Office Building Lease

                                        CB Commercial Real Estate Group, Inc.
                                        Is now known as CB Richard Ellis, Inc.

CB  RICHARD ELLIS     CB COMMERCIAL Real Estate Group Inc.
                      BROKERAGE AND MANAGEMENT
                      LICENSED REAL ESTATE BROKER

                                TABLE OF CONTENTS
                                                                         PAGE
Article 1     LEASE OF PREMISES ...........................................I
Article 2     DEFINITIONS .................................................1
Article 3     EXHIBITS AND ADDENDA ........................................2
Article 4     DELIVERY OF POSSESSION ......................................2
Article 5     RENT ........................................................2
Article 6     INTEREST AND LATE CHARGES ...................................4
Article 7     SECURITY DEPOSIT ............................................4
Article 8     TENANT'S USE OF THE PREMISES ................................4
Article 9     SERVICES AND UTILITIES ......................................5
Article 10    CONDITION OF THE PREMISES ...................................5
Article 11    CONSTRUCTION, REPAIRS AND MAINTENANCE .......................5
Article 12    ALTERATIONS AND ADDITIONS ...................................6
Article 13    LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY ...................6
Article 14    RULES AND REGULATIONS .......................................7
Article 15    CERTAIN RIGHTS RESERVED BY LANDLORD .........................7
Article 16    ASSIGNMENT AND SUBLETTING ...................................7
Article 17    HOLDING OVER ................................................8
Article 18    SURRENDER OF PREMISES .......................................8
Article 19    DESTRUCTION OR DAMAGE .......................................8
Article 20    EMINENT DOMAIN ..............................................8
Article 21    INDEMNIFICATION .............................................9
Article 22    TENANT'S INSURANCE ..........................................9
Article 23    WAIVER OF SUBROGATION ......................................10
Article 24    SUBORDINATION AND ATTORNMENT ...............................10
Article 25    TENANT ESTOPPEL CERTIFICATES ...............................10
Article 26    TRANSFER OF LANDLORD'S INTEREST ............................10
Article 27    DEFAULT ....................................................10
Article 28    BROKERAGE FEES .............................................11
Article 29    NOTICES ....................................................11
Article 30    GOVERNMENT ENERGY OR UTILITY CONTROLS ......................11
Article 31    RELOCATION OF PREMISES .....................................11
Article 32    QUIET ENJOYMENT ............................................12
Article 33    OBSERVANCE OF LAW ..........................................12
Article 34    FORCE MAJEURE...............................................12
Article 35    CURING TENANT'S DEFAULTS ...................................12
Article 36    SIGN CONTROL................................................12
Article 37    MISCELLANEOUS...............................................12

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              OFFICE BUILDING LEASE       CB COMMERCIAL REAL ESTATE GROUP, INC.
                                          IS NOW KNOWN AS CB RICHARD ELLIS, INC.

 CB  RICHARD ELLIS               CB COMMERCIAL REAL ESTATE GROUP, INC
                                 BROKERAGE AND MANAGEMENT
                                 LICENSED REAL ESTATE BROKER

This Lease between UNION BANK OF CALIFORNIA, TRUSTEE FOR AGNES M. BOURN AND
                   -------------------------------------------------------------
                   WILLIAM S.
                   ----------
                   Bourn Trusts a ("Landlord"),and First Source Capital, a
                   wholly owned subsidiary of
American River Holdings                              ("Tenant"),
is dated  June 29,                                   '1999

1.  LEASE OF PREMISES

In consideration of the Rent (as defined at Section 5.4) and the provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown by diagonal lines on the floor plan attached hereto as Exhibit
"A," and further described at Section 21. The Premises are located within the
Building and Project described in Section 2m. Tenant shall have the
non-exclusive right (unless otherwise provided herein) in common with Landlord,
other tenants, subtenants and invitees, to use of the Common Areas (as defined
at Section 2e).

2.  DEFINITIONS

As used in this Lease, the following terms shall have the following meanings:

a. Base Rent (initial): $      N/A                              per year

b. Base Year The calendar year of N/A

c. Broker(s)

      Landlord's:- CB RICHARD ELLIS, INC.
      Tenants:- CB RICHARD ELLIS. Inc.

In the event that CB Commercial Real Estate Group Inc. represents both Landlord
and Tenant, Landlord and Tenant hereby confirm that they were timely advised of
the dual presentation and that they consent to the same, and that they do not
expect said broker to disclose to either of them the confidential information of
the other party.

d. Commencement Date: July 8, 1999

e. Common Areas: the building lobbies, common corridors and hallways, restrooms,
garage and parking areas, stairways, elevators and other generally understood
public or common areas. Landlord shall have the right to regulate or restrict
the use of the Common Areas.

f. Expense Stop: (fill in if applicable): $ N/A

g. Expiration Date:- June 30, 2000 unless otherwise sooner terminated in
accordance with the provisions of this Lease.

h. Index (Section 5.2): United States Department of Labor, Bureau of Labor
Statistics Consumer Price Index for All Urban Consumers,  N/A
Average, Subgroup "All Items" (1967=100).

i - Landlord's Mailing Address:   RIVER PARK OFFICES C/O CB RICHARD ELLIS, INC.
                                  REMS
                                  555 CAPITOL MALL, SUITE 215, SACRAMENTO, CA
                                  95814

    Tenant's Mailing Address:     First Source Capital Attn: David T. Taber
                                  1545 RIVER PARK DRIVE, #107, SACRAMENTO, CA
                                  95815

    Monthly Installments of Base Rent (initial): $          533.40 per month.

k. Parking: Tenant shall be permitted, to park 2 cars on a non-exclusive basis
in the area(s) designated by Landlord for parking. Tenant shall abide by any and
all parking regulations and rules established from time to time by Landlord or
Landlord`s parking operator.

l. Premises: that portion of the Building containing approximately 381 square
feet of Rentable Area, shown by diagonal lines on Exhibit "A" located on the
FIRST floor of the Building and known as Suite 108.

m. Project: the building of which the Premises are a part (the "Building") and
any other buildings or improvements on the real property (the "Property")
located at 1540 River Park Drive.

   Project is known as RIVER PARK PROFESSIONAL OFFICES.

n. Rentable Area: as to both the Premises and the Project, the respective
measurements of floor area as may from time to time be subject to lease by
Tenant and all tenants of the Project, respectively, as determined by Landlord
and applies on a consistent basis throughout the Project. o. Security Deposit
(Section 7): $ 533.40

p. State: the State of CALIFORNIA

q. Tenant's First Adjustment Date (Section 5.2): the first day of the calendar
month following the Commencement Date plus   N/A  months.

r. Tenant's Proportionate Share: 1 / 2 %. Such share is a fraction, the
numerator of which is the Rentable Area of the Premises, and the denominator of
which is the Rentable Area of the Project, as determined by Landlord from time
to time. The Project consists of ________ building(s) containing a total
Rentable Area of 74,779 square feet.
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s. Tenant's Use Clause (Article 8): GENERAL OFFICE PURPOSES

t. Term: the period commencing on the Commencement Date and expiring at midnight
on the Expiration Date.

3. EXHIBITS AND ADDENDA.
The exhibits and addenda listed below (unless lined out) are incorporated by
reference in this Lease:

a.       Exhibit "A"-Floor Plan showing the Premises.
b.       Deleted.
c.       Deleted.
d.       Exhibit "D"-Rules and regulations.
e.       Deleted.
f.       Addenda:
    ADDENDUM

4. DELIVERY OF POSSESSION.
If for any reason Landlord does not deliver possession of the Premises to Tenant
on the Commencement Date, Landlord shall not be subject to any liability for
such failure, the Expiration Date shall not change and the validity of this
Lease shall not be impaired, but Rent shall be abated until delivery of
possession. "Delivery of possession" shall be deemed to occur on the date of
commencement. 'If Landlord permits Tenant to enter into possession of the
Premises before the Commencement Date, such possession shall be subject to the
provisions of this Lease, including, without limitation, the payment of Rent..

5. RENT.

5.1. Payment of Base Rent. Tenant agrees to pay the Base Rent for the Premises.
Monthly Installments of Base Rent shall be payable in advance on the first day
of each calendar month of the Term. If the Term begins (or ends) on other than
the first (or last) day of a calendar month, the Base Rent for the partial month
shall be prorated on a per diem basis. Tenant shall pay Landlord the first
Monthly Installment of Base Rent when Tenant executes the Lease.

5.4 Definition of Rent. All costs and expenses which Tenant assumes or agrees to
pay to Landlord under this Lease shall be deemed additional rent (which,
together with the Base Rent is sometimes referred to as the "Rent"). The Rent
shall be paid to the Building manager (or other person) and at such place, as
Landlord may from time to time designate in writing, without any prior demand
therefor and without deduction or offset, in lawful money of the United States
of America.

5.5 Rent Control. If the amount of Rent or any other payment due under this
Lease violates the terms of any governmental restrictions on such Rent or
payment, then the Rent or payment due during the period of such restrictions
shall be the maximum amount allowable under those restrictions. Upon termination
of the restrictions, Landlord shall, to the extent it is legally permitted,
recover from Tenant the difference between the amounts received during the
period of the restrictions and the amounts Landlord would have received had
there been no restrictions.

5.6 Taxes Payable by Tenant. In addition to the Rent and any other charges to be
paid by Tenant hereunder, Tenant shall reimburse Landlord upon demand for any
and all taxes payable by Landlord (other than net income taxes) which are not
otherwise reimbursable under this Lease, whether or not now customary or within
the contemplation of the parties, where such taxes are upon, measured by or
reasonably attributable to (a) the cost or value of Tenant's equipment,
furniture, fixtures and other personal property located in the Premises, or the
cost or value of any leasehold improvements made in or to the Premises by or for
Tenant, other than Building Standard Work made by Landlord, regardless of
whether title to such improvements is held by Tenant or Landlord; (b) the gross
or net Rent payable under this Lease, including, without limitation, any rental
or gross receipts tax levied by any taxing authority with respect to the receipt
of the Rent hereunder; (c) the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof; or (d) this transaction or any document to which Tenant is
a party creating or transferring an interest or an estate in the Premises; If it
becomes unlawful for Tenant to reimburse Landlord for any costs as required
under this Lease, the Base Rent shall be revised to net Landlord the same net
Rent after imposition of any tax or other charge upon Landlord as would have
been payable to Landlord but for the reimbursement being unlawful.

6. INTEREST AND LATE CHARGES.

If Tenant fails to pay when due any Rent or other amounts or charges which
Tenant is obligated to pay under the terms of this Lease, the unpaid amounts
shall bear interest at the maximum rate then allowed by law. Tenant acknowledges
that the late payment of any Monthly Installment of Base Rent will cause
Landlord to lose the use of that money and incur costs and expenses not
contemplated under this Lease, including without limitation, administrative and
collection costs and processing and accounting expenses, the exact amount of
which is extremely difficult to ascertain. Therefore, in addition to interest,
if any such installment is not received by Landlord within ten (10) days from
the date it is due, Tenant shall pay Landlord a Late charge equal to ten percent
(10%) of such installment. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the loss suffered from such nonpayment by Tenant.
Acceptance of any interest or late charge shall not constitute a waiver of
Tenant's default with respect to such nonpayment by Tenant nor prevent Landlord
from exercising any other rights or remedies available to Landlord under this
Lease.

7. SECURITY DEPOSIT.

Tenant agrees to deposit with Landlord the Security Deposit set forth at Section
2.0 upon execution of this Lease, as security for Tenant's faithful performance
of its obligations under this Lease. Landlord and Tenant agree that the Security
Deposit may be commingled with funds of Landlord and Landlord shall have no
obligation or liability for payment of interest on such deposit. Tenant shall
not mortgage, assign, transfer or encumber the Security Deposit without the
prior written consent of Landlord and any attempt by Tenant to do so shall be
void, without force or effect and shall not be binding upon Landlord.

If Tenant fails to pay any Rent or other amount when due and payable under this
Lease, or fails to perform any of the terms hereof, Landlord may appropriate and
apply or use all or any portion of the Security Deposit for Rent payments or any
other amount then due and unpaid, for payment of any amount for which Landlord
has become obligated as a result of Tenant's default or breach, and for any loss
or damage sustained by Landlord as a result of Tenant's default or breach, and
Landlord may so apply or use this deposit without prejudice to any other remedy
Landlord may have by reason of Tenant's default or


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breach. If Landlord so uses any of the Security Deposit, Tenant shall, within
ten (10) days after written demand therefor, restore the Security Deposit to the
full amount originally deposited; Tenant's failure to do so shall constitute an
act of default hereunder and Landlord shall have the right to exercise any
remedy provided for at Article 27 hereof. Within fifteen (15) days after the
Term (or any extension thereof) has expired or Tenant has vacated the Premises,
whichever shall last occur, and provided Tenant is not then in default on any of
its obligations hereunder, Landlord shall return the Security Deposit to Tenant,
or, if Tenant has assigned its interest under this Lease, to the last assignee
of Tenant. If Landlord sells its interest in the Premises, Landlord may deliver
this deposit to the purchaser of Landlord's interest and thereupon be relieved
of any further liability or obligation with respect to the Security Deposit.

8. TENANT'S USE OF THE PREMISES.

Tenant shall use the Premises solely for the purposes set forth in Tenant's Use
Clause. Tenant shall not use or occupy the Premises in violation of law or any
covenant, condition or restriction affecting the building or Project of the
certificate of occupancy issued for the Building or project, and shall, upon
notice from Landlord, immediately discontinue any use of the Premises which is
declared by any government authority having jurisdiction to be a violation of
law or the certificate of occupancy. Tenant, at Tenant's own cost and expense,
shall comply with al laws, ordinances, regulations, rules and/or any or
occupancy of the Premises, impose any duty upon Tenant or Landlord with respect
to the premises or its use or occupation. A judgment of any court of competent
jurisdiction or the admission by Tenant in any action or proceeding against
Tenant that Tenant has violated any such laws, ordinances, regulations, rules
and/or directions in the use of the Premises shall be deemed to be a conclusive
determination of that fact as between Landlord and Tenant. Tenants hall not do
or permit to be done anything which will invalidate or increase the cost of any
fire, extended coverage or other insurance policy covering the Building or
Project and/or property located therein, and shall comply with all rules,
orders, regulations, requirements and recommendation of the insurance services
Office or any other organization performing a similar function. Tenant shall
promptly upon DEMAND REIMBURSE LANDLORD FOR ANY ADDITIONAL PREMIUM CHARGED for
such policy by reason of Tenant's failure to comply with the provisions of this
Article. Tenant shall not do or PERMIT ANYTHING to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or Project, or injure or annoy them, or use
or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises. Tenant shall not commit or suffer to be committed
any waste in or upon the Premises.

9. SERVICES AND UTILITIES.

Provided that Tenant is not in default hereunder, Landlord agrees to furnish to
the Premises during generally recognized business days, and during hours
determined by Landlord in its sole discretion, and subject to the Rules and
Regulations of the Building or Project, electricity for normal desk top office
equipment and normal copying equipment, and heating, ventilation and air
conditioning ("HVAC") as required in Landlord's judgment for the comfortable use
and occupancy of the Premises. If Tenant desires HVAC at any other time,
Landlord shall use reasonable efforts to furnish such service upon reasonable
notice from Tenant and Tenant shall pay Landlord's charges therefor on demand.
Landlord shall also maintain and keep lighted the common stairs, common entries
and restrooms in the Building. Landlord shall not be in default hereunder or be
liable for any damages directly or indirectly resulting from, nor shall the Rent
be abated by reason of (i) the installation, use or interruption of use of any
equipment in connection with the furnishing of any of the foregoing services,
(ii) failure to furnish or delay in furnishing any such services where such
failure or delay is caused by accident or any condition or event beyond the
reasonable control of Landlord, or by the making of necessary repairs or
improvements to the Premises, Building or Project, or (iii) the limitation,
curtailment or rationing of, or restrictions on, use of water, electricity, gas
or any other form of energy serving the Premises, Building or Project. Landlord
shall not be liable under any circumstances for a loss of or injury to property
or business, however occurring, through or in connection with or incidental to
failure to furnish any such services. If Tenant uses heat generating machines or
equipment in the Premises which affect the temperature otherwise maintained by
the HVAC system, Landlord reserves the right to install supplementary air
conditioning units in the Premises and the cost thereof, including the cost of
installation, operation and maintenance thereof, shall be paid by Tenant to
Landlord upon demand by Landlord.

Tenant shall not, without the written consent of Landlord, use any apparatus or
device in the Premises, including without limitation, electronic data processing
machines, punch card machines or machines using in excess of 120 volts, which
consumes more electricity than is usually furnished or supplied for the use of
premises as general office space, as determined by Landlord. Tenant shall not
connect any apparatus with electric current except through existing electrical
outlets in the Premises. Tenant shall not consume water or electric current in
excess of that usually furnished or supplied for the use of premises as general
office space (as determined by Landlord), without first procuring the written
consent of Landlord, which Landlord may refuse, and in the event of consent,
Landlord may have installed a water meter or electrical current meter in the
Premises to measure the amount of water or electric current consumed. The cost
of any such meter and of its installation, maintenance and repair shall be paid
for by the Tenant and Tenant agrees to pay to Landlord promptly upon demand for
all such water and electric current consumed as shown by said meters, at the
rates charged for such services by the local public utility plus any additional
expense incurred in keeping account of the water and electric current so
consumed. If a separate meter is not installed, the excess cost for such water
and electric current shall be established by an estimate made by a utility
company or electrical engineer hired by Landlord at Tenant's expense.

Nothing contained in this Article shall restrict Landlord's right to require at
any time separate metering of utilities furnished to the Premises. In the event
utilities are separately metered, Tenant shall pay promptly upon demand for all
utilities consumed at utility rates charged by the local public utility plus any
additional expense incurred by Landlord in keeping account of the utilities so
consumed. Tenant shall be responsible for the maintenance and repair of any such
meters at its sole cost.

Landlord shall furnish elevator service, lighting replacement for building
standard lights, restroom supplies, window washing and janitor services in a
manner that such services are customarily furnished to comparable office
buildings in the area.

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10. CONDITION OF THE PREMISES.

Tenant's taking possession of the Premises shall be deemed conclusive evidence
that as of the date of taking possession the Premises are in good order and
satisfactory condition, except for such matters as to which Tenant gave Landlord
notice on or before the Commencement Date. No promise of Landlord to after,
remodel, repair or improve the Premises, the Building or the Project and no
representation, express or implied, respecting any matter or thing relating to
the Premises, Building, Project or this Lease (including, without limitation,
the condition of the Premises, the Building or the Project) have been made to
Tenant by Landlord or its Broker or Sales Agent, other than as may be contained
herein or in a separate exhibit or addendum signed by Landlord and Tenant.

11. CONSTRUCTION, REPAIRS AND MAINTENANCE.

a. Landlord's Obligations: Landlord shall maintain in good order, condition and
repair the Building and all other portions of the Premises not the obligation of
Tenant or of any other tenant in the Building.

b. Tenant's Obligations.

(1) Deleted.

(2) Tenant at Tenant's sole expense shall except for services furnished by
    Landlord pursuant to Article 9 hereof, maintain the Premises in good order,
    condition and repair, including the interior surfaces of the ceilings, walls
    and floors, all doors, all interior windows, all plumbing, pipes and
    fixtures, electrical wiring, switches and fixtures, Building Standard
    furnishings and special items and equipment installed by or at the expense
    of Tenant.

(3) Tenant shall be responsible for all repairs and alterations in and to the
    Premises, Building and Project and the facilities and systems thereof, the
    need for which arises out of (I) Tenant's use or occupancy of the premises,
    (ii) the installation, removal, use or operation of Tenant's Property (as
    defined in Article 13) in the Premises , (iii) the moving of Tenant's
    Property into or out of the Building, or (iv) the act, omission, misuse or
    negligence of Tenant, its agents, contractors, employees or invitees.

(4) If Tenant fails to maintain the Premises in good order, condition and
    repair, Landlord shall give Tenant notice to do such acts as are REASONABLY
    REQUIRED TO SO MAINTAIN THE PREMISES. If Tenant fails to promptly commence
    such work and diligently prosecute it to completion, then Landlord shall
    have the right to do such acts and expend such funds at the expense of
    Tenant as are reasonably required to perform such work. Any amount so
    expended by Landlord shall be paid by Tenant promptly after demand with
    interest at the prime commercial rate then being charged by Bank of America
    NT & SA plus two percent (2%) per annum, from the date of such work, but not
    to exceed the maximum rate then allowed by law. Landlord shall have no
    liability to Tenant for any damage, inconvenience, or interference with the
    use of the Premises by Tenant as a result of performing any such work.

c. Compliance with Law Landlord and Tenant shall each do all acts required to
comply with all applicable laws, ordinances, and rules of any public authority
relating to their respective maintenance obligations as set forth herein.

d. Waiver by Tenant. Tenant expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford the 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 order, condition and repair.

e. Load and Equipment Limits. Tenant shall not place a load upon any floor of
the Premises which exceeds the load per square foot which such floor was
designed to carry, as determined by Landlord or Landlord's structural engineer.
The cost of any such determination made by Landlord's structural engineer shall
be paid for by Tenant upon demand. Tenant shall not install business machines or
mechanical equipment which cause noise or vibration to such a degree as to be
objectionable to Landlord or other Building tenants.

f. Except as otherwise expressly provided in this Lease, Landlord shall have no
liability to Tenant nor shall Tenant's obligations under this Lease be reduced
or abated in any manner whatsoever by reason of any inconvenience, annoyance,
interruption or injury to business arising from Landlord's making any repairs or
changes which Landlord is required or permitted by this Lease or by any other
tenant's lease or required by law to make in or to any portion of the Project,
Building or the Premises. Landlord shall nevertheless use reasonable efforts to
minimize any interference with Tenant's business in the Premises.

g. Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part or appurtenance of the Building's mechanical, electrical,
plumbing, HVAC or other systems serving, located in, or passing through the
Premises.

h. Upon the expiration or earlier termination of this Lease, Tenant shall return
the Premises to Landlord clean and in the same condition as on the date Tenant
took possession, except for normal wear and tear. Any damage to the Premises,
including any structural damage, resulting from Tenant's use or from the removal
of Tenant's fixtures, furnishings and equipment pursuant to Section 13b shall be
repaired by Tenant at Tenant's expense.

12. ALTERATIONS AND ADDITIONS.

a. Tenant shall not make any additions, alterations or improvements to the
Premises without obtaining the prior written consent of Landlord. Landlord's
consent may be conditioned on Tenant's removing any such additions, alterations
or improvements upon the expiration of the Term and restoring the Premises to
the same condition as on the date Tenant took possession. All work with respect
to any addition, alteration or improvement shall be done in a good and
workmanlike manner by properly qualified and licensed personnel approved by
Landlord, and such work shall be diligently prosecuted to completion. Landlord
may, at Landlord's option, require that any such work be performed by Landlord's
contractor, in which case the cost of such work shall be paid for before
commencement of the work. Tenant shall pay to Landlord upon completion of any
such work by Landlord's contractor, an administrative fee of fifteen percent
(15%) of the cost of the work.

b. Tenant shall pay the costs of any work done on the Premises pursuant to
Section 12a, and shall keep the Premises, Building and Project free and clear of
liens of any kind. Tenant shall indemnity, defend against and keep Landlord free
and harmless from all liability, loss, damage, costs, attorneys' fees and any
other expense incurred on account of claims by any person performing work or
furnishing materials or supplies for Tenant or any person claiming under Tenant.
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Tenant shall keep Tenant's leasehold interest, and any additions or improvements
which are or become the property of Landlord under this Lease, free and clear of
all attachment or judgment liens. Before the actual commencement of any work for
which a claim or lien may be filed, Tenant shall give Landlord notice of the
intended commencement date a sufficient time before that date to enable Landlord
to post notices of non-responsibility or any other notices which Landlord deems
necessary for the proper protection of Landlord's interest in the Premises,
Building or the Project, and Landlord shall have the right to enter the Premises
and post such notices at any reasonable time.

c. Landlord may require, at Landlord's sole option, that Tenant provide to
Landlord, at Tenant's expense, a lien and completion bond in an amount equal to
at least one and one-half (1-1/2) times the total estimated cost of any
additions, alternations or improvements to be made in or to the Premises, to
protect Landlord against any liability for mechanic's and materialmen's liens
and to insure timely completion of the work. Nothing contained in this Section
12c shall relieve Tenant of its obligation under Section 12b to keep the
Premises, Building and Project free of all liens.

d. Unless their removal is required by Landlord as provided in Section 12a, all
additions, alterations and improvements made to the premises shall become the
property of landlord and be surrendered with the Premises upon the expiration of
the Term; provided, however, Tenants equipment, machinery and trade fixtures
which can be removed without damage to the premises shall remain the property of
Tenant and may be removed, subject to the provisions, of Section 13b.

13. LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY.

a. All fixtures, equipment improvements and appurtenances attached to or built
into the Premises at the commencement of or during the Term, whether or not by
or at the expense of Tenant ("leasehold Improvements"), shall be and remain a
par t of the premises, shall be the property of landlord and shall not be
removed by Tenant, except as expressly provided in Section 13b.

b. All movable partitions, business and trade fixtures, machinery and equipment,
communications equipment and office equipment located in the Premises and
acquired by or for the account of Tenant, without expense to Landlord, which can
be removed without structural damage to the Building, and all furniture,
furnishings and other articles of movable personal property owned by Tenant and
located in the Premises (collectively "Tenant's Property") shall be and shall
remain the property of Tenant and may be removed by Tenant at any time during
the Term; provided that if any of Tenant's Property is removed, Tenant shall
promptly repair any damage to the Premises or to the Building resulting from
such removal.

14. RULES AND REGULATIONS.

Tenant agrees to comply with (and cause its agents, contractors, employees and
invitees to comply with) the rules and regulations attached hereto as Exhibit
"D" and with such reasonable modifications thereof and additions thereto as
Landlord may from time to time make. Landlord shall not be responsible for any
violation of said rules and regulations by other tenants or occupants of the
Building or Project.

15. CERTAIN RIGHTS RESERVED BY LANDLORD.

Landlord reserves the following rights, exercisable without liability to Tenant
for (a) damage or injury to property, person or business, (b) causing an actual
or constructive eviction from the Premises, or (c) disturbing Tenant's use or
possession of the Premises:

a. To name the Building and Project and to change the name or street address of
the Building or Project;

b. To install and maintain all signs on the exterior and interior of the
Building and Project;

c. To have pass keys to the Premises and all doors within the Premises,
excluding Tenant's vaults and safes;

d. At any time during the Term, and on reasonable prior notice to Tenant, to
inspect the Premises, and to show the Premises to any prospective purchaser or
mortgagee of the Project, or to any assignee of any mortgage on the Project, or
to others having an interest in the Project or Landlord, and during the last six
months of the Term, to show the Premises to prospective tenants thereof; and

e. To enter the Premises for the purpose of making inspections, repairs,
alterations, additions or improvements to the Premises or the Building
(including, without limitation, checking, calibrating, adjusting or balancing
controls and other parts of the HVAC system), and to take all steps as may be
necessary or desirable for the safety, protection, maintenance or preservation
of the Premises or the Building or Landlord's interest therein, or as may be
necessary or desirable for the operation or improvement of the Building or in
order to comply with laws, orders or requirements of governmental or other
authority. Landlord agrees to use its best efforts (except in an emergency) to
minimize interference with Tenant's business in the Premises in the course of
any such entry.

16. ASSIGNMENT AND SUBLETTING.

No assignment of this Lease or sublease of all or any part of the Premises shall
be permitted, except as provided in this Article 16.

a. Tenant shall not, without the prior written consent of Landlord, assign or
hypothecate this Lease or any interest herein or sublet the Premises or any part
thereof, or permit the use of the Premises by any party other than Tenant. Any
of the foregoing acts without such consent shall be void and shall, at the
option of Landlord, terminate this Lease. This Lease shall not, nor shall any
interest of Tenant herein, be assignable by operation of law without the written
consent of Landlord.

b. If at any time or from time to time during the Term Tenant desires to assign
this Lease or sublet all or any part of the Premises, Tenant shall give notice
to Landlord setting forth the terms and provisions of the proposed assignment or
sublease, and the identity of the proposed assignee or subtenant. Tenant shall
promptly supply Landlord with such information concerning the business
background and financial condition of such proposed assignee or subtenant as
Landlord may reasonably request. Landlord shall have the option, exercisable by
notice given to Tenant within ten (10) days after Tenant's


<PAGE>

notice is given, either to sublet such space from Tenant at the rental and on
the other terms set forth in this Lease for the term set forth in Tenant's
notice, or, in the case of an assignment, to terminate this Lease. If Landlord
does not exercise such option, Tenant may assign the Lease or sublet such space
to such proposed assignee or sub tenant on the following further conditions:

(1) Landlord shall have the right to approve such proposed assignee or
subtenant, which approval shall not be unreasonably withheld;

(2) The assignment or sublease shall be on the same terms set forth in the
notice given to Landlord;

(2) No assignment or sublease shall be valid and no assignee or sublessee shall
take possession of the Premises until an executed counterpart of such assignment
or sublease has been delivered to Landlord;

(4) No assignee or sublessee shall have a further right to assign or sublet
except on the terms herein contained; and

(5) Any sums or other economic consideration received by Tenant as a result of
such assignment or subletting, however denominated under the assignment or
sublease, which exceed, in the aggregate (I) the total sums which Tenant is
obligated to pay Landlord under this lease (prorated to reflect obligations
allocable to any portion of the Premises subleased), plus (ii) any real estate
brokerage commissions or fees payable in connection with such assignment or
subletting, shall be paid to Landlord as additional rent under this Lease
without affecting or reducing any other obligations of Tenant hereunder.

c.. Notwithstanding the provisions of paragraph a and b above, Tenant may assign
this Lease or sublet the Premises or any portion thereof, without Landlord's
consent and without extending any recapture or termination option to Landlord,
to any corporation which controls, is controlled by or is under common control
with Tenant, or to any corporation resulting from a merger or consolidation with
Tenant, or to any person or entity which acquires all the assets of Tenant's
business as a going concern, provided that (I) the assignee or sublessee
assumes, in full, the obligations of Tenant under this lease, (ii) Tenant
remains fully liable under this lease, and (iii) the use of the Premises under
Article 8 remains unchanged.

d. No subletting or assignment shall release Tenant of Tenant's obligations
under this Lease or alter the primary liability of Tenant to pay the Rent and to
perform all other obligations to be performed by Tenant hereunder. The
acceptance of Rent by Landlord from any other person shall not be deemed to be a
waiver by Landlord of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting. In the event of default by an assignee or subtenant of Tenant or any
successor of Tenant in the performance of any of the terms hereof, Landlord may
proceed directly against Tenant without the necessity of exhausting remedies
against such assignee, subtenant or successor. Landlord may consent to
subsequent assignments of the Lease or sublettings or amendments or
modifications to the Lease with assignees of Tenant, without notifying Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto
and any such actions shall not relieve Tenant of liability under this Lease.

e. Tenant assigns the Lease or sublets the Premises or requests the consent of
Landlord to any assignment or subletting or if Tenant requests the consent of
Landlord for any act that Tenant proposes to do, then Tenant shall. upon demand,
pay Landlord an administrative fee of ZERO DOLLARS plus any attorneys' fees
reasonably incurred by Landlord in connection with such act or request.

17. HOLDING OVER.

If after expiration of the Term, Tenant remains in possession of the Premises
with Landlord's permission (express or implied), Tenant shall become a tenant
from month to month only, upon all the provisions of this Lease (except as to
term and Base Rent), but the "Monthly Installments of Base Rent" payable by
Tenant shall be increased to one hundred fifty percent (150%) of the Monthly
Installments of Base Rent payable by Tenant at the expiration of the Term. Such
monthly rent shall be payable in advance on or before the first day of each
month. If either party desires to terminate such month to month tenancy, it
shall give the other party not less than thirty (30) days advance written notice
of the date of termination.

18. SURRENDER OF PREMISES.

a. Tenant shall peaceably surrender the Premises to Landlord on the Expiration
Date, in broom-clean condition and in as good condition as when Tenant took
possession, except for (i) reasonable wear and tear, (ii) loss by fire or other
casualty, and (iii) loss by condemnation. Tenant shall, on Landlord's request,
remove Tenant's Property on or before the Expiration Date and promptly repair
all damage to the Premises or Building caused by such removal.

b. If Tenant abandons or surrenders the Premises, or is dispossessed by process
of law or otherwise, any of Tenant's Property left on the Premises shall be
deemed to be abandoned, and, at Landlord's option, title shall pass to Landlord
under this Lease as by a bill of sale. If Landlord elects to remove all or any
part of such Tenant's Property, the cost of removal, including repairing any
damage to the Premises or Building caused by such removal, shall be paid by
Tenant. On the Expiration Date Tenant shall surrender all keys to the Premises.

19. DESTRUCTION OR DAMAGE.

a. If the Premises or the portion of the Building necessary for Tenant's
occupancy is damaged by fire, earthquake, act of God, the elements of other
casualty, Landlord shall, subject to the provisions of this Article, promptly
repair the damage, if such repairs can, in Landlord's opinion, be completed
within (90) ninety days. If Landlord determines that repairs can be completed
within ninety (90) days, this Lease shall remain in full force and effect,
except that if such damage is not the result of the negligence or willful
misconduct of Tenant or Tenant's agents, employees, contractors, licensees or
invitees, the Base Rent shall be abated to the extent Tenants use of the
Premises is impaired, commencing with the date of damage and continuing until
completion of the repairs required of Landlord under Section 19d.

b. If in Landlord's opinion, such repairs to the Premises or portion of the
Building necessary for Tenants occupancy cannot be completed within ninety (90)
days, Landlord may elect, upon notice to Tenant given within thirty (30) days
after the date of such fire or other casualty, to repair such damage, in which
event this Lease shall continue in full force and effect, but the Base Rent
shall be partially abated as provided in Section 19a. If Landlord does not so
elect to make such repairs, this Lease shall terminate as of the date of such
fire or other casualty.
<PAGE>

c. If any other portion of the Building or Project is totally destroyed or
damaged to the extent that in Landlord's opinion repair thereof cannot be
completed within ninety (90) days, Landlord may elect upon notice to Tenant
given within thirty (30) days after the date of such fire or other casualty, to
repair such damage, in which event this Lease shall continue in full force and
effect, but the Base Rent shall be partially abated as provided in Section 19a.
If Landlord does not elect to make such repairs, this Lease shall terminate as
of the date of such fire or other casualty.

d. If the Premises are to be repaired under this Article, Landlord shall repair
at its cost any injury or damage to the Building and Building Standard Work in
the Premises. Tenant shall be responsible at its sole cost and expense for the
repair, restoration and replacement of any other Leasehold Improvements and
Tenant's Property. Landlord shall not be liable for any loss of business,
inconvenience or annoyance arising from any repair or restoration of any portion
of the Premises, Building or Project as a result of any damage from fire or
other casualty.

e. his Lease shall be considered an express agreement governing any case of
damage to or destruction of the Premises, building or Project by fire or other
casualty, and any present or future law which purports to govern the rights of
Landlord and Tenant in such circumstances in the absence of express agreement,
shall have no application.

20. EMINENT DOMAIN.

a If the whole of the Building or Premises is lawfully taken by condemnation or
in any other manner for any public or quasipublic purpose, this lease shall
terminate as of the date of such taking, and Rent shall be prorated to such
date. If less than the whole of the building or Premises is so taken, this Lease
shall be unaffected by such taking, provided that (I) Tenant shall have the
right to terminate this lease by notice to Landlord given within ninety (90)
days after the date of such taking if twenty percent (20%) or more of the
Premises is taken and the remaining area of the premises is not reasonably
sufficient for Tenant to continue operation of its business, and (ii) Landlord
shall have the right to terminate this Lease by notice to Tenant given within
ninety (90) days after the date of such taking. If either Landlord or Tenant so
elects to terminate this lease the Lease shall terminate on the thirtieth (30th)
day after either such notice. The Rent shall be prorated to the date of
termination. If this Lease continues in force upon such partial taking, the Base
Rent and Tenant's Proportionate Share shall be equitably adjusted according to
the remaining Rentable Area of the Premises and Project.

b. In the event of any taking, partial or whole, all of the proceeds of any
award, judgment or settlement payable by the condemning authority SHALL BE THE
EXCLUSIVE PROPERTY OF LANDLORD, AND TENANT hereby assigns to Landlord all of its
right, title and interest in any award, judgment or SETTLEMENT FROM THE
CONDEMNING AUTHORITY. Tenant, however, shall have the right, to the extent that
Landlord's award is not reduced or prejudiced, to claim from the condemning
authority (but not from Landlord) such compensation as may be recoverable by
Tenant in its own right for relocation expenses and damage to Tenant's personal
property.

c. In the event of a partial taking of the Premises which does not result in a
termination of this Lease, Landlord shall restore the remaining portion of the
Premises as nearly as practicable to its condition prior to the condemnation or
taking, but only to the extent of Building Standard Work. Tenant shall be
responsible at its sole cost and expense for the repair, restoration and
replacement of any other Leasehold Improvements and Tenant's Property.

21. INDEMNIFICATION.

a. Tenant shall indemnity and hold Landlord harmless against and from liability
and claims of any kind for loss or damage to property of Tenant or any other
person, or for any injury to or death of any person, arising out of: (1)
Tenant's use and occupancy of the Premises, or any work, activity or other
things allowed or suffered by Tenant to be done in, on or about the Premises;
(2) any breach or default by Tenant of any of Tenant's obligations under this
Lease; or (3) any negligent or otherwise tortious act or omission of Tenant, its
agents, employees, invitees or contractors. Tenant shall at Tenant's expense,
and by counsel satisfactory to Landlord, defend Landlord in any action or
proceeding arising from any such claim and shall indemnify Landlord against all
costs, attorneys' fees, expert witness fees and any other expenses incurred in
such action or proceeding. As a material part of the consideration for
Landlord's execution of this Lease, Tenant hereby assumes all risk of damage or
injury to any person or property in, on or about the Premises from any cause.

b. Landlord shall not be liable for injury or damage which may be sustained by
the person or property of Tenant, its employees, invitees or customers, or any
other person in or about the Premises, caused by or resulting from fire, steam,
electricity, gas, water or rain which may leak or flow from or into any part of
the Premises, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, whether such damage or injury results from conditions arising upon the
Premises or upon other portions of the Building or Project or from other
sources. Landlord shall not be liable for any damages arising from any act or
omission of any other tenant of the Building or Project.

22. TENANT'S INSURANCE.

a. All insurance required to be carried by Tenant hereunder shall be issued by
responsible insurance companies acceptable to Landlord and Landlord's lender and
qualified to do business in the State. Each policy shall name Landlord, and at
Landlord's request any mortgagee of Landlord, as an additional insured, as their
respective interests may appear. Each policy shall contain (i) a cross-liability
endorsement, (ii) a provision that such policy and the coverage evidenced
thereby shall be primary and non-contributing with respect to any policies
carried by Landlord and that any coverage carried by Landlord shall be excess
insurance, and (iii) a waiver by the insurer of any right of subrogation against
Landlord, its agents, employees and representatives, which arises or might arise
by reason of any payment under such policy or by reason of any act or omission
of Landlord, its agents, employees or representatives. A copy of each paid up
policy (authenticated by the insurer) or certificate of the insurer evidencing
the existence and amount of each insurance policy required hereunder shall be
delivered to Landlord before the date Tenant is first given the right of
possession of the Premises, and thereafter within thirty (30) days after any
demand by Landlord therefor. Landlord may, at any time and from time to time,
inspect and/or copy any insurance policies required to be maintained by Tenant
hereunder. No such policy shall be cancelable except after twenty (20) days
written notice to Landlord and Landlord's lender. Tenant shall furnish Landlord
with renewals or "binders" of any such policy at least ten (10) days prior to
the expiration thereof. Tenant agrees that if Tenant does not take out and
maintain such insurance, Landlord may (but shall not be required to) procure
said insurance on Tenant's behalf and charge the Tenant the premiums together
with a twenty-five percent (25%) handling charge, payable upon demand. Tenant
shall have the right to provide such insurance coverage pursuant to blanket
policies obtained by the Tenant, provided such blanket policies expressly afford
coverage to the Premises, Landlord, Landlord's mortgagee and Tenant as required
by this Lease.
<PAGE>

b. Beginning on the date Tenant is given access to the Premises for any purpose
and continuing until expiration of the Term, Tenant shall procure, pay for and
maintain in effect policies of casualty insurance covering (i) all Leasehold
Improvements (including any alterations, additions or improvements as may be
made by Tenant pursuant to the provisions of Article 12 hereof), and (ii) trade
fixtures, merchandise and other personal property from time to time in, on or
about the Premises, in an amount not less than one hundred percent (100%) of
their actual replacement cost from time to time, providing protection against
any peril included within the classification "Fire and Extended Coverage"
together with insurance against sprinkler damage, vandalism and malicious
mischief. The proceeds of such insurance shall be used for the repair or
replacement of the property so insured. Upon termination of this Lease following
a casualty as set forth herein, the proceeds under (i) shall be paid to
Landlord, and the proceeds under (ii) above shall be paid to Tenant.

c. Beginning on the date Tenant is given access to the Premises for any purpose
and continuing until expiration of the Term, Tenant shall procure, pay for and
maintain in effect workers' compensation insurance as required by law and
comprehensive public liability and property damage insurance with respect to the
construction of improvements on the Premises, the use, operation or condition of
the Premises and the operations of Tenant in, on or about the Premises.
Providing personal injury and broad form property damage coverage for not less
than One Million Dollars ($1,000,000.00) combined single limit for bodily
injury, death and property damage liability.

23. WAIVER OF SUBROGATION.

Landlord and Tenant each hereby waive all rights of recovery against the other
and against the officers, employees, agents and representatives of the other, on
account of loss by or damage to the waiving party of its property or the
property of others under its control, to the extent that such loss or damage is
insured against under any fire and extended coverage insurance policy which
either may have in force at the time of the loss or damage. Tenant shall, upon
obtaining the policies of insurance required under this Lease, give notice to
its insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.

24. SUBORDINATION AND ATTORNMENT.

Upon written request of Landlord, or any first mortgagee or first deed of trust
beneficiary of Landlord, or ground lessor of Landlord, Tenant shall, in writing,
subordinate its rights under this Lease to the lien of any first mortgage or
first deed of trust, or to the interest of any lease in which Landlord is
lessee, and to all advances made or hereafter to be made thereunder. However,
before signing any subordination agreement, Tenant shall have the right to
obtain from any lender or lessor or Landlord requesting such subordination, an
agreement in writing providing that, as long as Tenant is not in default
hereunder, this Lease shall remain in effect for the full Term. The holder of
any security interest may, upon written notice to Tenant, elect to have this
Lease prior to its security interest regardless of the time of the granting or
recording of such security interest.

In the event of any foreclosure sale, transfer in lieu of foreclosure or
termination of the lease in which Landlord is lessee, Tenant shall attorn to the
purchaser, transferee or lessor as the case may be, and recognize that party as
Landlord under this Lease, provided such party acquires and accepts the Premises
subject to this Lease.

25. TENANT ESTOPPEL CERTIFICATES.

Within ten (10) days after written request from Landlord, Tenant shall execute
and deliver to Landlord or Landlord's designee, a written statement certifying
(a) that this Lease is unmodified and in full force and effect, or is in full
force and effect as modified and stating the modifications; (b) the amount of
Base Rent and the date to which Base Rent and additional rent have been paid in
advance; (c) the amount of any security deposited with Landlord; and (d) that
Landlord is not in default hereunder or, if Landlord is claimed to be in
default, stating the nature of any CLAIMED default. Any such statement may be
relied upon by a purchaser, assignee or lender. Tenant's failure to execute and
deliver such statement within the time required shall at Landlord's election be
a default under this Lease and shall also be conclusive upon Tenant that: (1)
this Lease is in full force and effect and has not been modified except as
represented by Landlord; (2) there are no uncured defaults in Landlord's
performance and that Tenant has no right of offset, counter-claim or deduction
against Rent; and (3) not more than one month's Rent has been paid in advance.

26. TRANSFER OF LANDLORD'S INTEREST.

In the event of any sale or transfer by Landlord of the Premises, Building or
Project, and assignment of this Lease by Landlord, Landlord shall be and is
hereby entirely freed and relieved of any and all liability and obligations
contained in or derived from this Lease arising out of any act, occurrence or
omission relating to the Premises, Building, Project or Lease occurring after
the consummation of such sale or transfer, providing the purchaser shall
expressly assume all of the covenants and obligations of Landlord under this
Lease. If any security deposit or prepaid Rent has been paid by Tenant, Landlord
may transfer the security deposit or prepaid Rent to Landlord's successor and
upon such transfer, Landlord shall be relieved of any and all further liability
with respect thereto,

27. DEFAULT.

27. 1. Tenant's Default. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:

a. If Tenant abandons or vacates the Premises and stops paying rent

b. If Tenant fails to pay any Rent or any other charges required to be paid by
Tenant under this Lease and such failure continues for five (5) days after such
payment is due and payable; or

c. If Tenant fails to promptly and fully perform any other covenant, condition
or agreement contained in this Lease and such failure continues for thirty (30)
days after written notice thereof from Landlord to Tenant; or

d. If a writ of attachment or execution is levied on this Lease or on any of
Tenant's Property; or

e. If Tenant makes a general assignment for the benefit of creditors, or
provides for an arrangement, composition, extension or adjustment with its
creditors; or

f. If Tenant files a voluntary petition for relief or if a petition against
Tenant in a proceeding under the federal bankruptcy laws or other insolvency
laws is filed and not withdrawn or dismissed within forty-five (45) days
thereafter, of if under the provisions of any law providing for reorganization
or winding up of corporations, any court of competent jurisdiction assumes
jurisdiction, custody or control of

<PAGE>

Tenant or any substantial part of its property and such jurisdiction, custody or
control remains in force unrelinquished, unstayed or unterminated for a period
of forty-five (45) days; or

g. If in any proceeding or action in which Tenant is a party, a trustee,
receiver, agent or custodian is appointed to take charge of the Premises or
Tenant's Property (or has the authority to do so) for the purpose of enforcing a
lien against the Premises or Tenant's Property; or

h. If Tenant is a partnership or consists of more than one (1) person or entity,
if any partner of the partnership or other person or entity is involved in any
of the acts or events described in subparagraphs d through g above.

27.2. Remedies. In the event of Tenant's default hereunder, then in addition to
any other rights or remedies Landlord may have under any law, Landlord shall
have the right, at Landlord's option, without further notice or demand of any
kind to do the following:

a.  Terminate this Lease and Tenant's right to possession of the Premises and
    reenter the Premises and take position thereof, and Tenant shall have no
    further claim to the Premises or under this Lease; or
b.  Continue this Lease in effect, reenter and occupy the Premises for the
    account of Tenant, and collect any unpaid rent or other charges which have
    or thereafter become due any payable; or
c.  Reenter the Premises under the provisions of subparagraph b, and thereafter
    elect to terminate this lease and Tenant's right to possession of the
    premises.

If Landlord reenters the Premises under the provisions of subparagraphs b or c
above, Landlord shall not be deemed to have terminated this Lease or the
obligation of Tenant to pay any Rent or other charges thereafter accruing,
unless Landlord notifies Tenant in writing of Landlord's election to terminate
this Lease. In the event of any reentry or retaking of possession by Landlord,
Landlord shall have the right, but not the obligation, to remove all or any part
of Tenant's Property in the Premises and to place such property in storage at a
public warehouse at the expense and risk of Tenant. If Landlord elects to relet
the Premises for the account of Tenant, the rent received by Landlord from such
reletting shall be applied as follows: first, to the payment of any indebtedness
other than Rent due hereunder from Tenant to Landlord; second, to the payment of
any costs of such reletting; third, to the payment of the cost of any
alterations or repairs to the Premises; fourth to the payment of Rent due and
unpaid hereunder; and the balance, if any, shall be held by Landlord and applied
in payment of future Rent as it becomes due. It that portion of rent received
from the reletting which is applied against the Rent due hereunder is less than
the amount of the Rent due, Tenant shall pay the deficiency to Landlord promptly
upon demand by Landlord. Such deficiency shall be calculated and paid monthly.
Tenant shall also pay to Landlord, as soon as determined, any costs and expenses
incurred by Landlord in connection with such reletting or in making alterations
and repairs to the Premises, which are not covered by the rent received from the
reletting.

Should Landlord elect to terminate this Lease under the provisions of
subparagraph a or c above, Landlord may recover as damages from Tenant the
following:

      1. Past Rent The worth at the time of the award of any unpaid Rent which
         had been earned at the time of termination; plus

      2. Rent Prior to Award. The worth at the time of the 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 that
         Tenant proves could have been reasonably avoided; plus

      3. Rent After Award. The worth at the time of the award of the amount by
         which the unpaid Rent for the balance of the Term after the time of
         award exceeds the amount of the rental loss that Tenant proves could be
         reasonably avoided; plus

      4. Proximately Caused Damages. Any other amount necessary to compensate
         Landlord for all detriment proximately caused by Tenant's failure to
         perform its obligations under this Lease or which in the ordinary
         course of things would be likely to result therefrom, including, but
         not limited to, any costs or expenses (including attorneys' fees),
         incurred by Landlord in (a) retaking possession of the Premises, (b)
         maintaining the Premises after Tenant's default, (c) preparing the
         Premises for reletting to a new tenant, including any repairs or
         alterations, and (d) reletting the Premises, including broker's
         commissions.

"The worth at the time of the award" as used in subparagraphs 1 and 2 above, is
to be computed by allowing interest at the rate of ten percent (10%) per annum.
"The worth at the time of the award" as used in subparagraph 3 above, is to be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank situated nearest to the Premises at the time of the award plus one percent
(1%).

The waiver by Landlord of any breach of any term, covenant or condition of this
Lease shall not be deemed a waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or condition.
Acceptance of Rent by Landlord subsequent to any breach hereof shall not be
deemed a waiver of any preceding breach other than the failure to pay the
particular Rent so accepted, regardless of Landlord's knowledge of any breach at
the time of such acceptance of Rent. Landlord shall not be deemed to have waived
any term, covenant or condition unless Landlord gives Tenant written notice of
such waiver.

27.3 Landlord's Default. If Landlord fails to perform any covenant, condition or
agreement contained in this Lease within thirty (30) days after receipt of
written notice from Tenant specifying such default, or if such default cannot
reasonably be cured within thirty (30) days, if Landlord fails to commence to
cure within that thirty (30) day period, then Landlord shall be liable to Tenant
for any damages sustained by Tenant as a result of Landlord's breach; provided,
however, it is expressly understood and agreed that if Tenant obtains a money
judgment against Landlord resulting from any default or other claim arising
under this Lease, that judgment shall be satisfied only out of the rents,
issues, profits, and other income actually received on account of Landlord's
right, title and interest in the Premises, Building or Project, and no other
real, personal or mixed property of Landlord (or of any of the partners which
comprise Landlord, if any) wherever situated, shall be subject to levy to
satisfy such judgment. If, after notice to Landlord of default, Landlord (or any
first mortgagee or first deed of trust beneficiary of Landlord) fails to cure
the default as provided herein, then Tenant shall have the right to cure that
default at Landlord's expense. Tenant shall not have the right to terminate this
Lease or to withhold, reduce or offset any amount against any payments of Rent
or any other charges due and payable under this Lease except as otherwise
specifically provided herein.

28. BROKERAGE FEES

Tenant warrants and represents that it has not dealt with any real estate broker
or agent in connection with this Lease or its negotiation except those noted in
Section 2.c. Tenant shall indemnify and hold Landlord harmless from any cost,
expense or liability (including costs of suit and reasonable attorneys' fees)
for any compensation, commission or fees claimed by any other real estate broker
or agent in connection with this Lease or its negotiation by reason of any act
of Tenant.
<PAGE>

29. NOTICES

ALL notices, approvals and demands permitted or required to be given under this
Lease shall be in writing and deemed duly served or given if personally
delivered or sent by certified or registered U.S. mail, postage prepaid, and
addressed as follows:

(A)   IF TO LANDLORD, TO LANDLORD'S MAILING ADDRESS AND TO THE Building manager,
      and (b) if to Tenant, to Tenant's Mailing address; provided, however,
      notices to Tenant shall be deemed duly served or given f delivered or
      mailed to Tenant at the Premises. Landlord and Tenant may from time to
      time by notice to the other designate another place for receipt of future
      notices.

30. GOVERNMENT ENERGY OR UTILITY CONTROLS

In the event of imposition of federal, state or local government controls,
rules, regulations, or restrictions on the use or consumption of energy or other
utilities during the Term, both landlord and Tenant shall be bound thereby. In
the event of a difference in interpretation by Landlord and Tenant of any such
controls, the interpretation of Landlord shall prevails, and Landlord shall have
the right to enforce compliance therewith, including the right of entry into the
Premises to effect compliance.

31. RELOCATION OF PREMISES

Landlord shall have the right to relocate the Premises to another part of the
Building in accordance with the following:

    a. The new premises shall be substantially the same in size, dimensions,
    configuration, decor and nature as the Premises described in this Lease, and
    if the relocation occurs after the Commencement Date, shall be placed in
    that condition by Landlord at its cost.
    b. Landlord shall give Tenant at least thirty (30) days written notice of
    Landlord's intention to relocate the Premises.
    c. As nearly as practicable, the physical relocation of the Premises shall
    take place on a weekend and shall be completed before the following Monday.
    If the physical relocation has not been completed in that time, Base Rent
    shall abate in full from the time the physical relocation commences to the
    time it is completed. Upon completion of such relocation, the new premises
    shall become the "Premises" under this Lease.
    d. All reasonable costs incurred by Tenant as a result of the relocation
    shall be paid by Landlord.
    e. If the new premises are smaller than the Premises as it existed before
    the relocation, Base Rent shall be reduced proportionately.
    f. The parties hereto shall immediately execute an amendment to this Lease
    setting forth the relocation of the Premises and the reduction of Base Rent,
    if any.

32. QUIET ENJOYMENT.
Tenant, upon paying the Rent and performing all of its obligations under this
Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of
this Lease and to any mortgage, lease, or other agreement to which this Lease
may be subordinate.

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

34. FORCE MAJEURE.
Any prevention, delay or stoppage of work to be performed by Landlord or Tenant
which is due to strikes, labor disputes, inability to obtain labor, materials,
equipment or reasonable substitutes therefor, acts of God, governmental
restrictions or regulations or controls, judicial orders, enemy or hostile
government actions, civil commotion, fire or other casualty, or other causes
beyond the reasonable control of the party obligated to perform hereunder, shall
excuse performance of the work by that party for a period equal to the duration
of that prevention, delay or stoppage. Nothing in this Article 34 shall excuse
or delay Tenant's obligation to pay Rent or other charges under this Lease.

35. CURING TENANT'S DEFAULTS.
If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to) without waiving such
default, perform the same for the account at the expense of Tenant. Tenant shall
pay Landlord all costs of such performance promptly upon receipt of a bill
therefor.

36. SIGN CONTROL.
Tenant shall not affix, paint, erect or inscribe any sign, projection, awning,
signal or advertisement of any kind to any part of the Premises, Building or
Project, including without limitation, the inside or outside of windows or
doors, without the written consent of Landlord. Landlord shall have the right to
remove any signs or other matter, installed without Landlord's permission,
without being liable to Tenant by reason of such removal, and to charge the cost
of removal to Tenant as additional rent hereunder, payable within ten (10) days
of written demand by Landlord.

37. MISCELLANEOUS.
a. Accord and Satisfaction; Allocation of Payments. No payment by Tenant or
receipt by Landlord of a lesser amount than the Rent provided for in this Lease
shall be deemed to be other than on account of the earliest due Rent, nor shall
any endorsement or statement on any check or letter accompanying any check or
payment as Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of the Rent or pursue any other remedy provided for in this Lease. In
connection with the foregoing, Landlord shall have the absolute right in its
sole discretion to apply any payment received from Tenant to any account or
other payment of Tenant then not current and due or delinquent.
b. Addenda. If any provision contained in an addendum to this Lease is
inconsistent with any other provision herein, the provision contained in the
addendum shall control, unless otherwise provided in the addendum.
<PAGE>

c Attorneys' Fees. If any action or proceeding is brought by either party
against the other pertaining to or arising out of this Lease, the finally
prevailing party shall be entitled to recover al costs and expenses, including
reasonable attorneys' fees, incurred on account of such action or proceeding.

a.   Captions, Articles and Section Numbers. The captions appearing within the
     body of this Lease have been inserted as a matter of convenience and for
     reference only and in no way define, limit or enlarge the scope or meaning
     of this lease. All references to Article and Section numbers refer to
     Articles and Sections in this Lease.
b.   Changes Requested by Lender Neither landlord or Tenant shall unreasonably
     withhold its consent to change or amendments to this lease requested by the
     Lender on Landlord's interest, so long as these changes do not alter the
     basis business terms of this lease or otherwise materially diminish any
     rights or materially increase any obligations of the party from whom
     consent to such change or amendment is requested.
c.   Choice of law. This lease shall be construed and enforced in accordance
     with the laws of the State. Consent. Notwithstanding anything contained in
     this lease to the contrary. Tenant shall have no claim, and hereby waives
     the right to any claim against Landlord for money damages by reason of any
     refusal, withholding or delaying by Landlord of any consent, approval or
     statement of satisfaction, and in such event, Tenant's only remedies
     therefor shall be an action for specific performance, injunction or
     declaratory judgment to enforce any right to such consent, etc.

h. Corporate Authority. If Tenant is a corporation, each individual signing this
Lease on behalf of Tenant represents and warrants that he is duly AUTHORIZED TO
EXECUTE AND DELIVER THIS LEASE ON BEHALF OF THE CORPORATION, AND THAT this Lease
is binding on Tenant in accordance with its terms. Tenant shall, at Landlord's
request, deliver a certified copy of a resolution of its board of directors
authorizing such execution.

i. Counterparts. This Lease may be executed in multiple counterparts, all of
which shall constitute one and the same Lease.
j. Execution of Lease; No Option. The submission of this Lease to Tenant shall
be for examination purposes only, and does not and shall not constitute a
reservation of or option for Tenant to lease, or otherwise create any interest
of Tenant in the Premises or any other premises within the Building or Project.
Execution of this Lease by Tenant and its return to Landlord shall not be
binding on Landlord notwithstanding any time interval, until Landlord has in
tact signed and delivered this Lease to Tenant.
k. Furnishing of Financial Statements; Tenant's Representations. In order to
induce Landlord to enter into this Lease Tenant agrees that it shall promptly
furnish Landlord, from time to time, upon Landlord's written request, with
financial statements reflecting Tenant's current financial condition. Tenant
represents and warrants that all financial statements, records and information
furnished by Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects.
1. Further Assurances. The parties agree to promptly sign all documents
reasonably requested to give effect to the provisions of this Lease.
m. Mortgagee Protection. Tenant agrees to send by certified or registered mail
to any first mortgagee or first deed of trust beneficiary of Landlord whose
address has been furnished to Tenant, a copy of any notice of default served by
Tenant on Landlord. If Landlord fails to cure such default within the time
provided for in this Lease, such mortgagee or beneficiary shall have an
additional thirty (30) days to cure such default; provided that if such default
cannot reasonably be cured within that thirty (30) day period, then such
mortgagee or beneficiary shall have such additional time to cure the default as
is reasonably necessary under the circumstances.
n. Prior Agreements; Amendments. This Lease contains all of the agreements of
the parties with respect to any matter covered or mentioned in this Lease, and
no prior agreement or understanding pertaining to any such matter shall be
effective for any purpose. No provisions of this Lease may be amended or added
to except by an agreement in writing signed by the parties or their respective
successors in interest.
o. Recording. Tenant shall not record this Lease without the prior written
consent of Landlord. Tenant, upon the request of Landlord, shall execute and
acknowledge a "short form" memorandum of this Lease for recording purposes.
p. Severability. A final determination by a court of competent jurisdiction that
any provision of this Lease is invalid shall not affect the validity of any
other provision, and any provision so determined to be invalid shall, to the
extent possible, be construed to accomplish its intended effect.
q. Successors and Assigns. This Lease shall apply to and bind the heirs,
personal representatives, and permitted successors and assigns of the parties.
r. Time of the Essence. Time is of the essence of this Lease.
s. Waiver. No delay or omission in the exercise of any right or remedy of
Landlord upon any default by Tenant shall impair such right or remedy or be
construed as a waiver of such default.
t. Compliance. The parties hereto agree
to comply with all applicable federal, state and local laws, regulations, codes,
ordinances and administrative orders having jurisdiction over the parties,
property or the subject matter of this Agreement, including, but not limited to,
the 1964 Civil Rights Act and all amendments thereto, the Foreign Investment In
Real Property Tax Act, the Comprehensive Environmental Response Compensation and
Liability Act, and The Americans With Disabilities Act.
The receipt and acceptance by Landlord of delinquent Rent shall not constitute a
waiver of any other default; it shall constitute only a waiver of timely payment
for the particular Rent payment involved.
No act or conduct of Landlord, including, without limitation, the acceptance of
keys to the Premises, shall constitute an acceptance of the surrender of the
Premises by Tenant before the expiration of the Term. Only a written notice from
Landlord to Tenant shall constitute acceptance of the surrender of the Premises
and accomplish a termination of the Lease.
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent to or approval of any subsequent act by Tenant. Any waiver by
Landlord of any default must be in writing and shall not be a waiver of any
other default concerning the same or any other provision of the Lease.
The parties hereto have executed this Lease as of the dates set forth below.

Date:        7/23/99                      Date:        7/8/99
Union Bank of California, Trustee         First Source Capital, a wholly owned
Landlord: for Agnes M. J. Bourn and       Tenant:: Subsidiary of American River
Holdings

       William B. Bourn Trusts

By: /s/ BRIAN T. MULLINS                  By: /s/ DAVID T. TABER
    --------------------------------          ----------------------------------
    Brian T. Mullins                          David T. Taber
Title:                                        President and C.E.O.

--------------------------------------------------------------------------------
  CONSULT YOUR ADVISORS - This document has been prepared for approval by your
  attorney. No representation or recommendation is made by CB Commercial as to
  the legal sufficiency or tax consequences of this document or the transaction
  to which it relates. These are questions for your attorney.

  In any real estate transaction, it is recommended that you consult with a
  professional, such as a civil engineer, industrial hygienist or other person,
  with experience in evaluating the condition of the property, including the
  possible presence of asbestos, hazardous materials and underground storage
  tanks.
--------------------------------------------------------------------------------

<PAGE>

                      ADDENDUM TO THE OFFICE BUILDING LEASE
                        DATED JUNE 29,1999 BY AND BETWEEN

                   UNION BANK OF CALIFORNIA, N.A., TRUSTEE FOR
          AGNES M. BOURN AND WILLIAM B. BOURN TRUSTS, AS LANDLORD, AND
            FIRST SOURCE CAPITAL, WHOLLY OWNED SUBSIDIARY OF AMERICAN
                            RIVER HOLDINGS, AS TENANT

I        EXCULPATION OF LANDLORD. It is understood and agreed by the Tenant that
         Landlord is executing this Lease in its fiduciary capacity only and
         Landlord and Landlord's officers, directors, employees and agents are
         not and shall not be liable hereunder, directly or indirectly, except
         for willful misconduct, under or by execution of this Lease. The rights
         and claims of Tenant shall be limited exclusively to such rights Tenant
         may have against the trust or other estate or entity represented herein
         by Landlord (the "Trust").

2.       EXCULPATION OF TRUST. Any liability of Landlord (including without
         limitation Landlord's shareholders, affiliates, agents, and employees)
         to Tenant or any other person shall be limited to the estate of the
         Trust in the Building. Tenant or any other person claiming through
         Tenant agrees to look solely to such interest for the recovery of any
         judgement against Landlord, it being intended by the parties that
         neither Landlord, it trustees or beneficiaries, nor any other assets of
         the Trust or of such trustees or beneficiaries shall be liable for any
         such judgment.

3.       PAINTING. Landlord, at Landlord's sole cost and expense, shall paint
         the Premises.

4.       CLEANING. At Landlord's sole cost and expenses will clean, including
         carpets.

CONSULT YOUR ADVISORS - This document (including its exhibits and addendums, if
any) has been prepared by Broker for approval by the undersigned respective
parties' legal counsel. Broker makes no representation or recommendation as to
the legal sufficiency or tax consequences of this document or the transaction to
which it relates.  These are questions for an attorney or accountant.

THE ABOVE TERMS ARE ACKNOWLEDGED AND AGREED TO:

LANDLORD                                    TENANT

Union Bank of California, Trustee for       First Source Capital, a wholly owned
Agnes M. Bourn and William B. Bourn Trusts  subsidiary of American River
                                            Holdings

By: /s/ BRIAN T. MULLINS                      By: /s/ DAVID T. TABER
    ---------------------------------             -----------------------------
    Brian T. Mullins                              David T. Taber
    Vice President/Senior Asset Manager           President and C.E.O.

Date:    7/23/99                              Date:   7/8/99

<PAGE>

                              EXHIBIT "Exhibit "D"
                              Rules and Regulations

1.       No sign, placard, picture, advertisement, name or notice shall be
         inscribed, displayed or printed or affixed on or to any part of the
         outside or inside of the Building without the written consent of
         Landlord first had and obtained and Landlord shall have the right to
         remove any such sign, placard, picture, advertisement, name or notice
         without notice to and at the expense of Tenant.

         All approved signs or lettering on doors shall be printed, painted,
         affixed or inscribed at the expense of Tenant by a persona approved of
         by landlord. Tenant shall not place anything or allow anything to be
         placed near the glass of any window, door, partition or wall which may
         appear unsightly from outside the Premises; provided, however, that
         Landlord may furnish and install a Building standard window covering
         all exterior windows. Tenant shall not without prior written consent of
         Landlord cause or otherwise sunscreen any window.

2.       The sidewalks, halls, passages, exits, entrances, elevators and
         stairways shall not be obstructed by any of the tenants or used by them
         for any purpose other than for ingress and egress from their respective
         Premises.

3.       Tenant shall not alter any lock or install any new or additional locks
         or any bolts on any doors or windows of the Premises.

4.       The toilet rooms, urinals, wash bowls and other apparatus shall not be
         used for any purpose other than that for which they were constructed
         and no foreign substance of any kind whatsoever shall be thrown therein
         and the expense of any breakage, stoppage or damage resulting from the
         violation of this rule shall be borne by the Tenant who, or whose
         employees or invitees shall have caused it.

5.       Tenant shall not overload the floor of the premises or in any way
         deface the premises or any part thereof.

6.       No furniture, freight or equipment of any kind shall be brought into
         the Building without the prior notice to Landlord and all moving of the
         same into or out of the Building shall be done at such time and in such
         manner as Landlord shall designate. Landlord shall have the right to
         prescribe the weight, size and position of all sales and other heavy
         equipment brought into the Building and also the times and manner of
         moving the same in and out to the Building. Sales or other heavy
         objects shall, if considered necessary by landlord, stand on supports
         of such thickness as is necessary to properly distribute the weight.
         Landlord will not be responsible for loss of or damage to any such sale
         of property from any cause and all damage done to the Building by
         moving or maintaining any such sale or other property shall be repaired
         at the expense of Tenant.

7.       Tenant shall not use, keep or permit to be used or kept any foul or
         noxious gas or substance in the Premises, or permit or suffer the
         Premises to be occupied or used in a manner offensive orobjectionable
         the Landlord or other occupants of the Building by reason of noise,
         odors and/or vibrations, or interfere in any way with other tenants or
         those having business herein, nor shall any animals or birds be brought
         in or kept in or about the Premises of the Building.

8.       No cooking shall be done with the exception of microwave oven or
         permitted by any Tenant on the Premises, nor shall the Premises be used
         for the storage of merchandise, for washing clothes, for lodging, or
         for any improper, objectionable or immoral purposes.

9.       Tenant shall not use or keep in the Premises or the Building any
         kerosene, gasoline or inflammable or combustible fluid or material, or
         use any method of heating or air conditioning other than that supplies
         by Landlord.

10.      Landlord will direct electricians as to where and how telephone wires
         are to be introduced. No boring or cutting for wires will be allows
         without the consent of the Landlord. The location of telephones, call
         boxes and other office equipment affixed to the Premises shall be
         subject to the approval of landlord.

11.      On Saturdays, Sundays and legal holidays, and on other days between the
         hours of 6:00 p.m. and 8:00 a.m. the following day, access to the
         Building or to the halls, corridors, elevators or stairways in the
         Building, or to the premises may be refused unless the person seeking
         access is known to the person or employees of the Building in charge
         and has a pass or is properly identified. The landlord shall in no case
         be liable for damages for any error with regard to the admission to or
         exclusion from the Building of any person. In case of invasion, mob,
         riot, public excitement, or other commotion, the Landlord reserves the
         right to prevent access to the Building during the continuance of the
         same by closing of the doors or otherwise, for the safety of the
         tenants and protection of property in the Building and the Building.

12.      Landlord reserves the right to exclude or expel from the Building any
         person who, in the judgment of landlord, is intoxicated or under the
         influence of liquor or drugs, or who shall in any manner do any act in
         violation of any of the rules and regulations of the Building.

13.      No vending machine or machines of any description shall be installed,
         maintained or operated upon the Premises without the written consent of
         the Landlord.

14.      Landlord shall have the right, exercisable without notice and without
         liability to Tenant, to change the name and street address of the
         Building of which the Premises are a part.

15.      Tenant shall not disturb, solicit, or canvass any occupant of the
         Building and shall cooperate to prevent same.

16.      Without the written consent of Landlord, Tenant shall not use the name
         of the Building in connection with or in promoting or advertising the
         business of Tenant except as Tenant's address.

17.      Landlord shall have the right to control and operate the public
         portions of the Building, and the public facilities, and heating and
         air conditioning, as well as facilities furnished for the common use of
         the tenants, in such manner as it deems best for the benefit of the
         tenants generally.

18.      All entrance doors in the premises shall be left locked when the
         Premises are not in use, and all doors opening to public corridors
         shall be kept closed except for normal ingress and egress from the
         premises.

<PAGE>

                  CB RICHARD ELLIS, INC. SALE/LEASE DISCLOSURES

Property:  1555 River Park Drive, Sacramento, CA 95815

FLOOD ZONES. According to 060266-001 OE _[SPECIFY SOURCE], the Property X IS/ _
MAY OR MAY NOT be located in a flood zone. Many lenders require flood insurance
for properties located in flood zones, and government authorities may regulate
development and construction in flood zones. Whether or not located in a flood
zone, properties can be subject to flooding and moisture problems, especially
properties on a slope or in low-lying areas or in a dam inundation zone
(California Government Code Section 8589.5).

Buyers and tenants should have their experts confirm whether the Property is in
a flood zone and otherwise investigate and evaluate these matters. Flood Zone
Designation: Zone A99

EARTHQUAKES. Earthquakes occur throughout California. According to Fault-Rupture
Hazard Zones in California Special Publication 42 [specify source], the
Property_ is/ X MAY OR MAY NOT BE situated in an Earthquake Fault Zone and/or a
Seismic Hazard Zone (Sections 2621 et seq. and Sections 2690 et seq. of the
California Public Resources Code, respectively). Property development and
construction in such zones generally are subject to the findings of a geologic
report prepared by a state-registered geologist. Whether or not located in such
a zone, all properties in California are subject to earthquake risks and may be
subject to a variety of state and local earthquake-related requirements,
including retrofit requirements. Among other items, all new and existing water
heaters must be braced, anchored or strapped to resist falling or horizontal
displacement, and in sales transactions, sellers must execute a written
certification that the water heaters are so braced, anchored or strapped
(California Health and Safety Code Section 19211). Buyers and tenants should
have their experts confirm whether the Property is in any earthquake zone and
otherwise investigate and evaluate these matters.

HAZARDOUS MATERIALS AND UNDERGROUND STORAGE TANKS. Due to prior or current uses
of the Property or in the area or the construction materials used, the Property
may have hazardous or undesirable metals (including lead-based paint), minerals
(including asbestos), chemicals, hydrocarbons, petroleum-related compounds, or
biological or radioactive/emissive items (including electrical and magnetic
fields) in soils, water, building components, above or below-ground
tanks/containers or elsewhere in areas that may or may not be accessible or
noticeable. Such items may leak or otherwise be released. Asbestos has been used
in items such as fireproofing, heating/cooling systems, insulation, spray-on and
tile acoustical materials, floor tiles and coverings, roofing, drywall and
plaster. If the Property was built before 1978 and has a residential unit,
sellers/landlords must disclose all reports, surveys and other information known
to them regarding lead-based paint to buyers and tenants and allow for
inspections (42 United States Code Sections 4851 et seq.). Sellers/landlords are
required to advise buyers/tenants if they have any reasonable cause to believe
that any hazardous substance has come to be located on or beneath the Property
(California Health and Safety Code Section 25359.7), and sellers/landlords must
disclose reports and surveys regarding asbestos to certain persons, including
their employees, contractors, buyers and tenants (California Health and Safety
Code Sections 25915 et seq.); buyers/tenants have similar obligations. Have your
experts investigate and evaluate these matters.

AMERICANS WITH DISABILITIES ACT (ADA). The Americans With Disabilities Act (42
United States Code Sections 12101 et seq.) and other federal, state and local
requirements may require changes to the Property. Have your experts investigate
and evaluate these matters.

Taxes. Sales, leases and other real estate transactions can have federal, state
and local tax consequences. In sales transactions, Internal Revenue Code Section
1446 requires buyers to withhold and pay to the IRS 10% of the gross sales price
within 10 days of the date of a sale unless the buyers can establish that the
sellers are not foreigners, generally by having the sellers sign a Non-Foreign
Seller Affidavit. Depending on the structure of the transaction, the tax
withholding liability can exceed the net cash proceeds to be paid to the sellers
at closing. California imposes an additional withholding requirement equal to 3
1/3% of the gross sales price not only on foreign sellers but also out-of-state
sellers and sellers leaving the state if the sales price exceeds $100,000.
Withholding generally is required if the last known address of a seller is
outside California, if the proceeds are disbursed outside of California or if a
financial intermediary is used. Have your experts investigate and evaluate these
matters.

Fires. California Public Resources Codes Sections 4125 et seq. require sellers
of real property located within state responsibility areas to advise buyers that
the property is located within such a wildland zone, that the state does not
have the responsibility to provide fire protection services to any structure
within such a zone and that such zones may contain substantial forest/wildland
fire risks. Government Code Sections 51178 et seq. require sellers of real
property located within certain fire hazard zones to disclose that the property
is located in such a zone. Sellers must disclose that a property located in a
wildland or fire hazard zone is subject to the fire prevention requirements of
Public Resources Code Section 4291 and Government Code Section 51182,
respectively. Sellers must make such disclosures if either the sellers have
actual knowledge that a property is in such a zone or a map showing the property
to be in such a zone has been provided to the county assessor. Properties,
whether or not located in such a zone, are subject to fire/life safety risks and
may be subject to state and local fire/life safety-related requirements,
including retrofit requirements. Have your experts investigate and evaluate
these matters.

BROKER REPRESENTATION. C13 Richard Ellis, Inc. is a national brokerage firm
representing a variety of clients. Depending on the circumstances, CB Richard
Ellis, Inc. may represent both the seller/landlord and the buyer/tenant in a
transaction, or you may be interested in a property that may be of interest to
other CB Richard Ellis, Inc. clients. If CB Richard Ellis, Inc. represents more
than one party with respect to a property, CB Richard Ellis, Inc. will not
disclose the confidential information of one principal to the other.

SELLER/LANDLORD DISCLOSURE, DELIVERY OF REPORTS, PEST CONTROL REPORTS AND
COMPLIANCE WITH LAWS. Sellers/land lords are hereby requested to disclose
directly to buyers/tenants all information known to sellers/landlords regarding
the Property, including but not limited to, hazardous materials, zoning,
construction, design, engineering, soils, title, survey, fire/life safety, and
other matters, and to provide buyers/tenants with copies of all reports in the
possession of or accessible to sellers/landlords regarding the Property.
Sellers/landlords and buyers/tenants Must comply with all applicable federal
state and local laws regulations, codes, ordinances and administrative orders,
including but not limited to, the 1964 Civil Rights Act and all amendments
thereto, the Foreign Investment in Real Property Tax Act, the Comprehensive
Environmental Response Compensation and Liability Act, and the Americans with
Disabilities Act. If a pest control report is a condition of the purchase
contract, buyers are entitled to receive a copy of the report any certification
and notice of work completed.

Property Inspections and Evaluations. Buyers/tenants should have the Property
thoroughly inspected and all parties should have the transaction thoroughly
evaluated by the experts of their choice. Ask your experts what investigations
and evaluations may be appropriate as well as the risks of not performing any
such investigations or evaluations. Information regarding the Property supplies
by the real estate brokers has been received from third party sources and has
not been independently verified by the brokers. Have your experts verify all
information regarding the Property, including any linear or area measurements
and the availability of all utilities. All work should be inspected an evaluated
by your experts, as they deem appropriate. Any projections or estimates are for
example only, are based on assumptions that may not occur and do not represent
the current or future performance of the property. Real estate brokers are not
experts concerning nor can they determine if any expert is qualified to provide
advice on legal, tax, design, ADA, engineering, construction, soils, title,
survey, fire/life safety, insurance, hazardous material, or other such matters.
Such areas require special education and, generally, special licenses not
possessed by real estate brokers. Consult with the experts of your choice
regarding these matters.