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                                                                   EXHIBIT 10.17

                                                             MS Loan No 04-17356

                                 PROMISSORY NOTE
                              (Fixed -- Defeasance)

$7,850,000 00                                               Berkeley, California
                                                                January 27, 2005

      FOR VALUE RECEIVED, PYRAMID GILMAN STREET PROPERTY, LLC, a Delaware
limited liability company, as maker, having its principal place of business at
c/o Pyramid Breweries, Inc, Attention. Chief Financial Officer, 91 S. Royal
Brougham Way, Seattle, Washington 98134 ("Borrower"), hereby unconditionally
promises to pay to the order of MORGAN STANLEY MORTGAGE CAPITAL INC, a New York
corporation, as payee, having an address at c/o ARCap Servicing, Inc, 5605 North
MacArthur Boulevard, Suite 950, Irving, Texas 75038 ("Lender"), or at such other
place as the holder hereof may from time to time designate in writing, the
principal sum of Seven Million Eight Hundred Fifty Thousand and 00/100 Dollars
($7,850,000 00), in lawful money of the United States of America with interest
thereon to be computed from the date of this Note at the Applicable Interest
Rate (defined below) in accordance with the terms of this Note.

                            ARTICLE 1: PAYMENT TERMS

      Borrower agrees to pay sums under this Note in installments as follows:

      (a) on the date hereof, a payment of interest only with respect to the
period commencing on the date hereof and ending on, and including, the last day
of the month in which this Note is executed;

      (b) a constant payment of Forty-Five Thousand Nine Hundred Ten and 25/100
Dollars ($45,910 25) on the first day of April, 2005 and on the first day of
each calendar month thereafter up to and including the first day of February,
2015 (each, a "Payment Date"), each of the payments to be applied as follows:
(i) first, to the payment of interest computed at the Applicable Interest Rate,
and (ii) the balance toward the reduction of the principal sum; and

      (c) the balance of the principal sum and all interest thereon on the first
day of March, 2015 (the "Maturity Date")

                               ARTICLE 2: INTEREST

      The interest rate on this Note is five and 77/100 percent (5.77%) per
annum (the "Applicable Interest Rate") Interest on the principal sum of this
Note shall be calculated by multiplying (a) the actual number of days elapsed in
the period for which the calculation is being made by (b) a daily rate based on
a three hundred sixty (360) day year (that is, the Applicable Interest Rate or
the Default Rate, as then applicable, divided by 360) by (c) the outstanding
principal balance

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                       ARTICLE 3: DEFAULT AND ACCELERATION

      Borrower covenants and agrees that if (a) any payment required hereunder
(other than the payment due on the Maturity Date) is not paid prior to the fifth
(5th) day after the same is due, or (b) the entire Debt (defined below) is not
paid on or before the Maturity Date or (c) any other Event of Default (as
defined in the Security Instrument (defined below)) shall occur, then at the
option of Lender (i) the whole of the principal sum of this Note, (ii) interest,
default interest, late charges and other sums, as provided in this Note, the
Security Instrument or the Other Security Documents (as defined in the Security
Instrument), (iii) all other monies agreed or provided to be paid by Borrower in
this Note, the Security Instrument or the Other Security Documents, (iv) all
sums advanced pursuant to the Security Instrument to protect and preserve the
Property (defined below) and the lien and the security interest created thereby,
and (v) all sums advanced and costs and expenses incurred by Lender in
connection with the Debt or any part thereof, any renewal, extension, or change
of or substitution for the Debt or any part thereof, or the acquisition or
perfection of the security therefor, whether made or incurred at the request of
Borrower or Lender (all the sums referred to in (i) through (v) above shall
collectively be referred to as the "Debt") shall without notice become
immediately due and payable.

                           ARTICLE 4: DEFAULT INTEREST

      Borrower agrees that upon the occurrence of an Event of Default, Lender
shall be entitled to receive and Borrower shall pay interest on the entire
unpaid principal sum at a per annum rate equal to the lesser of (a) five percent
(5%) plus the Applicable Interest Rate or (b) the maximum interest rate which
Borrower may by law pay (the "Default Rate") The Default Rate shall be computed
from the occurrence of the default giving rise to such Event of Default (without
regard to any notice or grace period) until the earlier of the date upon which
the Event of Default is cured or the date upon which the Debt is paid in full
Interest calculated at the Default Rate shall be deemed part of the Debt, and
shall be deemed secured by the Security Instrument. This clause, however, shall
not be construed as an agreement or privilege to extend the date of the payment
of the Debt, nor as a waiver of any other right or remedy accruing to Lender by
reason of the occurrence of any Event of Default.

                             ARTICLE 5: LATE CHARGE

      If any monthly installment payable under this Note is not paid prior to
the fifth (5th) day after the applicable Payment Date, Borrower shall pay to
Lender upon demand an amount equal to the lesser of five percent (5%) of such
unpaid sum or the maximum amount permitted by applicable law to defray the
expenses incurred by Lender in handling and processing the delinquent payment
and to compensate Lender for the loss of the use of the delinquent payment and
the amount shall be secured by the Security Instrument and the Other Security
Documents.

                        ARTICLE 6: PREPAYMENT; DEFEASANCE

      (a) The principal balance of this Note may not be prepaid in whole or in
part except as expressly permitted pursuant hereto.

      (b) Subject to compliance with and satisfaction of the terms and
conditions of this Article 6 and provided that no Event of Default exists,
Borrower may elect to obtain a release

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(the "Release") of the Property from the lien of the Security Instrument on any
Payment Date after the Lockout Period Expiration Date (defined below) by
delivering to Lender, as security for the payment of all interest and principal
due and to become due pursuant to this Note through the Maturity Date, plus the
principal balance of this Note scheduled to be outstanding on the Maturity Date,
Defeasance Collateral (defined below) sufficient to generate Scheduled
Defeasance Payments (defined below) (the Release and the delivery of the
Defeasance Collateral, a "Defeasance")

      (c) As a condition precedent to a Defeasance, and prior to any Release,
Borrower shall have complied with all of the following.

            (i) Borrower shall provide not less than sixty (60) days prior
written notice to Lender specifying a Payment Date upon which it intends to
effect a Defeasance hereunder (the "Defeasance Date")

            (ii) All accrued and unpaid interest on the principal balance of
this Note to and including the Defeasance Date, the scheduled amortization
payment due on such Defeasance Date, and all other sums then due under this
Note, the Security Instrument and the Other Security Documents, shall be paid in
full on or prior to the Defeasance Date

            (iii) Borrower shall execute and deliver to Lender any and all
certificates, opinions, documents or instruments reasonably required by Lender
in connection with the Defeasance and Release, including, without limitation, a
pledge and security agreement reasonably satisfactory to Lender creating a first
priority lien on the Defeasance Collateral (a "Defeasance Security Agreement").
This Note shall thereafter be secured by the Defeasance Collateral delivered in
connection with the Defeasance. After Defeasance, this Note cannot be prepaid in
whole or in part or be the subject of any further Defeasance.

            (iv) Borrower shall have delivered to Lender an opinion of
Borrower's counsel that would be satisfactory to a prudent lender stating (A)
that the Defeasance Collateral and the proceeds thereof have been duly and
validly assigned and delivered to Lender and that Lender has a valid, perfected,
first priority lien and security interest in the Defeasance Collateral delivered
by Borrower and the proceeds thereof, (B) that if the holder of this Note shall
at the time of the Release be a REMIC (defined below), (1) the Defeasance
Collateral has been validity assigned to the REMIC Trust which holds this Note
(the "REMIC Trust"), (2) the Defeasance has been effected in accordance with the
requirements of Treasury Regulation 1 860(g)-2(a)(8) (as such regulation may be
amended or substituted from time to time) and will not be treated as an exchange
pursuant to Section 1001 of the IRS Code and (3) the tax qualification and
status of the REMIC Trust as a REMIC will not be adversely affected or impaired
as a result of the Defeasance and (C) that the delivery of the Defeasance
Collateral and the grant of a security interest therein to Lender shall not
constitute an avoidable preference under Section 547 of the U S Bankruptcy Code
or applicable state law. The term "REMIC" shall mean a "real estate mortgage
investment conduit" within the meaning of Section 860D of the IRS Code. The term
"IRS Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and the related Treasury Department regulations, including temporary
regulations.

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            (v) Borrower shall have delivered to Lender written confirmation
from the Rating Agencies (defined in the Security Instrument) that such
Defeasance will not result in a withdrawal, downgrade or qualification of the
then current ratings by the applicable Rating Agencies of the Securities or
Participations (each as defined in the Security Instrument). If required by the
Rating Agencies, Borrower shall, at Borrower's expense, also deliver or cause to
be delivered a non-consolidation opinion with respect to the Defeasance Obligor
(as defined below), if any, in form and substance that would be satisfactory to
a prudent lender.

            (vi) Borrower shall have delivered to Lender a certificate given by
Borrower's independent certified public accountant certifying that the
Defeasance Collateral shall generate the Scheduled Defeasance Payments.

      (d) In connection with any Defeasance hereunder, Borrower may and, if
requested by Lender shall, at Borrower's expense, establish or designate a
successor entity, which shall be a single purpose, bankruptcy remote entity
which is not directly or indirectly owned by Borrower and which shall be
approved by Lender (the "Defeasance Obligor") and Borrower shall transfer and
assign all obligations, rights and duties under and to this Note and the
Defeasance Security Agreement together with the pledged Defeasance Collateral to
such Defeasance Obligor. Such Defeasance Obligor shall assume the obligations
under the Note and any Defeasance Security Agreement and shall be bound by and
obligated under Sections 3.1, 7.2, 7.4(a), 11.2, 11.7 and 14.2 and Articles 13
and 15 of the Security Instrument; provided, however, that all references
therein to "Property" or "Personal Property" shall be deemed to refer only to
the Defeasance Collateral delivered to Lender, and Borrower shall be relieved of
its obligations under such documents and, except with respect to any provisions
therein which by their terms expressly survive payment of the Debt in full, the
Other Security Documents. Borrower shall pay $1,000 to any such Defeasance
Obligor as consideration for assuming such obligations.

      (e) The following terms shall have the meaning set forth below.

            (i) The term "Defeasance Collateral" as used herein shall mean
direct, non-callable and non-redeemable obligations of the United States of
America for the payment of which its full faith and credit is pledged, each of
which shall be duly endorsed by the holder thereof as directed by Lender or
accompanied by a written instrument of transfer in form and substance wholly
satisfactory to Lender (including, without limitation, such instruments as may
be required by the depository institution holding such securities or by the
issuer thereof, as the case may be, to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution) in order to
perfect upon the delivery of the Defeasance Collateral a first priority security
interest therein in favor of the Lender in conformity with all applicable state
and federal laws governing the granting of such security interests. Borrower
shall authorize and direct that the payments received from such obligations
shall be made directly to Lender or Lender's designee and applied to satisfy the
obligations of Borrower or, if applicable, the Defeasance Obligor, under this
Note.

            (ii) The term "Scheduled Defeasance Payments" as used herein shall
mean the scheduled payments of interest and principal in accordance with the
terms of the Defeasance Collateral (without consideration of any reinvestment of
interest therefrom), providing for payments prior, but as close as possible, to
all successive Payment Dates after the Defeasance

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Date through and including the Maturity Date, and in amounts equal to or greater
than the scheduled payments of interest and principal due under this Note,
including the principal balance of this Note scheduled to be outstanding on the
Maturity Date.

            (iii) The term "Lockout Period Expiration Date" shall mean the date
which is the earlier of (A) the second anniversary of the date that is the
"startup day," within the meaning of Section 860G(a) (9) of the IRS Code, of a
REMIC that holds this Note or (B) the four year anniversary of the first day of
the first full calendar month following the date of this Note.

      (f) Upon Borrower's compliance with all of the conditions to Defeasance
and a Release set forth in this Article 6, Lender shall release the Property
from the lien of the Security Instrument and the Other Security Documents. All
costs and expenses of Lender, third parties and the Rating Agencies incurred in
connection with the Defeasance and Release, including, without limitation,
Lender's counsel's fees and expenses, shall be paid by Borrower simultaneously
with the delivery of the Release documentation Any revenue, documentary stamp or
intangible taxes or any other tax or charge due in connection with the
Defeasance shall be paid by Borrower simultaneously with the occurrence of any
Defeasance.

      (g) If a Default Prepayment (defined below) occurs, Borrower shall pay to
Lender the entire Debt, including, without limitation, an amount (the "Default
Consideration") equal to the greater of (i) the amount (if any) which when added
to the then outstanding principal amount of this Note will be sufficient to
purchase Defeasance Collateral providing the required Scheduled Defeasance
Payments assuming Defeasance would be permitted hereunder, or (ii) one percent
(1%) of the Default Prepayment. For purposes of this Note, the term "Default
Prepayment" shall mean a prepayment of the principal amount of this Note made
after the occurrence of any Event of Default or an acceleration of the Maturity
Date under any circumstances, including, without limitation, a prepayment
occurring in connection with reinstatement of the Security Instrument provided
by statute under foreclosure proceedings or exercise of a power of sale, any
statutory right of redemption exercised by Borrower or any other party having a
statutory right to redeem or prevent foreclosure, any sale in foreclosure or
under exercise of a power of sale or otherwise.

      (h) Notwithstanding anything to the contrary herein, Borrower may prepay
the principal balance of this Note in whole, without premium or penalty, on any
Payment Date during the three months prior to the Maturity Date. In addition,
Borrower shall prepay without premium or penalty the principal balance of this
Note in an amount equal to any insurance proceeds or condemnation awards which
Lender elects to have applied to the Debt pursuant to Sections 36 and 37 of
the Security Instrument or the amount required by Lender due to changes in tax
and debt credit pursuant to Section 7.3 (a) or (b) of the Security Instrument
(provided, however, that in the event any such prepayment pursuant to this
sentence shall be made on a date other than a Payment Date, the amount so
prepaid shall include all interest which would have accrued on such amount
through the next Payment Date). In each instance of prepayment permitted under
this subparagraph (h), Borrower shall be required to pay all other sums due
hereunder, and no principal amount repaid may be reborrowed.

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                               ARTICLE 7: SECURITY

      This Note is secured by that certain Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing dated the date hereof in the
principal sum of $7,850,000.00 given by Borrower to (or for the benefit of)
Lender covering the fee simple estate of Borrower in certain premises located in
Alameda County, State of California, and other property, as more particularly
described therein (collectively, the "Property") and intended to be duly
recorded in said County (the "Security Instrument"), and by the Other Security
Documents.

                             ARTICLE 8: LOAN CHARGES

      This Note, the Security Instrument and the Other Security Documents are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the principal balance due hereunder at a rate which
could subject Lender to either civil or criminal liability as a result of being
in excess of the maximum interest rate which Borrower is permitted by applicable
law to contract or agree to pay. If by the terms of this Note, the Security
Instrument and the Other Security Documents, Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate in
excess of such maximum rate, the Applicable Interest Rate or the Default Rate,
as the case may be, shall be deemed to be immediately reduced to such maximum
rate and all previous payments in excess of the maximum rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or amount of
interest on account of the Debt does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debt for so long as
the Debt is outstanding.

                               ARTICLE 9: WAIVERS

      Borrower and all others who may become liable for the payment of all or
any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, protest and notice of protest and non-payment and
all other notices of any kind, except for notices expressly provided for in this
Note, the Security Instrument or the Other Security Documents. No release of any
security for the Debt or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
this Note, the Security Instrument or the Other Security Documents made by
agreement between Lender or any other person or party shall release, modify,
amend, waive, extend, change, discharge, terminate or affect the liability of
Borrower, and any other person or entity who may become liable for the payment
of all or any part of the Debt, under this Note, the Security Instrument or the
Other Security Documents. No notice to or demand on Borrower shall be deemed to
be a waiver of the obligation of Borrower or of the right of Lender to take
further action without further notice or demand as provided for in this Note,
the Security Instrument or the Other Security Documents. If Borrower is a
partnership, corporation or limited liability company, the agreements contained
herein shall remain in full force and effect, notwithstanding any changes in the
individuals or entities comprising the Borrower, and the term "Borrower," as
used herein, shall include any alternate or successor entity, but any
predecessor entity, and its

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partners or members, as the case may be, shall not thereby be released from any
liability (Nothing in the foregoing sentence shall be construed as a consent to,
or a waiver of, any prohibition or restriction on transfers of interests in
Borrower which may be set forth in the Security Instrument or any Other Security
Document)

                       ARTICLE 10: WAIVER OF TRIAL BY JURY

      BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT,
TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS
NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE, THIS NOTE, THE
SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF
LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

                             ARTICLE 11: EXCULPATION

      (a) Notwithstanding anything to the contrary contained in this Note, the
Security Instrument or any Other Security Document (but subject to the
provisions of subsections (b), (c) and (d) of this Article 11), Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note or the Security Instrument by any action or
proceeding wherein a money judgment or any deficiency judgment or other judgment
establishing any personal liability shall be sought against Borrower or any
principal, director, officer, employee, beneficiary, shareholder, partner,
member, trustee, agent or affiliate of Borrower or any person owning, directly
or indirectly, any legal or beneficial interest in Borrower, or any successors
or assigns of any of the foregoing (collectively, the "Exculpated Parties"),
except that Lender may bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable Lender to
enforce and realize upon this Note, the Security Instrument, the Other Security
Documents, and the interest in the Property, the Rents (as defined in the
Security Instrument) and any other collateral given to Lender to secure this
Note, provided, however, subject to the provisions of subsections (b), (c) and
(d) of this Article 11, that any judgment in any such action or proceeding shall
be enforceable against Borrower only to the extent of Borrower's interest in the
Property, in the Rents and in any other collateral given to Lender to secure
this Note Lender, by accepting this Note and the Security Instrument, agrees
that it shall not, except as otherwise provided in this Article 11, sue for,
seek or demand any deficiency judgment against Borrower or any of the Exculpated
Parties, in any such action or proceeding, under or by reason of or under or in
connection with this Note, the Security Instrument or the Other Security
Documents. The provisions of this Article 11 shall not, however, (i) constitute
a waiver, release or impairment of any obligation evidenced or secured by this
Note, the Security Instrument or the Other Security Documents delivered to
Lender; (ii) impair the right of Lender to name Borrower as a party defendant in
any action or suit for judicial foreclosure and sale under the Security
Instrument, (iii) affect the validity or enforceability of any indemnity,
guaranty, master lease or similar instrument made in connection with this Note,
the Security Instrument, or the Other Security Documents, (iv) impair the right
of Lender to obtain the appointment of a receiver; (v) impair the enforcement of
the Assignment of Leases and Rents executed in connection herewith, (vi) impair
the right of Lender to enforce the

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provisions of Section 12.2 of the Security Instrument or of Section 3 12(e) of
the Security Instrument; or (vii) impair the right of Lender to obtain a
deficiency judgment or other judgment on the Note against Borrower if necessary
to fully realize the security granted by the Security Instrument or to commence
any other appropriate action or proceeding in order for Lender to exercise its
remedies against the Property.

      (b) Notwithstanding the provisions of this Article 11 to the contrary,
Borrower shall be personally liable to Lender for the Losses (as defined in the
Security Instrument) Lender incurs due to: (i) fraud or intentional
misrepresentation by Borrower or any of the Exculpated Parties in connection
with the Loan; (ii) the gross negligence or willful misconduct of Borrower,
(iii) the removal or disposal of any portion of the Property after an Event of
Default. (iv) Borrower's misapplication, misappropriation or conversion of Rents
received by Borrower after the occurrence of an Event of Default; (v) Borrower's
misapplication, misappropriation or conversion of tenant security deposits or
Rents collected in advance; (vi) the misapplication, misappropriation or
conversion of insurance proceeds or condemnation awards; (vii) Personal Property
(as defined in the Security Instrument) taken from the Property by or on behalf
of Borrower or any of the Exculpated Parties and not replaced with Personal
Property of the same utility and of the same or greater value; (viii) any act of
arson by Borrower or any of the Exculpated Parties, (ix) any fees or commissions
paid by Borrower after the occurrence of an Event of Default to any Exculpated
Party in violation of the terms of this Note, the Security Instrument or the
Other Security Documents; (x) failure to pay charges for labor or materials or
other charges that can create liens on any portion of the Property; (xi) any
security deposits, advance deposits or any other deposits collected with respect
to the Property not being delivered to Lender upon a foreclosure of the Property
or action in lieu thereof, except to the extent any such security deposits were
applied in accordance with the terms and conditions of any of the Leases (as
defined in the Security Instrument) prior to the occurrence of the Event of
Default that gave rise to such foreclosure or action in lieu thereof; (xii) any
failure by Borrower to permit on-site inspections of the Property as required
by the Security Instrument and/or the Other Security Documents, (xiii) any
failure of Borrower to appoint a new property manager upon the request of Lender
as required by the terms of the Security Instrument and/or the Other Security
Documents, and/or (xiv) Borrower's breach of, or failure to comply with, the
representations, warranties and covenants contained in Articles 5 8(b) and/or 12
of the Security Instrument.

      (c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability as set forth in subsection (a) above SHALL BECOME NULL AND
VOID and shall be of no further force and effect and the Debt shall be fully
recourse to Borrower in the event that, (i) the first full monthly payment of
principal and interest under this Note is not paid when due, (ii) Borrower fails
to provide financial information to Lender as required by Section 3.12 of the
Security Instrument or fails to comply with any provision of Section 4 2 of the
Security Instrument, (iii) Borrower defaults under Article 8 of the Security
Instrument; (iv) Borrower files a voluntary petition under the U S Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law; (v) an
affiliate, officer, director or representative which controls Borrower, directly
or indirectly, files, or joins in the filing of, an involuntary petition against
Borrower under the U S Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition against Borrower from any person or entity, (vi)
Borrower files an answer consenting to or otherwise acquiescing in or joining in
any involuntary petition filed against it, by any other person or entity

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under the U.S Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law, or solicits or causes to be solicited petitioning creditors for
any involuntary petition from any person or entity; (vii) any affiliate,
officer, director or representative which controls Borrower consents to or
acquiesces in or joins in an application for the appointment of a custodian,
receiver, trustee, or examiner for Borrower or any portion of the Property, or
(viii) Borrower makes an assignment for the benefit of creditors, or admits, in
writing or in any legal proceeding, its insolvency or inability to pay its debts
as they become due.

      (d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Security Instrument or to require that all collateral shall
continue to secure all of the indebtedness owing to Lender in accordance with
this Note, the Security Instrument and the Other Security Documents.

                              ARTICLE 12: AUTHORITY

      Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver this Note, the Security Instrument and the Other Security Documents
and that this Note, the Security Instrument and the Other Security Documents
constitute valid and binding obligations of Borrower.

                            ARTICLE 13: GOVERNING LAW

      This Note shall be governed, construed, applied and enforced in accordance
with the laws of the State of California.

                               ARTICLE 14: NOTICES

      All notices required or permitted hereunder shall be given as provided in
the Security Instrument.

                     ARTICLE 15: INCORPORATION BY REFERENCE

      All of the terms, covenants and conditions contained in the Security
Instrument and the Other Security Documents are hereby made part of this Note to
the same extent and with the same force as if they were fully set forth herein.

                            ARTICLE 16: MISCELLANEOUS

      (a) Wherever pursuant to this Note it is provided that Borrower pay any
costs and expenses, such costs and expenses shall include, but not be limited
to, reasonable legal fees and disbursements of Lender, whether with respect to
retained firms, the reimbursement for the expenses of in-house staff, or
otherwise. Borrower shall pay to Lender on demand any and all expenses,
including legal expenses and reasonable attorneys' fees, incurred or paid by
Lender in enforcing this Note, whether or not any legal proceeding is commenced
hereunder, together with interest thereon at the Default Rate from the date paid
or incurred by Lender until such expenses are paid by Borrower.

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      (b) This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

      (c) If Borrower consists of more than one person or party, the obligations
and liabilities of each person or party shall be joint and several.

      (d) Whenever used, the singular number shall include the plural, the
plural number shall include the singular, and the words "Lender" and "Borrower"
shall include their respective successors, assigns, heirs, executors and
administrators.

                        ARTICLE 17: CALIFORNIA PROVISIONS

      (a) BY INITIALLING BELOW, BORROWER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS
THAT, PURSUANT TO THE TERMS OF THIS NOTE, IT HAS AGREED THAT IT HAS NO RIGHT TO
PREPAY THE NOTE PRIOR TO THE LOCKOUT DATE IN ARTICLE 6 AND THAT IT SHALL BE
LIABLE FOR THE PAYMENT OF THE PREPAYMENT CONSIDERATION FOR PREPAYMENT OF THIS
NOTE UPON ACCELERATION OF THIS NOTE IN ACCORDANCE WITH ITS TERMS FURTHER, BY
INITIALLING BELOW, BORROWER WAIVES ANY RIGHTS IT MAY HAVE UNDER SECTION 2954.10
OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR STATUTE, AND EXPRESSLY
ACKNOWLEDGES AND UNDERSTANDS THAT LENDER HAS MADE THE LOAN IN RELIANCE ON THE
AGREEMENTS AND WAIVER OF BORROWER AND THAT LENDER WOULD NOT HAVE MADE THE LOAN
WITHOUT SUCH AGREEMENTS AND WAIVER OF BORROWER. BORROWER ACKNOWLEDGES THAT
LENDER'S AGREEMENT TO MAKE THE LOAN AND THE OTHER TERMS SET FORTH HEREIN
CONSTITUTES ADEQUATE AND VALUABLE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY
BORROWER, FOR THE ABOVE WAIVER AND AGREEMENT.

                              /s/ J H
                              --------------------
                              Borrowers's Initials

      (b) BORROWER HEREBY ACKNOWLEDGES THAT INTEREST IN THIS NOTE IS TO BE
CALCULATED BY LENDER ON THE BASIS OF A THREE HUNDRED SIXTY (360) DAY YEAR AND
IS FULLY AWARE THAT SUCH CALCULATIONS MAY RESULT IN AN ACCRUAL AND/OR PAYMENT
OF INTEREST IN AMOUNTS GREATER THAN CORRESPONDING INTEREST CALCULATIONS BASED ON
A THREE HUNDRED SIXTY-FIVE (365) DAY YEAR.

      (c) Borrower recognizes that its default in making any payment as provided
herein or in the Security Instrument or any Other Security Document as agreed to
be paid when due, or the occurrence of any other Event of Default hereunder or
under the Security Instrument or any Other Security Document, will require
Lender to incur additional expense in servicing and administering the Loan, in
loss to Lender of the use of the money due and in frustration to Lender in
meeting its other financial and loan commitments and that the damages caused
thereby

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<PAGE>

would be extremely difficult and impractical to ascertain. Borrower agrees (a)
that an amount equal to the Late Charge plus the accrual of interest at the
Default Rate is a reasonable estimate of the damage to Lender in the event of a
late payment, and (b) that the accrual of interest at the Default Rate following
any other Event of Default is a reasonable estimate of the damage to Lender in
the event of such other Event of Default, regardless of whether there has been
an acceleration of the loan. Nothing in this Note shall be construed as an
obligation on the part of Lender to accept, at any time, less than the full
amount then due hereunder, or as a waiver or limitation of Lender's right to
compel prompt performance.

      (d) Upon notice from Lender to Borrower of the loss, theft, destruction or
mutilation of this Note and, upon receipt of indemnity reasonably satisfactory
to Borrower from Lender (except that if the Lender initially named herein is the
holder of this Note, an indemnification from the Lender initially named herein
shall be sufficient) or, in the case of mutilation hereof, upon surrender of the
mutilated Note, Borrower will make and deliver a new note of the tenor in lieu
of this Note.

      (e) Lender, at any time and without the consent of Borrower, may grant
participations in or sell, transfer, assign and convey ail or any portion of its
right, title and interest in and to the loan evidenced by this Note, this Note
and the other Loan Documents, any guaranties given in connection with the loan
evidenced by this Note and any collateral given as security for the loan
evidenced by this Note.

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