Document:

<PAGE>

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION OF COUNSEL FOR
THE HOLDER THEREOF, WHICH OPINION SHALL BE ACCEPTABLE TO DISCOVERY BANCORP, THAT
REGISTRATION IS NOT REQUIRED.

OPTIONEES TO WHOM INCENTIVE STOCK OPTIONS ARE GRANTED MUST MEET CERTAIN HOLDING
PERIOD AND EMPLOYMENT REQUIREMENTS FOR FAVORABLE TAX TREATMENT.

UNLESS OTHERWISE STATED, ALL TERMS DEFINED IN THE PLAN SHALL HAVE THE SAME
MEANING HEREIN AS SET FORTH IN THE PLAN.

                                DISCOVERY BANCORP

                             STOCK OPTION AGREEMENT

                             2004 STOCK OPTION PLAN

      9           Incentive Stock Option

      9           Non-Qualified Stock Option

      THIS AGREEMENT, dated the day of __________, 20__, by and between
Discovery Bancorp, a California corporation (the "Corporation"), and ___________
("Optionee");

      WHEREAS, pursuant to the Corporation's 2004 Stock Option Plan (the
"Plan"), the Stock Option Committee has authorized the grant to Optionee of a
Stock Option to purchase all or any part of ____________ (_____) authorized but
unissued shares of the Corporation's Common Stock, no par value, at the price of
_____________ Dollars ($____________) per share, such Stock Option to be for the
term and upon the terms and conditions hereinafter stated;

      NOW, THEREFORE, it is hereby agreed:

      1.    Grant of Stock Option. Pursuant to said action of the Stock Option
Committee and pursuant to authorizations granted by all appropriate regulatory
and governmental agencies, the Corporation hereby grants to Optionee the option
to purchase, upon and subject to the terms and conditions of the Plan, which is
incorporated in full herein by this reference, all or any part of _____________
(_____) Option Shares of the Corporation's Common Stock at the price of Dollars
($_____) per share. For purposes of this Agreement and the Plan, the date of
grant shall be ______________. At the date of grant, Optionee does not own/owns
stock possessing more than 10% of the total combined voting power of all classes
of capital stock of the Corporation or any Subsidiary.

      The Stock Option granted hereunder is/is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended.

<PAGE>

      2.    Exercisability. This Stock Option shall be exercisable as to _____
Option Shares on _____; as to _____ Option Shares on _____; as to _____ Option
Shares on _____; as to _____ Option Shares on _____; and as to _____ Option
Shares on _____. This Stock Option shall remain exercisable as to all of such
Option Shares until _________, 20_____ (but not later than ten (10) years from
the date hereof), at which time it shall expire in its entirety, unless this
Stock Option has expired or terminated earlier in accordance with the provisions
hereof or of the Plan. Option Shares as to which this Stock Option become
exercisable may be purchased at any time prior to expiration of this Stock
Option.

      3.    Exercise of Stock Option. Subject to the provision of Paragraph 4
hereof, this Stock Option may be exercised by written notice delivered to the
Corporation stating the number of Option Shares with respect to which this Stock
Option is being exercised, together with cash (or bank, cashier's or certified
check) and/or, if permitted at or before the time of exercise by the Stock
Option Committee, shares of Common Stock of the Corporation which when added to
the cash payment, if any, have an aggregate Fair Market Value equal to the full
amount of the purchase price of such Option Shares. Not less than ten (10)
Option Shares may be purchased at any one time unless the number purchased is
the total number which remains to be purchased under this Stock Option and in no
event may the Stock Option be exercised with respect to fractional shares. Upon
exercise, Optionee shall make appropriate arrangements and shall be responsible
for the withholding of all federal and state income taxes then due, if any.

      4.    Agreement and Representations of Optionee. Unless the shares of
Common Stock covered by this Stock Option have been registered with the
Securities and Exchange Commission pursuant to the registration requirements
under the Securities Act of 1933, Optionee shall: (i) by and upon accepting this
Stock Option, represent and agree in writing, in the form of the letter attached
hereto as Exhibit "A," for himself or herself and his or her transferees by will
or the laws of descent and distribution, that the Option Shares will be acquired
for investment purposes and not for resale or distribution; and (ii) by and upon
the exercise of this Stock Option, or a part hereof, furnish evidence
satisfactory to counsel for the Corporation, including written and signed
representations in the form of the letter attached hereto as Exhibit "B," to the
effect that the Option Shares are being acquired for investment purposes and not
for resale or distribution, and that the Option Shares being acquired shall not
be sold or otherwise transferred by the Optionee except in compliance with the
registration provisions under the Securities Act of 1933, as amended, or an
applicable exemption therefrom. Furthermore, the Corporation, at its sole
discretion, to assure itself that any sale or distribution by the Optionee
complies with the Plan and any applicable federal or state securities laws, may
take all reasonable steps, including placing stop transfer instructions with the
Corporation's transfer agent prohibiting transfers in violation of the Plan and
affixing the following legend (and/or such other legend or legends as the Stock
Option Committee shall require) on certificates evidencing the shares:

            "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
            1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED,
            HYPOTHECATED OR OTHERWISE TRANSFERRED OR OFFERED FOR SALE IN THE
            ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM
            UNDER THE ACT OR A WRITTEN OPINION OF COUNSEL FOR THE HOLDER
            THEREOF, WHICH OPINION SHALL BE ACCEPTABLE TO DISCOVERY BANCORP,
            THAT REGISTRATION IS NOT REQUIRED."

                                       2
<PAGE>

At any time that Optionee contemplates the disposition of any of the Option
Shares (whether by sale, exchange, gift or other form of transfer), he or she
shall first notify the Corporation of such proposed disposition and shall
thereafter cooperate with the Corporation in complying with all applicable
requirements of law which, in the opinion of counsel for the Corporation, must
be satisfied prior to the making of such disposition. Before consummating such
disposition, Optionee shall provide to the Corporation an opinion of Optionee's
counsel, at the Corporation's expense, of which both such opinion and such
counsel shall be satisfactory to the Corporation, that such disposition will not
result in a violation of any state or federal securities laws or regulations.
The Corporation shall remove any legend affixed to certificates for Option
Shares if and when all of the restrictions on the transfer of the Option Shares,
whether imposed by the Plan or federal or state law, have terminated.

      5.    Prior Outstanding Stock Options. Pursuant to Section 8(b) of the
Plan, an Incentive Stock Option held by Optionee may be exercisable while the
Optionee has outstanding and unexercised any Incentive Stock Option previously
granted (or substituted) to him or her by the Corporation or a corporation which
(at the time of grant) is a parent or Subsidiary of the Corporation, or a
predecessor corporation of any such entity.

      6.    Cessation of Affiliation. Except as provided in Paragraph 7 hereof,
if, for any reason other than Optionee's disability or death, Optionee ceases to
be employed by or affiliated with the Corporation or a Subsidiary, this Stock
Option shall expire three (3) months thereafter or on the date specified in
Paragraph 2 hereof, whichever is earlier. During such period after cessation of
employment or affiliation, this Stock Option shall be exercisable only as to
those increments, if any, which had become exercisable as of the date on which
the Optionee ceased to be employed by or affiliated with the Corporation or
Subsidiary, and any Stock Options or increments which had not become exercisable
as of such date shall expire and terminate automatically on such date.

      7.    Termination for Cause. If Optionee's employment by or affiliation
with the Corporation or a Subsidiary is terminated for cause, this Stock Option
shall expire on the expiration dates specified for said Stock Options at the
time of their grant, or thirty (30) days after termination for cause, whichever
is earlier, unless reinstated by the Stock Option Committee within thirty (30)
days of such termination by giving written notice of such reinstatement to
Optionee. In the event of such reinstatement, Optionee may exercise this Stock
Option only to such extent, for such time, and upon such terms and conditions as
if Optionee had ceased to be employed by or affiliated with the Corporation or a
Subsidiary upon the date of such termination for a reason other than cause,
disability or death. For purposes of this Plan "cause" shall mean the Optionee's
malfeasance or gross misfeasance in the performance of his/her duties or his/her
conviction of illegal activity in connection therewith and, in any event, the
determination of the Stock Option Committee with respect thereto shall be final
and conclusive.

      8.    Disability or Death of Optionee. If Optionee becomes disabled or
dies while employed by or affiliated with the Corporation or a Subsidiary, or
during the three-month period referred to in Paragraph 6 hereof, this Stock
Option shall automatically expire and terminate one (1) year after the date of
Optionee's disability or death or on the day specified in Paragraph 2

                                       3
<PAGE>

hereof, whichever is earlier. After Optionee's disability or death but before
such expiration, the person or persons to whom Optionee's rights under this
Stock Option shall have passed by order of a court of competent jurisdiction or
by will or the applicable laws of descent and distribution, or the executor,
administrator or conservator of Optionee's estate, subject to the provisions of
Paragraph 14 hereof, shall have the right to exercise this Stock Option to the
extent that increments, if any, had become exercisable as of the date on which
Optionee ceased to be employed by or affiliated with the Corporation or a
Subsidiary. For purposes hereof, "disability" shall have the same meaning as set
forth in Section 14 of the Plan.

      9.    Nontransferability. This Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during Optionee's lifetime only by Optionee.

      10.   Employment. This Agreement shall not obligate the Corporation or a
Subsidiary to employ Optionee for any period, nor shall it interfere in any way
with the right of the Corporation or a Subsidiary to increase or reduce
Optionee's compensation.

      11.   Privileges of Stock Ownership. Optionee shall have no rights as a
stockholder with respect to the Option Shares unless and until said Option
Shares are issued to Optionee as provided in the Plan. Except as provided in
Section 15 of the Plan, no adjustment will be made for dividends or other rights
in respect of which the record date is prior to the date such stock certificates
are issued.

      12.   Modification and Termination by Board of Directors. The rights of
Optionee are subject to modification and termination upon the occurrence of
certain events as provided in Sections 16 and 17 of the Plan.

      13.   Notification of Sale. Optionee agrees that Optionee, or any person
acquiring Option Shares upon exercise of this Stock Option, will notify the
Corporation in writing not more than five (5) days after any sale or other
disposition of such Shares.

      14.   Approvals. This Agreement and the issuance of Option Shares
hereunder are expressly subject to the approval of the Plan and the form of this
Agreement by the holders of not less than a majority of the voting stock of the
Corporation. This Stock Option may not be exercised unless and until all
applicable requirements of all regulatory agencies having jurisdiction with
respect thereto, and of the securities exchanges upon which securities of the
Corporation are listed, if any, have been complied with.

      15.   Notices. All notices to the Corporation provided for in this
Agreement shall be addressed to it in care of its Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer or Secretary at its main office and
all notices to Optionee shall be addressed to Optionee's address on file with
the Corporation or a Subsidiary, or to such other address as either may
designate to the other in writing, all in compliance with the notice provisions
set forth in Section 26 of the Plan.

      16.   Incorporation of Plan. All of the provisions of the Plan are
incorporated herein by reference as if set forth in full in this Agreement. In
the event of any conflict between the terms

                                       4
<PAGE>

of the Plan and any provision contained herein, the terms of the Plan shall be
controlling and the conflicting provisions contained herein shall be
disregarded.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

         Discovery Bancorp                          Optionee

         By: _______________________                ____________________________
         Its:

         By: _______________________
         Its:

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<PAGE>

                                   EXHIBIT "A"

                              ____________ , 20____

Discovery Bancorp
1145 San Marino Drive, Suite 346
San Marcos, California 92069

Gentlemen:

      On this ___ day of ________, 20___, the undersigned has received,
pursuant to the Discovery Bancorp 2004 Stock Option Plan (the "Plan") and the
Stock Option Agreement (the "Agreement") by and between Southwest Community
Bancorp (the "Corporation") and the undersigned, dated _________, 20___ an
option to purchase _________ shares of the common stock, no par value, of the
Corporation (the "Stock").

      In consideration of the grant of such option by the Corporation:

      1. I hereby represent and warrant to you that the Stock to be acquired
pursuant to the option will be acquired by me in good faith and for my own
personal account, and not with a view to distributing the Stock to others or
otherwise reselling the stock in violation of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder.

      2. I hereby acknowledge and agree that: (a) the Stock to be acquired by me
pursuant to the Plan has not been registered and that there is no obligation on
the part of Corporation to register such Stock under the Securities Act of 1933,
as amended, and the rules and regulations thereunder; and (b) the Stock to be
acquired by me will not be freely tradeable unless the Stock is either
registered under the Securities Act of 1933, as amended, or the holder presents
a legal opinion acceptable to the Corporation that the transfer will not violate
the federal securities laws.

      3. I understand that the Corporation is relying upon the truth and
accuracy of the representations and agreements contained herein in determining
to grant such options to me and upon subsequently issuing any Stock pursuant to
the Plan without the Corporation first registering the same under the Securities
Act of 1933, as amended.

      4. I understand that the certificate evidencing the Stock to be issued
pursuant to the Plan will contain a legend upon the face thereof to the effect
that the Stock is not registered under the

Securities Act of 1933 and that stop transfer orders will be placed against the
shares with the Corporation's transfer agent.

<PAGE>

      5. In further consideration for the grant of an option to purchase Stock
of Corporation, the undersigned hereby agrees to indemnify you and hold you
harmless against all liability, cost, or expenses (including reasonable
attorney's fees) arising out of or as a result of any distribution or resale of
shares of Stock issued by the undersigned in violation of the securities laws.
The agreements contained herein shall inure to the benefit of and be binding
upon the respective legal representatives, successors and assigns of the
undersigned and the Corporation.

                                 Very truly yours,

                                 (Signature)

                                 (Type or Print Name)

<PAGE>

                                   EXHIBIT "B"

                               ___________, 20____

Discovery Bancorp
1145 San Marino Drive, Suite 346
San Marcos, California 92069

Gentlemen:

      On this ___ day of _________, 20___, the undersigned has acquired,
pursuant to the Discovery Bancorp 2004 Stock Option Plan (the "Plan") and the
Stock Option Agreement (the "Agreement") by and between Southwest Community
Bancorp (the "Corporation") and the undersigned, dated ______, 20___,______
(______) shares of the Common Stock, no par value, of the Corporation (the
"Stock"). In consideration of the issuance by the Corporation to the undersigned
of said shares of its Common Stock:

      1. I hereby represent and warrant to you that the Stock is being acquired
by me in good faith for my own personal account, and not with a view to
distributing the Stock to others or otherwise reselling the Stock in violation
of the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder.

      2. I hereby acknowledge and agree that: (a) the Stock being acquired by me
pursuant to the Plan has not been registered and that there is no obligation on
the part of the Corporation to register such Stock under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder; and (b)
the Stock being acquired by me is not freely tradeable and must be held by me
for investment purposes unless the Stock is either registered under the
Securities Act of 1933 or transferred pursuant to an exemption from such
registration, as accorded by the Securities Act of 1933 and under the rules and
regulations promulgated thereunder. I further represent and acknowledge that I
have been informed by legal counsel in connection with said Plan of the
restrictions on my ability to transfer the Stock and that I understand the scope
and effect of those restrictions.

      3. I understand that the effects of the above representations are the
following: (i) that the undersigned does not presently intend to sell or
otherwise dispose of all or any part of the shares of the Stock to any person or
entity except in compliance with the terms described above, in the Plan and in
the Agreement; and (ii) that the Corporation is relying upon the truth and
accuracy of the representations and agreements contained herein in issuing said
shares of the Stock to me without first registering the same under the
Securities Act of 1933, as amended.

      4. I hereby agree that the certificate evidencing the Stock may contain
the following legend stamped upon the face thereof to the effect that the Stock
is not registered under the Securities Act of 1933, as amended, and that the
Stock has been acquired pursuant to the representations and restrictions in this
letter, the Plan and in the Agreement:

<PAGE>

      "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
      OTHERWISE TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN
      OPINION OF COUNSEL FOR THE HOLDER THEREOF, WHICH OPINION SHALL BE
      ACCEPTABLE TO DISCOVERY BANCORP, THAT REGISTRATION IS NOT REQUIRED."

      5. I hereby agree and understand that the Corporation will place a stop
transfer notice with its stock transfer agent to ensure that the restrictions on
transfer described herein will be observed.

      6. In further consideration of the issuance of the Stock, the undersigned
does hereby agree to indemnify you and hold you harmless against all liability,
costs, or expenses (including reasonable attorney's fees) arising out of or as a
result of any distribution or resale by the undersigned of any of the Stock. The
Agreements contained herein shall inure to the benefit of and be binding upon
the respective legal representatives, successors and assigns of the undersigned
and the Corporation.

                                 Very truly yours,

                                 (Signature)

                                 (Type or Print Your Name)<PAGE>

                                DISCOVERY BANCORP

                            INDEMNIFICATION AGREEMENT

      THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made as of the ___ day
of ________, ____ by and between Discovery Bancorp, a California corporation
(the "Company"), and ____________________ (the "Indemnitee"), a director or
officer of the Company with reference to the following facts:

                                    RECITALS

      A.    The Company and the Indemnitee recognize that interpretations of
ambiguous statutes, regulations, court opinions, and the Company's Articles of
Incorporation and Bylaws are too uncertain to provide the Company's officers and
directors with adequate or reliable advance knowledge or guidance with respect
to the legal risks and potential liabilities to which they may become personally
exposed as a result of performing their duties in good faith for the Company;

      B.    The Company and the Indemnitee are aware of the substantial growth
in the number of lawsuits filed against corporate officers and directors in
connection with their activities in such capacities and by reason of their
status as such;

      C.    The Company and the Indemnitee recognize that the cost of defending
against such lawsuits, whether or not meritorious, is typically beyond the
financial resources of most officers and directors of the Company;

      D.    The Company and the Indemnitee recognize that legal risks and
potential officer or director liabilities, or the threat thereof, and the
resultant substantial time and expense endured in defending against such
lawsuits, bear no reasonable logical relationship to the amount of compensation
received by the Company's officers or directors. These factors pose a
significant deterrent to, and induce increased reluctance on the part of,
experienced and capable individuals to serve as officers or directors of the
Company;

      E.    The Company has investigated the availability and deficiency of
liability insurance to provide its officers and directors with adequate
protection against the foregoing legal risks and potential liabilities. The
Company has concluded that such insurance provides only limited protection to
its officers and directors, and that it is in the best interests of the Company
and its shareholders to contract with its officers and directors, including the
Indemnitee, to indemnify them to the fullest extent permitted by law against
personal liability for actions taken in the good faith performance of their
duties to the Company;

      F.    Section 317 of the General Corporation Law of the State of
California, which sets forth certain provisions relating to mandatory and
permissive indemnification of officers and directors of a California corporation
by such corporation, requires indemnification in certain circumstances, permits
it in other circumstances, and prohibits it in some circumstances;

      G. The Board of Directors of the Company has determined, after due
consideration and investigation of this Agreement and various other options
available in lieu hereof, that the following Agreement is reasonable, prudent
and necessary to promote and ensure the best interests of the Company and its
shareholders in that this Agreement is intended to: (i) induce and encourage
highly experienced and capable persons such as the Indemnitee to serve as

<PAGE>

officers and/or directors of the Company; (ii) encourage such persons to defend
what they consider unjustifiable suits and claims made against them in
connection with the good faith performance of their duties to the Company,
secure in the knowledge that certain expenses, costs and liabilities incurred by
them in their defense of such litigation will be borne by the Company and that
they will receive the maximum protection against such risks and liabilities as
legally may be made available to them; and (iii) encourage officers and
directors to exercise their best business judgment regarding matters which come
before the Board of Directors without undue concern for the risk that claims may
be made against them on account thereof;

      H.    Article Six of the Company's Articles of Incorporation, Article VI
of the Company's Bylaws, and California Corporations Code Section 317 authorize
indemnification of persons who serve or served as officers or directors of the
Company; and

      I.    The Company desires to have the Indemnitee continue to serve as an
officer or director of the Company free from concern for unpredictable,
inappropriate or unreasonable legal risk and personal liabilities by reason of
Indemnitee acting in good faith in the performance of Indemnitee's duty to the
Company. The Indemnitee desires to continue to serve as an officer or director
of the Company, provided, and on the express condition, that he is furnished
with the indemnity set forth herein.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below and based on the premises set forth above, the Company and the
Indemnitee do hereby agree as follows:

                                    AGREEMENT

      1.    Definitions. For the purposes of this Agreement, the following
definitions shall apply:

            (a)   The term "Agent" shall mean any person who is or was acting in
his capacity as a director or officer of the Company, or is or was serving as a
director, officer, employee or agent of any other enterprise at the request of
the Company, and whether or not he is serving in any such capacity at the time
any liability or expense is incurred for which indemnification or reimbursement
can be provided under this Agreement.

            (b)   The term "Applicable Standard" means that a person acted in
good faith and in a manner such person reasonably believed to be in the best
interests of the Company; except that in a criminal proceeding, such person must
also have had no reasonable cause to believe that such person's conduct was
unlawful. The termination of any Proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create any presumption, or establish, that the person did not meet the
"Applicable Standard."

            (c)   The term "Expenses" includes, without limitation, expenses of
investigations, judicial or administrative proceedings or appeals, court costs,
attorneys' fees and disbursements and any expenses of establishing a right to
indemnification under law or Paragraph 7 of this Agreement. "Expenses" shall not
include the amount of any judgment, fines or penalties actually levied against
Indemnitee or amounts paid in settlement of a Proceeding by or on behalf of
Indemnitee without court approval.

                                       2
<PAGE>

            (d)   "Independent Legal Counsel" shall include any firm of
attorneys selected by lot by the regular outside counsel for the Company from a
list of firms which meet minimum size criteria and other reasonable criteria
established by the Board of Directors of the Company, so long as such firm has
not represented the Company, the Indemnitee or any entity controlled by the
Indemnitee within the preceding twenty-four (24) calendar months.

            (e)   References to "other enterprise" shall include employee
benefit plans; references to "fines" shall include any excise tax assessed with
respect to any employee benefit plan; references to "serving at the request of
the Company" shall include any service as a director or officer of the Company
which imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants, or beneficiaries; and a
person who acts in good faith and in a manner he reasonably believes to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Company" as referred to in this Agreement.

            (f)   The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the name of the Company
or otherwise and whether of a civil, criminal, administrative or investigative
nature, in which Indemnitee may be or may have been involved as a party or
otherwise (other than as plaintiff against the Company), by reason of the fact
that the Indemnitee is or was an Agent of the Company or by reason of any action
taken by him or of any inaction on his part while acting as such Agent.

            (g)   "Registration Statement" means any registration statement
previously filed or hereafter filed by the Company under the Securities Act of
1933, as amended (the "Securities Act") on any applicable form (including Forms
S-8 and S-4) for the registration of any securities of the Company under the
Securities Act, including, without limitation, debt and equity securities,
guarantees, back-up undertakings, rights, warrants and options and interest in
employee benefit plans, and shall include any amendment, post-effective or
otherwise, thereto and any related registration statement filed pursuant to Rule
462 under the Securities Act.

      2.    Agreement to Serve. The Indemnitee agrees to serve or continue to
serve as a director and/or officer of the Company at the will of the Company or
in accordance with the terms of any agreement with the Company, as the case may
be, for so long as he is duly elected or appointed, or until such time as he
tenders his resignation in writing or his service is terminated.

      3.    Indemnity in Third Party Proceedings. The Company shall indemnify
the Indemnitee if the Indemnitee is made a party to or threatened to be made a
party to, or otherwise involved in, any Proceeding (other than a Proceeding
which is an action by or in the right of the Company to procure a judgment in
its favor), by reason of the fact that the Indemnitee is or was an Agent of the
Company. This indemnity shall apply, and be limited, to and against all
Expenses, judgments, fines, penalties, settlements, and other amounts, actually
and reasonably incurred by the Indemnitee in connection with the defense or
settlement of the Proceeding, so long as it is determined pursuant to Paragraph
7 of this Agreement or by the court before which such action was brought, that
the Indemnitee met the Applicable Standard.

      4.    Indemnity in Proceeding By or In the Name of the Company. The
Company shall indemnify the Indemnitee if the Indemnitee is made a party to, or
threatened to be made a party to, or otherwise involved in, any Proceeding which
is an action by or in the right of the Company to procure a judgment in its
favor by reason of the fact that the Indemnitee is or was an Agent of

                                       3
<PAGE>

the Company. This indemnity shall apply, and be limited, to and against all
expenses actually and reasonably incurred by the Indemnitee in connection with
the defense or settlement of such Proceeding, but only if: (a) the Indemnitee
met the Applicable Standard (except that the Indemnitee's belief regarding the
best interests of the Company need not have been reasonable); (b) the Indemnitee
also acted in a manner he believed to be in the best interests of the Company's
shareholders; and (c) the action is not settled or otherwise disposed of without
court approval. No indemnification shall be made under this Paragraph 4 in
respect of any claim, issue or matter as to which the Indemnitee shall have been
adjudged to be liable to the Company in the performance of such person's duty or
the Company, unless, and only to the extent that, the court in which such
proceeding is or was pending shall determine upon application that, in view of
all the circumstances of the case the Indemnitee is fairly and reasonably
entitled to indemnification for the expenses which such court shall determine.

      Notwithstanding the foregoing provisions of this Paragraph 4, the Company
and the Indemnitee agree that insofar as indemnification for liabilities arising
under the Securities Act may be permitted under this Agreement to the
Indemnitee, in the event that a claim for indemnification against such
liabilities is made by the Indemnitee (other than the payment by the Company of
expenses incurred or paid by the Indemnitee in the successful defense of any
action, suit or proceeding) in connection with a Registration Statement, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act, and the Company and the Indemnitee will be
governed by the final adjudication of such question.

      5.    Expenses of Successful Indemnitee. Notwithstanding any other
provision of this Agreement, to the extent the Indemnitee has been successful on
the merits in defense of any Proceeding referred to in Paragraphs 3 or 4 hereof,
or in defense of any claim, issue or matter therein, including the dismissal of
an action or portion thereof without prejudice, the Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred in connection
therewith.

      6.    Advances of Expenses. The Expenses incurred by the Indemnitee in any
Proceeding shall be advanced by the Company prior to the final disposition of
such proceeding at the written request of the Indemnitee, but only if the
Indemnitee shall undertake to repay such advances if it is ultimately determined
that the Indemnitee is not entitled to indemnification as provided for in this
Agreement. Any advance required hereunder shall be deemed to have been approved
by the Board of Directors of the Company to the extent this Agreement was so
approved. In determining whether or not to make an advance hereunder, the
ability of the Indemnitee to repay shall not be a factor. However, in a
Proceeding brought by the Company directly, in its own right (as distinguished
from an action brought derivatively or by any receiver or trustee), the Company
shall have discretion whether or not to make the advances called for hereby if
Independent Legal Counsel advises in writing that the Company has probable cause
to believe, and the Company does believe, that the Indemnitee did not act in
good faith with regard to the subject matter of the Proceeding or a material
portion thereof.

      The Company shall be entitled to participate in the Proceeding and to
assume the defense thereof, with counsel chosen by the Company reasonably
satisfactory to the Indemnitee, and after notice from the Company to the
Indemnitee of its election to assume the defense thereof, the Company shall not
be liable to the Indemnitee under this Paragraph 6 for any Expenses of other
counsel or any other Expenses, in each case, subsequently incurred by such
Indemnitee, in

                                       4
<PAGE>

connection with the defense thereof, other than reasonable costs of
investigation actually incurred by the Indemnitee. In the event that after
notice of such an action the Company does not assume the complete defense
thereof, then the Indemnitee may, but shall not be obligated, to conduct a
defense of the action with counsel of the Indemnitee's choosing reasonably
satisfactory to the Company, with reasonable attorneys' fees and other
reasonable Expenses to be paid by the Company within thirty (30) days of the
delivery of each invoice therefor to the Company. In all cases, no settlement
shall be entered into without the express prior written consent of the Company.
The Company and the Indemnitee shall cooperate fully in the defense of any
Proceeding regardless of which party assumes the defense; provided, further, the
Indemnitee's cooperation shall be without compensation.

      7.    Right of Indemnitee to Indemnification Upon Application; Procedure
Upon Application. Any advance under Paragraphs 5 and/or 6 hereof or
indemnification shall be made no later than forty-five (45) days after receipt
of a written request of the Indemnitee in accordance with Paragraph 11 hereof.
In all other cases, indemnification shall be made by the Company only if
authorized in the specific case, upon a determination that indemnification of
the Agent is proper under the circumstances and the terms of this Agreement by:
(a) a majority vote of a quorum of the Board of Directors (or a duly constituted
committee thereof), consisting of directors who are not parties to such
Proceeding; (b) approval of the shareholders (as defined in Section 153 of the
California Corporations Code, as that Section reads at present), with the
Indemnitee's shares not being entitled to vote thereon; (c) the court in which
such Proceeding is or was pending upon application made by the Company, the
Indemnitee or any person rendering services in connection with the Indemnitee's
defense, whether or not the Company opposes such application; or (d) to the
extent permitted by law, and only if the court refuses or is unable to rule, by
Independent Legal Counsel in a written opinion.

      The right to indemnification or advances as provided by this Agreement
shall be enforceable by the Indemnitee in any court of competent jurisdiction.
The burden of proving that indemnification or advances are not appropriate shall
be on the Company. Neither the failure of the Company (including its Board of
Directors, Independent Legal Counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because the Indemnitee has met the
Applicable Standard of Conduct, nor an actual determination by the Company
(including its Board of Directors or Independent Legal Counsel) that the
Indemnitee has not met such Applicable Standard of Conduct, shall be a defense
to the action or create a presumption that the Indemnitee has not met the
Applicable Standard of Conduct. The Indemnitee's Expenses incurred in connection
with successfully establishing his or her right to indemnification or advances
in any such Proceeding shall also be indemnified by the Company; provided,
however, that if the Indemnitee is only partially successful in establishing his
right to indemnification or advances, only an equitably allocated portion of
such Expenses, as determined by the court, shall be indemnified.

      If the Indemnitee is entitled under any provision of this Agreement or
indemnification by the Company, for some or a portion of the Expenses,
judgments, fines or penalties actually and reasonably incurred by the Indemnitee
in the investigation, defense, appeal or settlement of any Proceeding but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
the Indemnitee for the portion (determined on an equitable basis) of such
Expenses, judgments, fines or penalties to which the Indemnitee is entitled.

                                       5
<PAGE>

      The Company's obligations to advance or indemnify hereunder shall be
deemed satisfied to the extent of any payments made by an insurer on behalf of
the Company or the Indemnitee.

      8.    Indemnification Hereunder Not Exclusive. The indemnification
provided by this Agreement shall not be deemed exclusive of any other rights to
which the Indemnitee may be entitled under the Articles of Incorporation, the
Bylaws, any agreement, any vote of shareholders or disinterested directors, the
General Corporation Law of the State of California, or otherwise, both as to
action in the Indemnitee's official capacity and as to action in another
capacity while holding such office. The indemnification under this Agreement
shall continue as to the Indemnitee even though the Indemnitee may have ceased
to be a director or officer and shall inure to the benefit of the heirs and
personal representatives of the Indemnitee.

      9.    Limitations. The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against the Indemnitee:

            (a)   for which payment is actually made to or for the benefit of
the Indemnitee under a valid and collectible insurance policy, provided,
however, that the Company shall remain liable for any payments required by this
Agreement in excess of the amount of payment under such insurance;

            (b)   for which the Indemnitee is indemnified by the Company
otherwise than pursuant to this Agreement;

            (c)   for an accounting of profits made from the purchase or sale by
the Agent of securities of the Company within the meaning of Section 16(b) of
the Securities Exchange Act of 1994 and amendments thereto or similar provisions
of any state statutory law or common law;

            (d)   for acts or omissions that involve intentional misconduct or a
knowing and culpable violation of law;

            (e)   for acts or omissions that the Indemnitee believes to be
contrary to the best interests of the Company or its shareholders or that
involve the absence of good faith on the part of the Indemnitee;

            (f)   for any transaction from which the Indemnitee derived an
improper personal benefit;

            (g)   for acts or omissions that show a reckless disregard for the
Indemnitee's duty to the Company or its shareholders in circumstances in which
the Indemnitee was aware, or should have been aware, in the ordinary course of
performing his or her duties, of a risk of serious injury to the Company or its
shareholders;

            (h)   for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the Indemnitee's duty to the
Company or its shareholders;

            (i)   under Section 310 of the General Corporation Law of the State
of California, as that Section reads at present; or

            (j)   under Section 316 of the General Corporation Law of the State
of California, as that Section reads at present.

                                       6
<PAGE>

      10.   Savings Clause. If this Agreement or any portion hereof is
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify the Indemnitee as to Expenses, judgments,
fines and penalties with respect to any Proceeding to the full extent permitted
by any applicable portion of this Agreement or by any other applicable law.

      11.   Notices. The Indemnitee shall, as a condition precedent to the
Indemnitee's right to be indemnified under this Agreement, give to the Company
notice in writing within thirty (30) days after he becomes aware of any claim
made against him or her for which he or she believes, or should reasonably
believe, indemnification will or could be sought under this Agreement. Notice to
the Company shall be directed to the Company's main office, Attention: President
(or such other address as the Company shall designate in writing to the
Indemnitee). Failure to so notify the Company shall not relieve the Company of
any liability which it may have to the Indemnitee otherwise than under this
Agreement.

      All notices, requests, demands and other communications (collectively
"notices") provided for under this Agreement shall be in writing (including
communications by telephone, telex or telecommunication facilities providing
facsimile transmission) and mailed (postage prepaid and return receipt
requested), telegraphed, telexed, transmitted or personally served to each party
at the address set forth at the end of this Agreement or at such other address
as any party affected may designate in a written notice to the other parties in
compliance with this section. All such notices shall be effective when received;
provided, however, receipt shall be deemed to be effective within three (3)
business days of any properly addressed notice having been deposited in the
mail, within twenty-four (24) hours from the time electronic transmission was
made, or upon actual receipt of electronic delivery, whichever occurs first.

      No costs, charges or expenses for which indemnity shall be sought
hereunder shall be incurred without the Company's consent, which consent shall
not be unreasonably withheld.

      12.   Choice of Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California, including applicable
statutes of limitations and other procedural statutes.

      13.   Attorneys' Fees. If any legal action is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to recover, in
addition to the amounts to which the prevailing party may be entitled, actual
attorneys' fees and court costs as may be awarded by the court.

      14.   Amendments. Provisions of this Agreement may be waived, altered,
amended or repealed in whole or in part only by the written consent of all
parties.

      15.   Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement to any persons other than the parties to it and their respective
successors and assigns (including an estate of the Indemnitee), nor is anything
in this Agreement intended to relieve or discharge the obligation or liability
of any third persons to any party hereto. Furthermore, no provision of this
Agreement shall give any third persons any right of subrogation or action
against any party hereto.

                                       7
<PAGE>

      16.   Severability. If any portion of this Agreement shall be deemed by a
court of competent jurisdiction to be unenforceable, the remaining portions
shall be valid and enforceable only if, after excluding the portion deemed to be
unenforceable, the remaining terms shall provide for the consummation of the
transaction contemplated herein in substantially the same manner as originally
set forth at the date this Agreement was executed.

      17.   Successors and Assigns. All terms and conditions of this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective transferees, successors and assigns; provided, however, that this
Agreement and all rights, privileges, duties and obligations of the parties, may
not be assigned or delegated by any party without the prior written consent of
the other parties.

      18.   Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

      19.   Entire Agreement. Except as provided in Paragraph 8 hereof, this
Agreement represents and contains the entire agreement and understanding between
and among the parties, and all previous statements or understandings, whether
express or implied, oral or written, relating to the subject matter hereof are
fully and completely extinguished and superseded by this Agreement. This
Agreement shall not be altered or varied except by a writing duly signed by all
of the parties.

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.

                                           Discovery Bancorp
                                           1145 San Marino Drive, Suite 346
                                           San Marcos, California 92069

                                           By: _________________________________

                                           Its: ________________________________

"Indemnitee"

________________________________________

Address: _______________________________

         _______________________________

                                       8

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