Exhibit
        10.42
  **LEASE**
  BY
        THIS
        LEASE dated July 15, 2005, The Silva Family Trust dated July 25, 1992,
        ("Lessor") leases to Heritage Oaks Bank, ("Lessee”) that certain real property,
        (“premises") in the City of Atascadero, County of San Luis Obispo, State of
        California, commonly known as 9900 El Camino Real, Atascadero, California.
        The
        premises consist of a commercial lot and two story building with on-site
        parking.
 
 ARTICLE
        1. TERM OF LEASE
 Original
        Term
 Section
        1.01. This lease shall be for a term of five (5) years commencing at 12:00
        a.m.
        on August 13, 2005, and ending at 11:59 p.m. on August 12, 2010 unless sooner
        terminated, or extended, as provided in this agreement.
 
 Extended
        Term
 Section
        1.02. Should Lessee perform all the terms and conditions of this lease for
        the
        full term specified in Section 1.01 of this lease, Lessee may extend this
        lease
        for four (4) additional terms of five (5) years each, commencing on expiration
        of the previous term, by giving Lessor written notice of Lessee's desire
        to do
        so at least ninety (90) days prior to expiration of the immediately preceding
        term specified above.
 
 Hold
        Over
 Section
        1.03. Should Lessee hold over and continue in possession of the premises
        after
        expiration of the term of this lease or any extension thereof, Lessee's
        continued occupancy of the premises shall be considered a month-to-month
        tenancy
        subject to all of the terms and conditions of this lease.
 
 Lessor's
        Inability to Deliver Possession
 Section
        1.04. Should Lessor for any reason be unable to deliver possession of the
        premises to Lessee on the date specified in Section 1.01 of this lease as
        the
        date on which the term of this lease is to commence, this lease shall not
        be
        void or voidable nor shall Lessor be liable to Lessee for any loss or damage
        resulting from such failure to deliver possession to Lessee so long as Lessor
        has exercised, and continues to exercise, reasonable diligence to deliver
        possession of the premises to Lessee. No rent shall, however, accrue or become
        due from Lessee to Lessor under this lease until the actual physical possession
        of the premises is delivered, or the right to actual physical possession
        of the
        premises is delivered, or the right to actual, unrestricted physical possession
        of the premises under this lease is tendered, by Lessor to Lessee. Furthermore,
        the term of this lease shall not be extended by Lessor's inability to deliver
        possession of the premises to Lessee on the date specified in Section 1.01
        for
        commencement of the term of this lease.
  ARTICLE
        2. RENT
 Minimum
        Rent Section 2.01. For the first five (5) years of the term hereof, Lessee
        agrees to pay to Lessor a fixed minimum rental for the use and occupancy
        of the
        premises of $5,026.45 per month payable on the first (1st) day of each and
        every
        month commencing September 1, 2005, prorated for any partial months, at the
        mailing address of Lessor at 6850 Adelaida Road, Paso Robles, CA 93446,
        California, or any such other place as Lessor may from time to time designate
        by
        written notice delivered to Lessee.
 
 Rent
        Adjustment
 Section
        2.02. The minimum monthly rent provided for herein shall be subject to
        adjustment at the end of the fifth year of this lease, ("the adjustment date")
        as follows:
 
 The
        base
        for computing the adjustment is The Consumer price Index for All Items for
        All
        Urban Consumers in the Los Angeles-Long Beach-Anaheim Metropolitan Area,
        published by the United States Department of Labor, Bureau of Labor Statistics
        ("Index"), which is last published prior to the date of the commencement
        of the
        term ("Beginning Index"). If the Index last published prior to the adjustment
        date ("Extension Index") has increased over the Beginning Index, the minimum
        monthly rent for the following term (until the next rent adjustment) shall
        be
        set by multiplying $5,026.45 by a fraction, the numerator of which is the
        Extension Index and the denominator of which is the Beginning Index. Upon
        adjustment of the minimum monthly rent as provided in this section, the parties
        shall immediately execute an amendment to this lease stating the new minimum
        monthly rent, which shall be subject to adjustment on the following adjustment
        date.
  •
            PAGE • 1
•
  
 If
        the
        Index is changed so that the base year differs from that used immediately
        preceding the month in which the term commences, the Index shall be converted
        in
        accordance with the conversion factor published by the United States Department
        of Labor, Bureau of labor Statistics. If the Index is discontinued or revised
        during the term, such other government index or computation with which it
        is
        replaced shall be used in order to obtain substantially the same result as
        would
        be obtained if the Index had not been discontinued or revised.
 
 If
        Lessee
        exercises its options for additional lease terms, the rent for each new term
        shall be determined using the same computation, using the base rent from
        the
        previous term as the multiplier and the Extension Index from the previous
        term
        as the denominator of the fraction.
 
 Utilities
        and Taxes
 Section
        2.03.
 (a)
        This
        is a net lease, and Lessee shall pay all utilities, including electricity,
        gas,
        water, sewer, trash collection, and telephone, and real property taxes assessed
        against the property. Lessor shall provide Lessee with real property tax
        bills
        as they are received to facilitate timely payment of the taxes by
        Lessee.
 
 Personal
        Property Taxes
 (b)
        Lessee shall pay before they become delinquent all taxes, assessments, or
        other
        charges levied or imposed by any governmental entity on the personal property
        placed by Lessee in, on, or about the premises.
 
 Late
        Charges
 Section
        2.04. If any installment of rent or other payment required to be paid by
        Lessee
        to Lessor is not paid within ten (10) days of the date on which it is due,
        a
        late charge equal to five percent (5%) of the late payment shall be due from
        Lessee to Lessor to compensate Lessor for the additional administrative work
        caused by such default and to compensate Lessor for the loss of use of such
        defaulted payment. The late charge herein shall be in addition to any other
        remedy which Lessor may have hereunder for such default.
 
 ARTICLE
        3. USE OF PREMISES
 Permitted
        Use
 Section
        3.01. The premises shall, during the term of this lease and any extensions
        thereof, be used for the purpose of operating a retail banking branch office,
        for uses normally incident to such purpose, and for no other purpose without
        the
        prior written consent of Lessor.
 
 Insurance
        Hazards
 Section
        3.02. Lessee shall not commit or permit the commission of any acts on the
        premises or use or permit the use of the premises in any manner that will
        increase the existing rates for or cause the cancellation of any fire,
        liability, or other insurance policy insuring the premises or the improvements
        on the premises.
 
 Waste
        or
        Nuisance
 Section
        3.03 Lessee shall not commit or permit the commission by others of any waste
        on
        the premises; Lessee shall not maintain, commit, or permit the maintenance
        or
        commission of any nuisance as defined in Section 3479 of the California Civil
        Code on the premises; and Lessee shall not use or permit the use of the premises
        for any unlawful purpose.
  •
            PAGE • 2
•
  
 Compliance
        with Law
 Section
        3.04.  Lessee
        shall at Lessee's own cost and expense comply with all statutes, ordinances,
        regulations, and requirements of all governmental entities, both Federal
        and
        State and County or Municipal, relating to lessee's use and occupancy of
        the
        premises whether such statutes, ordinances, regulations, and requirements
        are
        now in force or later enacted. The judgment of any court of competent
        jurisdiction, or the admission by Lessee in a proceeding brought against
        Lessee
        by any government entity, that Lessee has violated any such statute, ordinance,
        regulation, or requirement shall be conclusive as between Lessor and Lessee.
        Lessor agrees that any requirements of the Municipal, State, or Federal
        authorities which require alteration of Lessor's building shall not be the
        responsibility of Lessee, unless required because of an act or a use of the
        premises by Lessee.
  ARTICLE
        4. ALTERATIONS AND REPAIRS
 Conditions
        of Premises
 Section
        4.01. By entering into possession of the premises at the commencement of
        the
        lease term, Lessee accepts the premises in their present condition and
        stipulates with Lessor that the premises are in good, clean, safe, and
        tenantable condition. Lessee further represents to Lessor that the premises
        have
        been inspected by Lessee and that it has been assured by means independent
        of
        Lessor of the truth of all facts material to this lease and that the premises
        are being leased by Lessee as a result of its inspection and investigation
        and
        not as a result of any representations made by Lessor.
 
 Maintenance
        by Lessor
 Section
        4.02. Lessor shall, at its own cost and expense, maintain in good condition
        and
        repair the exterior roof and the foundations of the premises; provided that
        Lessor shall not be liable for any damages to Lessee or the property of Lessee
        resulting from Lessor's failure to make any repairs required by this section
        unless written notice of the need for such repairs has been given to Lessor
        and
        Lessor has failed for a reasonable period, not exceeding 30 days after receipt
        of the notice, unless prevented by causes not the fault of the Lessor, to
        make
        the needed repairs; provided, further, that Lessor shall promptly be reimbursed
        by Lessee for the full cost of any repairs made pursuant to this section
        required because of the negligence or other fault, other than normal and
        proper
        use, of Lessee or its employees or sublessees, if any. Lessee shall notify
        Lessor by personal delivery or certified mail of any unsafe conditions in
        or
        about the premises. Lessor shall not be liable to Lessee for any liability
        relating to any unsafe conditions on the premises or common areas of which
        Lessee is aware or reasonably should have been aware and for which notice
        was
        not given to Lessor by Lessee.
 In
        the
        event Lessor fails to so maintain the above-described components of the
        Premises, Lessee is hereby authorized to do so if reasonably necessary to
        protect Lessee's interest hereunder and to deduct the amount expended in
        performing Lessor's duty from the rent installment next accruing; provided,
        however, that Lessee may not deduct amounts in excess of one (1) month’s rent in
        any twelve month period without Lessor's prior written consent. Lessee shall
        provide Lessor with written receipts for all sums so deducted, showing the
        amount, to whom paid and purpose of such expenditures.
  Maintenance
        by Lessee
 Section
        4.03.
 (a)  Except
        as
        expressly provided in Section 4.02 above, Lessee shall, at its sole cost
        and
        expense, maintain all portions of the premises as well as all improvements
        on
        the premises, including but not limited to the interior walls, window glass,
        heating, ventilation and air conditioning systems in premises, in good order
        and
        repair and in as safe and clean a condition as they were when received by
        Lessee
        from Lessor, reasonable wear and tear excepted.
 (b)  Should
        Lessee fail to maintain the premises as set forth above, Lessor may, at Lessor's
        option, perform such maintenance on behalf of Lessee. In such event, Lessee
        shall promptly, on written demand, reimburse Lessor for all cost and expense
        incurred by Lessor in performing Lessee's maintenance obligations.
 
 Alterations
        and Liens
 Section
        4.04. Lessee shall not make or permit any other person to make any alterations
        to the premises without the written consent of Lessor. Lessee shall keep
        the
        premises free and clear from any and all liens, claims, and demands for work
        performed, materials furnished, or operations conducted on the premises at
        the
        request of Lessee. Furthermore, any and all alternations, additions,
        improvements, and fixtures, except furniture and trade fixtures, made or
        placed
        in or on the premises by Lessee or any other person shall, upon termination
        of
        this lease, become the property of Lessor and remain on the premises; provided,
        however, that Lessor shall have the option upon termination of this lease
        of
        requiring Lessee, at Lessee's sole cost and expense, to remove any or all
        of
        such alterations, additions, improvements, or fixtures from the
        premises.
  •
            PAGE • 3
•
  
 
 Inspection
        by Lessor
 Section
        4.05. Lessee shall permit Lessor to enter the premises during business hours
        for
        the purpose of inspection, or for the purpose of posting notices of
        non-liability for alterations, additions or repairs, or for the purpose of
        placing upon the premises any "For Sale" signs, without any rebate of rent
        and
        without any liability to Lessee for any loss of occupation or quiet enjoyment
        of
        the premises; and shall permit Lessor, at any time within one hundred fifty
        (150) days prior to the expiration of this lease, to place upon the premises
        any
        "For Lease" signs. Entries made by Lessor may not unreasonably interfere
        with
        the conduct of Lessee's business.
 
 Surrender
        of Premises
 Section
        4.06. On expiration or sooner termination of this lease, or any extensions
        or
        renewals of this lease, Lessee shall promptly surrender and deliver the premises
        to Lessor in as good condition as they are at the date of this lease, reasonable
        wear and tear excepted.
 
 ARTICLE
        5. INDEMNITY AND INSURANCE
 Hold-Harmless
        Clause
 Section
        5.01. Lessee agrees to indemnify and hold Lessor harmless from all claims,
        liability, loss, damage, or expenses resulting from Lessee's occupation and
        use
        of the premises, specifically including, without limitation, any claim,
        liability, loss, or damage arising by reason of:
 (a)
        The
        death or injury of any person or persons, including Lessee or any person
        who is
        an employee or agent of Lessee, or by reason of the damage to or destruction
        of
        any property, including property owned by Lessee, its agent or employee,
        and
        caused or allegedly caused by either the condition of the premises, or some
        act
        or omission of Lessee or of its agent, contractor, employee, servant, or
        sublessee on the premises;
 (b)  Any
        work
        performed on the premises or materials furnished to the premises at the request
        of Lessee, its agent or employee;
 (c)  Lessee's
        failure to perform any provision of this lease or to comply with any requirement
        imposed on Lessor or the leased premises by any duly authorized governmental
        agency or political subdivision.
  Notwithstanding
        the above, Lessee shall be under no duty to indemnify and hold Lessor harmless
        from any liability, claims, or damages arising because of any grossly negligent,
        intentional or willful acts of Lessor, its agent or employee acting in the
        course and scope of their agency or employment.
 
 Liability
        Insurance
 Section
        5.02. Lessee shall, at its own cost and expense, maintain during the entire
        term
        of this lease and any renewals or extensions of the lease, a broad form
        comprehensive coverage policy of public liability insurance issued by an
        insurance company acceptable to Lessor and insuring Lessee and Lessor against
        loss or liability caused by or connected with Lessee's occupation and use
        of the
        premises under this lease in amounts not less than:
 (a)  $1,000,000.00
        combined single limit for injury to or death as a result of any one accident
        or
        incident.
  Such
        public liability insurance and property damage insurance shall insure
        performance of Lessee of the indemnity provisions of Section 5.01 above.
        Lessor
        shall be named as an additional insured in the policy.
 
 Fire
        and
        Casualty Insurance
 Section
        5.03. Lessee shall, at Lessee's own cost and expense, at all times during
        the
        term of this lease keep all furniture, fixtures and equipment located on
        the
        premises insured for their full insurable value by insurance companies
        authorized to issue such insurance in California against loss or destruction
        by
        fire and the perils commonly covered under the standard extended coverage
        endorsement to fire insurance policies in San Luis Obispo County. Any loss
        payable under such insurance shall be payable to Lessee and Lessor as their
        interests may appear. Any proceeds received because of a loss covered by
        such
        insurance shall be used and applied in the manner required by Section 6.06
        of
        this lease.
  •
            PAGE • 4
•
  
 Deposit
        of Insurance with Lessor
 Section
        5.04. Lessee shall within 10 days after the execution of this lease and promptly
        thereafter when any policy is replaced, rewritten, or renewed, deliver to
        Lessor
        a copy of each insurance policy required by this lease or a certificate executed
        by the insurance company or companies or their authorized agent evidencing
        such
        policy or policies.
  ARTICLE
        6. SIGNS AND TRADE FIXTURES
 Installation
        and Removal of Trade Fixtures
 Section
        6.01. Lessee shall have the right at any time, at Lessee's sole cost and
        expense, to install and affix in, to, or on the premises such items, ("trade
        fixtures"), for use in Lessee's trade or business as Lessee may deem advisable.
        Any trade fixtures which can be removed without structural damage to the
        premises shall remain the property of the Lessee and may be removed by Lessee
        at
        any time prior to the termination of this lease. Any damage caused by the
        removal of trade fixtures shall be repaired by Lessee at Lessee's sole cost
        and
        expense.
 
 Unremoved
        Trade Fixtures
 Section
        6.02. Any trade fixtures which are not removed from the premises by Lessee
        within ten (10) days after the termination, regardless of cause, of this
        Lease
        shall be deemed abandoned by Lessee and shall automatically become the property
        of Lessor as owner of the real property to which they are affixed, unless
        Lessor
        notifies Lessee, in writing, of Lessor's election to have Lessee remove such
        trade fixtures and to repair any damage caused thereby. Upon election by
        Lessor
        to require Lessee to remove such trade fixtures, Lessee shall have fifteen
        (15)
        days from the date of the written notice in which to remove trade fixtures
        and
        repair any damage caused by such removal. If Lessee fails to remove the trade
        fixtures and/or repair any such damage, Lessor may do so at Lessee's sole
        cost
        and expense, including any costs of storing such property.
 
 Signs
 Section
        6.03. Lessee may place and maintain, on or in any exterior door, wall, or
        window
        of the premises, any sign, awning, canopy, marquee, or other advertising
        provided such sign, awning, canopy, marquee, or other advertising is in
        compliance with then existing governmental regulations affecting the premises.
        Lessee may place any decoration, lettering, or advertising matter on the
        glass
        of any exterior window of the premises. Lessee shall maintain such sign,
        awning,
        canopy, marquee, or other advertising in good appearance and repair. On
        termination of this lease, any of the items mentioned in this section not
        removed from the premises by Lessee on termination of this lease may be removed
        by Lessor.
 
 Partial
        Destruction
 Section
        6.04. Should premises be partially destroyed by any cause not the fault of
        Lessee, this lease shall continue in full force and effect and Lessor, at
        Lessor's own cost and expense, shall promptly commence the work of repairing
        and
        restoring the premises to their prior condition providing such work can be
        accomplished under all applicable governmental laws and regulations within
        90
        working days at a cost not exceeding 55 percent of the total replacement
        cost of
        the premises.
 
 Total
        Destruction
 Section
        6.05. Should the premises be so far destroyed by any cause not the fault
        of
        Lessee that they cannot be repaired or restored to their former condition
        within
        90 working days or at a cost not exceeding 55 percent of the total replacement
        cost of the premises, Lessor may at Lessor's option either:
 (a)  Continue
        this lease in full force and effect by repairing and restoring, at Lessor's
        own
        cost and expense, the premises to their former condition; or
 (b)  Terminate
        this lease by giving Lessee written notice of such termination.
 
 Insurance
        Proceeds
 Section
        6.06. Any insurance proceeds received by Lessor because of the total or partial
        destruction of the premises or the building on the premises shall be the
        sole
        property of Lessor, free from any claims of Lessee, and may be used by Lessor
        for whatever purpose Lessor may desire.
  •
            PAGE • 5
•
  
 Abatement
        of Rent
 Section
        6.07. Should Lessor elect under Section 6.05 of this lease or be required
        under
        Section 6.04 of this lease to repair and restore the premises to their former
        condition following partial or total destruction:
 (a)  Lessee
        shall not be entitled to any damages for any loss or inconvenience sustained
        by
        Lessee by reason of the making of such repairs and restoration;
 (b)  Lessor
        shall have full right to enter the premises and take possession of so much
        of
        the premises, including the whole premises, as may be reasonably necessary
        to
        enable Lessor promptly and efficiently to carry out the work of repair and
        restoration; and
 (c)  The
        fixed
        rent payable by Lessee to Lessor pursuant to Section 2.01 shall be abated
        to the
        extent and for the time Lessee is prevented from using the whole of the
        premises.
 
 Total
        Condemnation
 Section
        6.08. Should, during the term of this lease or any renewal or extension,
        title
        and possession of all of the premises be taken under the power of eminent
        domain
        by any public or quasi-public agency or entity, this lease shall terminate
        as of
        12:01 a.m. on the date actual physical possession of the premises is taken
        by
        the agency or entity exercising the power of eminent domain and both Lessor
        and
        Lessee shall be released from all obligations, except those specified in
        Section
        6.12, under this lease.
 
 Termination
        Option for Partial Condemnation
 Section
        6.09. Should, during the term of this lease or any renewal or extension,
        title
        and possession of only a portion of the premises be taken under the power
        of
        eminent domain by any public or quasi-public agency or entity, Lessee may,
        at
        Lessee's option, terminate this lease if, in Lessee’s sole opinion, the taking
        makes the operation of Lessee’s business impractical or uneconomical for Lessee.
        Lessee shall exercise its option by giving written notice to Lessor not later
        than 30 days after actual physical possession of the portion subject to the
        eminent domain power is taken by the agency or entity exercising that power.
        This lease shall terminate as of 12:01 A.M. on the date the notice is deemed
        given to Lessor but the minimum rent specified in Section 2.01 shall be reduced
        in the manner specified in Section 6.07 from the date of taking to the date
        of
        termination of the lease.
 
 Partial
        Condemnation without Termination
 Section
        6.10. Should Lessee fail to exercise the option described in Section 6.09,
        then,
        in that event:
 (a)  This
        lease shall terminate as to the portion of the premises taken by eminent
        domain
        as of 12:01 A.M. on the day, herein called the "date of taking," actual physical
        possession of that portion of the premises is taken by the agency or entity
        exercising the power of eminent domain;
 (b)  The
        fixed
        rent specified in Section 2.01 shall, after the date of taking, be reduced
        by an
        amount that bears the same ratio to the fixed rent specified in Section 2.01
        as
        the square footage of the portion of the premises taken under the power of
        eminent domain bears to the total square footage of the premises;
        and
 (c)  Lessor,
        at Lessor's own cost and expense, will remodel and reconstruct the building
        remaining on the portion of the premises not taken by eminent domain into
        a
        single efficient architectural unit as soon after the date of taking, or
        before,
        as can be reasonably done; provided, however, that the rent specified in
        this
        lease shall not be abated or reduced, except as provided in subparagraph
        (b) of
        this section, during such remodeling and reconstruction.
 
 Condemnation
        Award
 Section
        6.11. Should, during the term of this lease or any renewal or extension,
        title
        and possession of all or any portion of the premises be taken under the power
        of
        eminent domain by any public or quasi-public agency or entity, the portion
        of
        the compensation or damages for the taking awarded to each of the parties
        to
        this lease, Lessor and Lessee, shall belong to and be the sole property of
        the
        party to whom it is awarded. Lessee shall be entitled to that portion of
        the
        compensation or damages awarded for the eminent domain taking that represents
        (1) reasonable value of Lessee's rights under this lease for the unexpired
        term
        of this lease; (2) the cost or loss sustained by Lessee because of the removal
        of Lessee's trade fixtures, equipment and furnishings from the portion of
        the
        premises taken by eminent domain; and (3) the damages to Lessee caused by
        the
        reduction or elimination of Lessee’s business opportunity as a result of the
        taking.
  •
            PAGE • 6
•
  
 Arbitration
        of Condemnation Award
 Section
        6.12. Should separate awards not be made to Lessor and Lessee for the taking
        by
        eminent domain of all or any portion of the premises, and should Lessor and
        Lessee be unable to agree on the manner the total award is to be divided
        between
        them pursuant to Section 6.11, the proper division of the award between Lessor
        and Lessee shall be settled by arbitration under the Commercial Rules for
        Arbitration prescribed by the American Arbitration Association
  ARTICLE
        7. DEFAULT, ASSIGNMENT, AND TERMINATION
 Subleasing
        or Assigning as Breach
 Section
        7.01. Lessee shall not encumber, assign, or otherwise transfer this lease,
        any
        right or interest in this lease, or any right or interest in the without
        the
        express written consent of Lessor. Lessee shall not sublet the premises or
        any
        part of the premises without the written consent of Lessor. Consent by Lessor
        to
        one assignment or one subletting shall not be deemed to be consent to any
        subsequent assignment or subletting. Any encumbrance, assignment, transfer,
        or
        subletting without the written consent of Lessor, whether it be voluntary
        or
        involuntary, by operation of law or otherwise, is void and shall, at the
        option
        of Lessor, terminate this lease. The consent of Lessor to any assignment
        of
        Lessee's interest in this lease or the subletting by Lessee of the premises
        or
        parts of the premises shall not be unreasonably withheld. The transfer by
        Lessee
        to a corporation which is wholly owned by, or a subsidiary of Lessee or its
        holding company shall not constitute a prohibited assignment within the meaning
        of this section.
 
 Abandonment
        by Lessee
 Section
        7.02. Should Lessee breach this lease and abandon the premises prior to the
        natural expiration of this lease, Lessor may:
 (a)  Continue
        this lease in effect by not terminating Lessee's right to possession of the
        premises, in which event Lessor shall be entitled to enforce all its rights
        and
        remedies under this lease, including the right to recover the rent specified
        in
        this lease as it becomes due under this lease; or
 (b)  Terminate
        this lease and recover from Lessee:
 (1)  The
        worth
        at the time of award of the unpaid rent which had been earned at the time
        of
        termination of the lease;
 (2)  The
        worth
        at the time of award of the amount by which the unpaid rent which would have
        been earned after termination of the lease until the time of award exceeds
        the
        amount of rental loss that Lessee proves could have been reasonably
        avoided;
 (3)  The
        worth
        at the time of award of the amount by which the unpaid rent for the balance
        of
        the term of this lease after the time of award exceeds the amount of rental
        loss
        that Lessee proves could be reasonably avoided; and
 (4)  Any
        other
        amount necessary to compensate Lessor for all detriment proximately caused
        by
        Lessee's failure to perform its obligations under this lease.
 
 Default
        by Lessee
 Section
        7.03.  Should
        Lessee default in the performance of any of the covenants, conditions, or
        agreements in this lease, Lessee shall have breached the lease and Lessor
        may,
        in addition to the remedy specified in the subparagraph (b) of Section 7.02,
        reenter and regain possession of the premises in the manner provided by the
        laws
        of unlawful detainer in the State of California then in effect.
 
 Insolvency
        of Lessee
 Section
        7.04. The insolvency of Lessee as evidence by a receiver being appointed
        to take
        possession of all or substantially all of the property of Lessee, or the
        making
        of a general assignment for the benefit of creditors by Lessee or the filing
        by
        or against Lessee of a petition in bankruptcy, shall terminate this lease
        and
        entitle Lessor to reenter and regain possession of the premises.
 
 Cumulative
        Remedies
 Section
        7.05. The remedies given to Lessor in this Article shall not be exclusive
        but
        shall be cumulative and in addition to all remedies allowed by law or provided
        in this lease.
  •
            PAGE • 7
•
  
 Waiver
        of
        Breach
 Section
        7.06. The waiver by Lessor of any breach by Lessee of any of the provisions
        of
        this lease shall not constitute a continuing waiver or a waiver of any
        subsequent breach by Lessee whether of the same or another provision of this
        lease.
  ARTICLE
        8. MISCELLANEOUS
 Force
        Majeure - Unavoidable Delays
 Section
        8.01. Should the performance of any act required by this lease to be performed
        by either Lessor or Lessee be prevented or delayed by reason of an act of
        God,
        strike, lockout, labor troubles, inability to secure materials, restrictive
        governmental laws or regulations, or any other cause except financial inability,
        not the fault of the party required to perform the act, the time for performance
        of the act will be extended for a period equivalent to the period of delay
        and
        performance of the act during the period of delay will be excused; provided,
        however, that nothing contained in this section shall excuse the prompt payment
        of rent or other sums by Lessee as required by this lease or the performance
        of
        any act rendered difficult solely because of the financial condition of the
        party, Lessor or Lessee, required to perform the act.
 
 Attorney's
        Fees
 Section
        8.02. Should any litigation be commenced between the parties to this lease
        concerning the premises, this lease, or the rights and duties of either in
        relation thereto, the party prevailing in such litigation shall be entitled,
        in
        addition to such other relief as may be granted in the litigation, to a
        reasonable sum for its attorney's fees in such litigation, which shall be
        determined by the court.
 
 Notices
 Section
        8.03. All notices to be given to Lessee shall be given in writing personally
        or
        by depositing the same in the United States mail, postage prepaid, and addressed
        to Lessee at the premises, and with a copy to P.O. Box 7012, Paso Robles,
        CA
        93447-7012, whether or not Lessee has departed from, abandoned or vacated
        the
        premises. All notices to be given to Lessor shall be given in writing personally
        or by depositing the same in the United State mail, postage prepaid, and
        addressed to the Lessor at 6850 Adelaida Road, Paso Robles, CA 93446 or at
        such
        other place or places as may be designated by Lessor.
 
 No
        Merger
 Section
        8.04. The voluntary or other surrender of this lease by Lessee, or a mutual
        cancellation thereof, shall not work a merger, and shall, at the option of
        Lessor, terminate all existing subleases or subtenancies or may, at the option
        of Lessor, operate as an assignment to him of such subleases or
        subtenancies.
 
 Binding
        on Heirs and Successors
 Section
        8.05. This lease shall be binding on and shall inure to the benefit of the
        heirs, successors, and assigns of Lessor and Lessee.
 
 Partial
        Invalidity
 Section
        8.06. Should any provision of this lease be held by a court of competent
        jurisdiction to be either invalid, void, or unenforceable, the remaining
        provisions of this lease shall remain in full force and effect.
 
 Sole
        and
        Only Agreement
 Section
        8.07. This instrument constitutes the sole and only agreement between Lessor
        and
        Lessee regarding the leasing of the premises to Lessee and correctly sets
        forth
        the obligations of Lessor and Lessee to each other. Any agreements or
        representations regarding the premises or their leasing by Lessor to Lessee
        not
        expressly set forth in this agreement are null and void.
 
 Waiver
 Section
        8.08. The waiver by Lessor of any breach of any term, covenant or condition
        of
        this lease shall not be deemed to be a waiver of any subsequent breach of
        the
        same or any other term, covenant or condition.
 
 Subordination
 Section
        8.09.  This
        lease is subject and subordinate to all mortgages and deeds of trust which
        may
        now or hereafter affect the real property on which the premises are located,
        and
        to all renewals, modifications, replacements, and extensions thereof. Lessee
        agrees to execute any instruments for the benefit of the Lessor as may be
        necessary to effectuate this provision of the lease.
 
 •
            PAGE • 8
•
 
 Time
        of
        Essence
 Section
        8.10. Time is expressly declared to be the essence of this lease.
 
 This
        Lease is executed at Paso Robles, California, by the undersigned:
  Lessee:
                Buyer:Heritage
                  Oaks
                  Bank
                The Silva Family Trust
                  dated July
                  25, 1992by:
                /s/
                  Lawrence P. Ward
                by:
                /s/ David
                  J. SilvaLawrence
                  P. Ward, President
                David
                  J. Silva, Trustee
  Heritage
                    Oaks
                    Bank
                  The Silva Family Trust
                    dated July
                    25, 1992by:
                  /s/
                    Gwen Pelfrey
                  by:
                  /s/ Cecilia
                    J. SilvaGwen
                    Pelfrey, CAO
                  Cecilia
                    J. Silva, Trustee
  •
            PAGE • 9
•