Document:

DIRECTOR SUPPLEMENTAL COMPENSATION AGREEMENT

     This Agreement is made and entered into effective as of _________,  1998 by
and between  Saratoga  National Bank, a national banking  association  chartered
under the  federal  laws of the  United  States of  America  with its  principal
offices  located in the City of Saratoga,  Santa Clara County,  California  (the
"Bank"),  and  __________________,  an  individual  residing  in  the  State  of
California (the "Director").

                                    RECITALS

     WHEREAS, the Director is a member of the Board of Directors of the Bank and
has served in such capacity since 19__;

     WHEREAS, the Bank desires to establish a compensation benefit for directors
who are not also  officers  or  employees  of the Bank in order to  attract  and
retain individuals with extensive and valuable experience as directors; and

     WHEREAS, the Director and the Bank wish to specify in writing the terms and
conditions upon which this additional compensatory incentive will be provided to
the  Director,  or  as  applicable,  to  the  Director's  spouse  or  designated
beneficiaries, as the case may be.

     NOW,  THEREFORE,  in  consideration  of the services to be performed by the
Director in the future,  as well as the mutual promises and covenants  contained
herein, the Director and the Bank agree as follows:

                                    AGREEMENT

1.   Terms and Definitions.

     1.1.  Administrator.  The Bank shall be the "Administrator" and, solely for
the purposes of ERISA as defined in subparagraph  1.10 below, the "fiduciary" of
this Agreement where a fiduciary is required by ERISA.

     1.2.  Applicable  Percentage.  The term "Applicable  Percentage" shall mean
that percentage  listed on Schedule "A" attached hereto which is adjacent to the
number  of  calendar  years  which  shall  have  elapsed  from  the  date of the
Director's commencement of service to the Bank. Notwithstanding the foregoing or
the  percentages  set forth on Schedule  "A," but subject to all other term sand
conditions set forth herein, the "Applicable  Percentage" shall be: (i) provided
payments  have not yet begun  hereunder,  one  hundred  percent  (100%)upon  the
occurrence of a "Change in Control" as defined in subparagraph 1.4 below, or the
Director's  death, or Disability (as defined in subparagraph  1.7 below),  which
death or Disability occurs prior to the termination of the Director's service on
the Board of Directors of the Bank;  and (ii)  notwithstanding  subclause (i) of
this  subparagraph  1.2,  zero percent (0%) in the event the Director  takes any
intentional  action which prevents the Bank from  collecting the proceeds of any
life  insurance  policy  which  the  Bank may  happen  to own at the time of the
Surrogate's  death  and  of  which  the  Bank  is  the  designated  beneficiary.
Furthermore,  notwithstanding  the  foregoing,  or  anything  contained  in this
Agreement  to the  contrary,  in the event the  Director  takes any  intentional
action  which  prevents  the  Bank  from  collecting  the  proceeds  of any life
insurance policy which the Bank may happen to own at the time of the Surrogate's
death and of which the Bank is the  designated  beneficiary:  (1) the Director's
estate or designated  beneficiary  shall no longer be entitled to receive any of
the amounts  payable under the terms of this  Agreement,  and (2) the Bank shall
have the right to recover from the Director's  estate all of the amounts paid to
the  Director's  estate (with  respect to amounts paid prior to the  Surrogate's
death or paid to the Director's estate) or designated  beneficiary (with respect
to amounts  paid to the  designated  beneficiary)  pursuant to the terms of this
Agreement prior to and after Surrogate's death.

     1.3. Beneficiary.  The term "beneficiary" or "designated beneficiary "shall
mean  the  person  or  persons  whom the  Director  shall  designate  in a valid
Beneficiary Designation,  a copy of which is attached hereto as Schedule "C," to
receive the benefits  provided  hereunder.  A Beneficiary  Designation  shall be
valid  only  if it is in the  form  attached  hereto  and  made  a part  hereof,
completed and signed by the Director and received by the Administrator  prior to
the Director's death.

     1.4.  Change in  Control.  The term  "Change  in  Control"  shall  mean the
occurrence  of any of the  following  events with  respect to the Bank (with the
term "Bank"  being  defined for  purposes  of  determining  whether a "Change in
Control" has occurred to include any parent bank holding  company owning 100% of
the Bank's  outstanding  common stock): (i) a change in control of a nature that
would be required  to be  reported  in response to Item 6(e) of Schedule  14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the  "Exchange  Act"),  or in  response  to any  other  form or  report  to the
regulatory  agencies or governmental  authorities  having  jurisdiction over the
Bank or any stock  exchange on which the Bank's shares are listed which requires
the  reporting  of a change  in  control;  (ii)  any  merger,  consolidation  or
reorganization  of the Bank in which the Bank does not survive;  (iii) any sale,
lease,  exchange,  mortgage,  pledge,  transfer  or  other  disposition  (in one
transaction  or a series of  transactions)  of any assets of the Bank  having an
aggregate  fair market  value of fifty  percent  (50%) of the total value of the
assets of the Bank,  reflected in the most recent balance sheet of the Bank;(iv)
a transaction whereby any "person" (as such term is used in the Exchange Act) or
any individual, corporation,  partnership, trust or any other entity becomes the
beneficial owner, directly or indirectly, of securities of the Bank representing
twenty-five  percent  (25%) or more of the  combined  voting power of the Bank's
then  outstanding  securities;  or(v) a situation where, in any one-year period,
individuals  who at the  beginning  of  such  period  constitute  the  Board  of
Directors  of the Bank  cease for any reason to  constitute  at least a majority
thereof,  unless the  election,  or the  nomination  for  election by the Bank's
shareholders,  of  each  new  director  is  approved  by  a  vote  of  at  least
three-quarters (3/4) of the directors then still in office who were directors at
the beginning of the period.

     1.5. The Code. The "Code" shall mean the Internal  Revenue Code of 1986, as
amended (the "Code").

     1.6.  Director  Benefits.  The  term  "Director  Benefits"  shall  mean the
benefits  determined in accordance with Schedule "B", and reduced or adjusted to
the  extent:  (i)  required  under  the  other  provisions  of  this  Agreement,
including,  but not limited to,  Paragraphs 5, 6 and 7 hereof;  (ii) required by
reason of the lawful order of any regulatory agency or body having  jurisdiction
over the Bank; or (iii)  required in order for the Bank to properly  comply with
any and all applicable  state and federal laws,  including,  but not limited to,
income, employment and disability income tax laws (e.g., FICA, FUTA, SDI).

     1.7.  Disability/Disabled.  The term  "Disability" or "Disabled" shall have
the  same  meaning  given  such  terms in any  policy  of  disability  insurance
maintained by the Bank for the benefit of directors  including the Director.  In
the absence of such a policy which extends coverage to the Director in the event
of  disability,  the terms  shall  mean  bodily  injury or  disease  (mental  or
physical) which wholly and continuously  prevents the performance of duty for at
least three months.

     1.8. Early Retirement Date. The term "Early Retirement Date" shall mean the
Retirement,  as defined  below,  of the Director on a date which occurs prior to
the Director  attaining  sixty-two (62) years of age, but after the Director has
attained fifty-five (55) years of age.

     1.9.  Effective Date. The term  "Effective  Date" shall mean the date first
written above.

     1.10.  ERISA.  The term "ERISA" shall mean the Employee  Retirement  Income
Security Act of 1974, as amended.

     1.11. Plan Year. The term "Plan Year" shall mean the Bank's fiscal year.

     1.12.   Removal  for  Cause.  The  term  "Removal  for  Cause"  shall  mean
termination  of the employment of the Director by reason of any of the following
determined in good faith by the Bank's Board of Directors:

          (a)  The willful,  intentional and material breach or the habitual and
               continued  neglect  by the  Director  of  his  or her  employment
               responsibilities and duties;

          (b)  The  continuous  mental or physical  incapacity  of the Director,
               subject to disability rights under this Agreement;

          (c)  The Director's  willful and intentional  violation of any federal
               banking or securities laws, or of the Bylaws,  rules, policies or
               resolutions  of Bank, or the rules or regulations of the Board of
               Governors  of  the  Federal  Reserve   System,   Federal  Deposit
               Insurance Corporation, Office of the Comptroller of the Currency,
               or other  regulatory  agency  or  governmental  authority  having
               jurisdiction  over the Bank,  which has a material adverse effect
               upon the Bank;

          (d)  The written determination by a state or federal banking agency or
               governmental authority having jurisdiction over the Bank that the
               Director (i) is of unsound  mind,  or (ii) has  committed a gross
               abuse of authority or discretion  with  reference to the Bank, or
               (iii)  otherwise is not suitable to continue to serve as a member
               of the Board of Directors of the Bank;

          (e)  The  Director's  conviction  of (i)  any  felony  or (ii) a crime
               involving  moral  turpitude,   or  the  Director's   willful  and
               intentional commission of a fraudulent or dishonest act; or

          (f)  The  Director's  willful  and  intentional  disclosure,   without
               authority,  of any secret or confidential  information concerning
               Bank or taking any action  which the  Bank's  Board of  Directors
               determines,  in its sole  discretion  and  subject to good faith,
               fair dealing and  reasonableness,  constitutes unfair competition
               with or induces  any  customer  to breach any  contract  with the
               Bank.

     1.13.  Retirement.  The term  "Retirement"  or "Retires" shall refer to the
date which the Director  acknowledges  in writing to the Bank to be the last day
of service as a member of the Board of Directors of the Bank.

     1.14. Surrogate. The term "Surrogate" shall mean the individuals elected as
a substitute  insured for the Director  for  purposes  related to any  insurance
policy applicable to this Agreement.

     1.15.  Surviving Spouse. The term "Surviving Spouse" shall mean the person,
if any,  who  shall  be  legally  married  to the  Director  on the  date of the
Director's death.

2.   Scope, Purpose and Effect.

     2.1. Contract of Employment. Although this Agreement is intended to provide
the Director  with an  additional  incentive to continue to serve as a member of
the  Board of  Directors  of the  Bank,  this  Agreement  shall not be deemed to
constitute a contract of employment  between the Director and the Bank nor shall
any  provision  of this  Agreement  restrict  the right of the Bank to remove or
cause the removal of the Director including,  without limitation,  by (i)refusal
to nominate the Director  for  election for any  successive  term of office as a
member of the Board of Directors of the Bank, or (ii) complying with an order or
other  directive  from a  court  of  competent  jurisdiction  or any  regulatory
authority  having  jurisdiction  over the Bank which  requires  the Bank to take
action to remove the Director.

     2.2. Fringe Benefit. The benefits provided by this Agreement are granted by
the Bank as a fringe  benefit to the  Director  and are not a part of any salary
reduction plan or any arrangement  deferring a bonus or a salary  increase.  The
Director  has no option  to take any  current  payments  or bonus in lieu of the
benefits provided by this Agreement.

3.   Payments Upon Early Retirement or Retirement and After Retirement.

     3.1. Payments Upon Early  Retirement.  The Director shall have the right to
Retire on a date  which  constitutes  an Early  Retirement  Date as  defined  in
subparagraph 1.8 above.

          (a)  In the event  the  Director  elects  to  Retire  on a date  which
               constitutes  an Early  Retirement  Date,  and  provided  that the
               Surrogate is alive at the date the Director Retires, the Director
               shall be entitled  to be paid the  Applicable  Percentage  of the
               Director Benefits, in substantially equal monthly installments on
               the first day of each month,  beginning with the month  following
               the month in which the Early Retirement Date occurs,  payable (i)
               for the  period  designated  in  Schedule  "D" in the case of the
               balance in the Benefit  Account and (ii) until the first to occur
               of the Director's  death or the Surrogate's  death in the case of
               the Index Benefit defined in Schedule "B".

          (b)  In the event  the  Director  elects  to  Retire  on a date  which
               constitutes  an Early  Retirement  Date,  and  provided  that the
               Surrogate has  predeceased  the Director at the date the Director
               Retires, the Director shall been titled to the payments specified
               in subparagraph 3.3 below.

     3.2. Payments Upon Retirement.

          (a)  If the Director remains a member of the Board of Directors of the
               Bank until  attaining  sixty-two  (62) years of age, and provided
               that the Surrogate is alive at the date the Director Retires, the
               Director shall be entitled to be paid the  Applicable  Percentage
               of  the  Director  Benefits,   in  substantially   equal  monthly
               installments  on the first day of each month,  beginning with the
               month  following the month in which the Director  Retires or upon
               such later date as may be mutually  agreed  upon by the  Director
               and the Bank in advance of said Retirement date,  payable (i) for
               the period  designated in Schedule "D" in the case of the balance
               in the  Benefit  Account and (ii) until the first to occur of the
               Director's  death  or the  Surrogate's  death  in the case of the
               Index  Benefit  defined in  Schedule  "B". At the Bank's sole and
               absolute discretion,  the Bank may increase the Director Benefits
               as and when the Bank determines the same to be appropriate.

          (b)  If the Director remains a member of the Board of Directors of the
               Bank until  attaining  sixty-two  (62) years of age, and provided
               that the Surrogate has  predeceased  the Director at the date the
               Director Retires,  the Director shall be entitled to the payments
               specified in subparagraph 3.3 below.

     3.3.  Payments  in  the  Event  of  Surrogate's  Death  Before  Retirement.
Notwithstanding  subparagraph  3.1(a) and subparagraph  3.2(a), if the Surrogate
dies before the  Director  Retires,  then upon the  Director's  Retirement,  the
Director  Benefits to which the Director  would  otherwise be entitled  shall be
adjusted  such that the portion of such  Director  Benefits  which is derived by
reference  to an  insurance  policy,  if any,  underwritten  using  a  surrogate
insured(a  "Surrogate  Policy") shall be paid as follows:  the Bank shall pay to
the Director the  Applicable  Percentage of (i) that portion of the balance,  if
any, in the  Benefit  Account as of the date of the  Surrogate's  death which is
derived by reference to a Surrogate  Policy,  if any,  payable in  substantially
equal monthly  installments  on the first day of each month,  beginning with the
month  following the month in which the Director  Retires (or on such later date
as may be mutually  agreed upon by the  Director and the Bank in advance of said
Retirement  date) for the period  designated  in Schedule "D". Upon the death of
the Director before receiving all of the Director Benefits to which the Director
is entitled, the Bank shall pay to the Director's designated beneficiary(ies)the
Applicable  Percentage of the balance,  if any, of the Benefit  Account which is
derived by reference to a Surrogate  Policy,  if any, in lump sum. The remaining
Director  Benefits to which the Director is entitled  which are derived  without
reference to any Surrogate  Policy shall continue to be paid as specified in the
applicable provisions of this Agreement.

     3.4. Payments in the Event of Death After Retirement.

          (a)  If the Director  Retires,  but shall die before  receiving all of
               the Director  Benefits,  and provided that the Surrogate is alive
               at the date of the  Director's  death,  the Bank  will pay to the
               Director's designated  beneficiary(ies) the Applicable Percentage
               of the balance,  if any, of the Benefit Account, in lump sum, and
               up to twenty (20) annual Index  Benefit  installment  payments in
               the amounts that  otherwise  would have been paid to the Director
               if still alive and which are derived by  reference to a Surrogate
               Policy,  if  any,  minus  the  number  of  annual  Index  Benefit
               installment payments made to the Director prior to the Director's
               death. Upon the death of the Surrogate, such installment payments
               shall cease whether or not any unpaid  portion of the twenty (20)
               installment payments shall remain unpaid.

          (b)  If the Director  Retires,  but the Surrogate shall predecease the
               Director,  the Director shall be entitled to receive the payments
               specified in subparagraph 3.3 above.

          (c)  If a valid  Beneficiary  Designation  is not in effect,  then the
               remaining  amounts  due to the  Director  under the terms of this
               Agreement shall be paid to the Director's  Surviving  Spouse.  If
               the Director leaves no Surviving  Spouse,  the remaining  amounts
               due to the Director  under the terms of this  Agreement  shall be
               paid to the duly qualified personal  representative,  executor or
               administrator of the Director's estate.

4.   Payments in the Event Death or Disability Occurs Prior to Retirement.

     4.1. Payments in the Event of Death Prior to Retirement.

          (a)  If the Director dies at any time after the Effective Date of this
               Agreement  but  prior  to  Retirement,   and  provided  that  the
               Surrogate is alive at the date of the Director's  death, the Bank
               agrees to pay to the Director's  designated  beneficiary(ies) the
               Applicable  Percentage  of the  balance,  if any,  in the Benefit
               Account,  in lump sum, and up to twenty (20) annual Index Benefit
               installment  payments in the amounts  that  otherwise  would have
               been paid to the Director if still alive and which are derived by
               reference to a Surrogate  Policy,  if any.  Upon the death of the
               Surrogate,  such installment  payments shall cease whether or not
               any unpaid portion of the twenty  (20)installment  payments shall
               remain unpaid.

          (b)  If the Director dies at any time after the Effective Date of this
               Agreement  but  prior  to  Retirement,   and  provided  that  the
               Surrogate has predeceased the Director, the Bank agrees to pay to
               the  Director's   designated   beneficiary(ies)   the  Applicable
               Percentage of the balance, if any, of the Benefit Account in lump
               sum.

          (c)  If a valid  Beneficiary  Designation  is not in effect,  then the
               remaining  amounts  due to the  Director  under the terms of this
               Agreement shall be paid to the Director's  Surviving  Spouse.  If
               the Director leaves no Surviving  Spouse,  the remaining  amounts
               due to the Director  under the terms of this  Agreement  shall be
               paid to the duly qualified personal  representative,  executor or
               administrator of the Director's estate.

     4.2. Payments in the Event of Disability Prior to Retirement.  In the event
the  Director  becomes  Disabled  at any time after the  Effective  Date of this
Agreement but prior to  Retirement,  the Director  shall be paid the  Applicable
Percentage  of the  Director  Benefits  which the  Director  may be  entitled to
receive,  in substantially  equal monthly  installments on the first day of each
month,  beginning  with the month  following  the  month in which  the  Director
becomes  Disabled,  payable (i) for the period designated in Schedule "D" in the
case of the balance in the Benefit  Account and (ii) until the first to occur of
the Director's  death or the Surrogate's  death in the case of the Index Benefit
defined in Schedule "B".

5. Payments in the Event Service Is Terminated Prior to Retirement. As indicated
in  subparagraph  2.1 above,  the Bank reserves the right to remove or cause the
removal of the Director at any time prior to the Director's  Retirement.  In the
event that the  Director  shall be removed and his or her service as a member of
the Board of  Directors of the Bank  terminated,  other than by reason of death,
Disability or Retirement, prior to the Director's attaining sixty-two (62) years
of age, then this Agreement shall terminate upon the date of such termination of
service; provided, however, that the Director shall be entitled to the following
benefits as may be applicable  depending upon the circumstances  surrounding the
Director's termination of service:

     5.1.  Termination  Without Cause. If the Director's  service as a member of
the Board of  Directors  of the Bank is  terminated  for  reasons  other than as
specified in paragraph  5.3 below,  and such  termination  is not subject to the
provisions of subparagraph  5.4 below, the Director shall be entitled to be paid
the  Applicable  Percentage of the Director  Benefits,  in  substantially  equal
monthly  installments  on the first day of each month,  beginning with the month
following the month in which the Director  attains  fifty-five (55) years of age
or any month  thereafter,  as requested in writing by the Director and delivered
to the Bank or its  successor  thirty  (30) days  prior to the  commencement  of
installment payments; provided, however, that in the event the Director does not
request a commencement date as specified, such installments shall be paid on the
first day of each month,  beginning with the month  following the month in which
the Director  attains  sixty-two  (62) years of age. The  installments  shall be
payable (i)for the period  designated in Schedule "D" in the case of the balance
in the Benefit Account and (ii) until the first to occur of the Director's death
or the  Surrogate's  death in the case of the Index Benefit  defined in Schedule
"B".

     5.2. Voluntary  Termination by the Director. If the Director's service as a
member  of the  Board  of  Directors  of the  Bank is  terminated  by  voluntary
resignation   and  such   resignation  is  not  subject  to  the  provisions  of
subparagraph 5.4 below, the Director shall be entitled to be paid the Applicable
Percentage of the Director Benefits, in substantially equal monthly installments
on the first day of each month,  beginning with the month following the month in
which the Director attains fifty-five (55) years of age or any month thereafter,
as  requested  in  writing  by the  Director  and  delivered  to the Bank or its
successor  thirty (30) days prior to the  commencement of installment  payments;
provided,   however,  that  in  the  event  the  Director  does  not  request  a
commencement date as specified, such installments shall be paid on the first day
of each  month,  beginning  with the  month  following  the  month in which  the
Director attains sixty-two (62) years of age. The installments  shall be payable
(i) for the period  designated in Schedule "D" in the case of the balance in the
Benefit Account and (ii) until the first to occur of the Director's death or the
Surrogate's death in the case of the Index Benefit defined in Schedule "B".

     5.3.  Termination  by Removal for Cause.  The  Director  agrees that if the
Director's  service  as a  member  of the  Board  of  Directors  of the  Bank is
terminated  by "removal  for cause,"  (as defined in  subparagraph  1.12 of this
Agreement) and pursuant to subparagraph 1.12 (c), (d) or (e), the Director shall
forfeit any and all rights and benefits the Director may have under the terms of
this Agreement and shall have no right to be paid any of the amounts which would
otherwise  be due or paid to the  Director by the Bank  pursuant to the terms of
this  Agreement.  In the event  that the  Director's  service as a member of the
Board of Directors of the Bank is terminated by "removal for cause"  pursuant to
subparagraph  1.12(a), (b) or (f), the Director shall be entitled to be paid the
Applicable   Percentage  of  the  Director   Benefits,   as  defined  above,  in
substantially  equal  monthly  installments  on the  first  day of  each  month,
beginning  with the month  following  the month in which  the  Director  attains
fifty-five (55) years of age or any month thereafter, as requested in writing by
the Director and delivered to the Bank or its  successor  thirty (30) days prior
to the  commencement of installment  payments;  provided,  however,  that in the
event the  Director  does not request a  commencement  date as  specified,  such
installments  shall be paid on the first day of each month,  beginning  with the
month following the month in which the Director attains  sixty-two (62) years of
age. The installments  shall be payable(i) for the period designated in Schedule
"D" in the case of the balance in the  Benefit  Account and (ii) until the first
to occur of the  Director's  death or the  Surrogate's  death in the case of the
Index Benefit defined in Schedule "B".

     5.4.  Termination on Account of or After a Change in Control. In the event:
(i) the Director's  service as a member of the Board of Directors of the Bank is
terminated  in  conjunction  with,  or by reason of, a "Change in  Control"  (as
defined in subparagraph 1.4 above);  or (ii) by reason of the Bank's actions and
without the Director's prior written consent,  any change occurs in the scope of
the Director's position,  responsibilities,  duties, fees, benefits, or location
of meetings (which in the event of relocation of more than thirty (30)miles from
the  location of the Board or  committee  meetings  prior to a Change in Control
shall  constitute  such a change in location)  after a Change in Control occurs,
then the Director shall be entitled to be paid the Applicable  Percentage of the
Director Benefits, as defined above, in substantially equal monthly installments
on the first day of each month,  beginning with the month following the month in
which the Director attains fifty-five (55) years of age or any month thereafter,
as  requested  in  writing  by the  Director  and  delivered  to the Bank or its
successor  thirty (30) days prior to the  commencement of installment  payments;
provided,   however,  that  in  the  event  the  Director  does  not  request  a
commencement date as specified, such installments shall be paid on the first day
of each  month,  beginning  with the  month  following  the  month in which  the
Director attains sixty-two (62) years of age. The installments  shall be payable
(i) for the period  designated in Schedule "D" in the case of the balance in the
Benefit Account and (ii)until the first to occur of the Director's  death or the
Surrogate's death in the case of the Index Benefit defined in Schedule "B".

     5.5. Payments in the Event of Death Following Termination.  If the Director
dies prior to receiving all of the Director Benefits described in this Paragraph
5 to which the  Director is entitled,  then the Bank will make such  payments to
the  Director's  designated  beneficiary  in lump  sum.  If a valid  Beneficiary
Designation  is not in effect,  then the  remaining  amounts due to the Director
under  the terms of this  Agreement  shall be paid to the  Director's  Surviving
Spouse. If the Director leaves no Surviving Spouse, the remaining amounts due to
the  Director  under  the  terms  of this  Agreement  shall  be paid to the duly
qualified personal  representative,  executor or administrator of the Director's
estate.

6.  Section  280G  Adjustment.  The  Director  acknowledges  and agrees that the
parties have entered into this  Agreement  based upon certain  financial and tax
accounting  assumptions.  Accordingly,  with  full  knowledge  of the  potential
consequences the Director agrees that,  notwithstanding  anything contained here
into the  contrary,  in the event that any payment or benefit  received or to be
received  by the  Director,  whether  payable  pursuant  to the  terms  of  this
Agreement or any other plan,  arrangement  or agreement  with the Bank (together
with the Director Benefits,  the "Total  Payments"),  will not be deductible (in
whole  or in  part)  as a  result  of  Code  Section  280G or  other  applicable
provisions of the Code,  the Total Payments shall be reduced until no portion of
the Total  Payments is  nondeductible  as a result of Section 280G or such other
applicable provisions of the Code. For purposes of this limitation:

          (a)  No portion of the Total  Payments,  the receipt or  enjoyment  of
               which the Director shall have effectively waived in writing prior
               to the date of payment of any future Director Benefits  payments,
               shall be taken into account;

          (b)  No portion  of the Total  Payments  shall be taken into  account,
               which in the opinion of the tax counsel  selected by the Bank and
               acceptable  to the  Director,  does not  constitute  a "parachute
               payment" within the meaning of Section 280G of the Code;

          (c)  Any  reduction of the Total  Payments  shall be applied to reduce
               any payment or benefit received or to be received by the Director
               pursuant  to the  terms of this  Agreement  and any  other  plan,
               arrangement or agreement with the Bank in the order determined by
               mutual agreement of the Bank and the Director;

          (d)  Future payments shall be reduced only to the extent  necessary so
               that the Total Payments  (other than those referred to in clauses
               (a)  or  (b)  above  in  their  entirety)  constitute  reasonable
               compensation for services actually rendered within the meaning of
               Section 280G of the Code, in the opinion of tax counsel  referred
               to in clause (b) above; and

          (e)  The value of any  non-cash  benefit  or any  deferred  payment or
               benefit  included in the Total  Payments  shall be  determined by
               independent  auditors  selected by the Bank and acceptable to the
               Director in accordance with the principles of Section 280G of the
               Code.

7. Right To Determine Funding Methods. The Bank reserves the right to determine,
in its sole and absolute discretion, whether, to what extent and by what method,
if any, to provide  for the  payment of the amounts  which may be payable to the
Director, the Director's spouse or the Director's  beneficiaries under the terms
of this Agreement.  In the event that the Bank elects to fund this Agreement, in
whole or in part,  through the use of life insurance or annuities,  or both, the
Bank shall  determine the ownership and beneficial  interests of any such policy
of life insurance or annuity.  The Bank further  reserves the right, in its sole
and absolute discretion, to terminate any such policy, and any other device used
to fund its obligations under this Agreement,  at any time, in whole or in part.
Consistent with Paragraph 9 below,  neither the Director,  the Director's spouse
nor the Director's  beneficiaries  shall have any right, title or interest in or
to any funding source or amount utilized by the Bank pursuant to this Agreement,
and any such  funding  source or amount  shall not  constitute  security for the
performance of the Bank's obligations pursuant to this Agreement.  In connection
with the  foregoing,  the Director  agrees to execute such documents and undergo
such medical  examinations  or tests which the Bank may request and which may be
reasonably  necessary to facilitate  any funding for this  Agreement  including,
without  limitation,  the  Bank's  acquisition  of any  policy of  insurance  or
annuity.  Furthermore,  a refusal by the Director to consent to,  participate in
and undergo any such medical examinations or tests shall result in the immediate
termination of this Agreement and the immediate forfeiture by the Director,  the
Director's  spouse  and the  Director's  beneficiaries  of any and all rights to
payment hereunder.

8. Claims Procedure.  The Bank shall, but only to the extent necessary to comply
with ERISA,  be designated as the named fiduciary under this Agreement and shall
have  authority to control and manage the operation and  administration  of this
Agreement.  Consistent  therewith,  the Bank shall make all determinations as to
the rights to benefits under this Agreement.  Any decision by the Bank denying a
claim by the Director,  the Director's spouse, or the Director's beneficiary for
benefits  under this  Agreement  shall be stated in  writing  and  delivered  or
mailed, via registered or certified mail, to the Director, the Director's spouse
or the Director's beneficiary, as the case may be. Such decision shall set forth
the  specific  reasons for the denial of a claim.  In  addition,  the Bank shall
provide the Director, the Director's spouse or the Director's beneficiary with a
reasonable  opportunity for a full and fair review of the decision  denying such
claim.

9. Status as an Unsecured General Creditor.  Notwithstanding  anything contained
herein to the contrary:  (i) neither the Director,  the Director's spouse or the
Director's  designated  beneficiaries  shall have any legal or equitable rights,
interests  or claims in or to any  specific  property or assets of the Bank as a
result of this  Agreement;  (ii) none of the Bank's  assets  shall be held in or
under any trust for the benefit of the Director,  the  Director's  spouse or the
Director's  designated  beneficiaries  or held in any  way as  security  for the
fulfillment of the obligations of the Bank under this Agreement; (iii)all of the
Bank's assets shall be and remain the general unpledged and unrestricted  assets
of the Bank; (iv) the Bank's obligation under this agreement shall be that of an
unfunded and unsecured  promise by the Bank to pay money in the future;  and (v)
the Director, the Director's spouse and the Director's designated  beneficiaries
shall be unsecured  general  creditors with respect to any benefits which may be
payable under the terms of this Agreement.

     Notwithstanding  subparagraphs  (i)  through  (v)  above,  the Bank and the
Director  acknowledge and agree that, in the event of a Change in Control,  upon
request of the Director, or in the Bank's discretion if the Director does not so
request and the Bank nonetheless deems it appropriate, the Bank shall establish,
not later than the  effective  date of the Change in  Control,  a Rabbi Trust or
multiple  Rabbi Trusts (the "Trust" or "Trusts")  upon such terms and conditions
as the Bank, in its sole  discretion,  deems  appropriate and in compliance with
applicable  provisions  of the  Code,  in  order  to  permit  the  Bank  to make
contributions  and/or  transfer  assets to the Trust or Trusts to discharge  its
obligations pursuant to this Agreement. The principal of the Trust or Trusts and
any earnings  thereon  shall be held  separate and apart from other funds of the
Bank to be used exclusively for discharge of the Bank's obligations  pursuant to
this  Agreement  and shall  continue  to be  subject to the claims of the Bank's
general creditors until paid to the Director or its beneficiaries in such manner
and at such times as specified in this Agreement.

10. Discretion of Board to Accelerate Payout.  Notwithstanding  any of the other
provisions  of this  Agreement,  the  Board of  Directors  of the Bank  may,  if
determined in its sole and absolute discretion to be appropriate, accelerate the
payment of the  amounts  due under the terms of this  Agreement,  provided  that
Director (or Director's spouse or designated beneficiaries): (i) consents to the
revised  payout terms  determined  appropriate by the Bank's Board of Directors;
and (ii)  does not  negotiate  or in  anyway  influence  the  terms of  proposed
altered/accelerated  payout (said decision to be made solely by the Bank's Board
of Directors  and offered to the Director [or  Director's  spouse or  designated
beneficiaries] on a "take it or leave it basis").

11.  Miscellaneous.

     11.1.  Opportunity  To Consult  With  Independent  Advisors.  The  Director
acknowledges  that  he  has  been  afforded  the  opportunity  to  consult  with
independent advisors of his choosing including, without limitation,  accountants
or tax advisors and counsel regarding both the benefits granted to him under the
terms of this  Agreement and the (i) terms and  conditions  which may affect the
Director's  right to  these  benefits  and (ii)  personal  tax  effects  of such
benefits  including,  without  limitation,  the  effects of any federal or state
taxes,  Section  280G of the  Code,  and any other  taxes,  costs,  expenses  or
liabilities  whatsoever related to such benefits,  which in any of the foregoing
instances the Director  acknowledges and agrees shall be the sole responsibility
of the Director  notwithstanding  any other term or provision of this Agreement.
The  Director  further  acknowledges  and  agrees  that the Bank  shall  have no
liability  whatsoever related to any such personal tax effects or other personal
costs,   expenses,  or  liabilities  applicable  to  the  Director  and  further
specifically  waives  any  right  for the  Director,  himself,  and  his  heirs,
beneficiaries,  legal representatives,  agents, successors, and assigns to claim
or assert  liability  on the part of the Bank  related to the matters  described
above in this  subparagraph  11.1. The Director further  acknowledges and agrees
that he has read, understands and consents to all of the terms and conditions of
this Agreement, and that he enters into this Agreement with a full understanding
of its terms and conditions.

     11.2.  Arbitration of Disputes.  All claims,  disputes and other matters in
question  arising  out  of or  relating  to  this  Agreement  or the  breach  or
interpretation  thereof,  other than those matters which are to be determined by
the Bank in its sole and  absolute  discretion,  shall be  resolved  by  binding
arbitration before a representative member,  selected by the mutual agreement of
the parties, of the Judicial  Arbitration and Mediation Services,  Inc.("JAMS"),
located in San Francisco,  California.  In the event JAMS is unable or unwilling
to conduct the arbitration  provided for under the terms of this  Paragraph,  or
has discontinued its business,  the parties agree that a representative  member,
selected by the mutual  agreement  of the parties,  of the American  Arbitration
Association  ("AAA"),  located in San Francisco,  California,  shall conduct the
binding  arbitration  referred  to in this  Paragraph.  Notice of the demand for
arbitration shall be filed in writing with the other party to this Agreement and
with JAMS (or AAA, if necessary).  In no event shall the demand for  arbitration
be made after the date when institution of legal or equitable  proceedings based
on such  claim,  dispute  or other  matter  in  question  would be barred by the
applicable  statute of  limitations.  The  arbitration  shall be subject to such
rules of procedure  used or established by JAMS, or if there are none, the rules
of procedure used or established by AAA. Any award rendered by JAMS or AAA shall
be final and binding  upon the  parties,  and as  applicable,  their  respective
heirs, beneficiaries, legal representatives, agents, successors and assigns, and
may be entered in any court having jurisdiction  thereof.  The obligation of the
parties to arbitrate  pursuant to this clause shall be specifically  enforceable
in accordance with, and shall be conducted  consistently with, the provisions of
Title 9 of Part 3 of the California  Code of Civil  Procedure.  Any  arbitration
hereunder shall be conducted in Saratoga, California, unless otherwise agreed to
by the parties.

     11.3.  Attorneys'  Fees.  In the  event of any  arbitration  or  litigation
concerning any controversy, claim or dispute between the parties hereto, arising
out of or relating to this Agreement or the breach hereof, or the interpretation
hereof,   the   prevailing   party  shall  be  entitled  to  recover   from  the
non-prevailing party reasonable expenses,  attorneys' fees and costs incurred in
connection  therewith or in the  enforcement  or  collection  of any judgment or
award rendered therein. The "prevailing party" means the party determined by the
arbitrator(s) or court, as the case may be, to have most nearly prevailed,  even
if such party did not prevail in all matters,  not  necessarily the one in whose
favor a judgment is rendered.

     11.4.  Notice.  Any notice  required or permitted of either the Director or
the Bank under this  Agreement  shall be deemed to have been duly  given,  if by
personal  delivery,  upon  the date  received  by the  party  or its  authorized
representative;  if  by  facsimile,  upon  transmission  to a  telephone  number
previously  provided  by the  party  to whom the  facsimile  is  transmitted  as
reflected  in the  records  of the party  transmitting  the  facsimile  and upon
reasonable  confirmation of such transmission;  and if by mail, on the third day
after  mailing via U.S.  first  class mail,  registered  or  certified,  postage
prepaid and return receipt requested,  and addressed to the party at the address
given  below for the  receipt  of  notices,  or such  changed  address  as maybe
requested in writing by a party.

                       If to the Bank:   Saratoga National Bank
                                                  12000 Saratoga-Sunnyvale Rd.
                                                  Saratoga, California 95070
                                                  Attn: Chairman of the Board

                       If to the Director:        ______________________
                                                  ______________________
                                                  ______________________

     11.5.  Assignment.  Neither the Director,  the Director's  spouse,  nor any
other  beneficiary  under  this  Agreement  shall  have  any  power  or right to
transfer, assign, anticipate, hypothecate, modify or otherwise encumber any part
or all of the amounts  payable  hereunder,  nor,  prior to payment in accordance
with the terms of this  Agreement,  shall any  portion of such  amounts  be: (i)
subject to seizure by any creditor of any such  beneficiary,  by a proceeding at
law or in equity, for the payment of any debts,  judgments,  alimony or separate
maintenance  obligations  which  may be owed  by the  Director,  the  Director's
spouse, or any designated beneficiary;  or (ii) transferable by operation of law
in the  event  of  bankruptcy,  insolvency  or  otherwise.  Any  such  attempted
assignment or transfer shall be void and unenforceable without the prior written
consent of the Bank. The Bank's consent,  if any, to one or more  assignments or
transfers  shall not  obligate  the Bank to  consent to or be  construed  as the
Bank's consent to any other or subsequent assignment or transfer.

     11.6.  Binding  Effect/Merger  or  Reorganization.  This Agreement shall be
binding  upon and inure to the  benefit  of the  Director  and the Bank and,  as
applicable,  their  respective  heirs,  beneficiaries,   legal  representatives,
agents,  successors  and  assigns.  Accordingly,  the Bank  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 Bank under this Agreement.  Upon the
occurrence  of such event,  the term "Bank" as used in this  Agreement  shall be
deemed  to  refer  to such  surviving  or  successor  firm,  person,  entity  or
corporation.

     11.7. Nonwaiver.  The failure of either party to enforce at any time or for
any period of time any one or more of the terms or conditions of this  Agreement
shall not be a waiver of such term(s) or  condition(s)  or of that party's right
thereafter to enforce each and every term and condition of this Agreement.

     11.8. Partial Invalidity. If any term, provision, covenant, or condition of
this agreement is determined by an arbitrator or a court, as the case may be, to
be invalid,  void, or  unenforceable,  such  determination  shall not render any
other term, provision, covenant or condition invalid, void or unenforceable, and
the Agreement shall remain in full force and effect notwithstanding such partial
invalidity.

     11.9.  Entire  Agreement.  This  Agreement  supersedes  any and  all  other
agreements,  either oral or in writing,  between the parties with respect to the
subject  matter  of  this  Agreement  and  contains  all  of the  covenants  and
agreements  between  the  parties  with  respect  thereto.  Each  party  to this
Agreement acknowledges that no other representations,  inducements, promises, or
agreements,  oral or otherwise, have been made by any party, or anyone acting on
behalf  of any  party,  which  are not  set  forth  herein,  and  that no  other
agreement,  statement, or promise not contained in this Agreement shall be valid
or binding on either party.

     11.10. Modifications. Any modification of this Agreement shall be effective
only if it is in writing  and signed by each  party or such  party's  authorized
representative.

     11.11.  Paragraph  Headings.  The paragraph headings used in this Agreement
are included  solely for the  convenience of the parties and shall not affect or
be used in connection with the interpretation of this Agreement.

     11.12. No Strict Construction. The language used in this Agreement shall be
deemed to be the language  chosen by the parties  hereto to express their mutual
intent, and no rule of strict construction will be applied against any person.

     11.13. Governing Law. The laws of the State of California, other than those
laws  denominated  choice of law rules,  and,  where  applicable,  the rules and
regulations  of the Board of Governors of the Federal  Reserve  System,  Federal
Deposit  Insurance  Corporation,  Office of the Comptroller of the Currency,  or
other regulatory agency or governmental authority having jurisdiction over Bank,
shall  govern  the  validity,  interpretation,  construction  and effect of this
Agreement.

     IN WITNESS WHEREOF,  the Bank and the Director have executed this Agreement
on the date first  above-written  in the City of Saratoga,  Santa Clara  County,
California.

THE BANK                                THE DIRECTOR

SARATOGA NATIONAL BANK
By:____________________________         _____________________________
Richard L. Mount                        __________________
President and Chief Executive Officer

                                   SCHEDULE A

CALENDAR YEAR                                APPLICABLE PERCENTAGE

__________, 1981 to December 31, 1998. . . .  80.00%

December 31, 1999. . . . . . . . . . . . . .  90.00%

December 31, 2000. . . . . . . . . . . . . . 100.00%

                                   SCHEDULE B

                                DIRECTOR BENEFITS

1.   Director Benefits Determination.

     The Director Benefits shall be determined based upon the following:

          a.   Benefit Account:

               A Benefit  Account shall be  established  as a liability  reserve
               account on the books of the Bank for the benefit of the Director.
               Prior to the date on  which  the  Director  becomes  eligible  to
               receive payments under the Agreement,  such Benefit Account shall
               be increased (or  decreased)  each Plan Year  (including the Plan
               Year in which the Director  ceases to be employed by the Bank) by
               an amount equal to the annual earnings or loss for that Plan Year
               determined by the Index (described in subparagraph c below), less
               the Opportunity Cost (described in subparagraph d below) for that
               Plan Year.

          b.   Index Benefit:

               After the date on which the Director  becomes eligible to receive
               payments under the Agreement,  the Index Benefit for the Director
               for  any  Plan  Year  shall  be  determined  by  subtracting  the
               Opportunity  Cost for that Plan Year from the  earnings,  if any,
               established by the Index.

          c.   Index:

               The  Index  for any  Plan  Year  shall  be the  aggregate  annual
               after-tax  income  from the life  insurance  contracts  described
               hereinafter  as defined by FASB  Technical  Bulletin  85-4.  This
               Index  shall  be  applied  as if such  insurance  contracts  were
               purchased on the Effective Date.

               Insurance Company(ies)/Policy Number(s):

               _____________________________
               _____________________________

               If such contracts of life insurance are actually purchased by the
               Bank, then the actual policies as of the dates purchased shall be
               used in calculations to determine the Index and Opportunity Cost.
               If such  contracts  of life  insurance  are not  purchased or are
               subsequently  surrendered or lapsed,  then the Bank shall receive
               and  use  annual  policy  illustrations  that  assume  the  above
               described  policies were purchased from the above named insurance
               company(ies) on the Effective Date to calculate the amount of the
               Index and Opportunity Cost.

          d.   Opportunity Cost:

               The  Opportunity  Cost for any Plan Year shall be  calculated  by
               multiplying  (a) the sum of (i) the total  amount of premiums set
               forth in the insurance  policies described above, (ii) the amount
               of any Index  Benefits(described  at  subparagraph b above),  and
               (iii) the  amount of all  previous  years  after-tax  Opportunity
               Costs;  by (b) the  average  annualized  after-tax  cost of funds
               calculated  using a one-year  U.S.  Treasury Bill as published in
               the  Wall  Street  Journal.  The  applicable  tax  rate  used  to
               calculate the  Opportunity  Cost shall be the Bank's marginal tax
               rate until the  Director's  Retirement,  or other  termination of
               service  (including  a  Change  in  Control).   Thereafter,   the
               Opportunity  Cost shall be  calculated  with the  assumption of a
               marginal  forty-two  percent  (42%)  corporate tax rate each year
               regardless of whether the actual marginal tax rate of the Bank is
               higher or lower.

                                     EXAMPLE

                                 INDEX BENEFITS

 [n]          [A]           [B]         [C]          [D]
End of   Cash Surrender     Index    Opportunity    Annual   Cumulative
 Year     Value of Life    [Annual       Cost       Benefit   Benefit
        Insurance Policy    Policy    A0=premium      B-C      D+Dn-1
                           Income]   A0+Cn=1x.05x
                           An-An-1     (1-42%)
   0       $1, 000,000        --          --          --         --
   1       $1,050,000      $50,000     $29,000      $21,000   $21,000
   2       $1,102,500      $52,500     $29,841      $22,659   $43,659
   3       $1,157,625      $55,125     $30,706      $24,419   $68,078

   .
   .
   .

Assumptions:      Initial Insurance = $1,000,000
                  Effective Tax Rate = 42%
                  One Year US Treasury Yield = 5%

2. Director Benefits Payments.

     The  Director  shall be  entitled to payment of the  Applicable  Percentage
of(i) the balance in the  Benefit  Account in  installments,  and (ii) the Index
Benefit for each Plan Year payable in installments,  upon the terms as specified
in the Agreement until the Director's death

                                   SCHEDULE C

                             BENEFICIARY DESIGNATION

     To the  Administrator of the Saratoga  National Bank Director  Supplemental
Compensation Agreement:

     Pursuant  to  the  Provisions  of  my  Director  Supplemental  Compensation
Agreement  with  Saratoga  National  Bank,   permitting  the  designation  of  a
beneficiary or beneficiaries by a participant,  I hereby designate the following
persons and entities as primary and secondary beneficiaries of any benefit under
said Agreement payable by reason of my death:

Primary Beneficiary:

______________________     ____________________    _____________________________
Name                       Address                 Relationship

Secondary (Contingent) Beneficiary:

______________________     _____________________   _____________________________
Name                       Address                 Relationship

     THE  RIGHT TO  REVOKE  OR  CHANGE  ANY  BENEFICIARY  DESIGNATION  IS HEREBY
RESERVED. ALL PRIOR DESIGNATIONS, IF ANY, OF PRIMARY BENEFICIARIES AND SECONDARY
BENEFICIARIES ARE HEREBY REVOKED.

     The Administrator  shall pay all sums payable under the Agreement by reason
of my death to the  Primary  Beneficiary,  if he or she  survives  me, and if no
Primary Beneficiary shall survive me, then to the Secondary Beneficiary,  and if
no named beneficiary  survives me, then the Administrator  shall pay all amounts
in accordance with the terms of my Director Supplemental Compensation Agreement.
In the event that a named  beneficiary  survives me and dies prior to  receiving
the entire benefit  payable under said  Agreement,  then and in that event,  the
remaining  unpaid  benefit  payable  according  to  the  terms  of  my  Director
Supplemental   Compensation   Agreement   shall  be  payable  to  the   personal
representatives of the estate of said beneficiary who survived me but died prior
to receiving the total benefit provided by my Director Supplemental Compensation
Agreement.

Dated: ___________, 1998   __________________________
                           __________________

     CONSENT OF THE DIRECTOR'S SPOUSE TO THE ABOVE BENEFICIARY DESIGNATION:

     I,  ____________,  being the  spouse  of  __________________,  after  being
afforded the opportunity to consult with independent counsel of my choosing,  do
hereby  acknowledge  that  I have  read,  agree  and  consent  to the  foregoing
Beneficiary Designation which relates to the Director Supplemental  Compensation
Agreement  entered  into by my  spouse  effective  as of  ___________,  1998.  I
understand  that the above  Beneficiary  Designation  may affect  certain rights
which I may have in the  benefits  provided  for under the terms of the Director
Supplemental  Compensation  Agreement and in which I may have a marital property
interest.

Dated: ___________, 1998

______________________________
_________________

                                   SCHEDULE D

                              DISTRIBUTION ELECTION

     Pursuant  to  the  provisions  of  my  Director  Supplemental  Compensation
Agreement with Saratoga  National Bank, I hereby elect to have any  distribution
of the balance in my Benefit  Account paid to me in  installments  as designated
below:

                    thirty-six (36) monthly installments with the amount of each
                    installment  determined  as  of  each  installment  date  by
                    dividing  the  entire  amount in my  Benefit  Account by the
                    number of  installments  then remaining to be paid, with the
                    final  installment to be the entire remaining balance in the
                    Benefit Account.

                    sixty  (60)  monthly  installments  with the  amount of each
                    installment  determined  as  of  each  installment  date  by
                    dividing  the  entire  amount in my  Benefit  Account by the
                    number of  installments  then remaining to be paid, with the
                    final  installment to be the entire remaining balance in the
                    Benefit Account.

                    one  hundred  twenty  (120)  monthly  installments  with the
                    amount of each installment determined as of each installment
                    date by dividing the entire amount in my Benefit  Account by
                    the number of  installments  then remaining to be paid, with
                    the final  installment to be the entire remaining balance in
                    the Benefit Account.

                    one  hundred  eighty  (180)  monthly  installments  with the
                    amount of each installment determined as of each installment
                    date by dividing the entire amount in my Benefit  Account by
                    the number of  installments  then remaining to be paid, with
                    the final  installment to be the entire remaining balance in
                    the Benefit Account.

Dated: ____________, 1998

Signed:_______________________
       __________________LIFE INSURANCE

                      ENDORSEMENT METHOD SPLIT DOLLAR PLAN

                                    AGREEMENT

Insurer/Policy Number: ________________________

Bank: Saratoga National Bank

Participant: _________________

Insured: ______________, as the insured surrogate for Participant

Relationship of Participant to Bank: Director

Date: June 18, 1999

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

I.   DEFINITIONS

     Refer to the  Policy  provisions  for the  definition  of all terms in this
Agreement. Notwithstanding the foregoing, whenever the term "Insured" is used in
the Policies,  unless the Policy  provisions  otherwise  require,  it shall mean
[Director's  Name] for purposes of any beneficial  interest or right to proceeds
from any insurance policy to which this Agreement refers.

II.  POLICY TITLE AND OWNERSHIP

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

III. BENEFICIARY DESIGNATION RIGHTS

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

IV.      PREMIUM PAYMENT METHOD

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

V.       TAXABLE BENEFIT

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

VI.      DIVISION OF DEATH PROCEEDS

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

          A. 1.  Subject  to  paragraph  VI.A.2  below,  upon  the  death of the
Participant,  the Participant's  beneficiary(ies)  designated in accordance with
Paragraph III shall be entitled to an amount equal to the net at risk  insurance
portion of the proceeds under all Policies. The net at risk insurance portion is
the  total  proceeds  less the cash  value of the  Policy.  Notwithstanding  the
foregoing, in the event the Participant [or his or her  beneficiary(ies)]becomes
entitled  to  receive  the  foregoing  death  benefit  prior to the  Participant
becoming  entitled to receive 100% of the  benefits,  if any,  specified in that
certain Director  Supplemental  Compensation  Agreement between the Bank and the
Participant, effective __________, 1998 (the "Compensation Agreement"), then the
Participant  [or his or her  beneficiary(ies)]  shall been titled to receive the
same percentage of the foregoing  death benefit as the percentage  applicable to
the  Participant's   benefits,   if  any,  under  such  Compensation   Agreement
immediately prior to the Participant's  death or, if earlier,  the date on which
the Participant [or his or her  beneficiary(ies)]commences  receiving such death
benefit.

          2. Notwithstanding paragraph VI.A.1 above:

(a) If the Insured  predeceases the  Participant  prior to the date on which the
Participant  Retires,  becomes Disabled,  or otherwise  terminates  service as a
director  (as defined or  described  in the  Compensation  Agreement),then  that
portion of the death  proceeds  equal to the amount to which the  Participant is
entitled under  paragraph  VI.A.1 of this Agreement shall be held by the Bank in
trust for the Participant under the terms of this Agreement. Such death proceeds
shall be deposited into a separate, segregated interest bearing account. Neither
the Participant nor the Participant's beneficiary(ies)shall have any right to or
interest  in such  account  or the  funds  therein  except as  provided  in this
Agreement.  Such interest  bearing  account shall be selected by the Bank in its
sole  discretion  and may be an  account  at the  Bank or at  another  financial
institution.  The Bank shall have no  liability  whatsoever  with respect to the
rate of interest actually earned on such death proceeds. Accrued interest earned
on such death proceeds shall be paid to the Participant within fifteen (15) days
after the end of each calendar  quarter (or on such other  periodic basis as may
be mutually agreed upon by the Bank and the Participant).  The Participant shall
be responsible for payment of all taxes imposed on any income earned,  and shall
assume all risk of loss, with respect to such funds.  Upon the date on which the
Participant  Retires  after  attaining  sixty-two  (62) years of age, or becomes
Disabled,  or otherwise terminates service as a director (other than by "removal
for cause" as defined in the Compensation Agreement) whichever first occurs, the
Participant  shall be  entitled  to the amount  determined  in  accordance  with
paragraph  VI.A.1,  reduced  by the  amount of any Index  Benefit  Payments  (or
payments made in lieu of such Index Benefit Payments) made to the Participant or
the  Participant's  beneficiary(ies)  pursuant to the terms of the  Compensation
Agreement,  payable  in  lump  sum or in such  periodic  installments  as  maybe
mutually  agreed  upon by the Bank and the  Participant.  Upon the  death of the
Participant,  the  remaining  unpaid  balance of the death  benefit to which the
Participant  is entitled shall be paid to the  Participant's  beneficiary(ies)in
lump  sum.  In  no  event  shall  the  Participant   and/or  the   Participant's
beneficiary(ies) receive an aggregate benefit under this Agreement exceeding the
amount to which the Participant is entitled under paragraph VI.A.1 above.

               (b)  If  the  Insured   predeceases  the  Participant  after  the
Participant  Retires,  becomes Disabled,  or otherwise  terminates  service as a
director  (as defined or  described in the  Compensation  Agreement),  then that
portion of the death  proceeds  equal to the amount to which the  Participant is
entitled under paragraph VI.A.1 of this Agreement,  reduced by the amount of any
Index Benefit Payments (or payments made in lieu of such Index Benefit Payments)
made to the Participant or the  Participant's  beneficiary(ies)  pursuant to the
terms of the  Compensation  Agreement,  shall be paid to the Participant in lump
sum or in such periodic  installments as may be mutually agreed upon by the Bank
and the  Participant.  Upon the death of the  Participant,  the remaining unpaid
balance of the death benefit to which the  Participant is entitled shall be paid
to the  Participant's  beneficiary(ies)  in lump  sum.  In no  event  shall  the
Participant  and/or  the  Participant's   beneficiary(ies)receive  an  aggregate
benefit under this  Agreement  exceeding the amount to which the  Participant is
entitled  under  paragraph  VI.A.1  above.

     B.   The Bank shall be  entitled  to all  remaining  death  proceeds of the
          Policy(ies), including any balance remaining in the account referenced
          in paragraph VI.A.2 above.

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

VII. DIVISION OF CASH SURRENDER VALUE

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

VIII.PREMIUM WAIVER

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

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

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

X.   TERMINATION OF AGREEMENT

     This Agreement shall  terminate at the option of the Bank following  thirty
(30) days written notice to the Participant upon the happening of any one of the
following:

     1.   The Participant's  right to receive benefits pursuant to the terms and
          conditions  of  that  certain   Director   Supplemental   Compensation
          Agreement  effective as of ___________,  1998, shall terminate for any
          reason other than the Participant's or the Insured's death; or

     2.   The Insured shall be discharged from service with the Bank as a result
          of a removal  for cause  under  subparagraph  (c),  (d) or (e)  below.
          Notwithstanding  the foregoing,  this Agreement shall remain in effect
          in the event that the Insured is removed pursuant to subparagraph (a),
          (b) or (f) below.  The term "removal for cause" shall mean termination
          of the  service  of the  Insured  by  reason  of any of the  following
          determined in good faith by the Bank's Board of Directors:

          (a)  The willful,  intentional and material breach or the habitual and
               continued  neglect  by the  Insured  of  his  or  her  employment
               responsibilities and duties;

          (b)  The  continuous  mental or physical  incapacity  of the  Insured,
               subject to disability rights under this Agreement;

          (c)  The Insured's  willful and  intentional  violation of any federal
               banking or securities laws, or of the Bylaws,  rules, policies or
               resolutions  of Bank, or the rules or regulations of the Board of
               Governors  of  the  Federal  Reserve   System,   Federal  Deposit
               Insurance Corporation, Office of the Comptroller of the Currency,
               or other  regulatory  agency  or  governmental  authority  having
               jurisdiction  over the Bank,  which has a material adverse effect
               upon the Bank;

          (d)  The written determination by a state or federal banking agency or
               governmental authority having jurisdiction over the Bank that the
               Insured  (i) is of unsound  mind,  or (ii) has  committed a gross
               abuse of authority or discretion  with  reference to the Bank, or
               (iii)  otherwise is not suitable to continue to serve as a member
               of the Board of Directors of the Bank;

          (e)  The  Insured's  conviction  of (i)  any  felony  or  (ii) a crime
               involving  moral   turpitude,   or  the  Insured's   willful  and
               intentional commission of a fraudulent or dishonest act; or

          (f)  The  Insured's  willful  and  intentional   disclosure,   without
               authority,  of any secret or confidential  information concerning
               Bank or taking any action  which the  Bank's  Board of  Directors
               determines,  in its sole  discretion  and  subject to good faith,
               fair dealing and  reasonableness,  constitutes unfair competition
               with or induces  any  customer  to breach any  contract  with the
               Bank.

     Upon such termination, the Participant (or beneficiary[ies] or assignee[s])
shall  have a ninety  (90)  day  option  to  receive  from the Bank an  absolute
assignment  of the  Policy  in  consideration  of a cash  payment  to the  Bank,
whereupon this Agreement shall terminate. Such cash payment shall be the greater
of:

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

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

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

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

XI.  PARTICIPANT'S OR ASSIGNEE'S ASSIGNMENT RIGHTS

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

XII. AGREEMENT BINDING UPON THE PARTIES

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

XIII.NAMED FIDUCIARY AND PLAN ADMINISTRATOR

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

XIV. FUNDING POLICY

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

XV.  CLAIM PROCEDURES

     Claim forms or claim  information  as to the subject Policy can be obtained
by contacting The Benefit Marketing Group, Inc.  (770-952-1529).  When the Named
Fiduciary has a claim which may be covered under the provisions described in the
Policy,  it should contact the office named above, and they will either complete
a claim form and forward it to an  authorized  representative  of the Insurer or
advise the named Fiduciary what further requirements are necessary.  The Insurer
will  evaluate  and make a decision  as to payment.  If the claim is payable,  a
benefit check will be issued to the Named  Fiduciary.  In the event that a claim
is not eligible under the Policy, the Insurer will notify the Named Fiduciary of
the denial pursuant to the  requirements  under the terms of the Policy.  If the
Named  Fiduciary  is  dissatisfied  with the  denial of the claim and  wishes to
contest  such claim  denial,  it should  contact the office named above and they
will assist in making  inquiry to the Insurer.  All  objections to the Insurer's
actions  should be in  writing  and  submitted  to the  office  named  above for
transmittal to the Insurer.

XVI. GENDER

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

XVII.INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

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

     IN WITNESS  WHEREOF,  the Participant and a duly authorized Bank officer or
director have signed this Agreement at Saratoga, California as of the date first
above written.

SARATOGA NATIONAL BANK

__________________________           ________________________________
Richard L. Mount                     ___________________
President and Chief
Executive Officer

                          BENEFICIARY DESIGNATION FORM

Primary Designation:

Name                                   Relationship

_____________________________          _______________________________________
_____________________________          _______________________________________
_____________________________          _______________________________________

Contingent Designation:
_____________________________          _______________________________________
_____________________________          _______________________________________
_____________________________          _______________________________________

_____________, 1999_____________________

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