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                                                                 EXHIBIT *(10.1)

                       CONSTRUCTION AND SALES AGREEMENT


     This Construction and Sales Agreement (the "AGREEMENT"), dated March 31,
1997, is made and entered into by and between REGENCY SERVICE CORPORATION, a
California corporation ("RSC"), and GARY L. MCDONALD REAL ESTATE AND DEVELOPMENT
CO., a California corporation ("GMREDCO").

RECITALS

     A.   RSC and GMREDCO are parties to that certain Project Management
Agreement, dated as of April 1, 1996, as amended by an Amendment to Project
Manager Agreement, dated August 21, 1996, a Contract Extension Agreement, dated
December 19, 1996, a Contract Extension Agreement Extension, dated January 31,
1997, and a Contract Extension Agreement Extension, dated March 1, 1997
(collectively, the "PROJECT MANAGEMENT AGREEMENT").

     B.   The term of the Project Management Agreement expires on March 31,
1997.

     C.   RSC desires to assume responsibility for the management and
disposition of the  projects described in EXHIBIT A to this Agreement (the
"Projects") and to engage GMREDCO to provide construction and sales services as
designated by RSC and as provided in this Agreement.

AGREEMENT

     Now, therefore, in consideration of the mutual covenants set forth below
and other valuable consideration, the receipt and sufficiency of which are
acknowledged, RSC and GMREDCO, intending to be legally bound, hereby agree as
follows:

     1.   BASIC PROVISIONS.

          Date of Agreement:  March 31, 1997.
          
          Effective Date:     April 1, 1997 (the "EFFECTIVE DATE").
          
          Term:               See section 8 below.
          
          Compensation:       See section 7 below.
          
          Projects:           Those projects listed on EXHIBIT A to this
                              Agreement for so long as RSC holds an interest,
                              direct or indirect, therein (the "PROJECTS") 

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           Address for Notices:    RSC: Regency Service Corporation
                                        Attention:  Steve Hertel
                                        P. O. Box 16279
                                        Fresno, CA 93755-6279
                                        Fax: 209-438-2699
                                        Phone: 209-438-2600
           
                              GMREDCO:  Gary L. McDonald Real Estate 
                                        and Development Co.
                                        Attention:  Gary L. McDonald
                                        7120 North Whitney Avenue
                                        Fresno, CA  93720-0513
                                        Fax: 209-322-0603
                                        Phone: 209-322-1700

     2.   PROJECT MANAGEMENT AGREEMENT EXPIRATION.  The parties acknowledge and
agree that the Project Management Agreement shall expire on March 31, 1997.  The
provisions of the Project Management Agreement which by their terms or context
survive the expiration or termination of the Project Management Agreement shall
continue in full force and effect.  On or before April 30, 1997, GMREDCO shall
prepare and submit to RSC, for RSC's approval, a final accounting of expenses to
be paid by RSC through such expiration date.  This Agreement also terminates and
supersedes any and all other agreements between RSC and GMREDCO pertaining to
the construction, marketing and/or sale of improved and unimproved lots within
the Projects.

     3.   APPOINTMENT.  RSC engages GMREDCO to provide construction, marketing
and sales services on the terms described in this Agreement.  GMREDCO accepts
such appointment and agrees to provide the services and perform the duties
assigned to GMREDCO in this Agreement.  Construction, marketing and sales
services shall be provided only for those lots within the Projects as are
designated by RSC (the "LOTS").  Selection of Lots for construction and/or sale
by GMREDCO shall be in RSC's sole discretion.  However, GMREDCO may confer with
RSC in determining the Lots to be designated.  Nothing in this Agreement shall
be construed to obligate RSC to designate any Lot or Lots for improvement and/or
sale.  GMREDCO's obligations under this Agreement with respect to a particular
Lot shall commence upon GMREDCO's receipt of written notice designating the Lot
or Lots to be improved and/or sold by GMREDCO.

     4.   CONSTRUCTION SERVICES.  With respect to each Lot designated by RSC for
construction of improvements by GMREDCO, GMREDCO shall serve as the construction
manager and general contractor for the construction of single family residences
and related improvements on such Lots (the "CONSTRUCTION WORK").  All such
improvements shall be as designated by RSC.

          4.1  PLANS AND SPECIFICATIONS.  RSC shall furnish all plans, drawings
and specifications for the Construction Work.  All such plans, drawings,
specifications and copies 

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thereof furnished by RSC or its architect shall remain the property of RSC 
and may not be used on any other project without the express written consent 
of RSC.  From time to time, supplemental drawings and specifications may be 
provided by RSC either as part of the original construction documents or as 
part of Change Orders (defined below) submitted after commencement of the 
work.  Such supplemental drawings and specifications shall modify and 
supplement the previously existing drawings and specifications, PROVIDED that 
GMREDCO shall have had a reasonable opportunity to review such documents.

          4.2  DUTIES.  In its capacity as construction manager, GMREDCO shall
provide the following services:

               (a)  schedule and attend regular meetings with RSC and its agents
during the development of conceptual and preliminary designs, and during the
course of the Construction Work and, in general, keep RSC fully informed on a
regular basis of the progress of the Construction Work, including the
preparation of such reports as may reasonably be requested by RSC;

               (b)  advise RSC and its agents on recommendations for site use,
improvements, selection of materials, building systems and equipment,
construction feasibility, availability of materials and labor, time requirements
for construction, and factors relating to costs, including costs of alternative
designs or materials, preliminary budgets and possible economics;

               (c)  assist RSC in obtaining (at RSC's expense), and maintain in
full force and effect during the course of construction, any and all
governmental permits, approvals  and agreements required for the lawful
construction, completion and occupancy of the improvements included in the
Construction Work, including, without limitation, special permits for inspection
and temporary facilities required to be obtained by RSC, GMREDCO or the Trade
Contractors (defined below);

               (d)  comply, within a reasonable time after RSC's request, with
all terms and conditions applicable to RSC or the Projects contained in any (i)
loan agreement entered into in connection with any construction for the
Projects, (ii) permit, approval or agreement issued by or entered into with any
governmental authority relating to the terms and conditions of such
construction, (iii) insurance policy affecting or covering the Projects, or (iv)
surety bond obtained in connection with the work on the Projects; PROVIDED that
RSC has notified GMREDCO of such terms and conditions by providing GMREDCO with
either a written summary of the same or with a copy of such documents or
instruments;

               (e)  prepare or cause to be prepared and distribute to RSC, for
RSC's approval:  (i) a critical path schedule for each Construction Work project
assigned to GMREDCO, and periodic updates thereto as required by RSC to reflect
any material changes to the critical path schedule, (ii) construction budgets
and cost estimates as required by RSC, and (iii) financial accounting reports,
including monthly progress reports.  All such documents shall include such line
items, elements and other detail as may be reasonably required by RSC and shall
be substantially in the form of such reports as GMREDCO has previously been
required to 

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furnish to RSC.  In developing the construction budgets for the Construction 
Work, GMREDCO shall obtain not less than two (2) independent, competitive 
bids for all major trade items (e.g., electrical, plumbing, concrete, 
roofing, cabinetry, painting, etc.) contained in the construction budget.  In 
the event that GMREDCO or an Affiliate (defined below) of GMREDCO submits a 
bid for any such major trade item, then the bid of GMREDCO or its Affiliate 
shall be in addition to the two (2) or more independent, competitive bids for 
such work (for a total of not less than three (3) bids).  All bids, the 
construction budget and any changes to the construction budget shall be 
subject to RSC's approval.  If any contractor, subcontractor, materialman or 
laborer (the "TRADE CONTRACTORS") whose bid has been accepted and 
incorporated into the construction budget is thereafter determined by RSC not 
to be able to comply with the terms of the bid, then GMREDCO shall obtain for 
RSC's approval not less than two (2) additional independent, competitive bids 
for such work or materials from qualified parties, and the Trade Contractor 
whose bid is approved by RSC shall be substituted for the Trade Contractor 
who was unable to perform in accordance with its bid;

               (f)  expedite the procurement of long lead-time items to ensure
their delivery by the date required in the critical path schedule; ensure the
adequacy of the work force, equipment and materials at the work site; maintain a
competent staff at the work site; provide on-site construction supervision;
coordinate and direct the work in progress of the Trade Contractors on the site;
provide all supervision, labor, materials, equipment, tools and supplies which
are necessary for completion of the Construction Work and which are not provided
by the Trade Contractors or by RSC; and, in general, perform or cause to be
performed the Construction Work in accordance with the approved critical path
schedule and construction budget (as the same may be modified during the course
of construction subject to RSC's approval) and in accordance with the dates
specified by RSC for substantial and final completion of the work;

               (g)  assist RSC in obtaining reimbursement of deposits and
prepaid fees from City of Fresno, City of Clovis, utility companies and others
holding deposits or prepaid fees;

               (h)  if requested by RSC, provide to RSC a complete list of all
Trade Contractors engaged by GMREDCO with respect to the Projects; check all
materials and labor entering into the work and keep a full detailed account
thereof;

               (i)  assist RSC in keeping the Projects free of all mechanics
liens, including, without limitation, by obtaining and delivering to RSC, prior
to making any progress or final payment to any Trade Contractor, conditional and
unconditional lien waivers in statutory form acceptable to RSC;

               (j)  maintain the job sites and the streets and sidewalks around
the job sites in a clean, orderly and safe condition; provide project site
security and safety as appropriate; establish procedures for minimizing
accumulation of dirt and dust on such areas; and, at the completion of the
Construction Work, remove all spillage, waste materials and debris arising from
the performance of the Construction Work and all of GMREDCO's and its Trade
Contractors' tools, equipment and surplus materials;


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               (k)  enforce strict discipline and good order among GMREDCO's
employees and the Trade Contractors, and maintain harmonious labor relations
among the Trade Contractors;

               (l)  maintain current progress payment system providing for the
review, processing and payment of all Trade Contractors consistent with the
applicable construction budget; respond to inquiries and resolve problems
concerning invoices from and payments to Trade Contractors; assist RSC in the
processing and distribution of payments; and

               (m)  assist RSC and its architect in determining the substantial 
completion and final completion of the Construction Work (or designated portions
thereof); prepare reports of incomplete, defective or unsatisfactory work and
time schedules for their completion; ensure completion of punchlist items in
accordance with time schedules approved by RSC; apply for and obtain final
inspections and occupancy certificates; and cooperate with RSC in recording
notices of completion;

          4.3  CHANGE ORDERS.  RSC may order changes in the Construction Work (a
"CHANGE ORDER"), whether by addition, deletion or modification, to the plans and
specifications previously provided to GMREDCO.  GMREDCO may request Change
Orders to accommodate on-site conditions, inability to obtain specified
materials or equipment within the necessary time frame or for reasonable cost, 
governmental requirements, modifications requested by purchasers or other good
cause.  GMREDCO shall provide to RSC written estimates of GMREDCO's profit and
overhead charge to implement the Change Order, the cost or credit to RSC
resulting from the Change Order and the impact on the critical path schedule for
the Construction Work.  No Change Order shall be effective unless and until it
is approved in writing by RSC. 

          4.4  WARRANTY.  GMREDCO warrants to RSC and to each purchaser of the
Lot on which the Construction Work was performed that (a) all equipment and
materials incorporated into the Construction Work for such Lot  shall conform to
the plans and specifications therefor or, if no such specifications are provided
by RSC, that such equipment and materials shall be new and of good quality, and
(b) all equipment, materials, supplies and work furnished by or at the direction
of GMREDCO (either directly or through Trade Contractors) shall be free of
defects in materials or workmanship for a period of one (1) year after final
completion of such Construction Work.  If a Trade Contractor provides a longer
warranty with respect to its portion of the work, the foregoing warranty by
GMREDCO shall be deemed extended to be co-extensive and coterminous with the
warranty of such Trade Contractor.  The foregoing warranty shall not apply to
design defects unless the design was provided by or at the direction of GMREDCO.
Notwithstanding the foregoing, nothing in this Agreement shall be construed to
alter any limitations period that otherwise applies to GMREDCO or any Trade
Contractor.

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          4.5  CORRECTIVE WORK.  GMREDCO shall provide corrective work as
follows:

               (a)  GMREDCO'S WARRANTY CLAIMS.  GMREDCO shall promptly correct
Construction Work that fails to conform to the plans and specifications, whether
or not the deficiency is observed before or after the Construction Work is
determined to be substantially completed, and shall promptly correct any
warranty claims made with respect to the Construction Work.  All such warranty
work shall be at GMREDCO's sole expense (subject to GMREDCO's right to seek
reimbursement from responsible Trade Contractors).  If, prior to final
completion, GMREDCO fails to correct Construction Work which is not in
accordance with the requirements of the plans and specifications, or
persistently fails to carry out the Construction Work in accordance with the
plans and specification or this Agreement, then RSC may, by written notice,
order GMREDCO to stop the Construction Work, or any portion thereof, until the
cause for such order has been eliminated; however, the right of RSC to stop the
Construction Work shall not give rise to a duty on RSC's part to exercise this
right for the benefit of GMREDCO or any other person.

               (b)  CONTRACT WARRANTY WORK.  GMREDCO agrees to correct promptly 
any construction deficiencies which are identified to GMREDCO by RSC in
improvements within the Project which were constructed by a general contractor
other than GMREDCO.  In consideration for such services, RSC shall pay to
GMREDCO a fee as set forth in the Compensation Schedule attached as EXHIBIT B.

               (c)  PUNCH-OUT WORK.  Following substantial completion of the
Construction Work on a Lot, GMREDCO shall cooperate with RSC in performing a
walk-through inspection of such Construction Work and preparing a punch-out list
of items requiring corrective or supplemental action.  GMREDCO shall promptly
cause such corrective or supplemental action to be taken, to RSC's reasonable
satisfaction.  In the event such corrective or supplemental action does not
constitute a claim against GMREDCO's warranty (i.e., such work is not required
as a result of any failure of the Construction Work to conform to the plans and 
specifications), then RSC shall pay to GMREDCO a fee for such work as set forth
in the Compensation Schedule attached as EXHIBIT B.

          4.6  DOCUMENTATION.  GMREDCO shall provide to RSC and to any purchaser
of the Lots on which the Construction Work was performed, all warranty
documents, operating instructions and manuals, and equipment servicing and
replacement parts furnished by the supplier as part of the original unit
purchase for the work, equipment or improvement in question.

          4.7  RSC'S RIGHTS AND RESPONSIBILITIES.  RSC shall provide GMREDCO
with legal access to the construction site, by means of public roads or private
easements or licenses.  RSC reserves the right to enter the job sites at any
time with its employees, agents and contractors; PROVIDED, that it shall conduct
its activities on the job site in a manner so as to minimize any interference
with the performance of the Construction Work by GMREDCO.  RSC further reserves
the right to perform construction or operations related to any Project (whether 
construction, marketing, sales or other) with its own forces or to award
separate contracts in 

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connection with other portions of any Project.  Any such work shall be 
coordinated between RSC and GMREDCO.

     5.   MARKETING AND SALES.  With respect to improved or unimproved Lots
designated by RSC for sale by GMREDCO, GMREDCO shall provide the following
marketing and sales services:

          (a)  assist RSC in RSC's development of its marketing strategy and
materials, and implement the approved marketing program;

          (b)  identify and make contact with potential buyers through a variety
of methods, including, without limitation, individual direct contact, and
appropriate group meetings (breakfasts/lunches) with builders and brokers
specializing in improved and unimproved residential properties;

          (c)  develop sales contracts and negotiate terms and conditions of
sales for RSC's approval;

          (d)  monitor performance of buyers pursuant to the terms and
conditions of the sales contracts and, with respect to improved Lots, coordinate
the sales effort with the scheduled completion dates of residences being
constructed;

          (e)  assist buyers in obtaining requisite financing;

          (f)  interface with brokers and escrow/title companies on Lot
marketing and sales, including, but not limited to, meetings, providing data
sheets and, if designated by RSC, listing Lots with the local real estate
board's multiple listing service; and

          (g)  schedule and attend regular meetings with RSC and its agents and
keep RSC fully informed on a regular basis of the progress of the sales and
marketing effort, including the preparation of such reports as may reasonably be
requested by RSC.

     6.   GENERAL DUTIES.  GMREDCO further agrees as follows:

          (a)  to obtain and maintain during the term of this Agreement public
liability insurance covering personal injury and property damage which may arise
from or during the performance of this Agreement and course of completion
insurance, in such limits as RSC may reasonably approve, and automobile
liability, workers' compensation and such other insurance as may be required by
law, naming as additional insureds RSC, any mortgagee or deed of trust
beneficiary, and any other person or entity having an insurable interest in the
Projects and specified by RSC.  RSC agrees to reimburse GMREDCO the cost, if
any, of adding such additional insureds to such policies.  GMREDCO shall also
ensure that all Trade Contractors obtain and maintain during the course of their
respective work on the Projects such insurance as may be required by law;

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          (b)  to comply with all applicable present and future laws,
ordinances, orders, rules, regulations and requirements (hereinafter, "LAWS") of
all federal, state and municipal governments, courts, departments, commissions,
boards and offices, any national or local board of fire underwriters or
insurance services offices having jurisdiction in the county or counties in
which the Projects are situated, or any other body exercising functions similar
to those of any of the foregoing, or any insurance carriers providing any
insurance coverage for RSC or the Projects, which may be applicable to the
Projects.  GMREDCO shall likewise ensure that all agreements between GMREDCO and
independent contractors performing work in connection with the Projects on
behalf of GMREDCO shall include the agreement of such independent contractors to
comply with all such applicable laws;

          (c)  to assemble and retain all contracts, agreements and other
records and data as may be necessary to carry out GMREDCO's functions under this
Agreement, and to permit RSC, any representative or auditor thereof or
supervisory or regulatory authority to inspect and copy such documents and data;
and

          (d)  to maintain at all times during the term of this Agreement all
books and records prepared or maintained by GMREDCO at the place or places
approved by RSC, and make such books and records available for and subject to
audit, inspection and copying by RSC, any representative or auditor thereof or
supervisory or regulatory authority.  GMREDCO agrees that any supervisory or
regulatory authority shall also have the right, in connection with any
examination of RSC or the Projects, to examine and question GMREDCO and its
employees with respect to any such books and records, and GMREDCO agrees to
cooperate with all such supervisory or regulatory authorities. 

     7.   COMPENSATION.  

          7.1  AMOUNT; PAYMENT.  As compensation for the services rendered by
GMREDCO under this Agreement, RSC shall pay to GMREDCO a fee computed in
accordance with the Compensation Schedule attached as EXHIBIT B hereto.

          7.2  FULL COMPENSATION.  The compensation amount specified in section
7.1 above shall constitute full and complete payment to GMREDCO, and to any and
all of its officers, employees, agents, principals and affiliates, for all
services rendered under this Agreement.  GMREDCO shall not be entitled to any
other payment or reimbursement from RSC for any expenses GMREDCO may incur in
the performance of this Agreement, including, without limitation, expenses for
wages, salaries, travel, insurance, rent, secretarial and clerical support,
duplication, copying, telephone, facsimile and other communication charges,
tools, equipment, supplies, furnishings, entertainment costs, and all other
related and unrelated costs and expenses, overhead and profit, except for such
expenses of GMREDCO which RSC may, in its discretion, expressly agree in writing
to reimburse to GMREDCO or pay on GMREDCO's behalf.

          7.3  OFFSET RIGHT.  Notwithstanding the provisions of this section 7
to the contrary, RSC shall have the right to offset against any compensation
otherwise due GMREDCO under this Agreement any amounts owing by GMREDCO to RSC,
whether under or pursuant to 

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this Agreement, pursuant to applicable rules or regulations of regulatory 
agencies or governmental authorities having jurisdiction, or otherwise.  
Without limiting the foregoing, RSC shall have the right to withhold from any 
compensation otherwise due GMREDCO hereunder sums expended by RSC, or 
reasonably estimated by RSC to be expended, in the discharge of any 
obligation of GMREDCO which is not performed in accordance with the terms of 
this Agreement.  To the extent GMREDCO has been paid by RSC for any work 
which is the subject of any claim of lien , stop notice, equitable lien, lis 
pendens or other encumbrance against any Project, then GMREDCO shall 
immediately and at its expense procure and record appropriate lien release 
bonds which will extinguish such claim, stop notice or lis pendens.

     8.   TERM AND TERMINATION. 

          8.1   TERM - CONSTRUCTION SERVICES.  Unless sooner terminated in
accordance with section 8.4 below or extended pursuant to section 8.3 below, the
term of this Agreement with respect to the construction management services to
be rendered by GMREDCO under this Agreement shall commence on the Effective Date
and shall continue until December 31, 1997.

          8.2  TERM - SALES AND MARKETING SERVICES.  Unless sooner terminated in
accordance with section 8.4 below or extended pursuant to section 8.3 below, the
term of this Agreement with respect to the sales and marketing services to be
rendered by GMREDCO under this Agreement shall commence on the Effective Date
and shall continue, with respect to a particular Lot designated by RSC to be
marketed and sold by GMREDCO, until ninety (90) days after final completion of
the Construction Work on such Lot or, if the Lot is to be sold in an unimproved
condition, ninety (90) days after the date on which RSC notifies GMREDCO in
writing that it has designated such Lot to be sold by GMREDCO.

          8.3  EXTENSION.  RSC shall have the right to extend the term of this
Agreement, with respect to the construction services, the sales and marketing
services or both, and with respect to any or all remaining Lots within the
Projects, by giving written notice of such extension to GMREDCO at any time
prior to the expiration of the applicable term.  If RSC exercises its right to
extend the term of this Agreement, then this Agreement shall continue in effect
for the extension period specified in such written notice of extension;
PROVIDED, HOWEVER, that in no event shall the term of this Agreement be extended
beyond December 31, 1998.

          8.4  TERMINATION.  This Agreement may be terminated prior to the
expiration of its term as follows:

               (a)  BY RSC.  RSC may terminate this Agreement as follows:

                    (i)  immediately upon written notice to GMREDCO in the event
of  GMREDCO's default under this Agreement.  A "default" by GMREDCO is defined
as the occurrence of one or more of the following events:

                         (A)  GMREDCO fails to perform any of its services or
work under this Agreement in the manner or within the time required herein and
fails to cure such failure within fifteen (15) days after written notice
specifying the nature of such failure is 

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given by RSC to GMREDCO, or if such failure cannot reasonably be cured within 
fifteen (15) days, fails to commence such cure within such fifteen (15) day 
period or thereafter fails diligently to prosecute such cure to completion 
within sixty (60) days thereafter; or

                         (B)  GMREDCO shall file a voluntary petition in
bankruptcy; or shall be adjudicated a bankrupt or insolvent; or shall file any
petition or answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal or state law relating to bankruptcy, insolvency or other relief
for debtors; or shall seek, consent to or acquiesce in the appointment of any
trustee, receiver, conservator or liquidator of GMREDCO or of all or any
substantial part of its properties (the term "acquiesce", as used herein, being
deemed to include, but not be limited to, the failure to file a petition or
motion to vacate or discharge any order, judgment or decree providing for such
appointment within the time specified by law); or a court of competent
jurisdiction shall enter an order, judgment or decree approving a petition filed
against GMREDCO seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal or state law relating to bankruptcy, insolvency or other relief
for debtors, and GMREDCO shall consent to or acquiesce (as hereinabove defined)
in the entry of such order, judgment or decree, or the same shall remain
unvacated and unstayed for an aggregate of sixty (60) days from the date of
entry thereof; or any trustee, receiver, conservator or liquidator of GMREDCO or
of all or any substantial part of its properties shall be appointed without the
consent of or acquiescence of GMREDCO and such appointment shall remain
unvacated and unstayed for an aggregate of sixty (60) days; or

                    (ii) immediately upon written notice to GMREDCO that RSC has
fully divested itself of all of its interests in the Projects; or

                    (iii)     immediately upon written notice to GMREDCO, in the
event that Gary L. McDonald ceases to be the chief executive officer of, and the
holder of a controlling equity interest in, GMREDCO, whether by death,
resignation, removal, sale or issuance of shares, or otherwise; or

                    (iv) immediately (or at such later date as specified by RSC
in writing) upon written notice to GMREDCO in the event that RSC receives an
order, directive or other formal or informal, oral or written, notice or
communication from any regulatory agency or other governmental authority having
or purporting to have jurisdiction over RSC or any of its Affiliates requiring
the termination or modification of this Agreement; or

                    (v)  upon not less than thirty (30) days prior written
notice to GMREDCO for any reason, with or without cause, in RSC's sole and
absolute discretion; PROVIDED, HOWEVER, such termination shall be prospective
only and shall not affect GMREDCO's obligation to complete the Construction Work
or the sales and marketing of any Lots theretofore designated by RSC to GMREDCO
under this Agreement.; or

                    (vi) during the initial forty-five (45) days following the
Effective Date, upon five (5) days notice in the event that the board of
directors of RSC 

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determines, in its discretion, that termination of this Agreement is in the 
best interests of RSC, its shareholders and Affiliates.

               (b)  BY GMREDCO.  GMREDCO may terminate this Agreement as
follows:

                    (i)  immediately upon written notice to RSC in the event of 
RSC's default under this Agreement.  A "default" by RSC is defined as the
occurrence of one or more of the following events:

                         A)   RSC fails to perform any of its obligations under 
this Agreement in the manner or within the time required herein and fails to
cure such failure within fifteen (15) days after written notice specifying the
nature of such failure is given by GMREDCO to RSC, or if such failure cannot
reasonably be cured within fifteen (15) days, fails to commence such cure within
such fifteen (15) day period or thereafter fails diligently to prosecute such
cure to completion within sixty (60) days thereafter; or

                         (B)  RSC shall file a voluntary petition in bankruptcy;
or shall be adjudicated a bankrupt or insolvent; or shall file any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future federal
or state law relating to bankruptcy, insolvency or other relief for debtors; or
shall seek, consent to or acquiesce in the appointment of any trustee, receiver,
conservator or liquidator of RSC or of all or any substantial part of its
properties (the term "acquiesce", as used herein, being deemed to include, but
not be limited to, the failure to file a petition or motion to vacate or
discharge any order, judgment or decree providing for such appointment within
the time specified by law); or a court of competent jurisdiction shall enter an 
order, judgment or decree approving a petition filed against GMREDCO seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future federal or state law relating to
bankruptcy, insolvency or other relief for debtors, and RSC shall consent to or
acquiesce (as hereinabove defined) in the entry of such order, judgment or
decree, or the same shall remain unvacated and unstayed for an aggregate of
sixty (60) days from the date of entry thereof; or any trustee, receiver,
conservator or liquidator of RSC or of all or any substantial part of its
properties shall be appointed without the consent of or acquiescence of RSC and
such appointment shall remain unvacated and unstayed for an aggregate of sixty
(60) days; or

                    (ii) upon not less than thirty (30) days prior written
notice to RSC for any reason, with or without cause, in GMREDCO's sole and
absolute discretion; PROVIDED, HOWEVER, such termination shall be prospective
only and shall not affect GMREDCO's obligation to complete the Construction Work
or the sales and marketing of any Lots theretofore designated by RSC to GMREDCO
under this Agreement.

               (c)  ARBITRABLE DISPUTES.  The failure or refusal of a Party to
acquiesce to the demand of the other Party over any matter which, by the terms
of this Agreement, is to be submitted to arbitration for resolution shall not
constitute the basis of a default for which this Agreement may be terminated.

                                      11

<PAGE>

               (d)  EFFECT OF TERMINATION.  The expiration or termination of
this Agreement shall not impair, waive or otherwise affect in any way the
respective liabilities or obligations of the Parties hereunder which arose or
accrued prior to the date of such expiration or termination or which, by their
terms, survive the expiration or termination of this Agreement.

     9.   INDEMNITIES.  Each Party indemnifies the other Party as follows:

          9.1  BY GMREDCO.  GMREDCO hereby indemnifies and agrees to defend and
hold harmless RSC, its Affiliates, and their respective partners, principals,
shareholders, officers, directors and employees (collectively, the
"INDEMNITEES"), from and against any and all claims, demands, losses,
liabilities, actions, lawsuits and other proceedings, judgments, awards, costs
and expenses (including, without limitation, reasonable attorneys' fees, court
costs and witness fees), arising directly or indirectly, in whole or in part,
out of (a) the performance of the services rendered by GMREDCO under this
Agreement, (b) the breach of this Agreement by GMREDCO, or (c) any act or
omission of GMREDCO, any of its officers, directors, agents, employees, Trade
Contractors, or anyone directly employed by any of them, except to the extent
that the source or cause of the claim is a design deficiency and except to the
extent that the claim resulted solely from the negligence or misconduct of the
Indemnitee.

          9.2  BY RSC.  RSC hereby indemnifies and agrees to hold harmless
GMREDCO and its Affiliates, partners, principals, shareholders, officers,
directors, employees and agents from and against any and all claims, demands,
losses, liabilities, actions, lawsuits and other proceedings, judgments, awards,
costs and expenses (including, without limitation, reasonable attorneys' fees,
court costs and witness fees), relating to the construction and/or sale of
improved or unimproved lots within the Projects to the extent the improvements
on such lots were not constructed by or under the supervision of GMREDCO

     10.  OTHER BUSINESSES.  Nothing contained in this Agreement shall be
construed so as to prohibit any party to this Agreement (each a "PARTY" and
together the "PARTIES") or any Affiliate (defined below) or related person or
entity of any Party from owning, operating or investing in any real estate
development, wherever located, not constituting a Project.  Either Party, and
any Affiliate or related person or entity of such Party, may engage in or
possess an interest in another business venture or ventures of any nature and
description, independently or with others, including but not limited to the
ownership, financing, leasing, operation, management, syndication, brokerage and
development of real property, and neither Party shall have any rights by virtue
of this Agreement in and to such independent ventures or to the income or
profits derived therefrom.  For purposes of this Agreement, an "AFFILIATE" shall
mean any individual, partnership, corporation, trust or other entity
(collectively, a "PERSON") that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control with a
Party, including without limitation, a limited partnership in which a Party is a
general partner, any Person that is a director, officer, employee, member of,
partner in or trustee of, or serve in a similar capacity with respect to a Party
or any Person with respect to which a Party is a director, officer, employee,
member, partner or trustee or with respect to such Party serves in a similar
capacity and, with respect to RSC, Regency Bancorp, Regency Bank, Regency
Investment Advisors, and their respective directors, officers, shareholders and
agents.  A Person 

                                      12

<PAGE>

controls a corporation, for the purposes of this definition, when such Person 
owns at least a majority of the outstanding voting shares of the corporation, 
with the full right to vote such shares.

     11.  CONTRACTS AND EXPENDITURES.  GMREDCO shall have no authority to
execute or otherwise enter into any agreement binding on RSC.  GMREDCO shall
have no authority to incur any expense or make any payment on behalf of RSC, and
shall have no right to obtain reimbursement from RSC for any payment made by
GMREDCO.

     12.  NATURE OF AGENCY.  It is expressly understood that RSC and GMREDCO are
and shall remain independent contractors.  This Agreement shall not be construed
as creating a joint venture or partnership between them or their respective
successors in interests.  Neither Party shall have any authority to create or
assume, in the name or on behalf of the other Party, any obligation, expressed
or implied, nor to act or purport to act as the agent or the legally empowered
representative of the other Party hereto for any purpose whatsoever except as
expressly set forth herein.

     13.  OWNERSHIP OF INFORMATION AND MATERIALS.  Upon completion of GMREDCO's 
services or any sooner termination of this Agreement, GMREDCO shall deliver to
RSC all written data and information generated by or for GMREDCO in connection
with the Projects or supplied to GMREDCO by RSC or RSC's contractors,
consultants or agents, and all drawings, plans, books, records, contracts,
agreements and all other documents and writings in its possession relating to
its services or the Projects.  Such materials shall at all times be the property
of RSC and RSC shall have the right to use the same without further compensation
to GMREDCO.

     14.  COMPLIANCE WITH LAWS; LICENSES.  At all times during the term of this
Agreement, GMREDCO shall perform its services and work in strict compliance with
applicable federal, state and local law.  Without limiting the foregoing,
GMREDCO shall obtain and maintain such licenses as may be required for the
performance by GMREDCO of its services under this Agreement.

     15.  ARBITRATION.  All claims or disputes between RSC and GMREDCO arising
out of this Agreement, the performance of the Construction Work or the rendition
of any other services to be provided by GMREDCO hereunder shall be settled and
finally determined by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, or its successor,
then in effect.  In any case where the American Arbitration Association, or its
successor, is not in existence or fails or refuses to act within a reasonably
prompt period of time (but in no event exceeding 60 days from the date a request
for arbitration is filed), then the arbitration shall proceed in accordance with
the laws relating to arbitration then in effect in the State of California,
including but not limited to sections 1280 through 1294.2 of the California Code
of Civil Procedure, as the same may be amended or superseded from time to time. 
The following provisions shall also govern any such arbitration:

          15.1 INITIATION; PROCEDURES.  Either Party may demand arbitration of
any dispute under this Agreement by giving written notice thereof to the other
Party at any time.  The 

                                      13

<PAGE>

demand for arbitration shall contain a description of the dispute, the amount 
involved and the relief sought.  Any arbitration pursuant to this Agreement 
shall be conducted before three neutral arbitrators having not less than ten 
(10) years experience in real estate development, construction and sales.  
Arbitration proceedings shall be conducted in Fresno, California.  All 
arbitration proceedings, including all evidence and statements, shall be 
confidential and shall not be used or disclosed for any other purpose. 

          15.2 FINDINGS; AWARD; COSTS.  The arbitrators' award shall be in
writing and shall specify in reasonable detail the legal and factual bases of
the award.  Judgment on the award rendered in any such arbitration may be
entered in any court having jurisdiction thereof.  The award shall be final and
binding on the parties unless vacated or corrected pursuant to applicable law or
proven to have been the result of a substantial error of law or fact.  All fees
and expenses of the arbitrators shall be shared equally by the parties to such
arbitration.  Each Party shall pay its own attorneys' fees, expenses and costs
of the arbitration.  Notwithstanding the foregoing, (a) the arbitrators shall
have the authority to assess any of the foregoing costs against any Party acting
in bad faith, (b) if the prevailing Party is required to initiate proceedings to
enforce the award or confirming judgment, the prevailing Party shall be entitled
to recover its costs and attorneys' fees associated with such action, and (c) if
either Party brings any legal action by any method other than arbitration
against the other with respect to any dispute required to be arbitrated under
this Agreement, the other Party shall be entitled to recover from such Party all
damages, costs, expenses and attorneys' fees incurred as a result of such
action; PROVIDED, HOWEVER, each Party shall have the right to commence and
pursue, prior to the appointment of the arbitrators, a legal action for
injunctive or other protective relief in a court of competent jurisdiction.

          15.3 PAYMENT OF AWARD.  Any cash award shall be payable in United
States dollars through a bank in the United States.  The award shall earn
interest from the date of the award until satisfied in full at the United States
prime interest rate as reported in the Western Edition of THE WALL STREET
JOURNAL on the business day immediately preceding the date of the award.

     16.  NOTICES.  All notices, requests and communications required or
permitted to be given by one Party to the other under this Agreement shall be in
writing and shall be sent to the address of such Party set forth in section 1
above, or at such other address as the addressee may have provided to the other
Party by written notice given in accordance with this section.  Such notices
shall be deemed to be duly given on the earliest of (a) actual receipt,
irrespective of whether sent by post, telex, cable, facsimile transmission
(followed by same day mailing of a hard copy), overnight courier or other
method, or (b) on the third business day after mailing by registered or
certified first class mail, return receipt requested and postage prepaid.  

     17.  CONFIDENTIALITY.  Except for such disclosures as are required to be
made by law or on demand of any governmental authority, GMREDCO shall keep
confidential all information regarding the Projects and GMREDCO's activities
under this Agreement unless authorized in writing by RSC to release such
information, in which event GMREDCO shall abide by RSC's reasonable
instructions.

                                      14

<PAGE>

     18.  GENERAL PROVISIONS

          18.1 GOVERNING LAW.  This Agreement is entered into in the State of
California and shall be governed by the laws of the State of California
applicable to contracts made and to be wholly performed in that State.

          18.2 SEVERABILITY.  If any provision of this Agreement shall be
determined by a court, arbitrator or regulatory authority of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such illegal or
invalid provision shall be deemed modified to the minimum extent necessary to
render it legal and valid and, if such provision is not susceptible to such
modification then such provision shall be severed from this Agreement and, in
either event, the remainder of this Agreement shall remain in full force and
effect; PROVIDED, HOWEVER, if such illegal or invalid provision cannot be
reasonably modified or stricken from this Agreement without substantial
impairment of a Party's rights and expectations under this Agreement, then this
Agreement shall be terminated.

          18.3 WAIVER; CONSENTS.  No consent or waiver, express or implied, by
either Party hereto to or of any breach or default by the other Party in the
performance by the other of its obligations hereunder shall be valid unless in
writing, and no such consent or waiver shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other Party of the same or any other obligations of such Party hereunder.  
Failure on the part of either Party to complain of any act or failure to act of
the other Party or to declare the other Party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such Party of its
rights hereunder.  The granting of any consent or approval in any one instance
by or on behalf of RSC or GMREDCO shall not be construed to waive or limit the
need for such consent in any other or subsequent instance.

          18.4 TIME OF ESSENCE.  Time is of the essence in the performance of
this Agreement.

          18.5 FORCE MAJEURE.  A delay in or failure of performance by either
Party of its obligations under this Agreement, other than with respect to the
payment of money, shall not constitute a default if and to the extent that such
delay or failure is caused by occurrences beyond the reasonable control of such
Party and its agents, employees, contractors, subcontractors and consultants,
including but not limited to expropriation or confiscation of facilities,
compliance with any order or request of any governmental authority or person
purporting to act therefor, acts of declared or undeclared war, public
disorders, rebellion, sabotage, earthquakes, floods, severe adverse weather
conditions, natural disasters, fire, explosions, riots, strikes, inability of a
Party to obtain necessary materials (or reasonable substitutions therefor),
permits or licenses due to existing or future laws, rules or regulations of
governmental authorities, or any other causes not within the reasonable control
of such Party or its agents, employees, contractors, subcontractors and
consultants, and which by the exercise of reasonable diligence such Party is
unable to prevent.  However, (a) GMREDCO shall not be entitled to the benefits
of this section unless it gives prompt written notice to RSC of the existence of
any event, occurrence or condition which it believes permits a delay in the
performance of its obligations pursuant to this section, and (b) 

                                      15

<PAGE>


no such force majeure event shall prevent either Party from exercising any 
right it may have to terminate this Agreement other than due to the default 
of the other Party.

          18.6 ASSIGNMENT AND SUBCONTRACTORS.  By this Agreement, RSC has
specifically bargained for the unique and particular services of the GMREDCO
named in this Agreement and the personal services of Gary L. McDonald. 
Therefore, GMREDCO shall have no right, power or authority to assign or delegate
any of its rights, duties or obligations under, or arising pursuant to, this
Agreement, or any portion hereof, either voluntarily, involuntarily or by
operation of law, without the prior written approval of RSC, which approval RSC
may grant or withhold in its sole and absolute discretion.  Consent by RSC of
any particular assignment or delegation shall not constitute approval to any
subsequent assignment or delegation.  Without limiting the foregoing, GMREDCO
shall not subcontract its services, or any portion thereof, without the prior
written approval of RSC.  Any approval by RSC of any subcontract of GMREDCO's
services or any part thereof shall not be construed to make RSC a party to such
subcontract or to expose RSC to any claims or liabilities arising thereunder. 
RSC shall have the right to assign this Agreement, but such assignment shall not
discharge or release RSC from its duties and obligations to GMREDCO in the event
that RSC's assignee does not perform such duties and obligations.  Without
waiving the foregoing provisions, all of the rights, benefits, duties,
liabilities, and obligations of the Parties shall inure to the benefit of and be
binding upon the Parties and their respective successors and assigns.

          18.7 ENTIRE AGREEMENT.  This Agreement contains all of the
understandings and agreements of the Parties, and supersedes all prior written
and contemporaneous oral discussions, negotiations, understandings and
agreements of the Parties, with respect to the subject matter of this Agreement.

          18.8 AMENDMENTS.  This Agreement may not be amended except by a
written instrument signed by all of the Parties.

          18.8 CAPTIONS AND HEADINGS.  All captions and headings used in this
Agreement are provided for convenience and ease of reference only and are not to
be considered in the construction or interpretation of any provision of this
Agreement.

          18.9 INTERPRETATION.  Whenever the context requires, all words used in
the singular number shall be deemed to include the plural and vice versa, and
each gender shall include any other gender.  The use of the word "including",
when following any general statement, shall not be construed to limit such
statement to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as "without limitation," or "but not limited to," or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that could reasonably fall within the broadest possible scope
of such general statement, term or matter.  This Agreement has been negotiated
at arms-length between the Parties and shall be interpreted as if drafted by
both Parties.  The Parties expressly waive any rule of construction that would
interpret any ambiguous provision against the Party responsible for drafting
such provision.

                                      16

<PAGE>

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
and delivered by their respective duly authorized representatives on the dates
set forth beneath their signatures hereto, effective as of the Effective Date.

"RSC"                              "GMREDCO"

REGENCY SERVICE CORPORATION,       GARY L. McDONALD REAL ESTATE
a California corporation                AND DEVELOPMENT CO., 
                                   a California corporation


By:  /s/ STEVE HERTEL              By:     /s/ GARY L. McDONALD
     --------------------                  -------------------------
     Steve Hertel                  Name:   Gary L. McDonald
     President                     Title:  President, Chief Executive Officer

Date:  April 10, 1997              Date:   April 10, 1997
     --------------------                  -------------------------

                              17

<PAGE>

                                    EXHIBIT A

                              SCHEDULE OF PROJECTS


PARTNERSHIPS                                 PROJECT TYPE
------------                                 ------------

Highlands at Fort Washington                      SFR

Glen Castle L.P.                                  SFR

Excalibur Estates                                 SFR/LOTS


RSC OWNED PROJECTS
------------------

Blackhorse I                                      SFR

Blackhorse II                                     SFR

Blackhorse III                                    SFR

Seville Estates II                                LOTS

St. Andrews Green                                 LOTS

Woodward Classics Estates II                      SFR


<PAGE>

                                    EXHIBIT B

                              COMPENSATION SCHEDULE

In consideration for services actually rendered by GMREDCO to RSC under this
Agreement, RSC agrees to compensate GMREDCO according to the following terms:
CONSTRUCTION SERVICES FEE:

     RSC shall pay GMREDCO a fee of $2.50 per square foot of floor area of each
residential unit (excluding garage and any out-buildings) included within the
Construction Work and completed by GMREDCO.  The fee for each unit shall be paid
in three installments as follows:  

     (a)  one-third of such sum shall be paid when the unit has been framed;

     (b)  one third of such sum shall be paid when the drywall installation for
such unit has been completed; and

     (c)  one-third of such sum shall be paid after recordation of the notice of
completion for such unit and either the unconditional waiver of all mechanics
lien rights for such unit has been received by RSC or the period by which such
liens may be asserted shall have expired.  

     At GMREDCO's request and in RSC's discretion, RSC may accelerate the
foregoing payment schedule. 

     With respect to any residential units under construction on April 1, 1997
and designated by RSC for completion by GMREDCO under this Agreement, GMREDCO
shall be paid a prorata portion of the foregoing fee based on the percentage of
completion of such units at that date (i.e., if the unit is 60% completed at
April 1, 1997, then GMREDCO shall be paid 40% of the product obtained by
multiplying the square footage of the unit by $$2.50).  

     With respect to any units under construction at the expiration or
termination of this Agreement, GMREDCO shall be paid a prorata portion of the
foregoing fee based on the percentage of completion of such units at the
expiration or termination date.

CONTRACT WARRANTY WORK FEE.

     With respect to any warranty work provided by GMREDCO at RSC's request on
units constructed by a general contractor other than GMREDCO, whether or not
such units were completed before or after the Effective Date, RSC shall pay to
GMREDCO a fee based on the time and materials required to complete such warranty
work.  The amount of such fee (or the formula for determining such fee) shall be
subject to the mutual agreement of the Parties.

PUNCHOUT LIST WORK

     With respect to any punchout list work which does not constitute a claim
against GMREDCO's warranty (for which GMREDCO shall be solely responsible), RSC
shall pay to GMREDCO a fee based on the time and materials required to complete
such punchout work.  The 

<PAGE>

amount of such fee (or the formula for determining such fee) shall be subject 
to the mutual agreement of the Parties.  

MARKETING AND SALES FEE:

     Except with respect to Lots within the St. Andrews Green Project, RSC
agrees to pay GMREDCO a commission of two and one-half percent (2_%) of the
sales price of each Lot designated by RSC for sale by GMREDCO and sold, whether
improved or unimproved.  For Lots within the St. Andrews Green Project, the
commission amount shall be three percent (3%) of the sales price. 
Notwithstanding the foregoing, if one or more other brokers participate in the
sale of a Lot, RSC agrees to pay the sales commission due such other broker(s),
not to exceed a total commission of six percent (6%).

     Such commission will be paid at the close of escrow from the sales proceeds
actually received by RSC, if, as and when each sale is consummated, the purchase
price (net of fees, costs and prorations allocated to RSC) for such sale is
received by RSC, and title is transferred to the buyer of the Lot sold. 
Notwithstanding the foregoing, no commission shall be due or payable to GMREDCO
with respect to a Lot if (a) the buyer of the Lot was procured by RSC or any RSC
Affiliate, or (b) the sale of such Lot is not finally consummated as provided
above, for any reason, including, without limitation, due to (i) the acts or
omissions of RSC, its agents, employees or representatives; (ii) the buyer's
failure or refusal to accept the title offered by RSC; or (iii) the
unmarketability or uninsurability of the title.

     GMREDCO's right to receive, and RSC's obligation to pay, such commission
with respect to the sale of any particular Lot shall survive the expiration or
termination of this Agreement for a period of ninety (90) days; PROVIDED that
(a) on or before the termination of this Agreement (i) a binding contract of
sale shall have been entered into between RSC and the buyer of such Lot,
(ii) such contract shall be subject only to customary conditions of purchase
(e.g., buyer's approval of the condition of the property and title, and buyer's
ability to obtain financing), (iii) an escrow account shall have been opened and
the buyer shall have placed its initial deposit therein; (b) this Agreement
shall not have been terminated by RSC due to GMREDCO's default; and (c) payment
of such commission shall not violate or contravene the terms of any law, rule,
regulation, order or directive from any regulatory agency or other governmental
authority having or purporting to have jurisdiction over RSC or any of its
Affiliates.  After the expiration of such ninety (90) day period, all rights of
GMREDCO to receive such commission shall terminate absolutely, notwithstanding
any role GMREDCO may have had in procuring a buyer for any Lot.

                                   2