**EXHIBIT10.21**

 

**CHANGEIN TERMS AGREEMENT**

 
| **Principal  $2,000,000.00**                                                                                                                      | **Loan Date** | **Maturity  08-15-2006** | **Loan No  7001014** | **Call** | **Collateral  Stock** | **Account** | **Officer** | **Initials**[Illegible] |
|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------|--------------------------|----------------------|----------|-----------------------|-------------|-------------|-------------------------|
| References in the shaded area are for Lender’s use only and do not  limit the applicability of this document to any particular loan or item. |

 
| **Borrower:** |   | **Heritage Oaks Bancorp** |   | **Lender:** |   | **PACIFIC COAST BANKERS’ BANK** |
|---------------|--------|---------------------------|--------|-------------|--------|--------------------------------------|
|          |   | **545 12th Street**       |   |        |   | **340 Pine Street, Suite 401**       |
|          |   | **Paso Robles, CA 93446** |   |        |   | **San Francisco, CA 94104**          |

 

| **Principal Amount: $2,000,000.00** |   | **Date  of Agreement: October 23, 2000** |
|-------------------------------------|--------|------------------------------------------|

 

**DESCRIPTION OF EXISTING INDEBTEDNESS.** Funds are borrowed for expansion of thebank.

 

**DESCRIPTION OF COLLATERAL**. 339,332 shares of Heritage Oaks Bankstock.

 

**DESCRIPTION OF CHANGE IN TERMS.** Extension of an existing revolving lineof credit for another year; then the facility will be termed out for 5 yearswith a new maturity date of 8/15/2006. All other terms and conditions willremain unchanged.

 

**PROMISE TO PAY. Heritage Oaks Bancorp(“Borrower”) promises to pay to PACIFIC COAST BANKERS’ BANK (“Lender”), ororder, in lawful money of the United States of America, the principal amount ofTwo Million & 00/100 Dollars ($2,000,000.00), together with interest on theunpaid principal balance from October 23, 2000, until paid in full.**

** **

**PAYMENT. Subject to any paymentchanges resulting from changes in the Index, Borrower will pay this loan inaccordance with the following payment schedule:**

 

**  4 consecutive quarterly interest payments,beginning November 15, 2000, with interest calculated on the unpaid principalbalances at an interest rate of 1.000 percentage points over the Indexdescribed below; and 20 consecutive quarterly principal and interest paymentsin the initial amount of $130,289.52 each, beginning November 15, 2001, withinterest calculated on the unpaid principal balances at an interest rate of1.000 percentage points over the Index described below. Borrower’s finalpayment of $130,289.52 will be due on August 15, 2006. This estimated finalpayment is based on the assumption that all payments will be made exactly asscheduled and that the Index does not change; the actual final payment will befor all principal and accrued interest not yet paid, together with any otherunpaid amounts under this Agreement.**

 

The annual interest rate for this Agreement is computed on a 365/360basis; that is, by applying the ratio of the annual interest rate over a yearof 360 days, multiplied by the outstanding principal balance, multiplied by theactual number of days the principal balance is outstanding. Borrower will payLender at Lender’s address shown above or at such other place as Lender maydesignate in writing. Unless otherwise agreed or required by applicable law,payments will be applied first to accrued unpaid interest, then to principal,and any remaining amount to any unpaid collection costs and late charges.

 

**VARIABLE INTEREST RATE.** The interest rate on this Agreement issubject to change from time to time based on changes in an independent indexwhich is the Prime Rate as published in the Western Edition of the Wall Street Journal (the“Index"). The Index is not necessarily the lowest rate charged by Lenderon its loans. If the Index becomes unavailable during the term of this loan,Lender may designate a substitute index after notice to Borrower. Lender willtell Borrower the current Index rate upon Borrower’s request. Borrowerunderstands that Lender may make loans based on other rates as well. Theinterest rate change will not occur more often than each Day. **The Index currently is 9.500%. The interest rate orrates to be applied to the unpaid principal balance of this Agreement will bethe rate or rates set forth above in the “Payment” section.** NOTICE:Under no circumstances will the interest rate on this Agreement be more thanthe maximum rate allowed by applicable law. Whenever increases occur in theinterest rate, Lender, at its option, may do one or more of the following: (a)increase Borrower’s payments to ensure Borrower’s loan will pay off by itsoriginal final maturity date, (b) increase Borrower’s payments to coveraccruing interest, (c) increase the number of Borrower’s payments, and (d)continue Borrower’s payments at the same amount and increase Borrower’s finalpayment.

 

**PREPAYMENT.** Borrower may pay without penalty all ora portion of the amount owed earlier than it is due. Early payments will not,unless agreed to by Lender in writing, relieve Borrower of Borrower’sobligation to continue to make payments under the payment schedule. Rather,they will reduce the principal balance due and may result in Borrower makingfewer payments.

 

**LATE CHARGE.** If a payment is **10 days or more late,** Borrower will becharged **5.000% of the regularly scheduledpayment or $30.00, whichever is greater.**

 

**DEFAULT.** Borrower will be in default if any ofthe following happens: (a) Borrower fails to make any payment when due. (b)Borrower breaks any promise Borrower has made to Lender, or Borrower fails tocomply with or to perform when due any other term, obligation, covenant, or conditioncontained in this Agreement or any agreement related to this Agreement, or inany other agreement or loan Borrower has with Lender. (c) Borrower defaultsunder any loan, extension of credit, security agreement, purchase or salesagreement, or any other agreement, in favor of any other creditor or personthat may materially affect any of Borrower’s property or Borrower’s ability torepay this Note or perform Borrower’s obligations under this Note or any of theRelated Documents. (d) Any representation or statement made or furnished toLender by Borrower or on Borrower’s behalf is false or misleading in anymaterial respect either now or at the time made or furnished. (e) Borrowerbecomes insolvent, a receiver is appointed for any part of Borrower’s property,Borrower makes an assignment for the benefit of creditors, or any proceeding iscommenced either by Borrower or against Borrower under any bankruptcy orinsolvency laws. (f) Any creditor tries to take any of Borrower’s property onor in which Lender has a lien or security interest. This includes a garnishmentof any of Borrower’s accounts with Lender. (g) Any guarantor dies or any of theother events described in this default section occurs with respect to anyguarantor of this Agreement. (h) A material adverse change occurs in Borrower’sfinancial condition, or Lender believes the prospect of payment or performanceof the Indebtedness is impaired. (i) Failure to meet the deadlines required inthe Year 2000 Compliance Agreement to be Year 2000 Compliant or a reasonablelikelihood that Borrower cannot be Year 2000 Compliant on or before December31, 1999. (j) Lender in good faith deems itself insecure.

 

If any default, other than a default in payment, is curable and ifBorrower has not been given a notice of a breach of the same provision of thisAgreement within the preceding twelve (12) months, it may be cured (and noevent of default will have occurred) if Borrower, after receiving writtennotice from Lender demanding cure of such default: (a) cures the default withinten (10) days; or (b) if the cure requires more than ten (10) days, immediatelyinitiates steps which Lender deems in Lender’s sole discretion to be sufficientto cure the default and thereafter continues and completes all reasonable and necessarysteps sufficient to produce compliance as soon as reasonably practical.

 

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**LENDER’S RIGHTS.** Upon default, Lender may declare theentire unpaid principal balance on this Agreement and all accrued unpaidinterest immediately due, without notice, and then Borrower will pay thatamount. Upon Borrower’s failure to pay all amounts declared due pursuant tothis section, including failure to pay upon final maturity, Lender, at itsoption, may also, if permitted under applicable law, increase the variableinterest rate on this Agreement by 5.000 percentage points. Lender may hire orpay someone else to help collect this Agreement if Borrower does not pay.Borrower also will pay Lender that amount. This includes, subject to any limitsunder applicable law, Lender’s attorneys’ fees and Lender’s legal expenseswhether or not there is a lawsuit, including attorneys’ fees and legal expensesfor bankruptcy proceedings (including efforts to modify or vacate any automaticstay or injunction), appeals, and any anticipated post–judgmentcollection services. Borrower also will pay any court costs, in addition to allother sums provided by law. **This Agreementhas been delivered to Lender and accepted by Lender in the State of California.If there is a lawsuit, Borrower agrees upon Lender’s request to submit to thejurisdiction of the courts of San Francisco County, the State of California.Subject to the provisions on arbitration, this Agreement shall be governed by andconstrued in accordance with the laws of the State of California.**

 

**ARBITRATION. Lender and Borroweragree that all disputes, claims and controversies between them, whetherindividual, joint, or class in nature, arising from this Agreement orotherwise, including without limitation contract and tort disputes, shall bearbitrated pursuant to the Rules of the American Arbitration Association, uponrequest of either party.** No act to take or dispose of any collateral securing this Agreementshall constitute a waiver of this arbitration agreement or be prohibited bythis arbitration agreement. This includes, without limitation, obtaininginjunctive relief or a temporary restraining order; invoking a power of saleunder any deed of trust or mortgage; obtaining a writ of attachment orimposition of a receiver; or exercising any rights relating to personalproperty, including taking or disposing of such property with or withoutjudicial process pursuant to Article 9 of the Uniform Commercial Code. Anydisputes, claims, or controversies concerning the lawfulness or reasonablenessof any act, or exercise of any right, concerning any collateral securing thisAgreement, including any claim to rescind, reform, or otherwise modify anyagreement relating to the collateral securing this Agreement, shall also bearbitrated, provided however that no arbitrator shall have the right or thepower to enjoin or restrain any act of any party. Lender and Borrower agreethat in the event of an action for judicial foreclosure pursuant to CaliforniaCode of Civil Procedure Section 726, or any similar provision in any otherstate, the commencement of such an action will not constitute a waiver of theright to arbitrate and the court shall refer to arbitration as much of suchaction, including counterclaims, as lawfully may be referred to arbitration.Judgment upon any award tendered by any arbitrator may be entered in any courthaving jurisdiction. Nothing in this Agreement shall preclude any party fromseeking equitable relief from a court of competent jurisdiction. The statute oflimitations, estoppel, waiver, laches, and similar doctrines which wouldotherwise be applicable in an action brought by a party shall be applicable inany arbitration proceeding, and the commencement of an arbitration proceedingshall be deemed the commencement of an action for these purposes. The FederalArbitration Act shall apply to the construction, interpretation, andenforcement of this arbitration provision.

 

**CONTINUING VALIDITY.** Except as expressly changed by thisAgreement, the terms of the original obligation or obligations, including allagreements evidenced or securing the obligation(s), remain unchanged and infull force and effect. Consent by Lender to this Agreement does not waiveLender’s right to strict performance of the obligation(s) as changed, norobligate Lender to make any future change in terms. Nothing in this Agreementwill constitute a satisfaction of the obligation(s). It is the intention ofLender to retain as liable parties all makers and endorsers of the originalobligation(s), including accommodation parties, unless a party is expresslyreleased by Lender in writing. Any maker or endorser, including accommodationmakers, will not be released by virtue of this Agreement. If any person whosigned the original obligation does not sign this Agreement below, then allpersons signing below acknowledge that this Agreement is given conditionally,based on the representation to Lender that the non–signing party consentsto the changes and provisions of this Agreement or otherwise will not bereleased by it. This waiver applies not only to any initial extension,modification or release, but also to all such subsequent actions.

 

**MISCELLANEOUSPROVISIONS.**Lendermay delay or forgo enforcing any of its rights or remedies under this Agreementwithout losing them. Borrower and any other person who signs, guarantees orendorses this Agreement, to the extent allowed by law, waive any applicablestatute of limitations, presentment, demand for payment, protest and notice ofdishonor. Upon any change in the terms of this Agreement, and unless otherwiseexpressly stated in writing, no party who signs this Agreement. whether asmaker, guarantor, accommodation maker or endorser, shall be released fromliability. All such parties agree that Lender may renew or extend (repeatedlyand for any length of time) this loan, or release any party or guarantor orcollateral; or impair, fail to realize upon or perfect Lender’s securityinterest in the collateral; and take any other action deemed necessary byLender without the consent of or notice to anyone. Ail such parties also agreethat Lender may modify this loan without the consent of or notice to anyoneother than the party with whom the modification is made.

 

**PRIOR TO SIGNING THIS AGREEMENT,BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT, INCLUDINGTHE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THEAGREEMENT AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE AGREEMENT.**

 

**BORROWER:**

 

**HeritageOaks Bancorp**

 
| **By:** | /s/  Lawrence  P. Ward                    | **By:** | /s/ Gwen R. Pelfrey                           |
|---------|------------------------------------------------|---------|-----------------------------------------------|
|    | **Lawrence P. Ward, Chief Executive  Officer** |    | **Gwen R. Pelfrey, EVP/Corporate  Secretary** |

 

 

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**BUSINESSLOAN AGREEMENT**

 
| **Principal  $2,000,000.00**                                                                                                                      | **Loan Date** | **Maturity  08-15-2006** | **Loan No  7001014** | **Call** | **Collateral  Stock** | **Account** | **Officer** | **Initials**[Illegible] |
|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------|--------------------------|----------------------|----------|-----------------------|-------------|-------------|-------------------------|
| References in the shaded area are for Lender’s use only and do not  limit the applicability of this document to any particular loan or item. |

 
| **Borrower:** |   | **Heritage Oaks Bancorp** |   | **Lender:** |   | **PACIFIC COAST BANKERS’ BANK** |
|---------------|--------|---------------------------|--------|-------------|--------|--------------------------------------|
|          |   | **545 12th Street**       |   |        |   | **340 Pine Street, Suite 401**       |
|          |   | **Paso Robles, CA 93446** |   |        |   | **San Francisco, CA 94104**          |

 

 

**THIS BUSINESS LOAN AGREEMENT betweenHeritage Oaks Bancorp (“Borrower”) and PACIFIC COAST BANKERS’ BANK (“Lender”)is made and executed on the following terms and conditions. Borrower hasreceived prior commercial loans from Lender or has applied to Lender for acommercial loan or loans and other financial accommodations, including thosewhich may be described on any exhibit or schedule attached to this Agreement.All such loans and financial accommodations, together with all future loans andfinancial accommodations from Lender to Borrower, are referred to in thisAgreement individually as the “Loan” and collectively as the “Loans.” Borrowerunderstands and agrees that: (a) in granting, renewing, or extending any Loan,Lender is relying upon Borrower’s representations, warranties, and agreements,as set forth in this Agreement; (b) the granting, renewing, or extending of anyLoan by Lender at all times shall be subject to Lender’s sole judgment anddiscretion; and (c) all such Loans shall be and shall remain subject to thefollowing terms and conditions of this Agreement.**

 

**TERM.** This Agreement shall be effective as of **October****23, 2000,**and shall continuethereafter until all Indebtedness of Borrower to Lender has been performed infull and the parties terminate this Agreement in writing.

 

**DEFINITIONS.** The following words shall have thefollowing meanings when used in this Agreement. Terms not otherwise defined inthis Agreement shall have the meanings attributed to such terms in the UniformCommercial Code. All references to dollar amounts shall mean amounts in lawfulmoney of the United States of America.

 

**Agreement.** The word “Agreement” means this BusinessLoan Agreement, as this Business Loan Agreement may be amended or modified fromtime to time, together with all exhibits and schedules attached to thisBusiness Loan Agreement from time to time.

 

**Borrower.** The word “Borrower” means Heritage OaksBancorp. The word “Borrower” also includes, as applicable, all subsidiaries andaffiliates of Borrower as provided below in the paragraph titled “Subsidiariesand Affiliates.”

 

**CERCLA.** The word “CERCLA” means theComprehensive Environmental Response, Compensation, and Liability Act of 1980,as amended.

 

**Collateral.** The word “Collateral” means and includeswithout limitation all property and assets granted as collateral security for aLoan, whether real or personal property, whether granted directly orindirectly, whether granted now or in the future, and whether granted in theform of a security interest, mortgage, deed of trust, assignment, pledge,chattel mortgage, chattel trust, factor’s lien, equipment trust, conditionalsale, trust receipt, lien, charge, lien or title retention contract, lease orconsignment intended as a security device, or any other security or lieninterest whatsoever, whether created by law, contract, or otherwise.

 

**ERISA.** The word “ERISA” means the EmployeeRetirement Income Security Act of 1974, as amended.

 

**Event ofDefault.** Thewords “Event of Default” mean and include without limitation any of the Eventsof Default set forth below in the section titled “EVENTS OF DEFAULT.”

 

**Grantor.** The word “Grantor” means and includeswithout limitation each and all of the persons or entities granting a SecurityInterest in any Collateral for the Indebtedness, including without limitationall Borrowers granting such a Security Interest.

 

**Guarantor.** The word “Guarantor” means and includeswithout limitation each and all of the guarantors, sureties, and accommodationparties in connection with any Indebtedness.

 

**Indebtedness.** The word “Indebtedness” means andincludes without limitation all Loans, together with all other obligations,debts and liabilities of Borrower to Lender, or any one or more of them, aswell as all claims by Lender against Borrower, or any one or more of them;whether now or hereafter existing, voluntary or involuntary, due or not due,absolute or contingent, liquidated or unliquidated; whether Borrower may beliable individually or jointly with others; whether Borrower may be obligatedas a guarantor, surety, or otherwise; whether recovery upon such Indebtedness maybe or hereafter may become barred by any statute of limitations; and whethersuch Indebtedness may be or hereafter may become otherwise unenforceable.

 

**Lender.** The Word “Lender” means PACIFIC COASTBANKERS’ BANK, its successors and assigns.

 

**Loan.** The word “Loan” or “Loans” means andincludes without limitation any and all commercial loans and financialaccommodations from Lender to Borrower, whether now or hereafter existing, andhowever evidenced, including without limitation those loans and financialaccommodations described herein or described on any exhibit or scheduleattached to this Agreement from time to time.

 

**Note.** The word “Note” means and includeswithout limitation Borrower’s promissory note or notes, if any, evidencingBorrower’s Loan obligations in favor of Lender, as well as any substitute,replacement or refinancing note or notes therefor.

 

**RelatedDocuments.** Thewords “Related Documents” mean and include without limitation all promissorynotes, credit agreements, loan agreements, environmental agreements,guaranties, security agreements, mortgages, deeds of trust, and all otherinstruments, agreements and documents, whether now or hereafter existing,executed in connection with the Indebtedness.

 

**SecurityAgreement.** Thewords “Security Agreement” mean and include without limitation any agreements,promises, covenants, arrangements, understandings or other agreements, whethercreated by law, contract, or otherwise, evidencing, governing, representing, orcreating a Security Interest.

 

**SecurityInterest.** Thewords “Security Interest” mean and include without limitation any type ofcollateral security, whether in the form of a lien, charge, mortgage, deed oftrust, assignment, pledge, chattel mortgage, chattel trust, factor’s lien,equipment trust, conditional sale, trust receipt, lien or title retentioncontract, lease or consignment intended as a security device, or any othersecurity or lien interest whatsoever, whether created by law, contract, orotherwise.

 

**SARA.** The word “SARA” means the SuperfundAmendments and Reauthorization Act of 1986 as now or hereafter amended.

 

**REPRESENTATIONS AND WARRANTIES.** Borrower represents and warrants toLender, as of the date of this Agreement, as of the date of each disbursementof Loan proceeds, as of the date of any renewal, extension or modification ofany Loan, and at all times any Indebtedness exists:

 

**Organization.** Borrower is a corporation which is dulyorganized, validly existing, and in good standing under the laws of the Stateof California and is validly existing and in good standing in all states inwhich Borrower is doing business. Borrower has the full power and authority toown its properties and to transact the businesses in which it is presentlyengaged or presently proposes to engage. Borrower also is duly qualified as aforeign corporation and is in good standing in all states in which the failureto so qualify would have a material adverse effect on its businesses orfinancial condition.

 

 

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**Authorization.**The execution, delivery, and performance of thisAgreement and all Related Documents by Borrower, to the extent to be executed,delivered or performed by Borrower, have been duly authorized by all necessaryaction by Borrower; do not require the consent or approval of any other person,regulatory authority or governmental body; and do not conflict with, result ina violation of, or constitute a default under (a) any provision of its articlesof incorporation or organization, or bylaws, or any agreement or otherinstrument binding upon Borrower or (b) any law, governmental regulation, courtdecree, or order applicable to Borrower.

 

**Financial Information.**Each financial statement of Borrower supplied toLender truly and completely disclosed Borrower’s financial condition as of thedate of the statement, and there has been no material adverse change inBorrower’s financial condition subsequent to the date of the most recentfinancial statement supplied to Lender. Borrower has no material contingentobligations except as disclosed in such financial statements.

 

**Legal Effect.**This Agreement constitutes, and any instrument oragreement required hereunder to be given by Borrower when delivered willconstitute, legal, valid and binding obligations of Borrower enforceableagainst Borrower in accordance with their respective terms.

 

**Properties.**Except as contemplated by this Agreement or aspreviously disclosed in Borrower’s financial statements or in writing to Lenderand as accepted by Lender, and except for property tax liens for taxes notpresently due and payable, Borrower owns and has good title to all ofBorrower’s properties free and clear of all Security Interests, and has notexecuted any security documents or financing statements relating to suchproperties. All of Borrower’s properties are titled in Borrower’s legal name,and Borrower has not used, or filed a financing statement under, any other namefor at least the last five (5) years.

 

**Hazardous Substances.**The terms “hazardous waste,” “hazardous substance,”“disposal,” “release,” and “threatened release,” as used in this Agreement,shall have the same meanings as set forth in the “CERCLA,” “SARA,” theHazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., theResource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,Chapters 6.5 through 7.7 of Division 20 of the California Health and SafetyCode, Section 25100, et seq., or other applicable state or Federal laws, rules,or regulations adopted pursuant to any of the foregoing. Except as disclosed toand acknowledged by Lender in writing, Borrower represents and warrants that:(a) During the period of Borrower’s ownership of the properties, there has beenno use, generation, manufacture, storage, treatment, disposal, release orthreatened release of any hazardous waste or substance by any person on, under,about or from any of the properties. (b) Borrower has no knowledge of, orreason to believe that there has been (i) any use, generation, manufacture,storage, treatment, disposal, release, or threatened release of any hazardouswaste or substance on, under, about or from the properties by any prior ownersor occupants of any of the properties, or (ii) any actual or threatenedlitigation or claims of any kind by any person relating to such matters. (c)Neither Borrower nor any tenant, contractor, agent or other authorized user ofany of the properties shall use, generate, manufacture, store, treat, disposeof, or release any hazardous waste or substance on, under, about or from any ofthe properties; and any such activity shall be conducted in compliance with allapplicable federal, state, and local laws, regulations, and ordinances,including without limitation those laws, regulations and ordinances described above.Borrower authorizes Lender and itsagents to enter upon the properties to make such inspections and tests asLender may deem appropriate to determine compliance of the propertieswith this section of the Agreement. Any inspections or tests made by Lendershall be at Borrower’s expense and for Lender’s purposes only and shall not beconstrued to create any responsibility or liability on the part of Lender toBorrower or to any other person. The representations and warranties containedherein are based on Borrower’s due diligence in investigating the propertiesfor hazardous waste and hazardous substances. Borrower hereby (a) releases andwaives any future claims against Lender for indemnity or contribution in theevent Borrower becomes liable for cleanup or other costs under any such laws,and (b) agrees to indemnify and hold harmless Lender against any and allclaims, losses, liabilities, damages, penalties, and expenses which Lender maydirectly or indirectly sustain or suffer resulting from a breach of thissection of the Agreement or as a consequence of any use, generation,manufacture, storage, disposal, release or threatened release of a hazardouswaste or substance on the properties. The provisions of this section of theAgreement, including the obligation to indemnify, shall survive the payment ofthe Indebtedness and the termination or expiration of this Agreement and shallnot be affected by Lender's acquisition of any interest in any of theproperties, whether by foreclosure or otherwise.

 

**Litigationand Claims.** Nolitigation, claim, investigation, administrative proceeding or similar action(including those for unpaid taxes) against Borrower is pending or threatened,and no other event has occurred which may materially adversely affectBorrower’s financial condition or properties, other than litigation, claims, orother events, if any, that have been disclosed to and acknowledged by Lender inwriting.

 

**Taxes.**To the best of Borrower’s knowledge, all tax returns and reports ofBorrower that are or were requiredto be filed, have been filed, and all taxes, assessments and other governmentalcharges have been paid in full, except those presently being or to be contestedby Borrower in good faith in the ordinary course of business and for whichadequate reserves have been provided.

 

**Lien Priority.**Unless otherwise previously disclosed to Lender inwriting, Borrower has not entered into or granted any Security Agreements, orpermitted the filing or attachment of any Security Interests on or affectingany of the Collateral directly or indirectly securing repayment of Borrower’sLoan and Note, that would be prior or that may in any way be superior toLender’s Security Interests and rights in and to such Collateral.

 

**Binding Effect.**This Agreement, the Note, all Security Agreementsdirectly or indirectly securing repayment of Borrower’s Loan and Note and allof the Related Documents are binding upon Borrower as well as upon Borrower’ssuccessors, representatives and assigns, and are legally enforceable in accordancewith their respective terms.

 

**CommercialPurposes.**Borrower intends to use the Loan proceeds solely for business or commercialrelated purposes.

 

**Employee Benefit Plans.**Each employee benefit plan as to which Borrower mayhave any liability complies in all material respects with all applicablerequirements of law and regulations, and (i) no Reportable Event nor ProhibitedTransaction (as defined in ERISA) has occurred with respect to any such plan,(ii) Borrower has not withdrawn from any such plan or initiated steps to do so,(iii) no steps have been taken to terminate any such plan, and (iv) there areno unfunded liabilities other than those previously disclosed to Lender inwriting.

 

**Location of Borrower’s Offices and Records.**Borrower’s place of business, orBorrower’s Chief executive office, if Borrower has more than one place ofbusiness, is located at 545 12th Street, Paso Robles, CA 93446. Unless Borrowerhas designated otherwise in writing this location is also the office or officeswhere Borrower keeps its records concerning the Collateral.

 

**Information.**All information heretofore or contemporaneouslyherewith furnished by Borrower to Lender for the purposes of or in connectionwith this Agreement or any transaction contemplated hereby is, and allinformation hereafter furnished by or on behalf of Borrower to Lender will be,true and accurate in every material respect on the date as of which suchinformation is dated or certified; and none of such information is or will beincomplete by omitting to state any material fact necessary to make suchinformation not misleading.

 

**Survival of Representations and Warranties.**Borrower understands and agrees thatLender, without independent investigation, is relying upon the aboverepresentations and warranties in making the above referenced Loan to Borrower.Borrower further agrees that the foregoing representations and warranties shallbe continuing in nature and shall remain in full force and effect until suchtime as Borrower’s Indebtedness shall be paid in full, or until this Agreementshall be terminated in the manner provided above, whichever is the last tooccur.

 

 

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**AFFIRMATIVECOVENANTS.**Borrowercovenants and agrees with Lender that, while this Agreement is in effect,Borrower will:

 

**Litigation.**Promptly inform Lender in writing of (a) all materialadverse changes in Borrower’s financial condition, and (b) all existing and allthreatened litigation, claims, investigations, administrative proceedings orsimilar actions affecting Borrower or any Guarantor which could materiallyaffect the financial condition of Borrower or the financial condition of anyGuarantor.

 

**Financial Records.**Maintain its books and records in accordance withgenerally accepted accounting principles, applied on a consistent basis, andpermit Lender to examine and audit Borrower’s books and records at allreasonable times.

 

**Additional Information.**Furnish such additional information and statements,lists of assets and liabilities, agings of receivables and payables, inventoryschedules, budgets, forecasts, tax returns, and other reports with respect toBorrower’s financial condition and business operations as Lender may requestfrom time to time.

 

**Insurance.**Maintain fire and other risk insurance, publicliability insurance, and such other insurance as Lender may require withrespect to Borrower’s properties and operations, in form, amounts, coveragesand with insurance companies reasonably acceptable to Lender. Borrower, upon requestof Lender, will deliver to Lender from time to time the policies orcertificates of insurance in form satisfactory to Lender, includingstipulations that coverages will not be cancelled or diminished without atleast ten (10) days’ prior written notice to Lender. Each insurance policy alsoshall include an endorsement providing that coverage in favor of Lender willnot be impaired in any way by any act, omission or default of Borrower or anyother person. In connection with all policies covering assets in which Lenderholds or is offered a security interest for the Loans, Borrower will provideLender with such loss payable or other endorsements as Lender may require.

 

**Insurance Reports.**Furnish to Lender, upon request of Lender, reports oneach existing insurance policy showing such information as Lender mayreasonably request, including without limitation the following: (a) the name ofthe insurer; (b) the risks insured; (c) the amount of the policy; (d) theproperties insured; (e) the then current property values on the basis of whichinsurance has been obtained, and the manner of determining those values; and(f) the expiration date of the policy. In addition, upon request of Lender(however not more often than annually), Borrower will have an independentappraiser satisfactory to Lender determine, as applicable, the actual cashvalue or replacement cost of any Collateral. The cost of such appraisal shallbe paid by Borrower.

 

**Other Agreements.**Comply with all terms and conditions of all otheragreements, whether now or hereafter existing, between Borrower and any otherparty and notify Lender immediately in writing of any default in connectionwith any other such agreements.

 

**LoanProceeds.** Use allLoan proceeds solely for Borrower’s business operations, unless specificallyconsented to the contrary by Lender in writing.

 

**Taxes, Charges and Liens.**Pay and discharge when due all of its indebtedness andobligations, including without limitation all assessments, taxes, governmentalcharges, levies and liens, of every kind and nature, imposed upon Borrower orits properties, income, or profits, prior to the date on which penalties wouldattach, and all lawful claims that, if unpaid, might become a lien or chargeupon any of Borrower’s properties, income, or profits. Provided however,Borrower will not be required to pay and discharge any such assessment, tax,charge, levy, lien or claim so long as (a) the legality of the same shall becontested in good faith by appropriate proceedings, and (b) Borrower shall haveestablished on its books adequate reserves with respect to such contestedassessment, tax, charge, levy, lien, or claim in accordance with generallyaccepted accounting practices. Borrower, upon demand of Lender, will furnish toLender evidence of payment of the assessments, taxes, charges, levies, liensand claims and will authorize the appropriate governmental official to deliverto Lender at any time a written statement of any assessments, taxes, charges,levies, liens and claims against Borrower’s properties, income, or profits.

 

**Performance.**Perform and comply with all terms, conditions, andprovisions set forth in this Agreement and in the Related Documents in a timelymanner, and promptly notify Lender if Borrower learns of the occurrence of anyevent which constitutes an Event of Default under this Agreement or under anyof the Related Documents.

 

**Operations.**Maintain executive and management personnel withsubstantially the same qualifications and experience as the present executiveand management personnel; provide written notice to Lender of any change inexecutive and management personnel; conduct its business affairs in areasonable and prudent manner and in compliance with all applicable federal,state and municipal laws, ordinances, rules and regulations respecting itsproperties, charters, businesses and operations, including without limitation,compliance with the Americans With Disabilities Act and with all minimumfunding standards and other requirements of ERISA and other laws applicable toBorrower’s employee benefit plans.

 

**Inspection.**Permit employees or agents of Lender at any reasonabletime to inspect any and all Collateral for the Loan or Loans and Borrower’sother properties and to examine or audit Borrower’s books, accounts, and recordsand to make copies and memoranda of Borrower’s books, accounts, and records. IfBorrower now or at any time hereafter maintains any records (including withoutlimitation computer generated records and computer software programs for thegeneration of such records) in the possession of a third party, Borrower, uponrequest of Lender, shall notify such party to permit Lender free access to suchrecords at all reasonable times and to provide Lender with copies of anyrecords it may request, all at Borrower’s expense.

 

**Compliance Certificate.**Unless waived in writing by Lender, provide Lender atleast annually and at the time of each disbursement of Loan proceeds with acertificate executed by Borrower’s chief financial officer, or other officer orperson acceptable to Lender, certifying that the representations and warrantiesset forth in this Agreement are true and correct as of the date of thecertificate and further certifying that, as of the date of the certificate, noEvent of Default exists under this Agreement.

 

**Environmental Compliance and Reports.**Borrower shall comply in all respectswith all environmental protection federal, state and local laws, statutes,regulations and ordinances; not cause or permit to exist, as a result of anintentional or unintentional action or omission on its part or on the part ofany third party, on property owned and/or occupied by Borrower, anyenvironmental activity where damage may result to the environment, unless suchenvironmental activity is pursuant to and in compliance with the conditions ofa permit issued by the appropriate federal, state or local governmentalauthorities; shall furnish to Lender promptly and in any event within thirty(30) days after receipt thereof a copy of any notice, summons, lien, citation,directive, letter or other communication from any governmental agency orinstrumentality concerning any intentional or unintentional action or omissionon Borrower’s part in connection with any environmental activity whether or notthere is damage to the environment and/or other natural resources.

 

**Additional Assurances.**Make, execute and deliver to Lender such promissorynotes, mortgages, deeds of trust, security agreements, financing statements,instruments, documents and other agreements as Lender or its attorneys mayreasonably request to evidence and secure the Loans and to perfect all SecurityInterests.

 

**RECOVERY OF ADDITIONAL COSTS.**If the imposition of or any change in any law, rule,regulation or guideline, or the interpretation or application of any thereof byany court or administrative or governmental authority (including any request orpolicy not having the force of law) shall impose, modify or make applicable anytaxes (except U.S. federal, state or local income or franchise taxes imposed onLender), reserve requirements, capital adequacy requirements or otherobligations which would (a) increase the cost to Lender for extending ormaintaining the credit facilities to which this Agreement relates, (b) reducethe amounts payable to Lender under this Agreement or the Related Documents, or(c) reduce the rate of return on Lender’s capital as a consequence of Lender’sobligations with respect to the credit facilities to which this Agreementrelates, then Borrower agrees to pay Lender such

 

 

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additional amounts as will compensate Lender therefor, within five (5)days after Lender’s written demand for such payment, which demand shall beaccompanied by an explanation of such imposition or charge and a calculation inreasonable detail of the additional amounts payable by Borrower, whichexplanation and calculations shall be conclusive in the absence of manifesterror.

 

**NEGATIVECOVENANTS.**Borrowercovenants and agrees with Lender that while this Agreement is in effect,Borrower shall not, without the prior written consent of Lender:

 

**Indebtedness and Liens.**(a) Except for trade debt incurred in the normalcourse of business and indebtedness to Lender contemplated by this Agreement,create, incur or assume indebtedness for borrowed money, including capitalleases, (b) sell, transfer, mortgage, assign, pledge, lease, grant a securityinterest in, or encumber any of Borrower’s assets, or (c) sell with recourseany of Borrower’s accounts, except to Lender.

 

**Continuity of Operations.**(a) Engage in any business activities substantiallydifferent than those in which Borrower is presently engaged, (b) ceaseoperations, liquidate, merge, transfer, acquire or consolidate with any otherentity, change ownership, change its name, dissolve or transfer or sellCollateral out of the ordinary course of business, (c) pay any dividends onBorrower’s stock (other than dividends payable in its stock), provided, howeverthat notwithstanding the foregoing, but only so long as no Event of Default hasoccurred and is continuing or would result from the payment of dividends, ifBorrower is a “Subchapter S Corporation” (as defined in the Internal RevenueCode of 1986, as amended), Borrower may pay cash dividends on its stock to itsshareholders from time to time in amounts necessary to enable the shareholdersto pay income taxes and make estimated income tax payments to satisfy theirliabilities under federal and state law which arise solely from their status asShareholders of a Subchapter S Corporation because of their ownership of sharesof stock of Borrower, or (d) purchase or retire any of Borrower’s outstandingshares or alter or amend Borrower’s capital structure.

 

**Loans, Acquisitions and Guaranties.**(a) Loan, invest in or advance money orassets, (b) purchase, create or acquire any interest in any other enterprise orentity, or (c) incur any obligation as surety or guarantor other than in theordinary course of business.

 

**CESSATIONOF ADVANCES.**IfLender has made any commitment to make any Loan to Borrower, whether under thisAgreement or under any other agreement, Lender shall have no obligation to makeLoan Advances or to disburse Loan proceeds if: (a) Borrower or any Guarantor isin default under the terms of this Agreement or any of the Related Documents orany other agreement that Borrower or any Guarantor has with Lender; (b)Borrower or any Guarantor becomes insolvent, files a petition in bankruptcy orsimilar proceedings, or is adjudged a bankrupt; (c) there occurs a materialadverse change in Borrower’s financial condition, in the financial condition ofany Guarantor, or in the value of any Collateral securing any Loan; (d) anyGuarantor seeks, claims or otherwise attempts to limit, modify or revoke suchGuarantor’s guaranty of the Loan or any other loan with Lender; or (e) Lenderin good faith deems itself insecure, even though no Event of Default shall haveoccurred.

 

**OTHERCONDITIONS.                    **[Illegible]               [Illegible]

 

(1) Corporate resolution with copies of the minutes from the Board ofDirectors of Heritage Oaks Bancorp allowing the Bancorp to accept the revisedterms and conditions of the $2,000,000.00 from Pacific Coast Bankers’ Bank.

 

(2) Heritage Oaks Bancorp must receive written permission from PacificCoast Bankers’ Bank prior to declaring any cash dividends.

 

(3) All regulatory reports must be shared with Pacific Coast Bankers’Bank to the extent that they can legally be shared.

 

(4) Annual audited financial statements on Heritage Oaks Bank andHeritage Oaks Bancorp within 90 days of the fiscal year–end.

 

(5) Quarterly call reports on Heritage Oaks Bank within 30 days of eachquarter–end.

 

(6) Semi–annual company prepared financial statements on HeritageOaks Bancorp within 30 days of thesix month period.

 

(7) A minimum debt coverage ratio based on cash flow of 1.5:1.

 

(8) Heritage Oaks Bankand Heritage Oaks Bancorp must received written approval from Pacific CoastBankers’ Bank prior to incurring any additional debt.

 

(9) Minimum capital toassets ratio of 5% or the minimum capital to assets ratio, which defines a bankas adequately capitalized by regulatory agencies.

 

(10) All documentation will be CFI Laser Pro.

 

**EVENTS OF DEFAULT.** Each of the following shall constitutean Event of Default under this Agreement:

 

**Default on Indebtedness.**Failure of Borrower to make any payment when due onthe Loans.

 

**Other Defaults.**Failure of Borrower or any Grantor to comply with orto perform when due any other term, obligation, covenant or condition containedin this Agreement or in any of the Related Documents, or failure of Borrower tocomply with or to perform any other term, obligation, covenant or conditioncontained in any other agreement between Lender and Borrower.

 

**Default in Favor of Third Parties.**Should Borrower or any Grantor default under any loan,extension of credit, security agreement, purchase or sales agreement, or anyother agreement, in favor of any other creditor or person that may materiallyaffect any of Borrower’s property or Borrower’s or any Grantor’s ability torepay the Loans or perform their respective obligations under this Agreement orany of the Related Documents.

 

**False Statements.**Any warranty, representation or statement made orfurnished to Lender by or on behalf of Borrower or any Grantor under thisAgreement or the Related Documents is false or misleading in any materialrespect at the time made or furnished, or becomes false or misleading at anytime thereafter.

 

**Defective Collateralization.**This Agreement or any of the Related Documents ceasesto be in full force and effect (including failure of any Security Agreement tocreate a valid and perfected Security Interest) at any time and for any reason.

 

**Insolvency.**The dissolution or termination of Borrower’s existenceas a going business, the insolvency of Borrower, the appointment of a receiverfor any part of Borrower’s property, any assignment for the benefit ofcreditors, any type of creditor workout, or the commencement of any proceedingunder any bankruptcy or insolvency laws by or against Borrower.

 

**Creditor or Forfeiture Proceedings.**Commencement of foreclosure or forfeitureproceedings, whether by judicial proceeding, self–help, repossession orany other method, by any creditor of Borrower, any creditor of any Grantoragainst any collateral securing the Indebtedness, or by any governmentalagency. This includes a garnishment, attachment, or levy on or of any ofBorrower's deposit accounts with Lender. However, this Event of Default shallnot apply if there is a good faith dispute by Borrower or Grantor, as the casemay be, as to the validity or reasonableness of the claim which is the basis ofthe creditor or forfeiture proceeding, and if Borrower or Grantor gives Lenderwritten notice of the creditor or forfeiture proceeding and furnishes reservesor a surety bond for the creditor or forfeiture proceeding satisfactory toLender.

 

**Events Affecting Guarantor.**Any of the preceding events occurs with respect to anyGuarantor of any of the Indebtedness or any Guarantor dies or becomesincompetent, or revokes or disputes the validity of, or liability under, anyGuaranty of the Indebtedness. Lender, at its option, may, but shall not berequired to, permit the Guarantor’s estate to assume unconditionally theobligations arising under the guaranty in a manner satisfactory to Lender, and,in doing so, cure the Event of Default.

 

 

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**ChangeIn Ownership.** Anychange in ownership of twenty–five percent (25%) or more of the commonstock of Borrower.

 

**AdverseChange.** Amaterial adverse change occurs in Borrower’s financial condition, or Lenderbelieves the prospect of payment or performance of the Indebtedness isimpaired.

 

**Year2000 Compliance Failure.** Failure to meet the deadlines required in the Year 2000 ComplianceAgreement to be Year 2000 Compliant or a reasonable likelihood that Borrowercannot be Year 2000 Compliant on or before December 31, 1999.

 

**Insecurity.** Lender, in good faith, deems itselfinsecure.

 

**Right toCure.** If anydefault, other than a Default on Indebtedness, is curable and if Borrower orGrantor, as the case may be, has not been given a notice of a similar defaultwithin the preceding twelve (12) months, it may be cured (and no Event ofDefault will have occurred) if Borrower or Grantor, as the case may be, afterreceiving written notice from Lender demanding cure of such default: (a) curesthe default within ten (10) days; or (b) if the cure requires more than ten(10) days, immediately initiates steps which Lender deems in Lender’s sole discretionto be sufficient to cure the default and thereafter continues and completes allreasonable and necessary steps sufficient to produce compliance as soon asreasonably practical.

 

**EFFECT OF AN EVENT OF DEFAULT.** If any Event of Default shall occur, exceptwhere otherwise provided in this Agreement or the Related Documents, allcommitments and obligations of Lender under this Agreement or the RelatedDocuments or any other agreement immediately will terminate and, at Lender’soption, all indebtedness immediately will become due and payable, all withoutnotice of any kind to Borrower, except that in the case of an Event of Defaultof the type described in the “Insolvency” subsection above, such accelerationshall be automatic and not optional. In addition, Lender shall have all therights and remedies provided in the Related Documents or available at law, inequity, or otherwise. Except as may be prohibited by applicable law, all ofLender’s rights and remedies shall be cumulative and may be exercised singularlyor concurrently. Election by Lender to pursue any remedy shall not excludepursuit of any other remedy, and an election to make expenditures or to takeaction to perform an obligation of Borrower or of any Grantor shall not affectLender’s right to declare a default and to exercise its rights and remedies.

 

**MISCELLANEOUS PROVISIONS.** The following miscellaneous provisionsare a part of this Agreement:

 

**Amendments.** This Agreement, together with anyRelated Documents, constitutes the entire understanding and agreement of theparties as to the matters set forth in this Agreement. No alteration of oramendment to this Agreement shall be effective unless given in writing andsigned by the party or parties sought to be charged or bound by the alterationor amendment.

 

**ApplicableLaw. This Agreement has been delivered to Lender and accepted by Lender in theState of California. If there is a lawsuit, Borrower agrees upon Lender’srequest to submit to the jurisdiction of the courts of San Francisco County,the State of California. Subject to the provisions on arbitration, thisAgreement shall be governed by and construed in accordance with the laws of theState of California.**

 

**Arbitration.Lender and Borrower agree that all disputes, claims and controversies betweenthem, whether individual, joint, or class in nature, arising from thisAgreement or otherwise, including without limitation contract and tortdisputes, shall be arbitrated pursuant to the Rules of the American ArbitrationAssociation, upon request of either party.** No act to take or dispose of any Collateral shallconstitute a waiver of this arbitration agreement or be prohibited by thisarbitration agreement. This includes, without limitation, obtaining injunctiverelief or a temporary restraining order; invoking a power of sale under anydeed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising any rightsrelating to personal property, including taking or disposing of such propertywith or without judicial process pursuant to Article 9 of the Uniform Commercial Code. Any disputes, claims, orcontroversies concerning the lawfulness or reasonableness of any act, orexercise of any right, concerning any Collateral, including any claim torescind, reform, or otherwise modify any agreement relating to the Collateral,shall also be arbitrated, provided however that no arbitrator shall have theright or the power to enjoin or restrain any act of any party. Lender andBorrower agree that in the event of an action for judicial foreclosure pursuantto California Code of Civil Procedure Section 726, or any similar provision inany other state, the commencement of such an action will not constitute awaiver of the right to arbitrate and the court shall refer to arbitration asmuch of such action, including counterclaims, as lawfully may be referred toarbitration. Judgment upon any award rendered by any arbitrator may be enteredin any court having jurisdiction. Nothing in this Agreement shall preclude anyparty from seeking equitable relief from a court of competent jurisdiction. Thestatute of limitations, estoppel, waiver, laches, and similar doctrines whichwould otherwise be applicable in an action brought by a party shall beapplicable in any arbitration proceeding, and the commencement of anarbitration proceeding shall be deemed the commencement of an action for thesepurposes. The Federal Arbitration Act shall apply to the construction,interpretation, and enforcement of this arbitration provision.

 

**Caption Headings.**Caption headings in this Agreement are for conveniencepurposes only and are not to be used to interpret or define the provisions ofthis Agreement.

 

**MultipleParties; Corporate Authority.** All obligations of Borrower under this Agreementshall be joint and several, and all references to Borrower shall mean each andevery Borrower. This means that each of the persons signing below isresponsible for all obligations in this Agreement.

 

**Consentto Loan Participation.** Borrower agrees and consents to Lender’s sale or transfer, whether nowor later, of one or more participation interests in the Loans to one or morepurchasers, whether related or unrelated to Lender. Lender may provide, withoutany limitation whatsoever, to any one or more purchasers, or potential purchasers,any information or knowledge Lender may have about Borrower or about any othermatter relating to the Loan, and Borrower hereby waives any rights to privacyit may have with respect to such matters. Borrower additionally waives any andall notices of sale of participation interests, as well as all notices of anyrepurchase of such participation interests. Borrower also agrees that thepurchasers of any such participation interests will be considered as theabsolute owners of such interests in the Loans and will have all the rightsgranted under the participation agreement or agreements governing the sale ofsuch participation interests. Borrower further waives all rights of offset orcounterclaim that it may have now or later against Lender or against anypurchaser of such a participation interest and unconditionally agrees thateither Lender or such purchaser may enforce Borrower’s obligation under theLoans irrespective of the failure or insolvency of any holder of any interestin the Loans. Borrower further agrees that the purchaser of any suchparticipation interests may enforce its interests irrespective of anypersonal claims or defenses that Borrower may have against Lender.

 

**Costs and Expenses.**Borrower agrees to pay upon demand all of Lender’sexpenses, including without limitation attorneys’ fees, incurred in connectionwith the preparation, execution, enforcement, modification and collection ofthis Agreement or in connection with the Loans made pursuant to this Agreement.Lender may pay someone else to help collect the Loans and to enforce thisAgreement, and Borrower will pay that amount. This includes, subject to anylimits under applicable law, Lender’s attorneys’ fees and Lender’s legalexpenses, whether or not there is a lawsuit, including attorneys’ fees forbankruptcy proceedings (including efforts to modify or vacate any automaticstay or injunction), appeals, and any anticipated post–judgmentcollection services. Borrower also will pay any court costs, in addition to allother sums provided by law.

 

**Notices.** All notices required to be given underthis Agreement shall be given in writing, may be sent by telefacsimile (unlessotherwise required by law), and shall be effective when actually delivered orwhen deposited with a nationally recognized overnight courier or deposited inthe United States mail, first class, postage prepaid, addressed to the party towhom the notice is to be given at the address shown above. Any party may changeits address for notices under this Agreement by giving formal written notice tothe other parties, specifying that the purpose of the notice is to change theparty’s address. To the extent permitted by applicable law, if there is morethan one Borrower, notice to any Borrower will constitute notice to allBorrowers. For notice purposes, Borrower will keep Lender informed at all timesof Borrower’s current address(es).

 

 

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**Severability.** If a court of competent jurisdictionfinds any provision of this Agreement to be invalid or unenforceable as to anyperson or circumstance, such finding shall not render that provision invalid orunenforceable as to any other persons or circumstances. If feasible, any suchoffending provision shall be deemed to be modified to be within the limits ofenforceability or validity; however, if the offending provision cannot be somodified, it shall be stricken and all other provisions of this Agreement inall other respects shall remain valid and enforceable.

 

**Subsidiariesand Affiliates of Borrower.** To the extent the context of any provisions of thisAgreement makes it appropriate, including without limitation anyrepresentation, warranty or covenant, the word “Borrower” as used herein shallinclude all subsidiaries and affiliates of Borrower. Notwithstanding theforegoing however, under no circumstances shall this Agreement be construed torequire Lender to make any Loan or other financial accommodation to anysubsidiary or affiliate of Borrower.

 

**Successors and Assigns.**All covenants and agreements contained by or on behalfof Borrower shall bind its successors and assigns and shall Inure to thebenefit of Lender, its successors and assigns. Borrower shall not, however,have the right to assign its rights under this Agreement or any interesttherein, without the prior written consent of Lender.

 

**Survival.** All warranties, representations, andcovenants made by Borrower in this Agreement or in any certificate or otherinstrument delivered by Borrower to Lender under this Agreement shall beconsidered to have been relied upon by Lender and will survive the making ofthe Loan and delivery to Lender of the Related Documents, regardless of anyinvestigation made by Lender or on Lender’s behalf.

 

**Time Is****of the Essence.**Time is of the essence in the performance of thisAgreement.

 

**Waiver.** Lender shall not be deemed to havewaived any rights under this Agreement unless such waiver is given in writingand signed by Lender. No delay or omission on the part of Lender in exercisingany right shall operate as a waiver of such right or any other right. A waiverby Lender of a provision of this Agreement shall not prejudice or constitute awaiver of Lender’s right otherwise to demand strict compliance with thatprovision or any other provision of this Agreement. No prior waiver by Lender,nor any course of dealing between Lender and Borrower, or between Lender andany Grantor, shall constitute a waiver of any of Lender’s rights or of anyobligations of Borrower or of any Grantor as to any future transactions.Whenever the consent of Lender is required under this Agreement, the grantingof such consent by Lender in any instance shall not constitute continuingconsent in subsequent instances where such consent is required, and in allcases such consent may be granted or withheld in the sole discretion of Lender.

 

**BORROWER ACKNOWLEDGES HAVING READ ALLTHE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT, AND BORROWER AGREES TO ITSTERMS. THIS AGREEMENT IS DATED AS OF OCTOBER 23, 2000.**

** **

**BORROWER:**

** **

**HeritageOaks Bancorp**

** **
| **By:** | /s/  Lawrence  P. Ward                    | By:    | /s/ Gwen R. Pelfrey                           |
|---------|------------------------------------------------|--------|-----------------------------------------------|
|    | **Lawrence P. Ward, Chief Executive  Officer** |   | **Gwen R. Pelfrey, EVP/Corporate  Secretary** |

 

**LENDER:**

 

**PACIFIC COAST BANKERS’ BANK**

 
| **By:** | [Illegible]            |
|---------|------------------------|
|    | **Authorized Officer** |

 

 

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