POINT WEST SECURITIES LLC

                              OPERATING AGREEMENT


                                       by

                         Point West Capital Corporation


                                       and

                           Point West Securities, LLC



                                      as of

                                  July 8, 1998

<PAGE>



                                TABLE OF CONTENTS
                                ----------------- 
<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                =====


<S>                                                                                                              <C>    


SECTION I.                 DEFINED TERMS........................................................................  1

SECTION II.                FORMATION AND NAME; OFFICE; PURPOSE; TERM............................................  3
         2.1      ORGANIZATION..................................................................................  3
         2.2      NAME OF THE COMPANY...........................................................................  3
         2.3      PURPOSE.......................................................................................  3
         2.4      TERM..........................................................................................  4
         2.5      PRINCIPAL OFFICE..............................................................................  4
         2.6      RESIDENT AGENT................................................................................  4
         2.7      MEMBERS.......................................................................................  4
         2.8      OFFICERS, DIRECTORS, AND MANAGERS............................................................   4

SECTION III.               MEMBERS; CAPITAL; CAPITAL ACCOUNTS...................................................  4
         3.1      INITIAL CAPITAL CONTRIBUTIONS.................................................................  4
         3.2      NO OTHER CAPITAL CONTRIBUTIONS REQUIRED.......................................................  4
         3.3      LOANS.........................................................................................  4

SECTION IV.                PROFIT, LOSS AND DISTRIBUTIONS.......................................................  4
         4.1      DISTRIBUTIONS OF CASH FLOW....................................................................  4
         4.2      ALLOCATION OF PROFIT OR LOSS..................................................................  4
         4.3      LIQUIDATION AND DISSOLUTION...................................................................  4

SECTION V.                 MANAGEMENT: RIGHTS, POWER AND DUTIES.................................................  5
         5.1      MANAGEMENT....................................................................................  5
         5.2      PERSONAL SERVICES.............................................................................  5
         5.3      LIABILITY AND INDEMNIFICATION.................................................................  5

SECTION VI.                TRANSFER OF INTERESTS AND WITHDRAWALS OF MEMBERS.....................................  5
         6.1      TRANSFERS.....................................................................................  5
         6.2      TRANSFER TO A SUCCESSOR.......................................................................  5

SECTION VII.      DISSOLUTION, LIQUIDATION AND TERMINATION OF THE
                           COMPANY..............................................................................  5
         7.1      EVENTS OF DISSOLUTION.........................................................................  5
         7.2      PROCEDURE FOR WINDING UP AND DISSOLUTION......................................................  6
         7.3      FILING OF ARTICLES OF CANCELLATION............................................................  6

SECTION VIII.              BOOKS, RECORDS, ACCOUNTING AND TAX ELECTIONS.........................................  6
         8.1      BANK ACCOUNTS.................................................................................  6
         8.2      BOOKS AND RECORDS.............................................................................  6

</TABLE>


                                      (i)


<PAGE>
                           TABLE OF CONTENTS - Cont.
                           -------------------------
<TABLE>
       <S>                                                                                                            <C>    



         8.3      ANNUAL ACCOUNTING PERIOD......................................................................  6
         8.4      DISREGARD OF ENTITY...........................................................................  6
         8.5      TAX MATTERS PARTNER...........................................................................  6

SECTION IX.                GENERAL PROVISIONS...................................................................  7
         9.1      ASSURANCES....................................................................................  7
         9.2      NOTIFICATIONS.................................................................................  7
         9.3      SPECIFIC PERFORMANCE..........................................................................  7
         9.4      COMPLETE AGREEMENT............................................................................  7
         9.5      APPLICABLE LAW................................................................................  7
         9.6      SECTION TITLES................................................................................  7
         9.7      BINDING PROVISIONS............................................................................  8
         9.8      JURISDICTION AND VENUE........................................................................  8
         9.9      TERMS.........................................................................................  8
         9.10     SEPARABILITY OF PROVISIONS....................................................................  8
         9.11     COUNTERPARTS..................................................................................  8
</TABLE>


Exhibit A          -  Member Taxpayer Identification and Percentage
---------
Exhibit B          -  Point West's Cash and Property Contribution
---------
                                      (ii)

<PAGE>

                            POINT WEST SECURITIES LLC
                            -------------------------

                               OPERATING AGREEMENT
                               -------------------

         This Operating  Agreement (this "Agreement") is entered into as of this
                                          ---------
8th day of July, 1998, by and among Point West Capital  Corporation,  a Delaware
corporation ("Point West") and Point West Securities, L.L.C.
(the "Company").

                              EXPLANATORY STATEMENT
                              ---------------------

         The Company was organized as a limited liability company in Delaware on
July 8, 1998 in accordance  with the terms of, and subject to the conditions set
forth in, this Agreement.  This Agreement sets forth the agreements  under which
the Company  will  operate.  The Company was formed as a single  Member  limited
liability  company,  which is intended to be disregarded  for federal income tax
purposes.

         NOW,  THEREFORE,  for good and  valuable  consideration,  the  parties,
intending legally to be bound, agree as follows:

                                       I.
                                       --
                                 DEFINED TERMS
                                 =============
                                

         The following  capitalized  terms shall have the meanings  specified in
this  Section I. Other  terms are  defined in the text of this  Agreement;  and,
throughout  this  Agreement,  those terms shall have the  meanings  respectively
ascribed to them.

         "Agreement" means this Agreement, as amended from time to time. 
         ========== 

         "Code" means the  Internal  Revenue  Code of 1986,  as amended,  or any
         ======
corresponding provision of any succeeding law.

         "Company" means the limited  liability  company organized in accordance
         =========
with this Agreement.

         "Delaware  Act" means the Delaware  Limited  Liability  Company Act, as
         =============== 
amended from time to time.

         "Interest" means a Person's share of the Profits and Losses of, and the
         ==========
right to receive distributions from, the Company.

         "Interest Holder" means any Person who holds an Interest,  whether as a
         =================
Member or as an unadmitted assignee of a Member.

         "Involuntary  Withdrawal"  means,  with  respect  to  Point  West,  the
         =========================
occurrence of any of the following events:

<PAGE>


              (a)      Point West  makes an  assignment  for the  benefit of
              ---
        creditors;

              (b)      Point West files a voluntary petition of bankruptcy
              ---   

              (c)      Point West is adjudged bankrupt or insolvent or there
              ---
         is entered  against Point West an order for relief in any bankruptcy or
         insolvency proceeding;

              (d)      Point  West files a petition  or answer  seeking  for
              ---
         Point West any reorganization,  arrangement, composition, readjustment,
         liquidation,  dissolution, or similar relief under any statute, law, or
         regulation;

              (e)       Point West seeks,  consents to, or  acquiesces in the
              ---
         appointment  of a trustee for,  receiver for, or  liquidation  of Point
         West or of all or any substantial part of Point West's properties;

              (f)        Point  West   files  an  answer  or  other   pleading
              ---
         admitting or failing to contest the material  allegations of a petition
         filed against Point West in any proceeding described in subsections (a)
         through (e);

              (g)        any    proceeding    against   Point   West   seeking
              ---
         reorganization,  arrangement, composition,  readjustment,  liquidation,
         dissolution,  or similar relief under any statute,  law, or regulation,
         continues  for one  hundred  twenty  (120) days after the  commencement
         thereof, or the appointment of a trustee,  receiver,  or liquidator for
         Point West or all or any  substantial  part of Point West's  properties
         without Point West's  Agreement or acquiescence,  which  appointment is
         not  vacated or stayed  for one  hundred  twenty  (120) days or, if the
         appointment  is stayed,  for one  hundred  twenty  (120) days after the
         expiration  of the stay  during  which  period the  appointment  is not
         vacated; or

              (h)        Point  West's  death  or  adjudication  by a court of
              ---
         competent  jurisdiction as incompetent to manage Point West's person or
         property.

         "Member"   means   Point  West  and  any  Person  who subsequently is 
         ========
admitted as a member of the Company.

         "Membership Rights" means all of the rights of a Member in the Company,
         =================== 
including a Member's (a) Interest;  (b) right to inspect the Company's books and
records;  (c) right to  participate  in the  management  of and vote on  matters
coming  before the  Company;  and (d) unless this  Agreement  or the Articles of
Organization provide to the contrary, right to act as an agent of the Company.

         "Person"  means and includes an individual,  corporation,  partnership,
         ========
association, limited liability company, trust, estate, or other entity.

         "Positive  Capital  Account"  means a  Capital  Account  with a balance
         ===========================
greater than zero.

                                       2
<PAGE>

         "Profit"  and "Loss"  means,  for each  taxable year of the Company (or
         ========      ======= 
other period for which Profit or Loss must be computed)  the  Company's  taxable
income or loss determined in accordance with the Code.

         "Regulation" means the income tax regulations,  including any temporary
         ============
regulations, from time to time promulgated under the Code.

         "Successor" means all Persons to whom all or any part of an Interest is
         ===========
transferred  either  because of (a) the sale or gift by Point West of all or any
part of its Interest,  (b) an  assignment of Point West's  Interest due to Point
West's Involuntary  Withdrawal,  or (c) because such Person dies and the persons
are such Person's personal representatives, heirs, or legatees.

         "Transfer"   means,   when  used  as  a  noun,   any  voluntary   sale,
         ==========
hypothecation, pledge, assignment, attachment, or other transfer, and, when used
as a verb, means voluntarily to sell, hypothecate,  pledge, assign, or otherwise
transfer.

         "Withdrawal" means a Member's dissociation from the Company by any 
         ============
means.
                                       II.
                                       ==
                    FORMATION AND NAME; OFFICE; PURPOSE; TERM
                    =========================================

 
         II.1     ORGANIZATION.    Point West  Securities,  LLC has organized a 
         ----     =============     
limited  liability  company  pursuant  to the  Act and  the  provisions  of this
Agreement  and, for that  purpose,  has caused  Articles of  Organization  to be
prepared, executed and filed under the Delaware Act on July 8, 1998.

         II.2      NAME OF THE  COMPANY.   The name of the  Company  shall be 
         ---       ====================
"Point West  Securities  LLC".  The Company may do business  under that name and
under any other name or names upon which Point West may, in its sole discretion,
determine.  If the Company does business  under a name other than that set forth
in its  Articles  of  Organization,  then the  Company  shall  file a trade name
certificate as required by law.

         II.3  PURPOSE.    Company is  organized  to engage in any  lawful  act
         ----  =======
or activity for which a limited  liability  company may be  organized  under the
Delaware Act, and to do any and all things necessary,  convenient, or incidental
to that purpose.

         II.4  TERM.   The  term of the  Company  began  upon the filing of the 
         ----  ====
Articles of Organization  under the Delaware Act and shall continue in existence
until July 31,  2028,  unless its  existence  is sooner  terminated  pursuant to
Section VII of this Agreement.

         II.5  PRINCIPAL OFFICE.  The principal  office of the  Company in the
         ----  ================
State of  Delaware  shall be  located at 1220 North  Market  Street,  Suite 606,
Wilmington,  Delaware  19801, or at any other place within the State of Delaware
which Point West, in its sole discretion, determines.


                                       3

<PAGE>

         II.6  RESIDENT AGENT. The name and  address  of the Company's  resident
         ----  ==============
agent in the  State of  Delaware  shall be Registered Agents, Ltd.

         II.7  MEMBERS.  The   name,   present   mailing   address,  taxpayer  
         ----  =======
identification  number and Percentage of each Member are set forth on Exhibit
                                                                      -------
"A".
---

                                  SECTION III.
                                  ------------
                       MEMBERS; CAPITAL; CAPITAL ACCOUNTS
                       ==================================

         III.1  INITIAL CAPITAL CONTRIBUTIONS. Upon  the  execution  of  this  
         ----  =============================
Agreement,  Point West shall contribute to the Company the cash and property set
forth on Exhibit "B", as the single and sole Member of the Company.
         -----------

         III.2  NO OTHER CAPITAL CONTRIBUTIONS REQUIRED.  No  Member  shall  be 
         -----  =======================================
required to contribute any additional capital to the Company,  and except as set
forth  in the  Act,  no  Member  shall  have  any  personal  liability  for  any
obligations of the Company.

         III.3 LOANS.  Any Member may, at any time,  make or cause a loan to be
         ----- =====
made to the  Company in any amount and on those terms upon which the Company and
the Member agree.

                                       IV
                                       --
                         PROFIT, LOSS AND DISTRIBUTIONS
                         ==============================

         IV.1  DISTRIBUTIONS OF CASH FLOW. Cash Flow for  each  taxable  year of
         ----  ==========================
the Company shall be distributed to Point West no later than  seventy-five  (75)
days after the end of the taxable year.

         IV.2  ALLOCATION OF PROFIT OR LOSS.  All  Profit  or  Loss   shall  be
         ----  ============================
allocated to Point West, as the single and sole Member of the Company.

         IV.3  LIQUIDATION AND DISSOLUTION. If the  Company is  liquidated, the
         ----  ===========================
assets of the Company shall be distributed to Point West or to a Successor or 
Successors.

                                       V.
                      MANAGEMENT: RIGHTS, POWER AND DUTIES
                      ====================================


         V.1   MANAGEMENT. The Company shall be managed solely by the Members.
         ---   ==========        

         V.2   PERSONAL SERVICES.  No member  shall be required  to perform  
         ---   ================= 
services for the Company solely by virtue of being a Member.

                                       4

<PAGE>




          V.3  LIABILITY AND INDEMNIFICATION. 
          ---  =============================

               1.   The   Members   shall  not  be    liable,  responsible,  or
         accountable,  in    damages or  otherwise,  to the Company for any act
         performed by any of them with respect to  Company  matters,  except for
         fraud.

               2.   The Company  shall indemnify  Members for any act  performed
         by any of them with respect to Company matters, except for fraud.

                                       VI
                                       --
                           TRANSFER OF INTERESTS AND
                           =========================
                             WITHDRAWALS OF MEMBERS
                             ====================== 

         VI.1   TRANSFERS. Point  West may  Transfer  all, or any portion of, or
         ----   =========
its interest or rights in, its Membership Rights to one or more Successors.

         VI.2   TRANSFER  TO A  SUCCESSOR.  In the event of any Transfer  of all
         ----   =========================
or any part of  Point  West's  Interest  to a  Successor,  the  Successor  shall
thereupon become a Member and the Company shall be continued.

                                      VII.
                                      ---
                          DISSOLUTION, LIQUIDATION AND
                          ============================
                           TERMINATION OF THE COMPANY
                           ===========================

         VII.1 EVENTS OF DISSOLUTION. The Company shall be dissolved upon the 
         ----- =====================
happening of any of the following events:

               1.    When the period fixed for its duration in Section 2.4 has 
         expired; or

               2.    If one or all of the Members unanimously determine to 
         dissolve the Company.

         The  Company  shall  not  dissolve   merely  because  of  Point  West's
Involuntary Withdrawal.

         VII.2 PROCEDURE  FOR WINDING UP AND  DISSOLUTION.  If  the  Company  is
         ----- ==========================================
dissolved, the  affairs of the  Company  shall be wound up. On winding up of the
Company, the assets of the Company shall be distributed,  first, to creditors of
the Company in satisfaction  of the liabilities of the Company,  and then to the
Persons who are the Members of the Company in proportion to their Interests.

         VII.3 FILING OF ARTICLES OF CANCELLATION.  If the Company is dissolved,
         ----- ==================================
Articles of Cancellation  shall be promptly filed with the Delaware Secretary of
State.  If there are no remaining  Members,  the Articles  shall be filed by the
last Person to be a Member; if there are no remaining

                                       5
<PAGE>



Members,  or a Person who last was a Member,  the Articles shall be filed by the
legal or personal representatives of the Person who last was a Member.

                                      VIII.
                                      -----
                           BOOKS, RECORDS, ACCOUNTING
                           --------------------------
                                AND TAX ELECTIONS
                                =================

         VIII.1 BANK  ACCOUNTS.  All  funds  of the  Company  shall be deposited
         ------ ==============
in a bank account or accounts  opened in the  Company's  name.  The Member shall
unanimously determine the institution or institutions at which the accounts will
be opened and maintained,  the types of accounts,  and the Persons who will have
authority with respect to the accounts and the funds therein.

         VIII.2 BOOKS AND RECORDS.  The Members shall keep or cause to be kept  
         ------ =================
complete  and  accurate   books  and  records  of  the  Company  and  supporting
documentation of the  transactions  with respect to the conduct of the Company's
business.  The books and records shall be  maintained  in accordance  with sound
accounting principles and practices.

         VIII.3 ANNUAL ACCOUNTING PERIOD.  The  annual  accounting period of the
         ------ ========================
Company shall be its taxable year. The Company's  taxable year shall be selected
by the Members, subject to the requirements and limitations of the Code.

         VIII.4 DISREGARD OF ENTITY.  Point West and the Company intend  for the
         ------ ==================== 
Company to be treated as a partnership  for federal income tax purposes,  if the
Company has two or more Members,  and otherwise as an entity that is disregarded
as an entity separate from its owner for federal income tax purposes pursuant to
Treasury Regulation Section 301.7701-3.

         VIII.5 TAX MATTERS PARTNER.  To the extent applicable, Point West shall
         ------ ===================
act as the "tax matters partner" within the meaning of Section  623(a)(7) of the
Code.

                                      IX.
                                      --
                               GENERAL PROVISIONS
                               ==================

         IX.1  ASSURANCES.   Each  Member  shall  execute all  such certificates
         ----  ==========
and other  documents and shall do all such filing,  recording,  publishing,  and
other acts as the Members deem  appropriate to comply with the  requirements  of
law for the  formation and operation of the Company and to comply with any laws,
rules, and regulations relating to the acquisition, operation, or holding of the
property of the Company.

         IX.2  NOTIFICATIONS. Any  notice,  demand,  consent,  election, offer,
         ----  =============
approval, require, or other communication (collectively, a "notice") required or
                                                            ------
permitted  under  this  Agreement  must  be  in  writing  and  either  delivered
personally  or sent by certified or registered  mail,  postage  prepaid,  return
receipt  requested.  A notice must be  addressed  to an  Interest  Holder at the
Interest Holder's last known address on the records of the Company.  A notice to
the Company  must be  addressed  to the  Company's  principal  office.  A notice
delivered personally will be deemed given only when

                                       6

<PAGE>

acknowledged in writing by the person to whom it is delivered.  A notice that is
sent by mail will be deemed  given three (3)  business  days after it is mailed.
Any party may designate, by notice to all of the others, substitute addresses or
addresses  for  notices;  and,  thereafter,  notices are to be directed to those
substitute addresses or addressees.

         IX.3  SPECIFIC PERFORMANCE.  The  parties  recognize  that  irreparable
         ----  ====================
injury will result from a breach of any  provision  of this  Agreement  and that
money damages will be inadequate to fully remedy the injury. Accordingly, in the
event of a breach or threatened  breach of one or more of the provisions of this
Agreement, any party who may be injured (in addition to any other remedies which
may be available to that party) shall be entitled to one or more  preliminary or
permanent  orders 1.  restraining and enjoining any act which would constitute a
breach  or 2.  compelling  the  performance  of  any  obligation  which,  if not
performed, would constitute a breach.

         IX.4  COMPLETE AGREEMENT.  This  Agreement  constitutes  the  complete
         ----  ==================
and  exclusive  statement  of the  agreement  among the Company and the original
Member. It supersedes all prior written and oral statements, including any prior
representation,  statement, condition, or warranty. Except as expressly provided
otherwise herein,  this Agreement may not be amended without the written consent
of all of the Members.

         IX.5  APPLICABLE   LAW. All  questions   concerning  the construction,
         ----  ================ 
validity,  and  interpretation  of this  Agreement  and the  performance  of the
obligations imposed by this Agreement shall be governed by the internal law, not
the law of conflicts, of the State of Delaware.

         IX.6  SECTION  TITLES.  The headings herein are inserted as a matter of
         ----  ===============
convenience  only,  and do not  define,  limit  or  describe  the  scope of this
Agreement or the intent of the provisions hereof.

         IX.7  BINDING PROVISIONS. This Agreement is binding upon, and inures to
         ----  ==================
the  benefit  of, the  parties  hereto and their  respective  heirs,  executors,
administrators,  personal and legal representatives,  Successors,  and permitted
assigns.

         IX.8  JURISDICTION  AND VENUE. Any suit involving any dispute or matter
         ----  =======================
arising under this  Agreement may only be brought in the United States  District
Court  for  the  District  of  Delaware  or  any  Delaware  State  Court  having
jurisdiction  over the  subject  matter of the  dispute or matter.  All  Members
hereby consent to the exercise of personal  jurisdiction  by any such court with
respect to any such proceeding.

         IX.9  TERMS. Common nouns and pronouns shall be deemed to refer to the
         ----  =====
masculine,  feminine, neuter, singular and plural, as the identity of the Person
may in the context require.

         IX.10 SEPARABILITY OF PROVISIONS. Each  provision of  this   Agreement
         ----- ==========================
shall  be  considered  separable;  and if,  for any  reason,  any  provision  or
provisions  herein are  determined to be invalid and contrary to any existing or
future law,  such  invalidity  shall not impair the operation of or affect those
portions of this Agreement which are valid.

                                       7

<PAGE>


         IX.11 COUNTERPARTS. This   Agreement   may  be  executed simultaneously
         ----- ============
in two or more counterparts  each of which shall be deemed an original,  and all
of  which,  when  taken  together,  constitute  one and the same  document.  The
signature of any party to any  counterpart  shall be deemed a signature  to, and
may be appended to, any other counterpart.

         IN WITNESS WHEREOF, the parties have executed, or caused this Agreement
to be executed, under seal, as of the date set forth hereinabove.

WITNESS OR ATTEST:
=================

                                          POINT WEST SECURITIES, LLC



                                          By: Michael Gallo
                                             ------------------------
                                              Managing Director


                                          POINT WEST CAPITAL CORPORATION


                                          By: Alan B. Perper 
                                              ------------------------
                                              President 

                                       8
<PAGE>


                                    Exhibit A
                                    ---------- 


Point West Capital Corporation
1700 Montgomery Street, Suite 250
San Francisco, CA 94111
EIN:  94-3165263

Percentage of Member: 100%

                                       9




<PAGE>


                                    Exhibit B


3.1 INITIAL CAPITAL CONTRIBUTIONS.
Cash contribution to Point West Securities, LLC


$250,000

                                       10