<PAGE>

                                                                   Exhibit 10.26


                       FIRST AMENDMENT TO OPTION AGREEMENT
                       -----------------------------------


         This First Amendment to Option Agreement ("Amendment"), is dated for
reference purposes as of February 28, 2005, is entered into by and between HINES
NURSERIES, INC., a California corporation ("Optionor"), and TRIAD COMMUNITIES,
L.P., a California limited partnership ("Optionee").

                                    RECITALS
                                    --------

         A. Optionor and Optionee entered into that certain Option Agreement
dated April 30, 2003 ("Option Agreement") whereby Optionor granted to Optionee
an option to purchase that certain real property located in the City of
Vacaville, County of Solano, State of California, as more particularly described
in the Option Agreement ("Property").

         B. The parties have agreed to amend the Option Agreement on the terms
and conditions set forth in this Agreement. Any initial capitalized terms not
separately defined in this Amendment shall have the meaning set forth in the
Option Agreement.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:

                                    AGREEMENT
                                    ---------

1. INITIAL EXTENSION OF OPTION TERM. The Option Term as defined in Section 2 of
the Option Agreement shall be extended to SEPTEMBER 1, 2005 upon Optionee's
delivery of the Extension Funds to Optionor. Within one (1) business day
following the execution of this Amendment the Optionee shall deliver to Optionor
the sum of Nine Hundred Thousand Dollars ($900,000.00) (the "Extension Funds")
representing separate and independent consideration to Optionor for entering
into this Amendment. Delivery of the Extension Funds shall require actual
delivery of immediately available funds to Optionor, at its address for notices,
as provided in the Option Agreement. The Extension Funds shall be the sole and
absolute property of Optionor and shall not be refunded in the event Optionee
does not exercise this Option or this Option terminates or expires. Furthermore,
the Extension Funds shall not be applicable to the Purchase Price at the Close
of Escrow. The Option shall automatically terminate without further notice in
the event that Optionee fails to timely and properly deliver the Extension
Funds.

         2. ADDITIONAL EXTENSION OF OPTION TERM. If on or before expiration of
the Option Term set forth in Section 1 above, the Option has not terminated or
expired, the Optionor hereby agrees to grant to Optionee the right to extend the
Option Term to MARCH 1, 2006 (the "Additional Extension") upon satisfaction of
the terms and conditions set forth below. Optionee's right to extend the Option
Term shall be exercised by Optionee by delivering to Optionor written notice (in
accordance with the Option Agreement) irrevocably exercising said Additional
Extension on or before 5:00 p.m. California time on the date of expiration of
the Option Term concurrently with delivery to Optionor of the Additional

<PAGE>

Extension Funds. As separate and independent consideration for the Additional
Extension, the Optionee shall deliver to Optionor the sum of Nine Hundred
Thousand Dollars ($900,000.00) (the "Additional Extension Funds"). Delivery of
the Additional Extension Funds shall require actual delivery of immediately
available funds to Optionor, at its address for notices, as provided in the
Option Agreement. The Additional Extension Funds shall be the sole and absolute
property of Optionor and shall not be refunded in the event Optionee does not
exercise this Option or this Option terminates or expires. Furthermore, the
Additional Extension Funds shall not be applicable to the Purchase Price at the
Close of Escrow. The Option shall automatically terminate without further notice
in the event that Optionee fails to timely and properly deliver the notice
exercising the Additional Extension and/or deliver the Additional Extension
Funds.

         3. CLOSE OF ESCROW. In the event that Optionee timely and properly
exercises the Option, the "Close of Escrow" as defined in Section 10 of the
Option Agreement shall be thirty (30) calendar days following the date that
Optionee exercises the Option.

         4. OPTION MONIES. As of the date of this Amendment, the parties agree
that the Optionee has made all previously required option deposits under the
Option Agreement, and the Option Consideration as defined therein is absolutely
non-refundable to Optionor as set forth in Section 3 of the Option Agreement.

         5. TITLE REVIEW. Section 12(a) of the Option Agreement is hereby
deleted and replaced with the following:

                  "On or before APRIL 29, 2005, Optionee shall have the right in
         its sole and absolute discretion to approve any and all matters of and
         exceptions to title of the Property, including the legal description,
         as disclosed by the following documents and instruments (collectively,
         "Title Documents"): (A) a preliminary report ("Preliminary Report")
         issued by Escrow Holder with respect to the Property and all matters
         referenced therein; and (B) legible copies of all documents, referred
         to in such Preliminary Report."

         6. LICENSE AGREEMENT. The License Agreement attached as EXHIBIT "E" to
the Option Agreement is hereby replaced in its entirety by the form of the
License Agreement set forth on EXHIBIT "1" attached hereto. The attached License
Agreement shall be effective upon the Close of Escrow.

         7. DETERMINING BOUNDARIES OF PHASES. In accordance with Section 9 of
the Option Agreement the parties have determined the boundaries of the Phase I
Property, Phase II Property, and the Phase III Property under the License
Agreement.

         8. MEMORANDUM OF OPTION. Within two (2) days of the execution of this
Amendment the parties shall execute that certain First Amendment to Memorandum
of Option Agreement set forth on EXHIBIT "2" attached hereto.

         9. ENVIRONMENTAL INSURANCE POLICY. The parties agree that Optionor has
obtained the Environmental Policy required by Section 21 of the Option
Agreement, and that each party has paid their share of the premium for the
Environmental Policy.


                                       2
<PAGE>

         10. TIME OF THE ESSENCE. Time is of the essence in each and every term
of this Agreement.

         11. FULL FORCE AND EFFECT. Except as specifically set forth in this
Amendment, the Option Agreement shall remain unmodified and in full force and
effect.

         12. COUNTERPARTS. This Amendment may be executed in several
counterparts, and all so executed shall constitute one agreement binding on all
parties hereto, notwithstanding that all parties are not signatories to the
original or the same counterpart.

         13. INCONSISTENCIES. In the event of any inconsistency between the
terms of this Amendment and the Option Agreement, the terms of this Amendment
shall control.

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the dates set forth below.

                                       HINES NURSERIES, INC.,
                                       a California corporation


                                       By: /S/ CLAUDIA PIEROPAN
                                           -------------------------------------
                                           Claudia Pieropan
                                           Its:  Chief Financial Officer


                                       TRIAD COMMUNITIES, L.P.,
                                       a California limited partnership


                                       By: /S/ FREDERICK W. GRIMM
                                           -------------------------------------
                                           Frederick W. Grimm
                                           Its:  Manager of Triad Sky Valley LLC
                                                 General Partner


                                       3
<PAGE>

                                   EXHIBIT "1"
                                   -----------

                                LICENSE AGREEMENT
                                -----------------


         THIS LICENSE AGREEMENT, dated for reference purposes as of _________,
2006 [INSERT CLOSING DATE], is entered into by and between TRIAD COMMUNITIES,
L.P., a California limited partnership ("Licensor"), and HINES NURSERIES, INC.,
a California corporation ("Hines").

                                 R E C I T A L S
                                 ---------------

         A. Licensor and Hines entered into that certain Option Agreement, dated
for reference purposes as of April 30, 2003 as amended by that certain First
Amendment to Option Agreement dated February 28, 2005 ("Option Agreement"),
whereby Hines agreed to sell and Licensor agreed to purchase certain real
property described in the Option Agreement as the "Property."

         B. Immediately prior to execution of this License Agreement, Hines was
the fee owner of, and conducted a plant nursery operation on, the entire
Property.

         C. Hines is in the process of transferring its existing nursery
operation from the Property to property located in the County of Solano
(referred to herein as the "New Site") and desires to continue to use a portion
of the Property for nursery purposes to facilitate this transfer of operations
to the New Site.

         D. Licensor intends to develop the Property primarily as a
single-family residential subdivision, commencing with development of the
portion of the Property identified as the Phase I Parcel, as defined below.

         E. Licensor is willing to provide to Hines a non-exclusive license over
a portion of the Property to allow for the transfer of existing nursery
operations to the New Site, while still providing for the orderly development of
the Property in accordance with Licensor's development plans, all on the terms
and conditions set forth herein.

         NOW THEREFORE, in consideration of the foregoing recitals and the
covenants set forth below, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

         1. NON-EXCLUSIVE LICENSE. Licensor hereby grants to Hines, and its
subsidiaries and parent corporation, a non-exclusive license to occupy and use
those portions of the Property identified as the "Phase I Parcel", "Phase II
Parcel" and "Phase III Parcel" as generally depicted on the site plan attached
hereto as SCHEDULE "1" ("Site Plan"), to continue to operate and conduct its
plant nursery activities and to locate and maintain its equipment and other
improvements currently used in connection therewith, all as set forth in greater
detail in Section 2 below. The license granted herein to Hines shall be a
personal, non-possessory interest in the Phase I Parcel, the Phase II Parcel and
the Phase III Parcel (individually, a "License Parcel" and collectively, the
"License Parcels"), and Licensor shall at all times during the term hereof


                                   EXHIBIT "1"
                                   -----------
                     TO FIRST AMENDMENT TO OPTION AGREEMENT
<PAGE>

retain the right to possession of the Property (including the License Parcels),
subject to the terms and conditions of this License Agreement, and have the
right to use and occupy the Property for its own purposes, provided the same do
not unreasonably interfere with Hines' activities thereon. Licensor shall give
Hines seventy-two (72) hours notice prior to any entry onto the Property and the
general purpose of such entry. Such notice may be verbal and shall be directed
to the general manager at the Property. Licensor agrees not to revoke or cancel
the license granted herein during the term hereof except pursuant to Section
15.1 below.

         2. USE OF LICENSE PARCELS.

                  2.1 PERMITTED USE. The License Parcels shall at all times
during the term hereof be used by Hines for purposes of operating and conducting
its existing plant nursery activities and all activities reasonably related
thereto, and for no other purposes. In connection therewith, Hines may retain on
the License Parcels the equipment and improvements currently located on the
License Parcels. Additional improvements or equipment affixed to or a part of
the Property shall not be brought onto the License Parcels without Licensor's
consent, which consent shall not be unreasonably withheld, only upon the
condition that Hines agrees to pay for all costs of removing such additional
improvements or equipment. Hines shall be entitled to bring additional equipment
onto the Property which is of a temporary nature without the prior consent of
Licensor. Such uses and equipment shall at all times and in all manners be
strictly confined to the area within the License Parcels and shall not in any
manner or event be placed on or affect the other portions of the Property.

                  2.2 PROHIBITED USES. Hines shall not use, or permit its
employees or agents to use, the License Parcels in a manner which would
constitute a nuisance; result in waste; result in the cancellation of any
insurance being maintained by Licensor with respect to the Property or by Hines
hereunder with respect to its activities or in the increase in the premiums for
any such insurance maintained by Licensor where such cancellation or increase is
the result of a use not permitted by this License Agreement; violate any laws
(including any Laws or Permits) applicable to the Property or Hines' use or
operation of the License Parcels; constitute a default under the terms of this
License Agreement; or except as otherwise expressly provided herein, (i) result
in the use of or impact on any portion of the Property other than the License
Parcels or (ii) interfere with Licensor's development of the Property. The
parties agree that continuation of Hines' current operations shall not be deemed
to constitute a nuisance or deemed interference with Licensor's development of
the Property as long as Hines uses the Property in accordance with the terms of
this Agreement.

         3. LICENSE TERM.

                  3.1 INITIAL TERMS. The initial term of this License Agreement
shall commence on the Close of Escrow, as defined in the Option Agreement, and
expire (subject to the extension rights set forth below) on the following dates:
(i) JULY 1, 2006, as to the Phase I Parcel ("Phase I Term"), (ii) JULY 1, 2007,
as to the Phase II Parcel ("Phase II Term"), and (iii) JULY 1, 2008, as to the
Phase III Parcel ("Phase III Term"), unless sooner terminated pursuant to the
terms and provisions contained herein.


                                      -2-
<PAGE>

                  3.2 EXPIRATION/TERMINATION. Upon the expiration of the Phase I
Term or earlier termination of this License Agreement, (i) Hines shall
immediately cease its operations on the Phase I Parcel, (ii) Hines shall vacate
the Phase I Parcel, (iii) Hines shall remove, at Hines' sole cost and expense,
all of the Removal Property, as defined in Section 8.2 below, located on the
Phase I Parcel, and (iv) Hines' rights and obligations hereunder relating to the
Phase I Parcel shall terminate and cease except for any indemnification or other
obligations undertaken herein which are expressly stated hereunder to survive
such expiration or termination. Upon the expiration of the Phase II Term or
earlier termination of this License Agreement, (i) Hines shall immediately cease
its operations on the Phase II Parcel, (ii) Hines shall vacate the Phase II
Parcel, (iii) Hines shall remove, at Hines' sole cost and expense, all of the
Removal Property, as defined in Section 8.2 below, located on the Phase II
Parcel, and (iv) Hines' rights and obligations hereunder relating to the Phase
II Parcel shall terminate and cease except for any indemnification or other
obligations undertaken herein which are expressly stated hereunder to survive
such expiration or termination. Upon the expiration of the Phase III Term or
earlier termination of this License Agreement, (i) Hines shall immediately cease
its operations on the Phase III Parcel, (ii) Hines shall vacate the Phase III
Parcel, (iii) Hines shall remove, at Hines' sole cost and expense, all of the
Removal Property located on the Phase III Parcel as defined in Section 8.2
below, and (iv) Hines' rights and obligations hereunder relating to the Phase
III Parcel shall terminate and cease except for any indemnification or other
obligations undertaken herein which are expressly stated hereunder to survive
such expiration or termination.

         4. DEVELOPMENT OF PROPERTY BY LICENSOR.

                  4.1 ACCESS TO AND DEVELOPMENT OF LICENSE PARCELS; RESTRICTIONS
ON RELOCATION OF UTILITIES. Hines acknowledges that it will be necessary for
Licensor to install improvements, including without limitation, utilities, in,
on, over and under the License Parcels to provide for the development of the
Property, including the License Parcels, as a cohesive residential development
project. Therefore, Licensor shall be entitled to enter upon the License Parcels
for the purpose of performing engineering activities and making physical
improvements to the License Parcels, including but not limited to relocation of
existing utility improvements located on the Property (including the License
Parcels) subject to the terms and conditions in this License Agreement. In
performing such work, Licensor acknowledges and agrees that it shall take all
reasonable steps to avoid any material impact to the ongoing plant nursery
operation. If it is necessary to relocate any portion of the ongoing plant
nursery operation, Licensor shall perform such relocation at Licensor's sole
cost and in accordance with the terms and conditions set forth below. Without
limiting the foregoing, Licensor acknowledges that all loading, shipping, and
deliveries to the nursery shall continue without the imposition of any
restrictions thereon, and the water supply, power supply, utilities, pumping
station, recycling, sewage disposal and access shall remain in continuous
operation at current levels, subject to temporary interruptions. In the event
that Licensor needs to cause a temporary interruption of power or water supply
to the nursery operations as a result of Licensor's grading or construction
activities, Licensor shall coordinate any interruption with Hines, including
without limitation the date, time and length of the proposed interruption.
Licensor shall provide to Hines a minimum of seventy-two (72) hours prior
written notice of any temporary interruption. Notwithstanding the foregoing, at
no time shall the nursery operations be without alternative water or power
supply. Licensor acknowledges that Hines' back-up water supply capacity of the
nursery is approximately 3-4 hours, and that Hines has no back-up power supply.


                                      -3-
<PAGE>

Licensor shall be responsible, at its sole cost, for providing alternative water
and power supply sources as may be reasonably necessary to avoid any material
interruption in water or power supply, taking into consideration the Hines'
current back-up capacity. If Licensor's grading or construction activities on
any portion of the Property requires that the existing Solano Irrigation
District water line ("Water Line") running through the Property be relocated,
Licensor shall give Hines sixty (60) days prior written notice of its intent to
relocate the Water Line. Licensor shall relocate the Water Line at its sole
cost. On or before the expiration of the Phase II Term, Hines shall be
responsible, at its sole cost, for relocating the pump facilities located on the
Phase II Parcel to the Phase III Property.

                  4.2 DRAINAGE. In no event shall Licensor's grading or
construction activities on any portion of the Property cause any significant
additional drainage or water flow onto any portion of the License Parcels.
Without limiting the foregoing, no storm water or other runoff from Licensor's
development shall be discharged into or otherwise become part of Hines'
reclamation pond or recycling system. All water runoff and discharge from
Licensor's construction activities and/or from any portion of the Property other
than the License Parcels, shall be diverted from the License Parcels.

                  4.3 DUST CONTROL. In conducting any grading or other
construction activities on any portion of the Property, Licensor shall strictly
comply with all dust control mitigation measures imposed as a condition to
development of the Property by the appropriate governmental agencies.

                  4.4 REDUCTION OF NOISE/ODORS. At such time as Licensor
commences its home sales activities on the Phase I Parcel, Hines agrees to use
commercially reasonable efforts to minimize odors and noise from the nursery
operations; provided, however, Hines shall not be required to incur additional
costs, or risk material damage to any of the plants in the nursery operation.

                  4.5 RESTRICTIONS ON SALES OF RESIDENCES LOCATED ON PHASE I
PARCEL. Prior to JULY 1, 2007, Licensor shall not be entitled to convey fee
title to any home constructed on the Phase I Parcel that is located within 150
feet of the Phase II Parcel boundary. In the event that Licensor breaches or
threatens to breach this restriction, Hines shall be expressly entitled to seek
and obtain an injunction preventing such conveyance, recognizing that Hines
cannot be adequately compensated by an award of damages for such breach. The
right to injunctive relief shall not limit Hines' right to pursue any other
remedies available at law or in equity.

                  4.6 DISCLOSURES TO HOME PURCHASERS. Licensor acknowledges that
construction of residences adjacent to a nursery operation may raise concerns
with homeowners, including without limitation concerns over noise, lighting,
odors and other disturbances. Subject to Hines' obligations pursuant to Section
4.4 above and Section 6 below, Hines shall be entitled to continue its current
irrigation methods, fertilization, pesticides and spraying techniques, without
any interference or objection from Licensor. So long as Hines conducts any
operations on any portion of the Property, Licensor shall require each home
purchaser, concurrently with execution of a purchase agreement for a home which
is located within the Property, to execute: (i) an acknowledgement, in the form
attached hereto as SCHEDULE "2", confirming receipt of a disclosure regarding
the temporary existence of the adjacent nursery operation and the potential


                                      -4-
<PAGE>

effects on the home purchaser arising from the nursery operation, including,
without limitation, the use of tractors, trucks and loading facilities in
connection with a typical nursery operation, and (ii) an agreement expressly
waiving any nuisance claim against Hines and making a covenant not to object,
directly or indirectly, to the nursery operation.

                  4.7 OBLIGATIONS OF PARTIES UPON EXPIRATION OF PHASE I TERM,
PHASE II TERM AND PHASE III Term. The parties hereby agree to perform their
respective obligations specified in SCHEDULE "3", attached hereto, upon the
expiration or earlier termination of the Phase I Term, the expiration or earlier
termination of the Phase II Term and upon the expiration or earlier termination
of the Phase III Term.

                  4.8 DEVELOPMENT MEETINGS. Hines and Licensor agree to hold
periodic meetings to discuss and attempt to address any issues related to the
development of the Property and the ongoing operation of the nursery facilities
until termination or expiration of the Phase II Term.

         5. OPERATION. Hines shall operate its plant nursery facilities and
engage in its plant nursery activities on the License Parcels at all times
during the term hereof in accordance with all applicable laws, statutes,
ordinances and governmental rules and regulations.

         6. COMPLIANCE WITH LAWS. Hines shall not use or occupy the License
Parcels or permit anything to be done in, on or about the License Parcels by
persons acting under Hines which will in any manner violate any laws, statutes,
ordinances or governmental rules or regulations now in effect or which may
hereafter be enacted or promulgated in connection with the occupation of the
License Parcels and the operation of Hines' plant nursery activities thereon,
including without limitation, any Environmental Laws (collectively, the "Laws").
Additionally, Hines shall, at Hines' sole cost and expense, continue to maintain
all permits, licenses, authorizations and any other consents or approvals of any
local, state or federal agency necessary for the conduct of its activities as
contemplated by this License Agreement (collectively, the "Permits"). At all
times during the term of this License Agreement, Hines' occupancy of the License
Parcels and/or the conduct of its business thereon shall be in compliance with
all Laws and Permits, including, without limitation, any health and safety laws,
building codes, subdivision laws or Environmental Laws.

         7. HAZARDOUS MATERIALS. During the term of this License Agreement,
Hines shall not produce, store, release, transport or otherwise handle any
"Hazardous Materials" or engage in any "Environmental Activity" in, on, under,
to, or from the License Parcels, or permit or suffer its employees, invitees or
agents to do so, except as expressly provided in Section 6 above. As used
herein, "Hazardous Materials" means any chemical, material, or substance defined
as or included in the definition of "Hazardous Substances", "Hazardous
Material", "Hazardous Waste", "Restricted Hazardous Waste", "Extremely Hazardous
Waste", "Proposition 65 Listed Chemicals" or "Toxic Substances" or words of
similar import under any applicable local, state or federal law currently, or at
any time during the term hereof enacted, or under any of the regulations adopted
or publications promulgated pursuant thereto (collectively, the "Environmental
Laws") and any other material or substance which is regulated by any such
Environmental Law or governmental authority. The term "Environmental Activity"
as used herein means any storage, existence, release, threatened release,
generation, abatement, removal, disposal, handling or transportation of any


                                      -5-
<PAGE>

Hazardous Material at, on, to, from, under or onto the License Parcels. In the
event any Environmental Activity shall occur on the License Parcels during the
term hereof which is the direct or indirect result of Hines' activities thereon,
Hines shall immediately notify Licensor of the same in writing and shall take
all such remediation or other action to remove, clean up or otherwise correct
the same as may be required by any Environmental Law and/or any governmental
agency having jurisdiction thereof, all at Hines' sole cost and expense. The
obligations of Hines hereunder shall be absolute and unconditional and shall
survive the expiration or sooner termination of this License Agreement.

         Notwithstanding the immediately preceding paragraph, Hines may use at
the License Parcels such materials as Hines reasonably deems necessary for
operation of its plant nursery activities at the License Parcels and to maintain
the machinery used in connection therewith; provided, however, any and all use,
storage, transport and/or disposal of all such materials by Hines shall fully
comply with all Laws and Permits, and Hines must first notify Licensor (but
Licensor shall have no approval rights) in writing of Hines' intent to use any
materials which constitute Hazardous Materials, which notice shall identify such
materials. Licensor acknowledges that it has already received a list of
Hazardous Materials pursuant to Section 22(g) of the Option Agreement, and Hines
shall only be responsible for notifying Licensor of any additional Hazardous
Materials to be used on the License Parcels.

         8. IMPROVEMENTS; MAINTENANCE OF IMPROVEMENTS.

                  8.1 IMPROVEMENTS BY HINES. Hines does not contemplate building
or locating any additional improvements on the License Parcels during the term
of this License Agreement. Except as set forth in Section 2.1 above, Hines may
not, at any time during the term of this License Agreement, build or locate any
additional improvements, structures, equipment or other property (collectively,
"Personal Property") on any portion of the License Parcels without the prior
written consent of Licensor. In connection with such consent, Licensor may
require such plans, specifications, and such other written documents setting
forth the proposed nature and location of such Personal Property for its review
and approval within ten (10) days following Hines' submission of plans. Licensor
in its reasonable discretion shall also have the right to approve the location
of any improvements on the License Parcels. Licensor shall be entitled to post
notices of non-responsibility on the License Parcels. Hines shall indemnify and
defend Licensor and the Property against liability for mechanics' and
materialmen's liens and to insure completion of the intended work. Such approval
by Licensor relates only to the acceptability of such matters to Licensor and
shall not be deemed an approval by Licensor for purposes of architectural or
engineering design or safety. By approving the same, Licensor assumes no
liability or responsibility for any defect in any such Personal Property
constructed or located on the License Parcels by Hines, or the use, operation or
maintenance thereof. Such Personal Property shall be constructed, placed and
maintained only by licensed California professionals, except for Personal
Property of a temporary nature typically used by nursery personnel. All such
Personal Property shall be maintained in accordance with all applicable Laws and
Permits.

                  8.2 REMOVAL OF IMPROVEMENTS. On the expiration or earlier
termination hereof, Hines shall at its sole cost and expense remove that portion
of the Personal Property described in SCHEDULE "3" to this License Agreement
("Removal Property"). If any Removal Property still remains on the Phase I
Parcel after expiration or earlier termination of the Phase I Term, still


                                      -6-
<PAGE>

remains on the Phase II Parcel after expiration or earlier termination of the
Phase II Term or still remains on the Phase III Parcel after expiration or
earlier termination of the Phase III Term, Licensor may remove and dispose of
such Removal Property, without any obligation to account to Hines for the value
of such Removal Property, and Licensor shall be entitled to reimbursement from
Hines for all costs incurred in removing and disposing of such Removal Property.
On the expiration or earlier termination hereof, Hines may, but shall not be
obligated to remove all other improvements, machinery and equipment located on
the License Parcels (collectively, the "Remaining Property"). Any Remaining
Property that is not removed by Hines from the Phase I Parcel on or before
expiration or earlier termination of the Phase I Term, from the Phase II Parcel
on or before expiration or earlier termination of the Phase II Term, or from the
Phase III Parcel on or before expiration or earlier termination of the Phase III
Term shall be deemed abandoned by Hines, and Licensor may remove and dispose of
the Remaining Property in Licensor's sole discretion, without any obligation to
account to Hines for the value of such Remaining Property. Licensor shall not be
entitled to any reimbursement from Hines for any costs incurred in removing and
disposing of such Remaining Property. Hines expressly waives any claims against
Licensor arising directly or indirectly from Licensor's removal and disposition
of any Personal Property in accordance with the provisions of this License
Agreement.

                  8.3 MAINTENANCE. At all times during the term of this License
Agreement, Hines shall operate and maintain all Personal Property located on the
License Parcels used by Hines in connection with its activities in accordance
with all applicable Laws and Permits.

         9. LIENS. Hines shall at all times keep the License Parcels free from
any liens arising out of any and all work performed, materials, services or
equipment furnished, or obligations incurred by or on behalf of Hines. Hines
hereby agrees to indemnify, defend and hold Licensor and the Property free and
harmless from any and all liens, claims, damages or judgments arising out of any
such work performed, materials, labor or equipment furnished, or obligations
incurred by or on behalf of Hines in connection with its operations on the
License Parcels. The indemnification obligations of Hines hereunder shall be
absolute and unconditional and shall survive the expiration or sooner
termination of this License Agreement. If Hines contracts for work which results
in the imposition of any materialmens' or mechanics' liens for which either a
payment bond does not exist, or neither the bonding company nor Hines
voluntarily pay within ninety (90) days after receipt of written notice by
Licensor, then Licensor shall have an unconditional right (but not an
obligation) to extinguish any such encumbrances and to receive reimbursement
from Hines for all costs incurred in extinguishing such encumbrances immediately
upon written demand by Licensor.

         10. UTILITIES. Hines shall arrange to have all utilities servicing
Hines' operations separately metered or billed to Hines, and Hines shall be
responsible directly to the companies or persons providing the same. In the
event such utilities are not separately billed, Hines shall pay its proportional
share thereof on a monthly basis in amounts to be reasonably determined by
Licensor and approved by Hines. Hines' allocated portion thereof shall be paid
by Hines to Licensor within fifteen (15) business days after written demand
therefor by Licensor.

         11. INSURANCE. At all times during the term hereof, Hines shall
maintain, at its sole cost and expense, (i) customary and adequate worker's
compensation insurance, and (ii) comprehensive general liability insurance


                                      -7-
<PAGE>

insuring against any liability arising out of or in connection with the use,
occupancy or maintenance of the License Parcels and the Personal Property
located thereon by Hines. Such liability insurance shall have a single combined
liability limit of not less than One Million Dollars ($1,000,000) for damage to
property and a single combined liability limit of not less than Three Million
Dollars ($3,000,000) for injury or death to persons; provided, that any umbrella
coverage obtained by Hines shall be applicable to such minimum coverage limits.
If Hines fails to obtain or maintain such insurance, Licensor, at Hines' cost
and expense, shall have the right, but not the obligation, to obtain and/or
maintain such insurance on behalf of Hines. Should Licensor obtain and/or
maintain such insurance and should Hines fail to pay for the costs and expenses
therefore, Licensor shall be entitled to receive reimbursement from Hines for
all costs incurred in obtaining and/or maintaining such insurance immediately
upon written demand by Licensor. The limit of any insurance referenced herein
shall not limit the liability of Hines hereunder. Licensor and its lender shall
be named as additional insured in all such policies (except the workers'
compensation insurance) and the public liability insurance and property damage
insurance shall insure performance by Hines of any indemnities provided for
herein. All such insurance policies shall be obtained from reputable insurance
companies properly licensed and accredited by the State of California with a
rating of not less than B, Class VII in the most recent edition of Best's
Insurance Guide and shall provide that Licensor shall be given thirty (30) days
prior written notice by the applicable insurer in the event that either the
insurers or Hines desires to cancel or modify such policies of insurance or such
portions thereof. Hines shall provide Licensor with (i) written proof of such
insurance prior to the effectiveness of this License Agreement, and (ii) written
proof of renewal of all insurance required hereunder no later than five (5) days
prior to expiration.

         12. RENT. Hines shall not be responsible for paying Licensor any
compensation, fees, costs, expenses or monies for the License.

                  12.1 PERSONAL PROPERTY TAXES. During the term of this License
Agreement, Hines shall cause all taxes, assessments and other charges levied or
imposed upon any of Personal Property. Hines shall at all times during the term
hereof pay all such personal property taxes prior to delinquency.

                  12.2 LICENSOR PAYMENT OF TAXES. From and after the Close of
Escrow under the Option Agreement Licensor shall be responsible for the payment
of all real property taxes and assessments against the Property. Should Licensor
fail to pay said taxes and assessments prior to delinquency, Hines may pay such
taxes and assessment and Hines shall be entitled to reimbursement for such
payments from Licensor within fifteen (15) days following written demand. In the
event that Licensor does not reimburse Hines for such costs, Hines shall have
the right to offset such amounts from any payments owing to Licensor hereunder
in addition to pursuing any other remedies available at law or in equity.

         13. ASSIGNMENT/TRANSFER. During the term of this License Agreement
Hines shall not voluntarily, involuntarily or by operation of law, directly or
indirectly, assign, transfer, mortgage, pledge, hypothecate or encumber this
License Agreement or any of its interest or right herein, and shall not let any
person occupy or use the License Parcels or any portion thereof for any purposes
whatsoever. In connection therewith, Hines hereby acknowledges the personal
nature of the rights and privileges granted hereunder; provided, however, Hines
may assign its interest to any subsidiary or parent of Hines without the prior
consent of Licensor. In the event of any permitted assignment, Hines shall not
be released from liability hereunder.


                                      -8-
<PAGE>

         14. MUTUAL INDEMNIFICATION.

                  (a) Hines hereby agrees to indemnify, defend and hold Licensor
and its employees, agents, successors and assigns (collectively, "Licensor
Indemnitees") harmless from and against any and all payments, expenditures,
losses, damages, environmental clean up costs or claims (including remediation
costs and contribution claims), liabilities, claims, causes of action,
judgments, court costs, legal or other expenses (including reasonable attorneys'
fees) of whatever kind or nature, whether direct or indirect, contingent or
non-contingent, incurred or suffered by, or actually made against, any
Indemnitee resulting from or arising out of or by reason of (i) Hines' use or
occupancy of the License Parcels during the term of this License Agreement
and/or the conduct and operation of Hines' plant nursery activities thereon or
other things done, permitted or suffered by Hines in, on or about the License
Parcels; or (ii) any breach, default or failure by Hines to fully perform in a
timely fashion any of the covenants, obligations, agreements or other
undertakings of Hines to be performed under the terms of this License Agreement.
Hines' indemnification obligations shall not apply to matters arising from the
negligence or willful misconduct of Licensor or any breach of this License
Agreement by Licensor, nor shall this indemnification constitute a waiver of the
release provisions in the Option Agreement. The indemnification obligations of
Hines hereunder shall be absolute and unconditional, and shall survive the
expiration or sooner termination of this License Agreement.

                  (b) Licensor hereby agrees to indemnify, defend and hold Hines
and its employees, agents, successors and assigns (collectively, "Hines
Indemnitees") harmless from and against any and all payments, expenditures,
losses, damages, environmental clean up costs or claims (including remediation
costs and contribution claims), liabilities, claims, causes of action,
judgments, court costs, legal or other expenses (including reasonable attorneys'
fees) of whatever kind or nature, whether direct or indirect, contingent or
non-contingent, incurred or suffered by, or actually made against, any
Indemnitee resulting from or arising out of or by reason of (i) Licensor's use
or occupancy of the Property during the term of this License Agreement and/or
the conduct and operation of Licensor's development activities thereon; or (ii)
any breach, default or failure by Licensor to fully perform in a timely fashion
any of the covenants, obligations, agreements or other undertakings of Licensor
to be performed under the terms of this License Agreement. Licensor's
indemnification obligations shall not apply to matters arising from the
negligence or willful misconduct of Hines, or any breach of this License
Agreement by Hines. The indemnification obligations of Licensor hereunder shall
be absolute and unconditional, and shall survive the expiration or sooner
termination of this License Agreement.

         15. DEFAULTS.

                  15.1 BY HINES. In the event Hines fails to fully perform or
satisfy any of Hines' covenants, agreements or undertakings contained herein in
accordance with the terms hereof, and such failure is not cured within a period
of ten (10) calendar days after written notice thereof is delivered to Hines, or
in the event any such failure cannot be reasonably cured within such 10-day
period, Hines fails to commence such cure within such 10-day period and


                                      -9-
<PAGE>

diligently prosecute the same, Hines shall be in default hereunder. In the event
of any such default, Licensor shall be entitled to: (i) terminate this License
Agreement (subject to the provisions below), in which event Hines shall
immediately cease its operations, vacate the License Parcels, and all rights and
obligations of the parties under this License Agreement shall terminate except
for any indemnification or other obligations expressly stated herein as
surviving, which obligations shall survive and continue in full force and
effect; (ii) cure such default and Hines shall be required to reimburse Licensor
for the cost of remedying the default within ten (10) days following written
demand, and all unpaid sums shall bear interest at the rate of ten percent (10%)
per annum, and/or (iii) exercise any other remedies available to Licensor under
this License Agreement, at law, or in equity. In the event that a default by
Hines does not involve the payment of monies or possession of the Property
beyond the expiration of the Phase II or Phase III Terms, as a condition to
Licensor exercising its termination remedy, the parties agree to meet within ten
(10) days following written notice of default from Licensor and use good faith
efforts to attempt to agree upon a reasonable cure for such default. In the
event that the parties cannot agree upon a cure process for such default, the
parties shall submit the matter to arbitration in accordance with Section 16
below and the arbitrator shall determine the appropriate cure for such default.
After the arbitrator's determination of the appropriate cure process, then the
time period for curing defaults under this Section shall commence.

                  15.2 BY LICENSOR. In the event Licensor fails to fully perform
or satisfy any of Licensor's covenants, agreements or undertakings contained
herein in accordance with the terms hereof, and such failure is not cured after
a period of ten (10) calendar days after written notice thereof is delivered to
Licensor, or in the event any such failure cannot be reasonably cured within
such 10-day period, Licensor fails to commence such cure within such 10-day
period and diligently prosecute the same, Licensor shall be in default
hereunder. In the event of any such default, Hines shall cure such default and
Licensor shall be required to reimburse Hines for the cost of remedying the
default within ten (10) days following written demand, and all unpaid sums shall
bear interest at the rate of ten percent (10%) per annum. In addition, Hines
shall be entitled to exercise any remedies available to Hines under this License
Agreement, at law, or in equity. Nothing herein shall modify the release in the
Option Agreement.

         16. ARBITRATION OF DISPUTES. ANY CONTROVERSY BETWEEN THE PARTIES HERETO
SHALL BE SUBMITTED TO ARBITRATION IN SOLANO COUNTY, CALIFORNIA, ON THE REQUEST
OF EITHER PARTY. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES, SHALL BE
DETERMINED BY ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF
THE AMERICAN ARBITRATION ASSOCIATION ("AAA"), AND WRITTEN NOTICE THEREOF SHALL
BE GIVEN TO THE OTHER PARTY. ALL STATUTES OF LIMITATIONS WHICH WOULD OTHERWISE
BE APPLICABLE SHALL APPLY TO ANY ARBITRATION PROCEEDING UNDER THIS PARAGRAPH.
JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT HAVING JURISDICTION
AND SHALL BE FINAL AND BINDING.

         NO PROVISION OF, NOR THE EXERCISE OF ANY RIGHTS UNDER THIS SECTION 16
SHALL LIMIT THE RIGHT OF ANY PARTY TO OBTAIN PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS INJUNCTIVE RELIEF, FROM A COURT HAVING JURISDICTION BEFORE, DURING, OR


                                      -10-
<PAGE>

AFTER THE PENDENCY OF ANY ARBITRATION. THE INSTITUTION AND MAINTENANCE OF AN
ACTION FOR JUDICIAL RELIEF OR PURSUIT OF PROVISIONAL OR ANCILLARY REMEDIES SHALL
NOT CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE PLAINTIFF, TO
SUBMIT THE DISPUTE TO ARBITRATION.

         WHENEVER AN ARBITRATION IS REQUIRED, THE ARBITRATOR OR REFEREE SHALL BE
SELECTED IN ACCORDANCE WITH THIS SECTION. WITHIN FIVE (5) DAYS AFTER WRITTEN
NOTICE OF ANY DISPUTE IS GIVEN TO THE OTHER PARTY, THE PARTIES' SHALL ATTEMPT TO
AGREE ON A MUTUALLY ACCEPTABLE ARBITRATOR. IN THE EVENT THE PARTIES ARE UNABLE
TO SO AGREE WITHIN SUCH FIVE (5) DAY PERIOD, THE ARBITRATOR OR REFEREE SHALL BE
SELECTED IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. THE DISPUTED MATTER SHALL BE HEARD BY THE ARBITRATOR OR
REFEREE SO APPOINTED NO LATER THAN TWENTY (20) DAYS AFTER SUCH APPOINTMENT.
ARBITRATORS SHALL APPLY CALIFORNIA LAW AND BE BOUND BY PRECEDENT AND STATUTORY
RULES AS THOUGH THEY WERE JUDGES SITTING IN A CALIFORNIA COURT. STATEMENTS OF
ARBITRATION AWARDS SHALL BE IN WRITING. THE PARTIES SHALL BE ENTITLED IN ANY
ARBITRATION HEREUNDER, TO SUCH RIGHTS OF DISCOVERY AS DETERMINED BY THE
ARBITRATOR.

         IN THE EVENT OF ANY DISPUTE GOVERNED BY THIS SECTION, EACH OF THE
PARTIES SHALL PAY ALL OF ITS OWN EXPENSES, AND, SUBJECT TO THE AWARD OF THE
ARBITRATOR, SHALL PAY AN EQUAL SHARE OF THE ARBITRATORS' OR REFEREES' FEES. THE
ARBITRATOR SHALL HAVE THE POWER TO AWARD RECOVERY OF ALL COSTS AND FEES
(INCLUDING ATTORNEYS' FEES, ADMINISTRATIVE FEES, ARBITRATORS' FEES, AND COURT
COSTS) TO THE PREVAILING PARTY.

         NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU
ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A
COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR
JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY
INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO
THIS ARBITRATION PROVISION IS VOLUNTARILY.

                                      -11-
<PAGE>

         WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION
TO NEUTRAL ARBITRATION.

                  ___________________                   ___________________
                  Licensor's Initials                   Hines' Initials

         17.      MISCELLANEOUS.

                  17.1 GOVERNING LAW. This License Agreement has been executed
in Vacaville, California, and shall be governed by and construed in accordance
with the laws of the State of California.

                  17.2 ATTORNEYS' FEES. In the event either party shall commence
legal proceedings for the purpose of enforcing any provision or condition
hereof, or interpreting their rights hereunder, or by reason of any breach
arising under the provisions hereof, then the successful party in such
proceedings shall be entitled to reasonable attorneys' fees to be determined by
the Court.

                  17.3 INTEGRATION. Except as expressly stated herein, this
License Agreement contains the entire agreement of the parties hereto, and
supersedes any prior written or oral agreements between them concerning the
subject matter contained herein. Except as expressly stated herein, there are no
representations, agreements, arrangements, or understandings, oral or written,
relating to the subject matter which are not fully expressed herein. This
License Agreement may be modified only by a writing signed by the party against
whom it is sought to be enforced.

                  17.4 COUNTERPARTS. This License Agreement may be executed in
counterparts and shall be fully effective and binding on all parties hereto, as
if one or more copies thereof had been executed by all of the parties hereto,
when all of the parties have executed counterparts hereof, even though no single
counterpart has been executed by all of the parties hereto.

                  17.5 NOTICE. All notices or other communications required or
permitted hereunder shall be in writing, and shall be personally delivered or
sent by registered or certified mail, postage prepaid, return receipt requested,
or sent by electronic facsimile and shall be deemed received upon the earlier of
(i) if personally delivered, the date of delivery to the address of the person
to receive such notice, (ii) if mailed, on the date of posting by the United
States Post Office, or (iii) if given by electronic facsimile, when received by
the other party.

         TO LICENSOR:                       Triad Communities, L.P.
                                            1095 Hiddenbrooke Parkway
                                            Vallejo, CA  94591
                                            Attn:  Fred Grimm
                                            Telephone:  (707) 557-1184
                                            Facsimile:  (707) 557-1187


                                      -12-
<PAGE>

                                            Triad Communities, L.P.
                                            2801 Alaskan Way, Suite 107
                                            Seattle, WA  98121
                                            Telephone:  (206) 374-0414
                                            Facsimile:  (206) 374-0415

         With copy to:                      Foster Pepper & Shefelman, PLLC
                                            1111 Third Avenue, Suite 3400
                                            Seattle, WA  98101-3299
                                            Attention:  Michael Kuntz, Esq.
                                            Telephone:  (204) 447-8959
                                            Facsimile:  (204) 749-1976

         TO HINES:                          Hines Nurseries, Inc.
                                            12621 Jeffrey Road
                                            Irvine, California  92620-2101
                                            Attention:  Claudia Pieropan
                                            Telephone:  (949) 559-4444
                                            Facsimile:  (949) 786-0968

         With a copy to:                    Rutan & Tucker, LLP
                                            611 Anton Boulevard, Suite 1400
                                            Costa Mesa, California  92626-1931
                                            Attention:  Randall M. Babbush, Esq.
                                                        Joseph L. Maga, Esq.
                                            Telephone:  (714) 641-3456
                                            Facsimile:  (714) 546-9035

         Notice of change of address shall be given by written notice in the
manner described in this Section.

                  17.6 UNPAID AMOUNTS. In the event any reimbursement amounts
due from one party to the other are not paid within ten (10) calendar days after
written demand for payment, such amounts shall bear interest at the rate of ten
percent (10%) per annum from the eleventh (11th) day after the date of written
demand until paid.

                  17.7 WAIVER. Waiver by one party of the performance of any
covenant, condition or promise shall not invalidate this License Agreement, nor
shall it be considered to be a waiver by such party of any other covenant,
condition, or promise hereunder. The waiver by either or both parties of the
time for performing any act shall not constitute a waiver of the time for
performing any other act or an identical act required to be performed at a later
time. The exercise of any remedy provided by law or equity and the provisions of
this License Agreement for any remedy shall not exclude other remedies unless
they are expressly excluded.

                  17.8 CONSTRUCTION. As used in this License Agreement, the
masculine, feminine, or neuter gender and the singular or plural numbers shall
each be deemed to include the other whenever the context so indicates. This
License Agreement shall be construed as a whole, the captions being for the
convenience of the parties only and not intended to describe or define the
provisions in the portions of the License Agreement to which they pertain.


                                      -13-
<PAGE>

                  17.9 FORCE MAJEURE. Neither Hines nor Licensor shall be liable
to the other for failing to perform their respective obligations under this
License Agreement if such performance is prevented by strikes, labor disputes,
acts of God, governmental restrictions, governmental regulations, governmental
controls, enemy or hostile governmental action, civil commotion, fire or other
casualty, or by other similar causes or events beyond the reasonable control of
the prevented party, if the prevented party notifies the other party of the
existence of the cause or event within seventy-two (72) hours of its
commencement, and if the prevented party thereafter uses reasonable diligence
and good faith to overcome such cause or event to be able to resume performance.

                  17.10 NO RECORDATION. Neither this License Agreement nor any
memorandum hereof shall be recorded without the prior written consent of
Licensor, which consent may be withheld in its sole and absolute discretion.

                  17.11 SEVERABILITY. If any term, covenant, condition, or
provision of this License Agreement is held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remainder of the provisions shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.

                  17.12 SUBORDINATION AND NON-DISTURBANCE. Hines agrees to
subordinate this Agreement to any deed of trust or mortgage now or hereafter
placed upon the Property and to all amendment, modifications and replacements
thereof, on the condition that Hines' rights under this Agreement are not
disturbed in any way. Upon ten (10) days prior written request of Licensor,
Hines shall evidence in writing the subordination of its rights under this
Agreement to the lien of any mortgage now or hereafter in force, upon receipt of
a commercially reasonable non-disturbance agreement from such mortgagee. In the
event any proceedings are brought for foreclosure, or in the event of the
exercise of the power of sale under any mortgage, or delivery of a deed-in-lieu
of foreclosure Hines shall recognize such purchaser on the conditions set forth
herein.

                  17.13 ESTOPPEL. Each party shall at any time within ten (10)
days of written request of the other party, execute and deliver to the
requesting party and their proposed lender or purchaser, a written certificate
(a) stating that to their actual knowledge this Agreement is unmodified and in
full force and effect (or, if modified, stating the nature of such modification
and certifying that this Agreement as so modified is in full force and effect);
(b) acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of either party hereto, or specifying such defaults
if any are claimed or known; (c) the responding party has no known offsets or
claims against the enforcement of any of the provisions of this Agreement, or
specifying any contrary claims; (d) acknowledging that the certificate is made
to induce the proposed purchaser or a lender to consummate a transaction and
that such purchaser and/or lender shall rely upon the truth of the statements
made therein; and (e) confirming that the person executing the certificate is
the duly authorized signatory for or on behalf of the responding party.


                                      -14-
<PAGE>

                  17.14 SUCCESSORS. Subject to Section 13 above, this License
Agreement shall be binding on the successors and assigns of the parties hereto.

                  17.15 EXHIBITS. All Exhibits attached hereto shall be deemed a
part of this License Agreement and are hereby incorporated herein by reference
in full.

         IN WITNESS WHEREOF, the parties have duly executed this License
Agreement as of the day and year first above written.

                                     HINES NURSERIES, INC.,
                                     a California corporation


                                     By:
                                        ---------------------------------------
                                        Claudia Pieropan
                                        Chief Financial Officer


                                     TRIAD COMMUNITIES, L.P.,
                                     a California limited partnership


                                     By:
                                        ---------------------------------------
                                        Its:
                                            -----------------------------------


                                      -15-
<PAGE>

                                  SCHEDULE "1"
                                  ------------

        SITE PLAN DEPICTING THE PHASE I, PHASE II AND PHASE III PROPERTY
        ----------------------------------------------------------------


                       (To be inserted prior to execution)



                                  SCHEDULE "1"
                                  ------------
                              TO LICENSE AGREEMENT

<PAGE>

                                  SCHEDULE "2"
                                  ------------

                            DISCLOSURE TO HOME BUYERS
                            -------------------------


         The undersigned ("Buyer") has entered into that certain Purchase
Agreement with ____________________________________ ("Seller") to buy Lot/Unit
________ of Tract No. __________ located in the City of Vacaville, County of
Solano, State of California (the "Lot"). This Addendum shall supplement the
terms of the Purchase Agreement.

         1. ADJACENT NURSERY OPERATIONS. Buyer acknowledges that its Lot is
adjacent to or near an active nursery business, currently operated by Hines
Nurseries, Inc. ("Hines"). Buyer agrees that construction of its residence near
a nursery operation may result in nuisances, annoyances, and disturbances to
Buyer, including without limitation, increased noise, high lighting levels, use
of fertilizers and pesticides, and offensive odors. Buyer acknowledges that
Hines shall be entitled to continue its current use of tractors, trucks, loading
facilities, irrigation methods, fertilization, pesticides and spraying, without
any interference, objection or liability to Buyer.

         2. BUYER INVESTIGATION. Before acquiring fee title to a Lot Buyer is
advised to visit their Lot during operation hours for the nursery and during
differing times of the day to personally determine whether the nuisances and
disturbances from the nursery operations are acceptable to Buyer.

         3. RELEASE AND COVENANT NOT TO SUE. Buyer, by acceptance of a deed to a
Lot, represents that they have considered the potential negative impacts of the
nursery operations to persons and property and accepts all such potential
negative impacts. In connection therewith, Buyer for themselves and on behalf of
their family, guests, tenants, invitees and licensees (collectively, the
"Releasing Parties") hereby agree to:

                  3.1 Forever waive, release and hold Seller and Hines and their
respective successors and assigns (collectively, the "Released Parties")
harmless from and against any impact, claim, cost, expenses, action, damage,
liability, loss, nuisance, annoyance, disturbance or detriment to the Releasing
Parties or the Lot that may in any way arise, now or in the future, as a result
of such nursery operations;

                  3.2 Hold the Released Parties harmless from any claims,
actions, lawsuits, or proceedings, by the guests, tenants, invitees or licensees
of Buyer against any of the Released Parties arising in any way form the nursery
operations;

                  3.3 Not oppose or object to in any way (verbal or written),
directly or indirectly, to the continuation of such nursery operations and as
material consideration, waives any right Buyer may have to oppose or object to
the nursery operations; and

                  3.4 Not to bring any action, claim or proceeding of any kind
to alter, modify, reduce, terminate or cease the nursery operations before any
federal, state or local court, tribunal, governmental agency, entity or board or
administrative agency.


                                  SCHEDULE "2"
                                  ------------
                              TO LICENSE AGREEMENT
<PAGE>

         Buyer hereby expressly agrees that the foregoing waiver and
relinquishment of rights and claims, known or unknown, suspected or unsuspected
at the time of this signing, is given by the undersigned with full knowledge of
the provisions of California Civil Code Section 1542 and with the intention that
such waiver and relinquishment is intended to and shall extend to waive the
benefits of the provisions of Section 1542, which reads as follows:

                  "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
                  CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
                  TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

                                            ________________
                                            BUYER'S INITIALS

         4. THIRD PARTY BENEFICIARY. Each of the parties hereto agrees that
Hines shall be a third party beneficiary of rights and releases in this Addendum
and shall have the right to enforce the terms and conditions of this Addendum in
the event of any breach.

         5. SUCCESSORS AND ASSIGNS. Each and all of the terms, covenants,
conditions and releases herein shall run with the Lot and shall inure to the
benefit of and shall be enforceable by Hines and be binding upon the Lot, Buyer
and all persons or entities having any interest in all or any portion of the
Lot, together with their grantees, successors, assigns, lessees and mortgagees.
Each party acknowledges that at the request of Hines, the terms of this Addendum
may be required to be included in the grant deed conveying the Lot to Buyer.

         6. INTERPRETATION OF LEGAL DOCUMENTS. Sales representatives of Seller
are not authorized to explain, interpret or modify any of the legal documents
covering or pertaining to the purchase of the Lot including, without limitation,
this Addendum.

         7. NO REPRESENTATION. No salesman, employee or agent has the authority
to make any representation or warranty to Buyer which contradict the matters
contained in this Addendum. Buyer acknowledges that no representation or
warranty has been made on which Buyer has relied in connection with the purchase
of the Lot.

         8. INCONSISTENCY WITH PURCHASE AGREEMENT. In the event of any
inconsistency between this Addendum and the Purchase Agreement, the terms of
this Addendum shall control.\

         9. COUNTERPARTS. This Addendum may be executed in several counterparts,
and all so executed shall constitute one agreement binding on all parties
hereto, notwithstanding that all parties are not signatories to the original or
the same counterpart.


                                      -2-
<PAGE>

         BY SIGNING BELOW, THE UNDERSIGNED BUYER ACKNOWLEDGES HAVING READ AND
UNDERSTOOD THE FOREGOING DISCLOSURE AND RELEASE, AND AGREES TO BE BOUND BY ITS
TERMS.

BUYER(S):                                      SELLER:

                                               ---------------------------------
                                               a
--------------------------------------           -------------------------------
Buyer                            Date
                                               By:
                                                  ------------------------------
                                                  Its:
--------------------------------------
Buyer                            Date
                                               By:
                                                  ------------------------------
                                                                            Date
                                               Its:
                                                   -----------------------------


                                      -3-
<PAGE>

                                  SCHEDULE "3"
                                  ------------

                   LIST OF THE PARTIES' RESPECTIVE OBLIGATIONS
                   -------------------------------------------
                             REMOVAL FOR EACH PHASE
                             ----------------------

           (MAP DATED JULY 25, 2002 to be inserted prior to execution
                            of the Option Agreement)

                             MAP DATED JULY 25, 2002



                                  SCHEDULE "3"
                                  ------------
                              TO LICENSE AGREEMENT
<PAGE>

                                   EXHIBIT "2"
                                   -----------

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

------------------------------------

------------------------------------

------------------------------------
Attn:
       -----------------------------

================================================================================
                                                (Space Above For Recorder's Use)


                     FIRST AMENDMENT TO MEMORANDUM OF OPTION
                     ---------------------------------------

         The parties recorded that certain Memorandum of Option on __________,
2003 as Instrument No. 2003-______ in the Solano County Recorder's Office
("Option Agreement"). This First Amendment to Memorandum of Option
("Memorandum") is executed in connection with that certain First Amendment to
Option Agreement dated as of February 28, 2005 ("Amendment"), by and between
TRIAD COMMUNITIES, L.P., a California limited partnership ("Optionee") and HINES
NURSERIES, INC., a California corporation ("Optionor").

         For good and valuable consideration, the Optionor has granted Optionee
an option to purchase the Property at a price and under the terms and conditions
specifically set forth in the Option Agreement as modified by the Amendment.
Unless earlier terminated, Optionor must exercise its Option on or before
SEPTEMBER 1, 2005 ("Extended Option Date"), or elect to further extend the
Extended Option Date by strictly complying with the provisions of the Option
Agreement as modified by the Amendment. If properly and timely extended the date
for exercising the Option shall be extended to MARCH 1, 2006.


                                    HINES NURSERIES, INC.,
                                    a California corporation


                                    By:
                                       ----------------------------------------
                                          Claudia Pieropan
                                          Its:  Chief Financial Officer

                                    Date:
                                         --------------------------------------

                                                                      "Optionor"


                       [Signatures continued on next page]


                                   EXHIBIT "2"
                                   -----------
                     TO FIRST AMENDMENT TO OPTION AGREEMENT
<PAGE>

                   [Signatures continued from preceding page]


                                    TRIAD COMMUNITIES, L.P.,
                                    a California limited partnership


                                    By:
                                       ----------------------------------------
                                          Its:
                                              ---------------------------------

                                    Date:
                                         --------------------------------------

                                                                      "Optionee"


                                       -2-