Document:

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                                 EXHIBIT (10.26)

                                    EXECUTIVE

         This Agreement is made and entered into this 1 day of February 1999, by
and between Heritage Oaks Bank, a bank chartered under the laws of the State of
California (the "Employer"), and Margaret Torres, 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 Executive Vice President - Chief Financial 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.

                    1.1      ADMINISTRATOR. 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 Thirty Thousand Dollars

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                             ($30,000) by the Applicable Percentage (defined
                             below), and by then subtracting from that amount
                             those additional as may be: (1) required under the
                             other provisions of this Agreement, including, but
                             not

         limited to, Paragraphs 5 and 6 hereof; (ii) required by reason of
         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).

1.3      APPLICABLE 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. I I below; and (ii) notwithstanding the subclause
         (i) of this Paragraph 1.3, zero percent (0%) 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.

  1.4    BENEFICIARY, Excepting the reference made at the end of Paragraphs 1.3
         and 1. IO hereof, the term "beneficiary" or "designated beneficiary "
         shall mean the person or persons whom the Executive shall designate in
         a Vlid 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.

  1.5    CHANGE 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: (1) 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 any sale lease 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

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         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 indirect , or securitie's 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.

1.6      THE CODE. The "Code" shall mean the Internal Revenue Code of 1986,
         as amended (the "Code").

1.7      DISABILITY/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 (I 80) 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.

1.8      EFFECTIVE 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      ERISA.  The term "ERISA" shall mean the Employee Retirement Income
         I 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
         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

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         income, employment and disability income tax laws (e.g., FICA,
         FUTA,- SDI), partnership, trust or any other entity) becomes the
         beneficial owner, directly or indirectly, of securities of the
         Employer representing twenty-five percent (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.

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 (04b) 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.

1.12     SURVIVING SPOUSE. The term "Surviving Spouse" shall mean the person, if
         who shall be legally married to the Executive on the date of the
         Executive's death.

        1.3    TERMINATION 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

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               or regulations of the: (i) The California Institute 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 in the employ of the Executive with an additional
                  incentive to remain 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.

31       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

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                  above, for a period of fifteen (I 5) 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
       (66) 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 (I 5)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

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         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 the 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

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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 (I
         5) 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.

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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 deductions is denied to the Employer shall,
at the Employer's elections, 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 28OG of the Code (or the Annual Benefit or SPA is reduced to zero (0)).
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 28OG 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 above in their entirety) constitute
reasonable compensation for services actually rendered within the meaning of
Section 28OG of the Code, in the opinion of tax counsel refined to in clause (b)
above; and

(d) The value of any noncash benefit or any deferred payment or benefit included
in the Total Payments shall be determined by the Employer's independent
auditor's in accordance with the principles of Section 28OG 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

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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, any right,
title or the Executive's spouse nor the 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 a 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 all 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.

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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 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 I I I 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, Attorney fees and costs incurred or collection of any
             judgement or award rendered therein. The "prevailing party" means
             the party determined by the arbitrator(s) or court, as the

                                      11
<PAGE>

            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 Bank
                               545 Twelfth Street
                              Paso Robles, CA 93446

         Attn:    Corporate Secretary

  If to the Executive:           Margaret Torres
                           2401 Branch Creek Circle #3
                              Paso 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

                                      12

<PAGE>

  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)
        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 maybe, 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 inducements, promises, or acknowledges that no other
      representations, 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

                                      13

<PAGE>

        Corporation; and (iii) Securities and Exchange Commission shall govern
        the validity, interpretation, construction and effect of this Agreement.

         IN WITNESS WTMREOF, 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 BANK

         By.

         Dr. R. R. Bryant, Chairman                 Margaret Torres

                                       14<PAGE>

                                                                  EXHIBIT 10.27

                                      LEASE

                          Preamble-Parties and Premises

          Heritage Oaks Bancorp, herein called "Landlord," hereby Leases to
Heritage Oaks Bank, herein called "Tenant," those certain premises, herein
called "said premises," in that certain building, known as The Atascadero
Branch at 9900 El Camino Real, in the City of Atascadero, County of San Luis
Obispo, State of California on the following terms and conditions:

                                     1. TERM

         The initial term of this Lease shall be for the period of five years,
commencing April 1, 1999 and ending March 31, 2004.

                                  2. BASIC RENT

                  A. Tenant agrees to pay to Landlord as the basic rent, to be
                  adjusted as provided in Paragraph 3 of this Lease, for the use
                  and occupancy of said premises for the period of April 1, 1999
                  through March 31, 2004 the sum of four thousand seven hundred
                  and twenty five ($4,725.00) dollars per month. Rent shall be
                  payable without notice or demand and without any deduction,
                  off-set, or abatement, in lawful money of the United States to
                  the Landlord at the mailing address of Landlord, 545 12th
                  Street, Paso

                                     1

<PAGE>

                  Robles, California 93446 or at such other place
                  or places as Landlord may from time to time designate by
                  written notice given to Tenant.

                  B. Tenant agrees to pay a late charge of twenty-five dollars
                  ($25.00) if the rent is not received by the fifth day of each
                  month commencing April 5, 1999.

                         This late charge does not establish a grace period;
Landlord may make written demand for payment if the rent is not paid on its
due date each month. Landlord and Tenant agree that the charge is presumed to
be the damages sustained because of Tenant's late payment of rent, and it is
impracticable or extremely difficult to fix actual damages.

                  C. Tenant agrees to pay a service charge of twenty-five
                  dollars ($25.00) if Tenant's bank returns a rent check for
                  insufficient funds. If the bank returns Tenant's rent
                  checks more than once, Landlord may serve 30 days written
                  notice that all future rent be paid in cash or by certified
                  check or money order.

                               3. RENT ADJUSTMENTS

                  A. Rent Adjustments. Commencing at the same time as any
                  rental commences under this Lease, Tenant shall pay to
                  Landlord that percent of the total cost of the total floor
                  area of the building (here called Adjustments)

                                    1. All real estate taxes and insurance
                  premiums on the Premises, including land, building, and
                  improvements thereon. Said real estate taxes shall include all
                  real estate taxes and assessments that are levied upon and/or
                  assessed against the premises, including any taxes which may
                  be levied on rents. Said insurance shall include all insurance
                  premiums for fire, extended coverage, liability, and any other
                  insurance that Landlord deems necessary on the premises.

                                    2. All costs to maintain, repair and
                  replace common areas, hallways, fax and conference rooms,
                  lobby, parking lot lighting, sidewalks, driveways,
                  landscaping and gardening, rubbish pickup, and other areas
                  or services used in common by the Tenants of the building.

                                    3. Utility costs for common areas.

                                    4. All costs to supervise and administer
                  said common areas, copy and fax room, conference room,
                  lobby, parking lots, sidewalks, driveways, landscaping and
                  gardening, rubbish pickup, and other areas used in common
                  by the Tenants or occupants of the building. Said costs
                  shall include such fees as may be paid to a third party in
                  connection with same and may include a fee to Landlord to
                  supervise and administer same in an amount equal to no more
                  than ten percent (10%) of the total out of pocket costs of
                  Landlord.

                               4. USE OF PREMISES

          Said premises shall be used for General Banking Offices by Tenant and
for no other use or uses without the express written consent of Landlord.

                                     2

<PAGE>

                               5. PROHIBITED USES

          Tenant shall not commit or permit the commission of any acts on said
premises nor use or permit the use of said premises in any way that:

                  A.  Will increase the existing rates for or cause
                  cancellation of any fire, casualty, liability, or other
                  insurance policy insuring the premises or its contents;

                  B.  Violates or conflicts with any law, statue,  or
                  ordinance, or governmental rule or regulation, whether now in
                  force or hereinafter enacted, governing said premises;

                  C.  Obstructs or interferes with the rights of other
                  Tenants or occupants of the premises or injures or annoys
                  them;

                  D.  Constitutes the commission of waste on said
                  premises or the commission of maintenance of a nuisance as
                  defined by the laws of the State of California.

                             6. COMPLIANCE WITH LAW

Tenant shall not use the Premises or permit anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted
or promulgated. Tenant shall at its sole cost and expense promptly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now in force or which may hereafter be in force and with the
requirements of any board of fire insurance underwriters or other similar bodies
now or hereafter constituted relating to, or affecting the condition, use or
occupancy of the Premises, excluding structural changes not related to or
affected by Tenant's Improvements or acts. The judgment of any court of
competent jurisdiction or the admission of Tenant in thereto or not, that Tenant
has violated any law, statute, ordinance or governmental rule, any action,
against Tenant, whether Landlord be a part regulation or requirement, shall be
conclusive of that fact as between Landlord and Tenant.

                             7.   NO ASSIGNMENT OR SUBLEASING

Tenant shall not encumber, assign, or otherwise transfer this Lease, any
right or interest in this Lease, or any right or interest in said premises
without first obtaining the express written consent of Landlord first.
Neither shall Tenant sublet said premises or any part thereof or allow any
other persons, other then Tenant's agents and servants, to occupy or use said
premises or any part thereof without the prior written consent of Landlord. A
consent by Landlord to one assignment, subletting, or occupation and use by
another person shall not be deemed to be a consent to any subsequent
assignment, subletting, or occupation and use by another person. The consent
of Landlord to any assignment of Tenant's interest in this Lease or the
subletting by Tenant of said premises shall not be unreasonably withheld.

                               8.  REPAIRS

                                     3
<PAGE>

        A. By entry hereunder, Tenant shall be deemed to have accepted
        the premises as being in good sanitary order, condition, and
        repair. Tenant shall, at Tenant's sole cost and expense, keep
        the premises and every part thereof in good condition and
        repair (except as hereinafter provided with respect to
        Landlord's obligations) including without limitations, the
        maintenance, replacement and repair of any door, plate glass,
        window casements, glazing, plumbing, pipes, electric wiring
        and conduits, heating and cooling system (when there is an air
        conditioning system)

                          Tenant agrees that Landlord is not and shall
        in no event be responsible or liable to Tenant for the failure
        of operation of the heating and/or cooling (air conditioning
        system), or consequential damages, if any, to Tenant or
        otherwise, by reason of failure of operation of said systems,
        if any, on the premises.

                          Tenant shall upon expiration or sooner
        termination of this Lease, surrender the premises to the
        Landlord in good condition, broom clean, ordinary wear and
        tear and damages from causes beyond the reasonable control of
        Tenant excepted. Any damages to adjacent premises caused by
        Tenants use of the premises shall be repaired at the sole cost
        and expense of Tenant.

        B. Notwithstanding the provisions of Paragraph 8-A herein
        above, Landlord shall repair and maintain the structural
        portion of the building, including the exterior walls and
        roof, unless such maintenance and repairs are caused in part
        or in whole by the act, neglect, fault or omission of any duty
        by the Tenant, its agents, servants, employees, invitee's, or
        any damage caused by breaking and entering, in which case
        Tenant shall pay to Landlord the actual cost of such
        maintenance and repairs. Landlord shall also make any
        structural changes required by any governmental regulation.
        Landlord shall not be liable for any failure to make such
        repairs or to perform any maintenance unless such failure
        shall persist for an unreasonable time after written notice of
        the need of such repairs or maintenance is given to Landlord
        by Tenant. Except as may be caused by the gross negligence of
        Landlord's contractor, if any, there shall be no abatement of
        rent and no liability of Landlord by reason of any injury to
        or interference with Tenant's business arising from the making
        of any repairs, alterations or improvement in or to any
        portion of the premises or in or to fixtures, appurtenances
        and equipment therein. However, Landlord shall attempt to
        minimize any interference with Tenant's use of the premises in
        the course of any such repairs, maintenance, or structural
        changes

                        9.   ALTERATIONS AND ADDITIONS

        A. Tenant shall not make or allow to be made any alterations,
        additions, or improvements to or of the premises or any part
        thereof without first obtaining the written consent of
        Landlord and any alterations, additions, or improvements to or
        of said premises, including, but not limited to, wall
        covering, paneling and built-in cabinet work, but excepting
        moveable furniture and trade fixtures, shall at once become a
        part of the realty and belong to the Landlord and shall be
        surrendered with the premises. In the event Landlord consents
        to the making of any alterations, additions or improvements to
        the premises by Tenant, the same shall be made by Tenant at
        Tenant's sole cost and expense. Upon the expiration or sooner
        termination of the term hereof, Tenant shall upon written

                                    4

<PAGE>

         demand by Landlord, given at least thirty (30) days prior to
         the end of the term, at Tenant's sole cost and expense,
         forthwith and with all due diligence, remove any alterations,
         additions, or improvements made by Tenant constructed without
         Landlord's approval, designated by Landlord to be removed, and
         Tenant shall forthwith and with all due diligence, at its sole
         cost and expense, repair any damages to the premises caused by
         such removal.

         B. All work, alterations, additions or improvements, made or
         effected by Tenant, pursuant hereto, to be in accordance with
         applicable codes and permits where required.

                              10. LIENS

Tenant shall keep the premises and the property in which the premises are
situated free from any liens arising out of any work performed, materials
furnished or obligations incurred by or on behalf of Tenant. Landlord may
require, at Landlord's sole option, that Tenant shall provide to
Landlord, at Tenant's sole cost and expense, a lien and completion
bond in the amount equal to one and one-half (1-1/2) times the estimated
cost of any improvements, additions, or alterations in the premises
which the Tenant desires to make, to insure Landlord against any liability for
mechanic's and materialmen's liens and to insure completion of the work.

                               11. INSURANCE

                  A. Liability Insurance. Tenant shall, at Tenant's expense,
                  obtain and keep in force during the term of this Lease, a
                  policy of comprehensive public liability insurance insuring
                  Landlord and Tenant against any liability arising out of
                  ownership, use, occupancy or maintenance of the premises
                  and all areas appurtenant thereto. Such insurance shall be
                  in the amount of not less than five hundred thousand
                  dollars ($500,000.00) for any one accident or occurrence.
                  The limit of any such insurance shall not, however, limit
                  the liability of the Tenant hereunder. Tenant may provide
                  this Insurance under a blanket policy provided that said
                  insurance shall have a Landlord's protective liability
                  endorsement attached thereto. If Tenant shall fail to
                  procure and maintain said insurance, Landlord may, but
                  shall not be required to, procure and maintain same, but at
                  the expense of Tenant. Insurance required hereunder shall
                  be in companies rated A or better in "Best's Key rating
                  Guide." Tenant shall deliver to Landlord, prior to right of
                  entry, copies of policies of liability insurance required
                  herein or certificates evidencing the existence and amounts
                  of such insurance with loss payable clauses satisfactory to
                  Landlord. No policy shall be cancelable or subject to
                  reduction to coverage. All such policies shall be written
                  as primary policies not contributing with and not in excess
                  of coverage which Landlord may carry. Landlord shall be
                  named as an additional insured party, as to Landlord's
                  interests, and maintained by Tenant.

                  B. Fire Insurance by Tenant. Tenant shall pay for and
                  maintain in full force and effect during the term of this
                  Lease, a standard form policy or policies of fire, extended
                  coverage and vandalism, and rental value insurance with
                  standard form or extended

                                     5
<PAGE>

        coverage endorsement covering all exterior glass, whether plate or
        otherwise, and all interior glass and stock in trade, trade
        fixtures, equipment, and other personal property located in the
        premises and used by Tenant in connection with its business.
        Landlord shall be named as an additional insured party, as to
        Landlord's interests, under the insurance coverage hereunder
        required to be provided and maintained by Tenant, without limitation
        hereby.

        C. Fire Insurance by Landlord. Landlord shall maintain in full force
        and effect an insurance policy or policies of fire and extended
        coverage to protect against damage not less than the replacement
        value of the structural improvements of the premises. Tenant shall
        reimburse Landlord for said insurance costs pursuant to Paragraph 3
        of this Lease.

        D. Worker's Compensation Insurance. Tenant shall at all times
        maintain Worker's Compensation Insurance in compliance with
        California Law.

                                  12. UTILITIES

          Tenant shall pay for all water, gas, heat, light, power, sewer
charges, telephone services and all other services and utilities supplied to the
premises, together with any taxes thereon. If any such services are not
separately metered to Tenant, Tenant shall pay a reasonable proportion to be
determined by Landlord of all charges jointly metered with other premises.

                      13. RELEASE AND WAIVER OF SUBROGATION

        A. So long as the fire insurance on the building, containing the
        Leased premises, and so long as the fire insurance on the fixtures,
        goods, wares and merchandise and other property of Tenant, as the
        case may be, are not affected hereby and so long as the cost of the
        respective policies are not increased thereby, the Landlord does
        hereby waive as against Tenant and the Tenant does hereby waive as
        against Landlord any and all claims and demands, which are the
        subject of subrogation, for damages, loss or injury to the Leased
        premises or to the Tenant's fixtures goods, wares and merchandise,
        and other property as the case may be, which shall be caused by or
        result from fire or other perils, events or happenings and which are
        the subject of extended coverage insurance.

        B. Landlord and Tenant hereby agree that each policy of fire and
        extended coverage insurance on the Leased premises or on Tenant's
        fixtures, goods, wares, and merchandise and other property in and
        upon the Leased premises, now in force or which may hereafter be
        obtained by Landlord and Tenant shall be made expressly subject to
        the provisions of this paragraph, and that Landlord's insurers
        hereunder shall waive any right of subrogation against Tenant and
        Tenant's insurers hereunder shall waive any right of subrogation
        against Landlord.

                               14. HOLD HARMLESS

        A. Tenant shall indemnify and hold harmless

                                     6
<PAGE>

        Landlord against and from any and all claims arising from Tenant's
        use of the premises or from the conduct of its business or from any
        activity, work, or other things done, permitted or suffered by the
        Tenant in or about the premises, and shall further indemnify and hold
        harmless Landlord against and from any and all claims arising from
        any breach or default in the performance of any obligation on
        Tenant's part to be performed under the terms of this Lease, or
        arising from any act or negligence of the Tenant, or any officer,
        agent, employee, guest, or invitee of Tenant, and from all costs,
        attorney's fees, and liabilities incurring in or about the defense of
        any such claim or any action or proceeding brought thereon and in
        case any action or proceeding be brought against Landlord shall
        defend the same at Tenant's expense by counsel reasonably
        satisfactory to Landlord. Tenant, as a material part of the
        consideration to Landlord hereby assumes all rise of damage to
        property or injury to persons in, upon or about the premises, from
        any cause other than Landlord's negligence; and Tenant hereby waives
        all claims in respect thereof against Landlord, without limitations
        hereby. Tenant shall give prompt notice to Landlord in case of
        casualty or accidents in the premises.

        B. Landlord or its agents shall not be liable for any loss or damages
        to persons or property resulting from fire, explosion, falling
        plaster, steam, gas, electricity, water or rain which may leak trom
        any part ot the premises or from the pipes, appliances, heating/air
        conditioning or plumbing works therein or about the premises or from
        the roof, street or subsurface or from any other place resulting from
        or caused by dampness or any other cause whatsoever, without
        limitations hereby. Landlord or its agents shall not be liable for
        interference with light, air, heat, or otherwise, or for any latent
        defect in the premises, and shall not be liable for failure of any
        equipment to work, without limitations hereby.

                                  15. SIGN (S)

        A. No sign, placard, picture, name, advertisement or notice, visible
        from the exterior of any Tenant's premises shall be inscribed,
        painted, affixed, or otherwise displayed by any Tenant on any part of
        the premises without prior written consent of Landlord, and Landlord
        shall have the right to remove any such sign, placard, picture, name,
        advertisement or notice at Tenant's expense and without notice to
        Tenant. If Landlord shall have given such consent at any time, such
        consent shall be deemed to relate only to the particular sign,
        placard, picture, name, advertisement or notice so consented to by
        Landlord and shall not be construed as dispensing with the necessity
        of obtaining the specific written consent of Landlord with respect to
        each and every other sign, placard, picture, name, advertisement or
        notice. Land-lord may adopt and furnish to Tenant uniform rules and
        regulations which shall be applicable to all Tenants occupying the
        premises and Tenant agrees to conform to such rules and regulations.
        All approved signs or lettering on doors shall be printed, painted,
        affixed or inscribed at the expense of the Tenant by a person
        approved by Landlord. All signage must comply with applicable
        governmental regulations.

        B. Tenant agrees to install all approved signage within thirty (30)
        days of opening of

                                     7

<PAGE>

        Tenant's business. If signs are not installed by this date, they may
        be installed by Landlord at Tenant's expense.

                         16.  CONDEMNATION OF PREMISES

     Should all or part of said premises be taken by any public or
quasi-public agency or entity under the power of eminent domain during the term
of this Lease:

                  A. Either Landlord or Tenant may terminate this Lease by
                  giving the other sixty (60) days written notice of
                  termination; provided, however, that Tenant cannot
                  terminate this Lease unless the portion of said premises
                  taken by eminent domain is so extensive as to render the
                  remainder of said premises useless for the uses permitted
                  by this Lease.

                  B. Any and all damages and compensation awarded or paid
                  because of the taking, except for amounts paid Tenant for
                  moving expenses or for damage to any personal property or
                  trade fixtures owned by Tenant, shall belong to Landlord, and
                  Tenant shall have no claim against Landlord or the entity
                  exercising eminent domain power for the value of the unexpired
                  term of this Lease.

                  C. Should only a portion of said premises be taken by eminent
                  domain and neither Landlord nor Tenant terminates this Lease,
                  the rent thereafter payable under this Lease shall be reduced
                  by the same percentage that the floor area of the portion
                  taken by eminent domain bears to the floor area of the entire
                  said premises.

                               17. NOTICES

          Except as otherwise expressly provided by law, any and all notices or
other communications required or permitted by this Lease or by law to be served
on or given to either party hereto by the other party hereto shall be in writing
and shall be deemed duly served and given when personally delivered to the
party, Landlord or Tenant, to whom it is directed or any managing employee of
such party or, in lieu of such personal services, when deposited in the United
States mail, first class postage prepaid, addressed to Landlord at 545 12th
Street, Paso Robles, Ca. 93446 and to Tenant at 9900 El Camino Real, Atascadero,
Ca. 93422 . Either party, Landlord or Tenant, may change its address for
purposes of this paragraph by giving written notice of the change to the other
party in the manner provided in this paragraph

                                18. HOLDING OVER

          If Tenant remains in possession of the premises or any part thereof
after the expiration of the term hereof with the express written consent of
Landlord, such occupancy shall be a tenancy from month to month at a rental in
the amount of the last monthly Basic Rent, plus all charges payable hereunder,
and upon all the terms hereof applicable to a month to month tenancy. Tenant
agrees to give Landlord a 90 day notice to terminate tenancy.

                                     8

<PAGE>

                              19. ENTRY BY LANDLORD

          Landlord reserves, and shall at any and all times have, the right to
enter the premises to inspect the same, to submit said premises to prospective
purchasers or Tenants, to post notices of non-responsibility, to repair the
premises and any portion of the building of which the premises are a part that
Landlord may deem necessary or desirable, without abatement of rent, and may for
that purpose erect scaffolding and other necessary structures where reasonably
required by the character of the work to be performed, always providing that the
entrance to the premises shall not be unreasonably blocked thereby, and further
providing that the business of the Tenant shall not be interfered with
unreasonably. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the premises and any other loss occasioned thereby. For
each of the aforesaid purposes, Landlord shall at all times have and retain a
key with which to unlock all of the doors in, upon and about the premises,
excluding Tenant's vaults, safes and files, and Landlord shall have the right to
use any and all means which Landlord may deem proper to open said doors in an
emergency, in order to obtain entry to the premises without liability to Tenant
except for any failure to exercise due care for Tenant's property and any entry
to the premises obtained by Landlord by any of said means or otherwise shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the premises, or any eviction of Tenant from the
premises or any portion thereof.

                               20. ATTORNEY'S FEES

          Should any litigation be commenced between the parties to this Lease
regarding said premises, this Lease, or the rights and duties of either in
relation thereto, the party, Landlord or Tenant, prevailing in such litigation
shall be entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its attorney's fees in the litigation which shall be
determined by the court in such litigation or in a separate action brought for
the purpose.

                              21. TENANT'S DEFAULT

          The occurrence of any one or more of the following events shall
constitute a default and breach of this Lease by Tenant:

                  A. The vacating or abandonment of the premises by Tenant.

                  B. The failure by Tenant to make any payment or rent or other
                  payments required to be made by Tenant hereunder, as and when
                  due, where such failure shall continue for a period of three
                  (3) days after written notice thereafter by Landlord to
                  Tenant.

                  C. The failure by Tenant to observe or perform any of
                  the covenants, conditions, or provisions of this Lease to be
                  observed or performed by the Tenant, other than described in
                  Article 21.B., above, where such failure shall continue for a
                  period of thirty (30) days after written notice thereof by
                  Landlord to Tenant; provided, however, that if the nature of
                  Tenant's default is such that more than thirty (30) days are
                  reasonably required for its cure then Tenant shall not be
                  deemed to be in default if Tenant commences such cure within
                  said thirty (30) day period and thereafter diligently
                  prosecutes such cure to completion.

                  D. The making by Tenant of any general assignment or
                  general arrangement for the benefit of creditors; or the
                  filing by or against Tenant of a petition

                                     9

<PAGE>

                  to have Tenant adjudicated a bankrupt, or a petition for
                  reorganization or arrangement under any law relating to
                  bankruptcy (unless, in the case of a petition filed against
                  Tenant, the same is dismissed within sixty (60) days) : or
                  the appointment of a trustee or a receiver to take
                  possession of substantially all of Tenant's assets located
                  at the Premises or Tenant's interest in this Lease, where
                  possession of Tenant's interest in this Lease is not
                  restored to Tenant within thirty (30) days; or the
                  attachment, execution or other judicial seizure of
                  substantially all of Tenant's assets located at the
                  premises or of Tenant's interest in this Lease, where such
                  seizure is not discharged within thirty (30) days.

                             22. REMEDIES IN DEFAULT

          In the above event of any such default or breach by Tenant, Landlord
may at any time thereafter, in his sole discretion, and without limiting
Landlord in the exercise of a right or remedy whi9h Landlord may have by reason
of such default or breach:

                  A. Terminate Tenant's right to possession of the premises by
                  any lawful means, in which case this Lease shall terminate and
                  Tenant shall immediately surrender possession of the premises
                  to Landlord. In such event, Landlord shall be entitled to
                  recover from Tenant all damages incurred by Landlord by reason
                  of Tenant's default including, but not limited to, the cost of
                  recovering possession of the premises; expenses of reletting;
                  including necessary renovation and alteration of the premises;
                  reasonable attorney's fees; the worth at the time of award by
                  the court having jurisdiction thereof of the amount by which
                  the unpaid rent and other charges and Adjustments called for
                  herein for the balance of the term after the time of such
                  award exceeds the amount of such loss for the same period that
                  Tenant proves could be reasonably avoided; and that portion of
                  any Leasing commission paid by Landlord and applicable to the
                  unexpired term of this Lease. Unpaid installments of rent or
                  other sums bear interest from the date of suit at the maximum
                  legal rate; or

                  B. Maintain Tenant's right to possession, in which
                  case this Lease shall continue in effect whether or not Tenant
                  shall have abandoned the premises. In such event Landlord
                  shall be entitled to enforce all of Landlord's rights and
                  remedies under this Lease, including the right to recover the
                  rent and any other charges and Adjustments as may become due
                  hereunder; or

                  C. Pursue any other remedy now or hereafter available
                  to Landlord under the laws of the State of California.

                             23. DEFAULT BY LANDLORD

          Landlord shall not be in default unless Landlord fails to perform
obligations required of Landlord within a reasonable time, but in no event later
than thirty (30) days after written notice by Tenant to Landlord specifying
wherein Landlord has failed to perform such obligation; provided, however, that
if the nature of Landlord's obligation is such that more than thirty (30) days
are required for performance then

                                     10
<PAGE>

Landlord shall not be in default if Landlord commences performance within
such thirty (30) day period and thereafter diligently prosecutes the same to
completion.

                               24. RECONSTRUCTION

                  A. In the event the premises are damaged by fire or other
                  perils covered by extended coverage insurance, Landlord agrees
                  to forthwith repair same, and this Lease shall remain in full
                  force and effect. Tenant shall be entitled to a proportionate
                  reduction of the Basic Rent from the date of the damage and
                  while such repairs shall reasonably interfere with the
                  business carried on by the Tenant in the premises. If the
                  damage is due to the fault or neglect of Tenant or its
                  employees, there shall be no abatement of rent.

                  B. In the event the premises are damaged as a result of any
                  cause other then the perils covered by fire and extended
                  coverage insurance, then Landlord shall forthwith repair the
                  same, provided the extent of the destruction be less than ten
                  percent (10%) of the then full replacement cost of the
                  premises. In the event the destruction of the premises is to
                  an extent of ten percent (10%) or more of the full replacement
                  cost, then Landlord shall have the option:

                       (1) To repair or restore such damage, this Lease
                           continuing in full force and effect, but the Basic
                           Rent to be proportionately reduced as hereinabove
                           in this Article provided: or

                       (2) To give notice to Tenant at any time within
                           sixty (60) days after such damage, terminating this
                           Lease as of the date specified in such notice, which
                           date shall no less than thirty (30) days and no more
                           than sixty (60) days after the giving of such notice.
                           In the event of giving such notice, this lease shall
                           expire and all interest of the Tenant in the Premises
                           shall terminate on the date so specified in such
                           notice and the rent, reduced by a proportionate
                           amount, based upon the extent, if any, to which such
                           damage materially interfered with the business
                           carried on by the Tenant in the Premises, shall be
                           paid up to the date of such termination.

                  C. Notwithstanding anything to the contrary provided in this
                  Lease, Landlord shall not have the obligation whatsoever to
                  reconstruct or restore the premises when the damage resulting
                  from any casualty under this article occurs during the last
                  six (6) months of the term of this Lease or any extension
                  thereof.

                  D. Landlord shall not be required to repair any injury or
                  damage by fire or other cause, or to make any repairs or
                  replacements of any Leasehold improvements, fixtures, or
                  other personal property of Tenant.

                                     11

<PAGE>

                  E. Except for uninsured losses less than ten percent (10%) as
                  described in 26-B. herein, notwithstanding anything otherwise
                  or to the contrary provided in this Lease( Landlord shall at
                  no time and in no event ever be under obligation or liability
                  to make or effect reconstruction, repairs, or replacement of
                  the subject premises, or portions thereof, or at all, except
                  with and from and to the extent of insurance proceeds received
                  by Landlord in connection with or arising out of any related
                  insured loss, without limitations hereby.

                     25. PARKING AND COMMON AREAS; RULES AND REGULATIONS

                  A. The Landlord shall keep said automobile parking and common
                  areas in a reasonably neat, clean and orderly condition and
                  shall reasonably repair any damage to the facilities thereof,
                  but all expenses in connection with said automobile parking
                  and common areas shall be charged and prorated in ~he manner
                  as set forth in Paragraph 3 herein.

                  B. Notwithstanding anything otherwise herein contained, the
                  Landlord reserves the right to hereafter, and at any time,
                  execute and effectuate cross parking agreements and/or
                  easements with adjacent property owners, and Tenant hereby
                  expressly consents to such.

                  C. Tenant, for the use and benefit of Tenant, customers,
                  licensees and Sub-Tenants, shall have the non-exclusive right
                  in common with Landlord, and other present and future owners,
                  Tenants and their customers, licensees and Sub-Tenants, to
                  reasonably use said common and parking areas during the entire
                  egress, and automobile parking.

                  D. The Tenant, in the use of common areas and parking areas,
                  agrees to comply with such reasonable rules, regulations, and
                  charges as the Landlord may adopt or require from time to time
                  for the orderly and proper operation of common areas and
                  parking areas. Landlord in his sole discretion reserves the
                  right from time to time to modify said rules. The additions to
                  and modifications of such rules shall be binding upon Tenant
                  upon delivery of a copy thereof to Tenant. Such rules may
                  include, but shall not be limited to the following:

                     (1) The regulation of the storage, removal, and disposal of
                         Tenant's refuse and other rubbish at the sole cost
                         and expense of Tenant; and

                     (2) The limiting and/or restricting of employee parking
                         to limited designated areas or areas at time to time,
                         and in connection herewith, Landlord reserves the
                         right to so limit or restrict employee use of parking
                         facilities and time of parking, and

                                     12
<PAGE>

                         Tenant consents to such and agrees to cooperate with
                         Landlord in connection therewith.

                     (3) All interior common areas (lobby, fax and copy
                         room, conference room, hallways) are non-smoking
                         areas.

                     (4) The last person leaving the building is responsible
                         for locking main door to lobby. Landlord assumes no
                         responsibility for Tenants' losses or vandalism.

                     (5) Washing/Cleaning of vehicle in parking lot
                         is prohibited.

                            26. TENANT'S PERSONAL PROPERTY

         Any trade fixtures, signs and other personal property of Tenant not
         permanently affixed to the Premises shall remain the property of the
         Tenant. Tenant shall have the right, provided Tenant is not then in
         default under the terms of this Lease, at any time and from time to
         time during the term hereof, to remove any and all trade fixtures,
         signs and other personal property which it may have stored or installed
         in the Premises. If Tenant is in default, Landlord shall have the right
         to take exclusive possession of such property and to use the same rent
         and charge free, and the Landlord, whether or not it takes possession
         of such property shall have the benefit of any lien thereon permitted
         under applicable law and, if such possession is taken or such lien is
         asserted by Landlord in any manner, including, but not limited to,
         operation of law, Tenant shall not remove or permit the removal of said
         trade fixtures, signs and other personal property which shall become
         the property of the Landlord, without further act by either party
         hereto, unless Landlord elects to require their removal in which case
         Tenant shall promptly remove the same and restore the Premises to their
         prior condition at Tenant's expense.

                              27. OFFSET STATEMENT

         Tenant shall at any time and from time to time upon not less than
         twenty (20) days prior written notice from Landlord execute,
         acknowledge and deliver to Landlord a statement in writing, (a)
         certifying that this Lease is unmodified and in full force and
         effect (or, if modified, stating the nature of such modification and
         certifying that this Lease as so modified, is in full force and
         effect), and the date to which the rent and other charges are paid
         in advance, if any, and (b) acknowledging that there are not, to
         Tenant's knowledge, any uncured defaults on the part of Landlord
         thereunder, or specifying such defaults if any are claimed. Any such
         statement may be relied upon by any prospective purchaser or
         encumbrancer of all or any portion of the Building and of the land
         on which the Building is situated. If Tenant fails to deliver the
         offset statement within twenty (20) days, Tenant irrevocably
         constitutes and appoints Landlord as Tenant's special
         attorney-in-fact to execute and deliver the statement to any third
         party on Tenant's behalf.

                            28. MORTGAGEE PROTECTION

         Tenant agrees to send to any mortgagees and/or deed of trust
         holders, by registered mail, a copy of any notice of default served
         by Tenant upon Landlord, provided that prior to such notice Tenant
         has been notified, in writing (by way of notice of assignment of
         rents or otherwise) of the addresses of such mortgagees and/or deed
         of trust holders. Tenant further agrees that if Landlord shall have
         failed to cure or commence curing such default within the time
         provided for in this Lease,

                                     13

<PAGE>

         any such mortgagees and/or deed of trust holders shall have an
         additional thirty (30) days within which to cure such default or if
         such default is not reasonable susceptible of cure within that time,
         then such additional time as may be reasonably necessary if within
         such thirty (30) days, any mortgagee and/or deed of trust holder has
         commenced and is diligently pursuing the remedies necessary to cure
         such default, (including but not limited to commencement of
         foreclosure proceeding), in which event this Lease shall not be
         terminated when such remedies are being diligently pursued.

                      29. AUTHORITY OF PARTIES AND BINDING EFFECT

         If Tenant is a corporation each individual executing this Lease on
         behalf of said corporation represents and warrants that he is duly
         authorized to execute and deliver this Lease on behalf of said
         corporation, in accordance with a duly adopted resolution of the
         board of directors of said corporation or in accordance with the
         by-laws of said corporation, and this Lease is binding upon said
         corporation in accordance with its terms.

                                 30. BROKERS

         Tenant and Landlord warrant that they have had no dealings with any
         real estate broker or agents in connection with the negotiation of
         this Lease and it knows of no other real estate broker or agent who
         is or may be entitled to a commission in connection with this Lease.
         In connection with this Lease, Tenant and Landlord agree to
         indemnify and save each other harmless from any claims for
         commissions by brokers or agents.

                              31. PLATS AND RIDERS

         Clauses, plats and riders, if any, signed by the Landlord and the
         Tenant and endorsed on or affixed to this Lease are a part hereof.

                              32. MARGINAL HEADINGS

         The marginal headings and Article titles of the Articles of this
         Lease are not a part of this Lease and shall have no effect upon the
         construction or interpretation of any part hereof.

                        33. SALE OF PREMISES BY LANDLORD

         In the event of any sale of the Building, Landlord shall be and is
         hereby entirely freed and relieved of all liability under any and
         all of its covenants and obligations contained in or derived from
         this Lease arising out of any act, occurrence or omission

                                     14
<PAGE>

         occurring after the consummation of such sale; and the purchaser, at
         such sale or any subsequent sale of the Building shall be deemed,
         without any further agreement between the parties or their
         successors in interest or between the parties and any such
         purchaser, to have assumed and agreed to carry out any and all of
         the covenants and obligations of the Landlord under this Lease.
         Nothing herein shall restrict or limit the right of the Landlord to
         sell, assign transfer or encumber the Building in any way Landlord
         deems appropriate in its sole discretion.

                           34. GOVERNING LAW AND VENUE

         The laws of the State of California shall govern the construction,
         validity, performance and enforcement of this Lease. Should either
         party institute legal suit or action for enforcement of any
         obligation contained herein, it is agreed that the venue of such
         suit or action shall be in San Luis Obispo, County, California. This
         Lease shall not be construed either for or against Landlord or
         Tenant, but this Lease shall be interpreted in accordance with the
         general tenor of the language in an effort to reach an equitable
         result.

                           35.   BINDING ON SUCCESSORS AND ASSIGNS

         This Lease shall be binding on and shall inure to the benefit of the
         heirs, executors, administrators, successors, and assigns of the
         parties, Landlord and Tenant, hereto, but nothing in this paragraph
         shall be construed as a consent by Landlord to any assignment of
         this Lease or any interest therein by Tenant except as provided in
         Paragraph 7 of this Lease.

                                   36. WAIVER

         The waiver of any breach of any of the provisions of this Lease by
         Landlord shall not constitute a continuing waiver or a waiver of any
         subsequent breach by Tenant either of the same or of another
         provision of this Lease.

                              37. JOINT OBLIGATION

         If there be more than one Tenant the obligations hereunder imposed
         shall be joint and several.

                                    38. TIME

         Time is expressly declared to be the essence of this Lease and each
         and all of its provisions in which performance is a factor.

                                     15

<PAGE>

                                 39. RECORDATION

         Neither Landlord nor Tenant shall record this Lease, but a short
         form memorandum hereof may be recorded at the request of Landlord.

                              40. QUIET POSSESSION

         Upon Tenant paying the rent reserved hereunder and observing and
         performing all of the covenants, conditions and provisions on the
         Tenant's part to be observed and performed hereunder, as far as
         Landlord is concerned, Tenant shall have quiet possession of the
         premises for the entire term hereof, subject to all provisions of
         this Lease.

                             41. INABILITY TO PERFORM

         This Lease and the obligations of the Tenant shall not be affected
         or impaired because the Landlord is unable to fulfill any of its
         obligations hereunder or is delayed in doing so, if such inability
         or delay is caused by reason of strike labor troubles, act of God,
         or any other cause beyond the reasonable control of the Landlord.

                             42. PARTIAL INVALIDITY

         Any provision of this Lease which shall prove to be invalid, void,
         or illegal shall in no way affect, impair or invalidate any other
         provision hereof and such other provision shall remain in full force
         and effect.

                            43. CUMULATIVE REMEDIES

         No remedy or election hereunder shall be deemed exclusive but shall,
         whenever possible, be cumulative with all other remedies at law or
         in equity.

                                44. SUBORDINATION

         This Lease is and shall be subordinate to any encumbrances not of
         record or effected or recorded after the date of this Lease
         affecting the building, premises, common areas, and land of which
         the Premises are a part, without limitations hereby. Such
         subordination is effective without any further act or consent of
         Tenant. Landlord shall from time to time request that Tenant execute
         and deliver documents or

                                     16

<PAGE>

         instruments that may be required by a lender to effectuate any
         subordination. If Tenant fails to execute and deliver any such
         documents or instruments, Tenant irrevocably constitutes and
         appoints Landlord as Tenant's special attorney in fact to execute
         and deliver any such documents or instruments.

                    45. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS

         This Lease contains all prior agreements of the parties with respect
         to any matter mentioned herein. No prior agreement or understanding
         pertaining to any such matter shall be effective. This Lease may be
         modified in writing only, signed by the parties in interest at the
         time of the modification.

                         46. EXTENSION OF LEASE AGREEMENT

         Subsequent to the initial term, tenant has the option to extend this
         lease for three (3) five (5) year extensions. Tenant must give
         notice to Landlord three (3) months prior to the termination date of
         this Lease,of Tenants wishes and intentions to extend and
         renegotiate this Lease for another term.

EXECUTED ON MARCH 31, 1999, AT PASO ROBLES, SAN LUIS OBISPO COUNTY, CA.

LANDLORD:                                                  TENANT:

----------------------------------                ------------------------------
GWEN R. PELFREY, SECRETARY                        LAWRENCE P. WARD, PRES/CEO
HERITAGE OAKS BANCORP                             HERITAGE OAKS BANK

                                     17

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