RECITALS

                              SHAREHOLDER AGREEMENT

      THIS AGREEMENT is entered into this 20th day of October, 2004, by and
between Xxxx Xxxxxx ("Shareholder") and Discovery Bancorp ("Corporation"), a
California corporation with its principal executive office at 0000 Xxx Xxxxxx
Xxxxx, Xxxxx 000, Xxx Xxxxxx, Xxxxxxxxxx 00000.

                                    RECITALS

      A.    WHEREAS, the Articles of Incorporation of Corporation authorize the
issuance of up to 10,000,000 shares of its no par value common stock ("Common
Stock");

      B.    WHEREAS, the Board of Directors of Corporation has authorized the
sale and issuance of 200 shares of Corporation's Common Stock at the purchase
price of $10.00 per share to Shareholder; and

      C.    WHEREAS, Shareholder desires to purchase 200 shares of Corporation's
Common Stock for the purchase price of $10.00 per share pursuant to the terms
and conditions herein set forth;

      NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED by and between Corporation
and Shareholder as follows:

                                    AGREEMENT

      1.    Purchase. Corporation agrees to sell and Shareholder agrees to
purchase 200 shares of Corporation's Common Stock at the purchase price of
$10.00 per share for an aggregate purchase price of $2,000.00.

      2.    Transfer of Shares. Shareholder agrees not to sell, assign,
transfer, encumber, hypothecate, or make any other disposition of any of the
shares of the Common Stock to be purchased except with the prior written consent
of Corporation and except in accordance with the



terms of this Shareholder Agreement. This Shareholder Agreement shall be binding
upon and shall operate for the benefit of Corporation and Shareholder and the
respective executors or administrators and any transferees or assignees of
Shareholder, whether such transfers or assignments are in accordance with or in
violation of the provisions of this Shareholder Agreement.

      3.    Repurchase by Corporation. Upon consummation of the merger between
Corporation's wholly-owned subsidiary, DB Merger Company, and Discovery Bank,
pursuant to which Corporation will issue shares of its Common Stock to the
shareholders of Discovery Bank (the "Merger"), Corporation shall be obligated to
repurchase and Shareholder shall be obligated to resell to Corporation the 200
shares of Corporation's Common Stock at the repurchase price of $10.00 per
share, for a total repurchase price of $2,000.00. The repurchase and repayment
therefor shall occur simultaneously with the consummation of the Merger, at
which time Shareholder's share certificate shall be returned and cancelled.

      4.    Termination. This Shareholder Agreement shall terminate upon the
occurrence of any of the following events:

            (a)   The bankruptcy, receivership, or dissolution of Corporation;

            (b)   Mutual agreement of Corporation and Shareholder; or

            (c)   The failure of the consummation of the Merger for any reason
                  whatsoever.

      5.    Legend. Upon execution of this Shareholder Agreement, the
certificate representing the number of shares of Corporation's Common Stock to
be issued shall be endorsed as follows:

            "This certificate is transferable only upon compliance with the
            provisions of a Shareholder Agreement dated October 20, 2004."

      6.    Governing Law. This Shareholder Agreement shall be construed and
governed by

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the laws of the State of California.

      7.    Entire Agreement. This Shareholder Agreement constitutes the sole
and only agreement of the parties hereto respecting the sale and purchase of the
shares of Corporation's Common Stock and the resale or repurchase of the shares
of Corporation's Common Stock and correctly sets forth the rights, duties, and
obligations of each party to the other in relation thereto as of this date. Any
prior agreements, promises, negotiations or representations concerning the
subject matter of this Shareholder Agreement not expressly set forth in this
Shareholder Agreement are of no force or effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Shareholder
Agreement in San Marcos, California, on the date first above written.

"SHAREHOLDER"                                       DISCOVERY BANCORP

/s/ Xxxx Xxxxxx                                     By: /s/ Xxxxx X. Xxxxx, XX
----------------------                                  ------------------------
Xxxx Xxxxxx                                             Xxxxx X. Xxxxx, XX,
                                                        President and CEO

                                                    By: /s/ Xxxxxx Xxxxxx
                                                        ------------------------
                                                        Xxxxxx Xxxxxx,
                                                        Secretary

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