EXHIBIT 10.3

         EXHIBIT 10.3

                         Terms of Employment Arrangement
                            between Bay National Bank
                               and Xxxx X. Xxxxxxx

         Xx. Xxxxxxx is employed on an at will basis at a rate of pay of
$165,000 as of January 1, 2005. Xx. Xxxxxxx is also eligible for incentive
bonuses at the discretion of the Compensation Committee of the Board of
Directors, and is entitled to all benefits available to full time employees of
Bay National Bank.

         The Compensation Committee of the Board of Directors of the Bank
approved discretionary bonuses to Xx. Xxxxxxx of $30,000 in December 2001, 2002
and 2003 and $40,000 in December 2004, respectively. These bonuses were paid in
the subsequent calendar year.