**EXHIBIT 10.3**

 

February 28, 2002

 

Employment Agreement between Heritage OaksBank and Lawrence P. Ward

 

1.      Three yearagreement calling for continued employment as President and CEO of HeritageOaks Bank and Heritage Oaks Bancorp through 1-31-2005.  This agreement will automatically renew eachyear from the anniversary date unless either party gives written notice to thecontrary no less than 60 days from the Anniversary date.

 

 

2.               Annual basesalary for year 2002, $175,000.00. Bonus for 2001 to be paid in 2002 is $62,750.00

 

3.               Continuedparticipation in the performance based bonus plan, approved annually by theBoard of Directors.

 

4.             Continued participation in the bank sponsored 401-Kplan.

 

5.                                       Continuedparticipation in the executive salary continuation plan, which was establishedin 1994 and as increased in year 2001.

 

6.                                       Payment oflife insurance policy premiums of $121.90 per month on $100,000. Policy as iscurrently being done.

 

7.                                       Auto to beprovided by the bank with bank covering all associated costs to operate.  In the event of a change of control, seeauto section as outlined in #9 below.

 

8.                                       Continuedparticipation in any other compensation program established by the bank or itsparent holding company that is offered to any other employee of the organization.

 

9.                                       The Board mayterminate this agreement at any time with or without cause, provided that ifterminated without cause, Mr. Ward would be entitled to severance pay equal toone year annual base salary in effect at the date of termination, plus anadditional amount sufficient to pay for insurance coverage and automobileexpenses for a period of one year.  Inthe event of termination during or after a merger or change in control, Mr.Ward would be entitled to severance pay equal to two years base salary ineffect at the date of termination, plus an additional amount sufficient to payfor insurance coverage for a period of one year from the date of termination,and the auto provided by the bank to Mr. Ward be transferred into his name atthe time of termination.  The sales taxcalculation for the transfer of the auto would be based on the depreciatedvalue of the auto as it then appears on the bank’s books.  In the event of a change of controlwhere  Mr. Ward is offered subsequentemployment, Mr. Ward would be entitled to severance pay equal to 2 years annualbase salary if he is terminated or quits for good cause.  Events that are considered good causeinclude but are not limited to, reduction in title, compensation, demotion,expanded traveling, etc.

 
| Approved by the Board of  Directors | Accepted         |
|-------------------------------------|------------------|
|                                |             |
| By:                                 |             |   | By: |   |
|                                | Dr. B. R. Bryant |   |   | Lawrence P. Ward |
|                                | Chairman         |   |   | President, CEO |
|                                     |                  |  |  |  |  |

 

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