Document:

Exhibit 10.26

                                MONTEREY BAY BANK
                      FORM OF SALARY CONTINUATION AGREEMENT

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

                                  INTRODUCTION

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

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

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

                                    AGREEMENT

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

                                                              Page 1 of 36 Pages
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Monterey Bay Bank Salary Continuation Agreement

                                    Article 1
                                   Definitions

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

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

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

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

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Monterey Bay Bank Salary Continuation Agreement

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

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

         1.6 "Effective Date" means January 1, 2003.

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

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

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

         1.10 "Termination for Cause" See Article 5.

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

                                    Article 2
                                Lifetime Benefits

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

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Monterey Bay Bank Salary Continuation Agreement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Monterey Bay Bank Salary Continuation Agreement

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

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Monterey Bay Bank Salary Continuation Agreement

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

                                    Article 3
                                 Death Benefits

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

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

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

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Monterey Bay Bank Salary Continuation Agreement

                                    Article 4
                                  Beneficiaries

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

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

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Monterey Bay Bank Salary Continuation Agreement

                                    Article 5
                               General Limitations

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

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

            (b)   Conviction of a criminal felony; or

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

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

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

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Monterey Bay Bank Salary Continuation Agreement

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

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

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

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

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

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

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Monterey Bay Bank Salary Continuation Agreement

                                    Article 6
                           Claims and Review Procedure

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

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

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

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

            (a)   The specific reasons for the denial;

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

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

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

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

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Monterey Bay Bank Salary Continuation Agreement

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

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

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

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

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

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

            (a)   The specific reasons for the denial;

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

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

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

                                                             Page 12 of 36 Pages
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Monterey Bay Bank Salary Continuation Agreement

                                    Article 7
                           Amendments and Termination

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

                                    Article 8
                                  Miscellaneous

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

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

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

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

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

                                                             Page 13 of 36 Pages
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Monterey Bay Bank Salary Continuation Agreement

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

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

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

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

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

            (a)   Interpret the provisions of the Agreement;

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

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

            (d)   Maintain a record of benefit payments; and

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

                                                             Page 14 of 36 Pages
<PAGE>

Monterey Bay Bank Salary Continuation Agreement

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

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

EXECUTIVE                                     MONTEREY BAY BANK

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

WITNESS                                       MONTEREY BAY BANCORP, INC.

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

                                                             Page 15 of 36 Pages
<PAGE>

Monterey Bay Bank Salary Continuation Agreement

                         FORM OF BENEFICIARY DESIGNATION

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

Primary:  ______________________________________________________________________

________________________________________________________________________________

Contingent:  ___________________________________________________________________

________________________________________________________________________________

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

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

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

Signature ____________________________________

Date      ____________________________________

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

By                 ____________________________________

Name:              ____________________________________

Title              ____________________________________

                                                             Page 16 of 36 Pages
<PAGE>

                                MONTEREY BAY BANK
                         FORM OF SPLIT DOLLAR AGREEMENT

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

                                  INTRODUCTION

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

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

                                    AGREEMENT

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

                                    Article 1
                               General Definitions

         The following terms shall have the meanings specified:

         1.1 "Insured" means the Executive.

                                                             Page 17 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

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

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

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

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

            (b)   Conviction of a criminal felony; or

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

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

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

                                    Article 2
                   Policy Ownership / Interests / Restrictions

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

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

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

                                                             Page 18 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

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

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

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

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

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

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

                                                             Page 19 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

                                    Article 3
                                    Premiums

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

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

                                    Article 4
                                   Assignment

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

                                    Article 5
                                     Insurer

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

                                                             Page 20 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

                                    Article 6
                           Claims and Review Procedure

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

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

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

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

              (a)   The specific reasons for the denial,

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

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

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

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

                                                             Page 21 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

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

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

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

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

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

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

              (a)   The specific reasons for the denial;

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

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

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

                                                             Page 22 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

                                    Article 7
                            Amendment and Termination

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

                                    Article 8
                                  Miscellaneous

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

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

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

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

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

                                                             Page 23 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

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

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

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

            (a)   Interpret the provisions of this Agreement;

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

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

            (d)   Maintain a record of benefit payments; and

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

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

                                                             Page 24 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

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

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

EXECUTIVE                                     MONTEREY BAY BANK

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

WITNESS                                       MONTEREY BAY BANCORP, INC.

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

                                                             Page 25 of 36 Pages
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

INSURED                                       OWNER / MONTEREY BAY BANK

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

                                                             Page 26 of 36 Pages
<PAGE>

Monterey Bay Bank Split Dollar Agreement

                                MONTEREY BAY BANK
                        FORM OF EXECUTIVE BONUS AGREEMENT

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

                                  INTRODUCTION

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

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

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

                                    AGREEMENT

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

                                                             Page 27 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

                                    Article 1
                                   Definitions

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

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

         1.2 "Plan Year" means the calendar year.

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

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

            (b)   Conviction of a criminal felony; or

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

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

                                                             Page 28 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

                                    Article 2
                           Bonus Award / Restrictions

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

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

         LESS

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

Example

     Assumptions:

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

     Bonus Award Calculation:

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

                                                             Page 29 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

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

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

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

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

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

                                                             Page 30 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

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

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

                                    Article 3
                            Amendment and Termination

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

                                    Article 4
                            Parent Company Guarantee

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

                                                             Page 31 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

                                    Article 5
                           Claims and Review Procedure

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

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

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

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

              (a)   The specific reasons for the denial;

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

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

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

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

                                                             Page 32 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

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

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

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

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

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

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

                  (a) The specific reasons for the denial;

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

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

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

                                                             Page 33 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

                                    Article 6
                                  Miscellaneous

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

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

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

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

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

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

                                                             Page 34 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

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

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

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

            (a)   Interpret the provisions of this Agreement;

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

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

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

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

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

                                                             Page 35 of 36 Pages
<PAGE>

Monterey Bay Bank Executive Bonus Agreement

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

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

EXECUTIVE                                    MONTEREY BAY BANK

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

WITNESS                                      MONTEREY BAY BANCORP, INC.

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

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

Footnotes:
<TABLE>
<CAPTION>

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

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

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

</TABLE>

                                                             Page 36 of 36 PagesExhibit 10.27

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

         This AGREEMENT is made effective as of _________________,  2003, 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  ________________________________
("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 1 of 18 Pages
<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 2 of 18 Pages
<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 of 18 Pages
<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 _______ (__) 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 _______ (__) full calendar  months  following the
Date of Termination.

                                                              Page 4 of 18 Pages
<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 5 of 18 Pages
<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 6 of 18 Pages
<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 7 of 18 Pages
<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 8 of 18 Pages
<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 9 of 18 Pages
<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 10 of 18 Pages
<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 _____ day of  _________________,
2003.

ATTEST:                                           MONTEREY BAY BANCORP, INC.

__________________________________       By:      _____________________________
Mary Anne Carson                                  C. Edward Holden
Corporate Secretary                               Chief Executive Officer
                                                  President

ATTEST:                                           MONTEREY BAY BANK

__________________________________       By:      _____________________________
Mary Anne Carson                                  C. Edward Holden
Corporate Secretary                               Chief Executive Officer
                                                  President

WITNESS:                                          EXECUTIVE

__________________________________       By:      _____________________________
Witness Name                                      Executive Name

                                                             Page 11 of 18 Pages
<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
         __________________  ("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 12 of 18 Pages
<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 13 of 18 Pages
<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 14 of 18 Pages
<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 15 of 18 Pages
<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 16 of 18 Pages
<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 17 of 18 Pages
<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: ________________, 2003                  _______________________________
                                               Executive

                                               MONTEREY BAY BANK

DATED: _______________, 2003                   By: ___________________________
                                                   C. Edward Holden
                                                   Chief Executive Officer
                                                   President

                                               MONTEREY BAY BANCORP, INC.

DATED: _______________, 2003                   By: ___________________________
                                                   C. Edward Holden
                                                   Chief Executive Officer
                                                   President

                                                             Page 18 of 18 Pages

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