EXHIBIT 10.2001  EXECUTIVE SALARY CONTINUATION AGREEMENT  This Agreement is made and entered into
this 7th day of March, 2001, by and between Heritage Oaks Bank, a bank
chartered under the laws of the State of California (the Employer), and Mr.
Lawrence P Ward, an individual residing in the State of California (hereinafter
referred to as the Executive). RECITALS  WHEREAS, the Executive is an employee of
the Employer and is serving as its President and Chief Executive Officer; WHEREAS, the Executives experience and
knowledge of the affairs of the Employer and the banking industry are extensive
and valuable; WHEREAS, it is deemed to be in the best
interest of the Employer to provide the Executive with certain salary
continuation benefits, on the terms and conditions set forth herein, in order
to reasonably induce the Executive to remain in the Employers employment;
and WHEREAS, the Executive and the Employer
wish to specify in writing the terms and conditions upon which this additional
compensatory incentive will be provided to the Executive, or to the Executives
spouse or the Executives designated beneficiaries, as the case may be; NOW, THEREFORE, in consideration of the
services to be performed in the future, as well as the mutual promises and
covenants contained herein, the Executive and the Employer agree as follows:  AGREEMENT  1.Terms and
Definitions. 1.1Administrator.The Employer shall be the Administrator and, solely for the purposes
of ERISA, the Fiduciary of this Agreement where a fiduciary is required by
ERISA. 1.2.Annual
Benefit.The term Annual Benefit shall mean the
amount determined by first multiplying the sum of One Hundred Fifty Three
Thousand One Hundred Sixty Six 
($153,166) by the Applicable Percentage (defined below), and by then
subtracting from that amount those additional amounts as may be: (i) required
under the other provisions of this Agreement, including, but not limited to,
Paragraphs 5 and 6 hereof; (ii) required by reason of the lawful order of any
regulatory agency or body having jurisdiction over the Employer; and (iii)
required in order for the Employer 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). 1.3Applicable
Percentage.The term Applicable Percentage shall mean
that percentage listed on Schedule A attached hereto which is adjacent to the
number of complete years (with a year being the performance of personal
services for or on behalf of he Employer for a period of 365 days) which
have                          elapsed
starting from the Effective date of this Agreement and ending on the date
payments are to first begin under the terms of this Agreement.  Notwithstanding the foregoing or the
percentages set forth on Schedule A, but subject to all other terms and
conditions set forth herein, the Applicable Percentage shall be: (i) subject
to clause (ii) of this Paragraph 1.3, one hundred percent (100%) in the event
the Executive dies prior to Retirement as defined in subparagraph 1.11 below;
and (ii) notwithstanding the subclause (i) of this Paragraph 1.3, zero percent
(0%) in the event the Executive takes any action which prevents the Employer
from collecting the proceeds of any life insurance policy which the Employer
may happen to own at the time of the Executives death and of which the
Employer is the designated beneficiary.1.4Beneficiary.Excepting the reference made at the end of Paragraphs 1.3 and 1.10
hereof, the term beneficiary or designated beneficiary shall mean the
person or persons whom the Executive shall designate in a valid Beneficiary
Designation, a copy of which is attached hereto as Exhibit B, to receive the
benefits provided hereunder.  A
Beneficiary Designate shall be valid only if it is in the form attached hereto
and made a part hereof and is received by the Administrator prior to the
Executives death.1.5Change
in Control.The term Change in Control shall mean, with respect to the Employer or any
corporation formed to act as a parent or holding company of the Employer or its
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 Employer or any stock
exchange on which the Employers shares are listed which requires the reporting
of a change in control; (ii) any merger, consolidation or reorganization of the
employer in which the Employer does not survive; (iii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition (in fair market value
of fifty percent (50%) of the total value of the assets of the Employer,
reflected in the most recent balance sheet of the Employer; (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, or securities of the Employer representing
twenty-five (25%) or more of the combined voting power of the Employer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 Employer cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by the
Employer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.1.6The
Code.The Code shall mean the Internal Revenue
Code of 1986, as amended (the Code).1.7Disability/Disabled.The term Disability or Disabled shall have the same meaning given
such term in the principal disability insurance policy covering the Executive,
which is incorporated herein by reference to the limited extent thereof.  In the event the Executive is not covered by
a disability policy containing a definition of Disability or Disabled,
these terms shall mean an illness or incapacity which, having continued for a
period of one hundred and eighty (180) consecutive days, thereafter prevents
the Executive from adequately performing the Executives regular employment
duties.  The determination of whether
the Executive is Disabled shall be made by an independent physician selected by
mutual agreement of the parties.1.8Effective
Date.The term Effective Date shall mean the
date upon which this Agreement was entered into by the parties, as first
written above.1.9.1ERISA.The
term ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended.1.10.Lump
Sum Payout Amount.The term Lump Sum Payout Amount (also
referred to herein as the LSPA) shall mean that dollar amount determined by:
(a) multiplying (i) the Designated Dollar Amount listed on Schedule C
corresponding to the year in which an event occurs requiring payment of the
LSPA to the Executive occurs under this Agreement, by (ii) the LSPA
Percentage listed on Schedule D corresponding to the year in which the event
occurs requiring payment of the LSPA to the Executive under this Agreement; and
(b) reducing this resulting amount as may be: (i) required under the other
provisions of this Agreement, including, but not limited to Paragraph 4.2
(i.e., to take into account any previous Disability payment which may have been
paid under the terms of this Agreement), Paragraph 5 and Paragraph 6 hereof;
(ii) required by reason of the lawful order of any regulatory agency or body
having jurisdiction over the Employer; and (iii) required in order for the Employer
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).Notwithstanding the foregoing or the percentages
set forth on Schedule "D," but subject to all other terms and
conditions set forth herein, the "LSPA Percentage" shall be zero
percent (0%) in the event the Executive takes any action which prevents the
Employer from collecting the proceeds of any life insurance policy which the Employer
may happen to own at the time of the Executive's death and of which the
Employer is the designated beneficiary.1.11.Retirement.The term "Retirement" or
"Retires" shall refer to the date on which, after the Executive
attains sixty (60) years of age, the Executive acknowledges in writing to
Employer to be the last day he will provide any significant .personal services,
whether as an employee or independent consultant or contractor, to Employer or
to, for, or on behalf of, any other business entity conducting, performing or
making available to any person or entity banking or other financial services of
any kind. For purposes of this Agreement, the phrase "significant personal
services" shall mean more than ten (10) hours of personal services rendered
to one or more individuals or entitles in any thirty (30) day period.1.12Surviving
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.1.3Termination
for Cause.The term "Termination for Cause" shall mean termination of the
employment of the Executive by reason of any of the following:(a)A
termination "for cause" as this term may be defined in any written
employment agreement entered into by and between the Employer and the
Executive;(b)The willful breach of duty by the Executive in
the course of his employment;(c)The habitual neglect by the Executive of his
employment responsibilities and duties;(d)The Executive's deliberate violation of any
state or federal banking or securities laws, or of the Bylaws, rules, policies
or resolutions of the Employer, or of the rules or regulations of the: (i) The
Office of the California Superintendent of Banking  (ii) Federal Deposit Insurance Corporation; (iii) Securities and
Exchange Commission; or (iv) any other regulatory agency or governmental
authority having jurisdiction over the Employer;(e)The determination by a state or federal banking
agency or other governmental authority having jurisdiction over the Employer
that the Executive is not suitable to act in the capacity for which she is
employed by the Employer;(f)The Executive is convicted of any felony or a crime involving moral
turpitude or a fraudulent or dishonest act; or(g)The Executive discloses without authority any secret or
confidential information not otherwise publicly available concerning the
Employer or takes any action which the Employer'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 Employer.2.Scope,
Purpose and Effect.

2.1.         Contract of Employment. Although this Agreement is intended to
provide the Executive with an additional incentive to remain in the employ of
the Employer, this Agreement shall not be deemed to constitute a contract of
employment between the Executive and the Employer nor shall any provision of
this Agreement restrict or expand the right of the Employer to terminate the
Executive's employment. This Agreement shall have no impact or effect upon any
separate written Employment Agreement which the Executive may have with the
Employer, it being the parties' intention and agreement that unless this Agreement
is specifically referenced in said Employment Agreement (or any modification
thereto), this Agreement (and the Employer's obligations hereunder) shall stand
separate and apart and shall have no effect upon, nor be affected by, the terms
and provisions of said Employment Agreement.2.2.         Fringe Benefit.The benefits provided by this Agreement
are granted by the Employer as a fringe benefit to the Executive and are not a
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 payments or
bonus in lieu of the benefits provided by this Agreement.3.           Payments Upon or After Retirement.

3.1.Payments
Upon Retirement.If the
Executive shall remain in the continuous employment of the Employer until
attaining sixty (60) of age, the Executive shall be entitled to be paid the
Annual Benefit, as defined above, for a period of fifteen (15) years, with each
Annual Benefit amount to be paid in twelve (12) equal monthly installments
(paid on the first day of each month), beginning with the month following the
month in which the Executive Retires or upon such later date as may be mutually
agreed upon by the Executive and the Employer in advance of said Retirement
date. At the Employer's sole and absolute discretion. the Employer may increase
the Annual Benefit as and when the Employer determines the same to be
appropriate in order to reflect substantial change in the cost of living.
Notwithstanding anything contained herein to the contrary, the Employer shall
have no obligation hereunder to make any such cost–of–living
adjustment.3.2.Payments
in the Event of Death After Retirement.The Employer agrees that if the Executive
Retires, but shall die before receiving all of the monthly payments to which he
is entitled hereunder, the Employer 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, then the remaining amounts due to the Executive under the term of this
Agreement shall be paid to the Executive's Surviving spouse. If the Executive
leaves no Surviving Spouse, the remaining amounts due to the Executive under
the terms of this Agreement shall be paid to the duly qualified personal
representative, executor or administrator of the Executive'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.In
the event the Executive should die while actively employed by the Employer at
any time after the Effective Date of this Agreement, but prior to attaining
sixty (60) years of age or if the Executive chooses to work after attaining
sixty (60) years of age, but dies before Retirement, the Employer agrees to pay
the Annual Benefit to the Executive's designated beneficiary for a period of
fifteen (15) years, with each Annual Benefit amount to be paid in twelve (12)
equal monthly installments (paid on the first day of each month), beginning
with the month following the month in which the Executive's death occurs. If a
valid Beneficiary designation is not in effect, then the remaining amounts due
to the Executive under the terms of this Agreement shall be paid to the
Executive's Surviving Spouse in the same manner. If the Executive leaves no
Surviving Spouse, the remaining amounts due to the Executive under the terms of
this Agreement shall be paid to the duly qualified personal representative,
executor or administrator of the Executive's estate.4.2.         Payments in the Event of Permanent
Disability Prior to Retirement.In the event the Executive becomes Disabled
while actively employed by The Employer at any time after the date of this
Agreement but prior to Retirement, the Executive shall be entitled to be paid
the Annual Benefit, as defined above, for a period of fifteen (15)years, with
each Annual Benefit amount to be paid in twelve (12) equal monthly installments
paid on the first day of each month), beginning with the month following the
earlier of (1) the month in which the Executive formally retires after reaching
sixty (60) years of age, or (2) the date upon which the Executive is no longer
entitled to receive Disability benefits under the Executive's principal
Disability Insurance policy (or the date of the Disability if no Disability
policy exists), provided that the Executive remains unable to return to and
thereafter fulfill the responsibilities associated with the employment position
held with The Employer prior to becoming Disabled by reason of such Disability
continuing. However, in the event the Executive's Disability should cease and
Executive is able to return to and thereafter fulfill the responsibilities
associated with the employment position held with the Employer prior to
becoming Disabled, the Employer's obligation to make additional payments under
this Paragraph shall be suspended until such time as Executive next becomes
eligible to receive payments under the terms of this Agreement. In the event
the Employer's obligation to make additional payments under this Paragraph is
suspended as aforesaid, and the Executive then becomes entitled to receive
payments under the terms of this Agreement, the aggregate amount paid prior to
suspension shall be treated, notwithstanding anything contained in this
Agreement to the contrary, as having satisfied the Employer's payment
obligations with respect to that number of initial monthly payments as is equal
to the aggregate amount previously paid out under the terms of this Paragraph;
provided, however, that the Employer promptly begin making the remaining
monthly payments required under this Agreement to the Executive for as long as
such payments would otherwise be required after proper adjustment has been made
for the amounts previously paid to the Executive under this Paragraph. For
example, if the Executive receives $10,000 during a period of Disability, and
the Executive returns to work (such that future payments are suspended)
and  then becomes eligible for the
Retirement payout option described above (and is entitled to receive $10,000
over the first twelve payments under such option), the Employer shall be
entitled to credit the prior payments as having satisfied its obligation to
make the first twelve payments due to the Executive provided the Employer pays
to the Executive, on the first day of each successive month following the month
in which the Retirement occurs (as provided for above), the next monthly
payment amount required with respect to the payout option selected, i.e., in
this example, the amount to be paid as the first monthly payment under the
Retirement option would equal the amount payable under the Retirement option
for the thirteenth month (with the second payment equaling the amount payable
with respect to the fourteenth month and so on), until such time as the
Executive, etc., has received the 168 remaining payments due after making the
adjustment for payments made prior to suspension. In the event a Lump Sum
Payment Amount is to be paid under Paragraph 5, the SPA shall be reduced as
provided for in Paragraph 1.10 above by the aggregate amounts previously
distributed to the Executive under the terms of this Paragraph.5.       Payments in the Event Employment Is
Terminated Prior to Retirement.As
indicated in Paragraph 2 above, the Employer reserves the right to terminate
the Executive's employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to the Executive's
Retirement. In the event that the employment of the Executive shall be
terminated, other than by reason of Disability, Death or Retirement, prior to
the Executive's attaining sixty (60) years of age, 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, which
shall  be paid in lieu of any other
payout options contained herein, depending upon the circumstances surrounding
the Executive's termination:5.1.         Termination Without Cause.If the Executive's employment is terminated by
the Employer without cause, the Executive shall be entitled to be paid the Lump
Sum Payment Amount, as defined above, within ninety (90) days after the
effective date of the Executive's termination, or upon such later date as may be
mutually agreed upon by the Executive and the Employer in advance of the
effective date of the Executive's termination .5.2.Voluntary Termination by the
Executive.If
the Executive's employment is voluntarily terminated by the Executive, the
Executive shall be entitled to be paid the Lump Sum Payment Amount, as defined
above, within ninety (90) days after the effective date of the Executive's
termination, or upon such later date as may be mutually agreed upon by the
Executive and the Employer in advance of the effective date of the Executive's
termination.5.3.         Termination for Cause.The Executive agrees that his employment
with the Employer is terminated "for cause," as defined in
subparagraph 1.13 of this Agreement, he forfeit any and all rights and benefits
he may have under the toughens of this Agreement and shall have no right to be
paid any of the amounts which would otherwise be due or paid to the Executive
by the Employer pursuant to the terms of this Agreement.5.4.         Termination by the Employer on
Account of or After a Change in Control.In the event: (i) the executive's employment
with the Employer is terminated by the Employer in conjunction with, or by
reason of, a "change in control" (as defined in subparagraph 1.5
above); or (ii) by reason of the Employer's actions any adverse and material
change occurs in the scope of the Executive's position, responsibilities,
duties, salary, benefits, or location of employment after a "change in
control" (as defined in subparagraph 1.5) occurs or (iii) the Employer
causes an event to occur which reasonably constitutes or results in a demotion,
a significant diminution of responsibilities or authority, or a constructive
termination by forcing a resignation or otherwise) of the Executive's
employment after a "change in control" (as defined in subparagraph
1.5) occurs, then the Executive shall be entitled to be paid the Annual
Benefit, as defined above, for a period of fifteen (15) years, with each Annual
Benefit amount to be paid in twelve (12) equal monthly installments paid on the
first day of each month), beginning with the month following the month in which
the Executive is terminated or the action referred to above occurs.6.         Additional Limitations on the Amount
of the Annual Benefit.The Executive acknowledges and agrees that the
parties have entered into this Agreement based 
Upon the certain financial and tax accounting assumptions. Accordingly,
with full knowledge of the potential consequences the Executive agrees that,
notwithstanding anything contained herein to the contrary: (i) the amount of
the Annual Benefit or the SPA, as the case may be, shall be Limited to that
amount of the Annual Benefit or the SPA (determined without regard to this
Paragraph 6) which will be deductible by the Employer under the Code in the
year in which payment is to be made to the Executive; (ii) the Annual Benefit
or the SPA amount shall be deemed to be the last payment made to the Executive
and the first for which an income tax deduction, if any, has been disallowed;
and (iii) any compensatory amounts for which a deduction is denied to the
Employer shall, at the Employer's election, serve to first reduce the
Employer's obligation to pay the monthly Annual Benefit payments or the SPA to
the Executive under the terms of this Agreement. The Executive recognizes that,
in this regard, limitations on deductibility may be imposed under, but not
limited to, Code Section 280G. Consistent with the foregoing, and in the event
that any payment or benefit received or to be received by the Executive,
whether payable pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Employer (together with the Annual Benefit or
the SPA, the "Total Payments"), will not be deductible (in whole or
in part) as a result of Code Section 280G, the Annual Benefit or the SPA, as
the case may be, shall be reduced until no portion of the Total Payments is
nondeductible as a result of Section 280G of the Code (or the Annual Benefit or
SPA is reduced to zero (O)). For purposes of this limitation:(a)  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 a SPA
or any future Annual Benefit payments, shall be taken into account;(b)  No
portion of the Total Payments which, in the opinion of the tax counsel selected
by the Employer and acceptable to the Executive, does not constitute a
"parachute payment" within the meaning of Section 280G of the Code
shall be taken into account;(c) 
Future Annual Benefit payments, or the SPA as the case may be, 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 refined to in clause
(b) above; and(d)  The
value of any non-cash benefit or any deferred payment or benefit included in
the Total Payments shall be determined by the Employer's independent auditors
in accordance with the principles of Section 280G of the Code.7.          Right To Determine Funding Methods. The Employer 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 Executive, the Executive's spouse or the Executive's
beneficiaries under the terms of this Agreement. In the event that the Employer
elects to fund this Agreement, in whole or in part, through the use of life
insurance or annuities, or both, the Employer shall determine the ownership and
beneficial interests of any such policy of life insurance or annuity. The
Employer 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 lime, in whole or, in part. Consistent with
Paragraph 9 below, neither the Executive, the Executives spouse nor the Executive's
beneficiaries shall have any right, title or interest in or to any funding
source or amount utilized by the Employer pursuant to this Agreement, and any
such funding source or amount shall not constitute security for the performance
of the Employer's obligations pursuant to this Agreement. In connection with
the foregoing, the Executive agrees to execute such documents and undergo such
medical examinations or tests which the Employer may request and which may be
reasonably necessary to facilitate any funding for this Agreement including,
without limitation, the Employer's acquisition of any policy of insurance or
annuity. Furthermore, a refusal by the Executive 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
Executive, the Executive's spouse and the Executive's beneficiaries of any and
all rights to payment hereunder. Notwithstanding anything contained herein to
the contrary, no interest shall accrue or be payable with respect to any of the
amounts payable under the terms of this Agreement.8.          Claims Procedure.The Employer 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 Employer shall make
ail determinations as to the rights to benefits under this Agreement. Any
decision by the Employer denying a claim by the Executive, the Executive's
spouse, or the Executive's beneficiary for benefits under this Agreement shall
be stated in writing and delivered or mailed, via registered or certified mail,
to the Executive, the Executive's spouse or the Executive's beneficiary, as the
case may be. Such decision shall set forth the specific reasons for the denial
of a claim. In addition, the Employer shall provide the Executive, the
Executive's spouse or the Executive'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
Executive, the Executive's spouse or the Executive's beneficiary shall have any
legal or equitable rights, interests or claims in or to any specific property
or assets of the Employer; (ii) none of the Employer's assets shall be held in
or under any trust for the benefit of the Executive, the Executive's spouse or
the Executive's beneficiaries or held in any way as security for the
fulfillment of the obligations  of the
Employer under this Agreement; (iii) all of the Employer's assets shall be and
remain the general unpledged and unrestricted assets of the Employer; (iv) the
Employer's obligation under this Agreement shall be that of an unfunded and
unsecured promise by the Employers to pay money in the future; and (v) the
Executive, the Executive's spouse and the Executive's beneficiaries shall be
unsecured general creditors with respect to any benefits which may be payable
under the terms of this Agreement.10.        Miscellaneous.

10.1     Opportunity To Consult With Independent
Counsel.
The Executive acknowledges that he has been afforded the opportunity to consult
with independent counsel of his choosing regarding both the benefits granted to
him under the terms of this Agreement and the terms and conditions which may
affect the Executive's right to these benefits. The Executive further
acknowledges 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.10.2.
   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 Employer 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"), presently located at 111 Pine Suite, Suite 710, 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"), presently located at 417 Montgomery Street, 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 San Francisco, California, unless otherwise
agreed to by the parties.10.3.
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 losing 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.10.4.
Notice.Any notice required or permitted of either the Executive or the Employer 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 representation;
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 may be requested in writing by a
party.If to the Employer:
  Heritage Oaks Bank545 Twelfth StreetPaso Robles, CA 93446Attn: Corporate SecretaryIf to the Executive:
  Mr. Lawrence P Ward2495 Dry Well PlacePaso Robles, CA 93446

10.5.
Assignment.Neither the Executive, the Executive'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 Executive, the Executive'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 shall terminate this Agreement, and the Employer shall
thereupon have no further liability hereunder.10.6.
Binding Effect/Merger or Reorganization.This Agreement shall be binding upon and inure
to the benefit of the Executive and the Employers and, as applicable, their
respective heirs, beneficiaries, legal representatives, agents, successors and
assigns. Accordingly, the Employer 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 Employer under this Agreement. Upon the occurrence of such
event, the term "Employer" as used in this Agreement shall be deemed
to  refer to such surviving or successor
firm, person, entity of corporation.10.7.
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.10.8.
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.10.9.
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.10.10.
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.10.11
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.10.12.
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.10.13.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: (i) Office of the California Superintendent of
Banks; (ii) Federal Deposit Insurance Corporation; and (iii) Securities and
Exchange Commission shall govern the validity, interpretation, construction and
effect of this Agreement.IN WITNESS WHEREOF, the Employer and the Executive have executed this
Agreement on the date first above-written in the City of Paso Robles, San Luis
Obispo County, California.

THE EMPLOYER:
  THE EXECUTIVE:HERITAGE OAKS BANKBy:   
  __________________________________
  __________________________________Dr. B.R. Bryant, Chairman
  Mr. Lawrence P. Ward

SCHEDULE A
  NUMBER OF COMPLETE YEARS
  WHICH HAVE ELAPSED
  APPLICABLE PERCENTAGE1.
  10.0%2
  20.0%3
  30.0%4
  40.0%5
  50.0%6
  60.0%7
  70.0%8
  80.0%9
  90.0%10
  100.0%11
  100.0%

SCHEDULE "C"NUMBER OF COMPLETEDYEARS WHICH  HAVE
  ELAPSED
  DISGNATEDDOLLAR AMOUNT1
  $41,397.002
  $86,230.003
  $134,784.004
  $187,368.005
  $244,316.006
  $305,991.007
  $372,785.008
  $445,123.009
  $523,465.0010
  $608,309.0011
  $700,194.00SCHEDULE D



NUMBER OF COMPLETE YEARS 
  WHICH HAVE ELAPSED
  LSPA PERCENTAGE1
  10.0%2
  20.0%3
  30.0%4
  40.0%5
  50.0%6
  60.0%7
  70.0%8
  80.0%9
  90.0%10
  100.0%11
  100.0%