date
       by which the Company expects to render its decision.

              6.1.3 Notice of Decision. If the Company denies all or any part of
       the claim,  the  Company  shall  notify the  Claimant  in writing of such
       denial.  The Company shall write the notification in a manner  calculated
       to be understood by the Claimant. The notification shall set forth:

              (a)   The specific reasons for the denial,

              (b)   A reference to the specific  provisions of this Agreement on
                    which the denial is based;

              (c)   A  description  of any  additional  information  or material
                    necessary  for the  Claimant  to  perfect  the  claim and an
                    explanation of why it is needed;

              (d)   An explanation of this Agreement's review procedures and the
                    time limits applicable to such procedures; and

              (e)   A statement of the Claimant's  right to bring a civil action
                    under ERISA  Section  502(a)  following  an adverse  benefit
                    determination on review.


                                                             Page 21 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement



         6.2  Review  Procedure.  If the  Company  denies all or any part of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

              6.2.1  Initiation - Written Request.  To initiate the review,  the
       Claimant,  within 60 days after receiving the Company's notice of denial,
       must file with the Company a written request for review.

              6.2.2 Additional  Submissions - Information  Access.  The Claimant
       shall then have the  opportunity to submit written  comments,  documents,
       records,  and other information  relating to the claim. The Company shall
       also provide the  Claimant,  upon request and free of charge,  reasonable
       access to, and copies of, all documents,  records,  and other information
       relevant to the Claimant's claim for benefits.

              6.2.3  Considerations  on Review.  In considering the review,  the
       Company  shall  take into  account  all  materials  and  information  the
       Claimant  submits  relating to the claim,  without regard to whether such
       information   was  submitted  or   considered  in  the  initial   benefit
       determination.

              6.2.4 Timing of Company  Response.  The Company  shall  respond in
       writing to such  Claimant  within a 60-day  period  after  receiving  the
       request for review. If the Company determines that special  circumstances
       require  additional time for processing the claim, the Company can extend
       the response period by an additional 60 days by notifying the Claimant in
       writing,  prior  to  the  end of  the  initial  60-day  period,  that  an
       additional period is required. The notice of extension must set forth the
       special circumstances and the date by which the Company expects to render
       its decision.

              6.2.5 Notice of Decision. The Company shall notify the Claimant in
       writing  of  its  decision  on  review.   The  Company  shall  write  the
       notification in a manner calculated to be understood by the Claimant. The
       notification shall set forth:

              (a)   The specific reasons for the denial;

              (b)   A reference to the specific  provisions of this Agreement on
                    which the denial is based;

              (c)   A statement  that the Claimant is entitled to receive,  upon
                    request and free of charge, reasonable access to, and copies
                    of, all documents, records and other information relevant to
                    the Claimant's claim for benefits; and

              (d)   A statement of the Claimant's  right to bring a civil action
                    under ERISA Section 502(a).


                                                             Page 22 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement



                                    Article 7
                            Amendment and Termination

       This Agreement may be amended or terminated  only by a written  agreement
signed by the Company,  the Parent  Company,  and the Executive;  however,  this
Agreement will  automatically  terminate if no further benefit is payable to the
Executive or any Beneficiary due to the Executive's Termination for Cause, or in
the event the Insurer  refuses to pay the Policy  according  to the terms of the
Policy.  If the  Insurer  refuses to pay the Policy  following  the death of the
Executive  and the Company  receives no death  benefit  proceeds from the Policy
following the death of the Executive,  then  Executive's  Interest as defined in
Section 2.2 shall be zero.


                                    Article 8
                                  Miscellaneous

         8.1 Binding  Effect.  This  Agreement  shall bind the Executive and the
Companies,   and  their   beneficiaries,   survivors,   successors,   executors,
administrators, and transferees, and any Policy beneficiary.

         8.2 No Guarantee of  Employment.  This  Agreement is not an  employment
policy  or  contract.  It does not give the  Executive  the  right to  remain an
employee of the  Company,  nor does it  interfere  with the  Company's  right to
discharge  the  Executive.  It also does not require the  Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.

         8.3  Applicable  Law. The Agreement and all rights  hereunder  shall be
governed  by and  construed  according  to the laws of the State of  California,
except to the extent preempted by the laws of the United States of America.

         8.4 Reorganization. In the event that the Parent Company or the Company
shall merge or consolidate into or with another company, or reorganize,  or sell
substantially  all of its assets to another entity,  then the Parent Company and
the Company shall obtain the agreement of such  succeeding or continuing  entity
to assume,  honor,  and discharge the  obligations  of the Companies  under this
Agreement.  Upon the  occurrence  of such event,  the terms  "Company",  "Parent
Company",  and "Companies" as used in this Agreement shall be deemed to refer to
the successor or survivor entity or entities.

         8.5 Notice. Any notice,  consent, or demand required or permitted to be
given  under the  provisions  of this  Split  Dollar  Agreement  by one party to
another  shall be in writing,  shall be signed by the party giving or making the
same,  and may be  given  either  by  delivering  the same to such  other  party
personally,  or by mailing the same, by United States  certified  mail,  postage
prepaid,  to such party,  addressed to his or her last known address as shown on
the records of the Company. The date of such mailing shall be deemed the date of
such mailed notice, consent, or demand.

                                                             Page 23 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement

         8.6 Entire Agreement.  This Agreement  constitutes the entire agreement
between  the  Companies  and the  Executive  as to the  subject  matter  hereof.
However,  this  Agreement is in addition to, and shall not  supercede or nullify
any of, Executive's Employment Agreement with the Parent Company and the Company
dated May 1, 2002, the Salary Continuation  Agreement of even date herewith, and
the Executive  Bonus  Agreement of even date herewith.  No rights are granted to
the  Executive by virtue of this  Agreement  other than those  specifically  set
forth herein.

         8.7  Parent  Company  Guarantee.  The  Parent  Company  unconditionally
guarantees the  performance of the Company in regards to its  obligations  under
this Agreement.  If amounts or benefits due from the Company to the Executive or
his beneficiary are not timely paid or provided by the Company, such amounts and
benefits shall be paid or provided by the Parent Company.

         8.8 Administration.  The Company shall have full power, authority,  and
discretion to administer this Agreement, including, but not limited to, the full
power, authority, and discretion to:

            (a)   Interpret the provisions of this Agreement;

            (b)   Hear and decide any and all claims made under this Agreement;

            (c)   Establish  and  revise  the  method  of  accounting  for  this
                  Agreement;

            (d)   Maintain a record of benefit payments; and

            (e)   Establish rules and prescribe any forms necessary or desirable
                  to administer this Agreement.

         8.9  Tax  Withholding.  The  Company  shall  withhold  and  pay  to the
applicable tax  authorities  (and the benefits  payable shall be reduced by) any
taxes that are  required to be withheld  from the benefits  provided  under this
Agreement.


                                                             Page 24 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement




         8.10 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator  under the Agreement.  The named  fiduciary may delegate to others
certain aspects of the management and operation  responsibilities  including the
employment  of advisors and the  delegation of  ministerial  duties to qualified
individuals.



         IN WITNESS WHEREOF, the Executive,  the Parent Company, and the Company
have signed this Agreement.



EXECUTIVE                                     MONTEREY BAY BANK




--------------------------------------        ----------------------------------
*                                             McKenzie Moss
                                              Chairman of the Board of Directors



WITNESS                                       MONTEREY BAY BANCORP, INC.




--------------------------------------        ----------------------------------
Mary Anne Carson                              McKenzie Moss
                                              Chairman of the Board of Directors


                                                             Page 25 of 36 Pages
<PAGE>


      FPRM OF SPLIT DOLLAR POLICY ENDORSEMENT (various insurance companies)
                    MONTEREY BAY BANK SPLIT DOLLAR AGREEMENT

Insurer:                                                             Insured:  *
Policy Number:                                         Owner:  Monterey Bay Bank

       Pursuant to the terms of the  MONTEREY  BAY BANK SPLIT  DOLLAR  AGREEMENT
dated January 1, 2003, the undersigned Owner requests that the  above-referenced
policy issued by the above named Insurer  provide for the following  beneficiary
designation and limited contract ownership rights to the Insured:

       1. Upon the death of the  Insured,  proceeds  shall be paid in one sum to
the Owner,  its  successors  or  assigns,  to the extent of its  interest in the
policy.  It is hereby provided that the Insurer may rely solely upon a statement
from the Owner as to the amount of proceeds it is entitled to receive under this
paragraph.

       2. Any  proceeds at the death of the Insured in excess of the amount paid
under the provisions of the preceding paragraph shall be paid in one sum to:

--------------------------------------------------------------------------------
           PRIMARY BENEFICIARY, RELATIONSHIP / SOCIAL SECURITY NUMBER

--------------------------------------------------------------------------------
          CONTINGENT BENEFICIARY, RELATIONSHIP / SOCIAL SECURITY NUMBER

The exclusive  right to change the  beneficiary  for the proceeds  payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this  paragraph  which are available  under the terms of the policy and to
assign all rights and interests  granted under this paragraph are hereby granted
to the  Insured.  The sole  signature  of the  Insured  shall be  sufficient  to
exercise said rights.  The Owner retains all contract  rights not granted to the
Insured under this paragraph.

       3. It is agreed by the  undersigned  that this  designation  and  limited
assignment of rights shall be subject in all respects to the  contractual  terms
of the policy.

       4. Any payment  directed by the Owner under this  endorsement  shall be a
full  discharge  of the  Insurer,  and such  discharge  shall be  binding on all
parties claiming any interest under the policy.

The  undersigned  for the Owner is  signing  in a  representative  capacity  and
warrants  that he or she has the  authority  to bind the entity on whose  behalf
this document is being executed.

Signed at Watsonville, California this 19th day of December, 2002.

INSURED                                       OWNER / MONTEREY BAY BANK



-------------------------------------         ----------------------------------
*                                             McKenzie Moss
                                              Chairman of the Board of Directors


                                                             Page 26 of 36 Pages
<PAGE>


Monterey Bay Bank Split Dollar Agreement

                                MONTEREY BAY BANK
                        FORM OF EXECUTIVE BONUS AGREEMENT


         THIS AGREEMENT is adopted this first day of January, 2003, by and among
Monterey Bay Bancorp, Inc. (the "Parent Company"), a corporation organized under
the laws of the State of Delaware, located in Watsonville,  California; Monterey
Bay Bank (the  "Company"),  a federally  chartered  savings and loan association
organized  under  the  laws  of  the  United  States  of  America,   located  in
Watsonville, California; and * (the "Executive").


                                  INTRODUCTION

         The Company is willing to provide bonus  compensation  to the Executive
and the Parent Company is willing to guarantee the performance of the Company in
providing such bonus compensation to the Executive in recognition of Executive's
importance to the success of the Company.

         This Agreement provides for Executive to be 100% vested in his right to
receive  bonus  compensation  as of the  proper  execution  of  this  Agreement.
Executive's right to receive bonus compensation is forfeitable only in the event
of specific limited circumstances as defined and described herein.

         The Company will pay the bonus  compensation  from its general  assets.
Nothing in this Agreement is intended to provide Executive with any lien, claim,
or encumbrance  upon any specific  Company assets,  revenues,  or cash flows. In
regards to benefits receivable under this Agreement, Executive is intended to be
a general creditor of the Company.


                                    AGREEMENT

         The Parent Company and the Company  (collectively  the "Companies") and
the Executive agree as follows:


                                                             Page 27 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement




                                    Article 1
                                   Definitions

       Whenever used in this  Agreement,  the following  words and phrases shall
have the meanings specified:

         1.1  "Bonus  Award"  means  only  the  bonus  compensation  paid to the
Executive or on behalf of the  Executive  pursuant to this  Agreement for a Plan
Year and does not include any salary or any other compensation or benefit.

         1.2 "Plan Year" means the calendar year.

         1.3  "Termination   for  Cause"  means  the  Company   terminating  the
Executive's employment for any one or more of the following reasons:

            (a)   Gross  negligence or gross neglect of duties to the Company in
                  connection with the Executive's employment that has a material
                  adverse effect on the Company; or

            (b)   Conviction of a criminal felony; or

            (c)   Any breach of fiduciary duty to the Company involving personal
                  profit; or

            (d)   Fraud, disloyalty, dishonesty, or willful violation of any law
                  or significant Company policy committed in connection with the
                  Executive's  employment that has a material  adverse effect on
                  the Company.

                                                             Page 28 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement





                                    Article 2
                           Bonus Award / Restrictions

         2.1 Bonus Award. The Company shall pay the Executive or his Beneficiary
a Bonus  Award for each Plan Year until the Plan Year that  commences  following
the date of the Executive's  death. The amount of the Bonus Award shall be equal
to the amount  calculated  under paragraph (a) less the amount  calculated under
paragraph (b), below:

     (a) The  Executive's   economic  benefit  under  a  separate  Split  Dollar
         Agreement  among the  Executive and the Companies of even date herewith
         (the "Split Dollar  Agreement"),  as determined by the Company pursuant
         to Section 3.2 of the Split Dollar Agreement,  divided by one minus the
         Company's   combined  marginal   statutory  (as   differentiated   from
         effective)  federal  and state  income tax rate,  as  estimated  by the
         Company for each such Plan Year.

         LESS

     (b) The  Executive's   economic  benefit  under  a  separate  Split  Dollar
         Agreement  among the Executive and the Companies of even date herewith,
         as  determined  by the  Company  pursuant  to Section  3.2 of the Split
         Dollar Agreement.

Example

     Assumptions:

     Amount of Executive's economic benefit:  $6,000.00
     Company's combined marginal statutory federal and state income
     tax rate:  40.0%

     Bonus Award Calculation:

     Bonus Award = (($6,000 / (1-0.40)) - $6,000) = $4,000.00


                                                             Page 29 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement


         2.2 Payment of Bonus Award. Subject to Article 3, the Company shall pay
the Bonus Award to the  Executive  or his  Beneficiary  for each Plan Year on or
before  December  31 of such Plan Year.  The Company  shall  continue to pay the
Bonus Award to the Executive or his Beneficiary  each Plan Year,  including each
Plan Year  following the  termination  of the  Executive's  employment  with the
Company,  until  the  Plan  Year  that  commences  following  the  date  of  the
Executive's death; provided, however, upon the Executive's Termination for Cause
or if this Agreement is otherwise  terminated  pursuant to Article 3 herein, the
Bonus Award shall cease.

         2.3 Regulatory  Restrictions.  The following  provisions shall apply to
the benefits to be provided to Executive under this Agreement, provided that, as
set forth in subsections  (b), (c), and (d) below,  Executive's  vested benefits
under  this  Agreement   shall  not  be  affected  by  the  provisions  of  such
subsections.

     (a) If Executive is suspended from office and / or  temporarily  prohibited
         from  participating in the conduct of the Company's affairs by a notice
         served  under  Section  8(e)(3)  or  8(g)(1)  of  the  Federal  Deposit
         Insurance  Act,  12 U.S.C.  ss.1818(e)(3)  or  (g)(1);  the  Companies'
         obligations  under this Agreement  shall be suspended as of the date of
         service,  unless stayed by appropriate  proceedings.  If the charges in
         the notice are  dismissed,  the Company may in its  discretion  (i) pay
         Executive all or part of any payments  under this  Agreement  that were
         withheld  while their  contract  obligations  were  suspended  and (ii)
         reinstate  (in  whole or in part)  any of the  obligations  which  were
         suspended.

     (b) If  Executive  is  removed  and  /  or  permanently   prohibited   from
         participating  in the  conduct  of the  Company's  affairs  by an order
         issued  under  Section  8(e)(4)  or  8(g)(1)  of  the  Federal  Deposit
         Insurance Act, 12 U.S.C.  ss.1818(e)(4)  or (g)(1),  all obligations of
         the Companies  under this contract shall  terminate as of the effective
         date of the order,  but vested rights of the contracting  parties shall
         not be affected.

     (c) If the  Company is in  default  as  defined  in Section  3(x)(1) of the
         Federal Deposit Insurance Act, 12 U.S.C.  ss.1813(x)(1) all obligations
         of the Companies under this Agreement shall terminate as of the date of
         default,  but this paragraph  shall not affect any vested rights of the
         contracting parties.

                                                             Page 30 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement




     (d) All   obligations  of  the  Company  under  this  Agreement   shall  be
         terminated,  except to the extent  determined that  continuation of the
         Agreement is necessary for the continued  operation of the institution,
         (i) by the Director of the OTS (or his  designee)  or the FDIC,  at the
         time the FDIC enters into an agreement to provide  assistance  to or on
         behalf of the Company under the authority contained in Section 13(c) of
         the Federal Deposit Insurance Act, 12 U.S.C.ss.1823(c);  or (ii) by the
         Director of the OTS (or his  designee) at the time the Director (or his
         designee)  approves a supervisory merger to resolve problems related to
         the  operations of the Company or when the Company is determined by the
         Director  to be in an unsafe or  unsound  condition.  Any rights of the
         parties that have  already  vested,  however,  shall not be affected by
         such action.

     (e) Any payments made to Executive  pursuant to this  Agreement are subject
         to and conditioned upon compliance with 12 U.S.C. ss.1828(k), 12 C.F.R.
         ss.545.121,  FDIC  regulation  12 CFR Part 359,  Golden  Parachute  and
         Indemnification  Payments,  and any rules and  regulations  promulgated
         thereunder.


                                    Article 3
                            Amendment and Termination

         This Agreement may be amended or terminated only by a written agreement
signed by the Company,  the Parent  Company,  and the Executive;  however,  this
Agreement will  automatically  terminate if no further benefit is payable to the
Executive or any  Beneficiary  due to the  Executive's  Termination for Cause or
upon  termination of the Split Dollar  Agreement  executed on even date herewith
pursuant to its terms.


                                    Article 4
                            Parent Company Guarantee

         The Parent Company  unconditionally  guarantees the  performance of the
Company in  regards  to its  obligations  under  this  Agreement.  If amounts or
benefits due from the Company to the Executive or his beneficiary are not timely
paid or provided by the  Company,  such  amounts and  benefits  shall be paid or
provided by the Parent Company.

                                                             Page 31 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement




                                    Article 5
                           Claims and Review Procedure

       5.1 Claims  Procedure.  An Executive or beneficiary  ("Claimant") who has
not received  benefits under this  Agreement  that he or she believes  should be
paid shall make a claim for such benefits as follows:

              5.1.1 Initiation - Written Claim.  The Claimant  initiates a claim
       by submitting to the Company a written claim for the benefits.

              5.1.2 Timing of Company  Response.  The Company  shall  respond to
       such Claimant  within a 90-day period after  receiving the claim.  If the
       Company determines that special circumstances require additional time for
       processing  the claim,  the Company can extend the response  period by an
       additional 90 days by notifying the Claimant in writing, prior to the end
       of the initial 90-day period, that an additional period is required.  The
       notice of extension must set forth the special circumstances and the date
       by which the Company expects to render its decision.

              5.1.3 Notice of Decision. If the Company denies all or any part of
       the claim,  the  Company  shall  notify the  Claimant  in writing of such
       denial.  The Company shall write the notification in a manner  calculated
       to be understood by the Claimant. The notification shall set forth:

              (a)   The specific reasons for the denial;

              (b)   A reference to the specific  provisions of this Agreement on
                    which the denial is based;

              (c)   A  description  of any  additional  information  or material
                    necessary  for the  Claimant  to  perfect  the  claim and an
                    explanation of why it is needed;

              (d)   An explanation of this Agreement's review procedures and the
                    time limits applicable to such procedures; and

              (e)   A statement of the Claimant's  right to bring a civil action
                    under ERISA  Section  502(a)  following  an adverse  benefit
                    determination on review.

                                                             Page 32 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement




         5.2  Review  Procedure.  If the  Company  denies all or any part of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  5.2.1  Initiation - Written  Request.  To initiate the review,
         the Claimant,  within 60 days after  receiving the Company's  notice of
         denial, must file with the Company a written request for review.

                  5.2.2  Additional   Submissions  -  Information   Access.  The
         Claimant shall then have the  opportunity  to submit written  comments,
         documents,  records,  and other information  relating to the claim. The
         Company  shall also  provide  the  Claimant,  upon  request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant to the Claimant's claim for benefits.

                  5.2.3 Considerations on Review. In considering the review, the
         Company  shall take into  account all  materials  and  information  the
         Claimant submits relating to the claim,  without regard to whether such
         information   was  submitted  or  considered  in  the  initial  benefit
         determination.

                  5.2.4 Timing of Company Response. The Company shall respond in
         writing to such  Claimant  within a 60-day  period after  receiving the
         request  for   review.   If  the  Company   determines   that   special
         circumstances  require  additional  time for processing the claim,  the
         Company  can extend the  response  period by an  additional  60 days by
         notifying  the  Claimant  in  writing,  prior to the end of the initial
         60-day  period,  that an additional  period is required.  The notice of
         extension  must set forth  the  special  circumstances  and the date by
         which the Company expects to render its decision.

                  5.2.5  Notice  of  Decision.  The  Company  shall  notify  the
         Claimant in writing of its decision on review.  The Company shall write
         the  notification  in a  manner  calculated  to be  understood  by  the
         Claimant. The notification shall set forth:

                  (a) The specific reasons for the denial;

                  (b) A reference to the specific  provisions of this  Agreement
                      on which the denial is based;

                  (c) A statement that the Claimant is entitled to receive, upon
                      request  and free of  charge,  reasonable  access  to, and
                      copies of, all  documents,  records and other  information
                      relevant to the Claimant's claim for benefits; and

                  (d) A  statement  of the  Claimant's  right  to  bring a civil
                      action under ERISA Section 502(a).

                                                             Page 33 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement




                                    Article 6
                                  Miscellaneous

         6.1 Binding  Effect.  This  Agreement  shall bind the Executive and the
Companies and their beneficiaries,  survivors,  executors,  successors, assigns,
administrators, and transferees.

         6.2 No Guarantee of  Employment.  This  Agreement is not an  employment
policy  or  contract.  It does not give the  Executive  the  right to  remain an
employee of the  Company,  nor does it  interfere  with the  Company's  right to
discharge  the  Executive.  It also does not require the  Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.

         6.3  Applicable  Law. The Agreement and all rights  hereunder  shall be
governed by the laws of the State of California,  except to the extent preempted
by the laws of the United States of America.

         6.4 Non-Transferability.  Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

         6.5  Tax  Withholding.  The  Company  shall  withhold  and  pay  to the
applicable tax  authorities  (and the benefits  payable shall be reduced by) any
taxes  that  are  required  to be  withheld  from the  Bonus  Award  under  this
Agreement.

         6.6 Reorganization. In the event that the Parent Company or the Company
shall merge or consolidate into or with another entity,  or reorganize,  or sell
substantially  all of its assets to another entity,  then the Parent Company and
the Company shall obtain the agreement of such  succeeding or continuing  entity
to assume and discharge the  obligations of the Companies  under this Agreement.
Upon  occurrence  of such event,  the terms  "Company",  "Parent  Company",  and
"Companies" as used in this Agreement  shall be deemed to refer to the successor
or survivor entity or entities.

                                                             Page 34 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement




         6.7 Entire Agreement.  This Agreement  constitutes the entire agreement
between  the  Companies  and the  Executive  as to the  subject  matter  hereof.
However,  this  Agreement is in addition to, and shall not  supercede or nullify
any of, Executive's Employment Agreement with the Parent Company and the Company
dated May 1, 2002, the Salary Continuation  Agreement of even date herewith, and
the Split Dollar  Agreement of even date herewith.  No rights are granted to the
Executive by virtue of this Agreement  other than those  specifically  set forth
herein.

         6.8  Facility  of  Payment.   If  the   Executive  is  declared  to  be
incompetent,  or incapable of handling the  disposition  of his or her property,
the  Company  may  pay  such  benefit  to the  duly  appointed  guardian,  legal
representative,  or person  having  the care or custody  of the  Executive.  The
Company may require proof of incompetence,  minority,  or guardianship as it may
deem appropriate prior to distribution of the benefit.  Such distribution  shall
completely  discharge  the  Company  from all  liability  with  respect  to such
benefit.

         6.9 Administration.  The Company shall have full power, authority,  and
discretion to administer this Agreement,  including but not limited to, the full
power, authority, and discretion to:

            (a)   Interpret the provisions of this Agreement;

            (b)   Hear and decide any and all claims made under this Agreement;

            (c)   Establish  and  revise  the  method  of  accounting  for  this
                  Agreement;

            (d)   Maintain a record of Bonus Award payments; and

            (e)   Establish rules and prescribe any forms necessary or desirable
                  to administer this Agreement.

         6.10  Tax  Withholding.  The  Company  shall  withhold  and  pay to the
applicable tax  authorities  (and the benefits  payable shall be reduced by) any
taxes that are  required to be withheld  from the benefits  provided  under this
Agreement.

                                                             Page 35 of 36 Pages
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Monterey Bay Bank Executive Bonus Agreement




         6.11 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator  under this Agreement.  The named fiduciary may delegate to others
certain aspects of the management and operational responsibilities including the
employment  of advisors and the  delegation of  ministerial  duties to qualified
individuals.


         IN WITNESS WHEREOF, the Executive,  the Parent Company, and the Company
have signed this Agreement.


EXECUTIVE                                    MONTEREY BAY BANK




----------------------------------------     -----------------------------------
*                                            McKenzie Moss
                                             Chairman of the Board of Directors



WITNESS                                      MONTEREY BAY BANCORP, INC.




----------------------------------------     -----------------------------------
Mary Anne Carson                             McKenzie Moss
                                             Chairman of the Board of Directors


--------------------------------------------------------------------------------

Footnotes:
<TABLE>
<CAPTION>

<S>                                                          <C>                           <C>
* Executive Participants                                     C. Edward Holden              Mark R. Andino
                                                             Chief Executive Officer       Chief Financial Officer
                                                             President                     Treasurer

** Amount Of Salary Continuation Benefit                     $120,000                      $90,000

*** Amount Of Death Benefit, Disability Benefit              $1,521,568                    $1,141,175

</TABLE>


                                                             Page 36 of 36 Pages