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                                                                  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

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                  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.

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                               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

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        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

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         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

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        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

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        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

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        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.

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                              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

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                  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

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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.

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<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

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<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,


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<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

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<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.

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<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

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