Document:

EXHIBIT 10.14

                                 LIFE INSURANCE

                      ENDORSEMENT METHOD SPLIT DOLLAR PLAN

                                    AGREEMENT

INSURER/POLICY NUMBER:  Southland Life/0660015170
                        Union Central/U200001371

BANK: Solano Bank, a state-chartered commercial bank and wholly-owned subsidiary
      of North Bay Bancorp (the "Holding Company")

INSURED: Glen C. Terry

RELATIONSHIP OF INSURED TO BANK: Executive Officer

DATE:    September 21, 2001

         The  respective  rights and  duties of the Bank and the  Insured in the
above policy(ies) (the "Policy" or "Policies") shall be as follows:

I.       DEFINITIONS

         1. Refer to the Policy  provisions  for the  definition of all terms in
this Agreement other than those contained herein or set forth below:

         2. The term "Affiliate"  shall mean a corporation or entity of any type
directly or indirectly controlling or controlled by, or under direct or indirect
common  control  with,  the  Bank,  within  the  meaning  of Rule 144  under the
Securities Act of 1933, as amended.

II.      POLICY TITLE AND OWNERSHIP

         Title and  ownership  shall  reside in the Bank for its use and for the
use of the Insured all in accordance with this Agreement. The Bank alone may, to
the extent of its interest,  exercise the right to borrow or withdraw the Policy
cash values. Where the Bank and the Insured (or beneficiary[ies] or assignee[s],
with the  consent  of the  Insured)  mutually  agree to  exercise  the  right to
increase  the coverage  under the subject  split dollar  Policy,  then,  in such
event, the rights, duties and benefits of the parties to such increased coverage
shall continue to be subject to the terms of this Agreement.

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III.     BENEFICIARY DESIGNATION RIGHTS

         The Insured (or  beneficiary[ies]  or assignee[s]) shall have the right
and power to designate a beneficiary  or  beneficiaries  to receive his share of
the proceeds  payable  upon the death of the Insured,  and to elect and change a
payment option for such  beneficiary,  subject to any right or interest the Bank
may have in such proceeds, as provided in this Agreement.

IV.      PREMIUM PAYMENT METHOD

         The Bank  shall pay an amount  equal to the  planned  premiums  and any
other  premium  payments  that might become  necessary to maintain the Policy in
force.

V.       TAXABLE BENEFIT

         Annually  the  Insured  will  receive  a taxable  benefit  equal to the
assumed cost of insurance as required by the Internal Revenue Service.  The Bank
(or its  administrator)  will report to the Insured the amount of imputed income
received each year on Form W-2 or its equivalent.

VI.      DIVISION OF DEATH PROCEEDS

         Subject to Paragraph VII herein,  the division of the death proceeds of
the Policy is as follows:

         1.  If  death  occurs  before  age  seventy  one  (71),  the  Insured's
beneficiary(ies)  shall be  entitled to the lesser of  $750,000,  or one hundred
percent (100%) of the net at risk insurance proceeds.  If death occurs after age
seventy  one  (71)  but  on  or  before  age  eighty  one  (81),  the  Insured's
beneficiaries  shall be  entitled  to the  lesser of  $525,000,  or one  hundred
percent (100%) of the net at risk insurance proceeds.  If death occurs after age
eighty one (81), the Insured's  beneficiaries shall be entitled to the lesser of
$300,000,  or one hundred percent (100%) of the net at risk insurance  proceeds.
The net at risk  insurance  portion is the total proceeds less the cash value of
the Policy.

         2. The Bank and the Insured (or  beneficiary[ies] or assignee[s]) shall
share in any interest due on the death proceeds on a pro rata basis in the ratio
that the proceeds due the Bank and the Insured, respectively, bears to the total
proceeds, excluding any such interest.

         3 In the event that the Policy is terminated  other than as a result of
(a) a  termination  of  this  Agreement  pursuant  to  paragraph  X or  (b)  any
intentional  act of the Insured which results in the  termination of the Policy,
then the Bank shall pay to the Insider's  beneficiary(ies)  an amount which will
provide a total  after-tax  death  benefit equal to the benefit that the Insured
would have received if the Policy had not been terminated.

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VII.     DIVISION OF CASH SURRENDER VALUE

         The Bank  shall at all  times be  entitled  to an  amount  equal to the
Policy's  cash  value,  as that term is defined in the  Policy,  less any Policy
loans and unpaid interest or cash  withdrawals  previously  incurred by the Bank
and any applicable Policy surrender charges. Such cash value shall be determined
as of the date of  surrender  of the Policy or death of the  Insured as the case
may be.

VIII.    PREMIUM WAIVER

         If the Policy  contains a premium  waiver  provision,  any such  waived
amounts  shall be considered  for all purposes of this  Agreement as having been
paid by the Bank.

IX.      RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS

         In the event the Policy involves an endowment or annuity  element,  the
Bank's right and interest in any endowment proceeds or annuity benefits shall be
determined  under the  provisions of this  Agreement by regarding such endowment
proceeds or the  commuted  value of such annuity  benefits as the Policy's  cash
value.  Such endowment  proceeds or annuity benefits shall be treated like death
proceeds for the purposes of division under this Agreement.

X.       TERMINATION OF AGREEMENT

         This  Agreement  shall  terminate  at the option of the Bank  following
thirty (30) days written  notice to the Insured upon the happening of any one of
the following:  (i) the Insured commits fraud, theft or embezzlement against the
Bank, or any subsidiary or Affiliate thereof;  (ii) the Insured commits a felony
or a crime  involving  moral  turpitude;  (iii) the  Insured  compromises  trade
secrets or other  proprietary  information  of the Bank,  or any  subsidiary  or
Affiliate thereof; (iv) the Insured breaches any non-solicitation agreement with
the Bank, or any subsidiary or Affiliate  thereof;  (v) the Insured breaches any
of the material terms of any employment  agreement entered into with the Bank or
Holding Company and, if given the right in any such employment agreement,  fails
to cure said breach in accordance  therewith;  (vi) the Insured  breaches any of
the material terms of this  Agreement;  (vii) the Insured engages in any grossly
negligent act or willful misconduct that causes, or could be reasonably expected
to cause,  harm to the  business,  operations  or reputation of the Bank, or any
subsidiary  or  Affiliate  thereof;  or (viii) the Bank,  or any  subsidiary  or
Affiliate  thereof,  is ordered to  terminate  any  employment  agreement by any
governmental  regulatory agency with supervisory authority over the Bank, or any
subsidiary or Affiliate thereof.:

         Upon such termination, the Insured (or beneficiary[ies] or assignee[s])
shall  have a ninety  (90)  day  option  to  receive  from the Bank an  absolute
assignment  of the  Policy  in  consideration  of a

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cash payment to the Bank,  whereupon this Agreement shall  terminate.  Such cash
payment shall be the greater of:

         1. The Bank's share of the cash value of the Policy on the date of such
assignment, as defined in this Agreement.

         2. The amount of the premiums which have been paid by the Bank prior to
the date of such assignment.

         Should  the  Insured  (or  beneficiary[ies]  or  assignee[s])  fail  to
exercise this option within the prescribed  ninety (90) day period,  the Insured
(or beneficiary[ies] or assignee[s]) agrees that all of his rights, interest and
claims in the Policy shall  terminate as of the date of the  termination of this
Agreement.

         Except  as  provided   above,   this  Agreement  shall  terminate  upon
distribution  of the death  benefit  proceeds in  accordance  with  Paragraph VI
above.

XI.      INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS

         The Insured may not,  without  the prior  written  consent of the Bank,
assign to any  individual,  trust or other  organization,  any  right,  title or
interest in the Policy nor any rights,  options,  privileges  or duties  created
under this Agreement.

XII.     AGREEMENT BINDING UPON THE PARTIES

         This  Agreement  shall be binding  upon the Insured  and the Bank,  and
their respective heirs,  successors,  personal  representatives  and assigns, as
applicable.

XIII.    NAMED FIDUCIARY AND PLAN ADMINISTRATOR

         The Holding Company is hereby  designated the "Named  Fiduciary"  until
resignation  or  removal  by its Board of  Directors.  As Named  Fiduciary,  the
Holding  Company  shall  be  responsible  for  the  management,   control,   and
administration of this Agreement as established  herein. The Named Fiduciary may
allocate  to  others   certain   aspects  of  the   management   and  operations
responsibilities of this Agreement, including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.

XIV.     FUNDING POLICY

         The funding Policy for this  Agreement  shall be to maintain the Policy
in force by paying, when due, all premiums required.

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XV.      CLAIM PROCEDURES

         Claim  forms or  claim  information  as to the  subject  Policy  can be
obtained by contacting The Benefit  Marketing Group, Inc.  (770-952-1529).  When
the Named  Fiduciary  has a claim  which  may be  covered  under the  provisions
described in the Policy, it should contact the office named above, and they will
either complete a claim form and forward it to an authorized  representative  of
the  Insurer  or advise  the  named  Fiduciary  what  further  requirements  are
necessary.  The Insurer will evaluate and make a decision as to payment.  If the
claim is payable, a benefit check will be issued to the Named Fiduciary.

         In the event that a claim is not eligible under the Policy, the Insurer
will notify the Named Fiduciary of the denial pursuant to the requirements under
the terms of the Policy.  If the Named Fiduciary is dissatisfied with the denial
of the claim and wishes to contest  such claim  denial,  it should  contact  the
office named above and they will assist in making  inquiry to the  Insurer.  All
objections  to the Insurer's  actions  should be in writing and submitted to the
office named above for transmittal to the Insurer.

XVI.     GENDER

         Whenever in this  Agreement  words are used in the  masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or neuter
gender, whenever they should so apply.

XVII.    INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

         The  Insurer  shall not be deemed a party to this  Agreement,  but will
respect the rights of the parties as set forth herein upon receiving an executed
copy of this  Agreement.  Payment or other  performance  in accordance  with the
Policy provisions shall fully discharge the Insurer from any and all liability.

IN WITNESS  WHEREOF,  the Insured and a duly authorized Bank officer have signed
this Agreement as of the above written date.

SOLANO BANK                                 INSURED

By: _____________________________________   By: ________________________________
    Thomas Gavin                                Glen C. Terry
    Chairman of the Board

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Acceptance of Named Fiduciary Designation:

NORTH BAY BANCORP

By: _____________________________________
    Terry L. Robinson
    President and Chief Executive Officer

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                          BENEFICIARY DESIGNATION FORM

Primary Designation:

Name                                        Relationship
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Contingent Designation:

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_____________, 2001

Signed:    ____________________________
           Glen C. Terry

                                       7Exhibit 10.20

                           CHANGE IN CONTROL AGREEMENT
                           MONTEREY BAY BANCORP, INC.
                                MONTEREY BAY BANK

         This  AGREEMENT is made  effective as of March 22, 2002, by and between
Monterey Bay Bancorp, Inc.  ("Company"),  a corporation organized under the laws
of the State of Delaware,  with its principal  executive  offices located at 567
Auto  Center  Drive,  Watsonville,  California,  95076;  and  Monterey  Bay Bank
("Association"),   a  federally  chartered  savings  and  loan  association,   a
wholly-owned subsidiary of the Company, and Susan M. Carlson ("Executive").

         WHEREAS, the Company and Association wish to assure both themselves and
their key employees of continuity  of management  and objective  judgment in the
event of a threatened or actual change in control of the Company or Association,
and to induce its key employees to remain employed by the Company or Association
in the event of a  threatened  or actual  change in  control  of the  Company or
Association, and

         WHEREAS,  the  Boards  of  Directors  of  the  Company  and  /  or  the
Association  have determined that Executive is a key employee of the Company and
/ or Association and an integral part of its management; and

         WHEREAS,  this  Agreement  is not  intended  to  alter  materially  the
compensation and benefits that the Executive  reasonably could expect to receive
in the  absence of a  threatened  or actual  change in control of the Company or
Association,  and  this  Agreement  accordingly  will  be  operative  only  upon
circumstances relating to a change in control of the Company or Association,  as
set forth herein.

         NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereby agree as follows:

1.       TERM OF AGREEMENT.

         The term of this Agreement  shall be deemed to have commenced as of the
date first  above  written and shall  continue  for a period of twelve (12) full
calendar months  thereafter.  Commencing on the first  anniversary  date of this
Agreement and  continuing at each  anniversary  date  thereafter,  the Boards of
Directors ("Board") of the Company and Association may extend this Agreement for
an additional twelve months.  The Boards of Directors will review this Agreement
at least annually for purposes of  determining  whether to extend this Agreement
and shall give notice to the Executive as soon as possible  after such review as
to whether the Agreement is to be extended.

<PAGE>

2.       CHANGE IN CONTROL.

         (a) Upon the  occurrence  of a Change  in  Control  of the  Company  or
Association  (as herein  defined)  followed  at any time during the term of this
Agreement  or for  six  months  thereafter  by the  termination  of  Executive's
employment,  other than for  Termination  for Cause,  as defined in Section 2(c)
hereof, the provisions of Section 3 shall apply.

         (b) For  purposes  of this  Agreement,  a "Change  in  Control"  of the
Company  or  Association  shall  mean an event of a nature  that:  (i)  would be
required to be  reported in response to Item 1(a) 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 Company or  Association  within the meaning of the Home
Owners' Loan Act of 1933 and the Rules and Regulations promulgated by the Office
of Thrift Supervision  ("OTS") (or its predecessor or successor  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 Boards
of Directors  shall  substitute  their  judgment for that of the OTS);  or (iii)
without  limitation such a Change in Control shall be deemed to have occurred at
such time as (A) any "person"  (as the term is used in Sections  13(d) and 14(d)
of the Exchange  Act) is or becomes the  "beneficial  owner" (as defined in Rule
13d-3 under the Exchange  Act),  directly or  indirectly,  of  securities of the
Company or  Association  representing  25% or more of the  Association's  or the
Company's  outstanding  securities  except for any securities of the Association
purchased by the Company in connection with the conversion of the Association to
the stock form and any securities  purchased by any employee benefit plan of the
Company  or  Association,  or (B)  individuals  who  constitute  the  Boards  of
Directors on the date hereof (the  "Incumbent  Boards")  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  Boards, or
whose nomination for election by the Company's or Association's stockholders was
approved by the same Nominating Committees serving under Incumbent Boards, shall
be, for  purposes of this clause (B),  considered  as though he were a member of
the Incumbent Boards, or (C) a plan of  reorganization,  merger,  consolidation,
sale of all or  substantially  all the assets of the Company or  Association  or
similar  transaction  occurs  in which the  Company  or  Association  is not the
resulting  entity,  or (D) a proxy statement is distributed  soliciting  proxies
from stockholders of the Company,  by someone other than the current  management
of the Company, seeking stockholder approval of a plan of reorganization, merger
or consolidation of the Company or Association with one or more  corporations as
a result of which the outstanding shares of the class of securities then subject
to such plan or transaction are exchanged for or converted into cash or property
or securities not issued by the Company or the Association shall be distributed,
or (E) a tender  offer is made for 25% or more of the voting  securities  of the
Company or Association then outstanding.

<PAGE>

         (c) Executive shall not have the right to receive termination  benefits
pursuant to Section 3 hereof upon Termination for Cause.  The term  "Termination
for Cause" shall mean termination because of the Executive's intentional failure
to perform stated duties, personal dishonesty, incompetence,  unsatisfactory job
performance as voted by at least a three-fourths majority of the Boards, willful
misconduct,  any breach of fiduciary duty  involving  personal  profit,  willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses)  or final  cease and desist  order,  the use of drugs or alcohol  that
interferes  with the  Executive's  performance  of his job duties,  any unlawful
conduct by Executive injurious to the interest, property,  operations,  business
or  reputation  of the Company or  Association,  or any material  breach of this
Agreement.  For  purposes  of this  Section,  no act,  or the failure to act, on
Executive's  part shall be "willful"  unless done, or omitted to be done, not in
good faith and without  reasonable belief that the action or omission was in the
best interest of the Company or its affiliates.  Notwithstanding  the foregoing,
Executive shall not be deemed to have been Terminated for Cause unless and until
there shall have been  delivered to him a copy of a  resolution  duly adopted by
the affirmative vote of not less than three-fourths of the members of the Boards
of  Directors  at meetings of the Boards of  Directors  called and held for that
purpose,  finding  that in the good faith  opinion  of the Boards of  Directors,
Executive was guilty of conduct justifying  Termination for Cause and specifying
the particulars thereof in detail. Executive shall not have the right to receive
compensation or other benefits for any period after  Termination for Cause.  Any
stock options and related  limited rights  granted to Executive  under any stock
option plan, or any unvested  awards  granted to Executive  under any restricted
stock  benefit  plan of the Company or its  subsidiaries,  shall become null and
void effective upon  Executive's  receipt of Notice of Termination For Cause and
shall not be exercisable by or delivered to Executive at any time  subsequent to
such Termination for Cause.

<PAGE>

3.       TERMINATION BENEFITS.

         (a) If within six (6) months following the date a Change in Control has
occurred or the Boards of Directors have determined that a Change in Control has
occurred,  Executive shall be entitled to the benefits provided in Sections 3(b)
and 3(c) upon: (1) Executive's termination by the Company or Association,  other
than for  Termination  for Cause,  or (2) a material  detrimental  alteration in
authority or responsibility,  demotion, loss of title, or (3) material reduction
in annual compensation or benefits,  with material reduction defined as 5.00% or
more, or (4)  relocation of  Executive's  principal  place of employment by more
than thirty (30) miles from its prior location.

         (b) If the Executive  becomes  eligible for benefits under Section 3(a)
above, the Company or Association shall be obligated to pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries,  or his estate,
as the case  may be,  a sum  equal to six (6)  months  of the  Executive's  then
current annual compensation. Such annual compensation shall include base salary,
auto  allowance,  any bonuses in the form of cash or stock  grants paid or to be
paid to Executive in any such year,  and the amount of benefits  paid or accrued
to Executive  pursuant to any qualified or  non-qualified  employee benefit plan
maintained  by the Company or  Association  in any such year. At the election of
Executive  which  election  is to be made  prior to a Change  in  Control,  such
payment  may be made in a lump  sum.  In the  event  that no  election  is made,
payment to  Executive  will be made on a monthly  basis in  approximately  equal
installments  during  the  remaining  term of  this  Agreement.  This  Agreement
specifically  states that no benefits will be "grossed up" or otherwise adjusted
to reflect  the  personal  income tax  consequences  to or  personal  income tax
liabilities of Executive.

         (c) If the Executive  becomes  eligible for benefits under Section 3(a)
above, the Company or Association shall cause to be continued  medical,  dental,
vision, short term disability,  and long term disability coverage  substantially
similar to the coverage  maintained by the Company or Association  for Executive
prior to his severance, except to the extent such coverage may be changed in its
application to all Company or Association employees.  Such coverage and payments
shall cease upon expiration of six (6) full calendar  months  following the Date
of Termination.

<PAGE>

         (d) Notwithstanding the preceding  provisions of this Section 3, in the
event that:

                  (i)      the  aggregate  payments  or  benefits  to be made or
                           afforded  to  Executive,   which  are  deemed  to  be
                           parachute  payments as defined in Section 280G of the
                           Internal  Revenue  Code  of  1986,  as  amended  (the
                           "Code") or any successor  thereof,  (the "Termination
                           Benefits")  would be deemed  to  include  an  "excess
                           parachute  payment"  under  Section 280G of the Code;
                           and

                  (ii)     if  such  Termination  Benefits  were  reduced  to an
                           amount (the  "Non-Triggering  Amount"),  the value of
                           which is one dollar ($1.00) less than an amount equal
                           to three  (3) times  Executive's  "base  amount,"  as
                           determined in  accordance  with said Section 280G and
                           the  Non-Triggering  Amount would be greater than the
                           aggregate   value   of   the   Termination   Benefits
                           (excluding  such  reduction)  minus the amount of tax
                           required  to be  paid  by the  Executive  thereon  by
                           Section 4999 of the Code,

then the Termination Benefits shall be reduced to the Non-Triggering Amount. The
allocation of the reduction required hereby among the Termination Benefits shall
be determined solely by the Executive at Executive's discretion.

         (e)  If  the   Executive's   employment  is  terminated  by  reason  of
Executive's  voluntary  resignation,  all of  the  Company's  and  Association's
obligations  hereunder shall terminate upon the date the Executive  ceases to be
employed as a result of such voluntary resignation.  Executive shall be entitled
to no  additional  compensation  beyond  that  generally  available  to  all  or
substantially  all of the full-time  employees of the Company or  Association at
that  time,  and  Executive  shall only be  entitled  to that  compensation  and
benefits earned and vested at the date of such voluntary resignation.

<PAGE>

4.       NOTICE OF TERMINATION.

         (a)  Any  purported  termination  by the  Company,  Association,  or by
Executive  shall be  communicated  by Notice of  Termination  to the other party
hereto.  For purposes of this Agreement,  a "Notice of Termination" shall mean a
written notice which shall indicate the specific  termination  provision in this
Agreement relied upon and shall set forth in detail the facts and  circumstances
claimed to provide a basis for termination of Executive's  employment  under the
provision so indicated.

         (b) "Date of  Termination"  shall mean the date specified in the Notice
of Termination  (which, in the case of Termination for Cause,  shall not be less
than thirty (30) days from the date such Notice of Termination is given).

5.       SOURCE OF PAYMENTS.

         It is intended by the parties hereto that all payments provided in this
Agreement  shall  be paid in  cash  or  check  from  the  general  funds  of the
Association.  Further,  the Company guarantees such payment and provision of all
amounts and benefits due hereunder to Executive and, if such amount and benefits
due from the  Association  are not timely paid or  provided by the  Association,
such amounts and benefits shall be paid and provided by the Company.

6.       EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.

         This Agreement  contains the entire  understanding  between the parties
hereto and supersedes any prior Change In Control Agreement or similar agreement
between the Company or  Association  and  Executive,  except that this Agreement
shall not affect or operate to reduce  any  benefit or  compensation  inuring to
Executive of a kind elsewhere provided.  No provision of this Agreement shall be
interpreted to mean that  Executive is subject to receiving  fewer benefits than
those available to him without reference to this Agreement.

         Nothing in this  Agreement  shall  confer upon  Executive  the right to
continue in the employ of the  Company or  Association,  or shall  impose on the
Company or  Association  any  obligation  to employ or retain  Executive  in its
employ for any period.  Neither the Executive nor the Company or  Association is
bound to continue the employment relationship if either chooses, at its will, to
end the relationship and terminate this Agreement at any time.

<PAGE>

7.       NO ATTACHMENT.

         (a) Except as required by law, no right to receive  payments under this
Agreement  shall be  subject to  anticipation,  commutation,  alienation,  sale,
assignment,  encumbrance,  charge,  pledge, or  hypothecation,  or to execution,
attachment,  levy, or similar process or assignment by operation of law, and any
attempt,  voluntary  or  involuntary,  to affect any such action  shall be null,
void, and of no effect.

         (b) This Agreement  shall be binding upon, and inure to the benefit of,
Executive,  the Company and  Association  and their  respective  successors  and
assigns.

8.       MODIFICATION AND WAIVER.

         (a)  This  Agreement  may  not be  modified  or  amended  except  by an
instrument in writing signed by the parties hereto.

         (b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement,  except by written  instrument of the party charged with such
waiver or estoppel.  No such written waiver shall be deemed a continuing  waiver
unless specifically  stated therein,  and each such waiver shall operate only as
to the specific  term or condition  waived and shall not  constitute a waiver of
such  term  or  condition  for  the  future  or as to any act  other  than  that
specifically waived.

<PAGE>

9.       REQUIRED REGULATORY PROVISIONS.

         (a) If Executive is suspended from office and/or temporarily prohibited
from  participating  in the  conduct  of the  Association'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  Association's  obligations  under this
contract  shall  be  suspended  as of the  date of  service,  unless  stayed  by
appropriate  proceedings.  If the  charges  in the  notice  are  dismissed,  the
Association  may in its  discretion  reinstate  (in whole or in part) any of the
obligations which were suspended.

         (b)  If  Executive  is  removed  and/or  permanently   prohibited  from
participation  in the conduct of the  Association'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(c)(4)  or (g)(1)),  all  obligations of the Association or Company under
this Agreement shall terminate as of the effective date of the order, but vested
rights of the Executive, the Company, or Association shall not be affected.

         (c) If the  Association is in default as defined in Section  3(x)(1) of
the Federal Deposit Insurance Act, all Obligations of the Association or Company
under this Agreement shall terminate as of the effective date of the order,  but
vested rights of the Executive,  the Company,  or the  Association  shall not be
affected.

         (d) All obligations under this contract shall be terminated,  except to
the extent  determined  that  continuation  of the contract is necessary for the
continued  operation  of the  institution:  (i) by the Director of the Office of
Thrift  Supervision  (or his or her  designee)  at the time the Federal  Deposit
Insurance  Corporation  or the  Resolution  Trust  Corporation  enters  into  an
agreement to provide  assistance  to or on behalf of the  Association  under the
authority  contained in Section 13(c) of the Federal  Deposit  Insurance Act; or
(ii)  by the  Director  of the  Office  of  Thrift  Supervision  (or  his or her
designee)  at  the  time  the  Director  (or  his or her  designee)  approves  a
supervisory  merger to resolve  problems related to operation of the Association
or when the  Association  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,  or
otherwise,   are   subject  to  and   conditioned   upon   compliance   with  12
U.S.C.ss.1828(k) and any rules and regulations promulgated thereunder.

<PAGE>

10.      REINSTATEMENT OF BENEFITS UNDER SECTION 9(a).

         In the event Executive is suspended and/or temporarily  prohibited from
participating in the conduct of the Association's  affairs by a notice described
in Section 9(a) hereof (the  "Notice")  during the term of this  Agreement and a
Change in Control,  as defined herein,  occurs,  the Association will assume its
obligation  to  pay  and  Executive  will  be  entitled  to  receive  all of the
termination  benefits  provided for under Section 3 of this  Agreement  upon the
Association's receipt of a dismissal of charges in the Notice.

11.      SEVERABILITY.

         If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this  Agreement or any part of such  provision not held so invalid,  and each
such other  provision and part thereof shall to the full extent  consistent with
law continue in full force and effect.

12.      HEADINGS FOR REFERENCE ONLY.

         The headings of sections and paragraphs  herein are included solely for
convenience of reference and shall not control the meaning or  interpretation of
any of the provisions of this Agreement.

13.      GOVERNING LAW.

         The validity,  interpretation,  performance,  and  enforcement  of this
Agreement shall be governed by the laws of the State of Delaware,  except to the
extent preempted by Federal law.

<PAGE>

14.      ARBITRATION.

         In the event there is any dispute  arising out of this  Agreement,  the
Executive,  Company,  and  Association  agree to submit such  dispute to binding
arbitration in accordance with the terms of the Alternative  Dispute  Resolution
Agreement set forth in Appendix A to this Agreement and incorporated herein.

15.      PAYMENT OF COSTS AND LEGAL FEES.

                  In the event of any dispute between the parties  regarding the
interpretation or enforcement of this Agreement or any part thereof or otherwise
arising out of or  relating to this  Agreement,  the  prevailing  party shall be
entitled to recover  its costs  related to any such  dispute and its  reasonable
fees of attorneys,  accountants,  and expert witnesses incurred by such party in
connection therewith.  As used in this paragraph,  "prevailing party" shall mean
the party, if any, in whose favor  substantially all of the material issues have
been decided.

16.      INDEMNIFICATION.

         The Company shall provide Executive (including his heirs, executors and
administrators)   with  coverage  under  a  standard  directors'  and  officers'
liability insurance policy at its expense,  or in lieu thereof,  shall indemnify
Executive (and his heirs,  executors and  administrators)  to the fullest extent
permitted  under  Delaware law and as provided in the Company's  certificate  of
incorporation against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a Director or Officer of the Company or
Association (whether or not he continues to be a Director or Officer at the time
of incurring  such expenses or  liabilities),  such expenses and  liabilities to
include, but not be limited to, judgments, court costs, attorneys' fees, and the
cost of reasonable settlements.

<PAGE>

17.      SUCCESSOR TO THE COMPANY.

         The Company and  Association  shall  require any successor or assignee,
whether direct or indirect, by purchase, merger,  consolidation or otherwise, to
all  or  substantially  all  the  business  or  assets  of  the  Company  or the
Association,  expressly and  unconditionally  to assume and agree to perform the
Company's and Association's obligations under this Agreement, in the same manner
and to the same extent that the  Company  and  Association  would be required to
perform if no such succession or assignment had taken place.

                                   SIGNATURES

         IN WITNESS  WHEREOF,  Monterey Bay Bancorp,  Inc. and Monterey Bay Bank
have caused this Agreement to be executed by its duly  authorized  officer,  and
Executive has signed this Agreement, on the 22nd day of March, 2002.

ATTEST:                                         MONTEREY BAY BANCORP, INC.

By:      /s/ Mary Anne Carson                   By:      /s/ C. Edward Holden
         --------------------                            --------------------
         Mary Anne Carson                                C. Edward Holden
         Corporate Secretary                             Chief Executive Officer
                                                         President

ATTEST:                                         MONTEREY BAY BANK

By:      /s/ Mary Anne Carson                   By:      /s/ C. Edward Holden
         --------------------                            --------------------
         Mary Anne Carson                                C. Edward Holden
         Corporate Secretary                             Chief Executive Officer
                                                         President

WITNESS:                                        EXECUTIVE

By:      /s/ Mark R. Andino                     By:      /s/ Susan M. Carlson
         ------------------                              --------------------
         Mark R. Andino                                  Susan M. Carlson
         Witness                                         Executive

<PAGE>

                                   APPENDIX A

                         ALTERNATIVE DISPUTE RESOLUTION

I.       AGREEMENT TO ARBITRATE

         In the event that any employment  dispute  arises between  Monterey Bay
         Bancorp, Inc, ("Company"),  Monterey Bay Bank ("Association") and Susan
         M. Carlson ("Executive"), the parties involved will make all efforts to
         resolve any such dispute  through  informal  means.  If these  informal
         attempts  at  resolution  fail and if the  dispute  arises out of or is
         related  to  a  breach  of  the  parties'  Employment  Agreement,   the
         termination of employment or alleged unlawful discrimination,  Company,
         Association, and Executive will submit the dispute to final and binding
         arbitration.

         By  accepting  employment  with the Company or  Association,  Executive
         agrees that arbitration is the exclusive remedy for all such arbitrable
         disputes; with respect to such disputes, no other action may be brought
         in court or any other  forum  (except  actions  to  compel  arbitration
         hereunder).  THIS ALTERNATIVE DISPUTE RESOLUTION  ("ADR")AGREEMENT IS A
         WAIVER OF THE  PARTIES'  RIGHTS TO A CIVIL  COURT  ACTION FOR A DISPUTE
         RELATING   TO   TERMINATION   OF   EMPLOYMENT   OR   ALLEGED   UNLAWFUL
         DISCRIMINATION,  WHICH INCLUDES RETALIATION OR SEXUAL OR OTHER UNLAWFUL
         HARASSMENT;  ONLY AN ARBITRATOR,  NOT A JUDGE OR JURY,  WILL DECIDE THE
         DISPUTE.

         Employment  disputes  arising  out  of or  related  to  termination  of
         employment or alleged unlawful  discrimination,  including retaliation,
         sexual or other unlawful harassment,  shall include, but not be limited
         to, the following:  alleged  violations of federal,  state and/or local
         constitutions,  statutes or regulations;  claims based on any purported
         breach of contractual  obligation,  including breach of the covenant of
         good faith and fair dealing;  and claims based on any purported  breach
         of duty  arising  in  tort,  including  violations  of  public  policy.
         Disputes related to workers'  compensation  and unemployment  insurance
         are not arbitrable hereunder. Claims for benefits covered by a separate
         benefit plan that provides for  arbitration are not covered by this ADR
         Agreement.  Claims  that are filed with or are being  processed  by the
         U.S. Equal  Employment  Opportunity  Commission  ("EEOC"),  or that are
         brought  under Title VII of the Civil  Rights Act of 1964,  as amended,
         are not arbitrable  under this  Agreement,  except that the parties may
         agree in writing to do so with  respect to each such  dispute  that may
         arise.

<PAGE>

II.      ARBITRATION PROCEDURES

         A. Attempt At Informal Resolution Of Disputes

         Prior  to   submission   of  any  dispute  to   arbitration,   Company,
         Association,  and  Executive  shall  attempt  to  resolve  the  dispute
         informally through mediation.  Company, Association, and Executive will
         select a  mediator  from a list  provided  by the State  Mediation  and
         Conciliation  Service  or other  similar  agency  who will  assist  the
         parties  in  attempting  to  reach a  settlement  of the  dispute.  The
         mediator may make  settlement  suggestions to the parties but shall not
         have the power to impose a  settlement  upon  them.  If the  dispute is
         resolved  in  mediation,  the  matter  shall be deemed  closed.  If the
         dispute is not resolved in mediation and goes to the next step (binding
         arbitration),  any proposals or compromises  suggested by either of the
         parties or the mediator shall not be referred to or have any bearing on
         the  arbitration  procedure.  The  mediator  cannot  also  serve as the
         arbitrator in the subsequent  proceeding  unless all parties  expressly
         agree in writing.

         B. Request for Arbitration

         Should Company, Association, or Executive wish to pursue arbitration of
         any  arbitrable  dispute,  Company,  Association,  Executive or its/his
         representative  must submit a written  "Request For Arbitration" to the
         other  party with (1) year of the  alleged  conduct  giving rise to the
         dispute.   If  the  "Request  For  Arbitration"  is  not  submitted  in
         accordance with the aforementioned time limitations, the party will not
         be able to bring  its/his  claims  to this or any other  forum.  Unless
         otherwise  required by law, the "Request For Arbitration" shall clearly
         state it is "Request  For  Arbitration"  at the  beginning of the first
         page and includes the following information:  (1) a factual description
         of the  dispute in  sufficient  detail to advise the other party of the
         nature of the dispute,  (2) the date when the dispute first arose,  and
         (3) the relief requested by requesting party.

         A Request  for  Arbitration  must be mailed to the other  party's  last
         known address or  hand-delivered  to that party.  The party to whom the
         Request for  Arbitration  is directed  will respond  within thirty (30)
         days so that  the  parties  can  begin  the  process  of  selecting  an
         Arbitrator. Such response may include any counterclaims.

         C. Selection Of The Arbitrator

         All disputes will be resolved by a single Arbitrator,  selected through
         and under the American  Arbitration  Association's  "National Rules for
         the Resolution of Employment Disputes" as amended and effective June 1,
         1997.

<PAGE>

         D. The Arbitrator's Authority

         The Arbitrator shall have the powers enumerated below:

         1.       Ruling  on  motions   regarding   discovery,   and  ruling  on
                  procedural   and   evidentiary   issues   arising  during  the
                  arbitration.

         2.       Ruling on  motions  to  dismiss  and/or  motions  for  summary
                  judgment  applying the standards  governing such motions under
                  the Federal Rules of Civil Procedure.

         3.       Issuing  protective orders on the motion of any party or third
                  party witness, such protective orders may include, but are not
                  limited to, sealing the record of the arbitration, in whole or
                  in  part   (including   discovery   proceedings  and  motions,
                  transcripts,  and the  decision  and  award),  to protect  the
                  privacy or other constitutional or statutory rights of parties
                  and/or witnesses.

         4.       Determining  only  the  issue(s)  submitted  to  him/her.  The
                  issue(s) must be identifiable in the "Request For Arbitration"
                  or  counterclaim(s).  Except as required by law,  any issue(s)
                  not  identifiable  in those  documents is outside the scope of
                  the  Arbitrator's  jurisdiction  and any award  involving such
                  issue(s), upon motion by a party, shall be vacated.

<PAGE>

         E. Discovery

         The discovery  process shall proceed and be governed,  consistent  with
         the standards of the Federal Rules of Civil Procedure, as follows:

         1.       Unless otherwise required by law, parties may obtain discovery
                  by any of the following methods:

                  a.       Depositions   of  non-expert   witnesses   upon  oral
                           examination, five (5) per side as of right, with more
                           permitted if leave is obtained from the Arbitrator;

                  b.       Written  interrogatories,  up to a  maximum  combined
                           total  of  twenty  (20),  with the  responding  party
                           having twenty (20) days to respond;

                  c.       Request  for  production  of  documents  or things or
                           permission  to enter upon land or other  property for
                           inspection,  with the responding  party having twenty
                           (20) days to produce the documents and allow entry or
                           to file objections to the request;

                  d.       Physical and mental  examination,  in accordance with
                           Federal Rule of Civil Procedure 35(a); and

                  e.       Any   motion  to  compel   production,   answers   to
                           interrogatories  or entry onto land or property  must
                           be made to the Arbitrator within fifteen (15) days of
                           receipt of objections.

         2.       To the extent  permitted  by the  Federal  Arbitration  Act or
                  applicable  California law, each party shall have the right to
                  subpoena  witnesses and documents during discovery and for the
                  arbitration.

         3.       All discovery  requests  shall be submitted no less than sixty
                  (60) days before the hearing date.

         4.       The scope of discoverable evidence shall be in accordance with
                  Federal Rule of Civil Procedure 26(b)(1).

         5.       The   Arbitrator   shall  have  the  power  to   enforce   the
                  aforementioned   discovery   rights  and  obligations  by  the
                  imposition  of  the  same  terms,  conditions,   consequences,
                  liabilities,  sanctions and penalties as can or may be imposed
                  in like  circumstances  in a civil  action by a federal  court
                  under the Federal Rules of Civil Procedure.

<PAGE>

         F. Hearing Procedure

         The  hearing  shall  proceed  according  to  the  American  Arbitration
         Association's   "National   Rules  for  the  Resolution  of  Employment
         Disputes" as amended and  effective  June 1, 1997,  with the  following
         amendments:

                  1.       The  Arbitrator  shall  rule  at  the  outset  of the
                           arbitration on procedural issues that bear on whether
                           the arbitration is allowed to proceed.

                  2.       Each party has the burden of proving  each element of
                           its claims or  counterclaims,  and each party has the
                           burden of proving any of its affirmative defenses.

                  3.       In  addition  to,  or in  lieu of  closing  argument,
                           either  party  shall  have  the  right to  present  a
                           post-hearing  brief,  and the due date for exchanging
                           any  post-hearing  briefs shall be mutually agreed on
                           by the parties and the Arbitrator.

         G. Substantive Law

                  1.       The  parties  agree  that they will be  afforded  the
                           identical legal equitable,  and statutory remedies as
                           would be  afforded  them were they to bring an action
                           in a court of competent jurisdiction.

                  2.       The  applicable  substantive  law shall be the law of
                           the  State of  California  or  federal  law.  If both
                           federal  and state law are  applicable  to a cause of
                           action,  Executive  shall have the right to elect his
                           choice of law.  Choice of  substantive  law in no way
                           affects the  procedural  aspects of the  arbitration,
                           which are  exclusively  governed by the provisions of
                           this ADR Agreement.

         H. Opinion And Award

         The Arbitrator  shall issue a written opinion and award, in conformance
         with the following requirements:

                  1.       The opinion and award must be signed and dated by the
                           Arbitrator.

                  2.       The  Arbitrator's  opinion and award shall decide all
                           issues submitted.

                  3.       The  Arbitrator's  opinion  and award shall set forth
                           the  legal  principles  supporting  each  part of the
                           opinion.

                  4.       The Arbitrator shall have the same authority to award
                           remedies,  damages  and costs as  provided to a judge
                           and/or jury under parallel circumstances.

<PAGE>

         I. Enforcement Of Arbitrator's Award

         Following  the  issuance of the  Arbitrator's  decision,  any party may
         petition  a  court  to   confirm,   enforce,   correct  or  vacate  the
         Arbitrator's  opinion  and award  under the  Federal  Arbitration  Act,
         and/or applicable California law.

         J. Fees And Costs

         Unless otherwise  required by law, fees and costs shall be allocated in
         the following manner:

                  1.       Each  party   shall  be   responsible   for  its  own
                           attorneys' fees, except as otherwise provided by law.

                  2.       The Company or Association  shall pay the entire cost
                           of the arbitrator's  services,  the facility in which
                           the arbitration is to be held, and any similar costs,
                           except that Executive shall  contribute  toward these
                           costs an amount equal to the then-current  filing fee
                           in  California  Superior  Court  charged for filing a
                           complaint or for first appearing, whichever is lower.

                  3.       The Company or Association  shall pay the entire cost
                           of a court  reporter to  transcribe  the  arbitration
                           proceedings.  Each party  shall  advance the cost for
                           said  party's  transcript  of the  proceedings.  Each
                           party shall  advance its own costs for witness  fees,
                           service  and  subpoena  charges,  copying,  or  other
                           incidental  costs that each party  would bear  during
                           the course of a civil lawsuit.

                  4.       Each  party  shall  be  responsible   for  its  costs
                           associated with discovery,  except as required by law
                           or court order.

<PAGE>

III.     SEVERABILITY

         In the event that any  provision of this ADR Agreement is determined by
         a  court  of  competent   jurisdiction   to  be  illegal,   invalid  or
         unenforceable  to any extent,  such term or provision shall be enforced
         to the extent  permissible  under the law and all  remaining  terms and
         provisions  of this ADR  Agreement  shall  continue  in full  force and
         effect.

DATED:  March 22, 2002                      By:      /s/ Susan M. Carlson
                                                     --------------------
                                                     Susan M. Carlson
                                                     Executive

                                                     MONTEREY BAY BANK

DATED:  March 22, 2002                      By:      /s/ C. Edward Holden
                                                     --------------------
                                                     C. Edward Holden
                                                     Chief Executive Officer
                                                     President

                                                     MONTEREY BAY BANCORP, INC.

DATED:  March 22, 2002                      By:      /s/ C. Edward Holden
                                                     --------------------
                                                     C. Edward Holden
                                                     Chief Executive Officer
                                                     President

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