Document:

<PAGE>

                                                                     EXHIBIT 4.3

                                                                  EXECUTION COPY

                               SECURITY AGREEMENT

                                   dated as of

                                 August 10, 2001

                                       by

                              Polaroid Corporation

                                   in favor of

                      State Street Bank and Trust Company,
                                   as Trustee

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
<S>                                                                                <C>
Section 1.  DEFINITIONS.............................................................1
Section 2.  THE SECURITY INTERESTS..................................................3
Section 3.  RIGHTS IN COLLATERAL AND REMEDIES UPON EVENT OF DEFAULT.................4
Section 4.  GENERAL REPRESENTATIONS AND WARRANTIES..................................5
Section 5.  FURTHER ASSURANCES; GENERAL COVENANTS...................................6
Section 6.  FEES AND EXPENSES; INDEMNIFICATION......................................6
Section 7.  TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL................7
Section 8.  NOTICES.................................................................7
Section 9.  WAIVERS, REMEDIES NOT EXCLUSIVE.........................................8
Section 10.  SUCCESSORS AND ASSIGNS.................................................8
Section 11.  CHANGES IN WRITING.....................................................8
Section 12.  CHOICE OF LAW..........................................................8
Section 13.  SEVERABILITY...........................................................9
</TABLE>

                                       i

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SCHEDULE 1        Principal Properties

SCHEDULE 2        Jurisdiction of Organization

SCHEDULE 3        Filings Required to Perfect Security Interests

                                       ii

<PAGE>

                               SECURITY AGREEMENT

         SECURITY AGREEMENT (this "AGREEMENT") dated as of August 10, 2001 by
POLAROID CORPORATION in favor of STATE STREET BANK AND TRUST COMPANY, as Trustee
under the Indenture dated as of January 9, 1997 between the Lien Grantor and
State Street Bank and Trust Company, as Trustee, as supplemented by supplemental
indentures, pursuant to which the Notes were issued (the "INDENTURE").

         WHEREAS, the Lien Grantor issued the Notes under the Indenture; and

         WHEREAS, the Lien Grantor wishes to secure its obligations under (i)
the Indenture and (ii) the Notes issued thereunder by granting Liens on certain
of its equipment to the Trustee as provided in this Agreement.

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         Section 1. DEFINITIONS. Terms defined in the Indenture and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein. The following additional terms, as used herein, have the following
meanings:

                  "ADMINISTRATIVE AGENT" means Morgan Guaranty Trust Company of
         New York, in its capacity as administrative agent for the Lenders under
         the Credit Agreement, and its successors in such capacity.

                  "AGREEMENT" has the meaning set forth in the introduction
         hereto.

                  "COLLATERAL" means all property, whether now owned or
         hereafter acquired, in which a security interest or other Lien is
         granted or purports to be granted to the Trustee pursuant to this
         Agreement or any supplements hereto or other agreements to secure the
         Secured Obligations.

                  "COMMITMENTS" has the meaning set forth in the Credit
         Agreement.

                  "CREDIT AGREEMENT" means the Amended and Restated Credit
         Agreement dated as of December 11, 1998 among the Lien Grantor, the
         Lenders party thereto, Morgan Guaranty Trust Company of New York, as
         Administrative Agent and Collateral Agent, and Fleet National Bank
         (formerly known as BankBoston, N.A.), as Co-Agent, as amended, waived
         and/or restated from time to time.

                  "CREDIT AGREEMENT OBLIGATIONS" means the Secured Obligations
         as defined in the Senior Security Agreement.

                  "EQUIPMENT" means at any time "equipment" (as defined in UCC
         Section 9-102) then located on the Principal Properties, but excluding
         "fixtures" (as defined in UCC Section 9-102).

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                                                                               2

                  "EVENT OF DEFAULT" has meaning specified in the Indenture
         (including the indentures supplemental thereto).

                  "EXISTING COLLATERAL" means property of the Lien Grantor
         subject to a Lien created under the Senior Security Agreement.

                  "FEDERAL GOVERNMENT" means the federal government of the
         United States or any relevant agency thereof.

                  "FINANCING DOCUMENTS" has the meaning specified in the Credit
         Agreement.

                  "INDENTURE" means the Indenture dated as of January 9, 1997
         between the Lien Grantor and State Street Bank and Trust Company, as
         Trustee, as supplemented by supplemental indentures, pursuant to which
         the Notes were issued.

                  "LENDER" has the meaning specified in the Credit Agreement.

                  "LIEN GRANTOR" means Polaroid Corporation, a Delaware
         corporation, and its successors.

                  "NOTES" means the collective reference to the (i) 6 3/4% Notes
         due January 15, 2002, (ii) 7 1/4% Notes due January 15, 2007 and (iii)
         11 1/2% Notes February due 15, 2006.

                  "PERMITTED LIENS" means (i) the Security Interests and (ii)
         the other Liens on the Collateral permitted to be created or assumed or
         that exist pursuant to the Senior Collateral Documents and pursuant to
         Section 5.12 of the Credit Agreement.

                  "POST-PETITION INTEREST" means any interest that accrues after
         the commencement of any case, proceeding or other action relating to
         the bankruptcy, insolvency or reorganization of the Lien Grantor (or
         would accrue but for the operation of applicable bankruptcy or
         insolvency laws), whether or not such interest is allowed or allowable
         as a claim in any such proceeding.

                  "PRINCIPAL PROPERTIES" means the collective reference to the
         properties listed on Schedule 1 hereto.

                  "PROCEEDS" means "proceeds" as defined in UCC Section 9-102.

                  "RESTRICTED EQUIPMENT" means any Equipment subject to a
         contract with the Federal Government or with any state (or agency or
         instrumentality thereof) that prohibits the granting of a Lien on such
         Equipment.

                  "SECURED OBLIGATIONS" means the principal amount of and
         interest (including Defaulted Interest and Post-Petition Interest) on
         the Notes and all other amounts (including fees and disbursements of
         counsel) now or hereafter payable by the Lien Grantor pursuant to the
         Indenture and the Notes.

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                                                                               3

                  "SECURED PARTIES" means the holders from time to time of the
         Secured Obligations.

                  "SECURITY INTERESTS" means security interests in, or other
         Liens on, Collateral granted by the Lien Grantor under this Agreement.

                  "SENIOR COLLATERAL AGENT" means Morgan Guaranty Trust Company
         of New York, in its capacity as Collateral Agent for the Senior Secured
         Parties under the Senior Collateral Documents, and its successors in
         such capacity.

                  "SENIOR COLLATERAL DOCUMENTS" means the "Collateral Documents"
         as such term is defined in the Senior Security Agreement.

                  "SENIOR SECURED PARTIES" means the holders from time to time
         of the Credit Agreement Obligations.

                  "SENIOR SECURITY AGREEMENT" means the Amended and Restated
         Security Agreement dated as of March 21, 2001 among the Lien Grantor,
         the Subsidiary Guarantors referred to therein and Morgan Guaranty Trust
         Company of New York, as Collateral Agent, as amended from time to time.

                  "TRUSTEE" means State Street Bank and Trust Company, in its
         capacity as Trustee for the Secured Parties under this Agreement, and
         its successors in such capacity.

                  "UCC" means the Uniform Commercial Code as in effect from time
         to time in the State of New York; PROVIDED that, if perfection or the
         effect of perfection or non-perfection or the priority of any Security
         Interest in any Collateral is governed by the Uniform Commercial Code
         as in effect in a jurisdiction other than New York, "UCC" means the
         Uniform Commercial Code as in effect from time to time in such other
         jurisdiction for purposes of the provisions hereof relating to such
         perfection, effect of perfection or non-perfection or priority.

              Section 2. THE SECURITY INTERESTS. (a) In order to secure the full
and punctual payment of its Secured Obligations in accordance with the terms
thereof, the Lien Grantor grants to the Trustee for the benefit of the Secured
Parties a continuing security interest in all the following property of the Lien
Grantor, whether now owned or hereafter acquired:

                    (i) all Equipment; and

                    (ii) all Proceeds of the Equipment;

PROVIDED that the following property is excluded from the foregoing security
interests: (i) Equipment leased by the Lien Grantor under a lease that prohibits
the granting of a Lien on such Equipment and (ii) Restricted Equipment.

     (b) The Security Interests are granted as security only and shall not
subject the Trustee or any other Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of the Lien Grantor with respect
to any of the Collateral or any transaction in connection therewith.

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                                                                               4

     Section 3. RIGHTS IN COLLATERAL AND REMEDIES UPON EVENT OF DEFAULT. (a)
Notwithstanding anything to the contrary contained in this Agreement, the
Indenture or the Notes or any other document relating to this Agreement and
irrespective of the time, order, method or effectiveness of attachment or
perfection of the security interests created herein, or anything contained in
any filing or agreement to which the Trustee, the Lien Grantor or the Secured
Parties now or hereafter may be a party, the rules for determining attachment,
perfection or priority under the Uniform Commercial Code or any other law
governing the relative priorities of secured creditors or the avoidance of
liens, any security interest in the Collateral granted under the Senior Security
Agreement secures the Credit Agreement Obligations on a first priority basis and
any security interest in the Collateral granted under this Agreement secures the
Secured Obligations on a secondary basis, for so long as the Credit Agreement
Obligations remain outstanding and the Commitments have not been terminated.

     (b) So long as the Credit Agreement Obligations have not been paid in full
and the Commitments have not been terminated, whether or not any bankruptcy
proceeding or similar event or proceeding has been commenced by or against the
Lien Grantor or any Subsidiary, the Trustee and the Secured Parties will not (A)
exercise or seek to exercise any rights or exercise any remedies with respect to
any Collateral, (B) institute any action or proceeding with respect to such
rights or remedies, including, without limitation, any action of foreclosure,
(C) contest, protest or object to any foreclosure proceeding or action brought
by the Administrative Agent, the Senior Collateral Agent or any Lender or any
other exercise by the Administrative Agent, the Senior Collateral Agent or any
Lender of any rights and remedies relating to the Collateral under any Financing
Documents, or (D) object to the forbearance by the Administrative Agent, the
Senior Collateral Agent or any Lender from bringing or pursuing any foreclosure
proceeding or action or any other exercise of any rights or remedies relating to
the Collateral.

     (c) So long as the Credit Agreement Obligations remain outstanding and the
Commitments have not been terminated, the Senior Collateral Agent and the Senior
Secured Parties shall have the exclusive right to enforce the provisions of this
Agreement and exercise remedies hereunder, all in such order and in such manner
as they may determine in their reasonable discretion. Such exercise and
enforcement shall include, without limitation, the rights to sell or otherwise
dispose of Collateral, to incur expenses in connection with such sale or
disposition and to exercise all the rights and remedies of a secured lender
under the UCC of any applicable jurisdiction. Upon full satisfaction of the
Credit Agreement Obligations and the termination of the Commitments, the Trustee
and the Secured Parties shall have the exclusive rights and remedies specified
in this Section 3(c).

     (d) So long as the Credit Agreement Obligations remain outstanding and the
Commitments have not been terminated, any money, property or securities realized
upon the sale, disposition or other realization by any one or more of the Senior
Collateral Agent and the Senior Secured Parties upon all or any part of the
Collateral shall be applied by the Senior Collateral Agent and the Senior
Secured Parties in accordance with the terms of the Senior Security Agreement.
Upon full satisfaction of the Credit Agreement Obligations and the termination
of the Commitments, any money, property or securities realized upon the sale,

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                                                                               5

disposition or other realization by any one or more of the Trustee and the
Secured Parties upon all or any part of the Collateral may be applied by the
Trustee and the Secured Parties in accordance with the terms of the Indenture.

     (e) Subject to the foregoing provisions, the Trustee, on behalf of the
Secured Parties, shall have the rights, powers and remedies as a secured lender
under the UCC upon the occurrence and during the continuation of any Event of
Default, including, without limitation, any rights to take possession of the
Collateral and rights to exercise remedies under Part 6 of Article 9 of the UCC.

     (f) The foregoing provisions are not intended in any way to limit or modify
any payment terms of the Notes and the Indenture.

     (g) The Lien Grantor shall notify the Trustee of any remedies with respect
to the Collateral exercised by the Senior Collateral Agent pursuant to the
Existing Security Agreement.

        Section 4. GENERAL REPRESENTATIONS AND WARRANTIES. The Lien Grantor
represents and warrants that:

     (a) The Lien Grantor is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction identified as its
jurisdiction of organization on Schedule 2.

     (b) The Lien Grantor has good and marketable title to all of the Equipment,
free and clear of any Lien other than Permitted Liens.

     (c) No financing statement, security agreement, mortgage or similar or
equivalent document or instrument covering all or any part of the Collateral
owned by the Lien Grantor is on file or of record in any jurisdiction in which
such filing or recording would be effective to perfect or record a Lien on such
Collateral, except financing statements, mortgages or other similar or
equivalent documents with respect to Permitted Liens.

     (d) The Security Interests in all Collateral owned by the Lien Grantor (i)
have been validly created, (ii) will attach to each item of such Collateral on
the date hereof (or, if the Lien Grantor first obtains rights thereto on a later
date, on such later date) and (iii) when so attached will secure all of the Lien
Grantor's Secured Obligations.

     (e) When UCC financing statements describing the Collateral as set forth
Schedule 3 have been filed in the offices specified on Schedule 3, the Security
Interests will constitute perfected security interests in the Collateral owned
by the Lien Grantor to the extent that a security interest therein may be
perfected by filing pursuant to the UCC, prior to all Liens and rights of others
therein except Permitted Liens. Except for the filing of such UCC financing
statements which have been filed, no registration, recordation or filing with
any governmental body, agency or official is required in connection with the
execution or delivery of this Agreement in the United States or is necessary for
the validity or enforceability thereof in the United States or for the
perfection or due recordation of the Security Interests or for the enforcement
of the Security Interests in the United States.

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                                                                               6

         Section 5. FURTHER ASSURANCES; GENERAL COVENANTS. Each Lien Grantor
covenants as follows:

     (a) Subject to the other provisions of this Agreement, the Lien Grantor
will, from time to time, at the Lien Grantor's expense, execute, deliver, file
and record any statement, assignment, instrument, document, agreement or other
paper and take any other action (including, without limitation, any filing of
financing or continuation statements under the UCC) that from time to time may
be necessary, or that the Trustee may reasonably request, in order to create,
preserve, perfect, confirm or validate the Security Interests in the Lien
Grantor's Collateral; PROVIDED that the Lien Grantor shall not be required to
take any such actions in jurisdictions outside the United States.

     To the extent permitted by applicable law, the Lien Grantor authorizes the
Trustee to execute and file such financing statements or continuation statements
without the Lien Grantor's signature appearing thereon. The Lien Grantor agrees
that a carbon, photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement. The Lien
Grantor hereby constitutes the Trustee its attorney-in-fact to execute and file
all filings required or so requested for the foregoing purposes, all acts of
such attorney being hereby ratified and confirmed; and such power, being coupled
with an interest, shall be irrevocable until all of the Lien Grantor's
Collateral is released pursuant to Section 7. With respect to any action it is
permitted to take pursuant to the power of attorney contained in this paragraph,
the Trustee will notify the relevant Lien Grantor thereof (i) unless an Event of
Default shall have occurred and be continuing, prior to taking such action and
(ii) if an Event of Default shall have occurred and be continuing, promptly
after taking such action. The Lien Grantor will pay the costs of, or incidental
to, any recording or filing of any financing or continuation statements or other
documents recorded or filed pursuant hereto.

     (b) The Lien Grantor will not change its name, jurisdiction of organization
or corporate structure unless it shall have given the Trustee at least 10 days'
prior notice thereof.

     (c) The Lien Grantor will, promptly upon request, provide to the Trustee
all information and evidence concerning the Lien Grantor's Collateral that the
Trustee may reasonably request from time to time to enable it to enforce the
provisions of this Agreement, the Notes, the Indenture and any related document.

     (d) The Lien Grantor will not sell, lease, transfer, exchange, assign or
otherwise dispose of, or grant any option with respect to, any of the Equipment
to any of its Subsidiaries.

     (e) The Lien Grantor shall cause its Subsidiaries to transfer any ownership
interests they might have in any Equipment to the Lien Grantor.

          Section 6. FEES AND EXPENSES; INDEMNIFICATION. (a) The Lien Grantor
will forthwith upon demand pay to the Trustee:

               (i) the amount of any taxes that the Trustee may have been
          required to pay by reason of the Security Interests or to free any of
          the Collateral from any Lien thereon;

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                                                                               7

               (ii) the amount of any and all reasonable out-of-pocket expenses,
          including transfer taxes and reasonable fees and expenses of counsel
          and of any other experts, that the Trustee may incur in connection
          with (x) the administration or enforcement of this Agreement,
          including such expenses as are incurred to preserve the value of the
          Collateral or the validity, perfection, rank or value of any Security
          Interest, and all insurance expenses and all expenses of protecting,
          storing, warehousing, appraising, insuring, handling, maintaining and
          shipping any Collateral, (y) the collection, sale or other disposition
          of any Collateral or (z) the exercise by the Trustee of any of its
          rights or powers under this Agreement; and

               (iii) the amount required to indemnify the Trustee for, or hold
          it harmless and defend it against, any loss, liability or expense
          (including the reasonable fees and expenses of its counsel and any
          experts, agents or co-agents appointed by it hereunder) incurred or
          suffered by the Trustee in connection with this Agreement, except to
          the extent that such loss, liability or expense arises from the
          Trustee's gross negligence or willful misconduct or a breach of any
          duty that the Trustee has under this Agreement.

     (b) If any transfer tax, documentary stamp tax or other tax is payable in
connection with any transfer or other transaction provided for in this
Agreement, the Lien Grantor will pay such tax and provide any required tax
stamps to the Trustee or as otherwise required by law.

        Section 7. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL. (a)
When (i) the Indenture shall have expired or been terminated, (ii) all Notes
shall have expired or been terminated and (iii) all outstanding Secured
Obligations shall have been paid in full, the Security Interests shall terminate
and all rights to each item of Collateral shall (subject to the security
interest granted under the Senior Security Agreement) revert to the Lien Grantor
that owns such item of Collateral.

     (b) The Lien Grantor may sell, lease, transfer, exchange, assign or
otherwise dispose of, or grant any option with respect to, any of the
Collateral. Concurrently with any sale, lease, transfer or other disposition of
any of the Collateral, the Security Interests in the assets sold or disposed of
will cease immediately without any action by the Trustee or any other Secured
Party.

     (c) Upon any termination of Security Interests or release of Collateral in
accordance with this Section, the Trustee will, at the expense of the relevant
Lien Grantor, execute and deliver to the Lien Grantor such documents as the Lien
Grantor shall reasonably request to evidence the termination of the relevant
Security Interests or the release of the relevant Collateral, as the case may
be.

        Section 8. NOTICES. Each notice, request or other communication given to
any party hereunder shall be in writing (which term includes facsimile or other
electronic transmission) and shall be effective (i) when delivered to such party
at its address specified below, (ii) when sent to such party by facsimile or
other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered United States mail, addressed to it at its address
specified below, with first class or airmail postage prepaid:

<PAGE>

                                                                               8

     (a) in the case of the Lien Grantor, to it at its address or facsimile
number set forth in the Credit Agreement;

     (b) in the case of the Trustee, to it at:

                           State Street Bank and Trust Company
                           2 Avenue de Lafayatte
                           Boston, Massachusetts 02111
                           Attention:
                           Facsimile:

     (c) in the case of any Senior Secured Party, to the Senior Collateral Agent
to be forwarded to such Lender at its address or facsimile number specified in
or pursuant the Senior Security Agreement.

Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the Trustee and the
Lien Grantor in the manner specified above.

     Section 9. WAIVERS, REMEDIES NOT EXCLUSIVE. No failure on the part of the
Trustee or any Secured Party to exercise, and no delay in exercising and no
course of dealing with respect to, any right or remedy under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise by
the Trustee or any Secured Party of any right or remedy under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right or remedy. The rights and remedies specified in this Agreement are
cumulative and are not exclusive of any other rights or remedies provided by
law.

     Section 10. SUCCESSORS AND ASSIGNS. This Agreement is for the benefit of
the Trustee and the Secured Parties and their respective successors and assigns,
and in the event of an assignment of all or any of the Secured Obligations, the
rights of the holder thereof under this Agreement, to the extent applicable to
the Notes so assigned, shall be transferred with such Notes. This Agreement
shall be binding on the Lien Grantor and their respective successors and
assigns.

     Section 11. CHANGES IN WRITING. Any provision of this Agreement may be
amended, supplemented, modified or waived if (but only if) such amendment,
supplement, modification or waiver is in writing and is signed by each Lien
Grantor and the Senior Secured Party; PROVIDED that the written consent of all
the Senior Secured Parties will be required to modify Section 3 or this Section
11.

     Section 12. CHOICE OF LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York, except as otherwise
required by mandatory provisions of law and except to the extent that remedies
provided by the laws of any jurisdiction other than the State of New York are
governed by the laws of such jurisdiction.

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                                                                               9

     Section 13. SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
the other provisions of this Agreement shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Trustee and
the Secured Parties in order to carry out the intentions of the parties thereto
as nearly as may be possible; and the invalidity or unenforceability of any
provision thereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.

<PAGE>

                                                                              10

         IN WITNESS WHEREOF, the Lien Grantor hereto has caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.

                                          POLAROID CORPORATION

                                          By: /s/ William L. Flaherty
                                              --------------------------
                                          Name:    William L. Flaherty
                                          Title:   Executive Vice President
                                                   and Chief Financial Officer

<PAGE>

                                                                      SCHEDULE 1

                              PRINCIPAL PROPERTIES

1.   100 Duchaine Blvd., New Bedford, Massachusetts, referred to as "the New
     Bedford Campus" and also identified as NB-1, NB-2, NB-3, NB-4, NB
     Wastewater and NB-6 (including any portion sub-captioned as NB-6 (11X)).

2.   1265 Main Street, Waltham, Massachusetts, referred to as the "Waltham Main
     Street Campus".

<PAGE>

                                                                      SCHEDULE 2

                          JURISDICTION OF ORGANIZATION

         The Lien Grantor is a corporation organized under the laws of the State
of Delaware.

<PAGE>

                                                                      SCHEDULE 3

                                FILINGS REQUIRED
                          TO PERFECT SECURITY INTERESTS

         Financing statements describing the Collateral should be filed in the
Office of the Secretary of State of the State of Delaware.<Page>

                                                                    EXHIBIT 10.1

                     EXECUTIVE SALARY CONTINUATION AGREEMENT

       THIS AGREEMENT, made and entered into this 28th day of December, 1988, by
and between Borel Bank & Trust Company, a corporation organized and existing
under the laws of the State of California (hereinafter called "the
Corporation"), and Harold A. Fick (hereinafter called "the Executive").

                                   WITNESSETH:

       WHEREAS, the Executive is in the employ of the Corporation, serving as
its President; and

       WHEREAS, the experience, knowledge of the affairs of the Corporation, and
reputation and contacts in the industry of the Executive are so valuable that
assurance of the Executive's continued service is essential for the future
growth and profits of the Corporation, and it is in the best interest of the
Corporation to arrange terms of continued employment for the Executive so as to
reasonably assure the Executive's remaining in the Corporation's employment
during the Executive's lifetime or until the age of retirement; and

       WHEREAS, it is the desire of the Corporation that the Executive's
services be retained as herein provided; and

       WHEREAS, the Executive is willing to continue in the employ of the
Corporation provided the Corporation agrees to pay to the Executive or the
Executive's beneficiaries certain benefits in accordance with the terms and
conditions hereinafter set forth;

       NOW, THEREFORE, in consideration of the services to be performed in the
future, as well as the mutual promises and covenants herein contained, it is
agreed as follows:

                                   ARTICLE 1

       1.1. BENEFICIARY - The term "Beneficiary" shall mean the person or
persons whom the Executive shall designate in a valid Beneficiary Designation
Notice to receive the benefits provided hereunder.

            A Beneficiary Designation Notice shall be valid only if: (1) it is
in the form attached hereto and made a part hereof; and, (2) it is received by
the named Fiduciary and Plan Administrator prior to the Executive's death.

       1.2. CHANGE OF CONTROL - The term change of control shall mean:

            (a) any merger or consolidation of the corporation in which the
       Corporation is not the surviving corporation; or

            (b) any sale, lease, exchange, mortgage, pledge, transfer or other
       disposition (in one transaction or a series of transactions) of any
       assets of the Corporation having an aggregate Fair Market Value of fifty
       percent (50%) of the total value of the assets of the Corporation and its
       consolidated subsidiaries reflected in the most recent balance sheet of
       the Corporation; or

                                       1

<Page>

            (c) any person (as such term is used in Sections 13(d) and 14(d)(2)
       of the Securities Exchange Act of 1934) becomes a beneficial owner,
       directly or indirectly, of securities of the Corporation representing
       twenty-five per cent (25%) of the combined voting power of the
       Corporation's then outstanding securities.

       1.3. DISABILITY - The term "disability" shall mean the complete and total
inability, due to illness or injury, of the Executive to perform his or her
duties as an Executive Officer of the Corporation and the continued complete and
total inability to perform such duties. Such disability shall be determined by
an independent physician in the event of physical disability or by an
independent psychiatrist in the event of mental disability selected with the
approval of the Corporation and the Executive.

       1.4. NAMED FIDUCIARY AND PLAN ADMINISTRATOR - The Named Fiduciary and
Plan Administrator of this plan shall be the Corporation.

       1.5. PLAN YEAR - The term "Plan Year" shall mean the Corporation's fiscal
year.

       1.6. SURVIVING SPOUSE - The term "surviving spouse" shall mean the person
(if any) who shall be legally married to the Executive on the date of the
Executive's death.

       1.7. TERMINATION FOR CAUSE - The term "termination for cause" shall mean
termination of the employment of the Executive by reason of any of the
following:

            (a) The Executive's willful breach of duty in the course of
       employment, unless waived by the Corporation;

            (b) Dishonest or illegal conduct of the Executive; or,

            (c) The habitual neglect by the Executive of the Executive's
       employment duties, unless waived by the Corporation.

                                   ARTICLE 2

       2.1. EMPLOYMENT - The Corporation agrees to employ the Executive in such
capacity as the Corporation may from time to time determine. The Executive shall
continue in the employ of the Corporation in such capacity and with such duties
and compensation as may be determined from time to time by the Board of
Directors of the Corporation.

       2.2. FULL EFFORTS - The Executive agrees to devote his or her full time
and attention exclusively to the business and affairs of the Corporation, except
during vacation periods, and to use his or her best efforts to furnish faithful
and satisfactory services to the Corporation.

       2.3. FRINGE BENEFIT - The salary continuation benefits provided by this
Agreement are granted by the Corporation as a fringe benefit to the Executive
and are not part of any salary reduction plan or any arrangement deferring a
bonus or a salary increase. The Executive has no option to take any current
payment of bonus in lieu of these salary continuation benefits.

                                   ARTICLE 3

       3.1. RETIREMENT - If the Executive shall continue in the employment of
the Corporation at least until attaining the age of Sixty (60), the Executive
may retire from active daily employment as of the first

                                       2

<Page>

day of the month following attainment of age Sixty (60), or upon such later date
as may be mutually agreed upon by the Executive and the Corporation. In any
event, however, the Executive may continue to work after the age of Sixty (60).

       3.2. PAYMENT - The Corporation agrees that upon such retirement it will
pay to the Executive the annual sum of Seven-five Thousand Dollars ($75.000.00),
payable monthly on the first day of each month following such retirement for a
period of one hundred fifty-six (156) months, subject to the conditions and
limitations hereinafter set forth. The Seventy-five Thousand Dollars
($75,000.00) annual payment amount may be adjusted as of the first year in which
it is to be paid, to reflect changes in the federally determined cost-of-living
index (U.S. Dept. of Labor BLS CPI) and may be adjusted annually for each
payment year thereafter to reflect further changes in said federally determined
cost of living index, using the date of retirement as a baseline. However, the
Corporation is not obligated hereunder to make any such adjustment.

       3.3. DEATH AFTER RETIREMENT - The Corporation agrees that if the
Executive shall so retire, but shall die before receiving the full amount of
monthly payments to which he is entitled hereunder, it will continue to make
such monthly payments to the Executive's designated Beneficiary for the
remaining period. If a valid Beneficiary Designation is not in effect, the
payments shall be made to the executive's surviving spouse or, if none, said
payments shall be made to the duly qualified personal representative, executor
or administrator of the Executive's estate.

                                   ARTICLE 4

       4.1. DEATH PRIOR TO RETIREMENT - In the event the Executive should die
while actively employed by the Corporation at any time after the date of this
Agreement, but prior to attaining the age of Sixty (60) years, or if the
Executive chooses to work after the age of Sixty (60), but dies before
retirement, the Corporation will pay the annual sum of Seventy-five Thousand
Dollars ($75,000.00) per year to the Executive's designated Beneficiary in equal
monthly installments for a period of one hundred and fifty-six (156) months. If
a valid Beneficiary Designation is not in effect, the payments shall be made to
the Executive's surviving spouse at the time of death, or, if none, said
payments shall be made to the duly qualified personal representative, executor
or administrator of the Executive's estate. The said monthly payments shall
begin the first day of the month following the month of the decease of the
Executive. Provided, however, that anything hereinabove to the contrary
notwithstanding, no death benefit shall be payable hereunder if it is determined
that the Executive's death was caused by suicide on or before December 30, 1990.

       4.2. DISABILITY PRIOR TO HIS RETIREMENT - In the event the Executive
becomes disabled while actively employed by the Corporation at any time after
the date of this Agreement, but prior to attaining the age of Sixty (60) years
the Executive will be considered to be one hundred percent (100%) vested in the
amount set forth in Schedule A attached hereto and made a part hereof. Said
amount, at the election of the Executive, shall be paid to the Executive in a
lump sum within three (3) months of the determination of disability, or may be
paid in equal monthly installments over a period not to exceed one hundred and
fifty-six (156) months, or such shorter period as is mutually agreed upon by the
Corporation and the Executive. Said payment shall be in lieu of any other
retirement or death benefit under this Agreement.

       If the Executive elects to work beyond the age of Sixty (60) and becomes
disabled prior to retirement, the Executive will be considered to have retired
as defined in Section 3.1 of this Agreement and will be entitled to the benefits
provided by Article 3 of this Agreement.

                                       3

<Page>

                                   ARTICLE 5

       5.1. TERMINATION OF EMPLOYMENT - The Corporation reserves the right to
terminate employment of the Executive at any time prior to retirement. In the
event that the employment of the Executive shall be terminated prior to the
Executive's attaining the later of age Sixty (60) or the date of termination,
other than by reason of disability or death, then this Agreement shall terminate
upon the date of such termination of employment; provided, however, that the
Executive shall be entitled to the following benefits under the following
circumstances:

            (1) TERMINATION WITHOUT CAUSE. If the Executive has been employed by
       the Corporation for a period of at least three (3) continuous years, and
       the Executive's employment is terminated by the Corporation without
       cause, the Executive will be considered to be vested in twenty (20%) of
       the amount set forth in Schedule A attached hereto and made a part
       hereof, and shall become vested in an additional ten percent (10%) of
       said amount for each succeeding year thereafter until he becomes one
       hundred (100%) vested. If the Executive's employment is terminated under
       the provisions of this Section 5.1, the Corporation will pay the
       Executive's vested amount upon such terms and conditions and commencing
       at such time as the Corporation shall determine, but in no event
       commencing later than age Sixty (60).

            (2) VOLUNTARY TERMINATION BY THE EXECUTIVE. It is understood by the
       Executive that the purpose of this Agreement is to assure the Executive's
       continued employment with the Corporation. If the Executive voluntarily
       terminates his or her employment with the Corporation, then the Executive
       shall be entitled to no benefits under this Agreement and no amount shall
       be paid to the Executive under this Agreement.

            (3) TERMINATION FOR CAUSE. If the Executive is terminated for cause
       as defined herein, then the Executive shall be entitled to no benefits
       under this Agreement and no amount shall be paid to the Executive under
       this Agreement.

            (4) TERMINATION UPON CHANGE OF CONTROL. (a) Anything hereinabove to
       the contrary notwithstanding, if the Executive is not fully vested in the
       amount set forth in Schedule A, he will become fully vested in said
       amount in the event of a transfer in the controlling ownership or sale of
       the Corporation or its parent Corporation, and shall be entitled to the
       full amount set forth in Schedule A, upon the terms and conditions
       hereof, if termination of employment thereafter occurs under this Section
       5.1 as a result of such change of control.

                   (a) In the event that any payment or benefit received or to
            be received by the Executive in connection with a change in control
            of the Corporation or the termination of the Executive's employment
            (whether payable pursuant to the terms of this Agreement or any
            other plan, arrangement or agreement with the Corporation, any
            person whose actions result in a change in control of the
            Corporation or any person affiliated with the Corporation or such
            person (together with the Severance Payment, the "Total Payments"))
            would not be deductible (in whole or in part) as a result of Section
            280G of the Internal Code

                                       4

<Page>

            of 1954, as amended (the "Code"), the Severance Payment shall be
            reduced until no portion of the Total Payments is not deductible as
            a result of section 280G of the Code, or the Severance Payment is
            reduced to zero. For purposes of this limitation (i) no portion of
            the Total Payments, the receipt or enjoyment of which the Executive
            shall have effectively waived in writing prior to the date of
            payment of the Severance Payment, shall be taken into account; (ii)
            no portion of the Total Payments shall be taken into account which,
            in the opinion of tax counsel selected by the Corporation's
            independent auditors and acceptable to the Executive, does not
            constitute a "parachute payment" within the meaning of section
            280G(b)(2) of the Code; (iii) the Severance Payment shall be reduced
            only to the extent necessary so that the Total Payments (other than
            those referred to in clause (i) or clause (ii)) in their entirety
            constitute reasonable compensation for services actually rendered
            within the meaning of section 280G(b)(4) of the Code, in the opinion
            of the tax counsel referred to in clause (ii); and (iv) the value of
            any non-cash benefit or any deferred payment or benefit included in
            the Total Payments shall be determined by the Corporation's
            independent auditors in accordance with the principles of sections
            280G(d)(3) and (4) of the Code.

                                   ARTICLE 6

       6.1. TERMINATION OF AGREEMENT BY REASON OF CHANGES IN LAW - The
Corporation is entering into this Agreement upon the assumption that certain
existing tax laws will continue in effect in substantially their current form.
In the event of any changes in such federal laws, the Corporation shall have an
option to terminate or modify this Agreement, provided, however, that the
Executive shall be entitled to at least the same amount as he would have been
entitled to under Section 4.2 relating to disability. The payment of said amount
shall be made upon such terms and conditions and at such time as the Corporation
shall determine, but in no event commencing later than age Sixty (60) or the
date of termination.

                                   ARTICLE 7

       7.1. NONASSIGNABLE - Neither the Executive, nor the Executive's spouse,
nor any other Beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify, or
otherwise encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance owned by the Executive or the
Executive's Beneficiary, or any of them, or be transferable by operation of law
in the event of bankruptcy, insolvency, or otherwise.

                                   ARTICLE 8

       8.1. CLAIMS PROCEDURE - The Corporation shall make all determinations as
to rights to benefits under this Agreement. Any decision by the Corporation
denying a claim by the Executive or the Executive's Beneficiary for benefits
under this Agreement shall be stated in writing and delivered or mailed to the
Executive or such Beneficiary. Such decision shall set forth the specific
reasons for the denial, written to the best of the Corporation's ability, in a
manner calculated to be understood without

                                       5

<Page>

legal or actuarial counsel. In addition, the Corporation shall provide a
reasonable opportunity to the Executive or such Beneficiary for full and fair
review of the decision denying such claim.

                                   ARTICLE 9

       9.1. UNSECURED GENERAL CREDITOR - The Executive and the Executive's
Beneficiary shall have no legal or equitable rights, interests, or claims in or
to any property or assets of the Corporation. No assets of the Corporation shall
be held under any trust for the benefit of the Executive or his Beneficiaries,
or held in any way as security for the fulfillment of the obligations of the
Corporation under this Plan. All of the Corporation's assets shall be, and
remain, the general, unpledged, unrestricted assets of the Corporation. The
Corporation's obligation under this Plan shall be that of an unfunded and
unsecured promise by the Corporation to pay money in the future. Executives and
their Beneficiaries shall be unsecured general creditors with respect to any
benefits hereunder.

                                   ARTICLE 10

       10.1. REORGANIZATION - The Corporation shall not merge or consolidate
into or with another corporation, or reorganize, or sell substantially all of
its assets to another corporation, firm, or person, unless and until such
succeeding or continuing corporation, firm, or person agrees to assume and
discharge the obligations of the Corporation under this Agreement. Upon the
occurrence of such event, the term "Corporation," as used in this Agreement,
shall be deemed to refer to such successor or survivor corporation.

                                   ARTICLE 11

       11.1. BENEFITS AND BURDENS - This Agreement shall be binding upon, and
inure to the benefit of the Executive and the Executive's personal
representatives, and the Corporation and any successor organization which shall
succeed to substantially all of its assets and business.

                                   ARTICLE 12

       12.1. NOT A CONTRACT OF EMPLOYMENT - This Agreement shall not be deemed
to constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.

       IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its proper officer, and the Executive has hereunto set his hand at
San Mateo, California, the day and year first above written.

                                         BOREL BANK & TRUST COMPANY

                                         By:  /S/ RONALD G. FICK
                                            ------------------------------------
                                            Its: Vice President and
                                                 Senior Trust Officer

                                          EXECUTIVE

                                             /S/ HAROLD A. FICK
                                            ------------------------------------

                                       6

<PAGE>

                                 HAROLD A. FICK

                                   SCHEDULE A

                                         AMOUNT IN WHICH
     PLAN YEAR                            VESTING OCCURS
     ---------                            --------------
         1                                    28,644
         2                                    60,287
         3                                    95,244
         4                                   133,862
         5                                   176,523
         6                                   223,651
         7                                   275,714
         8                                   333,229
         9                                   396,766
        10                                   466,957
        11                                   544,497

                                       7

<PAGE>

                           DESIGNATION OF BENEFICIARY

       Pursuant to the terms of a Salary Continuation Agreement, dated December
28, 1988, between myself and the Borel Bank & Trust Company, I hereby designate
the following beneficiary (ies) to receive any payments which may be due under
such Agreement after my death:

Primary Beneficiary                 NANCY A. FICK
                   -------------------------------------------------------------

Secondary Beneficiary(ies)    TRUST UNDER THE WILL OF HAROLD A. FICK
                          ------------------------------------------------------

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

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

       The Primary Beneficiary named above shall be designated beneficiary
referred to in Articles 1.1, 3.3 and 4.1 of said Agreement if he or she is
living at the time a death benefit payment thereunder becomes due and payable,
and the Secondary Beneficiary named above shall be designated beneficiary
referred to in Articles 1.1, 3.3 and 4.1 of said Agreement only if he or she is
living at the time a death benefit payment becomes payable and the Primary
Beneficiary is not then living.

       This designation hereby revokes any prior designation which may have been
in effect.

                                         Date: DECEMBER 28, 1988

       /S/ AIDA B. LISS                        /S/ HAROLD A. FICK
       ------------------                      -------------------------------
       Witness                                 Executive

       Acknowledged By:                        /S/ RONALD G. FICK
                                               -------------------------------

                                       8

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