<PAGE>
 
                              400 EMERSON STREET
                                   PALO ALTO

                           COMMERCIAL LEASE SUMMARY
                           ------------------------

The information contained in this "Commercial Lease Summary" is incorporated
into the terms of the attached "Commercial" Lease.

     I.    LANDLORD: 400 Emerson Associates, a California Limited Partnership

     II.   TENANT:   Cupertino National Bank & Trust, a California corporation

     III.  PREMISES: 400 Emerson Street, Palo Alto, California: the entire first
                     and second floors of the Building, including common area
                     consisting of approximately 6,000 square feet, with the
                     actual square footage to be confirmed pursuant to Paragraph
                     1.1.

     IV.   TERM:

           Lease Term:  One Hundred Forty-Four months

           Lease Commencement:  The Lease Term shall commence in accordance with
           Paragraph 2.1.  It is anticipated that the Commencement Date will be
           January 1, 1996.

           The actual Commencement Date is agreed to be __________________.  The
           Expiration Date shall be _______________________________, which is
           the last day of the month in which the twelfth (12th) anniversary of
           the Commencement Date occurs.

           Landlord's Initials ____  Tenant's Initials ____ (See Paragraph 2.1)

     V.    THIRD FLOOR EXPANSION.  Tenant shall attempt to obtain approvals from
           the City of Palo Alto to convert the third floor of the Building from
           residential use to office use for the benefit of Tenant in accordance
           with Paragraph 1.6

     VI.   OPTION TO EXTEND:  Two 5-year options.  See Exhibits D-1 and D-2.

     VIII. BASE RENT AND REIMBURSEMENTS.

           Base Rent:  Monthly Base Rent is initially Two and 75/100 Dollars
           ($2.75) per rentable square foot of the Premises. Based on the
           assumption that the Premises contain 6,000 rentable square feet, the
           initial Monthly Base Rent is Sixteen Thousand Five Hundred Dollars
           ($16,500).

           Rental Adjustment Schedule:  Increases in Monthly Base Rent shall
           occur every two years, and will be based on a consumer price index
           but shall be not less than four percent (4%) over the two year period
           and not greater than ten percent (10%) over the two year period, in
           accordance with Paragraph 3.1.

           Security Deposit:  Sixteen Thousand Five Hundred Dollars ($16,500).

           Reimbursements:  Tenant shall reimburse Landlord for Tenant's
           Allocable Share of Operating Expenses, Taxes and Insurance pursuant
           to Paragraph 3.2.(a).


Landlord's Initials ____                                  Tenant's Initials ____

<PAGE>
 
           Tenant's Allocable Share:  Tenant's Allocable Share shall be computed
           in the manner specified in Paragraph 3.2(d). Based on the assumption
           that the first and second floors of the Building contain an aggregate
           of 6,000 rentable square feet and the third floor of the Building
           contains 2,250 rentable square feet, then for so long as the Premises
           do not include the third floor, Tenant's Allocable Share shall be
           equal to seventy-two and 73/100 percent (72.73%). Tenant's Allocable
           Share shall be computed based on the measurements of the Building
           taken pursuant to Paragraph 1.1.


     IX.   EXECUTION:  The Landlord and Tenant agree to the provisions of the
Commercial Lease, including the attached Exhibits.

                    Landlord:  400 Emerson Associates,
                               a California Limited Partnership
  
                               By:
                                   -----------------------------------------
                                   Edward D. Storm
                               Its: General Partner

                    Date:      July      , 1995
                                    -----
 
                    Tenant:    Cupertino National Bank & Trust, a California
                               corporation
 
                               By:
                                   -----------------------------------------
                                   Steven C. Smith
                               Its: Chief Financial Officer
 
                    Date:      July     , 1995
                                   -----











Landlord's Initials ____                                  Tenant's Initials ____

<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------
                                                                  Page
                                                                  ----
1.   Premises.....................................................  1
     1.1   Description of Premises................................  1
     1.2   Landlord's Shell Improvements and Tenant Improvements..  1
     1.3   Condition of Premises and Completion of Punch List.....  2
     1.4   Surrender of Premises..................................  3
     1.5   Parking................................................  3
     1.6   Third Floor Expansion..................................  3
     1.7   Automated Teller Machine...............................  4
                                                                 
2.   Term.........................................................  5
     2.1   Commencement...........................................  5
     2.2   Postponement...........................................  5
     2.3   Option to Extend.......................................  6
     2.4   Conditions Precedent; Banking Approvals................  6
                                                                 
3.   Rent.........................................................  6
     3.1   Payment of Rent........................................  6
     3.2   Expense Reimbursements.................................  7
     3.3   Late Payment Charge; Interest..........................  8
     3.4   Security Deposit.......................................  9
                                                                 
4.   Uses.........................................................  9
     4.1   Use of the Premises....................................  9
     4.2   No Exterior Uses....................................... 10
     4.3   Hazardous Materials.................................... 10
                                                                 
5.   Alterations and Additions.................................... 11
                                                                 
6.   Maintenance and Repair....................................... 11
     6.1   Tenant's Obligations................................... 11
     6.2   Landlord's Obligations................................. 12
     6.3   Tenant's Obligation to Reimburse....................... 12
                                                                 
7.   Taxes........................................................ 13
     7.1   Tenant's Personal Property Taxes....................... 13
     7.2   Tenant's Obligation to Pay Real Property Taxes......... 13
     7.3   Definition............................................. 13
     7.4   Supplemental Assessments............................... 14
                                                                 
8.   Utilities and Services....................................... 14
                                                                 
9.   Indemnity.................................................... 14
                                                                 
10.  Waiver of Claims............................................. 15
                                                                 
11.  Insurance.................................................... 15
     11.1  Tenant's Liability Insurance........................... 15
     11.2  Tenant's Property Insurance............................ 15
     11.3  Landlord's Liability Insurance......................... 16


Landlord's Initials ____                       Tenant's Initials ____

                                       i
<PAGE>
 
     11.4  Landlord's Property Insurance.......................... 16
     11.5  Insurance Premiums and Deductibles are "Operating 
            Expenses"............................................. 16
     11.6  Waiver of Subrogation.................................. 16
     11.7  Insurance Policies..................................... 17

12.  Damage....................................................... 17
     12.1  Tenant's Property...................................... 18
     12.2  Waiver................................................. 18

13.  Condemnation................................................. 18

14.  Advertisements and Signs..................................... 18
                                                                   
15.  Entry by Landlord............................................ 18
                                                                   
16.  Assignment and Subletting.................................... 19
     16.1  Landlord's Consent Required............................ 19
     16.2  Documentation.......................................... 19
     16.3  Terms and Conditions................................... 20
     16.4  Landlord's Remedies.................................... 20

17.  Default...................................................... 20
     17.1  Event of Default....................................... 20
     17.2  Remedies............................................... 21
     17.3  No Relief From Forfeiture After Default................ 21
     17.4  Landlord's Right to Perform Tenant's Obligations....... 22
     17.5  Remedies Not Exclusive................................. 22
     17.6  Termination, Surrender and Abandonment................. 22
     17.7  Landlord's Default..................................... 22

18.  Effect of Conveyance......................................... 23
                                                                   
19.  Instruments Required by Lender............................... 23
                                                                   
20.  Estoppel Certificates........................................ 23
                                                                   
21.  Subordination, Attornment and Quiet Enjoyment................ 23
                                                                   
22.  Notices...................................................... 24
                                                                   
23.  No Accord and Satisfaction................................... 24
                                                                   
24.  Attorneys' Fees.............................................. 24
                                                                   
25.  Holding Over................................................. 25
                                                                   
26.  Landlord Liability........................................... 25
                                                                   
27.  Abatement of Rent Due to Interference With Use............... 25
                                                                   
28.  Right of First Refusal to Purchase........................... 26
                                                                   
29.  General Provisions........................................... 26


Landlord's Initials ____                       Tenant's Initials ____

                                      ii
<PAGE>
 
     29.1   Entire Agreement...................................... 26
     29.2   Timeliness............................................ 27
     29.3   Consent............................................... 27
     29.4   Captions.............................................. 27
     29.5   California Law........................................ 27
     29.6   Partial Invalidity.................................... 27
     29.7   No Warranties......................................... 27
     29.8   Joint and Several Liability........................... 27
     29.9   Binding on Successors................................. 27
     29.10  Authority............................................. 27
     29.11  No Light, Air or View Easement........................ 27
     29.12  Brokers............................................... 27
     29.13  Force Majeure......................................... 27
 
Exhibits

A    Premises
B    Shell Improvements
C    Tenant Improvements
D-1  Option to Extend Term
D-2  Rent for Extended Term
E    Third Floor Premises





Landlord's Initials ____                       Tenant's Initials ____

                                      iii
<PAGE>
 
                               COMMERCIAL LEASE
                              400 EMERSON STREET
                                   PALO ALTO

     This Lease is made and entered into for reference purposes only as of 
July 1, 1995 by and between "Landlord" and "Tenant" as these terms are defined
in the "Commercial Lease Summary", which Commercial Lease Summary constitutes
and is numbered as page 1 of this Lease.

     1.   Premises
 
          1.1  Description of Premises. Landlord leases the "Premises" (as
hereinafter defined) to Tenant for Tenant's exclusive use, and Tenant leases the
Premises from Landlord for the term, at the rental, and upon all of the
conditions set forth herein and in the Lease Summary. The Premises consist of
the entire first and second floors of the building (the "Building") located at
400 Emerson Street, Palo Alto, California as shown on the plan attached as
Exhibit A. The Premises, the Building and the land on which the Building and the
Premises are located are referred to collectively as the "Property". Where the
Premises extend to an exterior perimeter wall, the rentable square footage of
the Premises shall be measured from the outside face of such exterior perimeter
walls, including all recessed entries, windows and alcoves (but excluding the
entire alcove at the rear of the Building other than that portion that is
directly in front of--i.e., the same width as--the rear door); otherwise the
rentable square footage of the Premises shall be measured from the center point
of interior walls. The rentable square footage of the Premises also shall
include 125 square feet of the elevator lobby at the rear of the Building.
Within thirty (30) days following mutual execution of this Lease, Landlord's
architect shall certify the actual rentable area of the Premises and the third
floor of the Building based on construction drawing completed by DES Architects
dated                     . If the architect's certified measurement indicates
that the actual rentable area of the Premises and/or the third floor of the
Building is different from 6,000 square feet and 2,850 square feet,
respectively, then the Monthly Base Rent, Additional Rent, and/or Tenant's
Allocable Share shall be adjusted accordingly.

          1.2  Landlord's Shell Improvements and Tenant Improvements. Landlord
shall provide the Premises to Tenant improved in the manner described in Exhibit
B (the "Shell Improvements") with respect to the Building shell. Landlord shall
also construct the tenant improvements, in accordance with Exhibit C (the
"Tenant Improvements") subject to the "Tenant Improvement Allowance" provided in
Exhibit C. Landlord represents and warrants that the Shell Improvements and
Tenant Improvements (collectively, the "Improvements") will be constructed in a
good, workmanlike manner and in compliance with all applicable laws, codes and
regulations. Landlord also represents and warrants that on the "Commencement
Date" (as defined in Paragraph 2.1 below) the Property shall be in compliance
with all applicable laws, codes and regulations. Landlord further warrants that
all elements of the Improvements shall be free from defects and Landlord shall
be responsible for repair and maintenance of all such elements of the
Improvements during the first six (6) months of the Lease Term. Tenant shall
promptly notify Landlord in writing of any defect in construction of the
Building Shell and the Tenant Improvements discovered during the Lease Term, and
promptly thereafter Landlord shall commence to cure such defect and complete
such cure with diligence at Landlord's sole cost; provided, however, Landlord
shall have no obligation to cure any patent defects in the construction of the
Building Shell and/or the Tenant Improvements unless Tenant provides Landlord
with written notice of any such patent defects within six (6) months following
the Commencement Date. The parties hereto acknowledge that it is their intention
that Tenant have the benefit of any construction or equipment warranties
existing in favor of Landlord that would assist Tenant in discharging its
obligations regarding the repair and maintenance of the Premises. Upon request
by Tenant, Landlord shall inform Tenant of all written construction and
equipment warranties existing in favor of Landlord which affect the roof
membrane, building systems, and the Tenant Improvements. Landlord shall
cooperate with Tenant in enforcing such warranties and in bringing any suit that
may be necessary to enforce liability with regard to any defective construction
or operation of equipment so that Tenant receives the benefit of any such
warranties. Tenant shall reimburse Landlord for all costs and expenses incurred
by Landlord in connection with any such cooperation by Landlord, which
reimbursement shall be made by Tenant to Landlord within thirty (30) days
following Landlord's written demand therefor.

Landlord's Initials ____                                  Tenant's Initials ____

                                       1
<PAGE>
 
          1.3  Condition of Premises and Completion of Punch List. Within 
fifteen (15) days after the Commencement Date, Tenant and Landlord shall conduct
a walk-through inspection of the Premises and shall prepare a punchlist of
Improvement items needing repair, correction or additional work. The punchlist
shall not include any damage to the Premises caused by Tenant's move-in, which
damage shall be repaired by Tenant at its expense. If no punchlist is prepared
within fifteen (15) days after the Commencement Date as a result of Tenant's
failure to participate or cooperate in such effort, there shall be deemed to be
no Improvement items needing repair, correction or additional work except for
the Landlord's warranties under Paragraph 1.2. Landlord shall complete all
agreed punchlist items within fifteen (15) days after the walk-through
inspection or as soon as practicable thereafter. Upon completion of such punch-
list items, Tenant shall approve or disapprove such corrected or completed items
in writing to Landlord. If Tenant fails to disapprove such items by written
notice thereof to Landlord within fifteen (15) days of completion, such items
shall be deemed approved by Tenant. As used in this Lease, "punchlist" means
items which are not fully or correctly completed as of the Commencement Date,
but which do not prevent Tenant from occupying and using the Premises for its
permitted use. Other than the items specified in the punchlist, and subject to
the Landlord's representations and warranties with respect to the Improvements
in accordance with Paragraph 1.2 above, by taking possession of the Premises,
Tenant shall be deemed to have accepted the Premises, the Building and the
Property in their condition existing as of the Commencement Date; provided that
in no event shall Tenant be deemed to have accepted responsibility for any
latent defects. Notwithstanding the preceding sentence, any instances of
noncompliance by the Building or the Premises with applicable laws, codes and
ordinances existing as of the Commencement Date and any structural defects in
the Building as of the Commencement Date shall be remedied by Landlord at its
cost.

          1.4  Surrender of Premises. At the end of the term of this Lease or 
upon any earlier termination pursuant to this Lease, Tenant shall surrender the
Premises to Landlord in substantially the same condition as existed when
received, except for reasonable wear and tear, repairs for which Landlord is
responsible under this Lease, damage or destruction covered by Paragraph 12 of
this Lease, and condemnation covered by Paragraph 13 of this Lease.
Notwithstanding anything to the contrary in the Lease, Tenant shall have no
obligations to remove any work or improvements installed or constructed by
Landlord (except for the ATM Facilities and any vault installed on the
Premises), and all articles of personal property and all business and trade
fixtures, machinery and equipment, furniture and movable partitions owned by
Tenant or installed by Tenant at its expense in the Premises shall remain the
property of Tenant, and may be removed by Tenant at any time during the Term of
this Lease.

          1.5  Parking.  Subject to Paragraph 1.6, Landlord shall provide 
Tenant nine (9) dedicated parking spaces in the parking lot on the Property
behind the Building during the Lease Term, as may be extended hereunder.

          1.6  Third Floor Expansion. The third floor of the Building,
consisting of approximately 2,250 square feet, is restricted to residential uses
pursuant to Ordinance No. 4238 of the City of Palo Alto which designates the
uses of Property pursuant to a Planned Community Zone. Tenant has been provided
a copy of Ordinance No. 18.49 and Ordinance No. 4238 of the City of Palo Alto
concerning permitted uses of the Premises. Provided that the City of Palo Alto
amends Ordinance No. 4238 for the Property (within one year of the Commencement
Date) to convert the use of the third floor from residential uses to commercial
uses (including bank and general office uses), the third floor shall become a
portion of the Premises. If the third floor becomes a portion of the Premises,
Tenant shall lease such space from Landlord in accordance with the terms of this
Lease (including without limitation Landlord's obligation to provide a Tenant
Improvement Allowance of $30 per rentable foot with respect to the third floor
space, which shall be expended generally in accordance with Exhibit C attached
hereto), except that (a) the timing of the parties' obligations under Exhibit C
shall be appropriately adjusted based on the date of the amendment to Ordinance
No. 4238, and (b) upon the commencement of the Lease Term with respect to the
third floor, which shall occur upon substantial completion of the tenant
improvements to be constructed therein in accordance with Exhibit C (the "Third
Floor Commencement Date"), (1) the Premises shall consist of the entire
Building, (2) Tenant's obligation to make the payments described in Paragraph
1.6 shall terminate, (3) the Monthly Base Rent shall increase from that in
effect immediately prior to the Third Floor Commencement Date to an amount equal
to the sum of (i) the Monthly Base Rent in effect immediately prior to the Third
Floor Commencement Date,

Landlord's Initials ____                                  Tenant's Initials ____

                                       2
<PAGE>
 
plus (ii) the result obtained by multiplying the rentable square footage of the
third floor by Two and 45/100 ($2.45) per rentable square foot, and (4) Tenant's
Allocable Share shall increase to one hundred percent (100%); provided that
Expiration Date of the Lease Term shall not be affected. Tenant may at its sole
expense (with Landlord's cooperation) attempt to cause the City of Palo Alto to
amend Ordinance No. 4238 to convert the use of the third floor of the Building
from residential uses to commercial uses. Landlord shall cooperate with Tenant
in Tenant's effort to so amend Ordinance No. 4238 by executing any reasonable
application therefor requested by Tenant, and Landlord shall pay all in-lieu
parking fees imposed under Ordinance No. 4238 in connection with the conversion
of the third floor from residential uses to commercial uses; provided, however,
that Landlord shall not be required to bear any other costs associated with such
proposed amendment. Landlord shall not be required to either appeal any denial
by the City Council of the City of Palo Alto, or file any lawsuit or threaten
any legal action against the City of Palo Alto with respect to Ordinance
No. 4238.

          Landlord shall not lease the third floor of the Building to a party
other than Tenant for the period from the Commencement Date until the date (the
"Expansion Deadline") which shall be the earliest date of: (i) one year from the
Commencement Date; (ii) the date of amendment of Ordinance No. 4238 to convert
the use of the third floor from residential uses to commercial uses, and
execution of the First Amendment to Commercial Lease; or (iii) the date of
denial by the City Council of the City of Palo Alto of Landlord's application to
amend Ordinance No. 4238 to convert the use of the third floor from residential
uses to commercial uses.

     On the first day of each month from the Commencement Date until the last
Expansion Deadline, Tenant shall pay to Landlord $2,500 per month as
consideration for Landlord's making the third floor available to Tenant pursuant
to this Paragraph 1.6. Tenant's payment obligation pursuant to the immediately
preceding sentence for any partial month shall be prorated on the basis of a
thirty (30) day month.

          1.7  Automated Teller Machine. Tenant shall have the right to 
install, repair, operate and use, at its sole cost and expense, one or more
automated teller machines and other related equipment ("ATM Facilities") on the
ground floor of the Building at a location mutually acceptable to Landlord and
Tenant. All installation, repair, operation and use of the ATM Facilities shall
be in accordance with applicable governmental rules and regulations and Tenant
shall, with Landlord's cooperation as required, obtain such licenses, permits
and approvals from the appropriate public and government authorities as
necessary to install, repair, operate and use the ATM Facilities. Tenant shall
provide adequate lighting and all other security precautions as are necessary to
make the ATM Facilities area safe, and Tenant shall be responsible for all
liability resulting therefrom.

     2.   Term.  This Lease shall begin on the Commencement Date and shall 
continue for a term of one hundred forty-four (144) months as stated in the
Lease Summary, in accordance with the following:

          2.1  Commencement.  The Commencement Date shall be the date of 
substantial completion of the Improvements. Notwithstanding the foregoing, the
Commencement Date shall be the first day Tenant is open for business even if
such date is earlier than the conditions set forth in the immediately preceding
sentence. The Improvements shall be deemed "substantially completed" at such
time as (i) utilities are available at the Premises, which in the City of Palo
Alto is provided only when the improvements have been approved as finalized by
the Chief Building Official for the City of Palo Alto, (ii) the architect
supervising construction of the Improvements certifies that they are
substantially complete in accordance with the plans and specifications therefor
and in compliance with all applicable laws, codes, and regulations, subject only
to punchlist defects that do not materially affect the Premises, and (iii)
Tenant reasonably accepts the Improvements as complete in accordance with
Exhibit B and Exhibit C of this Lease. Landlord shall advise Tenant, from time
to time and in good faith, of the estimated completion date for the
Improvements. Upon ascertaining the Commencement Date, the parties shall insert
that date in the Lease Summary as the "Commencement Date," and initial the
insertion. If the Commencement Date is other than the first day of a calendar
month, then the Lease Term shall be the number of full months stated in the
Lease Summary, beginning with the first day of the month following the
Commencement Date.

          2.2  Postponement.  It is anticipated that the Commencement Date shall
be January 1, 1996. However, if the date of satisfaction of the events 
establishing the Commencement Date occurs later than January 1, 

Landlord's Initials ____                                  Tenant's Initials ____

                                       3
<PAGE>
 
1996, the Commencement Date will be postponed without liability to either party
or affecting the validity of the Lease; provided that if the date of
satisfaction of the events establishing the Commencement Date occurs later than
May 1, 1996, Tenant shall be entitled to one day of free rent following the
Commencement Date for each day that elapses after May 1, 1996 until the
Commencement Date. However, to the extent that the Commencement Date is delayed
as a result of the acts or failures of Tenant as provided in Section l(c) of
Exhibit C attached hereto (a "Tenant Delay"), the first day from which Tenant
shall be entitled to free rent in accordance with the preceding sentence shall
be deferred beyond May 1, 1996 by one day for each such day of Tenant Delay.
Notwithstanding the foregoing, if Landlord is unable to deliver the Premises on
or before August 1, 1996, Tenant may terminate this Lease by providing Landlord
written notice of termination on or before August 15, 1996. However, to the
extent that Landlord's inability to deliver the Premises by August 1, 1996 is as
a result of a Tenant Delay, the day on which Tenant first shall have the right
to terminate this Lease (and the date by which Tenant is required to give notice
of termination) in accordance with the preceding sentence shall be deferred
beyond August 1, 1996 (and August 15, 1996) by one day for each such day of
Tenant Delay.

          2.3  Option to Extend. Tenant shall have two (2) options to extend 
the Lease Term for five (5) years each in accordance with Exhibit D-1 attached
to this Lease. Rent during any option terms is set forth in Exhibit D-2.

          2.4  Conditions Precedent; Banking Approvals. The effectiveness of 
this Lease shall be conditioned upon Tenant receiving regulatory approval from
the Office of the Comptroller of the Currency, the Federal Reserve Bank, and any
other appropriate governmental agencies or bodies for its establishment of a
branch office at the Premises. Tenant hereby represents and warrants that it
already has submitted its application for such regulatory approval. If Tenant
does not notify Landlord in writing of Tenant's satisfaction of the condition
set forth in this Lease by September 14, 1995, Landlord shall return the
Security Deposit to Tenant, and then this Lease shall be terminated and shall be
of no further force or effect.

     3.   Rent.

          3.1  Payment of Rent.  Tenant shall pay to Landlord the Base Rent as 
stated in the Lease Summary, without deduction, offset (except as otherwise
provided herein), prior notice or demand, in advance on the first day of each
calendar month of the term of this Lease. Rent shall be payable in lawful money
of the United States to Landlord at such place as Landlord may designate in
writing. Tenant's obligation to pay rent for any partial month shall be prorated
on the basis of a thirty (30) day month. Upon satisfaction of the condition
precedent specified in Paragraph 2.4, Tenant shall pay to Landlord the first
month's Base Rent.

          The Base Rent shall be adjusted as of every second anniversary (i.e.
every other year) of the Commencement Date (each a "Rental Adjustment Date") to
reflect any increase in the cost of living.  The adjustment or adjustments, if
any, shall be calculated upon the basis of the United States Department of
Labor, Bureau of Labor Statistics Consumer Price Index for All Urban Consumers,
for San Francisco-Oakland-San Jose Metropolitan Area (1982-84=100), hereafter
referred to as the "Index."  The Index most recently published as of January 1,
1996 shall be considered the "Base."  On each Rental Adjustment Date, the Base
Rent shall be increased to an amount equal to the Base Rent multiplied by a
fraction, the numerator of which is the Index as of the January 1 immediately
proceeding such Rental Adjustment Date, and the denominator of which is the
"Base."  The parties acknowledge that the foregoing adjustment in Base Rent
shall be made on the basis of the Index figures most recently published as of
January 1 of every other year, regardless of whether the Commencement Date
occurs on January 1 or on any other date in January.  When the adjusted Base
Rent is determined upon each Rental Adjustment Date, Landlord shall give Tenant
written notice to that effect indicating how the new Base Rent figure was
computed in accordance with this paragraph.  In no event shall the adjusted Base
Rent be less than one hundred four percent (104%) nor more than one hundred ten
percent (110%) of the Base Rent during the month immediately preceding the
Rental Adjustment Date. If the Index does not exist on any Rental Adjustment
Date in the same format as referred to in this paragraph, Landlord shall
substitute in lie further of an index reasonably comparable to the Index
referred to above which is then published by the Bureau of Labor Statistics, or
successor or 

LANDLORD'S INITIALS ____                                 TENANT'S INITIALS ____ 

                                       4
<PAGE>
 
similar governmental agency, or if no governmental agency then publishes an
index, Landlord shall substitute therefor any comparable index then published by
a reputable private organization.

          3.2  Expense Reimbursements.

               3.2.1  Tenant shall pay to Landlord during the term hereof, in
addition to the Base Rent, as additional rent (the "Additional Rent");

                      3.2.1.1  Tenant's "Allocable Share" (as described in 
Paragraph 3.2(d)) of Operating Expenses, as set forth in Paragraph 6.3(b)
herein;

                      3.2.1.2  Tenant's Allocable Share of all Real Property 
Taxes relating to the Property, as set forth in Paragraph 7.2 herein;

                      3.2.1.3  Tenant's Allocable Share of insurance premiums, 
as set forth in Paragraph 11.5, but not in excess of the premiums for insurance
carried by landlords of other first-class institutional quality office buildings
in Palo Alto ("Comparable Buildings"); and

                      3.2.1.4  All charges, costs and expenses which Tenant is
required to pay hereunder, together with all late charges, interest, costs and
expenses including attorneys' fees, that may accrue thereto in the event of
Tenant's failure to pay such amounts, and all damages, reasonable costs and
expenses which Landlord may incur by reason of Tenant's default or breach of
this Lease.
                      3.2.1.5  The monthly payments of $2,500 respecting the 
third floor, as required of Tenant pursuant to Paragraph 1.6.

                      3.2.1.6  In the event of nonpayment by Tenant of 
Additional Rent, Landlord shall have all the rights and remedies with respect
thereto as Landlord has for nonpayment of Base Rent.

                      3.2.1.7  From and after the Commencement Date, Tenant 
shall pay to Landlord on the first day of each calendar month of the Lease Term
an amount reasonably estimated by Landlord to be the monthly amounts
attributable to clauses (i), (ii), and (iii) of Paragraph 3(a) (collectively,
"Expense Reimbursements"). Within ninety (90) days following the end of each
calendar year Landlord shall furnish Tenant a statement of the actual expenses
incurred by Landlord in the calendar year and the payments made by Tenant with
respect to such period, complete with all invoices, bills, copies of cancelled
checks, and other evidence of expense substantiating all such expenses (such
statement of actual Expense Reimbursements, together with all required
substantiating documentation is referred to herein as the "Statement"). If
Tenant's payments are less than the amount of the actual expenses properly
allocable to Tenant, Tenant shall pay Landlord the deficiency within thirty (30)
days after receipt of such statement. If Tenant's payments exceed the actual
expenses properly allocable to Tenant, Landlord shall offset the excess against
the Base Rent and Additional Rent next thereafter to become due to Landlord;
provided that if the Lease Term shall have expired, Landlord shall refund the
excess to Tenant within thirty (30) days. The initial "Estimated Expense
Reimbursements" for the Premises is set forth on the Lease Summary. The
Estimated Expense Reimbursements may be adjusted by Landlord's providing thirty
(30) days written notice to Tenant of the changed Estimated Expense
Reimbursements. Tenant shall have the right to audit Landlord's books and
records to verify Expense Reimbursements for a period of up to one (1) year
following receipt of Landlord's Statement. Such audit shall be conducted at
Landlord's offices, during normal business hours, and on no less than ten (10)
days prior written notice. Tenant's payment of any amount pursuant to this
Paragraph 3.2(c) shall not preclude Tenant from later auditing the correctness
of such payment.

                      3.2.1.8  Tenant's "Allocable Share" shall be that 
percentage computed by dividing the rentable square footage of the Premises by
the rentable square footage of the entire Building (with each square footage
being certified pursuant to Paragraph 1.1 above). Assuming that the first and
second floors of the Building contain an aggregate of 6,000 rentable square feet
and the third floor of the Building contains 2,250
 
Landlord's Initials ____                                  Tenant's Initials ____

                                       5
<PAGE>
 
rentable square feet, then for so long as the Premises do not include the third
floor, Tenant's Allocable Share shall be equal to seventy-two and 73/100 percent
(72.73%). If and at such time the Premises include the third floor of the
Building, Tenant's Allocable Share shall be one hundred percent (100%).

          3.3  Late Payment Charge; Interest. If any installment of Rent,
Additional Rent or any other sum due from Tenant is not received by Landlord
within three (3) business days following Tenant's receipt of written notice of
delinquency, Tenant shall pay to Landlord as liquidated damages an additional
sum equal to five percent (5%) of the amount overdue (but not to exceed One
Thousand Dollars ($1,000) for any single event of late payment) to compensate
Landlord for reasonably foreseeable processing and accounting charges, and any
charges that may be incurred by Landlord with regard to any financing secured by
the Property. Notwithstanding the preceding sentence, if Landlord previously has
delivered within the preceding twelve month period at least (2) two written
notices of delinquency, then Tenant shall be obligated to pay the late charge
described in the preceding sentence if Tenant fails to pay any installment of
Rent, Additional Rent or any other sum due from Tenant within three (3) business
days following the due date therefor. Acceptance of any late charge shall not
constitute a waiver by Landlord of Tenant's default with respect to the overdue
amount. In addition, any amount not paid by Tenant within three (3) business
days following Tenant's receipt of written notice of delinquency shall bear
interest at the lower of five percent (5%) per annum plus the then discount rate
of the Federal Reserve Bank of San Francisco, or the highest rate then allowed
by law (such lower rate is referred to herein as the "Interest Rate"), from the
date due until paid in full. Notwithstanding the preceding sentence, if Landlord
previously has delivered within the preceding twelve month period at least two
(2) written notices of delinquency, then Tenant shall be obligated to pay
interest on any delinquent amount in accordance with the preceding sentence if
Tenant fails to pay any such amount within three (3) business days following the
due date therefor. Payment of such interest shall not excuse or cure any default
by Tenant.

          3.4  Security Deposit. Upon execution of this Lease, Tenant shall
deposit Security Deposit with Landlord as security for the full and faithful
performance by Tenant of every term and covenant of this Lease. In the event
Tenant defaults in the performance of any of its obligations hereunder, Landlord
may use or apply any portion of the Security Deposit to cure the default or to
compensate Landlord for its damages from the default, in which event Tenant
shall promptly deposit with Landlord the sum necessary to restore the Security
Deposit to its original amount. Upon termination of this Lease, Landlord shall
return to Tenant the Security Deposit or any balance thereof remaining after
application thereof to remedy any then existing default by Tenant. Tenant shall
not be entitled to any interest on the Security Deposit, and Landlord shall be
entitled to commingle the Security Deposit with its general funds.

     4.   Uses.

          4.1  Use of the Premises. The Premises shall be used only for
commercial banking (including the ATM Facilities) or general office purposes,
and for no other purpose except with Landlord's prior written consent. Tenant
will engage in no activity on the Premises that would, in the judgment of any
insurer of the Premises, increase the premium on any of Landlord's insurance
over the amount otherwise charged therefor or cause such insurance to be
canceled. In this regard Landlord represents to Tenant that Landlord has no
knowledge that Tenant's intended use of the Premises will cause an increase in
the premium on Landlord's insurance or cause such insurance to be cancelled.
Tenant will comply with all applicable laws and governmental regulations
pertaining to its use of the Premises; provided that if such compliance requires
that Changes (as defined in Paragraph 5) be made to any portion of the Building
or Premises, Tenant shall have no obligation to make any such Change unless such
Change is necessitated by Tenant's particular use of the Premises. Tenant will
not cause any excessive loads to be placed upon the floor slabs or the walls of
the Premises by the placement of its furnishings or equipment or otherwise.
Tenant will commit no nuisance or waste on the Premises and will not cause any
unreasonable odors, noise, smoke, vibration, electronic emissions, or any other
item to emanate from the Premises so as to damage the Property or any other
person's property.

          4.2  No Exterior Uses. Except for parking spaces reserved for the 
exclusive use of Tenant and the ATM Facilities, no area outside of the Building
or the exterior of the Building is leased to or may be used by

Landlord's Initials ____                                 Tenant's Initials ____

                                       6
<PAGE>
 
Tenant except for placement of signage in accordance with Paragraph 14. No 
rubbish containers may be stored outside of the Premises except in areas 
specifically identified by Landlord. No materials may be stored outside of the 
Premises by Tenant.

          4.3  Hazardous Materials.

               4.3.1  Tenant shall not cause or permit to be discharged from
the Premises or the Building any materials identified by any federal, state, or
local governmental body or agency as hazardous materials (collectively,
"Hazardous Materials"), except substances customarily used in connection with
the normal operation and maintenance of Comparable Buildings. Tenant shall at
its sole expense comply with all applicable governmental rules, regulations,
codes, ordinances, statutes and other requirements respecting Hazardous
Materials in connection with Tenant's activities on or about the Premises or the
Property. Tenant shall at its sole cost perform all clean-up and remedial
actions which may be required of Tenant by any governmental authority
pertaining to any discharge of such materials by Tenant.

               4.3.2  Tenant shall indemnify and hold Landlord harmless from
all costs, claims, judgments, losses, demands, causes of action, proceedings or
hearings, including Landlord's attorneys' fees and court costs, relating to the
storage, placement or use of Hazardous Materials by Tenant on or about the
Premises. Tenant shall reimburse Landlord for (i) losses in or reductions to
rental income resulting from Tenant's use, storage, or disposal of Hazardous
Materials; (ii) all costs of clean-up or other alterations to the Premises
necessitated by Tenant's use, storage, or disposal of Hazardous Materials; and
(iii) any diminution in the fair market value of the Property caused by Tenant's
use, storage, or disposal of Hazardous Materials. The obligations of Tenant
under this Paragraph 4.3 shall survive the expiration of the Lease Term.

               4.3.3  Landlord agrees to defend, indemnify and hold harmless
Tenant, its officers, directors, employees and agent, from and against any and
all liability, loss, suits, claims, actions, causes of action, proceedings,
demands, costs, penalties, fines and expenses, including without limitation
attorneys' fees, consultants' fees, litigation costs, and cleanup costs,
asserted against or incurred by Tenant at any time and from time to time by
reason of or arising out of the presence of any Hazardous Materials on the
Premises not caused by Tenant, or arising out of the generation, storage,
treatment, handling, transportation, disposal or release, other than by Tenant,
of any Hazardous Material at or near the Premises. The foregoing obligation of
Landlord shall survive the expiration or sooner termination of this Lease.
Landlord has delivered the following reports to Tenant: correspondence from the
Santa Clara County Water District to Edward Storm dated March 6, 1995 respecting
Underground Storage Tank Case Closure-Independent BMW, 400 Emerson Street, Palo
Alto, CA; Case No. 06S3W02d02f (the "Environmental Reports"). Landlord does not
warrant the truth or accuracy of anything contained in the Environmental
Reports, except that Landlord warrants and represents to Tenant to the best of
Landlord's actual knowledge there is no Hazardous Material contamination of the
Property, except as disclosed in the Environmental Reports.

     5.   Alterations and Additions. Tenant shall not make any alteration,
addition or utility installation (collectively "Changes") to the Premises
without Landlord's prior written consent which will not be unreasonably
withheld. Notwithstanding the immediately preceding sentence, Tenant shall have
the right without Landlord's approval to make Changes within the interior of the
Premises that do not affect the structure of the Building, provided that (i)
such Changes do not exceed Twenty-Five Thousand Dollars ($25,000) in cost per
project; (ii) prior to commencing such Changes, Tenant shall give written notice
to Landlord specifying the work to be done and the area of the Premises affected
by such work; and (iii) Tenant shall obtain all necessary governmental permits
and approvals prior to commencing such work. In making any Changes hereunder,
Tenant shall comply with all applicable building codes and other governmental
requirements. In connection with giving its consent to a requested Changes,
Landlord shall notify Tenant that such Change either (i) shall be removed from
the Premises, and all damage resulting from such removal repaired by Tenant
prior to the expiration or sooner termination of the Lease Term, or (ii) shall
remain on the Premises at the end of the Lease Term and become the property of
the Landlord. In making all Changes, Tenant shall hold Landlord harmless from
mechanics' liens and all other liability resulting therefrom. Tenant shall not
proceed to make any changes until five (5) days after receipt of Landlord's

Landlord's Initials ____                                  Tenant's Initials ____

                                       7
<PAGE>
 
written consent, in order that Landlord may post on the Premises appropriate
notices to avoid any liability or liens by reason thereof.

    6.    Maintenance and Repair.

          6. 1 Tenant's Obligations. Except for those portions of the Building 
which Landlord is obligated to maintain and repair pursuant to Paragraph 6.2
below, Tenant, at its sole cost, shall maintain in first class condition and
repair the non-structural portions of the Premises (latent defects excepted) and
every part thereof. If Tenant refuses or neglects to make repairs and/or
maintain the Premises, or any part thereof, in a manner and within a time
period reasonably satisfactory to Landlord, Landlord shall have the right, upon
giving Tenant reasonable written notice of its election to do so, to make such
repairs or perform such maintenance on behalf of and for the account of Tenant.
In such event the cost of such work shall be paid by Tenant promptly upon
Landlord's presentation of reasonable evidence of the costs actually incurred.

          6. 2 Landlord's Obligations. Subject to Tenant's obligations pursuant 
to Paragraph 6.3, and the provisions of this Lease dealing with damage or
destruction and condemnation, Landlord shall repair and maintain in good working
order the roof, roof membrane, and all structural portions of the Premises and
the Building, the heating, ventilation, air-conditioning and other equipment
serving the Premises, the elevators, plumbing and electrical systems (including
utility lines and conduits) and equipment, common areas, exterior surfaces or
the Building, sidewalks, the parking lot and landscaping for the Building.
Tenant hereby waives the benefit of any statute now or hereinafter in effect
which would otherwise afford Tenant the right to make repairs at Landlord's
expense or to terminate this Lease because of Landlord's failure to keep the
Premises in good condition, order and repair. Tenant specifically waives all
rights it may have under Sections 1932(1), 1941, and 1942 of the California
Civil Code, and any similar or successor statute or law. Notwithstanding the
foregoing, if Landlord fails to perform its maintenance and repair obligations
hereunder and, as a consequence, Tenant's use of the Premises is materially
impaired, Tenant shall have the right to cause the necessary repairs to be
performed and to seek reimbursement from Landlord for the cost thereof.

    6.3   Tenant's Obligation to Reimburse.

          6.3.1 Tenant shall pay Tenant's Allocable Share of all "Operating 
Expenses" (as defined below) as may be paid or incurred by Landlord during the
term of this Lease. All Operating Expenses shall be prorated as of the
Commencement Date and Expiration Date to reflect any portion of a calendar year
occurring within the Lease Term.

          6.3.2 The term "Operating Expenses" shall mean all costs and 
disbursements which Landlord shall pay or become obligated to pay in connection
with the insurance described in Paragraphs 11.3 and 11.4 below, the maintenance,
repair and operation of the Property, including, but not limited to all labor,
materials, supplies and services, including the cost of all maintenance
contracts, used or consumed in performing Landlord's maintenance obligations
hereunder provided such costs are incurred for the purpose of maintaining the
Building as a first class building suitable for financial services use.
Operating Expenses shall also include wages and salaries of all employees,
accounting personnel, and consultants engaged in the operation,
maintenance and security of the Building, including taxes, insurance and
benefits relating thereto, prorated to the extent attributable to their
involvement in the operation, maintenance and security of the Building (as
compared to other projects in which they are involved). The cost of any capital
improvements or expenditures made with respect to maintenance of the Building,
including, without limitation, replacements of the roof membrane, or
resurfacing, reglazing, or repainting of the Building exterior, or the costs of
repairing and maintaining the structural portions of the Building shall be
amortized in accordance with generally accepted accounting principles and such
amortized cost shall be included in Operating Expenses. A fee for property
management and general and administrative expenses incurred by Landlord in
connection with such work equal to three percent (3%) of the Base Rent payable
hereunder to Landlord shall be included; provided that in no event shall such
fee exceed comparable fees charged by Landlords of Comparable Buildings.
Operating Expenses shall also include all costs and disbursements which Landlord
shall pay or become

Landlord's Initials ____                                  Tenant's Initials ____

                                       8
<PAGE>
 
obligated to pay in connection with the maintenance, repair and operation of the
outside area of the Building, including landscaping costs.

          6.3.3 In addition to the foregoing, Tenant shall reimburse Landlord 
in full for any damages to the Premises or the Building which are caused by
Tenant, its agents, employees or contractors but not repaired by Tenant or
covered by insurance carried or required to be carried by Landlord pursuant to
Paragraph 11.2.

    7.    Taxes.

          7.1 Tenant's Personal Property Taxes. Tenant shall pay prior to
delinquency all taxes, license fees, and public charges assessed or levied
against Tenant, Tenant's estate in this Lease or Tenant's leasehold
improvements, trade fixtures, furnishings, equipment and other personal
property.

          7.2 Tenant's Obligation to Pay Real Property Taxes. Tenant shall pay
Tenant's Allocable Share of "Real Property Taxes" (as defined in Paragraph 7.3
below) during the Lease Term; provided, however that Landlord reserves the right
to adjust (and Tenant shall have the right to request an adjustment of)
Tenant's liability for Real Property Taxes respecting the Building to reflect
the portion thereof which is equitably allocable to Tenant based on the tax
assessor's worksheets. Tenant's liability to pay Real Property taxes shall be
prorated on the basis of a 365-day year to account for any fractional portion of
a tax year included in the Lease Term at the commencement or expiration hereof.

          7.3 Definition. The term "Real Property Taxes" shall mean all taxes,
general and special assessments, and other charges imposed by any taxing
authority and levied against the Property or against Landlord by virtue of its
ownership thereof or collection of rental income therefrom (excepting only
estate taxes, inheritance taxes, and income taxes that are payable on nonrental
as well as rental income). "Taxing authority" includes all entities having
taxing or assessment authority by law or by virtue of any recorded instrument
binding on the owner of the Property. General and special assessments shall be
included within the meaning of "Real Property Taxes" only to the extent payable
over the longest period of time permitted for the payment of such assessments.
The foregoing notwithstanding, Tenant shall not be responsible for paying any
portion of any increase in Real Property Taxes attributable to an increase in
valuation resulting or arising by virtue of a change of ownership of the
Property occurring during the first five (5) years of the Lease Term, and,
during the second five (5) years of the Lease Term (i.e., Lease years 6-10),
Tenant shall be obligated to pay its Allocable Share of increases in Real
Property Taxes attributable to an increase in valuation resulting or arising by
virtue of a change of ownership of the Property only with respect to the first
such change in ownership which occurs during such second five (5) year period
(i.e., Lease years 6-10). After the first ten (10) years of the Lease Term and
during any Extended Term(s), Tenant shall pay Tenant's Allocable Share of any
increase in Real Property Taxes attributable to an increase in valuation
resulting or arising from a change in ownership of the Property occurring after
the expiration of the first ten (10) years of the Lease Term or any Extended
Term(s).

          7.4 Supplemental Assessments. Tenant shall be liable for Tenant's
Percentage Share of Real Property Taxes of any supplemental assessments levied
against the Property which are applicable to any portion of the Lease Term.
Tenant's liability for supplemental assessments shall survive the expiration or
earlier termination of the Lease Term. Tenant shall pay Landlord such amounts
within thirty (30) days of Tenant's receipt of Landlord's invoice for
supplemental assessments.

    8.    Utilities and Services. Landlord shall provide water, gas, 
electricity, heating, ventilation, and air conditioning to the Premises, twenty-
four (24) hours per day, seven (7) days per week, every day of the year. In
addition, Landlord shall provide janitorial services to the Premises. Tenant
shall pay for all costs of providing utility services to the Premises including,
all charges for water, gas, electricity, refuse pickup, and all other utilities
and services supplied or furnished to the Premises. Tenant shall make payment to
the charging authority for all utilities that are separately metered to the
Premises. All utilities and services shall be separately metered to the 
Premises, except for common area utilities and maintenance charges, which common
area utilities and maintenance 

Landlord's Initials ____                                  Tenant's Initials ____

                                       9
<PAGE>
 
charges shall be included in Operating Expenses. No failure or interruption of
any such utilities or service shall entitle Tenant to terminate this Lease or to
withhold rent or other sums due hereunder and Landlord shall not be liable to
Tenant for any such failure or interruption unless caused by the willful
misconduct of Landlord; provided that if the interruption in utility services is
attributable to Landlord's failure to maintain the utility lines and conduits in
accordance with Paragraph 6.2, and if the interruption in utilities renders the
Premises untenable, then Tenant shall be entitled to an abatement of rent to the
extent of the interference with Tenant's use and occupancy of the Premises, with
such abatement to commence on the day that Tenant notifies Landlord of the
interruption in utilities. Landlord shall not be responsible for providing any
security protection for all or any portion of the Property and Tenant shall at
its own expense provide or obtain any security services that it desires.

     9.   Indemnity. Tenant hereby agrees to indemnify and hold Landlord 
harmless from and against any and all claims, demands, liabilities, and
expenses, including attorneys' fees, arising from Tenant's use of the Premises
or from any act permitted, or any omission to act, in or about the Premises or
the Property by Tenant or its agents, employees, contractors, or invitees, or
from any breach or default by Tenant of this Lease, or from any injury to person
or property, except to the extent caused by Landlord's negligence or willful
misconduct. In the event any action or proceeding shall be brought against
Landlord by reason of any such claim, Tenant shall defend the same at Tenant's
expense by counsel reasonably satisfactory to Landlord.

    10.   Waiver of Claims. Tenant hereby waives any claims against Landlord for
injury to Tenant's business or any loss of income therefrom, for damage to
Tenant's property, or for injury or death of any other person in or about the
Premises or the Property from any cause whatsoever, except to the extent caused
by Landlord's negligence, willful misconduct or breach of this Lease.

    11.   Insurance.

          11.1 Tenant's Liability Insurance. Tenant shall, at its 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 the operation of Tenant's business and the condition, use,
occupancy or maintenance of the Premises. Such insurance policy shall have a
combined single limit for both bodily injury and property damage in an amount
not less than Two Million Dollars ($2,000,000), which amount shall be increased
from time to time as reasonably required by Landlord. The policy shall contain
cross liability endorsements (to the extent available on commercially reasonable
terms) and shall insure performance by Tenant of the indemnity provisions of
Paragraph 9 above. The limits of said insurance shall not limit the liability of
Tenant hereunder.

          11.2 Tenant's Property Insurance. Tenant shall, at its expense, keep
in force during the term of this Lease, a policy of fire and property damage
insurance, in an "all risk" form, insuring, for their full replacement value,
Tenant's inventory, fixtures, equipment, personal property, and any leasehold
improvements within the Premises installed by Tenant or unique to Tenant's
particular use of the Premises. Tenant also shall obtain and maintain business
interruption insurance in an amount not less than an amount adequate to provide
for payment of Base Rent and other amounts due Landlord under this Lease
during a one year interruption of Tenant's business due to fire or other
casualty. Because Tenant must maintain property insurance pursuant to this
Paragraph 11.2 to cover Tenant's inventory, fixtures, equipment, personal
property, and any leasehold improvements within the Premises installed by
Tenant or unique to Tenant's particular use of the Premises, and because of
the waivers of subrogation set forth in Paragraph 11.6, Tenant hereby waives
all claims against Landlord any loss, cost, liability, damage, or expense to
Tenant's inventory, fixtures, equipment, personal property, and leasehold
improvements within the Premises installed by Tenant or unique to Tenant's
particular use of the Premises to the extent such loss, costs, liability,
damage, or expenses are covered (or would have been covered) by the insurance
carried (or required to be carried) by Tenant pursuant to this Paragraph 11.2,
even if such loss, cost, liability, damage, or expense results from the
negligent acts, omissions, or willful misconduct of Landlord or those of its
agents, contractors, servants, employees or licensees.

          11.3 Landlord's Liability Insurance. Landlord shall maintain a policy 
of comprehensive general liability insurance in an amount of not less than two 
million dollars ($2,000,000) insuring Landlord (and

Landlord's Initials ____                                  Tenant's Initials ____

                                      10
<PAGE>
 
such other entities as designated by Landlord) against liability for personal
injury, bodily injury or death and damage to property occurring or resulting
from an occurrence in, on, or about the Property with such coverage as Landlord
may from time to time deem advisable.

          11.4 Landlord's Property Insurance. Landlord shall maintain a 
policy or policies of insurance covering loss or damage to the Property,
including protection from rental loss and coverage for operating expenses
resulting from loss or damage to the Building, and such other hazards (including
earthquake) as are normally insured in the industry in such amounts and with  
such coverage as Landlord deems advisable, but in no event for less than 90% of
replacement value (except for earthquake coverage). All proceeds under such
policies shall be payable exclusively to Landlord. Because Landlord is required
to maintain insurance on the Building pursuant to this Paragraph 11.4 and
Tenant compensates Landlord for such insurance as part of Tenant's Allocable
Share of Expense Reimbursements and because of the waivers of subrogation set
forth in Paragraph 11.6, Landlord hereby waives all claims against Tenant for
any loss, cost, liability, damage, or expense to any of the Building other than
the Premises to the extent such loss, costs, liability, damage, or expenses are
covered (or would have been covered) by the insurance carried (or required to be
carried) by Landlord pursuant to this Paragraph 11.4, even if such loss, cost,
liability, damage, or expense results from the negligent acts, omissions, or
willful misconduct of Tenant or those of its agents, contractors, servants,
employees or licensees.

          11.5 Insurance Premiums and Deductibles are "Operating Expenses". 
Premiums for any insurance obtained by Landlord pursuant to Paragraphs 11.3 and
11.4 and any deductible amounts (not to exceed One Thousand Dollars ($ 1,000))
payable in connection with such insurance shall be Expense Reimbursements, Any
deductible amounts payable in connection with earthquake coverage, and all other
deductible amounts in excess of S1,000 shall be paid by Landlord. Landlord may
obtain such insurance for the Building separately, or together with other
buildings and improvements which Landlord elects to insure together under
blanket policies of insurance. In such case, Tenant shall be liable only for
such portion of the premiums of such blanket policies as are allocable to the
Premises as reasonably determined by the insurer of Landlord.

          11.6 Waiver of Subrogation. Tenant and Landlord each hereby waives, 
and shall cause their respective insurers to similarly waive, any and all rights
of recovery against the other, or against the officers, employees, partners,
agents and representatives of the other, for loss of or damage to the property
of the waiving party or the property of others under its control, to the extent
such loss or damage is (or would have been) insured against under any insurance
policy carried (or required to be carried) by Landlord or Tenant hereunder.

          11.7 Insurance Policies. All of Tenant's insurance shall be primary 
insurance written in a form satisfactory to Landlord by companies acceptable to
Landlord and shall specifically provide by endorsements reasonably acceptable to
Landlord that such policies shall: (i) not be subject to cancellation or other
change except after at least thirty (30) days' prior written notice to Landlord;
(ii) be primary insurance; (iii) specifically waive subrogation pursuant to this
Lease. All liability policies maintained by Tenant hereunder shall name Landlord
and Landlord's property management company as additional insured parties.
Copies of the policies or certificates evidencing the policies shall be
deposited with Landlord on or prior to the Commencement Date, and upon each
renewal of such policies, which shall be effected not less than thirty (30) days
prior to the expiration date of the term of such coverage. Reasonably
satisfactory evidence of payment of policy premiums shall be provided to
Landlord upon request.

    12.   Damage. Except as otherwise provided in this Paragraph 12, if any 
structural portion of the Premises that Landlord is obligated to maintain is
damaged or destroyed by any cause, and if such damage is required to be insured
against pursuant to Paragraph 11 above, then this Lease will not terminate and
Landlord will cause such damage to be repaired with reasonable diligence,
subject to delays in the obtaining and disbursement of insurance proceeds and
delays in repair caused by inclement weather, governmental action or inaction,
and shortage of materials or services. From the date of the casualty until the
restoration is completed, Tenant's obligation to pay Base Rent and Additional
Rent shall be abated to the extent the damage and repair period interfere with
Tenant's use of the Premises. If the damage is not required to be insured
against, or if the damage occurs within the last nine (9) months of the Lease
Term, either party may, at its option exercised by written notice to the other
within thirty (30)

Landlord's Initials ____                                  Tenant's Initials ____

                                      11
<PAGE>
 
days of the date of the damage, elect to terminate this Lease as of the date of
damage, and if neither party so elects, Landlord shall complete the repair at
its expense. Within thirty (30) days following the date on which Landlord learns
of any damage to the Premises, Landlord shall notify Tenant in writing as to the
estimated time for repairing the damage. If Landlord reasonably estimates that
the time required for repair of the Premises will exceed one (1) year, then
either Landlord or Tenant shall be entitled to terminate this Lease as of the
date of the damage by delivering written notice of termination to the other
party within ten (10) days of Landlord's determination of the time required for
repair. If Landlord elects to repair, Base Rent and Additional Rent will abate
in the manner described above; other than the obligation to repair stated above,
and Landlord shall have no liability to Tenant on account of the damage;
provided that if the estimated time for completion of repairs exceeds six (6)
months, or if the repairs are not completed within six (6) months (regardless of
the time estimate for completion of the repairs), Tenant shall have the right to
terminate this Lease by delivering written notice thereof to Landlord within
thirty (30) days after receipt of the estimate, or the expiration of the six (6)
month period, as the case may be, with any such termination effective as of the
date of the casualty.

          12.1 Tenant's Property. Landlord's obligation to rebuild or restore 
shall not include Tenant's trade fixtures, equipment, merchandise, or any
improvements, alterations or additions made by Tenant to the Premises.

          12.2 Waiver. Tenant waives the provisions of California Civil Code 
Sections 1932(2) and 1933(4), and any similar or successor statutes relating to
termination of leases in the event of damage or destruction, and agrees that the
parties' rights and obligations in such event shall instead be governed by this
Lease.

    13.   Condemnation. If any part of the Premises shall be taken for any 
public, or quasi-public use, under any statute or by right of eminent domain or
purchase in lieu thereof, and a part thereof remains which is reasonably
suitable for the conduct of Tenant's business, this Lease shall, as to the part
so taken, terminate as of the date title shall vest in the condemnor or
purchaser, and the rent payable hereunder shall be adjusted so that Tenant shall
be required to pay for the remainder of the Lease Term only such portion of such
rent as the value of the part of the Premises remaining after such taking bears
to the value of the entire Premises prior to such taking. If all of the
Premises, or such part thereof be taken so that there does not remain a portion
reasonably suitable for the conduct of Tenant's business, this Lease shall
thereupon terminate. All compensation awarded upon any taking hereunder shall
belong exclusively to the Landlord. Notwithstanding any provision to the
contrary contained herein, Tenant shall have the right to make a separate claim
against the appropriate governmental authority for condemnation proceeds
allocable to the unamortized costs of the leasehold improvements made at the
cost of Tenant, the removal of Tenant's trade fixtures or removable personal
property, and relocation expenses if and only to the extent that such separate
claim does not diminish Landlord's condemnation award.

    14.   Advertisements and Signs. Tenant shall not place or maintain any 
sign, advertisement, notice or other marking whether temporary or permanent in
nature upon or about the Premises or the Property without the approval of the
City of Palo Alto and the prior written consent of Landlord. The Landlord's
consent shall not be unreasonably withheld.

    15.   Entry by Landlord. Landlord and its agents shall have the right to 
enter the Premises on reasonable written or oral notice (except in an emergency)
to Tenant at the Premises only for the purpose of inspecting the same, showing
the Premises to prospective purchasers or others, posting notices of
non-responsibility, or making repairs, alterations or additions to any portion
of the Building (but not to the Premises, except when Landlord is required to do
so by this Lease or by law). Notwithstanding the preceding sentence, Tenant may
designate certain areas of the Premises as "Secured Areas" should Tenant require
such areas for the purpose of securing certain valuable property or confidential
information. Landlord may not enter such Secured Areas except in the case of
emergency or in the event of a Landlord inspection, in which case Landlord shall
provide Tenant with ten (10) days' prior written notice of the specific date and
time of such Landlord inspection. In making any entry pursuant to this Paragraph
15, Landlord shall minimize its interference with Tenant's use and occupancy to
the extent reasonable under the circumstances surrounding such entry. Landlord
and its agents may, at any time within

Landlord's Initials ____                                  Tenant's Initials ____

                                      12
<PAGE>
 
ninety (90) days prior to the expiration of the lease term, place upon Premises
"For Lease" signs and, on reasonable written or oral notice to Tenant at the
Premises only, exhibit the Premises to prospective tenants.

    16.   Assignment and Subletting.

          16.1 Landlord's Consent Required. Tenant shall not voluntarily or by 
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Tenant's interest in the Lease or in the Premises,
without Landlord's prior written consent, which shall not be unreasonably
withheld, conditioned or delayed. It shall be reasonable for Landlord to deny
consent if (a) the use to be made of the Premises by the proposed assignee or
sublessee would be prohibited by any other term of this Lease; or (b) the
character, reputation and financial condition of the proposed assignee or
sublessee are not satisfactory to Landlord. Notwithstanding the foregoing,
Tenant may assign this Lease at any time, or sublease all or part of the
Premises, without receipt of Landlord's consent, to any entity which acquires
all or part of Tenant, or which is acquired in whole or in part by Tenant, or
which is controlled directly or indirectly by Tenant, or which is under common
control with Tenant, or which entity controls, directly or indirectly, Tenant
("Affiliate"), or which owns or is owned by the Affiliate, so long as such
transaction was not entered into as a subterfuge to avoid the obligations and
restrictions of this Lease.

          16.2 Documentation. Prior to any assignment or sublease, Tenant shall 
(a) provide to Landlord the proposed assignee's or sublessee's name, address,
financial statements for the previous three (3) years, (if available) and copies
of all documents relating to Tenant's proposed assignment or sublease, and (b)
shall specify all monies and other consideration to be received by Tenant for
such assignment or sublease. In circumstances where Landlord's prior consent
is required, within ten (10) days after the receipt of such documentation,
Landlord shall either (a) consent in writing to the proposed assignment or
sublease subject to the terms and conditions hereinafter set forth, or (b)
notify Tenant in writing that Landlord refuses such consent, in which event
Landlord shall specifically identify its reasons for denial. In the event
Landlord fails to deliver such written notice within the required period,
consent to the proposed sublease or assignment shall be deemed approved.

          16.3 Terms and Conditions. In connection with any proposed 
assignment or sublease, Tenant shall pay Landlord's reasonable processing costs
and attorneys' fees (not to exceed One Thousand Dollars ($1,000)), regardless of
whether Landlord consults to such assignment or sublease. Each assignment or
sublease shall be in form satisfactory to Landlord and shall be subject and
subordinate to the provisions of this Lease. Once approved by Landlord, such
assignment or sublease shall not be modified without Landlord's prior written
consent. Each assignee or sublessee shall agree to perform all of the
obligations of Tenant hereunder and shall acknowledge that the termination of
this Lease shall, at Landlord's sole election, constitute a termination of every
such assignment or sublease. Notwithstanding any assignment or sublease,
Tenant shall remain primarily liable for all obligations and liabilities of
Tenant under this Lease.

          16.4 Landlord's Remedies. Any assignment or sublease without 
Landlord's prior written consent where such consent is required shall at
Landlord's election be void, and shall constitute a default under this Lease.
The consent by Landlord to any assignment or sublease shall not constitute a
waiver of the provisions of this Paragraph 16 with respect to any subsequent
assignment or sublease.

    17.   Default.

          17.1 Event of Default. The occurrence of any of the following events 
(an "Event of Default") shall constitute a default and breach of this Lease by
Tenant:

               17.1.1 The failure by Tenant to make any payment of rent or any 
other required payment, as and when due, and such failure shall not have been
cured within ten ( 10) days after written notice thereof from Landlord;

               17.1.2 Tenant's failure to perform any other term, covenant or 
condition contained in this Lease and such failure shall have continued for
thirty (30) days after written notice of such failure is given to

Landlord's Initials ____                                  Tenant's Initials ____

                                      13
<PAGE>
 
Tenant; provided that where such failure cannot reasonably be cured within said
thirty (30) day period, Tenant shall not be in default if Tenant commences such
cure within said thirty (30) day period and thereafter diligently pursues all
reasonable efforts to complete said cure until completion thereof;

               17.1.3 Tenant's assignment of its assets for the benefit of its 
creditors; the filing of a petition by or against Tenant, where such action is
not dismissed within thirty (30) days, seeking adjudication or reorganization
under the Bankruptcy Code; the appointment of a receiver to take possession of,
or a levy by way of attachment or execution upon, substantially all of Tenant's
assets at the Premises.

          17.2 Remedies. Upon any Event of Default, Landlord shall have the 
following remedies, in addition to all other remedies now or hereafter provided 
by law or equity:

               17.2.1 Landlord shall be entitled to keep this Lease in full 
force and effect and Landlord may enforce all of its rights and remedies under
this Lease, including the right to recover rent and other sums as they become
due, plus interest at the highest rate then allowed by law, from the due date of
each installment of rent or other sum until paid; or

               17.2.2 Landlord may terminate Tenant's right to possession by 
giving Tenant written notice of termination, whereupon this Lease and all of
Tenant's rights in the Premises shall terminate. Any termination under this
paragraph shall not release Tenant from the payment of any sum then due Landlord
or from any claim for damages or rent accrued.

    In the event this Lease is terminated pursuant to this Paragraph 17.2(b), 
Landlord may recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including but not limited to: (i) The cost of recovering
possession of the Premises; (ii) Expenses of reletting, including necessary
renovation and alteration of the Premises; (iii) Reasonable attorneys' fees, any
real estate commissions actually paid and that portion of any leasing commission
paid by Landlord applicable to the unexpired term of this Lease; (iv) The worth
at the time of award of the unpaid rent which had been earned at the time of
termination; (v) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss for the same period that Tenant
proves could have been reasonably avoided; (vi) The worth at the time of award
of the amount by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss for the same period that
Tenant proves could be reasonably avoided; and (vii) Any other amount necessary
to compensate Landlord for all the detriment proximately caused by Tenant's
failure to perform Tenant's obligations under this Lease, or which in the
ordinary course of things would be likely to result therefrom.

    The "worth at the time of award" of the amounts referred to in 
subparagraphs (iv) and (v) of this Paragraph 17.2(b) shall be computed by
allowing interest at the maximum rate then permitted by law. The "worth at
the time of award" of the amount referred to in subparagraph (vi) of this
Paragraph 17.2(b) shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%). The term "rent" as used in this paragraph shall include all sums
required to be paid by Tenant to Landlord pursuant to the terms of this Lease.

          17.3 No Relief From Forfeiture After Default. Tenant waives all 
rights of redemption or relief from forfeiture under California Code of Civil
Procedure Sections 1174 and 1179, and under any other present or future law, in
the event Tenant is evicted or Landlord otherwise lawfully takes possession of
the Premises by reason of any Event of Default.

          17.4 Landlord's Right to Perform Tenant's Obligations. If Tenant 
shall at any time fail to perform any obligation required of Tenant hereunder,
and provided Tenant has been provided a thirty (30) day notice from Landlord
concerning such obligation, then Landlord may, at its option, perform such
obligation to the extent Landlord deems desirable, and may pay any and all
reasonable expenses incidental thereto and employ counsel. No such action by
Landlord shall be deemed a waiver by Landlord of any of Landlord's rights or
remedies, 

Landlord's Initials ____                                  Tenant's Initials ____

                                       14
<PAGE>
 
or a release of Tenant from performance of such obligation. All sums so paid 
by Landlord shall be due and payable by Tenant to Landlord on the day
immediately following Landlord's payment thereof. Landlord shall have the same
rights and remedies for the nonpayment of any such sums as for default by Tenant
in the payment of rent.

          17.5 Remedies Not Exclusive. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies available.

          17.6 Termination, Surrender and Abandonment. No act or conduct of 
Landlord, including, without limitation, efforts to relet the Premises, an
action in unlawful detainer or service of notice upon Tenant or surrender of
possession by Tenant pursuant to such notice or action, shall extinguish the
liability of Tenant to pay rent or other sums due hereunder or terminate this
Lease, unless Landlord notifies Tenant in writing of Landlord's election to
terminate this Lease. No act or conduct of Landlord, including the acceptance
of the keys to the Premises, other than a written acknowledgment of
acceptance of surrender signed by Landlord, shall be deemed to be or constitute
an acceptance of the surrender of the Premises by Tenant prior to the
expiration of the Lease term. The surrender of this Lease by Tenant,
voluntarily or otherwise, shall, at Landlord's option, operate as an assignment
to Landlord of any and all existing assignments and subleases, or Landlord may
elect to terminate any or all of such assignments and subleases by notifying
the assignees and sublessees of its election within fifteen (15) days after such
surrender.

          17.7 Landlord's Default. In the event of any failure by Landlord to 
perform any of Landlord's obligations under this Lease, Tenant will give
Landlord written notice specifying such default with particularity, and Landlord
shall thereupon have thirty (30) days in which to cure any such default. Unless
and until Landlord fails to so cure any default after such notice, Tenant shall
not have any remedy or cause of action by reason thereof. If a default by
Landlord remains uncured after the expiration of the thirty (30) day period
(except for obligations of Landlord which reasonably require greater than thirty
(30) days to fulfill, and provided Landlord has initiated performance of any
such obligation within such thirty (30) day period and has thereafter diligently
acted to fulfill any such obligation), then Landlord shall be deemed in default
of this Lease. Upon such a default by Landlord, Tenant may exercise any of its
rights provided in law or at equity and shall have the right, but not the
obligation, to cure any such default and, in such event, to receive
reimbursement from Landlord for the costs incurred by Tenant to cure such
default, including legal fees and expenses, plus interest thereon at the
Interest Rate.

    18.   Effect of Conveyance. The term "Landlord" as used in this Lease, 
means only the current owner(s) of the Building so that in the event of any sale
or other transfer of the Building, the transferor shall be deemed to be relieved
of all obligations of the Landlord hereunder from and after the date of such
sale (except such obligations arising before the date of such sale), and the
transferee shall be deemed to have assumed and agreed to perform any and all
obligations of Landlord hereunder arising from and after said date.
Notwithstanding the preceding sentence, no transferor Landlord shall be relieved
its obligation to return the Security Deposit to Tenant in accordance with
Paragraph 3.4 unless and until such transferor Landlord delivers the full
Security Deposit to the transferee Landlord.

    19.   Instruments Required by Lender. Upon written request from 
Landlord, Tenant agrees to forthwith execute and deliver to Landlord, such
instruments, including a current statement of Tenant's financial condition, as
may be reasonably required by any mortgagee or holder of a deed of trust or
other encumbrance on the Property.

    20.   Estoppel Certificates. Each party ("Certifying Party") shall, from 
time to time, within ten (10) days after receipt from the other party
("Requesting Party") of written request therefor, deliver a duly executed and
acknowledged and factually accurate estoppel certificate to the Requesting Party
certifying: (i) that this Lease is unmodified and in full force and effect, or
if there has been any modification, that the same is in full force and effect as
modified, and stating all such modifications; (ii) whether or not there is then
existing any claim by the Certifying Party of default hereunder by the
Requesting Party and, if so, specifying the nature thereof; and (iii) the dates
to which the rent and other charges payable hereunder by Tenant have been paid.

Landlord's Initials ____                                  Tenant's Initials ____

                                      15
<PAGE>
 
    21.   Subordination, Attornment and Quiet Enjoyment. Prior to the
Commencement Date, Landlord shall deliver to Tenant an agreement executed by any
existing lender providing that so long as Tenant is not in default under this
Lease, no foreclosure or other right or remedy exercised by the lender shall
terminate this Lease and the lender (and/or its successor in interest to the
Property) will honor this Lease and perform Landlord's obligations hereunder.
Tenant agrees that this Lease may, at the option of Landlord, be subject and
subordinate to any mortgage, deed of trust, any other instrument of security, or
ground lease which shall be placed on the Property, provided that the lender or
other security holder ("Lender") executes a non-disturbance agreement with
Tenant providing that so long as Tenant is not in default under this Lease, no
foreclosure or other right or remedy exercised by the Lender shall terminate
this Lease and the Lender (and/or its successor in interest to the Property)
shall be obligated to honor this Lease and perform Landlord's obligations
hereunder. This subordination is hereby made effective without any further act
of Tenant. Tenant shall, at any time hereafter, on demand, execute any
instruments, releases, or other documents that may be required by any Lender
under any security instrument for the purpose of subjecting and subordinating
this Lease to the lien of such instrument, provided that as a condition to
executing such instrument, Tenant may require Lender to execute a non-
disturbance agreement with Tenant providing that so long as Tenant is not in
default under this Lease, no foreclosure or other right or remedy exercised by
the Lender shall terminate this Lease and the Lender (and/or the Lender's
successor in interest to the Property) shall be obligated to honor this Lease
and perform Landlord's obligations hereunder. Tenant shall attorn to any third
party purchasing or otherwise acquiring the Premises at any sale or other
proceeding or pursuant to the exercise of any rights, powers or remedies under
any instruments of security or ground leases now or hereafter encumbering all or
any part of the Premises, as if such third party had been named as Landlord
under this Lease. So long as Tenant timely pays all Base Rent and Additional
Rent and all other sums due under this Lease and timely performs all of its
obligations and covenants under this Lease, Tenant shall have and hold quiet
possession of the Premises without interference by Landlord or anyone claiming
by, through or under Landlord, subject, however, to all of the provisions of
this Lease.

    22.   Notices. All notices, demands or requests to be given to Tenant or 
Landlord shall be in writing, delivered personally or by commercial courier or
by United States mail, postage prepaid, certified return receipt requested and
addressed (a) to Tenant at the Premises, with a copy to Cupertino National Bank
& Trust, 20230 Stevens Creek Boulevard, Cupertino, CA 95014, Attn: Chief
Financial Officer, or (b) to Landlord at such address as it may from time to
time designate to Tenant in writing. Each such notice, demand or request shall
be deemed to have been received by Tenant or Landlord upon actual delivery.

    23.   No Accord and Satisfaction. No payment by Tenant, or receipt by 
Landlord, of an amount which is less than the full amount of Base Rent and all
other sums payable by Tenant hereunder at such time shall be deemed to be other
than on account of (a) the earliest of such other sums due and payable, and
thereafter (b) to the earliest Base Rent or other sum due and payable hereunder.
No endorsement or statement on any check or any letter accompanying any payment
of Base Rent or such other sums shall be deemed an accord and satisfaction, and
Landlord may accept any such check or payment without prejudice to Landlord's
right to receive payment of the balance of such rent and/or other sums, or
Landlord's right to pursue Landlord's remedies.

    24.   Attornevs' Fees. If any action or proceeding at law or in equity, or 
an arbitration proceeding (collectively, an "Action"), shall be brought to
recover any rent under this Lease, or for or on account of any breach of or to
enforce or interpret any of the terms, covenants, or conditions of this Lease,
or for the recovery of possession of the Premises, the "Prevailing Party" shall
be entitled to recover from the other party as a part of such action or in a
separate action brought for that purpose, its reasonable attorneys' fees and
costs and expenses incurred in connection with the prosecution or defense of
such action. "Prevailing Party" within the meaning of this paragraph shall
include, without limitation, a party who brings an action against the other
after the other is in breach or default, if such action is dismissed upon the
other's payment of the sums allegedly due or upon the performance of the
covenants allegedly breached, or if the party commencing such action or
proceeding obtains substantially the relief sought by it in such action, whether
or not such action proceeds to a final judgment or determination. In addition,
each party agrees to reimburse the other party for all of such other party's
legal fees and expenses incurred in the enforcement and protection of all of
such other party's rights under the Lease and applicable laws, whether or

Landlord's Initials ____                                  Tenant's Initials ____

                                      16
<PAGE>
 
not an action has been brought, including reasonable attorneys' fees and costs
incurred in any out-of-court settlement or in connection with the filing of a
bankruptcy petition by or against the first party.

    25.   Holding Over. This Lease shall terminate without further notice at 
the expiration of the Lease Term. Any holding over after the expiration of the
Lease Term, with the express written consent of Landlord, shall be construed to
be a tenancy from month to month, at a monthly rental of one hundred ten
percent (110%) of the last applicable Base Rent, and shall otherwise be on the
terms and conditions herein specified.

    26.   Landlord Liability. Tenant agrees that if Landlord shall fail to 
perform any covenant or obligation on its part to be performed, and as a
consequence thereof, or if on any other claim by Tenant concerning the Premises
or this Lease, Tenant shall recover a money judgment against Landlord, then
such judgment shall be satisfied only out of Landlord's estate in the Property,
including sales proceeds, insurance proceeds, and rent, and Landlord shall have
no personal or further liability whatsoever with respect to any such default or
judgment.

    27.   Offset of Rent Due to Remedial Costs. If (a) Tenant is prevented from 
using the Premises or any portion thereof for five (5) consecutive business days
or ten (10) days in any twelve (12) month period (the "Period of Impaired Use")
as a result of Landlord's failure to maintain and repair the Building and the
Premises in accordance with its obligations as set forth herein, or as a result
of any repair, maintenance or alteration performed by Landlord after the
Commencement Date and required by the Lease which interferes with Tenant's use
of the Premises, or as a result of any failure to provide services or access to
the Premises, or because of the presence of Hazardous Materials in or on the
Building, the Premises or the Property resulting from the acts or omissions of
Landlord which pose a health risk to occupants of the Premises, and (b) Tenant
takes remedial action to enable Tenant to fully use the Premises, and (c)
Landlord fails to reimburse Tenant for the costs and expenses incurred by Tenant
in performing such remedial action (plus any litigation costs, including
attorneys fees, incurred by Tenant is pursuing legal action to obtain such
reimbursement) (collectively, "Remedial Costs") for a period of one (1) year
after Tenant first incurs any Remedial Costs, then Tenant shall be entitled to
both (i) an offset of the unreimbursed Remedial Costs against Tenant's
obligation to pay Base Rent and Additional Rent on a dollar-for-dollar basis,
and (ii) an abatement or reduction, as the case may be, of Base Rent and
Additional Rent for a period of time equal to the Period of Impaired Use, in the
proportion that the rentable area of the portion of the Premises that Tenant is
prevented from using bears to the total rentable area of the Premises; provided
that if and to the extent Tenant is unable to effectively conduct its business
(and does not conduct its business) in the entire Premises because Tenant is
prevented from using a portion of the Premises as a result of the
circumstances described above, then the Rent and Additional Rent for the
entire Premises shall be abated for a period of time equal to the time period
that Tenant is unable to effectively conduct (and does not conduct) its business
in the entire Premises.

    28.   Right of First Refusal to Purchase. If at any time prior to the 
Expiration Date (as the same may be extended pursuant hereto), Landlord offers
the Property for sale, or receives an offer to purchase the Property, Tenant
shall have the first right (the "Right of First Refusal") to purchase the
Property on the terms hereinafter set forth. Any agreement, contract, or other
instrument ("Purchase and Sale Agreement") providing for sale, conveyance or
other transfer of the Property shall contain a provision stating that the
Purchase and Sale Agreement is subject to Tenant's Right of First Refusal and
shall be null and void as between Landlord and the proposed transferee if,
within ten (10) business days following Tenant' receipt of the fully executed
Purchase and Sale Agreement, Tenant exercises its Right of First Refusal in
accordance with the terms hereof, thereby obligating Tenant to purchase the
Property on the same terms and conditions as set forth in the Purchase
Agreement. Tenant shall exercise the Right of First Refusal, if at all, within
ten (10) business days following receipt of the fully executed Purchase and Sale
Agreement by notifying Landlord in writing of such exercise and depositing with
the escrow agent specified in the Purchase and Sale Agreement any deposit called
for therein within the time frames set forth therein. Promptly following
Tenant's exercise of the Right of First Refusal, Landlord and Tenant shall
execute a purchase and sale agreement directly between them containing the same
terms and conditions as set forth in the Purchase and Sale Agreement, and the
parties shall proceed to close escrow thereunder in good faith. The parties'
failure to execute any such direct purchase and sale agreement shall not affect
their respective rights and obligations

Landlord's Initials ____                                  Tenant's Initials ____

                                      17
<PAGE>
 
hereunder, and each shall be bound by the terms of the Purchase and Sale
Agreement as if it were executed by them. If Tenant does not exercise the Right
of First Refusal in accordance herewith, Landlord may sell, convey, or otherwise
transfer the Property to the proposed transferee specified in the Purchase and
Sale Agreement, but only on the terms specified therein. Landlord may not sell,
convey or otherwise transfer the Property on any other terms, and before 
attempting to do so, Landlord shall first submit the Property to Tenant for its
right to purchase pursuant to this Right of First Refusal. The Right of First
Refusal shall have no application, however, with respect to a transfer of the
Property to the constituent partners of Landlord as of the date hereof, or any
family trust established by such partners.

    29.   General Provisions.

          29.1 Entire Agreement. This instrument, together with the exhibits 
attached hereto, constitutes the entire agreement made between the parties
hereto and may not be modified orally or in any manner other than by an
agreement in writing signed by all of the parties hereto or their respective
successors in interest.

          29.2 Timeliness. Time is of the essence with respect to the
performance of each and every provision of this Lease in which time of 
performance is a factor.

          29.3 Consent. Whenever the provisions of this Lease provide that the 
consent of the party must be obtained, except as otherwise specifically
provided, such party agrees to act reasonably and in a timely manner in
determining whether to grant or withhold its consent.

          29.4 Captions. The captions of the numbered paragraphs of this Lease 
are inserted solely for the convenience of the parties hereto and shall have no
effect upon the construction or interpretation of any part hereof.

          29.5 California Law. This Lease shall be construed and interpreted in 
accordance with the laws of the State of California.

          29.6 Partial Invalidity. If any provision of this Lease is held by a 
court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions hereof shall nonetheless continue in full force and
effect.

          29.7 No Warranties. Any agreements, warranties or representations not 
expressly contained herein shall not bind either Landlord or Tenant.

          29.8 Joint and Several Liability. If Tenant is more than one person 
or entity, each such person or entity shall be jointly and severally liable 
under the Lease.

          29.9 Binding on Successors. The covenants and conditions herein 
contained, subject to the provisions as to assignment, shall apply to and be
binding upon the parties hereto and their respective successors in interest.

          29.10 Authority. The parties hereby represent and warrant that they 
have all necessary power and authority to execute and deliver this Lease on
behalf of Landlord and Tenant, respectively.

          29.11 No Light, Air or View Easement. Any diminution or shutting 
off of light, air or view by any structure which may be erected on lands
adjacent to or in the vicinity of the Building shall in no way affect this
Lease, entitle Tenant to any reduction of rent or impose any liability upon
Landlord.

Landlord's Initials ____                                 Tenant's Initials ____ 

                                      18
<PAGE>
 
          29.12 Brokers. Landlord agrees to pay a brokerage commission to 
Premier Properties Management, Inc., a California corporation. Neither Landlord
nor Tenant have engaged any other broker, finder or agent. Each party hereby
agrees to indemnify and hold the other harmless from any claims for commissions
arising from its dealings with any other broker or agent.

          29.13 Force Majeure. If either party hereto shall be delayed or 
prevented from the performance of any act required hereunder by reason of acts
of God, strikes, inability to procure materials, restrictive governmental laws
or regulations, delay by the other party hereto or other cause without fault and
beyond the control of the party obligated to perform (financial inability
excepted), then upon notice to the other party, the performance of such act
shall be excused for the period of the delay and the period for the performance
of such act shall be extended for a period equal to the period of such delay;
provided, however, the party so delayed or prevented from performing shall
exercise good faith efforts to remedy any such cause of delay or cause
preventing performance, and nothing in this Section shall excuse Tenant from the
prompt payment of any rental or other charges required of Tenant except as may
be expressly provided elsewhere in this Lease.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the
dates specified below immediately adjacent to their respective signatures.
Delivery of this Lease to Landlord, duly executed by Tenant, constitutes an
offer by Tenant to lease the Premises as herein set forth, and under no
circumstances shall such delivery be deemed to create an option or reservation
to lease the Premises for the benefit of Tenant.  This Lease shall only become
effective and binding upon execution of this Lease by Landlord and delivery of a
signed copy to Tenant.

                                    "LANDLORD"

                                    400 Emerson Associates, a California Limited
                                    Partnership


                                    By:
                                       Edward D. Storm
                                    Its: General Partner

                                    Date:


                                    "TENANT"

                                    Cupertino National Bank & Trust, a
                                    California corporation
 

                                    By:________________________________
                                       Steven C. Smith
                                    Its: Chief Financial Officer

                                    Dated:

Landlord's Initials ____                                  Tenant's Initials ____

                                      19
<PAGE>
 
                                   EXHIBIT A
                                   ---------

                                   PREMISES
                                   --------






Landlord's Initials ____                                  Tenant's Initials ____

                               Exhibit A Page 1
<PAGE>
 
                                   EXHIBIT B
                                   ---------

                              SHELL IMPROVEMENTS
                              ------------------

     1.   Landlord's Construction.

          Landlord shall cause to be constructed, at Landlord's sole expense,
the following improvements to the Building which shall be referred to as the
"Shell Improvements".

          (a) The building shall be completed in accordance with all plans,
specifications and drawings as prepared by DES Architects and Engineers dated
_________________ including all amendments thereto as of the date of this Lease
(the "Plans").  Tenant has received a full set of the Plans.

          (b) Landlord shall install on the roof of the Building HVAC equipment
in amounts sufficient to heat and cool the space so as to satisfy reasonable
requirements for office space on the second floor, and retail banking on the
first floor.  The HVAC equipment shall be installed, and operable, with main
ducting extending to each of the floors comprising the Premises, but shall not
be distributed throughout the Premises.  Distribution of the HVAC shall be an
element of the Tenant Improvements, but any heat transfer shall be a part of the
Shell Improvements.

          (c) Landlord shall provide a smooth floor surface for Tenant ready for
placement by Tenant of Tenant's flooring in accordance with the Plans.

          (d) Landlord shall provide Tenant an electrical power panel of 120/208
at a location to be agreed to by Landlord and Tenant.  From this panel, a
subpanel shall be provided at each floor of the Premises.  Any further
distribution of electrical service shall be an element of the Tenant
Improvements.

          (e) Landlord shall provide two handicap-accessible toilet rooms on
each of the first and second floors (or fewer if requested by Tenant) at a
location to be agreed to by Landlord and Tenant.  The floor shall be of a high
quality sheet vinyl material and walls of simple tile, marlite or comparable
materials.  Any upgrade of the bathrooms shall be an element of the Tenant
Improvements.

          (f) The Landlord shall provide fine sprinkler runs with no "drop
heads."  Drop heads shall be an element of the Tenant Improvements.

          (g) The surface of all walls the Plans and in the Premises shall be
sheetrocked and taped but not textured as an element of the Shell Improvements.

          (h) The stairs and elevator and elevator lobby shall be completed and
finished as an element of the Shell Improvements.

Landlord's Initials ____                                  Tenant's Initials ____

                               Exhibit B Page 1
<PAGE>
 
                                   EXHIBIT C
                                   ---------

                              TENANT IMPROVEMENTS
                              -------------------



      1.  Construction of Tenant Improvements.
 
          1.2  Definitions.
 
               1.2.1  The term "Tenant Improvements" shall mean those 
improvements that Landlord is obligated to construct in the Building pursuant to
plans and specifications developed therefor in accordance with Paragraph 1(b)
below.
 
               1.2.2  The term "Tenant Improvement Costs" shall mean those 
actual amounts (1) paid to contractors for labor and materials furnished
pursuant to any construction contract entered into by Landlord to construct the
Tenant Improvements pursuant to Paragraph 1(c) below; (2) paid to governmental
authorities or agencies for all necessary governmental permits, licenses,
inspections and approvals related to the Tenant Improvements; (3) engineering
and architectural fees for services required in connection with the design and
construction of the Tenant Improvements by Landlord's team (note: Tenant will
retain its own architect to prepare plans for the Tenant Improvements, but
Landlord's team will review such plans); and (4) premiums for course of
construction insurance and completion bonds relating only to construction of the
Tenant Improvements.
 
               1.2.3  The term "Tenant Improvement Allowance" shall mean the 
maximum amount Landlord is required to spend toward the payment of Tenant
Improvement Costs, which amount is Thirty Dollars ($30) per rentable square foot
of the Premises or One Hundred Eighty Thousand Dollars ($180,000).
 
               1.2.4  Procedure and Time Schedules.
 
                      1.2.4.1  Approval of Plans.  On or before August 1, 1995, 
Tenant shall prepare and deliver to Landlord for Landlord's approval preliminary
plans and specifications for the Tenant Improvements that Tenant wants Landlord
to construct for Tenant's use in the Building. Within ten (10) business days
after receipt thereof, Landlord shall approve such plans or deliver to Tenant
its specific written objections to such plans. Landlord shall not unreasonably
withhold its approval of the preliminary plans and specifications submitted by
Tenant. If Landlord so disapproves such plans, then the parties shall confer and
negotiate in good faith as expeditiously as possible to reach agreement on the
preliminary plans and specifications. As soon as the preliminary plans and
specifications are approved by both Landlord and Tenant, Tenant shall prepare
final plans, specifications and working drawings for the Tenant Improvements
that are consistent with and are logical evolutions of the preliminary plans and
specifications approved by the parties. As soon as such final plans,
specifications and working drawings are completed, Tenant shall deliver the same
to Landlord for its approval, which shall not be unreasonably withheld. If
Landlord does not respond within five (5) business days after receipt of such
final plans with either its written approval thereof or its specific written
objections thereto, such final plans shall be deemed approved. In all events,
the parties shall use their best efforts to reach agreement so that such plans
may be submitted for governmental approval as soon as reasonably practicable. As
soon as approved by Landlord and Tenant, each of whose approval shall not be
unreasonably withheld, Landlord shall submit such final plans, specifications
and working drawings to all appropriate governmental agencies for approval.
Immediately after all such governmental approvals have been obtained, four (4)
copies of such final plans, specifications and working drawings shall be
initialed and dated by Landlord and Tenant. The final plans, specifications and
working drawings as approved, and all change orders specifically permitted
pursuant to Paragraph 1(b)(iii) below, shall be referred to herein as the
"Approved Plans." Landlord shall deliver to Tenant a copy of the Approved Plans
within five (5) days after receipt of all necessary governmental approvals.

Landlord's Initials ____                                  Tenant's Initials ____

                               Exhibit C Page 1
<PAGE>
 
                      1.2.4.2  Contractors.  The Tenant Improvements shall be 
constructed by a general contractor designated by Landlord and approved by
Tenant. All subcontracts in excess of Ten Thousand Dollars ($10,000) shall be
competitively bid, with a minimum of three (3) bids. If the final estimate of
Landlord to build the Tenant Improvements in accordance with the Approved Plans
would result in Tenant Improvements Costs in excess of the sum of the Tenant
Improvement Allowance plus One Hundred Thousand Dollars ($100,000) (the "Cost
Ceiling"), then upon the request of Tenant (which must be made, if at all,
within five (5) days after Tenant's receipt from Landlord of Landlord's final
estimate of costs), Landlord and Tenant shall confer in good faith to modify the
Approved Plans to reduce such estimate so that such costs will be reduced to an
amount not greater than the Cost Ceiling. All parties shall use their best
efforts to complete the preparation and approval of the Approved Plans so that
construction contracts may be executed on or before August 1, 1995.
 
                      1.2.4.3  Changes To Approved Plans for Tenant 
Improvements. Once the Approved Plans have been finally approved by Landlord and
Tenant as provided above, then thereafter neither party shall have the right to
order extra work or change orders with respect to the construction of the Tenant
Improvements without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed. All extra work or change orders
requested by either Landlord or Tenant shall be made in writing, shall specify
the amount of delay or the time saved resulting therefrom, shall specify any
added or reduced cost resulting therefrom, and shall become effective and a part
of the Approved Plans once approved in writing by both parties.
 
                      1.2.4.4  Commencement and Completion of the Tenant 
Improvements. As soon as (1) the Approved Plans have been prepared as provided
above, and (2) all necessary governmental approvals have been obtained, then
Landlord shall thereafter commence construction of such improvements and shall
diligently prosecute such construction to completion, using its best efforts so
that the Tenant Improvements may be substantially completed by January 1, 1996.
Such improvements shall be constructed by Landlord in a good and workmanlike
manner, in accordance with the Approved Plans, and in compliance with all
applicable regulations, ordinances, building codes, and statutes of lawful
governmental authority.
 
                      1.2.4.5  Payment of Cost of Tenant Improvements.  
Landlord shall pay all Tenant Improvements Costs up to an amount equal to the
Tenant Improvement Allowance. After the Tenant Improvement Allowance has been
completely exhausted, then, to the extent the Tenant Improvement Costs exceed
such allowance, Tenant shall pay the entire amount of such excess within five
(5) days of written demand by Landlord therefor accompanied by a bill or other
reasonable evidence of the amount thereof.
 
               1.2.5  Delay In Completion Caused By Tenant.  The parties hereto
acknowledge that the Commencement Date may be delayed because of the acts or
failures of Tenant, including, among other things:
 
                      1.2.5.1  Tenant's failure to submit plans for the Tenant 
Improvements on or before the date specified in Paragraph 1(b)(i) above, or to
promptly review and approve plans for the Tenant Improvements submitted by
Landlord;
 
                      1.2.5.2  Tenant's request for special materials, finishes,
or installations which are not readily available;
 
                      1.2.5.3  Change orders requested by Tenant and approved 
by Landlord; or
 
                      1.2.5.4  Interference with Landlord's Work caused by 
Tenant or by Tenant's agents or representatives.

Landlord's Initials ____                                  Tenant's Initials ____

                               Exhibit C Page 2
<PAGE>
 
     It is the intent of the parties hereto that the Commencement Date not be
delayed by any of the foregoing causes or by any other act of Tenant, and in the
event it is so delayed, then the Lease Term shall commence as of the date it
would otherwise have commenced absent said delay cause by Tenant.





Landlord's Initials ____                                  Tenant's Initials ____

                               Exhibit C Page 3
<PAGE>
 
                                  EXHIBIT D-1
                                  -----------

                             OPTION TO EXTEND TERM
                             ---------------------


     Options to Extend Term.

     1.   Options.  At the expiration of the original one hundred forty-four
(144) month term hereof (the "Expiration Date"), Tenant may extend the term of
this Lease for two additional periods, each for a term of five (5) years (each
an "Extended Term"), the first commencing immediately following the Expiration
Date (the "First Extended Term") and the second period commencing immediately
following the expiration of the First Extended Term (the "Second Extended
Term").  Tenant shall exercise each such option, if at all, by giving Landlord
written notice of Tenant's exercise of the option at least nine (9) months but
no more than eighteen (18) months prior to the Expiration Date or the expiration
of the First Extended Term, as the case may be.  In no event shall any purported
exercise of such option by Tenant be effective if Tenant is in default of any
material term, covenant, agreement or obligation on its part under this Lease
during the period from the date Tenant exercised its option hereunder up to and
including the commencement of the subject Extended Term.  Tenant's options
hereunder shall include any space which Tenant has elected to Lease on the third
(3rd) floor of the Building pursuant to Paragraph 1.6 of the Lease.  Each
Extended Term shall be upon all of the terms and conditions hereof, except that
the Base Rent shall be adjusted as set forth on Exhibit D-2.

     2.   Additional Tenant Improvement Allowance.  If Tenant exercises its
option to extend the term of this Lease for the First Extended Term, Landlord
shall provide to Tenant a tenant improvement allowance of Eight Dollars ($8) per
rentable square foot of the Premises, to be used by Tenant to fund the cost of
improvements and alterations to the Premises.  This additional tenant
improvement allowance shall be paid to Tenant within thirty (30) days following
Tenant's delivery to Landlord of reasonably satisfactory proof of the cost of
such alterations and improvements to the Premises incurred after the seventh
(7th) year of the initial Lease Term.  Tenant may expend such tenant improvement
allowance (and receive payment therefor) in increments of less than the full
amount thereof, provided that the full amount of such tenant improvement
allowance is expended prior to the commencement of the third (3rd) year of the
First Extended Term.

Landlord's Initials ____                                  Tenant's Initials ____

                              Exhibit D-1 Page 1
<PAGE>
 
                                  EXHIBIT D-2
                                  -----------

                            RENT FOR EXTENDED TERM
                            ----------------------


     1.   Extended Term Rent.  Upon Tenant's exercising either of its options to
extend the term of this Lease, the monthly Base Rent for the Extended Term shall
be subject to negotiation between Landlord and Tenant, with an effort to
determine a fair market rental for the Premises, as improved and subject to the
rental adjustment set forth in Subparagraph 2 of the Exhibit D-2 and the
Tenant's responsibility for its "Allocable Share'' of Operating Expenses and
Real Property Taxes pursuant to this Lease. In the event the parties fail to
agree upon the amount of the monthly Base Rent for either Extended Term on or
before one hundred fifty (150) days prior to commencement thereof, the monthly
Base Rent for such Extended Term shall be determined by appraisal in the manner
hereafter set forth; provided, however, that in no event shall the monthly Base
Rent for either Extended Term be less than ninety percent (90%) the monthly Base
Rent payable hereunder for the last full month of the Lease term immediately
preceding commencement of such Extended Term.

     In the event it becomes necessary under this paragraph to determine the
fair market monthly Base Rent by appraisal, one hundred fifty (150) days prior
to commencement of the Extended Term, Landlord and Tenant each shall appoint a
real estate appraiser who shall be a member of the American Institute of Real
Estate Appraisers ("AIREA") and shall be experienced in the appraisal of rental
value for commercial properties in the Palo Alto area, and such appraisers shall
each determine the fair market monthly Base Rent for the Premises taking into
account the value of the Premises and the amenities provided by the Building,
the annual adjustments of Base Rent provided for hereinabove, and prevailing
comparable rentals; provided, however, that in their determination of fair
market rent the appraisers shall not take into account improvements to the
Premises provided or installed by Tenant which Tenant would be entitled to
remove upon expiration of the term pursuant to the terms of this Lease. Such
appraisers shall, within forty-five (45) business days after their appointment,
complete their appraisals and submit their appraisal reports to Landlord and
Tenant. If the fair market monthly Base Rent of the Premises established in the
two (2) appraisals varies by five percent (5%) or less of the higher rental, the
average of two shall be controlling. If said fair market monthly Base Rent
varies by more than five percent (5%) of the higher rental, said appraisers,
within ten (10) days after submission of the last appraisal, shall appoint a
third appraiser who shall be a member of the AIREA and who shall be similarly
qualified and experienced. Such third appraiser shall, within forty-five (45)
business days after his appointment, determine by appraisal the fair market
monthly Base Rent of the Premises, taking into account the same factors referred
to above, and submit his appraisal report to Landlord and Tenant. The fair
market monthly Base Rent determined by the third appraiser for the Premises
shall be averaged with whichever of the other two appraised values is closest to
that determined by the third appraiser, and said average shall be the fair
market rent used to determine Base Rent pursuant to the preceding paragraph. If
either Landlord or Tenant fails to appoint an appraiser, or if an appraiser
appointed by either of them fails, after his appointment, to submit his
appraisal within the required period in accordance with the foregoing, the
appraisal submitted by the appraiser properly appointed and timely submitting
his appraisal shall be controlling. If the two appraisers appointed by Landlord
and Tenant are unable to agree upon a third appraiser within the required period
in accordance with the required period in accordance with the foregoing,
application shall be made within twenty (20) days thereafter by either Landlord
or Tenant to the AIREA, which shall appoint a member of said institute willing
to serve as appraiser.  The cost of all appraisals under this paragraph shall be
borne equally by Landlord and Tenant.

     Notwithstanding the foregoing, in the event Base Rent as determined by
arbitration for the first lease year of either Extended Term is not acceptable
to Tenant, Tenant shall be entitled to rescind the exercise of its option to
extend the term by notifying Landlord in writing of said rescission within ten
(10) days of receiving notification of the arbitrators' final determination of
Base Rent. If Tenant fails to notify Landlord in writing of said rescission
within said ten (10) day period, Tenant shall be deemed to have accepted the
arbitrator's determination of Base Rent. 

Landlord's Initials ____                                  Tenant's Initials ____

                              Exhibit D-2 Page 1
<PAGE>
 
If Tenant rescinds the exercise of its option to extend the Term pursuant to
this paragraph, the then term of this Lease shall be modified so that it shall
expire nine (9) months from Landlord's receipt of Tenant's rescission notice.
Base Rent during any extended period of the term resulting from the extension
specified in the preceding sentence shall be the same as in final lease year of
the then term of this Lease.

     2.   Annual Adjustments During Each Extended Term.  On the anniversary date
of the first day of any Extended Term, the rent shall be adjusted in accordance
with the last paragraph of Paragraph 3.1 of the Lease.

Landlord's Initials ____                                  Tenant's Initials ____

                              Exhibit D-2 Page 2
<PAGE>
 
                                   EXHIBIT E
                                   ---------

                             THIRD FLOOR PREMISES
                             --------------------




Landlord's Initials ____                                  Tenant's Initials ____

                               Exhibit E Page 1