FOURTEEN HILL CAPITAL, L.P.
                
                        AGREEMENT OF LIMITED PARTNERSHIP
                                [revised 8/13/97]

         THIS  AGREEMENT  OF  LIMITED  PARTNERSHIP  ("Agreement")  is dated  and
effective as of August 13, 1997, by and among FOURTEEN HILL  MANAGEMENT,  LLC, a
Delaware  limited  liability  company (the  "General  Partner")  and the list of
Persons set forth in Schedule A attached hereto (the "Limited Partners").  Terms
set forth  herein  with  initial  capital  letters  are used  with the  meanings
specified  for such terms  below in Section  1.1 or as may be defined  elsewhere
herein.

                                   Background
                                   ----------

         FOURTEEN HILL CAPITAL,  L.P. (the  "Partnership")  is being formed as a
limited  partnership under the Delaware Revised Uniform Limited  Partnership Act
(Title 6, Chapter 17, of the Delaware Code (the "Delaware  Act")) by the General
Partner.

         The parties hereto intend that, if the Partnership obtains a license as
a Small  Business  Investment  Company  ("SBIC")  from the U. S. Small  Business
Administration  ("SBA"),  during the term of such license,  the Partnership will
operate  solely for the  purpose of  operating  as an SBIC  licensed  by the SBA
pursuant to the Small  Business  Investment  Act of 1958,  as amended (the "SBIC
Act"),  and the rules and regulations  promulgated  thereunder by the SBA, as in
effect from time to time.


                                   WITNESSETH
                                   ----------

         NOW,  THEREFORE,  the parties  hereto,  intending  to be legally  bound
hereby, agree as follows:

                                    ARTICLE 1
                                    ---------

                               GENERAL PROVISIONS
                               -------------------

         1.1  DefinitionsDefinitions.  For the  purposes  of this  Agreement,  
the  following  terms shall have the following meanings:

         "Additional  Limited  Partners"  shall mean any  Person  who  becomes a
Limited Partner after the date hereof in accordance with the terms hereof.

         "Advisory  Boards"  shall mean those boards which may be  authorized to
perform the functions set forth in Section 2.6 herein.


                                      
<PAGE>


         "Affiliates"  shall mean,  with  respect to any Person,  any  Person(s)
controlling,  controlled by or under common control with such Person;  provided,
however,  that Limited  Partners  (other than a Limited Partner which is also an
Affiliate of a General  Partner) and issuers of Investment  Securities  owned by
the Partnership shall not be deemed to be Affiliates of the Partnership.

         "Assets Under  Management"  shall mean, as of any specified  date,  the
value of all Securities owned by the Partnership (such value to be determined as
provided in Section 3.6 herein), including cash and cash equivalents.

         "Capital Account" shall mean the account of each Partner maintained and
adjusted as provided in this Agreement.

         "Capital  Contributions" shall mean, with respect to each Partner, that
portion of such Partner's  Commitment  that has been provided to the Partnership
either by payment in cash or the  provision  of goods or  services  from time to
time.

         "Certificate  of Limited  Partnership"  shall mean the  Certificate  of
Limited  Partnership  filed in connection with the formation of the Partnership,
as amended from time to time.

         "Closing  Capital  Account"  shall  mean,  with  respect  to any fiscal
period,  the Opening  Capital  Account of each  Partner  for such fiscal  period
adjusted in accordance with Section 3.5(a) herein.

         "Code"  shall  mean  the  Internal   Revenue  Code  of  1986,  and  the
regulations  and  interpretations  thereof  promulgated by the Internal  Revenue
Service, as amended and supplemented from time to time.

         "Commitments"  shall mean the capital  contributions to the Partnership
which the Partners  have made or are  obligated to make to the  Partnership,  as
increased  or  decreased  from time to time as provided in this  Agreement.  The
amounts and terms of the Commitments of the Partners shall be as defined in this
Agreement.

         "Debentures" shall have the meaning set forth in the SBIC Act.

         "Delaware  Act"  shall  have  the  meaning   ascribed  thereto  in  the
Background section above.

         "Distributive  Share"  shall mean the amount that a Partner  would have
received  pursuant  to  Section  3.7(a)  herein  if  the  Partnership  had  been
liquidated and all  adjustments  pursuant to Section 3.5 herein had been made at
the date in question  and all assets of the  Partnership  had been  converted to
cash in an amount equal to the value of all such assets  computed in  accordance
with Section 3.6 herein.


                                      -2-
<PAGE>

         "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934, 
as amended,  and the  regulations and interpretations thereof promulgated by the
U. S. Securities and Exchange Commission ("SEC").

         "General  Partner"  shall  have the  meaning  ascribed  thereto  in the
Preamble to this Agreement.

         "Initial   Public   Offering"   shall  mean  the   agreement   to  sell
substantially all of the Partners'  ownership  interest in the Partnership;  the
offering of  securities  representing  the Partners'  ownership  interest in the
Partnership  or any  portion  thereof  in either a private  placement  or public
offering;  or the  conversion of the  Partnership  into another  entity with the
intention to offer to the public  securities  representing the ownership of that
entity.

         "Investment  Advisers  Act" shall mean the  Investment  Advisers Act of
1940, as amended, and the regulations and interpretations thereof promulgated by
the SEC.

         "Investment Company Act" shall mean the Investment Company Act of 1940,
as amended,  and the regulations and interpretations  thereof promulgated by the
SEC.

         "Investment  Adviser/Manager"  shall mean any Person  selected  as such
under Section 2.1(b) herein.

         "Investment  Securities"  shall mean  Securities that do not constitute
cash, bank deposits or so-called "money market" instruments.

         "Legal   Representative"   shall  mean  any  executor,   administrator,
committee, guardian, conservator or trustee of any Partner.

         "Leverage" shall have the meaning set forth in the SBIC Act.

         "Limited  Partners"  shall  mean  the  Limited  Partners  set  forth in
Schedule A attached  hereto as of the date  hereof  and any  Additional  Limited
Partners  for so  long as such  Persons  continue  as  limited  partners  of the
Partnership.

         "Management  Compensation"  shall  mean  the  amounts  payable  by  the
Partnership,  as provided in Sections 2.5(a), (d) and (e) herein, to the General
Partner.

         "Net Losses" shall mean, with respect to any fiscal period, the excess,
if any,  of (i) all  expenses  and losses  (including  realized  and  unrealized
capital  depreciation and Operating Expenses) incurred during such fiscal period
by the Partnership, over (ii) the aggregate revenue, income and gains (including
realized  and  unrealized  capital  appreciation,  but  not  including  any  Net
Short-Term   Investment   Income)  earned  during  such  fiscal  period  by  the
Partnership  from all 

                                      -3-
<PAGE>

sources; provided, however, that such realized gains or losses shall, as to each
         --------  -------
Security owned by the  Partnership,  be taken into account only to the extent of
any  differences  between  the  actual  amount of such  gains or losses  and the
aggregate  amount of unrealized  appreciation  or  depreciation  as to each such
Security  as of the  close of the  preceding  fiscal  period.  For  purposes  of
determining Net Losses,  realized and unrealized  appreciation  and depreciation
shall be included without regard to their treatment for Federal,  state or local
income tax  purposes.  

          "Net  Profits"  shall mean,  with  respect to any fiscal  period,  the
excess,  if any,  of (i) the  aggregate  revenue,  income  and gains  (including
realized  and  unrealized  capital  appreciation,  but  not  including  any  Net
Short-Term   Investment   Income)  earned  during  such  fiscal  period  by  the
Partnership  from all  sources,  over (ii) all  expenses  and losses  (including
realized and unrealized  capital  depreciation and Operating  Expenses) incurred
during such  fiscal  period by the  Partnership;  provided,  however,  that such
                                                  --------   -------
realized gains or losses shall, as to each Security owned by the Partnership, be
taken into  account  only to the extent of any  differences  between  the actual
amount  of  such  gains  or  losses  and  the  aggregate  amount  of  unrealized
appreciation  or  depreciation  as to each such  Security as of the close of the
preceding fiscal period.  For purposes of determining Net Profits,  realized and
unrealized  appreciation  and  depreciation  shall be included without regard to
their treatment for Federal, state or local income tax purposes.

         "Net  Short-Term  Investment  Income"  shall mean,  with respect to any
fiscal period,  the income received by the Partnership during such fiscal period
from investments in Securities  which are issued by any governmental  authority,
or which are bank  certificates of deposit,  time deposits,  commercial paper or
other so-called "money-market instruments."

         "Opening Capital Account,"with respect to any fiscal period,shall mean:

                  (i) with  respect to any Partner  admitted  during such fiscal
         period,  that  Partner's initial Capital Contribution; and

                  (ii) with  respect to any  Partner  admitted  during any prior
         fiscal period, that Partner's Closing Capital Account for the preceding
         fiscal period.

         "Operating  Expenses"  shall mean,  with respect to any fiscal  period,
Management  Compensation,  interest  expenses  and  any  other  expenses  of the
Partnership,  including  amortization,  if any,  of  Organization  Expenses  but
excluding realized and unrealized capital depreciation.

         "Optioned Partnership Interest" shall have the meaning ascribed thereto
in Section 3.3(d) herein.

         "Optionee" shall have the meaning ascribed thereto in Section 3.3(d) 
herein.

                                      -4-
<PAGE>

         "Optionor" shall have the meaning ascribed thereto in Section 3.3(d) 
herein.

         "Organization  Expenses" shall mean all reasonable expenses incurred in
the formation and marketing of the  Partnership,  the development of specialized
credit  approval  and review  systems for the  Partnership,  and the offering of
limited partnership interests in the Partnership (including reimbursement of the
General  Partner and the officers and employees of the General  Partner for such
expenses);

         "Outstanding  Leverage"  shall  mean the total  amount  of  outstanding
Debentures  and other  securities  issued by the  Partnership  which  qualify as
Leverage  and which have not been repaid for  purposes of and as provided in the
SBIC Act.

         "Partners" shall mean the General Partner, the Limited Partners and any
Person  who after the date  hereof  becomes  a general  partner  under the terms
hereof.

         "Partnership" shall have the meaning ascribed thereto in the Preamble 
to this Agreement.

         "Partner's Percentage" shall mean the percentage  determined,  for each
of the  Partners,  by dividing  (i) the  aggregate  Capital  Contributions  with
respect to each  Partner's  Commitment  and credited to such  Partner's  Capital
Account as  provided  in Section  3.5(a)(i)  herein at the time of any  relevant
calculation by (ii) the aggregate  Capital  Contributions of all Partners and so
credited with respect to such  Partners'  Commitments  at such time,  and taking
into account any adjustment  made pursuant to Section 3.3(d) (viii) herein.  The
sum of the respective Partners' Percentages shall at all times equal 100%.

         "Person"   shall  mean  any  natural   person,   corporation,   general
partnership, limited partnership,  proprietorship,  other business organization,
trust, association or other legal entity.

         "Publicly  Traded Security" shall mean a Security that is traded (i) on
a  recognized  national  or  foreign  securities   exchange,   or  (ii)  in  the
over-the-counter  market,  and  that the  General  Partner  determines  to be so
actively traded as to have a readily ascertainable market value.

         "Purchase  Price"  shall have the meaning  ascribed  thereto in Section
3.3(d) herein.

         "Remaining  Portion" shall have the meaning ascribed thereto in Section
3.3(d) herein.

         "Return of Capital" shall mean the time when the Limited Partners shall
have received distributions, on a cumulative basis, in an aggregate amount equal
to the aggregate Capital  Contributions of all such Limited Partners on the date
of distribution.

         "SBA" shall mean the United States Small Business Administration.

                                      -5-
<PAGE>


         "SBIC" shall mean a small business  investment  company  licensed under
the SBIC Act.

         "SBIC Regulations" shall mean all laws, rules, regulations and standard
operating  procedures or other  promulgations  of the SBA that may be applicable
from time to time to an SBIC.

         "Securities"   shall  mean  and  include  common  and  preferred  stock
(including   warrants,   rights  and  other  options  relating  thereto  or  any
combination  thereof),  notes,  bonds,  debentures,  trust  receipts  and  other
obligations,  instruments or evidences of indebtedness,  and other properties or
interests  commonly  regarded as securities,  and in addition  interests in real
property,  whether improved or unimproved, and interests in personal property of
all kinds, tangible or intangible, chooses in action and cash, bank deposits and
so-called "money market instruments."

         "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules, regulations and interpretations thereof promulgated by the SEC.

         "SEC" shall mean the U. S. Securities and Exchange Commission.

         "Voting Interest," as to any Partner, shall mean the Partner's
Percentage for such Partner.

         1.1.1  Superseding   Definitions.   To  the  extent  that  any  of  the
                -------------------------
definitions  set forth herein conflict with the definition of those terms as set
forth  in  the  SBIC  Act  or  regulations  promulgated  pursuant  thereto,  the
definitions  contained  in the  SBIC  Act or  regulations  promulgated  pursuant
thereto shall control.

         1.2 Name.  The Partnership  shall conduct its activities  under the
             ----
name of "Fourteen Hill Capital,  L.P." The General  Partner shall have the power
at any time to change the name of the Partnership without obtaining the approval
of any Limited Partners. The General Partner shall thereafter give notice of any
such change to each Partner.

         1.3  Principal  Office,  Registered Office and Qualification.  
              -------------------------------------------------------


                  (a) The principal executive office of the Partnership shall be
Incline Village, 917 Tahoe Boulevard,  Suite 204, Incline Village, Nevada 89452,
or such  other  place  as may from  time to time be  designated  by the  General
Partner. The registered office of the Partnership in the State of Delaware shall
be located at 1220 N. Market Street,  Suite 606,  Wilmington,  DE 19801, or such
other place as may from time to time be designated by the General  Partner.  The
name of the Partnership's registered agent at such address is Registered Agents,
Ltd.

                  (b) The General  Partner shall use its best efforts to qualify
the Partnership to do business in each jurisdiction  where the activities of the
Partnership make such  qualification  necessary.  The General Partner shall have
the  power  at any time to  qualify  the  Partnership  under  

                                      -6-
<PAGE>

any name  when the Partnership's  name is  unavailable  for use in a particular 
jurisdiction.  The General Partner shall also have the power to designate any 
registered offices or registered  agents, or both, that the General Partner may 
deem  appropriate in connection with any such qualification to do business.

         1.4 Duration.  The Partnership shall continue through the close
             --------
of business on December 31, 2024 (the "Initial Term"),  unless sooner terminated
pursuant to the  provisions  of Article 4 hereof,  provided,  however,  that the
                                                   --------   -------
General  Partner  may,  at any time,  extend the life of the  Partnership  for a
period  of up to ten  years  following  the  Initial  Term,  and  for up to five
successive ten-year periods thereafter.

         1.5 Partners.
             ---------         
                  (a) Schedule A attached hereto sets forth the name and address
of the General  Partner  and the Limited  Partners as of the date hereof and the
aggregate Commitment of each Partner to the Partnership.

                  (b) No one  shall  be  admitted  as a  General  Partner  or an
Additional Limited Partner without subscribing and delivering to the Partnership
a counterpart of this Agreement and any initial Capital  Contribution to be made
by such Partner in accordance with Section 3.1 herein or Section 3.2 herein.

                  (c) The addition to the Partnership at any time of one or more
Partners shall not be a cause for  dissolution of the  Partnership,  and all the
Partners shall continue to be subject to the provisions of this Agreement in all
respects.

                  (d) The Limited  Partners shall take no part in the control or
management of the business or affairs of the Partnership,  nor shall the Limited
Partners have any authority to act for or on behalf of the  Partnership,  except
as specifically  provided in this Agreement.  The Limited Partners shall not act
in any way which would conflict with the SBIC Act, the Delaware Act, the Code or
any other statute or provision referenced herein.

                  (e) The Limited  Partners may not delegate their voting rights
to any other Person  without the prior  approval of the General  Partner and the
SBA. This  restriction  does not apply to (i) a proxy given by a Limited Partner
to vote at a single  specified  meeting  or (ii)  the  delegation  by a  Limited
Partner of voting rights to such Limited Partner's investment advisor,  provided
that such investment advisor is not an Affiliate.

                                      -7-
<PAGE>


         1.6 Liability of Partners.Losses, liabilities and expenses incurred by 
             ---------------------
the Partnership during any fiscal period shall be allocated among the Partners 
in accordance  with the  procedures  set forth in Section 3.5 herein.  The 
General  Partner shall have unlimited  liability for the repayment,satisfaction
and  discharge  of all  losses,  liabilities  and  expenses of the Partnership 
to the extent  provided under the Delaware Act;  provided,  however, that  the  
                                                 --------   -------
General  Partner  shall  not  be  obligated to restore by way of a contribution 
to capital or  otherwise  any deficits in the  respective  Capital Accounts of 
the Limited Partners should such deficits occur. Except as otherwise required 
under the Delaware Act (including where required under Sections 17-303, 17-502
and 17-607 of the Delaware Act), no Limited Partner shall in any event be
liable for or  subject  to any loss,  liability  or  expense  whatsoever  of the
Partnership  beyond  that  portion  of such  Limited  Partner's  Commitment  not
actually paid to the Partnership.

         1.7 Purpose and Powers. If the Partnership obtains an SBIC license
             ------------------
 from the SBA,  during the term of such license,  the  Partnership's
sole purpose shall be to perform  functions and to conduct  activities  that are
contemplated  by the SBIC Act for an SBIC. In furtherance  of its purposes,  the
Partnership  shall have all powers  necessary,  suitable or convenient for their
accomplishment,  alone or with  others,  as principal  or agent,  including  the
following:

                  (a) to buy,  sell and  invest  in  Securities,  regardless  of
         whether such  Securities  are readily  marketable,  and to reinvest the
         proceeds of any Securities in other Securities;

                  (b) to  hold,  receive,  mortgage,  pledge,  lease,  transfer,
         exchange,  otherwise  dispose of,  grant  options  with  respect to and
         otherwise deal in and exercise all rights, powers, privileges and other
         incidents of ownership or possession with respect to all property owned
         or held by the Partnership;

                  (c) to borrow,  raise money,  issue promissory notes,  drafts,
         bills of exchange, warrants, bonds, debentures and other negotiable and
         non-negotiable instruments and evidences of indebtedness,  to guarantee
         the obligations of others or incur lease obligations from time to time,
         to secure the payment of the principal of any such indebtedness and the
         interest  thereon or any other such  obligation  by  mortgage,  pledge,
         conveyance  or  assignment  in  trust  of the  whole or any part of the
         property of the  Partnership,  whether at the time owned or  thereafter
         acquired,  and to buy,  sell,  pledge or otherwise  dispose of any such
         instrument or evidence of indebtedness  (subject to the limitations set
         forth below);

                  (d) in  such  reasonable  degree  and  manner  as the  General
         Partner may deem appropriate,  to have and maintain one or more offices
         within or  without  the  States of  Nevada  or  California,  to rent or
         acquire office space, to engage personnel and compensate them and to do
         such  other  acts  as the  General  Partner  may  deem  appropriate  in
         connection with the maintenance of such office or offices;

                                      -8-
<PAGE>


                  (e) to open, maintain and close accounts with brokers;

                  (f) to open, maintain and close bank accounts and draw checks 
         and other orders for the payment of moneys;
         

                  (g)   to   engage    accountants,    custodians,    Investment
         Advisers/Managers,  attorneys, consultants and any and all other agents
         and  assistants,   both  professional  and   nonprofessional,   and  to
         compensate  them  in  such  reasonable  degree  and  manner  as  may be
         necessary or advisable;

                  (h) to form or cause to be formed  and to own the stock of one
         or more corporations, whether foreign or domestic, and to form or cause
         to be  formed  and to  participate,  but only as a limited  partner  or
         participant with limited liability, in partnerships and joint ventures,
         whether foreign or domestic;

                  (i) to enter into, make and perform all contracts,  agreements
         and other  undertakings as the General Partner may deem  appropriate to
         carry out the purposes hereof;

                  (j) to sue, prosecute, settle or compromise all claims against
         third parties, to compromise, settle or accept judgment with respect to
         claims  against the  Partnership  and to execute all documents and make
         all representations, admissions and waivers in connection therewith;

                  (k) to take any  actions  that the  General  Partner  may deem
         appropriate  in order to obtain the approval of the SBA therefor; and

                  (l) to engage in any other  lawful act or  activity  for which
         limited  partnerships may be organized under the Delaware Act and which
         conform with SBIC Regulations.

If the Partnership fails to obtain an SBIC license from the SBA, the Partnership
shall have all powers set forth in subparagraphs (a) through (j) above and shall
also have the power to engage in any  other  lawful  act or  activity  for which
limited partnerships may be organized under the Delaware Act.

         1.8 Applicable  Law. This Agreement shall be governed by, and 
             ---------------
construed in accordance with, the laws of the State of Delaware.


                                      -9-
                                     <PAGE>


         l.9 SBIC.
             ----
                  (a) If the Partnership  becomes an SBIC, the Partnership shall
not be  required  to take any  action or  refrain  from any  action  that may be
necessary for the  Partnership  to maintain its status as an SBIC if the General
Partner,  in its sole discretion,  determines that it would be desirable for the
Partnership to cease being an SBIC.

                  (b) In order to permit the  Partnership to become an SBIC, the
General Partner shall have the authority,  without obtaining the approval of any
Limited Partners, to amend this Agreement to the extent necessary to comply with
any applicable SBIC  Regulations or to obtain SBA approval of the  Partnership's
Application  to become an SBIC,  including  any of the  following  matters:  the
dissolution and/or reorganization of the Partnership, the removal of the General
Partner, the rights of any transferee of or successor to the General Partner and
the  indemnification  of the General Partner.  However,  (i) the General Partner
shall not have the authority to amend any of the Sections  included in Article 3
herein or Section 1.6 herein  without  the written  consent of a majority of the
Limited  Partners  with  each  Limited  Partner  having  such  Partner's  Voting
Interest, and (ii) the General Partner shall have the authority to amend Section
2.5(a) herein only to the extent to comply with any applicable  SBIC  Regulation
or to obtain SBA approval of the Partnership's Application to become an SBIC.

         1.10  Incorporation of SBA Annexes.
               ----------------------------

                  (a) The  provisions of SBA Annex GDP ("Annex GDP") attached to
this Agreement are incorporated in this Agreement with the same force and effect
as if fully set forth  herein.  The  provisions  of SBA  Annex OP  ("Annex  OP")
attached to this  Agreement are  incorporated  in this  Agreement  with the same
force and effect as if fully set forth herein.

                  (b) The provisions of this  Agreement  shall be interpreted to
the fullest extent  possible in a manner  consistent  with the provisions of the
SBIC Act,  Annex GDP and Annex  OP.  In the event of any  conflict  between  any
provision of the  Agreement,  Annex GDP, or Annex OP and the  provisions  of the
SBIC Act, the provisions of the SBIC Act shall control.

                  (c) In the event of any conflict between any provision of this
Agreement  and any  provision of either Annex GDP or Annex OP, the  provision of
Annex GDP or Annex OP shall control.

                  (d) In the event of any  conflict  between  any  provision  of
Annex  GDP and any  provision  of Annex  OP,  the  provision  of Annex GDP shall
control.

                                      -10-
<PAGE>


                                    ARTICLE 2
                                    =========

                                   MANAGEMENT
                                   ==========

         2.1 Authority of General Partner.
             ----------------------------

                  (a) The  management and operation of the  Partnership  and the
formulation  and execution of investment  policy shall be vested  exclusively in
the General Partner. The General Partner shall, in its sole discretion, exercise
all powers on behalf and in the name of the Partnership that the General Partner
deems appropriate for carrying out the purposes of the Partnership.

                  (b) The General  Partner may, but is not required to, delegate
any part of its authority under this Agreement to an Investment  Adviser/Manager
chosen by the General  Partner.  The General  Partner may enter into  agreements
with the  Investment  Adviser/Manager  delegating  its  authority,  limiting the
authority so delegated and specifying  that such authority shall be exercised in
conformity  with the terms and conditions of such agreements and this Agreement;
provided,  however,  that  (i) no such  delegation  shall in any way  limit  the
representations, fiduciary responsibility and obligations of the General Partner
under this Agreement,  which shall continue notwithstanding any such delegation,
and (ii) any compensation to be paid to any Investment  Adviser/Manager shall be
paid by the General Partner.

                  (c) Upon the  occurrence of any of the events  specified in 13
C.F.R.  ss.107.1810(d)(1) through (d)(6) or (f)(1) through (f)(3), as determined
by the SBA, the SBA shall have the right,  upon written  notice,  to require the
Partnership to remove the person(s) responsible for such occurrence, and in such
an event,  the General  Partner shall take all necessary  actions to comply with
the directives of the SBA.

                  (d) The  General  Partner  shall,  so long as it  remains  the
general partner of the Partnership,  devote  substantially all of its activities
to the conduct of the business of the  Partnership and shall not engage actively
in any other business unless such engagement is related to and in furtherance of
the affairs of the Partnership.

                  (e)  Limited   Partners   shall  not  be  obligated  to  refer
investments to the  Partnership,  and no Limited  Partner shall be restricted or
precluded  hereby  in any  investment  it may  make,  including  any  investment
opportunity  in which the  Partnership is actively  considering  investing or in
which the Partnership  invests. The General Partner may, in its sole discretion,
offer  certain or all Limited  Partners the  opportunity  to invest  directly in
particular  investments in which the Partnership is also investing in situations
where the General Partner decides that making such  co-investment  opportunities
available to one or more Limited  Partners would be in the best interests of the
Partnership.  Limited  Partners  shall  not be  obligated  to invest in any such


                                      -11-
<PAGE>

co-investment  opportunities  that may be presented  to them,  nor shall they be
entitled to object if certain co-investment  opportunities shall be offered only
to other Limited Partners.

                  (f) This  Agreement  shall not be  construed  to preclude  any
Affiliate  of the  General  Partner or any  officer or  director  of the General
Partner or of any such  Affiliate  from  engaging in any business or  investment
activity  (including  buying or  selling  Securities  for its own  account)  and
receiving compensation or profit therefrom.  In particular,  any of such Persons
shall be entitled to co-invest in transactions  in which the  Partnership  shall
invest,  and any such  co-investment  shall  not be deemed a  violation  of this
Agreement  or of any  duty  that  may be  owed  by any of  such  Persons  to the
Partnership or the Partners.

         2.2 Investment Company Act; Investment Advisers Act. The Partnership is
             -----------------------------------------------
being formed in such fashion as to be exempt from the  Investment  Company  Act.
The  relationship  between the Partnership,  on the one hand,  and the General 
Partner,  on the other hand, is being structured in such manner as to exempt th 
General Partner, Affiliates of the General Partner and the officers and 
directors of either the General Partner or Affiliates of the General Partner 
from the requirements of the Investment Advisers Act. Existing laws, regulations
and interpretations or changes thereto may make it  necessary  or  advisable  to
register the  Partnership  under the Investment  Company  Act or to  register 
the General  Partner,  any  Affiliates thereof  or the  officers  or  directors 
of either the  General  Partner or any Affiliates thereof under the Investment 
Advisers Act. The General Partner shall have the power to take such action as it
may deem advisable in light of existing or changing regulatory conditions in 
order to permit the Partnership to continue in  existence. The General  Partner 
shall also have the power to register  the Partnership  under the  Investment 
Company  Act, and to take any and all action necessary to secure such 
registration and to secure appropriate exemptions under the Investment Advisers 
Act for the General Partner,  any Affiliates thereof and the  officers  and  
directors  of either the General  Partner or any  Affiliates thereof (including 
an exemption from the provisions of Section 205(a) thereof). In addition,  
subject to the approval in writing by the Limited  Partners (or as may be 
otherwise  required for an amendment by Section 6.7 herein),  the General
Partner  shall have the power to modify the present fee structure in Section 2.5
herein if the  General  Partner,  any  Affiliates  thereof,  or the  officers or
directors of either the General Partner or any Affiliate  thereof is required to
register  under the  Investment  Advisers  Act.  This Section shall not give the
General  Partner any power to amend this  Agreement  otherwise  than as provided
pursuant to Section 6.7 herein.

         2.3 Standard of Care.
             ----------------

             (a) Neither the General  Partner,  any Investment  Adviser/Manager,
any partner, shareholder, director, officer or employee nor any Affiliate of any
of them shall be liable to the  Partnership  or any Partner for any action taken
or omitted to be taken by it or any other  Partner or other person in good faith
and in a manner  they  reasonably  believed  to be in or not opposed to the best
interests  of the  Partnership,  and,  with  respect to any  criminal  action or
proceeding, had no   reasonable   cause   to   believe   their   conduct   was 
unlawful.

                                      -12-
<PAGE>


                  (b)  Neither  any  Limited  Partner,  nor  any  member  of any
Partnership  committee or board who is not an Affiliate of the General  Partner,
shall be liable to the  Partnership or any Partner as the result of any decision
made in good faith by such Limited Partner or member, in his capacity as such.

                  (c) The General  Partner and any  Investment  Adviser/Manager,
the stockholders,  directors,  officers,  employees and partners of any of them,
any Limited  Partner and any member of a  Partnership  committee  or board,  may
consult  with  reputable  legal  counsel  selected  by them  and  shall be fully
protected,  and shall incur no liability to the  Partnership or any Partner,  in
acting or refraining to act in good faith in reliance upon the opinion or advice
of such counsel.

                  (d) This  Section  2.3 shall not  constitute  a  modification,
limitation  or waiver of Section  314(b) of the SBIC Act, or a waiver by the SBA
of any of its rights pursuant to such Section 314(b).

         2.4 [intentionally deleted]

         2.5 Management Compensation and Expenses.
             -------------------------------------
          (a) As basic  compensation for services  rendered in the management of
the  Partnership,  the Partnership  shall pay the General  Partner,  the maximum
management  fee permitted  under the Act and  regulations,  interpretations,  or
policy statements  promulgated or issued  thereunder.  Such management fee, with
respect to each fiscal  quarter,  shall be paid quarterly in advance,  and shall
equal the greater of (i) In the first five fiscal years,  .625% of the aggregate
Regulatory Capital and two tiers (two times Regulator Capital) of Leverage as if
committed  and/or granted to the Partnership.  Thereafter,  with respect to each
fiscal  quarter,  .625% of  Combined  Capital,  as  defined  in SBA  Regulations
(ss 107.50) as of the close of business on the last day of the preceding  fiscal
quarter or (ii) such other  percentage  approved  by the SBA. In  addition,  the
Partnership  shall pay the  General  Partner an  additional  $31,250  per fiscal
quarter as compensation for management  services until such time as the Combined
Capital equals or exceeds Twenty Million Dollars ($20,000,000).

          (b) Except as provided in Section 2.5(c) herein,  the General  Partner
shall pay (i) the  compensation  of all  professional  and other  employees  who
render services to the  Partnership  and (ii) the cost of providing  support and
general services to the Partnership,  including expenses of insurance (except as
otherwise  specifically  provided in Section 2.5(c)(iii) herein),  office rental
expenses (provided,  however, that responsibility for the payment of such office
rental expenses does not preclude the  Partnership  from being the lessee of any
rental property  dedicated to the Partnership's  use now or in the future,  such
office rental expenses then being borne by the Partnership  after being deducted
from the General Partner's  Management  Compensation) and secretarial,  clerical
and bookkeeping expenses.

                                      -13-
<PAGE>


                  (c)  The  Partnership  shall  pay  the  following  Partnership
expenses: (i) expenses of the Advisory Boards for the Partnership; (ii) expenses
incurred in the actual or proposed  acquisition  or  disposition  of Securities,
including  accounting fees, brokerage fees, legal fees, transfer taxes and costs
related to the registration or qualification for sale of Securities; (iii) other
legal,  accounting and auditing expenses and the reasonable  expenses of limited
partnership  reimbursement  insurance  for the  Partnership  (if any);  (iv) all
expenses of consultants  for  specialized or technical  services  related to the
actual or proposed  acquisition  or disposition  of Investment  Securities;  (v)
expenses  incurred by the General  Partner in connection with meetings of and on
behalf of the Partnership,  including meetings of the Advisory Boards;  (vi) all
Organization  Expenses;  and (vii) taxes payable by the  Partnership to Federal,
state,  local and other governmental  agencies.  The payment of such expenses by
the  Partnership  shall be due and  payable on a regular  basis as billed to the
Partnership, against appropriate supporting documentation.

                  (d) If the effective date of the Partnership's  dissolution or
the date that the  General  Partner  ceases  to be the  general  partner  of the
Partnership is not the last day of a fiscal quarter, the Management Compensation
for the period between the effective date of such  dissolution  and the close of
the  preceding  fiscal  quarter,  or for the  period  between  the date that the
General  Partner ceases to be the general partner and the close of the preceding
fiscal  quarter,  shall be computed on a pro rata basis for such period pursuant
                                         --- -----
to Section  2.5(a)  herein.  Any  difference  between  the amount of  Management
Compensation  paid by the  Partnership  pursuant to Section  2.5(a)  herein with
respect to such  fiscal  period and the amount due under this  Section  shall be
repaid to the Partnership  within 30 days after either the effective date of the
Partnership's  dissolution or the date that the General Partner ceases to be the
general partner of the Partnership, as the case may be.

                  (e) The  Management  Compensation  payable with respect to the
period  commencing  on  the  date  of  filing  of  the  Certificate  of  Limited
Partnership  and  ending  on the last day of the  first  fiscal  quarter  of the
Partnership after the date hereof shall be computed on a pro rata basis for such
                                                         --- ----
period and shall be due and  payable in advance on the date  hereof.  Management
Compensation  payable with respect to the Commitment of any  Additional  Limited
Partner or any increase in the Commitment of any Limited  Partner for the period
commencing on the date of admission of such  Additional  Limited  Partner or the
effective date for the increase of any Limited  Partner's  Commitment to the end
of that fiscal  quarter  shall be computed  with respect to such  Commitment  or
increase  in such  Commitment  as of the date of  admission  of such  Additional
Limited Partner or the effective date for the increase in such Limited Partner's
Commitment, on a pro rata basis for such quarter.  Management Compensation shall
                 --- ----
be due and payable in advance on the first  business day  following  the date of
admission  of any  Additional  Limited  Partner  or the  effective  date for any
increase  in  any  Limited  Partner's   Commitment;   provided,   however,  that
notwithstanding  anything to the contrary  contained herein, the initial payment
of Management Compensation with respect to the admission of each Limited Partner
and 

                                      -14-
<PAGE>

each  Additional  Limited  Partner shall be equal to the sum of the pro rata
                                                                    --- ----
payment for that fiscal quarter, as provided above.

          2.6 Advisory Boards.  The members of any Advisory Boards shall consist
              ---------------
of business persons, scientists and other persons generally recognized for their
standing and reputation, all of whom shall be designated by the General Partner.
Members  of  the  Advisory  Boards  may  receive  a fee  for  their  service  as
consultants on an Advisory  Board,  as determined by the General  Partner,  plus
reasonable  out-of-pocket  expenses.  The Advisory  Boards  shall hold  periodic
meetings,  as determined by the General Partner. The Advisory Boards shall serve
as an adviser to the  General  Partner  on behalf of the  Partnership  and shall
consult with the General  Partner  concerning the  Partnership's  activities and
operations as to business,  scientific and technical matters; provided, however,
                                                              --------  -------
that the Advisory  Boards shall take no part in the control or management of the
Partnership  nor  shall  the  Advisory  Boards or any  member  thereof  have any
authority to act for or on behalf of the Partnership.

                                    ARTICLE 3
                                    --------- 

                                CAPITAL ACCOUNTS
                                ----------------


         3. 1 Capital Contribution.
              --------------------

                  (a) The General Partner and the Limited Partners hereby commit
to make contributions to the capital of the Partnership in the amounts set forth
opposite  their  respective  names in  Schedule A attached  hereto.  On the date
hereof,  any Limited Partner who is an individual and whose net worth (excluding
the value of any equity in such Limited  Partner's  most valuable  residence) is
under  $2,000,000  shall contribute to the Partnership the entire amount of such
Limited Partner's Commitment. On the date hereof, the General Partner may permit
any Limited  Partner who is an  individual  and whose net worth  (excluding  the
value of any equity in such Limited  Partner's  most  valuable  residence) is at
least  $2,000,000  but  is  under   $10,000,000  to  merely  contribute  to  the
Partnership a capital  contribution in an amount which will reduce the amount of
such Limited Partner's  remaining unfunded  Commitment to an amount which is not
greater than ten percent of such Limited Partner's net worth. Upon not less than
30 days prior notice from the General Partner,  each Limited Partner  (including
each  Additional   Limited  Partner)  which  has  not  yet  contributed  to  the
Partnership  the entire amount of such Limited  Partner's  Commitment  shall pay
such  percentage  of its  Commitment  (in 5%  increments)  as is demanded by the
General Partner, in cash and at such times as shall be determined by the General
Partner,  and each such notice from the General  Partner  shall specify the date
such  payment  shall  be  due  and  the  percentage  of  the  Limited  Partners'
Commitments  then  due.  On the  date of  admission  of any  Additional  Limited
Partner,  the  General  Partner may permit such  Additional  Limited  Partner to
merely pay such percentage of its Commitment as will equal the percentage of the
Commitment  which one or more existing  Limited  Partners have paid. Any Limited
Partner may elect to 
                                      -15-

<PAGE>

contribute  all or any portion of its  Commitment prior to the date such portion
would be due pursuant to this  Section  3.1(a);  any such advance  contribution 
with respect to a Commitment will be applied to the amount due from such Limited
Partner with respect to the next required contribution (or contributions)  and 
shall be credited to such Limited  Partner's Capital Account when and to the 
extent so applied, as provided in Section 3.5(a)(i) herein.

                  (b) The General  Partner  shall  contribute an amount equal to
not less than one  percent of the total  Commitments  of the  Limited  Partners.
Except as otherwise  provided in Section 3.1(c) herein,  the General Partner may
pay its  Commitment in the form of a promissory  note,  bearing  interest at the
minimum rate  necessary to avoid the  imputation  of interest or the creation of
original  issue  discount  under the Code,  interest and the  principal of which
shall be payable to the  Partnership in full upon the termination or dissolution
of the  Partnership.  If necessary,  such  promissory note shall be amended from
time to time to account for the Commitments of any Additional  Limited  Partners
and any increase in the Commitments of any Limited Partners,  and to account for
any distributions to the General Partner.

                  (c) If at the time any  distribution  in cash is to be made to
the General Partner under Section 3.7(a) herein, the aggregate percentage of the
Commitment  of the  General  Partner  which has been paid or set off against its
promissory note is lower than the aggregate percentage of the Commitments of the
Limited  Partners  which  have  become  due or with  respect  to  which a notice
requiring a contribution  has been given pursuant to Section 3.1(a) herein as of
such  date,  then a  portion  of such  distribution  (up to the  maximum  amount
provided   below)  shall  be  contributed  to  the   Partnership  as  a  Capital
Contribution  with respect to the General  Partner's  Commitment and such amount
shall  be set  off  against  its  promissory  note.  The  portion  of  any  such
distribution which shall be so contributed shall be the lesser of (i) the amount
required to cause the  aggregate  percentage  of the  Commitment  of the General
Partner which has been paid or set off against its  promissory  note to be equal
to the aggregate  percentage of the  Commitments  of the Limited  Partners which
have become due or with respect to which a notice  requiring a contribution  has
been  given  pursuant  to  Section  3.1(a)  herein  or,  (ii) the amount of such
distribution  less a  percentage  of such  distribution  equal  to the  combined
highest  marginal  Federal and applicable  state income tax rates for individual
taxpayers.  Capital  Contributions  pursuant to this Section shall be applied to
the promissory note, first against interest and then to principal.  The date any
contribution   is  made  pursuant  to  this  Section  shall  be  the  date  such
contribution is due and received for purposes of Section 3.5(a)(i) herein.

         (d) Upon the dissolution or termination of the Partnership, the General
Partner  will  contribute  to the  Partnership  an amount  equal to the  deficit
balance in its Capital Account.

         3.2  Additional  Limited  Partners and Increased  Commitments.  The 
              -------------------------------------------------------- 
General Partner may, from time to time after the date hereof,  admit one or more
Additional Limited Partners or permit any Limited Partner to increase its
Commitment, under the following terms and conditions:


                                      -16-
<PAGE>


         (a) Each Additional  Limited Partner and Limited Partner increasing its
Commitment  shall execute and deliver to the  Partnership a counterpart  of this
Agreement,  thereby  evidencing such Limited Partner's  agreement to be bound by
and comply with the terms and provisions  hereof as if such Limited Partner were
an original  signatory to this Agreement.  Thereupon,  the General Partner shall
amend  Schedule A attached to this  Agreement to reflect such Limited  Partner's
name,  address  and  Commitment  (or  the  increase  in such  Limited  Partner's
Commitment, as the case may be).

         (b)  Each   Additional   Limited  Partner  shall  be  admitted  to  the
Partnership  as of the date that (i) an executed  counterpart  of this Agreement
has been delivered to and accepted by the  Partnership  and (ii) such Additional
Limited Partner has paid, by way of contribution to the Partnership,  cash in an
amount equal to 25% of its Commitment (plus any additional  proportionate amount
due with  respect  to such  Commitment  pursuant  to any cash  call  made by the
General Partner prior thereto pursuant to Section 3.1(a) herein).

         (c) In the  case of each  Limited  Partner  whose  Commitment  has been
increased,  such increased Commitment shall be effective as of the date that (i)
an executed  counterpart of this Agreement  reflecting such increased Commitment
has been  delivered  to and  accepted by the  Partnership  and (ii) such Limited
Partner has paid, by way of contribution to the  Partnership,  cash in an amount
equal to 25% of the  increased  amount of its  Commitment  (plus any  additional
proportionate  amount due with respect to such increased  Commitment pursuant to
any cash call made by the General Partner prior thereto  pursuant to Section 3.1
(a) herein).

         (d)  Upon  the  admission  of an  Additional  Limited  Partner  to  the
Partnership or an increase in the Commitment of any Limited Partner  pursuant to
this Section 3.2 herein,  the opening Capital Account of such Additional Limited
Partner or Limited Partner,  as the case may be, shall be debited with an amount
equal to (i) such  Additional  Limited  Partner's or Limited  Partner's pro rata
share (in proportion to the  respective  Commitments of the Partners in the case
of an Additional  Limited  Partner or in the proportion  that the amount of such
increase  bears to the  Commitments  of the Partners in the case of an increased
Commitment) of all expenses  delineated in Section 2.5(c) herein incurred by the
Partnership in the period from the date of filing of the  Certificate of Limited
Partnership to the date of such  admission or increase in Commitment,  plus (ii)
all expenses  incurred by the  Partnership  in connection  with the admission of
such  Additional  Limited  Partner or the  increase  in the  Commitment  of such
Limited Partner  pursuant to this Section 3.2. Any such amounts debited from the
Capital  Account of any such  Additional  Limited  Partner  or  Limited  Partner
increasing its Commitment shall be credited to the Capital Accounts of the other
Partners in the manner provided in Section 3.5(a)(iv) herein.

         (e) The General  Partner shall  determine the price for each  Partner's
Percentage  to be issued to each  Additional  Limited  Partner  or each  Limited
Partner whose  Commitment is to be increased,  which price shall be known as the
"Offering Price."


                                      -17-
<PAGE>


                  (i) In determining  the Offering  Price,  the General  Partner
shall  not set the price at less than the book  value of the  percentage  of the
Partnership's  Assets Under Management  reflected in the Partner's Percentage to
be issued;  however,  the General Partner,  in its sole  discretion,  may set an
Offering   Price  in  excess  of  the  book  value  of  the  percentage  of  the
Partnership's  Assets Under  Management to be issued to the  Additional  Limited
Partner or to the Limited Partner increasing its Commitment.

                  (ii) In the event  that,  by a  majority  vote of the  Limited
Partners with each Limited Partner having such Partner's  Voting  Interest,  the
Limited  Partners  decide that the Offering Price does not fairly  represent the
fair market value of the Partner's  Percentage  to be issued,  then the Offering
Price  of such  Partner's  Percentage  to be  issued  shall be  determined  by a
recognized appraisal or investment firm with experience in making determinations
of value of the type required to be made herein.  In such an event,  the General
Partner and the Limited  Partners shall agree on an independent  appraiser,  and
such independent  appraiser shall be directed to determine the fair market value
of such Partner's Percentage to be issued as soon as practicable.  The appraised
value shall be calculated by determining  the appraised value of the Partnership
as a whole and dividing that value by the Partner's Percentage to be issued. The
determination  by the appraiser of the fair market value will be conclusive  and
binding on all Partners.

                  (iii) To the extent that the Offering  Price  exceeds the book
value of the percentage of the Partnership's  Assets Under Management,  any such
surplus shall be credited to the Capital  Accounts of the other  Partners in the
manner provided in Section 3.5(a)(iv) herein.

         3.3 Noncontributing Partners.
             ------------------------

                  (a)  The   Partnership   shall  be  entitled  to  enforce  the
obligations of each Partner to make the  contributions  to capital  specified in
Sections  3.1 and 3.2  herein,  and the  Partnership  shall  have  all  remedies
available at law or in equity in the event any such contribution is not so made,
including any or all of the remedies set forth in Sections  3.3(b),  (c), (d) or
(e) herein.

                  (b)  If any  Limited  Partner  fails  to  make a  contribution
required  under  Section  3.1 or 3.2  herein  within 10 days after the date such
contribution  is due, then interest at an annual rate equal to the lesser of (i)
the highest prime rate reported in The Wall Street  Journal,  from time to time,
plus two percent or (ii) the highest rate of interest  such  Limited  Partner is
legally  permitted to pay in such  circumstance,  shall be charged on the amount
due from the date such amount  became due until the earlier of (x) the date paid
or (y) the date of any  notice  given to such  Limited  Partner  by the  General
Partner  pursuant  to  Section  3.3(c) or (d)  herein.  Such  interest  shall be
deducted from such Partner's  Capital  Account on a periodic basis at the end of
each fiscal quarter;  provided,  however, that the amount of interest charged as
provided  in this  Section  3.3(b)  shall not exceed the amount of such  Limited
Partner's  Capital Account.  Any interest  deducted from such Limited  Partner's
Capital Account shall be credited to the Capital  Accounts of the other Partners
in the manner provided in Section 3.5(a)(iv) herein.


                                      -18-
<PAGE>


                  (c) In  addition,  if any  Limited  Partner  fails  to  make a
contribution  required  under Section 3.1 or 3.2 herein within 20 days after the
date such  contribution is due, unless the General Partner has acted pursuant to
Section 3.3(d) herein, the General Partner may, in its sole discretion, elect to
declare,  by  notice  to such  Limited  Partner,  that  such  Limited  Partner's
Commitment  shall be deemed to be reduced to the amount of any  contributions of
capital  timely made  pursuant to Section 3.1 or 3.2 herein.  Upon such  notice,
such Limited  Partner  shall have no right to make any  contribution  thereafter
(including  the  contribution  as to  which  the  nonpayment  occurred  and  any
contribution  otherwise required to be made thereafter  pursuant to the terms of
Section 3.1 or 3.2 herein).  Upon such notice,  the General  Partner shall amend
Schedule A to this Agreement.

                  (d)  If any  Limited  Partner  fails  to  make a  contribution
required  under  Section  3.1 or 3.2  herein  within 20 days after the date such
contribution  is due,  unless the General  Partner has acted pursuant to Section
3.3(c)  herein,  the  General  Partner  may,  in its sole  discretion,  elect to
declare,  by notice to such Limited  Partner,  that such  Limited  Partner is in
default.  If the General  Partner so elects to declare such  Limited  Partner in
default (such Limited Partner being hereinafter  referred to as the "Optionor"),
then the other Limited  Partners that are not in default (the  "Optionees")  and
the General  Partner shall have the right and option to acquire the  Partnership
interest,  which shall include the Optionor's  Capital Account,  of the Optionor
(the "Optioned Partnership Interest") on the following terms:

               (i) The General Partner shall give the Optionees notice
          promptly after declaration of any such default.  Such notice
          shall  advise each  Optionee of the portion of the  Optioned
          Partnership  Interest available to it and the price therefor
          (as hereinafter  determined).  The portion available to each
          Optionee  shall be that portion of the Optioned  Partnership
          Interest   that  bears  the  same  ratio  to  the   Optioned
          Partnership Interest as each Optionee's Partner's Percentage
          bears to the aggregate Partners'  Percentages,  exclusive of
          the  Partner's  Percentage  of the  Optionor.  The aggregate
          price for the  Optioned  Partnership  Interest  shall be the
          assumption of the unpaid  Commitment (both that portion then
          due and  amounts  due in the  future) of the  Optionor  (the
          "Purchase  Price").  The  Purchase  Price for each  Optionee
          shall be prorated  according  to the portion of the Optioned
          Partnership Interest purchased by each such Optionee so that
          the  percentage  of the  unpaid  Commitment  assumed by each
          Optionee  is the  same  as the  percentage  of the  Optioned
          Partnership Interest purchased by such Optionee.  The option
          granted hereunder shall be exercisable by each Optionee,  in
          whole  only,  at any time  within 30 days of the date of the
          notice from the General Partner by the delivery to the


                                      -19-
<PAGE>

          General  Partner of (A) a notice of exercise of option,  and
          (B) the  contribution  to  capital  due in  accordance  with
          Section  3.3(d)(v)(A)  herein.  The  General  Partner  shall
          forward the above notices of exercise of option  received to
          the Optionor.

               (ii) Should any Optionee not exercise its option within
          the 30 day period provided in Section 3.3(d)(i) herein,  the
          General  Partner,  within 10 days of the end of such period,
          shall  notify  the  other   Optionees  who  have  previously
          exercised  their options in full,  that such  Optionees have
          the right and  option  ratably  among  them to  acquire  the
          portion of the Optioned  Partnership Interest not previously
          acquired  (the  "Remaining  Portion")  within 10 days of the
          date of the notice  specified in this Section 3.3(d) (ii) on
          the same terms as provided in Section 3.3(d)(i) herein.

               (iii) The amount of the Remaining  Portion not acquired
          by the Optionees  pursuant to Section 3.3(d) (ii) herein may
          be  acquired by the  General  Partner  within 10 days of the
          expiration of the 10 day period  specified in Section 3.3(d)
          (ii)  herein  on the  same  terms as set  forth  in  Section
          3.3(d)(i) herein.
          
               (iv) To the extent  that the  Remaining  Portion is not
          fully  acquired by the  Optionees  and the  General  Partner
          pursuant  to  Section   3.3(d)(ii)  and  (iii)  herein,  the
          Partnership  and/or the General  Partner  may, in their sole
          discretion,  elect to exercise  one or more of the  remedies
          provided in Section 3.3(a),  (b) or (c) with respect to such
          unacquired Remaining Portion.  Alternatively,  the amount of
          the Remaining  Portion not acquired by the Optionees and the
          General  Partner  pursuant to Section  3.3(d)(ii)  and (iii)
          herein  may,  if the  General  Partner  deems it in the best
          interest of the Partnership,  be sold to any other Person on
          terms  not  more   favorable  to  such  purchaser  than  the
          Optionees'  option  (and the  General  Partner may admit any
          such  third  party  purchaser  as a  Limited  Partner).  Any
          consideration received by the Partnership for such amount of
          the Optionor's  interest in the Partnership in excess of the
          Purchase Price therefor shall be retained by the Partnership
          and allocated  among the Partners'  Capital  Accounts in the
          manner provided by Section 3.5(a) (iv) herein.

               (v)  Upon  exercise  of  any  option  hereunder,   such
          Optionee (or the General  Partner,  if it has  exercised its
          right  pursuant to Section  3.3(d)  (iii)  herein)  shall be
          deemed to have assumed that
                                 -20-
<PAGE>

          portion of the Optionor's unpaid Commitment representing the
          Purchase  Price of the  purchased  portion  of the  Optioned
          Partnership   Interest  and  shall  be   obligated   (A)  to
          contribute to the  Partnership the portion of the Commitment
          then due from the Optionor  equal to the  percentage  of the
          Optioned Partnership Interest purchased by such Optionee and
          (B) to pay to the  Partnership  the same  percentage  of any
          further  contributions  which would have  otherwise been due
          from such Optionor. 
 
              (vi) Upon the General Partner's purchase of any portion
          of the  Optioned  Partnership  Interest  pursuant to Section
          3.3(d) (iii) herein, the General Partner shall also become a
          Limited Partner to the extent of such interest.

               (vii) Upon the  purchase of any portion of the Optioned
          Partnership Interest by an Optionee,  the General Partner or
          other Person pursuant to this Section  3.3(d),  the Optionor
          shall  have no  further  rights or  obligations  under  this
          Agreement with respect to such portion.

               (viii) Upon the purchase of any portion of the Optioned
          Partnership   Interest,   for  purposes  of  computing  such
          purchaser's  Partner's  Percentage,  such purchaser shall be
          deemed  to have a  Partner's  Percentage  (or the  Partner's
          Percentage of any Optionee, shall be increased by an amount)
          equal to the percentage  which the purchased  portion of the
          Optioned  Partnership  Interest represents of the defaulting
          Limited  Partner's  entire  Partnership  Interest,  and  the
          Partner's  Percentage  of such  defaulting  Limited  Partner
          shall be reduced by a corresponding amount.

          (e) Each Limited  Partner  hereby grants to the Partnership a security
interest  in  such  Limited  Partner's interest  to  secure  the full and prompt
payment to the Partnership of such Limited Partner's Commitment.


                                 -21-
<PAGE>


          3.4 Capital Accounts. For each fiscal quarter while the Partnership is
              ---------------- 
in effect, there shall be established on the books of the Partnership an Opening
Capital  Account for each Partner in accordance with the definitions and methods
of adjustment  prescribed  herein.  No  adjustment  shall be made to any Opening
Capital  Account until the close of each fiscal quarter except upon (i) the date
of the  admission  of an  Additional  Limited  Partner  pursuant  to Section 3.2
herein,  (ii) the date of an increase  in the  Commitment  of a Limited  Partner
pursuant  to  Section  3.2  herein,  (iii)  the date of the  dissolution  of the
Partnership,  or (iv) the date prior to a distribution  pursuant to Sections 3.7
herein or 4.5 herein (or if a  distribution  of Securities in kind is being made
on the date of an initial public offering of such  Securities,  then on the date
of such distribution). Additionally, as of the close of business on the last day
of each fiscal quarter of the  Partnership,  the Opening Capital Account of each
Partner shall be adjusted in accordance with Section 3.5 herein.

         3.5 Adjustments.
             -----------

             (a)As of the close of business on each of the dates provided for in
Section 3.4 herein,the Opening Capital Account of each Partner shall be adjusted
to arrive at such  Partner's Closing  Capital  Account for such quarter or other
period as follows:

               (i) The  amount of any  Capital  Contributions  paid by
          such Partner during such quarter or period shall be credited
          to  such  Opening   Capital   Account  (other  than  Capital
          Contributions  referred  to in the  definition  of  "Opening
          Capital Account" provided in Section 1.1 herein);  provided,
          however, that:

                    (A) Any such Capital  Contribution shall
          be  edited  to  such  Partner's   Opening  Capital
          Account  on the  later  of the date  such  Capital
          Contribution was due as provided in Section 3.1 or
          3.2  herein  or the  date on  which  such  Capital
          Contribution   was   actually   received   by  the
          Partnership; and

                    (B) The General Partner may elect to pay
          its Capital  Contributions  in a timely  manner by
          amending its promissory note accordingly;

               (ii)  The  amount  of any  distributions  made  to such
          Partner  pursuant to Sections  3.7(a),  3.7(c) or 4.4 herein
          during such quarter or period shall be debited  against such
          Opening Capital Account;

               (iii) Net Short-Term  Investment  Income, if any, shall
          be credited to such Opening Capital Account, allocated among
          the
                            -22-
<PAGE>

          Partners (to be  apportioned  among them in accordance  with
          their respective Partners' Percentages);

               (iv) Net Profits,  if any,  (reduced by the amount,  if
          any, allocated pursuant to Section 3.5(a)(iii) herein) shall
          be credited to such Opening  Capital Account and Net Losses,
          if any, (increased by the amount, if any, allocated pursuant
          to Section 3.5(a)(iii) herein) shall be debited against such
          Opening Capital Account and allocated among the Partners (to
          be   apportioned   among  them  in  accordance   with  their
          respective Partners' Percentages); and
 
              (v) The amount of any reallocation  pursuant to Section
          3.2 or 3.3  herein  shall  be  debited  or  credited  to the
          Partners'  Opening Capital  Accounts in accordance with such
          Sections.

          (b) For  Federal,  state and local income tax  purposes,  each item of
Partnership  income,  credit, gain or loss shall be allocated among the Partners
in accordance with the allocation of such income, credit, gain or loss among the
Partners as provided in Section  3.5(a)  herein for computing  their  respective
Capital Accounts,  except as otherwise  provided in the Code or other applicable
law. The General  Partner  shall be the "tax  matters  partner" (as such term is
used in the Code) and shall have the power to make such  allocation  and to take
any and all action  necessary  under the Code or other  applicable law to effect
such  allocation  and to  maintain  the  substantial  economic  effect  thereof;
provided, however, that the General Partner shall not make any allocations under
this  provision  in a  manner  different  from  that  provided  for  under  this
Agreement.  The  General  Partner  shall  keep  the  Partners  informed  of  all
administrative and judicial  proceedings with respect to Partnership tax returns
or for the  adjustment  of  Partnership  items.  Any  Partner  who enters into a
settlement agreement with respect to Partnership items shall promptly notify the
General Partner of such settlement agreement and its terms as they relate to the
Partnership  items.  In the event of any  admission  of any  Limited  Partner or
transfer by any Limited Partner of its Partnership interest, the General Partner
shall allocate items of income, credit, gain or loss in accordance with the Code
and may make such elections  thereunder as the General Partner  determines to be
necessary or appropriate.

          (c)  Notwithstanding  any  other  provision  of  this  Agreement,  the
interests of the General  Partner in each material item of  Partnership  income,
credit, gain, loss, or deduction shall be equal to at least 1% of each such item
at all times during the existence of the Partnership.

          (d) If the book  value of any  asset  differs  from its  adjusted  tax
basis, the tax allocations of income,  credit, gain, loss and deduction shall be
shared  among the  Partners  in a manner that takes into  account the  variation
between such book value and adjusted  tax basis,  pursuant to Section  704(c) of
the Code or  pursuant to the  principles  thereof.  Allocations  made under this
Section  3.5(d) are made solely for Federal,  state or local income tax purposes
and shall
                            -23-
<PAGE>

not  affect,  or any way be taken  into  account  in  computing,  any
Partner's  Capital  Account  or  share  of  Profits,   Losses,  other  items  or
distributions pursuant to any provision of this Agreement.

         3.6  Valuation.  The value of any Security shall be determined
              ---------
in accordance with a Valuation Policy to be adopted by the General Partner.

         3.7 Distributions.
             -------------

             (a)  Distributions  of  cash  or  property  (including   Investment
Securities),  if any,  shall be made (subject to the  provisions of this Section
3.7) at such times as the General  Partner shall  determine in conformance  with
the following:

               (i) cash that the General  Partner decides to distribute
          that is attributable to Net Short-Term Investment Income will
          be distributed  to Partners (to be apportioned  among them in
          accordance  with their  respective  Partners'  Percentages as
          most  recently  adjusted  (after  giving effect to any amount
          distributed  to  the  General  Partner  with  respect  to tax
          liability  pursuant  to  Section  3.7(c)  herein  and not yet
          deducted   from  the  General   Partner's   Opening   Capital
          Account)); and
 
               (ii) cash that the General Partner decides to distribute
          that is attributable to net operating  income,  consisting of
          operating income  (including fee income,  interest income and
          any other  operating  income  but  excluding  Net  Short-Term
          Investment   Income)  less   Operating   Expenses,   will  be
          distributed  to  Partners  (to be  apportioned  among them in
          accordance  with their  respective  Partners'  Percentages as
          most  recently  adjusted  (after  giving effect to any amount
          distributed  to  the  General  Partner  with  respect  to tax
          liability  pursuant  to  Section  3.7(c)  herein  and not yet
          deducted   from  the  General   Partner's   Opening   Capital
          Account)); and

               (iii)  subject  to  Section  3.7(b)  herein,  Investment
          Securities in kind and the proceeds from the sale or exchange
          of Investment  Securities that the General Partner decides to
          distribute will be distributed to the Partners,  with respect
          to each  such  Investment  Security,  amount of  proceeds  or
          amount of other cash, as follows:
     
                         (A)  a   portion   of   the   Investment
               Securities  being   distributed  in  kind  or  the
               proceeds  from the sale or exchange of  Investment
               Securities,   the  value  of  which   exceeds  the
               Partnership's  actual cost for 
                               

                                     -24-

<PAGE>

              the total amount of such Investment  Securities or
              proceeds being distributed, will be distributed to
              the  Partners  (to  be   apportioned   among  them
              according to their respective Partners'Percentages
              as most recently adjusted); and

                        (B)  the   remaining   portion  of  such
              Investment Securities being distributed in kind or
              the   proceeds   from  the  sale  or  exchange  of
              Investment  Securities  will be distributed to the
              Partners   (to  be   apportioned   among  them  in
              accordance   with   their   respective   Partners'
              Percentages,    after   giving   effect   to   the
              distributions  made  pursuant  to  clause  (i) and
              clause  (iii)(A)  above and not yet deducted  from
              such Partners' Opening Capital Accounts).

                  (b) It is the General  Partner's  intention,  where consistent
with  the  exercise  of  due  care,  prudence  and  its  fiduciary  duty  to the
Partnership,  to prefer to make  distributions  in cash;  however,  the  General
Partner  may,  in  its  sole  discretion,  at  any  time  distribute  Investment
Securities in kind, pro rata with respect to such  distribution of each group of
                    --- ----
each separate Investment Security of each issuer that has a different tax basis,
as part of any distribution  pursuant to this Section 3.7 or Section 4.4 herein.
Investment  Securities  distributed in kind pursuant to this Agreement  shall be
subject to such conditions and  restrictions  as the General Partner  determines
are legally or otherwise required, including such conditions and restrictions as
the General Partner determines are required to assure compliance by the Partners
or the Partnership with the aggregation  rules and volume  limitations under SEC
Rule 144 promulgated pursuant to the Securities Act.

                  (c) Anything contained herein to the contrary notwithstanding,
the General Partner shall at all times be entitled to receive distributions from
the Partnership (after taking into account any other  distributions  received by
the General  Partner in such fiscal  year) in amounts  sufficient  to enable the
General  Partner and the  shareholders  of the General  Partner to discharge any
actual  Federal,  state and local tax  liability  (after taking into account all
actual Federal,  state and local tax savings of the  shareholders of the General
Partner as a result of the  allocations of Partnership  deductions,  credits and
losses to the General  Partner in such fiscal  year)  arising as a result of the
General  Partner's  interest in the  Partnership.  Such  distributions  shall be
debited to such Partner's  Capital  Account,  as provided in Section  3.5(a)(ii)
herein.

                  (d) The  Partnership  shall at all times be  entitled  to make
payments with respect to any Partner in amounts  required to discharge any legal
obligation of the  Partnership to withhold or make payments to any  governmental
authority  with  respect to any Federal,  state and local tax  liability of such
arising as a result of such  Partner's  interest in the  Partnership.  Each such
payment  

                                      -25-
<PAGE>
shall be deemed to be a loan by the Partnership to such Partner and shall not be
deemed to be a distribution for purposes of Section 3.7(a) herein. The amount of
such payments made with respect to any Partner,  plus interest at an annual rate
equal to the highest prime rate reported in The Wall Street Journal from time to
time,  plus 2% on each such amount from the date of each such payment until such
amount is repaid to the  Partnership,  shall be repaid to the Partnership by (i)
deduction  from any  distributions  made to any such  Partner  pursuant  to this
Agreement or (ii) earlier payment of such amounts and interest by the Partner to
the Partnership.

                  (e) The  General  Partner  shall use  commercially  reasonable
efforts to  distribute in  accordance  with Section  3.7(a) herein (i) within 90
days  after  the  receipt  thereof,  the  cash  proceeds  from  any  sale of any
Investment  Securities,  net of any expenses  related to such sale,  revenues or
amounts  required  in the good  faith  judgment  of the  General  Partner  to be
retained  to meet future  expenses or  liabilities  of the  Partnership  and any
amounts  the General  Partner  elects to retain for the  purchase of  Investment
Securities and (ii) within 90 days of the end of each fiscal year, to the extent
not  distributed  pursuant to clause (i) hereof,  a portion of the net  realized
gain (including  items of ordinary income) for the preceding fiscal year that is
equal to the maximum U.S. Federal rate applicable to individuals.

                  (f) Anything herein contained to the contrary notwithstanding,
no  distribution  may be made by the  Partnership if and to the extent that such
distribution would violate Section 17--607 of the Delaware Act.


                                   ARTICLE 4
                                   ---------

                           TERMINATION AND DISSOLUTION
                           ---------------------------

         4.1 Termination.
             ------------

                  (a) The  Partnership  shall be dissolved on the later to occur
of (i) the date of dissolution set forth in Section 1.4 herein or (ii) two years
after all  Outstanding  Leverage  shall have  matured.  The date of  dissolution
provided for in this Section  4.1(a) shall be known as the  "Statutory  Ultimate
Date of Dissolution."

                  (b) The General Partner and the Limited  Partners may elect to
dissolve the Partnership at any time after ten (10) years, provided that (i) all
Outstanding Leverage has been repaid and (ii) all amounts due the SBA, its agent
or trustee  have been paid.  The date after which such a  dissolution  may occur
shall be known as the "Statutory  Permissive Date of Dissolution."  The election
provided  for in this Section  4.1(b) shall be made by the majority  vote of the
Partners with each Partner having such Partner's Voting Interest.

                                      -26-

<PAGE>


                  (c) Following the Statutory  Permissive  Date of  Dissolution,
the General  Partner may decide to dissolve the Partnership at any time. In such
an event,  the General Partner shall give notice to each Limited Partner of such
dissolution not less than 90 days before the effective date of such dissolution.

                  (d) The Partnership  shall not dissolve upon the  dissolution,
bankruptcy,  death or  adjudication  of  incompetency or insanity of any Limited
Partner.

                  (e)  Subject to Section 4.3 herein,  when the  Partnership  is
dissolved,  the property and business of the Partnership  shall be liquidated by
the General  Partner or, in the event of (i) the  unavailability  of the General
Partner or (ii) the withdrawal of the General Partner  pursuant hereto, a Person
designated by a majority vote of the Limited  Partners with each Limited Partner
having such Partner's Voting Interest.

                  (f) Within 60 days after the effective  date of dissolution of
the  Partnership,  whether  by  expiration  of its full term or  otherwise,  the
Partnership's  assets  (except  for  amounts  reserved  pursuant  to Section 4.6
herein),  subject  to  applicable  provisions  of the  Delaware  Act,  shall  be
distributed in the following manner and order:

                       (i) the claims of all creditors of the Partnership
             who  are  not  Partners  shall  be paid  and  discharged  or
             reasonable provision shall be made therefor;

                       (ii)  the   claims   of  all   creditors   of  the
             Partnership  who are  Limited  Partners  shall  be paid  and
             discharged or reasonable provision shall be made therefor;
 
                       (iii)  the   claims  of  all   creditors   of  the
             Partnership who are General  Partners  (including any claims
             for  unpaid  Management  Compensation)  shall  be  paid  and
             discharged or reasonable provision shall be made therefor;

                       (iv) any amounts  contributed by Limited  Partners
              prior to the time such  Capital Contributions  were due and
              no  credited to such  Limited  Partners'  Capital  Accounts
              pursuant to Section  3.5(a)(i)  herein shall be paid to such
              Limited Partners; and
    
                       (v) the  remainder  shall  be  distributed  to the
              Partners  in  accordance   with  the  respective   Partners'
              Percentages.

                  (g)  During the term of the  Partnership  set forth in Section
1.4  herein,  the  General  Partner  shall  not  voluntarily  withdraw  from the
Partnership  except by an assignment  made

                            -27-
<PAGE>

pursuant to the  provisions of Section  6.1(b) herein and shall not  voluntarily
dissolve and commence winding up proceedings with respect to itself.

         4.2  Death,  Disability,  Separation  or  Divorce  of a Natural  Person
              ------------------------------------------------------------------
Limited  Partner.  If a natural  person  who is a Limited  Partner  shall die or
----------------
become  incapacitated,  or  shall  become  separated  or  divorced  and  thereby
transfers  all or any portion of his interest in the  Partnership  pursuant to a
divorce decree or property settlement agreement to such Limited Partner's spouse
or former spouse, then such Limited Partner's Legal  Representative,  spouse, or
former  spouse (as the case may be) shall have the  rights of an  assignee  of a
limited partnership interest under the Delaware Act and shall not be substituted
as a Limited  Partner unless the General Partner  consents to such  substitution
and the party  agrees to be bound by all of the  terms  and  conditions  of this
Agreement.

         4.3  Withdrawal  of  the  General  Partner  and   Continuation  of  the
              ------------------------------------------------------------------
Partnership.
-----------

                  (a) If an event of withdrawal (as defined in the Delaware Act)
of the General  Partner occurs,  the rights of the Limited  Partners to continue
the Partnership shall be as set forth in Section 17-801(3) of the Delaware Act.

                  (b) Upon an event of withdrawal of the General Partner without
continuation  of  the  Partnership  as  provided  above,   the  affairs  of  the
Partnership  shall be wound up in accordance  with the provisions of Section 4.1
herein.

                  (c) Upon the  occurrence of any of the events  specified in 13
C.F.R.  ss.107.1810(d)(1) through (d)(6) or (f)(1) through (f)(3), as determined
by the SBA, the SBA shall have the right,  upon written  notice,  to require the
Partnership  to remove the General  Partner,  and in such an event,  the General
Partner shall withdraw from the Partnership. In such an event, the rights of the
Limited  Partners to continue the  Partnership  shall be as set forth in Section
17-801(3) of the Delaware Act.


                  (d)  Notwithstanding  any other  provisions of this Agreement,
(i) the General  Partner and any successor  general partner that may be approved
by the SBA shall not be removed or replaced by the Limited  Partners without the
prior written  approval of the SBA and (ii) any  transferee  of, or successor in
interest  to,  the  General  Partner  or any  such  successor  general  partner,
including any assignee  approved by the Limited  Partners  under Section  6.1(b)
herein,  shall have only the rights and liabilities of a Limited Partner pending
the SBA's written approval of such transfer or succession.

          4.4 Withdrawal from the  Partnership.  No Limited Partner may withdraw
              --------------------------------
from the Partnership  before its dissolution or termination  pursuant to Section
1.4 or 4.1 herein.



                                      -28-
<PAGE>

         4.5 Amounts Reserved and Pending Claims.
             -----------------------------------

                  (a) If there  are any  assets  that,  in the  judgment  of the
General Partner,  cannot be sold, or be properly distributed in kind in the case
of dissolution  without  sacrificing a significant portion of the value thereof,
then the value of a Partner's interest in each separate group of such assets may
be excluded  from such  Partner's  Capital  Account for  purposes of computing a
Partner's  Distributive  Share. Any Partner's  interest,  including his pro rata
                                                                        --- ----
interest in any gains, losses or distributions, in assets so excluded, shall not
be paid or distributed until such time as the General Partner shall determine.

                  (b) If there is any pending transaction or claim by or against
the  Partnership  as to which the interest or obligation of any Partner  therein
cannot, in the judgment of the General Partner,  be then  ascertained,  then the
value thereof or probable  loss  therefrom may be excluded from the valuation of
assets for purposes of computing any  Partner's  Distributive  Share.  No amount
shall be paid or charged  to any such  Partner  or his Legal  Representative  on
account of any such  transaction  or claim  until its final  settlement  or such
earlier  time as the  General  Partner  shall  determine;  the  Partnership  may
meanwhile retain from other sums due such Partner or his Legal Representative an
amount that the General Partner estimates to be sufficient to cover the share of
such Partner in any probable loss or liability on account of such transaction or
claim.

                  (c)  Upon   determination   by  the   General   Partner   that
circumstances  no longer require the exclusion of assets or retention of sums as
provided in Sections  4.5(a) and (b) herein,  the General  Partner shall, at the
earliest  practicable  time,  pay such  sums or  distribute  such  assets or the
proceeds  realized  from the sale of such assets to each  Partner from whom such
sums or assets have been withheld.

                  (d) Any assets  excluded or retained  pursuant to this Section
4.5 herein at the time of the  dissolution of the  Partnership  shall be held by
the General  Partner after the  dissolution of the  Partnership in trust for the
benefit of the  Partners  on the same terms as provided  in this  Agreement  and
distributed to the Partners pursuant to Section 4.5(c) herein.

                                   ARTICLE 5
                                   ----------
                               REPORTS TO PARTNERS
                               --------------------
          5.1 Books of Account.  Appropriate  records and books of account shall
              ----------------
be kept,  on the  accrual  basis,  at 1700  Montgomery  Street,  Suite 250,  San
Francisco, CA 94111, and each Partner shall have access to all records and books
of account and the right to receive copies thereof; provided,  however, that the
Partnership  shall not be  required to  disclose  to the  Limited  Partners  any
confidential  or  proprietary   information   received  by  the  Partnership  in
connection  with its investment  operations,  unless the Limited Partner signs a
confidentiality agreement acceptable to the General Partner.



                                      -29-
<PAGE>

         5.2 Reports.
             -------

                  (a) The books and  records  of the  Partnership  shall be kept
according  to  generally  accepted  accounting  principles,  except as otherwise
provided  herein,  and shall be audited as of the end of each  fiscal  year by a
firm  of  independent  certified  public  accountants  selected  by the  General
Partner.  Within 120 days of the end of each fiscal year, the Partnership  shall
prepare and mail to each  Partner a report,  setting  forth as of the end of and
for such fiscal year:

                     (i) a balance sheet of the Partnership;

                     (ii) a  statement  of the Net Profits  Losses,  if
                     any,  for  such  year  and  such  Partner's  share
                     thereof,  and 
      
                     (iii) such Partner's Closing Capital Account.


Within 90 days of the end of each fiscal year, the Partnership shall prepare and
mail to each Partner information setting forth as of the end of such fiscal year
the amount of such Partner's share in the  Partnership's  taxable income or loss
for such year, in sufficient  detail to enable it to prepare its Federal,  state
and other tax returns.

                  (b) On a regular  basis,  not less  frequently  than once each
fiscal year,  the  Partnership  shall  prepare and mail to each Partner a report
(subject to any  restrictions  on the disclosure of  confidential or proprietary
information  received by the Partnership)  providing summary  information on all
investments and potential investments considered by the Partnership.

          5.3  Fiscal  Year.  The  fiscal  year of the  Partnership  shall  be a
               ------------
twelve-month year (except for the first partial year) ending on December 31.

 
                                   ARTICLE 6
                                   ---------

                                  MISCELLANEOUS
                                  -------------
         6.1 Assignability.
             -------------

                  (a) No Limited Partner may assign, pledge or otherwise grant a
security  interest in its  interest  in the  Partnership  or in this  Agreement,
except with the written  consent of the General  Partner  (which  consent may be
withheld in the sole discretion of the General Partner).  In addition, a Limited
Partner's  interest may be assigned by  operation of law, but any such  assignee
shall receive only the Limited  Partner's  economic  interest in the Partnership
(to the extent  assigned)  and shall not  become a partner  of the  Partnership,
except as provided in the immediately preceding sentence.


                                      -30-
<PAGE>

                  (b) No  assignment,  pledge or grant  pursuant to this Section
6.1  shall  be  allowed  if the  actions  to be taken in  connection  with  such
assignment,  pledge or grant would (i) cause the  termination  or dissolution of
the Partnership;  (ii) cause it to be classified other than as a partnership for
Federal income tax purposes;  (iii) result in a violation of the Securities Act;
(iv) require the  Partnership  to register as an  investment  company  under the
Investment  Company Act; (v) require the  Partnership or the General  Partner to
register as an investment adviser under the Investment Advisers Act; (vi) result
in a termination  of the  partnership  for Federal or state income tax purposes;
(vii) cause the Partnership to be classified as a "Publicly Traded  Partnership"
within the meaning of Section 7704 of the Code;  (viii) result in a violation of
any law, rule or  regulation  by the Limited  Partner,  the  Partnership  or the
General Partner  effecting the assignment,  pledge or grant; or (ix) result in a
violation  of  any  SBIC  Regulations.  Any  assignee  of  any  interest  in the
Partnership  pursuant to an assignment in compliance with this Section 6.1 shall
become  a  substituted  Partner  hereunder  upon  delivery  and  execution  of a
counterpart hereof, shall have the same rights and  responsibilities  under this
Agreement as his assignor and shall  succeed to the Capital  Account and balance
thereof.  Any act by a Limited  Partner or the General  Partner in  violation of
this Section 6.1 shall be null and void ab initio and shall not be recognized by
the Partnership for any purpose.


          6.2  Authority  to  Act.  Notwithstanding  anything  to  the  contrary
               ------------------
contained herein, the General Partner shall have the sole authority to bind  the
Partnership in carrying on the business of the Partnership, subject to the terms
and conditions of this Agreement.

          6.3 Binding Agreement. This Agreement shall be binding upon the heirs,
              -----------------
successors, assigns and Legal Representatives of the Partners.

          6.4  Interpretation.  Unless  the  context of this  Agreement  clearly
               --------------
requires  otherwise,  (a)  references to the plural  include the  singular,  the
singular  the  plural and the part the whole,  (b) the  reference  to any gender
includes all genders,  (c) "or" has the inclusive meaning frequently  identified
with  the  phrase  "and/or"  and  (d)  "including"  has  the  inclusive  meaning
frequently  identified  with the phrase  "but not  limited  to." The section and
other headings  contained in this Agreement are for reference  purposes only and
shall  not  control  or  affect  the  construction  of  this  Agreement  or  the
interpretation thereof in any respect. Section, subsection, schedule and exhibit
references are to this Agreement  unless  otherwise  specified.  Each accounting
term used herein that is not specifically  defined herein shall have the meaning
given to it under generally accepted accounting principles.



                                      -31-
<PAGE>

          6.5  Notice.  All notices  hereunder  shall be in writing and shall be
               ------
deemed to have been duly given (i) upon receipt, if personally  delivered,  (ii)
one fifth day after mailing,  if mailed by registered or certified mail,  return
receipt requested,  (iii) upon confirmation by facsimile machine report, if sent
by telecopier or (iv) upon receipt,  if sent by overnight  courier service.  All
notices shall be sent to the Partnership at the address or telecopier number, as
the case may be, of the General Partner set forth in Schedule A attached hereto,
or at such other addresses or telecopier  numbers as to which the Partners shall
have been given notice and to other Limited Partners, at such other addresses or
telecopier  numbers as to which the Partnership  shall have been given notice in
accordance with this Section 6.5.

          6.6  Counterparts.  This  Agreement  may be  executed in any number of
               ------------
counterparts   and  by  any  combination  of  the  parties  hereto  in  separate
counterparts,  each of which  counterparts shall be an original and all of which
taken together shall constitute one and the same agreement.


          6.7 Entire Agreement; Amendments. This Agreement sets forth the entire
              -----------------------------
understanding  of all the parties  hereto and except as specified  below in this
Section 6.7,  this  Agreement  shall not be amended  except by an  instrument in
writing  executed by 66-2/3 % in Voting  Interest of the Limited  Partners as of
the effective date of such amendment and the General Partner; provided, however,
                                                              --------- ------- 
that no such  amendment  shall  increase  the  amount of any  Limited  Partner's
Commitment  without  such  Limited  Partner's  consent;  and  provided  further,
                                                              -----------------
however,  that each Limited  Partner  hereby  consents to any amendment that the
-------
General  Partner may deem  desirable in  connection  with:  (i) the admission of
Additional  Limited  Partners in accordance with Section 3.2 herein and (ii) the
assignment of a Limited Partner's interest in accordance with Section 6.1 herein
and the admission of a substituted  Limited Partner pursuant thereto or pursuant
to Section 4.2 herein.  Any amendment of this  Agreement or the  Certificate  of
Limited Partnership  necessary to effect any such admission or assignment may be
effected by the General  Partner  without  obtaining the approval of any Limited
Partners. In addition,  notwithstanding the foregoing provisions of this Section
6.7 or any other  provisions of this  Agreement,  the General Partner shall have
the  authority to amend this  Agreement  without  obtaining  the approval of any
Limited  Partners to the extent that Section l.9(b) herein  provides for certain
amendments without approval by any Limited Partners. This Section 6.7 shall only
be amended by an  instrument in writing  executed by all Limited  Partners as of
the effective date of such amendment and the General Partner.



                                      -32-
<PAGE>

         6.8 Goodwill.  The Partnership's name and goodwill shall belong to the
              --------
General Partner or any successor thereof,  and no Limited Partner shall have any
right or claim individually to the use thereof.

         6.9 Merger and  Consolidation.  Pursuant to an  agreement  of merger or
             -------------------------
consolidation,  the  Partnership  may merge or consolidate  with or into another
business  entity,  with such other business entity being the surviving  business
entity.  Such merger or consolidation  shall not occur,  except with the advance
approval in writing of the SBA and the  General  Partner.  The Limited  Partners
shall not have the right to approve such merger or consolidation.

                                  ARTICLE 7
                                  ---------
                    REPRESENTATIONS, WARRANTIES AND COVENANTS
                               OF LIMITED PARTNERS
                               -------------------

          7.1 Representations  and Warranties.  Each Limited Partner, by signing
              -------------------------------
this  Agreement or a Counterpart  Signature Page hereof,  hereby  represents and
warrants to the Partnership as follows:

                  (a) The Limited  Partner has received and  carefully  read the
         material   documents  and  agreements   relating  to  the  Partnership,
         including the Agreement of Limited  Partnership (the  "Documents"),  is
         familiar with and understands the Documents,  has based its decision to
         invest on the  information  contained in the Documents and has not been
         furnished  with any offering  literature or prospectus  other than such
         information.

                  (b) The Limited Partner is acquiring its interest as a limited
         partner of the Partnership  (the  "Interest")  for its own account,  as
         principal,  for  investment  and  not  with a  view  toward  resale  or
         distribution.

                  (c) The Limited  Partner (i) is an  "accredited  investor"  as
         such term is defined in Rule 501(a) of Regulation D, promulgated  under
         the  Securities  Act, and (ii) has such  knowledge  and  experience  in
         financial  and business  matters that it is capable of  evaluating  the
         merits and risks of the investment in the Interest.

                  (d) The Limited  Partner is able to bear the economic  risk of
         losing its entire investment in the Interest.

                  (e) The Limited  Partner's  overall  commitment to investments
         that are not  readily  marketable  is not  disproportionate  to its net
         worth,  and its  investment in the Interest will not cause such overall
         commitment to become excessive.


                                      -33-
<PAGE>

                  (f)  The  Limited  Partner,  by  reason  of  its  business  or
         financial experience,  has the capacity to protect its own interests in
         connection with the purchase of the Interest.

                  (g) The Limited  Partner  maintains its domicile and principal
         residences  (and  is not a  transient  or  temporary  resident)  at the
         address shown below and has no present intention of becoming a resident
         of  any  other  state  or  jurisdiction;   if  a  corporation,   trust,
         partnership,  joint venture or other organization,  the Limited Partner
         has its domicile,  principal  place of business or principal  office at
         the address shown below and has no present intention of relocating such
         domicile,  principal place of business or principal office to any other
         state or jurisdiction.

                  (h) The Limited Partner understands that it is not entitled to
         cancel,  terminate  or  revoke  this  Agreement  or  any  part  hereof,
         including  the  power  of  attorney  granted  hereby,  and  that  it is
         unconditionally  obligated  to pay  its  Commitment  regardless  of any
         adverse  change in the  Partnership  or the  Partnership's  properties,
         business, financial condition or prospects.

                  (i) The Limited Partner  understands that (i) the Interest has
         not been registered under the Securities Act or any state securities or
         "Blue Sky" laws pursuant to exemptions  therefrom,  and the Partnership
         has not  registered  under the  Investment  Company Act  pursuant to an
         exemption therefrom, (ii) the Partnership has no obligation to register
         the Interest for resale under any Federal or state  securities laws, to
         register the  Partnership  under the Investment  Company Act or to take
         any action  (including  the filing of  reports  or the  publication  of
         information  required  by Rule  144  under  the  Securities  Act or the
         Investment  Company Act) that would make  available any exemption  from
         the registration requirements of such laws, and (iii) it is likely that
         the  Limited  Partner,  therefore,  may be  precluded  from  selling or
         otherwise  transferring  or  disposing  of the  Interest or any portion
         thereof  and  may,  therefore,  have  to  bear  the  economic  risk  of
         investment in the Interest for an indefinite period.

                  (j) The Limited Partner  understands  that no Federal or state
         agency  has  approved  or  disapproved  the  Interest,  passed  upon or
         endorsed  the merits of the  offering  thereof,  or made any finding or
         determination as to the fairness of the Interest for investment.

                  (k)  The  Limited  Partner   acknowledges  that  all  material
         documents,  records and books  pertaining to the  Partnership  have, on
         request,  been made available to it, and that the  Partnership has made
         available  to it, the  opportunity  to ask  questions  of, and  receive
         answers from,  the  Partnership  concerning the terms and conditions of
         the offering and to obtain any  additional  information,  to the extent
         that the  
                                      -34-

<PAGE>

         Partnership  possesses  such  information,  or can acquire it
         without  unreasonable  effort  or  expense,  necessary  to  verify  the
         accuracy  of the  information  given  to it or  otherwise  to  make  an
         informed investment decision.

 
                  (l) The Limited  Partner  understands  that by executing this
         Agreement or a Counterpart  Signature  Page hereof,  it is  irrevocably
         appointing the General  Partner (with power of  substitution)  (and any
         additional  or  successor   general  partners)  to  be  its  agent  and
         attorney-in-fact for certain purposes.

                  (m) The Limited Partner certifies, under penalties of perjury,
         that it has not been notified that it is subject to backup  withholding
         as a result of a failure to report all  interest or  dividends,  or the
         Internal Revenue Service has notified the Limited Partner that it is no
         longer subject to backup withholding.

                  (n) [intentionally deleted]

                  (o) If the Limited  Partner is not a natural  person,  (i) the
         Limited  Partner is duly organized and validly  existing under the laws
         of the  jurisdiction  of its  organization,  and  has  full  power  and
         authority to enter into and perform this Agreement and the transactions
         contemplated  hereby,  (ii) the execution,  delivery and performance by
         the Limited Partner of this Agreement and the transactions contemplated
         hereby have been duly  authorized  by all  requisite  action of it, and
         (iii) the Limited  Partner was not  organized or formed for the purpose
         of investing  in the  Interest.  This  Agreement is a valid and binding
         obligation  of the  Limited  Partner,  enforceable  against the Limited
         Partner in accordance with its terms.

                  (p) The Limited Partner understands that the Interest is being
         offered  and  sold  in  reliance  on  specific   exemptions   from  the
         registration requirements of Federal and state securities laws and that
         the  Partnership,  the General Partner and controlling  persons thereof
         are  relying  upon  the  truth  and  accuracy  of the  representations,
         warranties,  agreements,  acknowledgments  and understandings set forth
         herein,  in order to determine the applicability of such exemptions and
         the  suitability  of the Limited  Partner to acquire the Interest,  and
         represents and warrants that the  information  set forth herein is true
         and correct.
                                      -35-
<PAGE>

           7.2  Restrictions  on  Transfer.The Limited  Partner  will not sell,
               --------------------------
transfer,  assign or  otherwise  dispose of the  Interest or any rights  therein
unless and until the Limited Partner (i) obtains any consent required under this
Agreement,  (ii) complies with all applicable  requirements of Federal and state
securities  laws; and (iii) provides the Partnership  with an opinion of counsel
which is  satisfactory  to the  General  Partner  (both as to the  issuer of the
opinion  and the form and  substance  thereof)  that the  Interest  may be sold,
transferred,  assigned or disposed of without registration of the Interest under
the Securities  Act, and without  violation of any applicable  state  securities
laws  (including any investor  suitability  standards) and the transfer will not
cause the  Partnership to be required to register  under the Investment  Company
Act  or to  lose  the  "safe  harbor"  exemption  from  registration  under  the
Investment  Company Act that relates to the number of  beneficial  owners of the
securities issued by the Partnership.

         7.3 Power of Attorney.
             -----------------
             
                  (a) The Limited  Partner,  by  executing  this  Agreement or a
Counterpart  Signature Page hereof,  hereby constitutes and appoints the General
Partner (and any additional or successor general  partner),  each officer of the
General  Partner and each of their  respective  successors,  its true and lawful
attorney-in-fact with full power of substitution, with such attorney having full
power and authority for the Limited Partner and in its name,  place and stead to
execute,  acknowledge,  deliver,  swear to, certify,  verify,  publish, file and
record at the  appropriate  public offices such documents as may be necessary or
appropriate  to  carry  out the  provisions  of this  Agreement,  including  the
following:

               (i)all  certificates  and other  instruments,  including
          counterparts of this Agreement, the Partnership's Certificate
          of Limited  Partnership,  and amendments to the Partnership's
          Certificate of Limited  Partnership  necessary or appropriate
          to reflect the admission of additional or substitute  Limited
          Partners  or  any  other   change  in  the   Partnership   or
          Partnership  Agreement and fictitious name certificates,  and
          any  amendment  of any  thereof,  and  all  certificates  and
          instruments  that the General  Partner deems  appropriate  to
          qualify or continue the Partnership as a limited partnership,
          or as a  partnership  in  which  the  Limited  Partners  have
          limited   liability  in  the   jurisdictions   in  which  the
          Partnership may conduct business;

               (ii) all  instruments  that the  General  Partner  deems
          appropriate  to  reflect  a  change  or  modification  of the
          Partnership in accordance  with the terms of the Delaware Act
          or this Agreement;

               (iii) all instruments necessary to effect a dissolution,
          termination   and   liquidation   of  the   Partnership   and
          cancellation of

                                      -36-
<PAGE>

          the Certificate  of Limited  Partnership as provided in  the Delaware
          Act or  this Agreement;

               (iv) all  instruments  necessary to perfect the security
          interest in the  Interest  granted  hereunder  by the Limited
          Partner to the  Partnership,  the  General  Partner and their
          respective assignees, including financing statements pursuant
          to the Uniform  Commercial  Code as adopted by the applicable
          jurisdictions; and

               (v) any other  document or  instrument  that the General
          Partner  deems  necessary  or  desirable  to  carry  out  the
          provisions  and  purposes  of this  Agreement,  including  in
          connection  with  an  offer  and  sale of the  Interest  of a
          Limited  Partner  that  is  in  default  of  its  obligations
          hereunder.

                  (b)  The   Limited   Partner   hereby  (i)   authorizes   such
attorney-in-fact  to take any further  action that such  attorney-in-fact  shall
consider  necessary or advisable in connection  with any of the foregoing,  (ii)
gives such  attorney-in-fact full power and authority to do and perform each and
every act or thing whatsoever requisite or advisable to be done in and about the
foregoing as fully and to the same extent as such Limited Partner might or could
do if  personally  present,  and  (iii)  ratifies  and  confirms  all that  such
attorney-in-fact  shall  lawfully  do or  cause  to be  done by  virtue  hereof;
provided,  that in no  event  may the  General  Partner  utilize  this  power of
attorney to cast any vote or consent of a Limited Partner as to the matters with
respect to which the Limited  Partners  are  entitled to vote under the terms of
this Agreement.

                  (c) The Limited  Partner shall execute any and all  additional
forms,  documents or instruments  as may be reasonably  necessary or required by
the General  Partner to evidence  the power of attorney  granted in this Section
7.3.

                  (d) The power of attorney granted in this Section 7.3 shall be
deemed to be coupled with an interest,  shall be  irrevocable  and shall survive
the death, disability,  dissolution,  merger or other termination of the Limited
Partner.

          7.4  Indemnification.  The Limited  Partner  shall  indemnify and hold
               ---------------
harmless the Partnership, the General Partner, its officers and directors, other
Partners and all Persons  deemed to be Affiliates  of any of the foregoing  from
and  against any and all  losses,  costs,  expenses,  damages,  liabilities  and
interest  (including court costs and attorneys' fees) arising out of or due to a
breach by the Limited Partner of any provisions of this Agreement, including the
representations   and   warranties  set  forth  in  this  Article  7.  All  such
representations  shall survive the admission of the Limited Partner as a limited
partner of the Partnership.


                                      -37-
<PAGE>
          7.5 Jurisdiction.  In any suit, action or proceeding arising out of or
              ------------
in connection  with the Limited  Partner's  investment in the  Partnership,  the
Limited  Partner  consents  to the in  personam  jurisdiction  of any  court  of
                                   ------------
competent   jurisdiction  and  proper  venue  within  the  state  in  which  the
Partnership has its principal place of business at the time of any suit,  action
or proceeding.



         IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as
of the date first written


                                                   GENERAL PARTNER:
                                                   ---------------

                                                   FOURTEEN HILL MANAGEMENT, LLC


                                                   By:/s/JOHN WARD ROTTER
                                                   ----------------------------


                                                   LIMITED PARTNERS:
                                                   -----------------

                                                   DIGNITY PARTNERS, INC.


                                                   By:/s/JOHN WARD ROTTER
                                                   ----------------------------


                                                                                
                                                   By:/s/JAMES MCGORRY
                                                   ----------------------------


                                      -38-

<PAGE>







                                                       

                                   SCHEDULE A
                                   ----------

                                    PARTNERS
                                    --------

                                 General Partner
                                 ---------------

Fourteen Hill Management, LLC
917 Tahoe Boulevard, Suite 204
Incline Village, Nevada  89452
(415) 362-1977
(415) 394-9471 (fax)
EIN:  94-3272241

         TOTAL                                       $5,000,000
         CASH INVESTMENT AT CLOSING                  $5,000,000
         AMOUNT OF COMMITMENT                        $5,000,000




                                Limited Partners
                                ----------------
 
Dignity Partners, Inc.
1700 Montgomery Street, Suite 250
San Francisco, California  94111
(415) 394-9467
(415) 394-9471
EIN:  94-3165263

         TOTAL                                       $1,000
         CASH INVESTMENT AT CLOSING                  $1,000
         AMOUNT OF COMMITMENT                        $1,000


James McGorry
103 Wood Sorrell Way
Cary, North Carolina
(919) 383-9883

         TOTAL                                       $100
         CASH INVESTMENT AT CLOSING                  $100
         AMOUNT OF COMMITMENT                        $100


<PAGE>
-10-




                     SBA Annex GDP Version 1.1 March 1, 1996
===============================================================================




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

                                  SBA ANNEX GDP
                                   VERSION 1.1

                    GENERAL AND DEBENTURE RELATED PROVISIONS
         -------------------------------------------------------------







                       SBA ANNEX OF GENERAL PROVISIONS FOR
                       AN AGREEMENT OF LIMITED PARTNERSHIP
                          FOR A SECTION 301(C) LICENSEE
                   WITHOUT LEVERAGE OR ONLY ISSUING DEBENTURES








================================================================================

This document has been drafted by the law firm of  O'Sullivan  Gracy & Karabell,
in  collaboration  with the law firms of Pepper,  Hamilton & Scheetz and, Hoag &
Eliot, the National Association of Small Business Investment Companies,  and the
Office  of  the   General   Counsel  of  the  United   States   Small   Business
Administration.

The Small  Business  Administration  does not endorse or approve law firms.  The
above legend is not an  endorsement  or approval by the Small  Business A of any
law firm identified therein,  and no representation to the contrary by any party
is authorized.



<PAGE>


================================================================================
                                  SBA ANNEX GDP
================================================================================
                                TABLE OF CONTENTS                           Page
                                                                              
ARTICLE I     General Provisions..............................................1
     1.1.     Definitions.....................................................1
     1.2.     Conflict With the SBIC Act......................................2
     1.3.     Conflict With Other Provisions of the Agreement.................2
     1.4.     Effective Date of Incorporated SBIC Act Provisions..............2
     1.5.     Incorporation of this Annex into the Agreement..................3

ARTICLE II    Purpose and Powers..............................................3

ARTICLE III   Management......................................................3
     3.1.     Authority of General Partner....................................3
     3.2.     Valuation of Assets.............................................4

ARTICLE IV    Small Business Investment Company Matters.......................4
     4.1.     Provisions Required by the SBIC Act for Issuers of Debentures...4
     4.2.     SBA as Third Party Beneficiary..................................4
     4.3.     Representations of Private Limited Partners.....................5
     4.4.     Notices With Respect to Representations by Private Limited 
              Partners........................................................6

ARTICLE V     Partner's Commitments...........................................6
     5.1      Conditions to the Commitments of the General Partner and the
              Private Limited Partners........................................6
     5.2.     Failure to Make Required Capital Contributions..................7
     5.3.     Termination of the Obligation to Contribute Capital.............7
     5.4.     Withdrawal by ERISA Regulated Pension Plans.....................8
     5.5.     Withdrawal by Government Plans Complying with State and Local 
              Law.............................................................8
     5.6.     Withdrawal by Government Plans Complying with ERISA.............8
     5.7.     Withdrawal by Tax Exempt Private Limited Partners...............9
     5.8.     Withdrawal by Registered Investment Companies...................9
     5.9.     Notice and Opinion of Counsel...................................9
     5.10.    Cure, Termination of Capital Contributions and Withdrawal.......9
     5.11.    Distributions on Withdrawal.....................................9

ARTICLE VI    Dissolution....................................................10
ARTICLE VII   Audit and Report...............................................10
ARTICLE VIII  Miscellaneous..................................................10
     8.1.     Assignability..................................................10
     8.2.     Amendments.....................................................11

                                                                                



<PAGE>


===============================================================================
                                 SBA ANNEX GDP
==============================================================================
                                    ARTICLE I
                                    ---------
                               General Provisions
                               ==================

         1.1.     Definitions.  For the  purposes of this Annex, the following 
                  ===========
terms  shall have the  following meanings:
                  

         "Act" shall mean the state statute under which the Partnership is 
organized.

         "Agreement"  shall mean the  agreement  of limited  partnership  of the
Partnership  to which this Annex is  attached  and  incorporated  as a provision
thereof. References to the Agreement  shall be deemed to include all  provisions
incorporated in the Agreement by reference.

         "Assets" shall mean and include common and preferred  stock  (including
warrants, rights and other options relating thereto or any combination thereof),
notes, bonds, debentures,  trust receipts and other obligations,  instruments or
evidences of indebtedness,  and other properties or interests  commonly regarded
as securities, and in addition,  interests in real property, whether improved or
unimproved,  and  interests  in  personal  property  of all kinds,  tangible  or
intangible,  choses in action,  and cash,  bank  deposits and  so-called  "money
market instruments".

         "Code"  shall  mean  the  Internal   Revenue  Code  of  1986,  and  the
regulations  and  interpretations  thereof  promulgated by the Internal  Revenue
Service, as amended and supplemented from time to time.

         "Commitments"  shall mean the capital  contributions to the Partnership
which the Partners  have made or are obligated to make to the  Partnership.  The
amounts  and terms of the  Commitments  of the  General  Partner and the Private
Limited Partners shall be as defined in the Agreement.

         "Debentures" shall have the meaning set forth in the SBIC Act.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended,  and the regulations and interpretations  thereof promulgated by the
Department of Labor.

         "General Partner" shall mean the general partner or general partners of
 the Partnership.

         "Institutional Investor" shall have the meaning set forth in the SBIC 
Act.

         "Investment Company Act" shall mean the Investment Company Act of 1940,
as amended,  and the regulations and interpretations  thereof promulgated by the
Securities and Exchange Commission.

         "Leverage" shall have the meaning set forth in the SBIC Act.


                                      -1-


<PAGE>


         "Outstanding  Leverage"  shall  mean the total  amount  of  outstanding
Debentures  and other  securities  issued by the  Partnership  which  qualify as
Leverage  and have not been  repaid for  purposes of and as provided in the SBIC
Act.

         "Partners" shall mean the General Partner and the Private Limited 
Partners.

         "Partnership" shall mean the limited partnership established by the 
Agreement.

         "Private Limited Partners" shall mean any limited partners of the 
Partnership.

         "Qualified Nonprivate Funds" shall have the meaning set forth in the 
SBIC Act.

         "Regulatory Capital" shall have the meaning set forth in the SBIC Act.

         "SBA" shall mean the United States Small Business Administration.

         "SBA Annex PS" shall mean the version of such Annex,  if any,  which is
attached to and incorporated as a part of the Agreement.

         "SBIC Act" shall mean the Small  Business  Investment  Act of 1958,  as
amended, and the rules and regulations  promulgated thereunder by the SBA, as in
effect from time to time.


         1.2.  Conflict With the SBIC Act. The  provisions of this Annex and the
         ---   ==========================
Agreement  shall be  interpreted  to the  fullest  extent  possible  in a manner
consistent with the SBIC Act. In the event of any conflict between any provision
of the  Agreement  and  the  provisions  of the  SBIC  Act  (including,  without
limitation,  any conflict with respect to the rights of the SBA hereunder),  the
provisions of the SBIC Act shall control.

         1.3. Conflict With Other Provisions of the Agreement.(a) The provisions
         ---  ===============================================
of the Agreement shall be interpreted to the fullest extent possible in a manner
consistent  with the  provisions  of this  Annex.  In the event of any  conflict
between any  provision of this Annex and any other  provision of the  Agreement,
the provisions of this Annex shall control.

         (b) If this  Annex  and  SBA  Annex  PS are  both  incorporated  in the
Agreement, in the event of any conflict between the provisions of this Annex and
SBA Annex PS, the provisions of SBA Annex PS shall control.

         1.4. Effective Date or Incorporated SBIC Act Provisions. (a) Subject to
         ---  ==================================================
Section 1.4(b),  any section of this Annex relating to Debentures  issued by the
Partnership  which  incorporates  or  refers  to a  provision  of the  SBIC  Act
including, without limitation, 13 C.F.R. ss.ss. 107.1830 - 107.1850, shall, with
respect  to the  rights of the SBA (or any other  holder of any such  Debenture)
under any such section as to each Debenture, be deemed to refer to such SBIC Act
provision as in effect on the date on which such  Debenture was  purchased  from
the Partnership.

        (b)  Notwithstanding Section 1.4(a),  the  provisions  of 13  C.F.R. ss.
107.1810(i)  incorporated by reference in Section 4.1 shall be deemed to be such
provisions  as in effect on the date of the first  purchase of a Debenture  from
the Partnership  after April 25, 1994. If 13 C.F.R.  ss.  107.1810(i) is amended
subsequent to the date such section is incorporated in the Agreement pursuant

                                      -2-

<PAGE>


to this Section  1.4(b),  then unless the SBA shall  otherwise  give its written
consent,  before the Partnership  may issue  additional  Leverage,  this Section
1.4(b) must be amended to incorporate the version of 13 C.F.R.  ss  107.1810(i)
then in effect.

         (c) This  Section 1.4 applies to the rights of the SBA in its  capacity
as a holder or guarantor of Debentures.  This Section 1.4 shall not be construed
to  apply to the  provisions  of the SBIC Act  which  relate  to the  regulatory
authority  of SBA under the SBIC Act over the  Partnership  as a licensed  small
business  investment  company.  References  to the  provisions  of the  SBIC Act
relating to the SBA's  regulatory  authority  shall mean such  provisions  as in
effect from time to time.

         1.5. Incorporation  of this Annex into the  Agreement. The  Agreement  
         ---  ================================================
shall contain the following provision evidencing the  incorporation of  this 
Annex:

                  "The  provisions  of SBA Annex GDP attached to this  Agreement
                  are  incorporated  in this  Agreement  with the same force and
                  effect as if fully set forth herein."



                                   ARTICLE II
                                   ----------
                               Purpose and Powers
                               ===================

                  The Partnership is being  organized  solely for the purpose of
operating  as a  small  business  investment  company  under  the  SBIC  Act and
conducting the activities  described  under Title III of the SBIC Act, and shall
have the powers, responsibilities,  and be subject to the limitations,  provided
in the SBIC Act.

                                   ARTICLE III
                                   -----------
                                   Management
                                   ==========

         3.1.     Authority  of General  Partner.  (a) The  management  and  
         ---      ==============================
operation of the  Partnership  and the formulation of investment policy shall be
vested exclusively in the General Partner.

         (b)      The General Partner shall, so long as it  remains the General
Partner  of the  Partnership,  comply  with the  requirements  of the SBIC  Act,
including,  without  limitations 13 C.F.R. ss 107.160(a) and (b),* as in effect
from time to time.

         3.2.     Valuation of Assets.  (a) The Partnership shall adopt written 
         ---      ===================
guidelines for  determining  the value  of its  Assets.  Assets  held by the  
Partnership  shall  be  valued  by the  Genera  Partner  in a manner consistent 
with such guidelines and the SBIC Act.


*These regulations describe the number of individuals required and the 
organizational requirements for the General Partner.


                                      -3-

<PAGE>


         (b)      To the extent that the SBIC Act requires any Asset held by the
Partnership  to be valued other than as provided in the  Agreement,  the General
Partner  shall value such Asset in such manner as it determines to be consistent
with the SBIC Act.

         (c)      Assets held by the Partnership  shall be valued not less often
than annually (or more often,  as the SBA may require),  and shall be valued not
less often than semi-annually(or more often, as the SBA may require) at any time
that the Partnership has Outstanding Leverage.*

                                   ARTICLE IV
                                   ----------
                    Small Business Investment Company Matters
                    ==========================================

         4.1.     Provisions Required by the SBIC Act for Issuers or Debentures.
         ---      =============================================================
**  (a) The  provisions of 13 C.F.R. ss 107.1810(i) are hereby incorporated by 
reference in this Annex as if fully set forth herein.

         (b)      The Partnership and the Partners hereby consent to the 
exercise by the SBA of all of the rights of the SBA under 13 C.F.R. ss. 107.1810
(i),  and agree to take all actions  which the SBA may require in accordance
with 13 C.F.R. ss 107.1810(i).

         (c)      This  Section  4.1 shall  be in  effect at any  time that the
Partnership  has  outstanding  Debentures and shall not be in effect at any time
that the Partnership does not have any outstanding Debentures.

         (d)      Nothing in this Section 4.1 shall be construed to limit  the 
ability or  authority  of  the  SBA  to  exercise  its  regulatory  authority  
over  the Partnership as a licensed small business investment company under the
SBIC Act.

         4.2.     SBA as Third Party Beneficiary. The SBA shall be deemed an 
         ---      ==============================
express third party beneficiary of the provisions of the Agreement  (including,
without limitation,this Annex) to the extent of the rights of the SBA thereunder
and under the Act, and the SBA shall be  entitled  to  enforce  such  provisions
(including,  without limitation,  those provisions setting forth the obligations
of each Partner to make capital contributions) for the benefit of the holders of
Debentures and for its benefit, as if the SBA were a party thereto.

         4.3.     Representations or Private Limited  Partners. (a) Each Private
         ---      ============================================
Limited  Partner  represents  to the  Partnership  and  the  SBA  that  it is an
Institutional Investor with respect to the Partnership;  provided, however, that
                                                         --------  --------
in lieu of making  representation, any Private Limited Partners 

*See 13 C.F.R. ss 107.503(d),which requires valuation of assets on a semi-annual
basis if there is outstanding Leverage.

**This Section incorporates regulations relating to the special rights of the 
SBA when the Partnership has outstanding Debentures.

                                   -4-

<PAGE>


may provide the Partnership with a separate written  representation  describing 
its status under the definition of an Institutional Investor.*

         (b) Each Private Limited Partner  represents to the Partnership and the
SBA that its Commitment qualifies as Private Capital, and none of its Commitment
constitutes Qualified Nonprivate Funds whose source is Federal funds;  provided,
                                                                       --------
however,  that in lieu of making this representation any Private Limited Partner
-------
may provide the Partnership with a separate written  representation  stating the
amount of its Commitment  which  qualifies as Private  Capital and the amount of
its Commitment  which  constitutes  Qualified  Nonprivate  Funds whose source is
Federal funds.**

         (c) Each Private Limited Partner  represents to the Partnership and the
SBA that (i) its net worth or (in the case of any employee benefit plan, pension
plan or  government  plan as  defined  under  ERISA) net  assets  available  for
benefits  equals  or  exceeds  $10  million  (exclusive,  in  the  case  of  any
individual,  of the  value of any  equity  in such  individual's  most  valuable
residence),  (ii) its  Commitment to the  Partnership  represents  less than ten
percent (10%) of such Private Limited Partner's net worth or (in the case of any
employee  benefit plan,  pension plan or government plan as defined under ERISA)
net assets available for benefits,  and (iii) if such Private Limited Partner is
a natural  person,  such  person is a permanent  resident of the United  States;
provided,  however,  that in lieu of  making  this  representation  any  Private
--------   -------
Limited   Partner  may  provide  the   Partnership   with  a  separate   written
representation  stating the amount of its net worth  (exclusive,  in the case of
any individual,  of the value of any equity in such  individual's  most valuable
residence)  or net  assets  available  for  benefits  (in the  case of any  such
employee benefit plan,  pension plan or government plan), the percentage of such
net worth or net assets  available  for  benefits  represented  by such  Private
Limited  Partner's  Commitment to the Partnership and the country (if other than
the  United  States)  in which  such  Private  Limited  Partner  is a  permanent
resident.***

         (d) Each Private  Limited  Partner which directly or indirectly owns or
controls a limited  partner's  interest which  constitutes  ten percent (10%) or
more of the  partnership  capital  (as  such  term is  used  in the  SBIC  Act),
represents to the Partnership and the SBA that its Commitment to the Partnership
does not (i) constitute  thirty-three  percent (33%) or more of the  partnership
capital or (ii) exceed five percent (5 %) of such Private Limited  Partner's net
worth or net assets  available for benefits (in the case of any employee benefit
plan,  pension plan or  government  plan);  provided,  however,  that in lieu of
                                            --------   -------
making  this   representation  any  Private  Limited  Partner  may  provide  the
Partnership with a separate written representation stating the percentage of the
partnership  capital which the limited partner's interest directly or indirectly
owned or  controlled  by it  constitutes,  and the  percentage  of its net worth
represented by such limited partner's interest.****

*See the definition of "Institutional Investor" at 13 C.F.R. ss107.50.

**See the definitions of "Regulatory Capital", "Qualified Nonprivate Funds" and
"Leverageable Capital" at 13.C.F.R. ss 107.50.

***See the definations of "Private Capital" and "Regulatory Capital" at 13 
C.F.R. ss 107.50.

****See the definition of "Associate" at 13 C.F.R. ss 107.50.

                                      -5-

<PAGE>



         (e) Each Private Limited Partner  represents to the Partnership and the
SBA that such Private  Limited  Partner has full power and  authority to execute
and deliver the Agreement and to act as a Private  Limited  Partner  thereunder;
the Agreement has been authorized by all necessary  actions by it; the Agreement
has been duly executed and delivered by it; and the Agreement is a legal,  valid
and binding obligation of it, enforceable against it according to its terms.

         4.4  Notices  With  Respect  to   Representations  by  Private  Limited
         ---  ==================================================================
Partners.  (a) In the event that the  representation  made by a Private  Limited
========
Partner in Section 4.3(a), (b), (c) or (d) shall cease to be true (including any
separate  written  representation  previously  provided by such Private  Limited
Partner to the  Partnership  as provided in such  Sections),  then such  Private
Limited Partner shall promptly  provide the Partnership  with a correct separate
written representation as provided in each such Section.

         (b) The  Partnership  shall give the SBA prompt  written  notice of any
notice received from any Private Limited Partner pursuant to Section 4.4(a) with
respect to the representations of such Private Limited Partner.


                                    ARTICLE V
                                    ---------

                              Partners' Commitments
                              =====================

         5.1.  Conditions  to the  Commitments  of the  General  Partner and the
         ---   =================================================================
Private Limited Partners.  (a) Notwithstanding any provision in the Agreement to
========================
the contrary,  the General  Partner and the Private  Limited  Partners  shall be
obligated  to  contribute  any  amount  of  their  respective  Commitments,  not
previously contributed to the Partnership, upon the earlier of (i) completion of
the  liquidation of the  Partnership or (ii) one year from the  commencement  of
such  liquidation if and to the extent that the other Assets of the  Partnership
have  not  been  sufficient  to  permit  at  such  time  the  redemption  of all
Outstanding  Leverage,  the payment of all  amounts due with respect to the 
Outstanding Leverage as provided in the SBIC Act and the payment of all amount
owed by the Partnership to the SBA.

         (b)  Notwithstanding  any  provision  in the  Agreement to the contrary
(except as  expressly  provided in this Section  5.1(b)),  in the event that the
Partnership is subject to restricted operations(as such term is used in the SBIC
Act) and  prior to the liquidation  of the  Partnership  the SBA  requires  the
General  Partner and the Private  Limited  Partners to contribute  any amount of
their respective Commitments not previously contributed to the Partnership,  the
obligation to make such contributions shall not be subject to any conditions set
forth in the Agreement  other than  limitations on the amount of capital which a
Partner is obligated to contribute  (i) within any specified time period or (ii 
prior to any specified date.

         (c)  The  provisions  of  this  Section  5.1  shall  not  apply  to the
Commitment  of any Private  Limited  Partner  whose  obligation  to make capital
contributions  has been  terminated  or who has withdrawn  from the  Partnership
pursuant to a provision of this Article V or any agreement,  release, settlement
or action  under any  provision of the  Agreement  which has been taken with the
consent of the SBA as provided in Section  5.2.  No Private  Limited  Partner or
General  Partner  shall have any right to delay,  reduce or offset  any  capital
contribution  obligation to the Partnership called under this Section 5.1 by 
reason of any  counterclaim  or right to offset by such  Partner or the 
Partnership against SBA.

                                      -6-

<PAGE>
         5.2. Failure  to  Make  Required  Capital   Contributions.   (a)  The
         ---  ====================================================
Partnership shall be entitled to enforce the obligations of each Partner to make
the  contributions  to Capital  specified in the Agreement,  and the Partnership
shall have all rights and  remedies  available at law or equity in the event any
such contribution is not so made.*

         (b) The  Partnership  shall give the SBA prompt  written  notice of any
default by a Private Limited  Partner in making any capital  contribution to the
Partnership  required under the Agreement which continues  beyond any applicable
grace period specified in the Agreement.

         (c) The Partnership shall not enter into any agreement (whether oral or
written),  release or  settlement  with any Partner or take any action under any
provision of the Agreement, which defers, reduces, or terminates the obligations
of any such Partner to make contributions to the capital of the Partnership,  or
commence any legal  proceeding or  arbitration,  which seeks any such  deferral,
reduction or termination of such  obligation,  and no such  agreement,  release,
settlement  or  action  taken  under any  provision  of the  Agreement  shall be
effective with respect to the Partnership or any such Partner, without the prior
written (except as provided in Section 5.2(d)) consent of the SBA.

         (d) If the Partnership has given the SBA thirty (30) days prior written
notice of any proposed legal  proceeding,  arbitration or other action under the
provisions  of the  Agreement  with respect to any default by a Private  Limited
Partner in making any capital contribution to the Partnership required under the
Agreement  and for which SBA consent is required as provided in Section  5.2(c),
and the Partnership  shall not have received written notice from the SBA that it
objects to such  proposed  action  within such thirty (30) day period,  then SBA
shall be deemed to have consented to such proposed Partnership action.

         (e) Section 5.2(c) shall be in effect at any time that the  Partnership
has Outstanding  Leverage and shall not be in effect at any time the Partnership
has no Outstanding Leverage.

         5.3. Termination   or   the   Obligation   to   Contribute   Capital.
         ---  ================================================================
Notwithstanding  any  other  provision  of  the  Agreement  (including,  without
limitation, the provisions of this Annex), any Private Limited Partner may elect
to terminate its  obligation in whole or in part to make a capital  contribution
required  pursuant to the Agreement or upon demand by the General  Partner shall
no longer be entitled to make such capital contribution,  in the event that such
Private  Limited  Partner  or the  General  Partner  shall  obtain an opinion of
counsel to the effect that making such  contribution  would require such Private
Limited  Partner to withdraw  from the  Partnership  pursuant  to  Sections  5.4
through  5.8.  Upon  receipt by the General  Partner of an opinion and notice as
required  under  Section  5.9,  unless cured  within the period  provided  under
Section 5.10,  the Commitment of the Private  Limited  Partner  delivering  such
opinion shall be deemed to be reduced by the amount of such capital contribution
and the Agreement shall be deemed amended to reflect a  corresponding  reduction
of aggregate Commitments to the Partnership.

         5.4.  Withdrawal by ERISA Regulated Pension Plans.  Notwithstanding any
         ---   ===========================================
other provision of the Agreement (including,  without limitation, the provisions
of this Annex),  any Private Limited Partner that is an "employee  benefit plan"
within the meaning of, and subject to the  provisions  of,  ERISA,  may elect to
withdraw from the Partnership in whole or in part, or upon demand by the General
Partner shall withdraw from the  Partnership in whole or in part, if either such
Private Limited

*See also the rights of the SBA as a third party beneficiary under Section 4.2.

                                      -7-

<PAGE>


Partner or the General  Partner shall obtain an opinion of counsel to the effect
that, as a result of ERISA,  (i) the withdrawal of such Private  Limited Partner
from the  Partnership to such extent is required to enable such Private  Limited
Partner to avoid a violation of, or breach of the fiduciary duties of any person
under (other than a breach of the fiduciary duties of any such person based upon
the  investment  strategy  or  performance  of the  Partnership),  ERISA  or any
provision  of the Code related to ERISA or (ii) all or any portion of the assets
of the  Partnership (as opposed to such Private  Limited  Partner's  partnership
interest)  constitute  assets of such  Private  Limited  Partner for purposes of
ERISA and are  subject  to the  provisions  of ERISA to  substantially  the same
extent as if owned directly by such Private Limited Partner.

         5.5. Withdrawal by Government Plans Complying with State and Local Law.
         ---  =================================================================
Notwithstanding  any  other  provision  of  the  Agreement  (including,  without
limitation, the provisions of this Annex), any Private Limited Partner that is a
"government  plan"  within the meaning of ERISA may elect to  withdraw  from the
Partnership  in whole or in part,  or upon demand by the General  Partner  shall
withdraw  from the  Partnership  in whole or in part,  if  either  such  Private
Limited Partner or the General Partner shall obtain an opinion of counsel to the
effect that as a result of state statutes, regulations, case law, administrative
interpretations  or similar authority  applicable to such "government plan", the
withdrawal of such Private  Limited  Partner from the Partnership to such extent
is required to enable such Private Limited Partner or the Partnership to avoid a
violation  (other  than a violation  based upon  investment  performance  of the
Partnership) of such applicable state law.

         5.6.   Withdrawal   by   Government   Plans   Complying   with   ERISA.
         ---    ================================================================
Notwithstanding  any  other  provision  of  the  Agreement  (including,  without
limitation,  the provision of this Annex), any Private Limited Partner that is a
"government  plan"  within the meaning of ERISA may elect to  withdraw  from the
Partnership  in whole or in part,  if such  "government  plan"  shall  obtain an
opinion of counsel to the effect that, as a result of ERISA,  (i) the withdrawal
of such "government  plan" from the Partnership to such extent would be required
if it were an "employee benefit plan"  within the meaning of, and subject to the
provisions of, ERISA, to enable such "government  plan" to avoid a violation of,
or breach of the  fiduciary  duties of any person  under (other than a breach of
the fiduciary  duties of any such person based upon the  investment  strategy or
performance of the  Partnership),  ERISA or any provision of the Code related to
ERISA in the manner which would be required  were it an "employee  benefit plan"
within the meaning of, and subject to the provisions  of, ERISA,  or (ii) all or
any portion of the assets of the  Partnership  would  constitute  assets of such
"government  plan" for the purposes of ERISA, if such "government  plan" were an
"employee benefit plan" within the meaning of, and subject to the provisions of,
ERISA and would be subject to the provisions of ERISA to substantially  the same
extent as if owned directly by such "government plan."

         5.7. Withdrawal by Tax Exempt Private Limited Partners. Notwithstanding
         ---  =================================================
any  other  provision  of the  Agreement  (including,  without  limitation,  the
provision  of this  Annex),  any  Private  Limited  Partner  that is exempt from
taxation  under  Section  501(a) or  501(c)(3) of the Code may elect to withdraw
from the  Partnership in whole or in part, if such Private Limited Partner shall
obtain an  opinion  of  counsel  to the  effect  that as a result of  applicable
statutes,  regulations,  case law,  administrative  interpretations  or  similar
authority,  the withdrawal of such Private  Limited Partner from the Partnership
to such extent is required to enable such tax exempt Private  Limited Partner to
avoid loss of its tax exempt  status  under  Section  501(a) or 501(c)(3) of the
Code.

         5.8. Withdrawal by Registered Investment Companies. Notwithstanding any
         ---  =============================================
other provision of the Agreement (including,  without limitation,  the provision
of this Annex),  any Private  

                                      -8-

<PAGE>

Limited Partner that is an "investment  company"  subject to registration  under
the Investment  Company Act, may elect to withdraw from the Partnership in Whole
or in part,  or upon  demand by the  General  Partner  shall  withdraw  from the
Partnership in whole or in part, if either such Private  Limited  Partner or the
General  Partner  shall  obtain an opinion of counsel to the effect  that,  as a
result of the  Investment  Company Act, the  withdrawal of such Private  Limited
Partner from the  Partnership  to such extent is required to enable such Private
Limited Partner or the Partnership to avoid a violation of applicable provisions
of the Investment  Company Act or the requirement that the Partnership  register
as an investment company under the Investment Company Act.

         5.9. Notice and Opinion of Counsel.  In the event of the issuance of an
         ---  =============================
opinion of counsel described in Sections 5.3 through 5.8, a copy of such opinion
shall be sent by the  General  Partner  to the SBA,  together  with the  written
notice of the  election of the  Private  Limited  Partner to which such  opinion
relates to terminate its obligation to make further capital  contributions  with
respect to its Commitment or withdraw from the  Partnership in whole or in part,
or the written demand of the General Partner for such termination or withdrawal,
as the case may be. Any counsel  rendering  an opinion  pursuant to Sections 5.3
through 5.8 shall be subject to the approval of the General Partner and the SBA,
and any such opinion shall be  satisfactory in form and substance to the General
Partner and the SBA.

         5.10. Cure, Termination of Capital Contributions and Withdrawal. Unless
         ----  =========================================================
within  ninety  (90) days after the giving of  written  notice and  satisfactory
opinion of counsel,  as provided in Section 5.9, the Private  Limited Partner or
the  Partnership  eliminates the necessity for  termination of the obligation of
such Private Limited Partner to make further  capital  contributions  or for the
withdrawal of such Private  Limited  Partner from the Partnership in whole or in
part to the  reasonable  satisfaction  of such Private  Limited  Partner and the
General   Partner,   such  Private  Limited  Partner  shall  withdraw  from  the
Partnership in whole or in part to the extent required,  effective as of the end
of such ninety (90) day period. Subject to the provisions of Section 5.2, in its
discretion the General  Partner may waive all or any part of the ninety (90) day
cure period and cause such termination of capital contributions or withdrawal to
be effective at an earlier date as set forth in such waiver.

         5.11.  Distributions  on Withdrawal.  Upon  withdrawal  pursuant to any
         ----   ============================
provision of the Agreement,  a Private  Limited Partner shall have the rights to
distributions  set forth in the Act with respect to  distributions to be made to
limited partners upon withdrawal from a limited partnership;  provided, however,
                                                              --------  -------
that any  distribution by the Partnership to a Private Limited Partner  pursuant
to its withdrawal pursuant to any provision of the Agreement shall be subject to
the provisions of the SBIC Act and the prior written consent of the SBA.

                                      -9-

<PAGE>


                                   ARTICLE VI
                                   ----------
                                   Dissolution
                                   ===========

         The  Partnership  shall be  dissolved  on the later to occur of (i) the
date of  dissolution  set forth in the  Agreement  or (ii) two  years  after all
Outstanding  Leverage  shall have  matured.  The  Agreement may provide that the
General  Partner  and the Private  Limited  Partners  may elect to dissolve  the
Partnership at any time after ten (10) years; provided, that (i) all Outstanding
                                              --------
Leverage has been repaid and (ii) all amounts due SBA, its agent or trustee have
been paid.*

                                   ARTICLE VII
                                   -----------
                                Audit and Report
                                ================

         The  Partnership  shall maintain  books and records in accordance  with
Treasury  Regulation  ss 1.704 - 1(b), the provisions of the SBIC Act regarding
financial  accounts and reporting and generally accepted  accounting  principles
(except as otherwise  provided  herein),  and the  financial  statements  of the
Partnership  shall be audited and certified as of the end of each fiscal year by
a firm of independent certified public accountants selected by the Partnership.

                                  ARTICLE VIII
                                  ------------
                                  Miscellaneous
                                  =============

          8.1. Assignability.  (a) The General Partner may not assign, pledge or
          ---- =============
otherwise  grant a security  interest in its interest in the  Partnership  or in
this Agreement, except with the prior written consent of the SBA.

         (b) No transfer of any interest in the Partnership  shall be allowed if
the actions to be taken in connection with such transfer would (i) result in any
violation of the SBIC Act;** or (ii) result in a violation  of any law,  rule or
regulation by the Partnership.

          8.2.  Amendments.  Any amendment of the  Agreement  which would affect
          ---   ==========
this Annex or the rights,  obligations  or  liabilities of the SBA shall require
the prior written consent of the SBA.

*See 13 C.F.R. ss107.160(c)(1) which specifies the minimum duration for an SBIC
in limited partnership form.

**See 13 C.F.R. ss 107.400 which requires SBA approval for any transfer which 
would result in any person owning more than specified percentage of any class 
of partnership capital.

                                      -10-

<PAGE>


                     SBA Annex OP, Version 1.1 March 1, 1996

================================================================================




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

                                  SBA ANNEX OP
                                   VERSION 1.1

                          ANNEX OF OPTIONAL PROVISIONS

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





                      SBA ANNEX OF OPTIONAL PROVISIONS FOR
                       AN AGREEMENT OF LIMITED PARTNERSHIP
                          FOR A SECTION 301(C) LICENSEE








================================================================================

This document has been drafted by the law firm of  O'Sullivan  Gracy & Karabell,
in  collaboration  with the law firms of Pepper,  Hamilton & Scheetz  and Foley,
Hoag & Eliot, the National  Association of Small Business Investment  Companies,
and the  Office of the  General  Counsel  of the United  States  Small  Business
Administration.

The Small  Business  Administration  does not endorse or approve law firms.  The
above legend is not an  endorsement  or approval by the Small  Business A of any
law firm identified therein,  and no representation to the contrary by any party
is authorized.



<PAGE>


================================================================================
                                       -i-
================================================================================



                                  SBA ANNEX OP

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I     General Provisions..............................................1
     1.1.     Definitions.....................................................1
     1.2.     Conflict with SBIC Act..........................................3
     1.3.     Conflict With Other Provisions of the Agreement.................3
     1.4.     Deletion of Certain Provisions..................................3
     1.5.     Incorporation of this Annex into the Agreement..................3

ARTICLE II    Remedies for Failure of a Private Limited Partner to Make a 
              Contribution to Capital.........................................4
     2.1.     Interest on Overdue Contributions...............................4
     2.2.     Termination of Right to Make Further Capital Contributions......4
     2.3.     Forfeiture of Interest in the Partnership.......................4
     2.4.     Withholding and Application of Distributions....................5
     2.5.     Required Sale of Interest in the Partnership....................5

ARTICLE III   Small Business Investment Company Matters.......................7

ARTICLE IV    Indemnification.................................................7
     4.1.     Standard of Care................................................7
     4.2.     Indemnification.................................................8

ARTICLE V     Amendments......................................................9




                                                   

<PAGE>


                                  SBA ANNEX OP
                                  ------------
                                    ARTICLE I
                                    ---------
                               General Provisions
                               ===================

          1.1  Definitions.  For the purposes of this Annex, the following terms
          ---  ============
shall have the following meanings:

         "Affiliate" shall have the meaning set forth in the SBIC Act.

         "Agreement"  shall mean the  agreement  of limited  partnership  of the
Partnership  to which this Annex is  attached  and  incorporated  as a provision
thereof.  References to the Agreement  shall be deemed to include all provisions
incorporated in the Agreement by reference.

         "Assets" shall mean and include common and preferred  stock  (including
warrants,  rights and other options relating thereto or any combination thereof,
notes, bonds, debentures,  trust receipts and other obligations,  instruments or
evidences of indebtedness,  and other properties or interests  commonly regarded
as securities, and in addition,  interests in real property, whether improved or
unimproved,  and  interests  in  personal  property  of all kinds,  tangible  or
intangible,  choses in action,  and cash,  bank  deposits and  so-called  "money
market instruments".

         "Assets Under  Management"  shall mean, as of any specified  date,  the
value of all Assets owned by the  Partnership  (such value to be  determined  as
provided  in the  Agreement),  including  contributions  requested  and due from
Partners and uncalled  amounts of Commitments less the amount of any liabilities
                                              ----
of the Partnership  determined in accordance with generally accepted  accounting
principles.

         "Associate" shall have the meaning set forth in the SBIC Act.

         "Capital  Account" shall mean the account of each Partner that reflects
its interest in the  Partnership  determined in accordance with Article V of SBA
Annex  PS (if  such  Annex  is  incorporated  as  part of the  Agreement)  or as
otherwise set forth in the Agreement.

         "Commitments"  shall mean the capital  contributions to the Partnership
which the Preferred  Limited Partners have made and the other Partners have made
or are obligated to make to the Partnership. The terms of the Commitments of the
Preferred  Limited  Partners shall be as set forth in SBA Annex PS (if SBA Annex
PS is  incorporated  in the Agreement,  or if not then as otherwise set forth in
the  Agreement);  provided,  that any Commitment by a Preferred  Limited Partner
                  ---------------
shall  include  only the amount such  Preferred  Limited  Partner  has  actually
contributed  to the  Partnership,  and shall not  include  any amount  under any
agreement  by any such  Partner or SBA to provide  Leverage  to the  Partnership
which has not been contributed to the Partnership.  The amounts and terms of the
Commitments of the General Partner and the Private Limited  Partners shall be as
defined in the Agreement.

         "Control Person" shall have the meaning set forth in the SBIC Act.

                                      -1-


<PAGE>


          "General  Partner" shall mean the general partner or general  partners
of the Partnership.

          "Investment  Advisor/Manager"  shall have the meaning set forth in the
SBIC Act.

          "Leverage" shall have the meaning set forth in the SBIC Act.

          "Optionor" shall have the meaning set forth in Section 2.5.

          "Optionees" shall have the meaning set forth in Section 2.5.

          "Optioned  Partnership  Interest"  shall have the meaning set forth in
Section 2.5.

          "Option Price" shall have the meaning set forth in Section 2.5.

          "Participating Security" shall have the meaning set forth in the SBIC
Act.

          "Partnership"  shall mean the limited  partnership  established by the
Agreement.

          "Partners" shall mean the General Partner,the Private Limited Partners
and the Preferred Limited Partners, if any, of the Partnership.

          "Preferred  Limited  Partner" shall mean the SBA, in its capacity as a
Preferred  Limited  Partner,  or any other person  holding one or more Preferred
Limited Partnership Interests in the Partnership.

         "Preferred Limited Partnership Interest" shall mean a preferred limited
partnership  interest in the  Partnership  which  qualifies  as a  Participating
Security.

          "Private  Limited  Partners"  shall mean any  limited  partners of the
Partnership, other than any Preferred Limited Partner.

          "Remaining Portion" shall have the meaning set forth in Section 2.5.

          "SBA" shall mean the United States Small Business Administration.

          "SBA Annex GDP" shall mean the version of such Annex, if any, which is
attached to and incorporated as a part of the Agreement.

          "SBA Annex PS" shall mean the version of such Annex, if any,  which is
attached to and incorporated as a part of the Agreement.

         "SBA Annex OP" shall mean the  version of this Annex  which is attached
to and incorporated as a part of the Agreement.

          "SBIC Act" shall mean the Small  Business  Investment  Act of 1958, as
amended, and the rules and regulations  promulgated thereunder by the SBA, as in
effect from time to time

                                      -2-
<PAGE>



         1.2.  Conflict  with SBIC Act.  The  provisions  of this  Annex and the
         ---   =======================
Agreement  shall be  interpreted  to the  fullest  extent  possible  in a manner
consistent with the SBIC Act. In the event of any conflict between any provision
of the Agreement or this Annex and the  provisions  of the SBIC Act  (including,
without  limitation,  any conflict  with respect to the rights of the SBA or the
respective Partners hereunder), the provisions of the SBIC Act shall control.

         1.3. Conflict With Other Provisions or the Agreement. The provisions of
         ---  ===============================================
the Agreement  shall be interpreted  to the fullest extent  possible in a manner
consistent  with the  provisions  of this  Annex.  In the event of any  conflict
between any  provision of this Annex and any other  provision  of the  Agreement
(other than the  provisions of SBA Annex PS and SBA Annex GDP, if either of such
Annexes is incorporated as part of the Agreement),  the provisions of this Annex
shall control.  In the event of any conflict between any provision of this Annex
and any provision of SBA Annex PS or SBA Annex GDP, the  provisions of SBA Annex
PS or SBA Annex GDP (if such  Annex is  incorporated  as part of the  Agreement)
shall control.

         1.4. Deletion of Certain Provisions.  (a) The specific sections of this
         ---  ============================== 
Annex  identified  in clauses (c) and (d) of this  Section may be deleted at the
option of the  Partnership  from the form of the Annex that is  attached  to and
incorporated  in the  Agreement.  Blank  spaces for periods,  interest  rates or
percentages  appearing  in any  section  of this  Annex  may be filled in by the
Partnership  or left  blank.  In the case of any such  blank  space in a section
which is not filled in by the  Partnership,  the space must be lined through and
the  period,  interest  rate or  percentage  which  appears  in bold  face  type
immediately before such blank space will apply.  References in this Annex to the
provisions or sections of this Annex shall refer only to those  provisions which
have not been so  deleted,  giving  effect  to any  periods,  interest  rates or
percentages filled in by the Partnership in such sections.  The footnote numbers
which appear in certain  sections and the notes which appear in certain sections
and the notes which appear at the end of this Annex are for convenience only and
shall neither be considered part of this Annex nor be given any legal effect.

          (b) The  deletion of any section of this Annex shall be  indicated  by
striking  through that Section (note that subsections of an included section may
not be deleted).

          (c) In  Article  II,  the  Partnership  may elect to delete any of the
Sections.

          (d) In  Article IV,  the  Partnership  may elect to delete  either all
sections  or Section  4.2; if Section  4.2 is  included,  Section 4.1 may not be
deleted.

          1.5.  Incorporation  of this Annex Into the  Agreement. The Agreement
          ---   ================================================
shall contain the  following  provision  evidencing  the  incorporation  of this
Annex:

                  "The provisions of SBA Annex OP attached to this Agreement are
                  incorporated  in this Agreement with the same force and effect
                  as if fully set forth herein."


                                      -3-



<PAGE>


                                   ARTICLE II
                                   ----------

                Remedies for Failure of a Private Limited Partner
                -------------------------------------------------
                        to make a Contribution to Capital
                        =================================
          2.1. Interest on Overdue  Contribution.  In the event that any Private
          ---  =================================
Limited Partner fails to make a contribution required under the Agreement within
thirty (30) days (unless  another period is specified  here:              ( )
                                                            --------------  
days) [1] after the date such contribution is due, then the General Partner may,
      ---
in its sole discretion, elect to charge such Private Limited Partner interest at
an annual rate equal to ten percent  (10%)  (unless  another  rate is  specified
here:             ) [2] on the amount due from the date such  amount  became due
     -------------  --- 
until the  earlier of (i) the date on which  such  payment  is  received  by the
Partnership or (ii) the date of any notice given to such Private Limited Partner
by the General Partner  pursuant to Sections 2.3, 2.4 or 2.5. Any  distributions
to which such Private Limited Partner is entitled shall be reduced by the amount
of such  interest,  and  such  interest  shall be  deemed  to be  income  to the
Partnership.  The amount of interest  charged as  provided  in this  Section 2.1
shall not exceed the amount of such Private Limited  Partner's  Capital Account.
[3]
---
         2.2. Termination of Right to Make Further Capital Contributions. In the
         ---  =========================================================== 
event that any Private Limited Partner fails to make contribution required under
the  Agreement  within  thirty (30) (unless  another  period is specified  here:
          ( )) days after the date such contribution is due, the General Partner
----------
may,  in its sole  discretion  (and with the consent of SBA given as provided in
Section  7.2 of SBA Annex PS or Section 5.2 of SBA Annex GDP, if SBA Annex PS or
SBA GDP is incorporated in the Agreement),  elect to declare,  by notice to such
Private Limited Partner, that:

                  (a) Such Private Limited Partner's  Commitment shall be deemed
       to be reduced to the amount of any  contributions  of capital timely made
       pursuant to the Agreement; and

                  (b) Upon such notice (i) such Private  Limited  Partner  shall
       have no right to make any capital contribution  thereafter (including the
       contribution  as to  which  the  default  occurred  and any  contribution
       otherwise  required  to be made  thereafter  pursuant to the terms of the
       Agreement) and (ii) to this Agreement  shall be deemed amended to reflect
       such reduced Commitment.

          2.3. Forfeiture of Interest in the Partnership.  In the event that any
          ---  =========================================
Private  Limited  Partner  fails  to  make a  contribution  required  under  the
Agreement,   within  thirty (30) (unless  another  period is  specified   here: 
          ( )) days after notice by the General  Partner to such Private Limited
----------
Partner  that  it  has  failed  to  make  its  contribution  on  the  date  such
contribution  was due, the General  Partner may in its sole discretion (and with
the  consent of SBA given as  provided in Section 7.2 of SBA Annex PS or Section
5.2 of SBA Annex GDP,  if SBA Annex PS or SBA Annex GDP is  incorporated  in the
Agreement)  declare,  by notice of forfeiture to such Private  Limited  Partner,
that one hundred  percent (100%) (unless  another  percentage is specified here:
              percent (_ %)) of the interest of such Private Limited Partner in
-------------
the  Partnership  (including  amounts  in its  Capital  Account  as  well as any
interest in future  profits,  losses or  distributions  of the  Partnership)  is
forfeited, effective as of the date of such Private Limited Partner's failure to
make such required  contribution,  in which event, as of the date of such notice
of forfeiture (i) the Private  Limited  Partner shall cease to be a Partner with
respect to such  forfeited  interest;  provided,  however,  that such  forfeited
                                       --------   ------- 
Private Limited Partner shall cease to have any liability for the payment of the
forfeited  percentage  of any capital  contributions  due at such time or in the
future and (ii) the  forfeited  percentage  of such  Private  Limited  Partner's
Capital  Account  shall be held by the  Partnership  and  reallocated  among the
Capital Accounts of the Partners one

                                      -4-
<PAGE>


percent  (1%)  (unless  another  percentage  is  specified  here:
                                                                 ---------------
percent ( %)) to the  General  Partner and  ninety-nine  percent  (99%)  (unless
another  percentage  is  specified  here:               percent  (_  %)) to the
                                         --------------
Private Limited Partners (other than such forfeited  Private Limited Partner) to
be  apportioned  among such Private  Limited  Partners in accordance  with their
respective aggregate capital contributions. [4]
                                            ---

         2.4.  Withholding  and  Application  of  Distributions.  No part of any
         ---   ================================================
distribution  shall be paid to any Private  Limited  Partner from which there is
then due and owing to the  Partnership,  at the time of such  distribution,  any
amount  required to be paid to the  Partnership.  At the election of the General
Partner,  which it may make in its sole  discretion,  the Partnership may either
(i) apply all or part of any such withheld  distribution  in satisfaction of the
amount then due to the  Partnership  from such Private  Limited  Partner or (ii)
withhold  such  distribution  until  all  amounts  then  due  are  paid  to  the
Partnership by such Private Limited Partner.  Upon payment of all amounts due to
the  Partnership (by application of withheld  distributions  or otherwise),  the
General  Partner shall  distribute  any  unapplied  balance of any such withheld
distribution  to such Private Limited  Partner.  No interest shall be payable on
the amount of any  distribution  withheld  by the  Partnership  pursuant to this
Section.
          2.5.  Required Sale of Interest in the Partnership.  In the event that
          ---   ============================================
any Private  Limited  Partner fails to make a  contribution  required  under the
Agreement   within   thirty   (30)   (unless   another   period   is   specified
                     ------   ----
here:              ( )) days after notice by the General Partner to such Private
     -------------
Limited  Partner  that it has failed to make its  contribution  on the date such
contribution  is due,  unless the General Partner has acted pursuant to Sections
2.2 or 2.3 (if either of such Sections are included in the version of this Annex
incorporated in the Agreement) the General Partner may, in its sole  discretion,
(and with the consent of SBA given as provided in Section 7.2 of SBA Annex PS or
Section 5.2 of SBA Annex GDP,  if SBA Annex PS or SBA Annex GDP is  incorporated
in the Agreement)  elect to declare such Private Limited Partner in default.  If
the General Partner so elects to declare such Private Limited Partner in default
(such Private Limited Partner being hereinafter  referred to as the "Optionor"),
then the other  Private  Limited  Partners of the  Partnership  which are not in
default  (the  "Optionees")  and the  General  Partner  shall have the right and
option to acquire one hundred  percent  (100%)  (unless  another  percentage  is
specified  here:               percent ( _%)) of the Partnership interest, which
                --------------
shall include one hundred percent (100%) (unless another percentage is specified
              --------------------------
here:               percent  (  %))  of  the  Capital  Account  (the  "Optioned
     --------------
Partnership Interest") [5] of the Optionor on the following terms:
                       ---

                           (i) The  General  Partner  shall  give  the  Partners
       notice promptly after declaration of any such default.  Such notice shall
       advise each Optionee of the portion of the Optioned  Partnership Interest
       available  to it and the price  therefor.  The portion  available to each
       Optionee shall be that portion of the Optioned  Partnership Interest that
       bears  the  same  ratio  to the  Optioned  Partnership  Interest  as each
       Optionee's  capital   contributions  to  the  Partnership  bears  to  the
       aggregate  capital  contributions  to the  Partnership,  exclusive of the
       capital  contributions to the Partnership of the Optionor.  The aggregate
       price for the Optioned  Partnership  Interest  shall be the assumption of
       the unpaid Commitment  obligation (both that portion then due and amounts
       due in the future) of the Optionor (the "Option  Price").  [5] The Option
                                                                  ---  
       Price for each Optionee shall be prorated according to the portion of the
       Optioned Partnership Interest purchased by each such Optionee so that the
       percentage of the unpaid Commitment  assumed by each Optionee is the same
       as the percentage of the Optioned  Partnership Interest purchased by such
       Optionee.  The option  granted  hereunder  shall be  exercisable  by each
       Optionee in whole only at any time within thirty (30) days of the date of
       the notice  from the  General  Partner  by the  delivery  to the  General
       
                                      -5-

<PAGE>


       Partner  of (A) a notice  of  exercise  of  option,  and (B) the  capital
       contribution due in accordance with clause 2.5(v)(A). The General Partner
       shall  forward the above  notices of  exercise of option  received to the
       Optionor.

                           (ii)  Should any  Optionee  not  exercise  its option
       within the period provided in clause (i), the General Partner, within ten
       (10) (unless  another period is specified  here:             ( )) days of
                                                         ----------
       the end of such  period,  shall  notify  the  other  Optionees  who  have
       previously  exercised  their options in full,  which Optionees shall have
       the right and option  ratably  among them to acquire  the  portion of the
       Optioned  Partnership  Interest not so acquired (the "Remaining Portion")
       within ten (10) (unless another period is specified here: 
                                                                 ---------------
       ( )) days of the date of the notice  specified in this Section 2.5(ii) on
       the same terms as provided in clause (i).

                           (iii)  The  amount  of  the  Remaining   Portion  not
       acquired by the Optionees  pursuant to clause (ii) may be acquired by the
       General Partner within ten (10) (unless another period is specified here:
                   ( )) days of the expiration of the period specified in clause
       ------------
       (ii) on the same terms as set forth in clause (i).

                           (iv) The amount of the Remaining Portion not acquired
       by the Optionees and the General Partner pursuant to clause (iii) may, if
       the General Partner deems it in the best interest of the Partnership,  be
       sold  to any  other  corporations,  partnerships,  individuals  or  other
       entities  on  terms  not  more  favorable  to  such  purchaser  than  the
       Optionees option (and the General Partner may admit any such third party
       purchaser as a Private Limited  Partner,  subject to the approval of SBA,
       if  required  under the SBIC  Act).  Any  consideration  received  by the
       Partnership for such amount of the Optionor's interest in the Partnership
       in  excess  of  the  Option  Price  therefor  shall  be  retained  by the
       Partnership  and  allocated  among  the  Partners  Capital  Accounts  in
       proportion to the respective Partners capital contributions.

                           (v)  Upon  exercise  of any  option  hereunder,  such
       Optionee (or the General Partner, if it has exercised its rights pursuant
       to clause  (iii))  shall be deemed to have  assumed  that  portion of the
       Optionor's  unpaid  Commitment  representing  the  Option  Price  of  the
       purchased  portion  of the  Optioned  Partnership  Interest  and shall be
       obligated (A) to contribute to the Partnership the portion of the capital
       contribution  then due from the Optionor  equal to the  percentage of the
       Optioned  Partnership  Interest purchased by such Optionee and (B) to pay
       the  same  percentage  of any  further  contributions  which  would  have
       otherwise been due from such Optionor.

                           (vi) Upon the purchase by the General  Partner of any
       portion of the Optioned  Partnership Interest in the Partnership pursuant
       to clause (iii), the General Partners shall also become a Private Limited
       Partner to the extent of such interest.

                           (vii)  Upon  the  purchase  of  any  portion  of  any
       Optioned  Partnership  Interest by an  Optionee,  the General  Partner or
       other person  pursuant to this  Section  2.5, the Optionor  shall have no
       further rights or  obligations  under this Agreement with respect to such
       portion.

                           (viii)  Upon  the  purchase  of  any  portion  of the
       Optioned Partnership Interest, for purposes of computing such purchaser's
       aggregate capital  contributions,  such purchaser shall be deemed to have
       aggregate capital  contributions (or the aggregate capital  contributions
       of any


                                      -6-
<PAGE>


       Optionee, shall be increased by an amount) equal to the percentage of the
       defaulting Private Limited Partner's aggregate capital contribution which
       the purchased portion of the Optioned  Partnership Interest represents of
       the defaulting Private Limited Partner's entire Partnership interest, and
       the aggregate  capital  contributions of such defaulting  Private Limited
       Partner shall be reduced by a corresponding amount.


                                   ARTICLE III
                                   -----------
  
                    Small Business Investment Company Matters
                    =========================================
             
         The SBA shall be deemed  an  express  third  party  beneficiary  of the
provisions of the Agreement (including,  without limitation,  this Annex) to the
extent of the rights of the SBA  thereunder and under the Act, and the SBA shall
be entitled to enforce such  provisions  for its  benefit,  as if the SBA were a
party thereto.

                                   ARTICLE IV
                                   ----------
                                 Indemnification
                                 ================

         4.1. Standard of Care. (a) Neither the General Partner,  any Investment
         ---  ================
Advisor/Manager nor any partner, shareholder,  director, officer or employee nor
any Affiliate of any thereof shall be liable to the  Partnership  or any Partner
for any action taken or omitted to be taken by it or any other  Partner or other
person in good faith and in a manner  they  reasonably  believed to be in or not
opposed to the best  interests  of the  Partnership,  and,  with  respect to any
criminal action or proceeding,  had no reasonable cause to believe their conduct
was unlawful.

         (b)  Neither  any  Private  Limited  Partner,  nor  any  member  of any
Partnership  committee or board who is not an Affiliate of the General  Partner,
shall be liable to the  Partnership or any Partner as the result of any decision
made in good faith by such Private Limited Partner or member, in his capacity as
such.

         (c) The  General  Partner  and any  Investment  Advisor/  Manager,  the
stockholders, directors, officers, employees and partners of either thereof, any
Private Limited Partner and any member of a Partnership  committee or board, may
consult  with  reputable  legal  counsel  selected  by them  and  shall be fully
protected,  and shall incur no liability to the  Partnership or any Partner,  in
acting or refraining to act in good faith in reliance upon the opinion of advice
of such counsel.

         (d) This Section 4.1 shall not constitute a modification, limitation or
waiver of Section  314(b) of the SBIC Act,  or a waiver by the SBA of any of its
rights pursuant to such Section 314(b).*

        (e) In addition to the standards of care set forth in this  Section 4.1,
the Agreement may also provide for  additional standards of care which must also
be met.

*This provision relates to the fiduciary duty of SBIC managers.

                                      -7-

<PAGE>


         4.2.  Indemnification.  (b) The  Partnership  shall  indemnify and hold
         ---   =============== 
harmless,  but only to the  extent  of  Assets  Under  Management,  the  General
Partner, the general and limited partners of the General Partner, any Investment
Advisor/Manager and any partner, shareholder, director, officer, employee or any
Affiliate  of any thereof  from any and all costs,  expenses,  damages,  claims,
liabilities,  fines and judgments  (including the reasonable cost of the defense
of any claim or action  and any sums  which may be paid with the  consent of the
Partnership in settlement  thereof) which may be incurred by or asserted against
such person or entity,  by reason of any action  taken or omitted to be taken on
behalf of the Partnership and in furtherance of its interests.

         (b) The Partnership shall indemnify and hold harmless,  but only to the
extent of Assets Under Management,  the Private Limited Partners, and members of
any Partnership committee or board who are not Affiliates of the General Partner
or any Investment  Advisor/Manager  from any and all costs,  expenses,  damages,
claims, liabilities,  fines and judgements (including the reasonable cost of the
defense of any claim or action  and any sums which may be paid with the  consent
of the  Partnership  in settlement thereof) which may be incurred by or asserted
against  such  person or entity,  by any third party on account of any matter or
transaction of the Partnership,  which matter or transaction occurred during the
time that such person has been a Private Limited Partner or such member.

         (c) The Partnership  shall have power, in the discretion of the General
Partner,  to agree to indemnify on the same terms as set forth in Section 4.2(b)
any person who is or was serving,  pursuant to a prior written  request from the
Partnership,  as a consultant to, agent for or representative of the Partnership
as a director, officer, employee, agent of or consultant to another corporation,
partnership,  joint venture,  trust or other  enterprise,  against any liability
asserted  against such person and incurred by such person in any such  capacity,
or arising out of such person's status as such.

         (d) No person shall be entitled to claim any indemnity or reimbursement
under  Section  4.2(a),  (b) or (c) in  respect  of any cost,  expense,  damage,
liability,  claim,  fine,  judgment  (including  any cost of the  defense of any
claim,  action,  suit,  proceeding or  investigation,  by or before any court or
administrative  or legislative  body or authority)  that may be incurred by such
person which results from the failure of such person to act in  accordance  with
the provisions of this  Agreement and the applicable  standard of care set forth
in Section 4. 1. The termination of any action,  suit or proceeding by judgment,
order,  settlement,  conviction,  or  upon  a plea  of  nolo  contendere  or its
                                                        ----  ---------- 
equivalent,  shall not,  of itself,  preclude a  determination  that such person
acted in accordance with the applicable standard of care set forth in Section 4.
1.

          (e) To the extent that a person claiming indemnification under Section
4.2(a),  (b) or (c) has been  successful on the merits in defense of any action,
suit or proceeding  referred to in Section  4.2(a),  (b) or (c) or in defense of
any  claim,  issue or matter  therein  such  person  shall be  indemnified  with
respect,  to such matter as provided in such Section.  Except as provided in the
foregoing  sentence  and as provided in Section  4.2(h) with  respect to advance
payments,  any  indemnification  under this  Section 4.2 shall be paid only upon
determination  on that  the  person  to be  indemnified  has met the  applicable
standard of conduct set forth in Section 4. 1 (a) or (b).

         (f) A determination  that a person to be indemnified under this Section
4.2 has met the applicable  standard set forth in Section 4.1(a) or (b) shall be
made by (i) the General  Partner,  with  respect to the  indemnification  of any
person other than a person claiming indemnification under Section 4.2(a), (ii) a
committee of the  Partnership  whose members are not affiliated with the General
Partner or any Investment Advisor/Manager with respect to indemnification of any
person  indemnified under Section 

                                      -8-

<PAGE>


4.2(a)  or (iii) at the  election  of the  General  Partner,  independent  legal
counsel selected by the General Partner,  with respect to the indemnification of
any person indemnified under Section 4.2, in a written opinion.

         (g) In making any such  determination  with respect to  indemnification
under Section 4.2(f),  the General Partner, a committee of the Partnership whose
members  are  not  affiliated   with  the  General  Partner  or  any  Investment
Advisor/Manager  or  independent  legal  counsel,  as the case may be,  shall be
authorized  to make such  determination  on the basis of its  evaluation  of the
records  of  the   General   Partner,   the   Partnership   or  any   Investment
Advisor/Manager  to the  Partnership  and of the statements of the party seeking
indemnification with respect to the matter in question and shall not be required
to  perform  any   independent   investigation   in  connection  with  any  such
determination.  Any party making any such determination is authorized,  however,
in its sole discretion,  to take such other actions (including engaging counsel)
as it deems advisable in making such determination.

         (h)  Expenses  incurred  by any person in  respect  of any such  costs,
expenses, damages, claims, liabilities, fines, and judgments (including any cost
of the defense of any claim,  action, suit,  proceeding or investigation,  by or
before any court or administrative or legislative body or authority) may be paid
by the  Partnership  in  advance of the final  disposition  of any such claim or
action upon  receipt of an  undertaking  by or on behalf of such person to repay
such amount  unless it shall  ultimately  be  determined  as provided in Section
4.2(e) or (f) that such person is entitled to be indemnified by the  Partnership
as authorized in this Section.

         (i) The rights  provided by this Section 4.2 shall inure to the benefit
of the heirs, executors, administrators,  successors, and assigns of each person
eligible for indemnification hereunder.

         (j) The rights to indemnification provided in this Section 4.2 shall be
the exclusive rights of all Partners to indemnification  by the Partnership.  No
Partner shall enter into, or make any claim under,  any other agreement with the
Partnership  (whether  direct or indirect)  providing for  indemnification.  The
General  Partner shall not enter into any agreement  with any person which is an
employee, officer, director, partner or shareholder, or an Affiliate,  Associate
or Control Person of any of the foregoing,  providing for indemnification of any
such person unless such agreement  provides for a determination  with respect to
such  indemnification  as  provided  under  Section  4.2(f)(ii)  or  (iii).  The
provisions of this Section 4.2 shall not apply to  indemnification of any person
which is not at the expense (whether in whole or in part) of the Partnership.

         (k) The  Partnership  may purchase  and  maintain  insurance on its own
behalf, or on behalf of any person or entity, with respect to liabilities of the
types described in this Section 4.2. The Partnership may purchase such insurance
regardless  of whether  such  person is acting in a capacity  described  in this
Section 4.2 or whether the  Partnership  would have the power to indemnify  such
person against such liability under the provisions of this Section 4.2.

                                    ARTICLE V
                                    ---------
                                    Amendments
                                    ==========

         Any amendment of the Agreement which would affect (i) this Annex,  (ii)
or the rights,  obligations  or  liabilities  of the SBA shall require the prior
written consent of the SBA.

                                      -9-

<PAGE>


                                      NOTES
                                      =====

1.   All notice periods are variable.

2.   Any interest rate may be selected.

3.   The rotation on the amount of interest is optional.

4.   Forfeitures  may be in  whole  or in  part.  The  sum  of the  reallocation
     percentages  to the General  Partner and the Private  Limited  Partner must
     equal 100%. The  elimination of liability after  forfeiture is optional;  a
     forfeited  limited  partner may remain  liable for  capital  contributions.
     Reallocation of a forfeited interest can be freely determined.

5.   Any percentage of a defaulted  limited  partner's  interest can be sold. A 
     variety of pricing  mechanisms can be used: fixed, formula or appraisal.



                                      -10-