Exhibit 10.4

   Lease by and between Davies Partners II, as Lessor, and North Bay Bancorp,
 as Lessee, with respect to premises at 1395 E. 2d Street, Benicia, California.




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        STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - MODIFIED NET
                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

                                     [GRAPHIC]


1.      Basic Provisions ("Basic Provisions").

        1.1 Parties:  This Lease ("Lease"),  dated for reference  purposes only,
October  28,  1999,  is made by and between  Davies  Partners  II, a  California
limited partnership  ("Lessor") and North Bay Bancorp, a California  corporation
("Lessee"), (collectively the "Parties," or individually a "Party").

        1.2(a)  Premises:  That certain  portion of the Building,  including all
improvements  therein or to be provided by Lessor under the terms of this Lease,
commonly  known by the  street  address  of 1395 E. 2nd  Street  (+/-  2,OOOsf),
located in the City of  Benicia,  County of Solano,  State of CA,  with zip code
94510,  as  outlined  on  Exhibit  ______  attached  hereto  ("Premises").   The
"Building"  is that certain  building  containing  the  Premises  and  generally
described as  (describe  briefly the nature of the  Building):  8,500 +/- square
foot Retail/Office Center with related site improvements  fronting onto East 2nd
Street and not including the companion  building  fronting onto Military Avenue.
In addition  to Lessees  rights to use and occupy the  Premises  as  hereinafter
specified,  Lessee  shall  have  non-exclusive  rights to the  Common  Areas (as
defined in Paragraph 2.7 below) as  hereinafter,  specified,  but shall not have
any rights to the roof, exterior walls or utility raceways of the Building or to
any other buildings in the Industrial  Center. The Premises,  the Building,  the
Common  Areas,  the land  upon  which  they are  located,  along  with all other
buildings and improvements  thereon, are herein collectively  referred to as the
"Industrial  Center," (Also see Paragraph 2.) As used throughout this Lease, the
term "lndustrial Center" shall mean "Retail/Office Center."

        1.2(b) Parking: 38 +/ - as available  unreserved  vehicle parking spaces
("Unreserved  Parking  Spaces");  and three (3) reserved  vehicle parking spaces
("Reserved Parking Spaces"). (Also see Paragraph 2.6.) (See Paragraph 51)

        1.3 Term: 5 years and 4 months ("Original Term") commencing  December 1,
1999 ("Commencement  Date") and ending March 31, 2005 ("Expiration Date"). (Also
see Paragraph 3 and Paragraph 56.)

        1.4 Early Possession:  Not Applicable ("Early  Possession Date").  (Also
see Paragraphs 3.2 and 3.3.)

        1.5 Base Rent: $2,980.00 per month ("Base Rent"), payable on the the 1st
day of each month, in advance,  commencing  December 1, 1999 (Also see Paragraph
4.) [Also See Paragraph 50]

[X]     If this box is  checked,  this  Lease  provides  for the Base Rent to be
adjusted per Par 50 , attached hereto.

        1.6(a)  Base Rent Paid Upon  Execution:  $1,000.00  as Base Rent for the
period 12/1/99-12/31/99 (See also Paragraph 50).

        1.6(b) Lessee's Share of Common Area Operating  Expenses:  See Paragraph
61 percent  (N/A %)  ("Lessee's  Share")  as  determined  by [ ] prorata  square
footage of the Premises as compared to the total square  footage of the Building
or [ ] other criteria as described in Addendum _________. Lessee's obligation to
pay Common Area  Expenses is waved in its entirety for the period of December 1,
1999 through March 31, 2000.

        1.7  Security  Deposit:   $4,000.00  ("Security  Deposit").   (Also  see
Paragraph 5.)

        1.8  Permitted  Use:  Banking  Facility and Lending  Offices and related
activities______________________________________________________________________
___________________________________________________("Permitted  Use")  (Also see
Paragraph 6.)

        1.9 Insuring Party.  Lessor is the "Insuring Party." (Also see Paragraph
8.)

        1.10(a)  Real  Estate  Brokers.  The  following  real  estate  broker(s)
(collectively,   the  "Brokers")  and  brokerage  relationships  exist  in  this
transaction and are consented to by the Parties (check applicable boxes):

[ ]     None represents Lessor exclusively ("Lessor's Broker");

[X]     Spectrum Properties  represents Lessee exclusively  ("Lessee's Broker");
or

[ ]     None  represents  both  Lessor and  Lessee  ("Dual  Agency").  (Also see
Paragraph 15.)

        1.10(b) Payment to Brokers. Lessor shall pay to said Broker a fee as set
forth in a separate written  agreement  between Lessor and said Broker(s) (or in
the  event  there is no  separate  written  agreement  between  Lessor  and said
Broker(s),  the  sum of  $4,000.00)  for  brokerage  services  rendered  by said
Broker(s) in connection with this transaction [Also See Paragraph 6O].

        1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by None______________________________________________________________
________________________________________________________________________________
("Guarantor") (Also see Paragraph 37.)

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                           MULTI-TENANT-MODIFIED NET
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                                  Page 1 of 19
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        1.12  Addenda and  Exhibits.  Attached  hereto is an Addendum or Addenda
consisting  of  Paragraphs  ____________  through  __________,  and Exhibits n/a
through n/a , all of which constitute a part of this Lease.

2.      Premises, Parking and Common Areas.

        2.1 Letting.  Lessor hereby  leases to Lessee,  and Lessee hereby leases
from Lessor,  the  Premises,  for the term,  at the rental,  and upon all of the
terms,  covenants  and  conditions  set forth in this  Lease.  Unless  otherwise
provided  herein,  any statement of square  footage set forth in this Lease,  or
that may have been used in  calculating  rental  and/or  Common  Area  Operating
Expenses,  is an  approximation  which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph  1.6(b)) based thereon is
not  subject to  revision  whether or not the actual  square  footage is more or
less.

        2.2  Condition.  Lessor  shall  deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
plumbing,  electrical systems, fire sprinkler system, lighting, air conditioning
and heating  systems,  and loading  doors,  if any, in the Premises,  other than
those constructed by Lessee,  shall be in good operating  condition and the roof
shall be watertight on the  Commencement  Date.  If a  non-compliance  with said
warranty exists as of the Commencement  Date, Lessor shall,  except as otherwise
provided in this Lease,  promptly  after  receipt of written  notice from Lessee
setting  forth with  specificity  the nature and extent of such  non-compliance,
rectify same at Lessor's expense.  If Lessee does not give Lessor written notice
of a  non-compliance  with  this  warranty  within  sixty  (60)  days  after the
Commencement Date,  correction of that non-compliance shall be the obligation of
Lessee at Lessee's sole cost and expense.

        2.3 Compliance with Covenants,  Restrictions  and Building Code.  Lessor
warrants that any  improvements  (other than those  constructed  by Lessee or at
Lessee's  direction)  on or in the  Premises  which  have  been  constructed  or
installed  by Lessor or with  Lessor's  consent or at Lessor's  direction  shall
comply with all applicable  covenants or  restrictions  of record and applicable
building codes,  regulations and ordinances in effect on the Commencement  Date.
Lessor further  warrants to Lessee that Lessor has no knowledge of any violation
or violations of applicable  building codes,  regulations,  or ordinances  exist
with regard to the Premises as of the  Commencement  Date. Said warranties shall
not apply to any  Alterations  or Utility  Installations  (defined in  Paragraph
7.3(a))  made or to be made by Lessee.  If the  Premises do not comply with said
warranties,  Lessor shall, except as otherwise provided in this Lease,  promptly
after  receipt  of  written  notice  from  Lessee  given  within  six (6) months
following the  Commencement  Date and setting forth with  specificity the nature
and extent of such non-compliance, take such action, at Lessor's expense, as may
be  reasonable or  appropriate  to rectify the  non-compliance.  Lessor makes no
warranty  that the  Permitted Use in Paragraph 1.8 is permitted for the Premises
under Applicable Laws (as defined in Paragraph 2.4).

        2.4 Acceptance of Premises.  Except for  conditions  subject to Sections
2.2 and 2.3,  Lessee  hereby  acknowledges:  (a) that it has been advised by the
Broker(s)  to satisfy  itself  with  respect to the  condition  of the  Premises
(including,  but not  limited to, the  electrical  and fire  sprinkler  systems,
security,  environmental  aspects,  seismic  and  earthquake  requirements,  and
compliance  with the Americans  with  Disabilities  Act and  applicable  zoning,
municipal,  county, state and federal laws, ordinances and regulations,  and any
covenants or restrictions of record  (collectively,  "Applicable  Laws") and the
present and future  suitability  of the Premises for Lessee's  intended use; (b)
that Lessee has made such  investigation as it deems necessary with reference to
such  matters,   is  satisfied   with   reference   thereto,   and  assumes  all
responsibility  therefore  as the  same  relate  to  Lessee's  occupancy  of the
Premises and/or the terms of this Lease; and (c) that neither Lessor, nor any of
Lessor's agents, has made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease.

        2.5 Lessee as Prior  Owner/Occupant.  The  warranties  made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the date
set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises.  In
such  event,  Lessee  shall,  at  Lessee's  sole cost and  expense,  correct any
non-compliance of the Premises with said warranties.

        2.6 Vehicle Parking. [See Also Paragraph 51] Lessee shall be entitled to
use the  number  of  Unreserved  Parking  Spaces  and  Reserved  Parking  Spaces
specified in Paragraph  1.2(b) on those portions of the Common Areas  designated
from time to time by  Lessor  for  parking.  Lessee  shall not use more  parking
spaces  than said  number.  Said  parking  spaces  shall be used for  parking by
vehicles no larger  than  full-size  passenger  automobiles  or pick-up  trucks,
herein called  "Permitted  Size  Vehicles"  Vehicles  other than  Permitted Size
Vehicles  shall be parked and loaded or  unloaded  as  directed by Lessor in the
Rules and Regulations  (as defined in Paragraph 40) issued by Lessor.  (Also see
Paragraph 2.9.)

                (a) Lessee shall not permit or allow any vehicles that belong to
or  are  controlled  by  Lessee  or  Lessee's  employees,  suppliers,  shippers,
customers,  contractors or invitees to be loaded,  unloaded,  or parked in areas
other than those designated by Lessor for such activities.

                (b) If Lessee permits or allows any of the prohibited activities
described  in this  Paragraph  2.6,  then Lessor  shall have the right,  without
notice,  in  addition to such other  rights and  remedies  that it may have,  to
remove or tow away the  vehicle  involved  and charge the cost to Lessee,  which
cost shall be immediately payable upon demand by Lessor.

                (c) Lessor shall at the Commencement  Date of this Lease provide
the parking facilities required by Applicable Law.

        2.7 Common Areas - Definition. The term "Common Areas" is defined as all
areas and facilities  outside the Premises and within the exterior boundary line
of the Industrial  Center and interior utility raceways within the Premises that
are  provided  and  designated  by the Lessor  from time to time for the general
nonexclusive  use of Lessor,  Lessee and other lessees of the Industrial  Center
and their respective employees, suppliers, shippers, customers,  contractors and
invitees,  including  parking areas,  loading and unloading areas,  trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

        2.8 Common Areas - Lessee's Rights.  Lessor hereby grants to Lessee, for
the  benefit  of Lessee and its  employees,  suppliers,  shippers,  contractors,
customers and invitees,  during the term of this Lease, the non-exclusive  right
to use,  in common with others  entitled to such use,  the Common  Areas as they
exist from time to time, subject to any rights,  powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or  restrictions   governing  the  use  of  the  Industrial  Center.   Under  no
circumstances  shall the right herein  granted to use the Common Areas be deemed
to include the right to store any property,  temporarily or permanently,  in the
Common  Areas.  Any such storage  shall be permitted  only by the prior  written
consent of Lessor or Lessor's  designated agent, which consent may be revoked at
any time.  In the event that any  unauthorized  storage  shall occur then Lessor
shall have,  the right,  without  notice,  in addition to such other  rights and
remedies that it may have, to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

        2.9 Common Areas - Rules and Regulations. Lessor or such other person(s)
as Lessor may appoint  shall have the  exclusive  control and  management of the
Common Areas and shall have the right, from time to time, to establish,  modify,
amend and enforce  reasonable  Rules and  Regulations  with  respect  thereto in
accordance with  Paragraph 10. Lessee agrees to abide by and conform to all such
Rules  and  Regulations,  and  to  cause  its  employees,  suppliers,  shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance  with said rules and regulations by
other lessees of the Industrial Center.

        2.10 Common Areas - Changes.  Lessor  shall have the right,  in Lessor's
sole discretion,  except as otherwise  expressly  provided  below,  from time to
time: (a) Upon receipt of the prior approval of Lessee,  to  make changes to the
Common Areas,  including,  without  limitation,  changes in the location,  size,

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                          MULTI-TENANT - MODIFIED NET
              (C)1993 - American Industrial Real Estate Association
                                  Page 2 of 19
REVISED                                                         Form MTN-1-6/93E

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shape and number of driveways, entrances, parking spaces, parking areas, loading
and unloading areas, ingress,  egress,  direction of traffic,  landscaped areas,
walkways and utility raceways;

                (b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

                (d) To add additional  buildings and  improvements to the Common
Areas so long as there is (1) no  reduction  in the number of parking  spaces in
the  Industrial  Center and (2) no obstruction of the visibility of the Premises
adjacent public streets;

                (e) To use the Common Areas while  engaged in making  additional
improvements,  repairs or alterations to the Industrial  Center,  or any portion
thereof; and

                (f) To do and  perform  such  other  acts  and make  such  other
changes  in, to or with  respect to the Common  Areas and  Industrial  Center as
Lessor may, in the exercise of sound business judgment,  deem to be appropriate.

3.      Term.

        3.1     Term. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.

        3.2  Early  Possession.  If an Early  Possession  Date is  specified  in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after the
Early Possession Date but prior to the Commencement  Date, the obligation to pay
Base Rent  shall be abated for the  period of such  early  occupancy.  All other
terms of this Lease, however, (including, but not limited to, the obligations to
pay Lessee's Share of Common Area  Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect  during such period.  Any such eariy
possession  shall not affect nor advance  the  Expiration  Date of the  Original
Term.

        3.3  Delay  in  Possession.  If for any  reason  Lessor  cannot  deliver
possession  of the Premises to Lessee by the Early  Possession  Date,  if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified,  by the
Commencement  Date, Lessor shall not be subject to any liability  therefor,  nor
shall such failure  affect the  validity of this Lease,  or the  obligations  of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as  otherwise  provided  herein,  be obligated to pay rent or perform any
other  obligation of Lessee under the terms of this Lease until Lessor  delivers
possession  of the  Premises to Lessee.  If  possession  of the  Premises is not
delivered to Lessee  within ten (10) days after the  Commencement  Date.  Lessee
may,  at its option,  by notice in writing to Lessor  within ten (10) days after
the end of said ten (10) day  period,  cancel  this  Lease,  in which  event the
Parties shall be discharged from all obligations  hereunder;  provided  further,
however,  that if such written notice of Lessee is not received by Lessor within
said ten (10) day period,  Lessee's right to cancel this Lease  hereunder  shall
terminate  and be of no  further  force or  effect.  Except as may be  otherwise
provided,  and  regardless  of when the Original  Term  actually  commences,  if
possession is not tendered to Lessee when required by this Lease and Lessee does
not terminate this Lease, as aforesaid, the period free of the obligation to pay
Base Rent, if any, that Lessee would  otherwise  have enjoyed shall run from the
date of delivery of  possession  and  continue  for a period equal to the period
during which the Lessee would have otherwise enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee.

4.      Rent.

        4.1 Base Rent. Lessee shall pay Base Rent and other rent or charges,  as
the same may be  adjusted  from time to time,  to Lessor in lawful  money of the
United States, without offset or deduction,  on or before the day on which it is
due under the terms of this Lease.  Base Rent and all other rent and charges for
any period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved.  Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other  persons or at such other  addresses as Lessor may from time to
time designate in writing to Lessee.

        4.2 Common Area  Operating  Expenses.  Lessee shall pay to Lessor during
the term hereof,  in addition to the Base Rent,  Lessee's Share (as specified in
Paragraph 61 of all Common Area  Operating  Expenses,  as  hereinafter  defined,
during each  calendar  year of the term of this Lease,  in  accordance  with the
following provisions:

                  (a) "Common Area Operating Expenses" are defined, for purposes
of this Lease,  as all costs  incurred by Lessor  relating to the  ownership and
operation  of  the  Industrial  Center,  including,  but  not  limited  to,  the
following:

                      (i) The operation, repair and maintenance, in neat, clean,
good order and condition, of the following:

                          (aa)  The  Common  Areas,   including  parking  areas,
loading  and  unloading  areas,  trash  areas,  roadways,  sidewalks,  walkways,
parkways,  driveways,  landscaped areas, striping,  bumpers, irrigation systems,
Common Area lighting  facilities,  fences and gates,  elevators  and roof.

                          (bb) Exterior signs and any tenant directories.

                          (cc) Fire detection and sprinkler systems.

                      (ii) The cost of water, gas,  electricity and telephone to
service the Common Areas.

                      (iii) Trash  disposal,  property  management  and security
services and the costs of any environmental inspections.

                      (iv)  Reserves  set aside for  maintenance  and  repair of
Common Areas.

                      (v) Real Property Taxes (as defined in Paragraph  10.2) to
be paid by Lessor for the  Building  and the Common  Areas  under  Paragraph  10
hereof.

                      (vi) The costs of the premiums for the insurance  policies
maintained by Lessor under Paragraph 8 hereof.

                      (vii) Any deductible portion of an insured loss concerning
the Building or the Common Areas.

                      (viii) Any other  services  to be  provided by Lessor that
are stated elsewhere in this Lease to be a Common Area Operating Expense.

                  (b) Any Common Area Operating Expenses and Real Property Taxes
that are  specifically  attributable to the Building or to any other building in
the Industrial Center or to the operation, repair and maintenance thereof, shall
be allocated  entirely to the Building or to such other building.  However,  any
Common Area Operating Expenses and Real Property Taxes that are not specifically
attributable  to the  Building  or to any other  building  or to the  operation,
repair and maintenance  thereof,  shall be equitably  allocated by Lessor to all
buildings in the Industrial Center.

                  (c) The inclusion of the improvements, facilities and services
set forth in  Subparagraph  4.2(a)  shall not be deemed to impose an  obligation
upon Lessor to either have said  improvements  or facilities or to provide those
services  unless the  Industrial  Center  already has the same,  Lessor  already
provides the services,  or Lessor has agreed  elsewhere in this Lease to provide
the same or some of them.

                  (d) Lessee's Share of Common Area Operating  Expenses shall be
due and payable by Lessee with Lessee's payrnent of Base Rent.

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                          MULTI-TENANT - MODIFIED NET
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                                  Page 3 of 19
REVISED                                                         Form MTN-1-6/93E

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5. Security  Deposit.  Lessee shall deposit with Lessor upon Lessee's  execution
hereof the Security  Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful  performance of Lessee's  obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder,  or otherwise  Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any  portion of said  Security  Deposit for the payment of any amount due
Lessor or to reimburse or compensate  Lessor for any liability,  cost,  expense,
loss or damage  (including  attorneys' fees) which Lessor may suffer or incur by
reason  thereof.  If Lessor uses or applies all or any portion of said  Security
Deposit,  Lessee  shall  within ten (10) days after  written  request  therefore
deposit  monies with Lessor  sufficient to restore said Security  Deposit to the
full amount required by this Lease.  Lessor shall not be required to keep all or
any part of the Security  Deposit  separate  from its general  accounts.  Lessor
shall,  at the  expiration or earlier  termination  of the term hereof and after
Lessee has vacated the Premises, return to Lessee (or, at Lessors option, to the
last  assignee,  if any,  of  Lessee's  interest  herein),  that  portion of the
Security  Deposit  not used or  applied by Lessor.  Unless  otherwise  expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust,  to bear interest or other  increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease.

6.       Use.

         6.1 Permitted Use.

                  (a)  Lessee  shall use and occupy  the  Premises  only for the
Permitted  Use set  forth in  Paragraph  1.8,  or any  other  legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful,  creates waste or a
nuisance,  or that disturbs owners and/or  occupants of, or causes damage to the
Premises or neighboring premises or properties.

                  (b) Lessor hereby agrees to not unreasonably withhold or delay
its consent to any written request by Lessee,  Lessee's assignees or subtenants,
and by  prospective  assignees  and  subtenants  of Lessee,  its  assignees  and
subtenants,  for a modification  of said Permitted Use, so long as the same will
not impair the structural  integrity of the  improvements  on the Premises or in
the Building or the mechanical or electrical systems therein,  does not conflict
with uses by other lessees, is not significantly more burdensome to the Premises
or the  Building and the  improvements  thereon,  and is  otherwise  permissible
pursuant to this Paragraph 6. If Lessor elects to withhold such consent,  Lessor
shall  within  five  (5)  business  days  after  such  request  give  a  written
notification  of same,  which notice  shall  include an  explanation  of Lessors
reasonable objections to the change in use.

        6.2 Hazardous Substances.

                  (a)  Reportable  Uses  Require  Consent.  The term  "Hazardous
Substance"  as used in this Lease shall mean any product,  substance,  chemical,
material  or  waste  whose  presence,   nature,  quantity  and/or  intensity  of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination  with other  materials  expected to be on the
Premises,  is either: (i) potentially  injurious to the public health, safety or
welfare,  the environment,  or the Premises;  (ii) regulated or monitored by any
governmental  authority;  or (iii) a basis for potential  liability of Lessor to
any govemmental agency or third party under any applicable statute or common law
theory.  Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum,  gasoline,  crude oil or any products or by-products thereof.  Lessee
shall not engage in any activity in or about the Premises  which  constitutes  a
Reportable  Use (as  hereinafter  defined) of Hazardous  Substances  without the
express  prior written  consent of Lessor and  compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable  Requirements (as defined in
Paragraph 6.3).  "Reportable  Use" shall mean (i) the installation or use of any
above or below ground storage tank;  (ii) the generation,  possession,  storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report,  notice,  registration or business plan
is required to be filed with, any governmental authority; and (iii) the presence
in, on or about the Premises of a Hazardous  Substance with respect to which any
Applicable Laws require that a notice be given to persons  entering or occupying
the Premises or neighboring  properties.  Notwithstanding the foregoing,  Lessee
may, without Lessor's prior consent, but upon notice to Lessor and in compliance
with all  Applicable  Requirements,  use any  ordinary and  customary  materials
reasonably  required to be used by Lessee in the normal  course of the Permitted
Use,  so long as such  use is not a  Reportable  Use and  does  not  expose  the
Premises or neighboring  properties to any meaningful risk of  contamination  or
damage or expose Lessor to any liability therefor. In addition,  Lessor may (but
without any  obligation to do so) condition its consent to any Reportable Use of
any Hazardous  Substance by Lessee upon Lessee's  giving Lessor such  additional
assurances as Lessor, in its reasonable  discretion,  deems necessary to protect
itself,   the  public,   the  Premises  and  the  environment   against  damage,
contamination or injury and/or liability  therefor,  including,  but not limited
to, the  installation  (and,  at  Lessors  option,  removal  on or before  Lease
expiration  or  earlier   termination)   of  reasonably   necessary   protective
modifications to the Premises (such as concrete  encasements) and/or the deposit
of an additional Security Deposit under Paragraph 5 hereof.

                  (b) Duty to Inform Lessor.  If Lessee knows, or has reasonable
cause to  believe,  that a  Hazardous  Substance  has come to be located in, on,
under or about the Premises or the Building,  other than as previously consented
to by Lessor,  Lessee shall  immediately  give Lessor  written  notice  thereof,
together  with  a  copy  of  any  statement,   report,   notice,   registration,
application,  permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous Substance
including,  but not  limited  to, all such  documents  as may be involved in any
Reportable  Use  involving  the  Premises.  Lessee shall not cause or permit any
Hazardous  Substance  to be  spilled  or  released  in,  on,  under or about the
Premises (including,  without limitation, through the plumbing or sanitary sewer
system).

                  (c) Indemnification.  Lessee shall indemnify,  protect, defend
and hold Lessor, its agents,  employees,  lenders and ground lessor, if any, and
the  Premises,  harmless  from and  against  any and all  damages,  liabilities,
judgments,  costs,  claims,  liens,  expenses,  penalties,  loss of permits  and
attorneys'  and  consultants'  fees  arising out of or involving  any  Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under Lessee's
control. Lessee's obligations under this Paragraph 6.2(c) shall include, but not
be limited to, the effects of any contamination or injury to person, property or
the  environment  created or suffered by Lessee,  and the cost of  investigation
(including consultants' and attorneys' fees and testing), removal,  remediation,
restoration and/or abatement thereof,

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                           MULTI-TENANT - MODIFIED NET
             (c)1993 - American Industrial Real Estate Association
                                  Page 4 of 19

REVISED                                                         Form MTN-1-6/93E

<PAGE>

or of any contamination  therein  involved,  and shall survive the expiration or
earlier  termination  of this Lease.  No  termination,  cancellation  or release
agreement  entered  into by Lessor  and Lessee  shall  release  Lessee  from its
obligations  under this  Lease with  respect  to  Hazardous  Substances,  unless
specifically so agreed by Lessor in writing at the time of such agreement.

                  (d) Lessor's  Warranty.  Lessor hereby represents and warrants
to Lessee  there are no  Hazardous  Substances  on the  Premises or in or on the
Industrial  Center in which the Premises are  located.  Lessor shall  indemnify,
protect,  defend  and hold  Lessee,  its  agents,  employees,  lenders,  if any,
harmless from and against any and all damages,  liabilities,  judgments,  costs,
claims,  liens,  expenses,   penalties,  loss  of  permits  and  attorneys'  and
consultants'  fees  arising out of or involving  any  Hazardous  Substances  (i)
existing on the Premises or in or on the Industrial Center in which the Premises
are located in contravention of Lessors warranty given in the preceding sentence
or (ii) brought onto the Premises or the  Industrial  Center by or for Lessor or
by anyone under  Lessor's  control.  Lessor's  obligations  under this Paragraph
6.2(d) shall include, but not be limited to, the effects of any contamination or
injury to person,  property or the environment created or suffered by Lessee and
the  cost of  investigation  (including  consultants'  and  attorneys'  fees and
testing) removal,  remediation,  restoration and/or abatement thereof, or of any
contamination  therein  involved,  and shall  survive the  expiration or earlier
termination of this Lease.

         6.3 Lessee's  Compliance with  Requirements.  Lessee shall, at Lessee's
sole cost and expense, fully, diligently and in a timely manner, comply with all
"Applicable  Requirements,"  which  term is used in this Lease to mean all laws,
rules,   regulations,   ordinances,   directives,   covenants,   easements   and
restrictions  of  record,  permits,  the  requirements  of any  applicable  fire
insurance  underwriter or rating  bureau,  and the  recommendations  of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including,
but  not  limited  to,  matters  pertaining  to  (i)  industrial  hygiene:  (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions; and (iii) the use, generation, manufacture,  production,
installation,  maintenance, removal, transportation,  storage, spill, or release
of any  Hazardous  Substance),  now in effect or which may  hereafter  come into
effect.  Lessee shall,  within five (5) days after  receipt of Lessor's  written
request, provide Lessor with copies of all documents and information, including,
but not limited to, permits, registrations, manifests, applications, reports and
certificates,  evidencing Lessee's  compliance with any Applicable  Requirements
specified  by Lessor,  and shall  immediately  upon  receipt,  notify  Lessor in
writing  (with copies of any  documents  involved) of any  threatened  or actual
claim, notice, citation, warning, complaint or report pertaining to or involving
failure by Lessee or the Premises to comply with any Applicable Requirements.

        6.4 Inspection; Compliance with Law. Lessor, Lessor's agents, employees,
contractors  and designated  representatives,  and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("Lenders") shall have the right
to enter the Premises at any time in the case of an emergency  (such entry shall
be permissable  only for the limited purpose of admitting fire,  police or other
public safety  officials onto the Premises),  and otherwise at reasonable  times
upon three (3) business days advance  notice,  for the purpose of inspecting the
condition of the Premises and for verifying compliance by Lessee with this Lease
and all Applicable  Requirements (as defined in Paragraph 6.3), and Lessor shall
be entitled to employ  experts  and/or  consultants  in connection  therewith to
advise Lessor with respect to Lessee's activities,  including but not limited to
Lessee's installation,  operation, use, monitoring,  maintenance,  or removal of
any  Hazardous  Substance on or from the  Premises.  Any  inspections  conducted
pursuant  to this  Section  shall  be  conducted  in a  manner  which  will  not
unreasonably  interfere with the operation of Lessee's  business.  The costs and
expenses of any such  inspections  shall be paid by the party  requesting  same,
unless a Default or Breach of this Lease by Lessee or a violation of  Applicable
Requirements or a contamination,  caused or materially contributed to by Lessee,
is found to exist or to be imminent,  or unless the  inspection  is requested or
ordered  by a  governmental  authority  as the  result of any such  existing  or
imminent  violation or  contamination.  In such case,  Lessee shall upon request
reimburse  Lessor  or  Lessor's  Lender,  as the case may be,  for the costs and
expenses of such inspections.

7. Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations.

        7.1 Lessee's Obligations.

                  (a) Subject to the provisions of Paragraphs  2.2  (Condition),
2.3 (Compliance  with Covenants,  Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's  sole cost and expense and at all times,  keep the  Premises  and every
part thereof in good order, condition and repair (whether or not such portion of
the  Premises  requiring  repair,  or the  means  of  repairing  the  same,  are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs  occurs as a result of Lessee's  use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning,  ventilating,  electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises,  fixtures,  interior walls,  interior  surfaces of exterior
walls,  ceilings,  floors,  windows,  doors,  plate glass,  and  skylights,  but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order,  condition and repair,
shall  exercise and perform good  maintenance  practices.  Lessee's  obligations
shall include restorations,  replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair.

                  (c) If Lessee fails to perform Lessee's obligations under this
Paragraph  7.1,  Lessor may enter upon the  Premises  after ten (10) days' prior
written notice to Lessee  (except in the case of an emergency,  in which case no
notice shall be required),  perform such obligations on Lessee's behalf, and put
the Premises in good order,  condition and repair,  in accordance with Paragraph
13.2 below.

        7.2 Lessor's  Obligations.  Subject to the  provisions of Paragraphs 2.2
(Condition),  2.3 (Compliance  with Covenants,  Restrictions and Building Code),
4.2 (Common Area Operating  Expenses),  6 (Use), 7.1 (Lessee's  Obligations),  9
(Damage or Destruction) and 14 (Condemnation),  Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order,  in a first class condition
and repair the foundations,  exterior walls (including  repainting),  structural
condition of interior  bearing  walls,  exterior  roof,  fire  sprinkler  and/or
standpipe  and hose (if  located in the Common  Areas) or other  automatic  fire
extinguishing  system  including fire alarm and/or smoke  detection  systems and
equipment,  fire  hydrants,   parking  lots,  walkways,   parkways,   driveways,
landscaping,  fences, signs and utility systems serving the Common Areas and all
parts  thereof,  as well as  providing  the services for which there is a Common
Area Operating  Expense pursuant to Paragraph 4.2. Lessor shall not be obligated
to paint the interior  surfaces of exterior  walls nor shall Lessor be obligated
to maintain,  repair or replace  windows,  doors or plate glass of the Premises.

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                          MULTI-TENANT - MODIFIED NET
             (c)1993 - American Industrial Real Estate Association
                                  Page 5 of 19
REVISED Form                                                         MTN-1-6/93E

<PAGE>

        7.3  Utility  Installations,  Trade  Fixtures,  Alterations.  [See  Also
Paragraph 53)

                  (a)   Definitions;   Consent   Required.   The  term  "Utility
Installations"  is used in this Lease to refer to all air lines,  power  panels,
electrical  distribution,  security,  fire  protection  systems,  communications
systems, lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing,  and fencing in, on or about the Premises.  The term "Trade  Fixtures"
shall mean Lessee's  machinery and equipment  which can be removed without doing
material  damage  to  the  Premises.  The  term  "Alterations"  shall  mean  any
modification  of the  improvements  on the Premises which are provided by Lessor
under  the  terms of this  Lease,  other  than  Utility  Installations  or Trade
Fixtures. "Lessee-Owned Alterations and/or Utility Installations" are defined as
Alterations  and/or Utility  Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a).

                  All Alterations and Utility Installations to be made by Lessee
shall be deemed  conditioned upon: (i) Lessee's acquiring all applicable permits
required by  governmental  authorities;  (ii) the  furnishing  of copies of such
permits together with a copy of the plans and  specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the  compliance by Lessee with all  conditions of said permits in a prompt
and  expeditious  manner.  Any  Alterations or Utility  Installations  by Lessee
during the term of this Lease  shall be done in a good and  workmanlike  manner,
with good and  sufficient  materials,  and be in compliance  with all Applicable
Requirements.  Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor.

                  (c) Lien Protection.  Lessee shall pay when due all claims for
labor or materials  furnished or alleged to have been furnished to or for Lessee
at or  for  use on the  Premises,  which  claims  are or may be  secured  by any
mechanic's or materialmen's  lien against the Premises or any interest  therein.
Lessee  shall  give  Lessor  not less than ten (10)  days'  notice  prior to the
commencement  of any work in, on, or about the  Premises,  and Lessor shall have
the  right  to post  notices  of  non-responsibility  in or on the  Premises  as
provided by law. If Lessee  shall,  in good faith,  contest the  validity of any
such lien, claim or demand,  then Lessee shall, at its sole expense,  defend and
protect  itself,  Lessor  and the  Premises  against  the same and shall pay and
satisfy  any such  adverse  judgment  that may be  rendered  thereon  before the
enforcement thereof against the Lessor or the Premises.

        7.4 Ownership,  Removal, Surrender, and Restoration.

                  (a) Ownership.  All Alterations and Utility Installations made
to the  Premises by Lessee  shall be the  property  of and owned by Lessee,  but
considered  a part of the  Premises.  Lessor may, at any time and at its option,
elect in writing to Lessee to be the owner of all or any  specified  part of the
Lessee-Owned Alterations and Utility Installations.  Unless otherwise instructed
per  Subparagraph  7.4(b)  hereof,  all  Lessee-Owned  Alterations  and  Utility
Installations  shall,  at the  expiration or earlier  termination of this Lease,
become the property of Lessor and remain upon the  Premises  and be  surrendered
with the Premises by Lessee.

                  (b) Removal. [See Paragraphs 53 and 54]

                  (c) Surrender/Restoration. Lessee shall surrender the Premises
by the end of the last day of the Lease term or any  earlier  termination  date,
clean and free of debris and in good  operating  order,  condition  and state of
repair,  ordinary  wear and tear  excepted.  Ordinary  wear and tear  shall  not
include  any damage or  deterioration  that would  have been  prevented  by good
maintenance  practice or by Lessee  performing all of its obligations under this
Lease.  Except as  otherwise  agreed  or  specified  herein,  the  Premises,  as
surrendered,  shall  include  the  Alterations  and Utility  Installations.  The
obligation  of Lessee shall  include the repair of any damage  occasioned by the
installation,  maintenance or removal of Lessee's Trade  Fixtures,  furnishings,
equipment,  as well as the  removal  of any  storage  tank  installed  by or for
Lessee, and the removal,  replacement,  or remediation of any soil,  material or
ground water  contaminated by Lessee,  all as may then be required by Applicable
Requirements  and/or good  practice.  Lessee's  Trade  Fixtures shall remain the
property of Lessee and shall be removed by Lessee  subject to its  obligation to
repair and restore the Premises per this Lease.

8.      Insurance; Indemnity.

        8.1 Payment of  Premiums.  The cost of  the premiums  for the  insurance
policies  maintained  by Lessor  under this  Paragraph  8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof.  Premiums for policy periods
commencing  prior to,  or  extending  beyond,  the term of this  Lease  shall be
prorated to coincide  with the  corresponding  Commencement  Date or  Expiration
Date.

        8.2     Liability Insurance.

        (a) Carried by Lessee.  Lessee shall obtain and keep in force during the
term of this Lease a Commercial General Liability policy of insurance protecting
Lessee,  Lessor and any  Lender(s)  whose names have been  provided to Lessee in
writing (as additional  insureds)  against  claims for bodily  injury,  personal
injury  and  property  damage  based  upon,  involving  or  arising  out  of the
ownership,  use,  occupancy  or  maintenance  of  the  Premises  and  all  areas
appurtenant  thereto.  Such insurance shall be on an occurrence  basis providing
single limit coverage in an amount not less than  $1,000,000 per occurrence with
an "Additional  Insured-Managers or Lessors of Premises" endorsement. The limits
of said  insurance  required  by this Lease or as  carried by Lessee  shall not,
however,  limit the  liability  of Lessee nor relieve  Lessee of any  obligation
hereunder.  All  insurance  to be carried by Lessee  shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.

        (b) Carried by Lessor.  Lessor shall also maintain  liability  insurance
described  in  Paragraph  8.2(a)  above,  in addition to and not in lieu of, the
insurance  required to be maintained by Lessee.  Lessee shall not be named as an
additional insured therein.

        8.3  Property  Insurance  -  Building,  Improvements  and Rental  Value.

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                          MULTI-TENANT - MODIFIED NET
             (c)1993 - American Industrial Real Estate Association
                                  Page 6 of 19
REVISED                                                         Form MTN-1-6/93E

<PAGE>

                  (a) Building and Improvements. Lessor shall obtain and keep in
force  during the term of this Lease a policy or policies in the name of Lessor,
with loss  payable  to Lessor and to any  Lender(s),  insuring  against  loss or
damage to the Premises.  Such insurance shall be for full  replacement  cost, as
the same shall exist from time to time, or the amount required by any Lender(s),
but in no event more than the  commercially  reasonable and available  insurable
value  thereof  if, by reason of the  unique  nature or age of the  improvements
involved,  such latter amount is less than full replacement  cost.  Lessee-Owned
Alterations  and  Utility  installations,  Trade Fixtures and Lessee's  personal
property  shall be insured by Lessee  pursuant to Paragraph 8.4. If the coverage
is available and  commercially  appropriate,  Lessor's  policy or policies shall
insure against all risks of direct physical loss or damage (except the perils of
flood and/or earthquake unless required by a Lender), including coverage for any
additional  costs  resulting  from  debris  removal  and  reasonable  amounts of
coverage  for  the   enforcement   of  any  ordinance  or  law   regulating  the
reconstruction or replacement of any undamaged sections of the Building required
to be  demolished  or  removed  by reason of the  enforcement  of any  building,
zoning,  safety  or land use  laws as the  result  of a  covered  loss,  but not
including plate glass  insurance.  Said policy or policies shall also contain an
agreed  valuation  provision  in  lieu of any  co-insurance  clause,  waiver  of
subrogation,  and inflation guard  protection  causing an increase in the annual
property  insurance  coverage  amount by a factor of not less than the  adjusted
U.S.  Department of Labor Consumer  Price Index for All Urban  Consumers for the
city nearest to where the Premises are located.

                  (b) Rental  Value.  Lessor shall also obtain and keep in force
during the term of this Lease a policy or policies  in the name of Lessor,  with
loss payable to Lessor and any  Lender(s),  insuring the loss of the full rental
and other charges  payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes,  insurance  costs, all Common Area Operating
Expenses and any scheduled rental increases). Said insurance may provide that in
the event the Lease is terminated  by reason of an insured  loss,  the period of
indemnity for such coverage shall be extended  beyond the date of the completion
of repairs or replacement  of the Premises,  to provide for one full year's loss
of rental  revenues from the date of any such loss. Said insurance shall contain
an agreed valuation provision in lieu of any co-insurance clause, and the amount
of coverage shall be adjusted  annually to reflect the projected  rental income,
Real  Property  Taxes,  insurance  premium  costs  and other  expenses,  if any,
otherwise payable, for the next 12-month period.  Common Area Operating Expenses
shall include any deductible amount in the event of such loss.

                  (c)  Adjacent  Premises.  Lessee shall pay for any increase in
the premiums for the property insurance of the Building and for the Common Areas
or other  buildings  in the  Industrial  Center  if said  increase  is caused by
Lessee's acts, omissions, use or occupancy of the Premises.

                  (d) Lessee's Improvements: Since Lessor is the Insuring Party,
Lessor  shall not be required  to insure  Lessee-Owned  Alterations  and Utility
Installations  unless the item in  question  has become the  property  of Lessor
under the terms of this Lease.

        8.4  Lessee's  Property  Insurance.   Subject  to  the  requirements  of
Paragraph  8.5,  Lessee at its cost  shall  either  by  separate  policy  or, at
Lessor's option, by endorsement to a policy already carried,  maintain insurance
coverage on all of Lessee's personal  property,  Trade Fixtures and Lessee-Owned
Alterations and Utility  Installations  in, on  or about the Premises similar in
coverage to that carried by Lessor as the Insuring Party under Paragraph 8.3(a).
Such insurance shall be full  replacement cost coverage with a deductible not to
exceed $1,000 per occurrence. The proceeds from any such insurance shall be used
by Lessee for the replacement of personal  property and the restoration of Trade
Fixtures and Lessee-Owned  Alterations and Utility  Installations.  Upon request
from  Lessor,  Lessee  shall  provide  Lessor with  written  evidence  that such
insurance is in force.

        8.5  Insurance  Policies.  Insurance  required  hereunder  shall  be  in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+, V, or such other  rating as may be required by a Lender,  as set
forth in the most current issue of "Best's Insurance Guide." Lessee shall not do
or permit to be done anything  which shall  invalidate  the  insurance  policies
referred to in this  Paragraph  8. Lessee shall cause to be delivered to Lessor,
within  seven (7) days  after the  earlier of the Early  Possession  Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance  required under Paragraph  8.2(a) and 8.4. No such
policy shall be cancelable or subject to  modification  except after thirty (30)
days' prior written  notice to Lessor.  Lessee shall,  at least thirty (30) days
prior to the  expiration  of such  policies,  furnish  Lessor  with  evidence of
renewals or "insurance  binders" evidencing renewal thereof, or Lessor may order
such  insurance  and charge the cost  thereof to Lessee,  which  amount shall be
payable by Lessee to Lessor upon demand.

        8.6  Waiver  of  Subrogation.  Without  affecting  any  other  rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover  damages  (whether in contract or in tort) against
the other,  for loss or damage to their  property  arising out of or incident to
the perils  required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of  insurance  carried  or  required,  or by any  deductibles  applicable
thereto.  Lessor and Lessee agree to have their respective  insurance  companies
issuing  property  damage  insurance  waive any right to  subrogation  that such
companies may have against Lessor or Lessee,  as the case may be, so long as the
insurance is not invalidated thereby.

        8.7 Indemnity. Except for Lessor's negligence, willful acts or omissions
and/or breach of express warranties, Lessee shall indemnify, protect, defend and
hold harmless the  Premises,  Lessor and its agents,  Lessor's  master or ground
lessor, partners and Lenders, from and against any and all claims, loss of rents
and/or damages, costs, liens, judgments,  penalties, loss of permits, attorneys'
and consultants' fees, expenses and/or liabilities arising out of, involving, or
in  connection  with,  the  occupancy of the Premises by Lessee,  the conduct of
Lessee's  business,  any  act,  omission  or  neglect  of  Lessee,  its  agents,
contractors,  employees or invitees,  and out of any Default or Breach by Lessee
in the  performance  in a timely manner of any obligation on Lessee's part to be
performed under this Lease. The foregoing shall include,  but not be limited to,
the  defense  or  pursuit  of any  claim or any  action or  proceeding  involved
therein,  and  whether  or not  (in the  case of  claims  made  against  Lessor)
litigated  and/or  reduced  to  judgment.  In case any action or  proceeding  be
brought against Lessor by reason of any of the foregoing matters,  Lessee,  upon
notice  from  Lessor,  shall  defend  the same at  Lessee's  expense  by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense.  Lessor  need not  have  first  paid  any such  claim in order to be so
indemnified.

        8.8 Exemption of Lessor from Liability.  Except for Lessor's negligence,
willful acts and/or  omissions,  Lessor shall not be liable for injury or damage
to the person or goods, wares, merchandise or other property of Lessee, Lessee's
employees, contractors, invitees, customers, or any other person in or about the
Premises,  whether  such  damage or injury is caused by or  results  from  fire,
steam,  electricity,  gas,  water  or  rain,  or  from  the  breakage,  leakage,
obstruction  or other  defects of pipes,  fire  sprinklers,  wires,  appliances,
plumbing,  air  conditioning  or  lighting  fixtures,  or from any other  cause,
whether said injury or damage results from conditions  arising upon the Premises
or upon other  portions of the Building of which the  Premises are a part,  from
other sources or places,  and  regardless of whether the cause of such damage or
injury or the means of repairing the same is accessible or not. Lessor shall not
be liable for any damages arising from any act or neglect of any other lessee of
Lessor nor from the  failure by Lessor to enforce  the  provisions  of any other
lease in the  Industrial  Center.

9.      Damage or  Destruction.

        9.1 Definitions.
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                          MULTI-TENANT - MODIFIED NET
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                                  Page 7 of 19
REVISED                                                         Form MTN-1-6/93E

<PAGE>

                  (a) "Premises Partial Damage" shall mean damage or destruction
to the Premises,  other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or  destruction is less than fifty percent (50%)
of the then  Replacement  Cost (as defined in Paragraph  9.1(d)) of the Premises
(excluding   Lessee-Owned   Alterations  and  Utility  Installations  and  Trade
Fixtures) immediately prior to such damage or destruction.

                  (b)  "Premises  Total   Destruction"   shall  mean  damage  or
destruction to the Premises,  other than  Lessee-Owned  Alterations  and Utility
Installations,  the repair cost of which damage or  destruction is fifty percent
(50%)  or  more  of  the  then  Replacement  Cost  of  the  Premises  (excluding
Lessee-Owned   Alterations  and  Utility   Installations   and  Trade  Fixtures)
immediately  prior  to such  damage  or  destruction.  In  addition,  damage  or
destruction to the Building,  other than  Lessee-Owned  Alterations  and Utility
Installations  and Trade  Fixtures of any lessees of the  Building,  the cost of
which  damage  or  destruction  is  fifty  percent  (50%)  or more  of the  then
Replacement Cost (excluding  Lessee-Owned  Alterations and Utility Installations
and Trade Fixtures of any lessees of the Building) of the Building shall, at the
option of Lessor, be deemed to be Premises Total Destruction.

                  (c)  "Insured  Loss" shall mean damage or  destruction  to the
Premises,  other than  Lessee-Owned  Alterations and Utility  Installations  and
Trade  Fixtures,  which was  caused by an event  required  to be  covered by the
insurance  described in Paragraph 8.3(a)  irrespective of any deductible amounts
or coverage limits involved.

                  (d)  "Replacement  Cost"  shall  mean  the cost to  repair  or
rebuild the improvements  owned by Lessor at the time of the occurrence to their
condition  existing  immediately  prior thereto,  including  demolition,  debris
removal and upgrading  required by the operation of applicable  building  codes,
ordinances or laws, and without deduction for depreciation.

                  (e) "Hazardous  Substance Condition" shall mean the occurrence
or discovery of a condition  involving the presence of, or a contamination by, a
Hazardous  Substance  as  defined  in  Paragraph  6.2(a),  in,  on, or under the
Premises.

        9.2 Premises  Partial Damage - Insured Loss. If Premises  Partial Damage
that is an Insured Loss occurs,  then Lessor shall, at Lessor's expense,  repair
such damage (but not Lessee's Trade  Fixtures or  Lessee-Owned  Alterations  and
Utility  Installations)  as soon as  reasonably  possible  and this Lease  shall
continue  in full  force and  effect.  In the  event,  however,  that there is a
shortage of  insurance  proceeds and such  shortage is due to the fact that,  by
reason  of  the  unique  nature  of  the  improvements  in  the  Premises,  full
replacement  cost  insurance  coverage  was  not  commercially   reasonable  and
available,  Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique  aspects of the Premises,  provided such
damage is not the result of Lessor's negligence,  willful acts and/or omissions,
unless  Lessee  provides  Lessor  with  the  funds to cover  same,  or  adequate
assurance  thereof,  within ten (10) days following receipt of written notice of
such shortage and request  therefor.  If Lessor  receives said funds or adequate
assurance thereof within said ten (10) day period, Lessor shall complete them as
soon as  reasonably  possible  and this  Lease  shall  remain in full  force and
effect.  If Lessor does not receive such funds or assurance  within said period,
Lessor may  nevertheless  elect by written notice to Lessee within ten (10) days
thereafter to make such  restoration  and repair as is  commercially  reasonable
with  Lessor  paying any  shortage in  proceeds,  in which case this Lease shall
remain in full  force and  effect.  If Lessor  does not  receive  such  funds or
assurance  within such ten (10) day  period,  and if Lessor does not so elect to
restore and repair,  then this Lease shall  terminate  sixty (60) days following
the occurrence of the damage or destruction.  Unless  otherwise  agreed,  Lessee
shall in no event  have any right to  reimbursement  from  Lessor  for any funds
contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake  shall be subject to Paragraph 9.3 rather than
Paragraph 9.2,  notwithstanding  that there may be some insurance coverage,  but
the net proceeds of any such  insurance  shall be made available for the repairs
if made by either Party.

        9.3 Partial Damage - Uninsured Loss. If Premises  Partial Damage that is
not an Insured  Loss occurs as a result of  Lessor's  negligence,  willful  acts
and/or  omissions,  Lessor  shall be  required  to repair such damage as soon as
reasonably  possible at Lessor's expense. If Premises Partial Damage that is not
an Insured  Loss occurs,  unless  caused by a negligent or willful act of Lessee
(in which event Lessee shall make the repairs at Lessee's expense and this Lease
shall continue in full force and effect), Lessor may, at Lessor's option, either
(i) repair such damage as soon as reasonably  possible at Lessor's  expense,  in
which  event this Lease shall  continue  in full force and effect,  or (ii) give
written  notice to Lessee  within  thirty  (30) days after  receipt by Lessor of
knowledge of the occurrence of such damage of Lessor's  desire to terminate this
Lease as of the date sixty (60) days  following the date of such notice.  In the
event Lessor elects to give such notice of Lessor's  intention to terminate this
Lease,  Lessee  shall have the right  within ten (10) days after the  receipt of
such notice to give written  notice to Lessor of Lessee's  commitment to pay for
the repair of such damage totally at Lessee's expense and without  reimbursement
from Lessor. Lessee shall provide Lessor with the required funds or satisfactory
assurance thereof within thirty (30) days following such commitment from Lessee.
In such event this Lease shall  continue  in full force and  effect,  and Lessor
shall  proceed to make such  repairs as soon as  reasonably  possible  after the
required  funds are  available.  If Lessee does not give such notice and provide
the funds or assurance  thereof  within the times  specified  above,  this Lease
shall terminate as of the date specified in Lessor's notice of termination.

        9.4 Total  Destruction.  Notwithstanding  any other provision hereof, if
Premises Total  Destruction  occurs  (including any destruction  required by any
authorized public authority),  this Lease shall terminate as of the date of such
total  destruction,  whether or not the damage or destruction is an insured Loss
or was caused by a negligent  or willful act of Lessee.  In the event,  however,
that the damage or destruction was caused by Lessee, Lessor shall have the right
to  recover  Lessor's  damages  from  Lessee  except as  released  and waived in
Paragraph 9.7. In the event,  however,  that the damage or destrutlon was caused
by Lessor,  Lessee shail have the right to recover  Lessee's damages from Lessor
except as released or waived in Paragraph 9.7.

        9.5  Damage  Near End of Term.  If at any time  during  the last six (6)
months of the term of this  Lease  there is damage  for which the cost to repair
exceeds one month's Base Rent,  whether or not an Insured  Loss,  Lessor may, at
Lessor's  option,  terminate this Lease  effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within  thirty (30) days after the date of  occurrence of such
damage.  Provided,  however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the  Premises,  then Lessee may  preserve  this
Lease by (a) exercising such option,  and (b) providing Lessor with any shortage
in insurance proceeds if such damage is not due to Lessor's negligence,  willful
acts and/or  omissions in which event Lessor  shall pay any such  shortage,  (or
adequate  assurance thereof) needed to make the repairs on or before the earlier
of (i) the date  which is ten (10)  days  after  Lessee's  receipt  of  Lessor's
written notice  purporting to terminate this Lease, or (ii) the day prior to the
date upon which such option expires. If Lessee duly exercises such option during
such period and provides  Lessor with funds (or adequate  assurance  thereof) to
cover any shortage in insurance  proceeds,  Lessor shall,  at Lessor's  expense,
repair such damage as soon as reasonably  possible and this Lease shall continue
in full force and effect.  If Lessee  fails to exercise  such option and provide
such funds or assurance  during such period,  then this Lease shall terminate as
of the date set forth in the first sentence of this Paragraph 9.5.

        9.6       Abatement of Rent; Lessee's Remedies.

                  (a) In the  event  of (i)  Premises  Partial  Damage  or  (ii)
Hazardous Substance Condition for which Lessee is not legally  responsible,  the
Base Rent, Common Area Operating Expenses and other charges,  if any, payable by
Lessee  hereunder  for the period  during  which such damage or  condition,  its
repair,  remediation or restoration continues,  shall be abated in proportion to
the degree to which Lessee's use of the Premises is impaired,  but not in excess
of proceeds from insurance required to be carried under Paragraph 8.3(b). Except
for abatement of Base Rent, Common Area Operating Expenses and other charges, if
any, as aforesaid,  all other obligations of Lessee hereunder shall be performed
by Lessee, and Lessee shall have no claim against Lessor for any damage suffered
by reason

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of any such damage, destruction, repair, remediation or restoration.

                  (b) If Lessor  shall be  obligated  to repair or  restore  the
Premises under the  provisions of this Paragraph 9 and shall not commence,  in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such  obligation  shall  accrue,  Lessee may, at any time
prior to the commencement of such repair or restoration,  give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate  this Lease on a date not less than sixty (60) days  following  the
giving of such  notice.  If Lessee  gives such notice to Lessor and such Lenders
and such repair or  restoration  is not commenced  within thirty (30) days after
receipt of such notice,  this Lease shall  terminate as of the date specified in
said notice.  If Lessor or a Lender  commences the repair or  restoration of the
Premises  within  thirty (30) days after the receipt of such notice,  this Lease
shall  continue in full force and effect.  "Commence" as used in this  Paragraph
9.6 shall mean either the unconditional  authorization of the preparation of the
required plans,  or the beginning of the actual work on the Premises,  whichever
occurs  first.  In the event that Lessor does not  perform  its  obligations  to
repair  and  restore  the  Premises  as provided  under the  provisions  of this
Section 9 in a timely manner, Lessee shall have the right to recover its damages
resulting from such delay by Lessor.

        9.7 Hazardous Substance  Conditions.  If a Hazardous Substance Condition
occurs,  unless  Lessee is legally  responsible  therefor  (in which case Lessee
shall make the  investigation  and  remediation  thereof  required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's  rights under  Paragraph  6.2(c) and Paragraph  13),  Lessor may, at
Lessor's option,  either (i) investigate and remediate such Hazardous  Substance
Condition,  if required,  as soon as reasonably possible at Lessor's expense, in
which event this Lease shall  continue in full force and effect,  or (ii) if the
estimated cost to investigate  and remediate such condition  exceeds twelve (12)
times the then monthly Base Rent or $100,000, whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the  occurrence  of such  Hazardous  Substance  Condition of Lessor's  desire to
terminate  this Lease as of the date sixty (60) days  following the date of such
notice. In the event Lessor elects to give such notice of Lessor's  intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written  notice to Lessor of Lessee's  commitment
to pay for  the  excess  costs  of (a)  investigation  and  remediation  of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount  equal to twelve  (12)  times the then  monthly  Base Rent or
$100,000,  whichever  is greater.  Lessee  shall  provide  Lessor with the funds
required of Lessee or  satisfactory  assurance  thereof  within thirty (30) days
following said commitment by Lessee.  In such event this Lease shall continue in
full force and effect,  and Lessor shall proceed to make such  investigation and
remediation  as soon  as  reasonably  possible  after  the  required  funds  are
available. If Lessee does not give such notice and provide the required funds or
assurance  thereof  within the time  period  specified  above,  this Lease shall
terminate as of the date specified in Lessor's notice of termination.

In the event of any  investigatIon of the Premises or the Industrial  Center due
to the  occurrence of a Hazardous  Substance  Condition.  Lessor shall  promptly
provide Lessee with a copy of any and all reports  generated in connection  vith
the  investigation  or  remediation  of same.  Lessee  shall  have the  right to
terminate this Lease  effective upon delivery of written notice to Lessor if, in
the  judgment  and  sole  discretion  of  Lessee,  remediation  of the Hazardous
Substance  Condition will materially  interfere with the conduct of its business
at the Premises.

        9.8  Termination  - Advance  Payments.  Upon  termination  of this Lease
pursuant to this  Paragraph 9, Lessor shall retum to Lessee any advance  payment
made by Lessee to Lessor  and so much of  Lessee's  Security  Deposit as has not
been,  or is not then  required  to be,  used by Lessor  under the terms of this
Lease.

        9.9 Waiver of  Statutes.  Lessor and Lessee agree that the terms of this
Lease shall  govern the effect of any damage to or  destruction  of the Premises
and the Building with respect to the  termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.

10.     Real Property Taxes.

        10.1 Payment of Taxes.  Lessor  shall pay the Real  Property  Taxes,  as
defined in Paragraph 10.2,  applicable to the Industrial  Center,  and except as
otherwise  provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating  Expenses in accordance with the provisions
of Paragraph 4.2.

        10.2 Real  Property  Tax  Definition.  As used  herein,  the term  "Real
Property  Taxes"  shall  include  any  form of real  estate  tax or  assessment,
general,  special,  ordinary or extraordinary,  and any license fee,  commercial
rental tax,  improvement  bond or bonds,  levy or tax (other  than  inheritance,
personal  income or estate  taxes)  imposed  upon the  Industrial  Center by any
authority having the direct or indirect power to tax,  including any city, state
or federal  govemment,  or any school,  agricultural,  sanitary,  fire,  street,
drainage,  or other improvement  district  thereof,  levied against any legal or
equitable  interest of Lessor in the Industrial  Center or any portion  thereof,
Lessor's right to rent or other income  therefrom,  and/or Lessor's  business of
leasing the Premises. The term "Real Property Taxes" shall also include any tax,
fee, levy,  assessment or charge, or any increase therein,  imposed by reason of
events occurring, or changes in Applicable Law taking effect, during the term of
this Lease,  including,  but not limited  to, a change in the  ownership  of the
Industrial Center or in the improvements  thereon,  the execution of this Lease,
or  any  modification,  amendment  or  transfer  thereof,  and  whether  or  not
contemplated by the Parties. In calculating Real Property Taxes for any calendar
year,  the Real Property Taxes for any real estate tax year shall be included in
the  calculation  of Real  Property  Taxes for such calendar year based upon the
number of days which such calendar year and tax year have in common.

        10.3 Additional  Improvements.  Common Area Operating Expenses shall not
include Real Property  Taxes  specified in the tax  assessor's  records and work
sheets as being caused by  additional  improvements  placed upon the  Industrial
Center by other lessees or by Lessor for the  exclusive  enjoyment of such other
lessees.  Notwithstanding  Paragraph 10.1 hereof,  Lessee shall, however, pay to
Lessor at the time Common Area  Operating  Expenses are payable under  Paragraph
4.2, the entirety of any increase in Real Property  Taxes if assessed  solely by
reason of Alterations,  Trade Fixtures or Utility  Installations placed upon the
Premises by Lessee or at Lessee's request.

        10.4 Joint Assessment.  If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed,  such proportion to be determined by Lessor from the respective
valuations  assigned in the assessor's work sheets or such other  information as
may be reasonably available.  Lessor's reasonable determination thereof, in good
faith, shall be conclusive.

        10.5 Lessee's Property Taxes.  Lessee shall pay prior to delinquency all
taxes  assessed  against and levied upon  Lessee-Owned  Alterations  and Utility
Installations,  Trade Fixtures, fumishings,  equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible,   Lessee  shall  cause  its   Lessee-Owned   Alterations  and  Utility
Installations,  Trade  Fixtures,  furnishings,  equipment and all other personal
property to be assessed and billed  separately from the real property of Lessor.
If any of Lessee's said property  shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes  attributable to Lessee's  property within ten
(10)  days  after  receipt  of a  written  statement  setting  forth  the  taxes
applicable to Lessee's property.

11. Utilities. Lessee shall pay directly for all utilities and services supplied
to  the  Premises,  including,  but  not  limited  to,  electricity,  telephone,
security, gas and cleaning of the Premises,  together with any taxes thereon. If
any such  utilities  or services are not  separately  metered to the Premises or
separately billed to the

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Premises, Lessee shall pay to Lessor a reasonable proportion to be determined by
Lessor of all such charges  jointly metered or billed with other premises in the
Building,  in the  manner and within  the time  periods  set forth in  Paragraph
4.2(d).

12.     Assignment and Subletting. [See Also Paraqraph 52)

        12.1 Lessor's Consent Required.

                  (a)  Lessee  shall  not  voluntarily  or by  operation  of law
assign,  transfer,  mortgage or  otherwise  transfer or encumber  (collectively,
"assign") or sublet all or any part of Lessee's interest in this Lease or in the
Premises  without  Lessor's prior written consent given under and subject to the
terms of Paragraph 36.

                  (b)  A  change  in  the   control  of  Lessee  or  any  parent
corporation  of Lessee shall not  constitute  an assignment  requiring  Lessor's
consent  so long as the stock of Lessee or any parent  corporation  of Lessee is
traded through an exchange, over the counter or the OTC Bulletin Board.

                  (c)  The   involvement   of  Lessee  or  its   assets  in  any
transaction,  or series of transactions  (by way of merger,  sale,  acquisition,
financing,  refinancing,  transfer, leveraged buy-out or otherwise),  whether or
not a formal  assignment  or  hypothecation  of this  Lease or  Lessee's  assets
occurs,  which results or will result in a reduction of the Net Worth of Lessee,
as  hereinafter  defined,  by an amount  equal to or  greater  than  twenty-five
percent (25%) of such Net Worth of Lessee as it was represented to Lessor at the
time of full  execution  and  delivery  of this Lease or at the time of the most
recent  assignment to which Lessor has  consented,  or as it exists  immediately
prior to said  transaction  or  transactions  constituting  such  reduction,  at
whichever  time said Net Worth of Lessee was or is greater,  shall be considered
an  assignment of this Lease by Lessee to which Lessor may  reasonably  withhold
its  consent.  "Net Worth of Lessee" for purposes of this Lease shall be the net
worth of Lessee (excluding any Guarantors)  established under generally accepted
accounting principles consistently applied.

                  (d) An assignment  or  subletting of Lessee's interest in this
Lease without Lessor's specific prior written consent shall, at Lessor's option,
be a Default curable  after notice per Paragraph  13.1, or a non-curable  Breach
without the necessity of any notice and grace period.  If Lessor elects to treat
such  unconsented  to assignment or subletting as a non-curable  Breach,  Lessor
shall have the right to either:  (i) terminate  this Lease,  or (ii) upon thirty
(30) days' written notice  ("Lessor's  Notice"),  increase the monthly Base Rent
for the  Premises  to the greater of the then fair  market  rental  value of the
Premises,  as reasonably determined by Lessor, or one hundred ten percent (110%)
of the Base Rent then in effect.  Pending  determination  of the new fair market
rental  value,  if disputed by Lessee,  Lessee shall pay the amount set forth in
Lessor's Notice,  with any overpayment  credited against the next installment(s)
of Base Rent coming due, and any  underpayment  for the period  retroactively to
the effective date of the adjustment being due and payable  immediately upon the
determination  thereof.  Further,  in  the  event  of  such  Breach  and  rental
adjustment,  (i) the purchase  price of any option to purchase the Premises held
by Lessee shall be subject to similar  adjustment  to the then fair market value
as  reasonably  determined  by Lessor  (without  the Lease being  considered  an
encumbrance or any deduction for depreciation or  obsolescence,  and considering
the Premises at its highest and best use and in good  condition)  or one hundred
ten percent (110%) of the price  previously in effect,  (ii) any  index-oriented
rental or price adjustment formulas contained in this Lease shall be adjusted to
require that the base index be determined with reference to the index applicable
to the time of such adjustment, and (iii) any fixed rental adjustments scheduled
during the  remainder  of the Lease term shall be increased in the same ratio as
the new rental bears to the Base Rent in effect immediately prior the adjustment
specified in Lessor's Notice.

                  (e) Lessee's  remedy for any breach of this  Paragraph 12.1 by
Lessor shall be limited to compensatory damages and/or injunctive relief.

        12.2      Terms and Conditions Applicable to Assignment and Subletting.

                  (a)  Regardless  of  Lessor's   consent;   any  assignment  or
subletting shall not (i) be effective without the express written  assumption by
such assignee or sublessee of the  obligations of Lessee under this Lease,  (ii)
release  Lessee  of any  obligations  hereunder,  nor (iii)  alter  the  primary
liability  of Lessee  for the  payment  of Base Rent and other  sums due  Lessor
hereunder or for the  performance  of any other  obligations  to be performed by
Lessee under this Lease.

                  (b)  Lessor may accept  any rent or  performance  of  Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the  acceptance  of any rent for  performance  shall  constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.

                  (c) The  consent  of Lessor to any  assignment  or  subletting
shall not  constitute a consent to any  subsequent  assignment  or subletting by
Lessee or to any  subsequent  or  successive  assignment  or  subletting  by the
assignee or sublessee. However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or  modifications  thereto without
notifying  Lessee or anyone else  liable  under this Lease or the  sublease  and
without obtaining their consent,  and such action shall not relieve such persons
from liability under this Lease or the sublease.

                  (d)  In the  event  of  any  Default  or  Breach  of  Lessee's
obligation under this Lease,  Lessor may proceed  directly  against Lessee,  any
Guarantors  or anyone  else  responsible  for the  performance  of the  Lessee's
obligations under this Lease, including any sublessee,  without first exhausting
Lessor's  remedies  against any other person or entity  responsible  therefor to
Lessor, or any security held by Lessor.

                  (e) Each request for consent to an  assignment  or  subletting
shall  be  in  writing,   accompanied  by   information   relevant  to  Lessor's
determination   as  to  the  financial  and   operational   responsibility   and
appropriateness  of the  proposed  assignee  or  sublessee,  including,  but not
limited to, the intended use and/or required  modification  of the Premises,  if
any,  together with a  non-refundable  deposit of $1,000 or ten percent (10%) of
the monthly Base Rent  applicable  to the portion of the  Premises  which is the
subject of the  proposed  assignment  or  sublease,  whichever  is  greater,  as
reasonable consideration for Lessor's considering and processing the request for
consent.  Lessee  agrees  to  provide  Lessor  with  such  other  or  additional
information and/or documentation as may be reasonably requested by Lessor.

                  (f) Any assignee of, or sublessee under,  this Lease shall, by
reason of accepting such  assignment or entering into such sublease,  be deemed,
for the benefit of Lessor, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said  assignment or sublease,  other than
such  obligations  as are  contrary to or  inconsistent  with  provisions  of an
assignment or sublease to which Lessor has specifically consented in writing.

                  (g) The  occurrence  of a  transaction  described in Paragraph
12.2(c) shall give Lessor the right (but not the obligation) to require that the
Security  Deposit  be  increased  by an  amount  equal to six (6) times the then
monthly  Base Rent,  and  Lessor  may make the  actual  receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.

                  (h)  Lessor,  as a  condition  to giving  its  consent  to any
assignment or subletting, may require that the amount and adjustment schedule of
the rent  payable  under this Lease be adjusted to what is then the market value
and/or  adjustment  schedule  for  property  similar  to the  Premises  as  then
constituted, as determined by Lessor.

        12.3  Additional  Terms and  Conditions  Applicable to  Subletting.  The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises  and shall be deemed  included in all  subleases  under
this Lease whether or not expressly incorporated therein:

        (a) Lessee  hereby  assigns  and  transfers  to Lessor  all of  Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises  heretofore or hereafter made by Lessee,  and Lessor may collect
such rent and income  and apply  same  toward  Lessee's  obligations  under this
Lease;

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REVISED                                                         Form MTN-1-6/93E

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provided,  however,  that until a Breach (as  defined in  Paragraph  13.1) shall
occur in the performance of Lessee's  obligations under this Lease,  Lessee may,
except as otherwise provided in this Lease, receive, collect and enjoy the rents
accruing  under such  sublease.  Lessor  shall not,  by reason of the  foregoing
provision or any other  assignment of such sublease to Lessor,  nor by reason of
the collection of the rents from a sublessee,  be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee's obligations
to such sublessee under such Sublease.  Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach  exists in the  performance  of  Lessee's  obligations  under this
Lease,  to pay to Lessor the rents and other charges due and to become due under
the  sublease.  Sublessee  shall rely upon any such  statement  and request from
Lessor  and  shall  pay such  rents and other  charges  to  Lessor  without  any
obligation   or  right  to  inquire  as  to  whether  such  Breach   exists  and
notwithstanding  any notice  from or claim from Lessee to the  contrary.  Lessee
shall have no right or claim  against such  sublessee,  or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.

                  (b) In the event of a Breach by Lessee in the  performance  of
its  obligations  under  this  Lease,  Lessor,  at its option  and  without  any
obligation  to do so, may require any  sublessee  to attorn to Lessor,  in which
event  Lessor  shall  undertake  the  obligations  of the  sublessor  under such
sublease from the time of the exercise of said option to the  expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents or
security deposit paid by such sublessee to such sublessor or for any other prior
defaults or breaches of such sublessor under such sublease.

                  (c) Any matter or thing requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor herein.

                  (d) No  sublessee  under a sublease  approved by Lessor  shall
further assign or sublet all or any part of the Premises  without Lessor's prior
written consent.

                  (e)  Lessor  shall  deliver a copy of any notice of Default or
Breach by Lessee to the sublessee,  who shall have the right to cure the Defauit
of Lessee  within  the grace  period,  if any,  specified  in such  notice.  The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults

13.     Default; Breach; Remedies.

        13.1 Default;  Breach.  A "Default" by Lessee is defined as a failure by
Lessee  to  observe,  comply  with  or  perform  any  of the  terms,  covenants,
conditions or rules  applicable to Lessee under this Lease. A "Breach" by Lessee
is defined as the occurrence of any one or more of the following Defaults,  and,
where a grace period for cure after notice is specified  herein,  the failure by
Lessee to cure such Default  prior to the  expiration  of the  applicable  grace
period,  and shall entitle Lessor to pursue the remedies set forth in Paragraphs
13.2 and/or 13.3:

                  (a) The  vacating of the  Premises  without the  intention  to
reoccupy same, or the abandonment of the Premises.

                  (b) Except as expressly  otherwise provided in this Lease, the
failure by Lessee to make any  payment of Base  Rent,  Lessee's  Share of Common
Area Operating  Expenses,  or any other monetary  payment required to be made by
Lessee  hereunder as and when due, the failure by Lessee to provide  Lessor with
reasonable  evidence of insurance or surety bond required  under this Lease,  or
the failure of Lessee to fulfill any obligation under this Lease which endangers
or threatens  life or property,  where such  failure  continues  for a period of
three (3) days  following  written  notice  thereof by or on behalf of Lessor to
Lessee.

                  (c) Except as expressly  otherwise provided in this Lease, the
failure by Lessee to provide Lessor with  reasonable  written  evidence (in duly
executed  original  form,  if  applicable)  of (i)  compliance  with  Applicable
Requirements  per Paragraph 6.3, (ii) the  inspection,  maintenance  and service
contracts   required  under  Paragraph  7.1(b),   (iii)  the  rescission  of  an
unauthorized  assignment  or  subletting  per  Paragraph  12.1,  (iv) a  Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination of
this Lease per  Paragraph 30, (vi) the guaranty of the  performance  of Lessee's
obligations under this Lease if required under Paragraphs 1.11 and 37, (vii) the
execution of any document  requested under  Paragraph 42 (easements),  or (viii)
any other  documentation or information  which Lessor may reasonably  require of
Lessee  under the terms of this Lease,  where any such failure  continues  for a
period of ten (10) days  following  written  notice by or on behalf of Lessor to
Lessee.

                  (d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease,  or of the rules adopted under  Paragraph 40 hereof
that are to be observed,  complied with or performed by Lessee, other than those
described  in  Subparagraphs  13.1(a),  (b) or (c),  above,  where such  Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee;  provided,  however,  that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably  required for its
cure,  then it shall not be  deemed  to be a Breach  of this  Lease by Lessee if
Lessee  commences  such cure within  said thirty (30) day period and  thereafter
diligently prosecutes such cure to completion.

                  (e) The  occurrence  of any of the following  events:  (i) the
making by Lessee of any general  arrangement  or  assignment  for the benefit of
creditors;  (ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section
101 or any successor  statute thereto  (unless,  in the case of a petition filed
against  Lessee,  the same is  dismissed  within  sixty  (60)  days);  (iii) the
appointment of a trustee or receiver to take possession of substantially  all of
Lessee's  assets located at the Premises or of Lessee's  interest in this Lease,
where  possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at thd Premises or of Lessee's interest in this Lease, where such
seizure is not discharged  within thirty (30) days;  provided,  however,  in the
event  that any  provision  of this  Subparagraph  13.1(e)  is  contrary  to any
applicable  law, such  provision  shall be of no force or effect,  and shall not
affect the validity of the remaining provisions.

                  (f) The  discovery by Lessor that any  financial  statement of
Lessee or of any  Guarantor,  given to Lessor  by Lessee or any  Guarantor,  was
materially false.

                  (g) If the  performance  of  Lessee's  obligations  under this
Lease is  guaranteed:  (i) the death of a Guarantor,  (ii) the  termination of a
Guarantor's  liability with respect to this Lease other than in accordance  with
the  terms of such  guaranty,  (iii) a  Guarantor's  becoming  insolvent  or the
subject  of a  bankruptcy  filing,  (iv) a  Guarantor's  refusal  to  honor  the
guaranty,  or  (v)  a  Guarantor's  breach  of  its  guaranty  obligation  on an
anticipatory  breach  basis,  and  Lessee's  failure,  within  sixty  (60)  days
following  written notice by or on behalf of Lessor to Lessee of any such event,
to provide Lessor with written  alternative assurances of security,  which, when
coupled  with the then  existing  resources  of Lessee,  equals or  exceeds  the
combined  financial  resources of Lessee and the Guarantors  that existed at the
time of execution of this Lease.

        13.2  Remedies.  If Lessee  fails to  perform  any  affirmative  duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without  obligation to do so),  perform such duty or obligation on Lessee's
behalf,  including,  but not limited to, the  obtaining of  reasonably  required
bonds,  insurance policies, or govemmental licenses,  permits or approvals.  The
costs and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice  therefor.  If any check given to Lessor by Lessee
shall not be  honored  by the bank upon  which it is drawn,  Lessor,  at its own
option, may require all future payments to be made under this Lease by Lessee to
be made only by cashier's check.

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                          MULTI-TENANT - MODIFIED NET
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                                 Page 11 of 19
REVISED                                                         Form MTN-1-6/93E

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In the event of a Breach of this Lease by Lessee (as defined in Paragraph 13.1),
with or without  further notice or demand,  and without  limiting  Lessor in the
exercise of any right or remedy  which Lessor may have by reason of such Breach,
Lessor may;

                  (a) Terminate  Lessee's right to possession of the Premises by
any lawful means,  in which case this Lease and the term hereof shall  terminate
and Lessee shall immediately  surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee: (i) the worth at the
time of the  award of the  unpaid  rent  which  had been  earned  at the time of
termination;  (ii) the  worth at the time of award of the  amount  by which  the
unpaid  rent which would have been earned  after  termination  until the time of
award  exceeds the amount of such rental loss that the Lessee  proves could have
been reasonably  avoided;  (iii) the worth at the time of award of the amount by
which  the  unpaid  rent for the  balance  of the term  after  the time of award
exceeds  the  amount  of such  rental  loss  that  the  Lessee  proves  could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the  detriment  proximately  caused by the  Lessee's  failure to perform its
obligations  under this Lease or which in the ordinary course of things would be
likely  to  result  therefrom,  including,  but  not  limited  to,  the  cost of
recovering  possession  of  the  Premises,  expenses  of  reletting,   including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and that portion of any leasing  commission  paid by Lessor in  connection  with
this Lease applicable to the unexpired term of this Lease. The worth at the time
of  award of the  amount  referred  to in  provision  (iii)  of the  immediately
preceding  sentence shall be computed by discounting such amount at the discount
rate of the Federal  Reserve Bank of San  Francisco or the Federal  Reserve Bank
District in which the Premises are located at the time of award plus one percent
(1%). Efforts by Lessor to mitigate damages caused by Lessee's Defauit or Breach
of this  Lease  shall not waive  Lessor's  right to recover  damages  under this
Paragraph 13.2. If termination of this Lease is obtained through the provisional
remedy of  unlawful  detainer,  Lessor  shall  have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for such
rent and/or damages.  If a notice and grace period required under  Subparagraphs
13.1(b),  (c) or (d) was not previously  given, a notice to pay rent or quit, or
to  perform  or quit,  as the case may be,  given to Lessee  under  any  statute
authorizing the forfeiture of leases for unlawful detainer shall also constitute
the  applicable  notice  for grace  period  purposes  required  by  Subparagraph
13.1(b),  (c) or (d).  In such  case,  the  applicable  grace  period  under the
unlawful  detainer statute shall run  concurrently  after the one such statutory
notice,  and the failure of Lessee to cure the Default within the greater of the
two (2) such grace  periods  shall  constitute  both an unlawful  detainer and a
Breach of this Lease entitling Lessor to the remedies provided for in this Lease
and/or by said statute.

                  (b)  Continue the Lease and Lessee's  right to  possession  in
effect (in California under California Civil Code Section 1951.4) after Lessee's
Breach and recover the rent as it becomes due,  provided Lessee has the right to
sublet or assign,  subject  only to  reasonable  limitations.  Lessor and Lessee
agree  that the  limitations  on  assignment  and  subletting  in this Lease are
reasonable. Acts of maintenance or preservation,  efforts to relet the Premises,
or the  appointment  of a receiver to protect the Lessor's  interest  under this
Lease, shall not constitute a termination of the Lessee's right to possession.

                  (c) Pursue  any other  remedy now or  hereafter  available  to
Lessor under the laws or judicial  decisions  of the state  wherein the Premises
are located.

                  (d) The  expiration  or  termination  of this Lease and/or the
termination  of  Lessee's  right to  possession  shall not  relieve  Lessee from
liability under any indemnity  provisions of this Lease as to matters  occurring
or accruing  during the term hereof or by reason of  Lessee's  occupancy  of the
Premises.

        13.3  lnducement  Recapture in Event of Breach.  Any agreement by Lessor
for free or abated rent or other charges applicable to the Premises,  or for the
giving  or  paying  by  Lessor  to or for  Lessee  of any cash or  other  bonus,
inducement or consideration  for Lessee's entering into this Lease, all of which
concessions  are  hereinafter  referred to as "Inducement  Provisions"  shall be
deemed  conditioned  upon Lessee's full and faithful  performance  of all of the
terms,  covenants  and  conditions  of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended.  Upon the  occurrence
of a Breach (as  defined in  Paragraph  13.1) of this Lease by Lessee,  any such
Inducement  Provision shall  automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus,  inducement or
consideration  theretofore  abated,  given  or  paid  by  Lessor  under  such an
Inducement  Provision  shall be immediately due and payable by Lessee to Lessor,
and   recoverable  by  Lessor,   as  additional   rent  due  under  this  Lease,
notwithstanding  any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which  initiated  the operation of this
Paragraph  13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.

        13.4 Late  Charges.  Lessee  hereby  acknowledges  that late  payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs  not  contemplated  by this  Lease,  the  exact  amount  of which  will be
extremely  difficuit to ascertain.  Such costs include,  but are not limited to,
processing  and accounting  charges,  and late charges which may be imposed upon
Lessor by the terms of any ground lease,  mortgage or deed of trust covering the
Premises.  Accordingly,  if any installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's  designee within ten (10) days after
such amount shall be due, then,  without any  requirement  for notice to Lessee,
Lessee  shall  pay to Lessor a late  charge  equal to six  percent  (6%) of such
overdue amount. The Parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Lessor will incur by reason of late payment
by Lessee. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee's Default or Breach with respect to such overdue amount,  nor
prevent  Lessor from  exercising  any of the other rights and  remedies  granted
hereunder. In the event that a late charge is payable hereunder,  whether or not
collected,   for  three  (3)   consecutive   installments  of  Base  Rent,  then
notwithstanding  Paragraph  4.1 or any  other  provision  of this  Lease  to the
contrary,  Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.

        13.5  Breach  by  Lessor.  Lessor  shall not be deemed in breach of this
Lease unless  Lessor fails  within a  reasonable  time to perform an  obligation
required to be  performed  by Lessor.  For  purposes of this  Paragraph  13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose,  of written notice  specifying  wherein such
obligation  of Lessor has not been  performed;  provided,  however,  that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance,  then Lessor shall not be in
breach of this Lease if  performance  is  commenced  within such thirty (30) day
period and thereafter diligently pursued to completion.

14.  Condemnation.  If the  Premises or any portion  thereof are taken under the
power of eminent  domain or sold under the threat of the  exercise of said power
(all of which are herein called  "condemnation"),  this Lease shall terminate as
to the part so taken as of the date  the  condemning  authority  takes  title or
possession,  whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises,  or more than twenty-five  percent (25%) of the portion of
the Common Areas  designated  for Lessee's  parking,  is taken by  condemnation,
Lessee may, at Lessee's option,  to be exercised in writing within ten (10) days
after Lessor shall have given  Lessee  written  notice of such taking (or in the
absence of such  notice,  within ten (10) days  after the  condemning  authority
shall have taken possession)  terminate this Lease as of the date the condemning
authority  takes such  possession,  If Lessee does not  terminate  this Lease in
accordance with the foregoing,  this Lease shall remain in full force and effect
as to the portion of the Premises remaining,  except that the Base Rent shall be
reduced in the same  proportion as the rentable floor area of the Premises taken
bears to the total  rentable  floor area of the  Premises.  No reduction of Base
Rent  shall  occur if the  condemnation  does not  apply to any  portion  of the
Premises.  Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall  be the  property  of Lessor,  whether  such award  shall be made as
compensation for diminution of value of the leasehold or


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                          MULTI-TENANT - MODIFIED NET
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REVISED                                                         Form MTN-1-6/93E

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for the taking of the fee, or as  severance  damages;  provided,  however,  that
Lessee shall be entitled to any compensation,  separately  awarded to Lessee for
Lessee's  relocation  expenses  and/or loss of Lessee's Trade  Fixtures.  In the
event that this Lease is not terminated by reason of such  condemnation,  Lessor
shall to the  extent  of its net  severance  damages  received,  over and  above
Lessee's  share of the  legal  and  other  expenses  incurred  by  Lessor in the
condemnation  matter,   repair  any  damage  to  the  Premises  caused  by  such
condemnation  authority.  Lessee  shall be  responsible  for the  payment of any
amount in excess of such net severance damages required to complete such repair.

15.     Brokers' Fees [See Also Paragraph 60]

        15.1  Procuring  Cause.  The  Broker  named  in  Paragraph  1.10  is the
procuring cause of this Lease.

        15.2 Additional  Terms.  Lessor agrees that: (a) if Lessee exercises any
Option (as defined in  Paragraph  39.1)  granted  under this Lease or any Option
subsequently  granted,  or (b) if Lessee  acquires any rights to the Premises or
other  premises in which  Lessor has an  interest,  or (c) if Lessee  remains in
possession  of the Premises  with the consent of Lessor after the  expiration of
the term of this Lease after  having  failed to  exercise  an Option,  or (d) if
Lessor and Lessee enter into any other lease  pertaining to the Premises  and/or
any adjacent  property in which  Lessor has an  interest.  Lessor shall pay said
Broker a fee of $720.00 for each 12 months of such occupancy, payable at the end
of each 12 month period,  such fee being prorated for any occupancy of less than
12 months.

        15.3  Assumption  of  Obligations.  Any buyer or  transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed  Lessor's  obligation  under this Paragraph
15. Each Broker shall be an intended  third party  beneficiary of the provisions
of Paragraph  1.10 and of this Paragraph 15 to the extent of its interest in any
commission  arising from this Lease and may enforce that right directly  against
Lessor and its successors.

        15.4  Representations  and Warranties.  Lessee and Lessor each represent
and  warrant to the other that it has had no  dealings  with any  person,  firm,
broker or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation  of  this  Lease  and/or  the   consummation   of  the   transaction
contemplated  hereby,  and that no broker or other person,  firm or entity other
than said named  Broker(s)  is entitled  to any  commission  or finder's  fee in
connection  with said  transaction.  Lessee and Lessor do each  hereby  agree to
indemnify,  protect,  defend  and  hold the  other  harmless  from  and  against
liability for  compensation  or charges which may be claimed by any such unnamed
broker,  finder or other  similar  party by reason of any dealings or actions of
the indemnifying Party,  including any costs,  expenses,  and/or attorneys' fees
reasonably incurred with respect thereto.

16.     Tenancy and Financial Statements.

        16.1 Tenancy Statement.  Each Party (as "Responding Party") shall within
ten (10) days after written notice from the other Party (the "Requesting Party")
execute,  acknowledge and deliver to the Requesting Party a statement in writing
in a form similar to the then most current "Tenancy Statement" form published by
the  American   Industrial  Real  Estate   Association,   plus  such  additional
information,  confirmation  and/or statements as may be reasonably  requested by
the Requesting Party.

        16.2 Financial Statement.  If Lessor desires to finance,  refinance,  or
sell  the  Premises  or the  Building,  or any  part  thereof,  Lessee  and  all
Guarantors  shall  deliver to any  potential  lender or purchaser  designated by
Lessor  such  publicly  available  financial   statements  of  Lessee  and  such
Guarantors as may be reasonably required by such lender or purchaser, including,
but not limited to, Lessee's  publicly  available  financial  statements for the
past three (3) years. All such financial  statements shall be received by Lessor
and such  lender  or  purchaser  in  confidence  and  shall be used only for the
purposes herein set forth.

17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises. In the event of
a transfer  of  Lessor's  title or  interest  in the  Premises or in this Lease,
Lessor shall  deliver to the  transferee  or assignee (in cash or by credit) any
unused  Security  Deposit  held  by  Lessor  at the  time of  such  transfer  or
assignment.  Except  as  provided  in  Paragraph  15.3,  upon such  transfer  or
assignment and delivery of the Security Deposit, as aforesaid,  the prior Lessor
shall be  relieved  of all  liability  with  respect to the  obligations  and/or
covenants under this Lease thereafter to be performed by the Lessor.  Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.

18.  Severability.  The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19. Interest on Past-Due Obligations. Any monetary payment due Lessor hereunder,
other than late charges,  not received by Lessor within ten (10) days  following
the date on which it was due, shall bear interest from the date due at the prime
rate  charged  by the  largest  state  chartered  bank in the state in which the
Premises are located plus four percent  (4%) per annum,  but not  exceeding  the
maximum rate allowed by law, in addition to the potential  late charge  provided
for in Paragraph 13.4.

20. Time of Essence.  Time is of the essence with respect to the  performance of
all obligations to be performed or observed by the Parties under this Lease.

21. Rent Defined.  All monetary  obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.

22. No Prior or Other  Agreements;  Broker  Disclaimer.  This Lease contains all
agreements  between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each  represents and warrants to the Brokers that it has made,
and is relying solely upon,  its own  investigation  as to the nature,  quality,
character and financial  responsibility  of the other Party to this Lease and as
to  the  nature,  quality  and  character  of  the  Premises.  Brokers  have  no
responsibility  with  respect  thereto or with  respect to any default or breach
hereof by either Party. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.

23.     Notices.

        23.1 Notice  Requirements.  All notices  required or  permitted  by this
Lease  shall  be in  writing  and may be  delivered  in  person  (by  hand or by
messenger or


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courier service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile  transmission
during normal business hours, and shall be deemed  sufficiently  given if served
in a manner  specified in this  Paragraph 23. The addresses  noted adjacent to a
Party's  signature on this Lease shall be that  Party's  address for delivery or
mailing of notice  purposes.  Either  Party may by  written  notice to the other
specify a different  address  for notice  purposes,  except  that upon  Lessee's
taking  possession  of the  Premises,  the Premises  shall  constitute  Lessee's
address for the purpose of mailing or  delivering  notices to Lessee.  A copy of
all  notices  required or  permitted  to be given to Lessor  hereunder  shall be
concurrently  transmitted  to such party or parties at such  addresses as Lessor
may from time to time hereafter designate by written notice to Lessee.

        23.2 Date of Notice.  Any notice sent by registered  or certified  mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given  forty-eight  (48) hours after
the same is  addressed  as  required  herein and mailed  with  postage  prepaid.
Notices  delivered  by United  States  Express  Mail or overnight  courier  that
guarantees next day delivery shall be deemed given  twenty-four (24) hours after
delivery of the same to the United  States  Postal  Service or  courier.  If any
notice is transmitted by facsimile transmission or similar means, the same shall
be deemed  served or  delivered  upon  telephone or  facsimile  confirmation  of
receipt  of the  transmission  thereof,  provided a copy is also  delivered  via
delivery  or mail.  If notice is  received  on a Saturday or a Sunday or a legal
holiday, it shall be deemed received on the next business day.

24. Waivers.  No waiver by Lessor of the Default or Breach of any term, covenant
or  condition  hereof by  Lessee,  shall be  deemed a waiver of any other  term,
covenant or condition hereof,  or of any subsequent  Default or Breach by Lessee
of the same or any other term,  covenant or condition  hereof.  Lessor's consent
to, or approval of, any such act shall not be deemed to render  unnecessary  the
obtaining of Lessor's  consent to, or approval of, any subsequent or similar act
by Lessee,  or be construed as the basis of an estoppel to enforce the provision
or  provisions  of this Lease  requiring  such  consent.  Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting  rent,  the acceptance
of rent by Lessor  shall not be a waiver of any  Default  or Breach by Lessee of
any  provision  hereof.  Any payment  given  Lessor by Lessee may be accepted by
Lessor  on  account  of  monies  or  damages  due  Lessor,  notwithstanding  any
qualifying statements or conditions made by Lessee in connection therewith which
such  statements  and/or  conditions  shall be of no force or effect  whatsoever
unless  specifically  agreed to in  writing  by Lessor at or before  the time of
deposit of such payment.

25.  Recording.  Either  Lessor or Lessee  shall,  upon  request  of the  other,
execute,  acknowledge  and deliver to the other a short form  memorandum of this
Lease  for  recording  purposes.  The  Party  requesting  recordation  shall  be
responsible for payment of any fees or taxes applicable thereto.

26.  No Right to  Holdover.  Lessee  has no right to  retain  possession  of the
Premises or any part thereof  beyond the  expiration or earlier  termination  of
this Lease.  In the event that Lessee holds over in violation of this  Paragraph
26 then the Base  Rent  payable  from and after  the time of the  expiration  or
earlier  termination  of this Lease shall be  increased  to two hundred  percent
(200%) of the Base Rent applicable during the month  immediately  preceding such
expiration or eariler  termination.  Nothing contained herein shall be construed
as a consent by Lessor to any holding over by Lessee.

27.  Cumulative  Remedies.  No  remedy  or  election  hereunder  shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28.  Covenants and  Conditions.  All  provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties,
their  personal  representatives,  successors and assigns and be governed by the
laws of the state in which the Premises are located.  Any litigation between the
Parties  hereto concerning  this Lease shall be initiated in the county in which
the Premises are located.

30.     Subordination; Attornment; Non-Disturbance.

        30.1  Subordination.  This Lease and any Option  granted hereby shall be
subject and subordinate to any ground lease,  mortgage,  deed of trust, or other
hypothecation  or security  device  (collectively,  "Security  Device"),  now or
hereafter  placed by Lessor upon the real  property of which the  Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications,  consolidations,  replacements  and  extensions  thereof.  Lessee
agrees that the Lenders  holding any such  Security  Device  shall have no duty,
liability or obligation to perform any of the  obligations  of Lessor under this
Lease,  but that in the  event of  Lessor's  default  with  respect  to any such
obligation,  Lessee  will  give any  Lender  whose  name and  address  have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant
to  Paragraph  13.5.  If any Lender  shall  elect to have this Lease  and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written  notice  thereof to Lessee,  this Lease and such Options shall be deemed
prior  to such  Security  Device,  notwithstanding  the  relative  dates  of the
documentation or recordation thereof.

        30.2 Attornment.  Subject to the non-disturbance provisions of Paragraph
30.3,  Lessee  agrees to attorn  to a Lender  or any  other  party who  acquires
ownership of the Premises by reason of a foreclosure of a Security  Device,  and
that in the event of such  foreclosure,  such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events  occurring
prior to  acquisition  of ownership,  (ii) be subject to any offsets or defenses
which  Lessee  might  have  against  any  prior  lessor,  or  (iii)  be bound by
prepayment of more than one (1) month's rent.

        30.3  Non-Disturbance.  With respect to Security Devices entered into by
Lessor after the execution of this Lease,  Lessee's  subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease,  including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.

        30.4 Self-Executing. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents;  provided, however,
that upon  written  request from Lessor or a Lender in  connection  with a sale,
financing  or  refinancing  of Premises,  Lessee and Lessor  shall  execute such
further writings as may be reasonably  required to separately  document any such
subordination or non-subordination,  attornment and/or non-disturbance agreement
as is provided for herein.

31.  Attorneys'  Fees.  If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights  hereunder,  the Prevailing Party (as
hereafter defined) in any such proceeding,  action, or appeal thereon,  shall be
entitled to  reasonable  attorneys'  fees.  Such fees may be awarded in the same
suit or recovered in a separate  suit,  whether or not such action or proceeding
is pursued to decision or judgment.  The term "Prevailing  Party" shall include,
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limitation,  a Party or Broker who  substantially  obtains or defeats the relief
sought, as the case may be, whether by compromise,  settlement, judgment, or the
abandonment by the other Party or Broker of its claim or defense. The attorneys'
fee award shall not be computed in accordance  with any court fee schedule,  but
shall be such as to fully  reimburse all attorneys'  fees  reasonably  incurred.
Lessor shall be entitled to  attorneys'  fees,  costs and  expenses  incurred in
preparation  and service of notices of Default and  consultations  in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting  Breach.  Broker(s) shall be intended third party
beneficiaries of this Paragraph 31.

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the  Premises at any time,  in the case of an  emergency
for only the limited  purpose of admitting  fire,  police or other public safety
officals  on the  Premies,  and  otherwise  at  reasonable  times upon three (3)
business  days  advance  written  notice for the  purpose of showing the same to
prospective  purchasers,  lenders,  or  lessees,  and making  such  alterations,
repairs, improvements or additions to the Premises or to the Building, as Lessor
may reasonably deem necessary  provided that same shall be done in a manner that
does not unreasonably  interfere with the conduct of Lessee's  business.  Lessor
may at any time place on or about the  Premises or Building  any  ordinary  "For
Sale"  signs and Lessor  may at any time  during the last sixty (60) days of the
term hereof place on or about the Premises any ordinary "For Lease"  signs.  All
such  activities  of Lessor  shall be without  abatement of Rent or liability to
Lessee.

33.  Auctions.  Lessee shall not  conduct,  nor permit to be  conducted,  either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained  Lessor's  prior  written  consent.  Notwithstanding  anything  to  the
contrary in this Lease,  Lessor  shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.

34. Signs.  Lessee shall not place any sign upon the exterior of the Premises or
the  Building,  except that Lessee may, with  Lessor's  prior  written  consent,
install (but not on the roof) such signs as are reasonably required to advertise
Lessee's  own  business  so long as such signs are in a location  designated  by
Lessor  and  comply  with  Applicable  Requirements  and  the  signage  criteria
established for the Industrial Center by Lessor. The installation of any sign on
the Premises by or for Lessee shall be subject to the  provisions of Paragraph 7
(Maintenance,  Repairs, Utility Installations,  Trade Fixtures and Alterations).
Unless otherwise expressly agreed herein,  Lessor reserves all rights to the use
of the roof of the Building,  and the right to install  advertising signs on the
Building,  including  the roof,  which do not  unreasonably  interfere  with the
conduct of Lessee's business; Lessor shall be entitled to all revenues from such
advertising signs.

35.  Termination;  Merger.  Unless  specifically  stated otherwise in writing by
Lessor,  the  voluntary or other  surrender of this Lease by Lessee,  the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee,  shall  automatically  terminate any sublease or lesser estate in the
Premises;  provided,  however, Lessor shall, in the event of any such surrender,
termination or  cancellation,  have the option to continue any one or all of any
existing subtenancies.  Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser  interest,  shall constitute  Lessor's  election to have such
event constitute the termination of such interest.

36.     Consents.

                  (a) Except for Paragraph 33 hereof  (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party,  such consent shall not be unreasonably  withheld
or delayed.  Lessor's actual reasonable costs and expenses  (including,  but not
limited to,  architects',  attorneys',  engineers' and other  consultants' fees)
incurred in the  consideration  of, or response  to, a request by Lessee for any
Lessor  consent  pertaining  to this Lease or the Premises,  including,  but not
limited to, consents to an assignment,  a subletting or the presence or use of a
Hazardous  Substance,  shall be paid by  Lessee  to Lessor  upon  receipt  of an
invoice  and  supporting  documentation  therefor.  In  addition  to the deposit
described in Paragraph  12.2(e),  Lessor may, as a condition to considering  any
such  request by Lessee,  require  that Lessee  deposit with Lessor an amount of
money (in addition to the Security  Deposit held under  Paragraph 5)  reasonably
calculated by Lessor to represent the cost Lessor will incur in considering  and
responding  to Lessee's  request.  Any unused  portion of said deposit  shall be
refunded to Lessee without interest.  Lessor's consent to any act, assignment of
this Lease or  subletting  of the  Premises by Lessee  shall not  constitute  an
acknowiedgment  that no Default or Breach by Lessee of this  Lease  exists,  nor
shall such  consent be deemed a waiver of any then  existing  Default or Breach,
except as may be otherwise  specifically stated in writing by Lessor at the time
of such consent.

                  (b) All  conditions  to Lessor's  consent  authorized  by this
Lease are  acknowledged  by Lessee as being  reasonable.  The failure to specify
herein any  particular  condition  to Lessor's  consent  shall not  preclude the
impositions by Lessor at the time of consent of such further or other conditions
as are then reasonable with reference to the particular matter for which consent
is being given.

37.     Guarantor.

        37.1 Form of Guaranty.  If there are to be any  Guarantors of this Lease
per  Paragraph  1.11,  the form of the  guaranty  to be  executed  by each  such
Guarantor  shall  be in  the  form  most  recently  published  by  the  American
Industrial Real Estate Association,  and each such Guarantor shall have the same
obligations  as Lessee  under this  Lease,  including,  but not  limited to, the
obligation  to  provide  the  Tenancy  Statement  and  information  required  in
Paragraph 16.

        37.2 Additional Obligations of Guarantor.  It shall constitute a Default
of the Lessee  under this Lease if any such  Guarantor  fails or  refuses,  upon
reasonable  request by Lessor to give:  (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor (and
of the party signing on  Guarantor's  behalf) to obligate such Guarantor on said
guaranty,  and  resolution of its board of directors  authorizing  the making of
such guaranty,  together with a certificate of incumbency showing the signatures
of  the  persons  authorized  to  sign  on its  behalf,  (b)  current  financial
statements  of Guarantor as may from time to time be requested by Lessor,  (c) a
Tenancy  Statement,  or (d) written  confirmation  that the guaranty is still in
effect.

38.  Quiet  Possession.  Upon payment by Lessee of the Rent for the Premises and
the  performance of all of the covenants,  conditions and provisions on Lessee's
part to be observed  and  performed  under this Lease,  Lessee  shall have quiet
possession  of the  Premises  for the entire term  hereof  subject to all of the
provisions of this Lease.

39.     Options. [Also See Paragraph 57)

        39.1  Definition.  As used in this  Lease,  the  word  "Option"  has the
following  meaning:  (a) the right to extend  the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other  property of
Lessor;  (b) the right of first  refusal to lease the  Premises  or the right of
first offer to lease the  Premises or the right of first  refusal to lease other
property  of Lessor  or the  right of first  offer to lease  other  property  of
Lessor;  (c) the  right to  purchase  the  Premises,


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or the right of first  refusal to purchase the  Premises,  or the right of first
offer to  purchase  the  Premises,  or the right to purchase  other  property of
Lessor,  or the right of first refusal to purchase other property of Lessor,  or
the right of first offer to purchase other property of Lessor.

        39.3 Multiple Options. In the event that Lessee has any multiple Options
to extend or renew this Lease,  a later option  cannot be  exercised  unless the
prior Options to extend or renew this Lease have been validly exercised.

        39.4    Effect of Default on Options.

                  (a)  Lessee  shall  have  no  right  to  exercise  an  Option,
notwithstanding any provision in the grant of Option to the contrary: (i) during
the period  commencing  with the giving of any notice of Default under Paragraph
13.1 and  continuing  until the  noticed  Default is cured,  or (ii)  during the
period of time any monetary obligation due Lessor from Lessee is unpaid (without
regard to whether  notice  thereof is given  Lessee),  or (iii)  during the time
Lessee is in Breach of this Lease, or (iv) in the event that Lessor has given to
Lessee three (3) or more notices of separate Default under Paragraph 13.1 during
the twelve (12) month period  immediately  preceding the exercise of the Option,
whether or not the Defaults are cured.

                  (b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

                  (c) All  rights of Lessee  under the  provisions  of an Option
shall terminate and be of no further force or effect,  notwithstanding  Lessee's
due and timely  exercise of the Option,  if, after such  exercise and during the
term of this Lease,  (i) Lessee fails to pay to Lessor a monetary  obligation of
Lessee  for a period of thirty  (30) days  after  such  obligation  becomes  due
(without  any  necessity  of Lessor to give notice  thereof to Lessee),  or (ii)
Lessor  gives to Lessee  three (3) or more  notices of separate  Defaults  under
Paragraph 13.1 during any twelve (12) month period,  whether or not the Defaults
are cured, or (iii) if Lessee commits a Breach of this Lease.

40.  Rules and  Regulations.  Lessee  agrees that it will abide by, and keep and
observe all reasonable  rules and regulations  ("Rules and  Regulations")  which
Lessor  may  make  from  time to time  for the  management,  safety,  care,  and
cleanliness  of the  grounds,  the parking  and  unloading  of vehicles  and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Industrial Center and their invitees.

41. Security  Measures.  Lessee hereby  acknowledges  that the rental payable to
Lessor  hereunder  does not include the cost of guard service or other  security
measures,  and that Lessor shall have no obligation  whatsoever to provide same.
Lessee assumes all  responsibility  for the protection of the Premises,  Lessee,
its agents and invitees and their property from the acts of third parties.

42.  Reservations.  Lessor  reserves  the  right,  from time to time,  to grant,
without the consent or joinder of Lessee, such easements, rights of way, utility
raceways,  and  dedications  that  Lessor  deems  necessary,  and to  cause  the
recordation of parcel maps and restrictions,  so long as such easements,  rights
of way, utility raceways, dedications, maps and restrictions do not unreasonably
interfere  with the use of the  Premises  by Lessee.  Lessee  agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

43.  Performance  Under Protest.  If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment  "under  protest"  and such payment  shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to  institute  suit for recovery of such sum. If it shall be adjudged
that there was no legal  obligation on the part of said Party to pay such sum or
any part  thereof,  said Party shall be entitled to recover  such sum or so much
thereof  as it was not  legally  required  to pay under the  provisions  of this
Lease.

44.  Authority.  If either Party hereto is a corporation,  trust,  or general or
limited  partnership,  each  individual  executing  this Lease on behalf of such
entity  represents and warrants that he or she is duly authorized to execute and
deliver  this  Lease  on its  behalf.  If  Lessee  is a  corporation,  trust  or
partnership,  Lessee  shall,  within  thirty (30) days after  request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45. Conflict.  Any conflict between the printed provisions of this Lease and the
typewritten or handwritten  provisions shall be controlled by the typewritten or
handwritten provisions.

46.  Offer.  Preparation  of this Lease by either  Lessor or Lessee or  Lessor's
agent or Lessee's  agent and submission of same to Lessee or Lessor shall not be
deemed  an offer to  lease.  This  Lease is not  intended  to be  binding  until
executed and delivered by all Parties hereto.

47.  Amendments.  This  Lease may be  modified  only in  writing,  signed by the
Parties in interest  at the time of the  modification.  The Parties  shall amend
this  Lease from time to time to reflect  any  adjustments  that are made to the
Base  Rent or  other  rent  payable  under  this  Lease.  As long as they do not
materially  change Lessee's  obligations  hereunder,  Lessee agrees to make such
reasonable  non-monetary  modifications  to  this  Lease  as may  be  reasonably
required  by an  institutional  insurance  company  or  pension  plan  Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.

48. Multiple  Parties.  Except as otherwise  expressly  provided herein, if more
than one  person or entity is named  herein  as  either  Lessor or  Lessee,  the
obligations   of  such   multiple   parties  shall  be  the  joint  and  several
responsibility of all persons or entities named herein as such Lessor or Lessee.

49. Broker Status Acknowledgement: Lessee acknowledges that it has been informed
that one or more of the  partners  of Lessor  is/are  licensed  California  real
estate brokers.

50. Monthly Status Rent and Adjustment:  Notwitstanding  anything in this Lease
to the  contrary  the  Monthly  Base Rent  payable  hereunder  for the period of
December  1,  1999  through  March  31,  2000  shall  be  ONE  THOUSAND  DOLLARS
($1,000.00). The Monthly Base Rent for the Period of April 1, 2000 through March
31, 2001 shall be TWO


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THOUSAND NINE HUNDRED EIGHTY DOLLARS  ($2,980.00).  On April 1, 2001 and on each
April 1st thereafter ("Rent Adjustment  Date"),  including each April 1st during
any option period,  the Monthly Base Rent payable  hereunder shall be increased,
but not  decreased,  to an amount which is determined by  multiplying  $2,980.00
times a fraction,  the numerator of which is the Consumer  Price Index All Urban
Consumers,  All Items (1984=100) for the San  Franclsco/Oakland/San  Jose Region
("CPI") for the month of February Immediately preceding the Rent Adjustment Date
and the  denominator  of which is the CPI for the month of February  2000. In no
event,  however,  shall the rent increase on any Rent  Adjustment Date result in
the new Monthly Base Rent being less than l02% nor more than 104% of the Monthly
Base Rent payable immediately prior to such Rent Adjustment Date.

Should publication of the CPI be discontinued for any reason,  Lessor and Lessee
shall  immediately  agree upon a  replacement  index which  measures the general
inflation rate for the area in which the Premises are located.

Lessor and Lessee  mutually agree that the $l,000.00 per month Base Rent payable
during the period of December  1999 through  March 2000 shall not  constitute an
"Inducement Provision" as such term is used in Paragraph 13.3 of this Lease.

51. Parking  Spaces:  Lessor hereby grants Lessee the exclusive right to use the
three (3) parking  spaces at the rear of the  building in which the Premises are
located  (closest to N Street) and agrees  that Lessee may mark  throughout  the
term of the Lease such spaces as reserved for  Lessee's  exclusive  use.  Lessor
also grants Lessee the right, throughout the term of the Lease, to paint the end
of stall  curb for the six  spaces  closest  to "N"  Street  which  are  located
immediately  in front of the  Premises  green  and  stencil  same as "30  Minute
Parking."  In  consideration  of the  reserved  parking  granted  to Lessee  and
Lessee's  right  to  mark  spaces  in the  Retail/Office  Center  as "30  Minute
Parking,"  Lessee  covenants that it shall take all  reasonable  steps to ensure
that its  employees  do not park their  vehicles in the  Retail/Office  Center's
parking lot (other than in Lessee's three (3) reserved spaces).

52. Assignment:  Notwithstanding  anything in the Lease to the contrary,  Lessee
shall have the unfettered right to assign its rights under this Lease, including
the right to  exercise  any options to  extend/renew  contained  herein,  to any
financial  institution regulated by state and/or federal agencies without having
to obtain  any form of  approval  or payment of any type of fee to Lessor or its
agents.  This right  shall  include the right to assign the Lease to a financial
institution  with  which  Lessee  may  merge or  consolidate,  to any  parent or
subsidiary  of Lessee or  subsidiary  of Lessee's  parent  corporation,  or to a
purchaser of substantially all of Lessee's assets.

53. Interior  Alterations:  Lessee may make such alterations as Lessee may elect
to the interior of the Premises in order to make same  suitable in Lessee's sole
opinion  for  Lessee's  intended  use of the  Premises.  Lessee  shall  have  no
obiligation to remove any of its interior  improvements or otherwise restore the
Premises upon the expiration of the Lease  excepting only that Lessee shall,  at
Lessee's  sole cost and expense,  remove its Trade  Fixtures  (including  safes,
vaults,  automated  teller  machines)  and repair any damage  occasioned by such
removal.  Lessee shall not  undertake  any  demolition  or  modification  of the
existing  improvements  at the Premises or  construct  any  improvements  at the
Premises  prior to the  earlier of (a) April 1, 2000;  or (b)  Lessee's  written
waiver of its right to terminate the Lease as provided in Paragraph 56 below.

54.  Exterior  Improvements:   Lessor  acknowledges  and  consents  to  Lessee's
installation  and operation of an automated  teller machine ("ATM") which may be
accessible  from the  exterior of the  Premises.  Lessor  also hereby  consents,
subject to approval of the City of Benicia,  to Lessee's remodeling of the front
exterior facade of the Premises,  including the relocation of the Premises entry
door provided,  however, that such facade remodeling shall utilize substantially
the same materials as presently  exist,  shall be painted to match and shall not
result in more than a 25%  reduction  in the glass area  facing East 2nd Street.
Upon the expiration or termination of the Lease, Lessee shall not be required to
restore such front facade to its original condition but shall remove any ATM and
replace  same with  matching  wall or glazing.  Lessee shall not  undertake  any
improvement or modification of the exterior of the Premises until the earlier of
(a) April 1, 2000; or (b) Lessee's  written waiver of its right to terminate the
Lease as provided in Paragraph 56 below.

55. Tenant  Applications:  Lessor  covenants that it will fully  co-operate with
Lessee In obtaining all appropriate  governmental  approvals of the improvements
that Lessee wishes to make to the interior and exterior of the Premises.  Lessor
agrees to execute all applications  and similar  documents as are required to be
executed by the property  owner in order to facilitate  Lessee's  obtaining such
governmental  approvals provided,  however,  that Lessor shall incur no costs in
such regard nor shall Lessor obligate itself to construct any  improvements as a
result of such applications and/or other documents.

56. Lessee's Right to Terminate: By written notice to Lessor delivered not later
than  February  29, 2000,  Lessee  shall have the right to terminate  this Lease
effective  on the date set  forth in such  notice  (but in no event  later  than
February  29,  2000) if Lessee  has been  unable  for any  reason to obtain  all
governmental  approvals  it  requires  to  operate  a  banking  facility  in the
Premises.  Rents  shall be pro  rated as of such  termination  date.  Upon  such
termination  date Lessee shall return all keys to Lessor and Lessor shall return
Lessee's Security Deposit and thereafter  neither party shall have any rights or
obligations to the other party under this Lease.

57.  Options to Extend:  Lessor hereby grants  Lessee three (3)  consecutIve  60
month options to extend the term of this Lease. The first Option Period shall be
from April 1, 2005,  through  March 31, 2010,  the second Option Period shall be
from April 1, 2010 through  March 31, 2015 and the Third Option  Period shall be
from April 1, 2015 through  March 31,  2020.  All terms and  conditions  of this
Lease shall apply  during each Option  Period and the Monthly  Base Rent payable
during each Option  Period shall be governed by the  provisions  of Paragraph 50
above.  Lessee may  exercise its right to extend the term of this Lease for each
Option Period only by delivery of written  notice of such election to Lessor not
less than ninety (90) days prior to the  commencement  of the applicable  Option
Period.

58. Exclusive Use of ATM: As a material  inducement to Lessee to enter into this
Lease,  Lessor hereby grants  Lessee the exclusive  right within the  Industrial
Center  (a) to install  and  operate  any form of  automated  teller  machine or
similar device which dispenses  currency to its user, and (b) to operate a bank.
Lessor covenants for the term of this Lease,  including any extended terms, that
it shall not  permit  any  other  tenant to  operate  a bank,  savings  and loan
association,  credit union or other financial  institution within the Industrial
Center.

59. Tenant Improvement  Allowance:  Provided that Lessee does not terminate this
Lease in accorance with  Paragraph 56 above,  Lessor shall grant Lessee a tenant
improvement/demolition  allowance of TWENTY THOUSAND DOLLARS ($20,000.00).  Such
tenant  improvement/demoilition  allowance  shall be paid to  Lessee in five (5)
equal  installments,   the  first  of  which  shall  be  due  and  payable  upon
commencement  of  Lessee's  demolition  of  existing   improvements  within  the
Premises.  The remaining four installment payments shall be due and payable each
15 days after Lessee  commences such demolition of existing  improvements at the
Premises.


                                                                Initials:  ???
                                                                         -------
                                                                           ???
                                                                         -------

                          MULTI-TENANT - MODIFIED NET
             (c)1993 - American Industrial Real Estate Association
                                 Page 17 of 19
REVISED                                                         Form MTN-1-6/93E

<PAGE>

60. Brokerage Fee: The brokerage fee payable by Lessor to Spectrum Properties in
accordance  with  Paragraph  15 above  shall be due and payable if, and only if,
Lessee does not terminate this Lease in accordance with Paragraph 56 above. Such
brokerage fee shall be fully due and payable on March 1, 2000.

61.  Lessee's Share of Common Area Expenses:  Throughout the term of this Lease,
including any options or other extensions hereof,  Lessee's share of Common Area
Expenses shall be fixed in accordance  with this Paragraph  notwithstanding  the
actual Common Area Expenses of the Industrial Center.

For the period of December 1999 through March 2000 Lessee's Common Area Expenses
shall be zero ($0).  For the period of April 2000 through  March 2001,  Lessee's
Common Area Expenses shall be Seven Hundred Twenty ($720.00) per month. On April
1,  2001  and on  each  succeeding  April  1st,  Lessee's  Common  Area  Expense
obligation  shall be adjusted to reflect  changes in the Consumer Price Index in
accordance with the provisions of Paragraph 50 above.

LESSOR AND LESSEE HAVE  CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION  CONTAINED  HEREIN,  AND BY THE  EXECUTION  OF THIS  LEASE  SHOW THEIR
INFORMED AND VOLUNTARY  CONSENT  THERETO.  THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND  EFFECTUATE  THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

     IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR  ATTORNEY'S
     REVIEW AND APPROVAL.  FURTHER  EXPERTS  SHOULD BE CONSULTED TO EVALUATE THE
     CONDITION  OF  THE   PROPERTY  FOR  THE  POSSIBLE   PRESENCE  OF  ASBESTOS,
     UNDERGROUND  STORAGE TANKS OR HAZARDOUS  SUBSTANCES.  NO  REPRESENTATION OR
     RECOMMENDATION IS MADE BY THE AMERICAN  INDUSTRIAL REAL ESTATE  ASSOCIATION
     OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS,  AGENTS OR EMPLOYEES AS
     TO THE LEGAL  SUFFICIENCY,  LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE
     OR THE TRANSACTION TO WHICH IT RELATES;  THE PARTIES SHALL RELY SOLELY UPON
     THE  ADVICE OF THEIR OWN  COUNSEL AS TO THE LEGAL AND TAX  CONSEQUENCES  OF
     THIS LEASE. IF THE SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN
     ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The  Parties  hereto  have  executed  this  Lease at the  place and on the dates
specified above their respective signatures.

Executed at: Fairfield, CA                Executed at: San Rafael, CA
             ---------------------------              --------------------------
on: October     , 1999                    on: October      , 1999
    ------------------------------------      ----------------------------------

By LESSOR:                                By LESSEE:

Davies Partners II, a California limited  North Bay Bancorp, a California
----------------------------------------  --------------------------------------
partnership                               coporation
----------------------------------------  --------------------------------------

By: /s/ Robert Braghetta                  By: /s/ Terry L. Robinson
   -------------------------------------     -----------------------------------

Name Printed: Robert Braghetta            Name Printed; Terry L. Robinson
             ---------------------------                ------------------------

Title: General Partner                    Title: Chief Executive Officer
       ---------------------------------        --------------------------------

By: /s/ Robert Braghetta                  By:
   -------------------------------------      ----------------------------------

Name Printed:                             Name Printed:
             ---------------------------               -------------------------

Title:                                    Title:
      ----------------------------------        --------------------------------

Address: 49 Mt. Whitney Drive,            Address:
         -------------------------------          ------------------------------
         San Rafael, CA 94903
----------------------------------------  --------------------------------------

Telephone: (415) 472-9000                 Telephone: (707)
           -----------------------------            ----------------------------
Facsimile: (415) 472-9001                 Facsimile: (707)
           -----------------------------            ----------------------------


BROKER:                                   BROKER:

Executed at: Not Applicable               Executed at: Fairfield, CA
             ---------------------------               ------------------------

on: Not Applicable                        on: October __, 1999
    ------------------------------------     ----------------------------------

By:                                       By: /s/ Bruce L. Bishop
   -------------------------------------     ----------------------------------


                          MULTI-TENANT - MODIFIED NET
             (c)1993 - American Industrial Real Estate Association
                                  Page 18 of 19
REVISED                                                         Form MTN-1-6/93E

<PAGE>

Name Printed: None                       Name Printed: Spectrum Properties None
             --------------------------               --------------------------
Title:                                   Title: President
      ---------------------------------        ---------------------------------
Address:                                 Address: 785 Alamo Drive #110,
        -------------------------------          -------------------------------
                                                  Vacaville, CA 95688
---------------------------------------  ---------------------------------------
Telephone: (   )                         Telephone:(707) 447-6l22
          -----------------------------            -----------------------------
Facsimile: (   )                         Facsimile: (707) 447-6136
          -----------------------------            -----------------------------

NOTE:   These forms are often modified to meet changing  requirements of law and
        needs  of the  industry.  Always  write  or call to  make  sure  you are
        utilizing  the  most  current  form;  AMERICAN  INDUSTRIAL  REAL  ESTATE
        ASSOCIATION, 700 South Flower Street, Suite 600, Los Angeles, California
        90017. (213) 687-8777.





                          MULTI-TENANT - MODIFIED NET
             (c)1993 - American Industrial Real Estate Association
                                  Page 19 of 19
REVISED                                                         Form MTN-1-6/93E

<PAGE>

                                  EXHIBIT "C"

                                         We hereby certify this to be a true and
                                         correct  copy  of the original document
Recording Requested By                   recorded  September  4, 1997   in  Book
and when recorded return to:             _________________ page  Series 97-57528
                                         Solano County Official Records.
Vacaville Redevelopment Agency
40 Eldridge Avenue, Suite 1-5
Vacaville, California 95688              First American Title Guaranty Company
                                         by: /s/ ???????
                                            -----------------------------------


                                 DECLARATION OF
                             RECIPROCAL EASEMENTS,
                     COVENANTS, CONDITIONS AND RESTRICTIONS

                                      FOR

                           BASIC AMERICAN FOODS SITE


                                 August 27, 1997


        This  Declaration  of Reciprocal  Easements,  Covenants,  Conditions and
Restrictions  (this  "Declaration")  is made this day of August 27, 1997, by the
VACAVILLE REDEVELOPMENT AGENCY, a public body corporate and politic ("Agency").

                                    RECITALS

        A. Agency owns certain real property generally located on the north side
of Interstate 80 freeway and bounded by Davis Street,  Mason Street,  Interstate
80, and the Depot Street  on/off ramps to the freeway in  Vacaville,  California
more  particularly  described as Parcels 1 through 6  ("Parcels")  on Exhibit A,
attached hereto;

        B.  Agency  intends by this  Declaration  to impose  reciprocal  access,
parking, utility and drainage easements with respect to the Parcels;

        C. Agency further intends by this Declaration to impose upon the Parcels
mutually  beneficial  restrictions  under a general plan of improvement  for the
benefit of all of the Parcels;

        D. Agency  will  hereafter  hold and convey  title to all of the Parcels
subject to the easements,  covenants,  conditions and restrictions hereafter set
forth.


                                       1
  ???                                                                      ???
-------                                                                  -------

<PAGE>

        NOW,  THEREFORE,  the Agency  declares  that the Parcels shall be owned,
sold, leased,  mortgaged,  encumbered,  rented, developed,  improved,  conveyed,
graded,  landscaped,  maintained,  repaired,  occupied  and used  subject to the
uniform covenants, conditions,  restrictions,  easements, rights, rights-of-way,
liens, charges, and other protective and beneficial provisions set forth in this
Declaration, each and all of which:

                  (i) are hereby expressly  imposed upon and against each Parcel
as mutual,  beneficial,  and equitable servitudes in favor of and for the mutual
use and benefit of the other Parcels,  the Agency and all subsequent  Owners (as
defined below) of the Parcels or any part thereof;

                  (ii) are hereby  expressly  declared  to be  binding  upon the
Parcels,  the Agency and upon all  subsequent  Owners of the Parcels or any part
thereof; and

                  (iii) shall run with the land and each and every part thereof,
inuring to the benefit of and being a burden upon the Parcels and shall bind the
respective  Owners of the Parcels.  Upon  recordation of this  Declaration,  any
conveyance, sale, hypothecation, assignment, lease or other transfer made by the
Agency or an Owner shall be and hereby is deemed to incorporate by reference the
provisions of this Declaration, as the same may be amended from time to time.

The covenants contained herein shall be covenants running with the land pursuant
to applicable law, including, but not limited to, Section 1468 of the California
Civil Code.

        In consideration of the foregoing, the Agency declares as follows:


                             ARTICLE 1. DEFINITIONS

        Unless the context clearly indicates otherwise, the following terms used
in this Declaration are defined as follows:

        Section 1.1 "Access and Parking" shall mean and be deemed to include and
permit the following:

                  (a) The parking of passenger  vehicles and the  pedestrian and
vehicular traffic of the Owners and their Permitees,  in conjunction with use of
any and all portions of Building Areas within the Parcels;

                  (b) The ingress  and egress of any of the Owners or  Permitees
and the vehicles thereof, to any and from any portion of the Common Area and the
Building Area and public streets adjacent to the Common Area;


                                       2

<PAGE>

                  (c) The movement of pedestrians and passenger vehicles between
mercantile, business and professional establishments and occupants located or to
be located within the Building Areas;

                  (d) Subject to Section  2.2,  the  construction,  maintenance,
repair,  replacement,  rearrangement  and  reconstruction  in the Common Area of
parking sites or stalls, including wheel stops, sidewalks,  landscaping,  ramps,
driveways,  lanes, curbs, gutters,  traffic control areas, signals,  directional
signs,  traffic and parking, lighting, facilities and other similar improvements
and facilities; and

                  (e) The ingress and egress of delivery and service  trucks and
vehicles  to and from  Building  Areas or any  portion  thereof  and the  public
streets adjacent to the Parcels for the delivery of goods,  wares or merchandise
and the  rendering  of  services to the Owners and their  respective  Permitees.
Other than in designated loading areas, the Common Area shall not at any time be
used for the parking of trucks, or the loading or unloading thereof,  except for
the temporary  parking,  loading or unloading of trucks during and in connection
with the  construction  or demolition  of buildings  upon a Building  Area,  the
servicing and  supplying of a Building Area which cannot be reasonably  serviced
and supplied from areas  designated as loading areas, the delivery or removal of
trade fixtures  (including signs) or the construction,  repair or maintenance of
parking  area  and  improvements  and  facilities  herein  permitted,  upon  the
condition,  however,  that any  such use  shall  be  confined  to that  which is
reasonably  necessary in connection with the matters herein  specified and shall
be diligently and promptly performed.

         Section 1.2 "Agency" shall mean the Vacaville Redevelopment Agency.

         Section 1.3  "Association"  shall mean the association of Owners formed
pursuant to the provisions of Article 12.

         Section 1.4 "Building  Areas" shall mean those  portions of the Parcels
on which structures are located, as determined in accordance with Section 2.1.4.

         Section  1.5  "Building  Improvements"  shall mean  structures  located
within Building Areas.

         Section  1.6  "City"  shall  mean the City of  Vacaville,  a  municipal
corporation.

         Section 1.7 "Common Areas" shall mean the landscaping areas, driveways,
access and parking areas and associated  improvements  (including landscaping in
the area owned by the State of California  that is between an Owner's Parcel and
Interstate  80)  constructed  by  an  Owner  in  accordance  with  plans


                                       3

<PAGE>

and specifications  approved by City and by the Agency so long as Agency has any
direct or  indirect  interest  in any  Parcel,  which are used for  landscaping,
access and parking,  as and when the Common Area  Improvements  for a Parcel are
actually constructed, as determined in accordance with Section 2.1.4.

        Section  1.8  "Common  Area  Expenses"  shall  mean all of the costs and
expenses incurred for operation,  control,  repair and maintenance of the Common
Areas,  including,  without  limitation,  Common Area  Improvements,  and Common
Utility Facilities which shall be operated, controlled,  repaired and maintained
at the sole expense of the Owner of the Parcel on which such Common Area, Common
Area Improvement or Common Utility Facility, or portion thereof, is located.

        Section  1.9  "Common  Area  Improvements"  shall mean the  landscaping,
parking,  lighting,  and  vehicular,   pedestrian  access  ways  and  any  other
improvements  located or to be located within,  over and across or on the Common
Areas.

        Section 1.10 "Common  Utility  Facilities"  shall mean  underground  and
above ground utility facilities for drainage, storm sewers,  detention/retention
facilities,  joint trench and water lines, and pumping facilities, fire hydrants
or other fire protection installations (including those between the Parcels) and
the lines or facilities of the  governmental  body or public  utility  providing
storm drainage and fire protection (excluding however,  laterals within five (5)
feet of any building  servicing  only such building and located  entirely on the
Parcel on which  said  building  is  located)  and  underground  facilities  for
electricity, gas, telephone, telecommunications or other utilities.

        Section 1.11 "Direct or Indirect Interest" shall mean the following real
estate interests:  fee title, a leasehold interest either as lessee or lessor or
a security  interest as  mortgagee,  or an  interest as an equity  holder in any
entity possessing such a real estate interest.

        Section 1.12 "Mortgage" shall mean any duly recorded mortgage or deed of
trust encumbering a Parcel or portion thereof.

        Section 1.13 "Mortgagee"  shall mean the mortgagee or beneficiary  under
any Mortgage.

        Section 1.14 "Owner"  shall mean the record owner of fee simple title to
all or any part of a Parcel, and its successors and assigns. If the ownership of
any  buildings  or other  improvements  or any  portion  thereof  shall  ever be
separated  from the  land,  whether  by lease or by deed,  the  owner(s)  of the
interest in the land and not such  buildings or other  improvements


                                       4

<PAGE>

or portion thereof shall be deemed an Owner hereunder. A landlord and tenant may
agree upon a different  method of allocating  duties imposed upon a Parcel which
agreement  shall be  controlling  as to said  Owner and tenant but not as to the
Owners of the other Parcels.

        Section 1.15 "Owners" shall mean  collectively all Owners of all Parcels
or parts thereof.

        Section  1.16 "Parcel  Map" shall mean that  certain  Parcel Map,  dated
July,  1997 and  recorded  by City in the  Official  Records  of Solano  County,
California, on 9/4, 1997 as Book 40 **Instrument No. 97-57527 legally describing
the Parcels.

*of Parcel Maps, Page 66,**

        Section 1.17 "Permittee" shall mean an Owner, any tenant or other lawful
occupant  of  a  Parcel,  and  officers,  directors,   employees,   contractors,
customers, clients, vendors, suppliers, visitors or concessionaires of an Owner,
tenant or other lawful occupant of a Parcel.

        Section  1.18  "Policy  Plan" shall mean the Basic  American  Foods Site
Policy Plan,  dated January 1996 and adopted by the City.  The Policy Plan as it
currently  exists  or as it may be  amended  from  time to time  shall be deemed
incorporated in this Declaration by this reference.

        Section  1.19  "Services  and  Activities"  shall  mean and be deemed to
include and permit the following:

                 (a) The  installation,  maintenance,  repair,  replacement  and
operation,  within the confines of the Common  Area,  of private  and/or  public
utilities,  including without limitation gas lines, water lines, fire protection
systems,  electrical  lines and  telephone  and  telecommunications  lines,  and
sewage,  storm water and drainage  facilities  serving Building Areas,  together
with and including vaults,  manholes,  meters,  pipelines,  grease interceptors,
valves, hydrants,  sprinkler controls,  conduits and related facilities,  all of
which shall be even with or below the surface,  except  hydrants,  transformers,
risers and other facilities which by their nature must be installed,  maintained
or  operated  above  ground;   provided,   however,  that  any  poles  or  other
above-surface installations shall be located so that there shall be an unimpeded
access for  vehicles  and trucks to and from the public  streets from and to the
loading  areas of any Building  Area,  and all  crossarms and pole racks and the
like attached thereto shall be in compliance with all applicable laws;

                  (b) The  provision  of  other  facilities  such as  mailboxes,
public  telephones  and benches for the comfort and  convenience  of  customers,
visitors,  invitees,  licensees,  and patrons of the  mercantile,  business  and
professional establishments and occupants located or to be located upon the


                                       5

<PAGE>

Building  Areas or any portion  thereof,  provided that the  foregoing  shall be
located on sidewalks or in landscaping areas abutting Building  Improvements and
installed in accordance  with the approval of the  governmental  agencies having
jurisdiction  over the Parcel and in  compliance  with all  applicable  laws and
regulations;

                 (c)  Subject to Section  2.2,  the  installation,  maintenance,
repair, replacement and operation of truck loading and unloading areas including
ramps, docks and similar facilities; trash, refuse and garbage container storage
areas; and other incidental and related facilities;  provided that the foregoing
shall  be  located  and  installed  in  accordance  with  the  approval  of  the
governmental  agencies having  jurisdiction  over the Parcel,  and in compliance
with the Policy Plan and all applicable laws and regulations;

                 (d) The construction,  maintenance and repair of monument signs
installed  or erected in  accordance  with the Policy  Plan  and/or an  approved
Planned Sign Program and all other applicable sign laws and regulations, subject
to the approval of City; and

                 (e) The  construction,  maintenance,  repair,  replacement  and
operation of any  landscaped  area  including  plants,  planting  boxes,  edges,
decorative walls or sculpture, and sprinklers and valves.

        Section 1.20 "Substantially Complete" shall mean that an improvement has
been  constructed  to the point  where it can be used for the  purpose  intended
although  there may be minor  adjustments  or work to be  completed  that do not
interfere  with the intended use or  constitutes a public health or safety issue
as determined by any public agency having  jurisdiction  over said public health
or safety issue.


                            ARTICLE 2. COMMON AREAS

        Section 2.1 Easements.

                  2.1.1  Access and  Parking.  Each Owner shall have  reciprocal
non-exclusive  easements appurtenant to each Parcel over the Common Area of each
Parcel for Access and Parking for the Owner and its Permitees, except as set out
in Section 2.1.7 below. The Access and Parking  easements on any Parcel shall be
effective as of the date the Common Area  Improvements for such parcel are first
Substantially Complete.

                 2.1.2  Utilities.  Each Owner shall have the  nonexclusive  and
perpetual  right and  reciprocal  easement to  install,  maintain,  repair,  and
replace the Common Utility


                                       6

<PAGE>

Facilities,  within  and upon the  Common  Area,  together  with such  temporary
construction  and access  easements  as are  reasonably  necessary to permit the
foregoing   activities.   Owners  will  use  reasonable  efforts  to  cause  the
installation  of such  utility and  service  lines prior to paving of the Common
Areas.  No such  lines,  sewers,  utilities  or  services  of one party shall be
installed  within the Building Areas or under  accessory  buildings on any other
Owner's  Parcel.  If any Owner desires to install a Common  Utility  Facility on
another  Owner's  Parcel,  the Owner so desiring shall obtain the consent of the
other Owner,  which consent shall not be  unreasonably  withheld.  If the Common
Area has not been designated on a Parcel at the time an Owner desires to install
Common Utility  Facilities on that Parcel,  the Owner of the Parcel on which the
Common Utilities Facilities are to be located shall designate the portion of the
Parcel that is  reasonably  expected  to be Common  Area and the Common  Utility
Facilities  shall be  installed  in that area.  Subject to  obtaining  necessary
approval(s),  if any,  of any public  agency,  any Owner  upon whose  Parcel any
Common Utility  Facilities shall have been installed shall have the right,  upon
sixty (60) days prior notice to the other Owners serviced by said Common Utility
Facilities,  at any  time or from  time to  time,  to  move  and  relocate  such
facilities to such place on its Parcel as it shall designate, provided, however,
that such  relocation  shall be made at the sole cost and  expense  of the Owner
requesting  such  relocation  and  shall  not  substantially  interfere  with or
increase the cost of any other users' utility service, or unreasonably interfere
with the conduct or operation of another Owner's business or cause any damage to
another  Owner's  Parcel.  To the  greatest  extent  possible,  the Owners shall
install  Common  Utility  Facilities  in a manner that will permit the  separate
metering of all utilities to an Owner's Parcel,  including  without  limitation,
utilities serving the Common Areas located on such Parcel.

                 2.1.3  Drainage.  Any  alteration in the natural water drainage
flow which may occur as a consequence of normal construction  activities and the
existence of the  improvements  contemplated  by the site plans  approved by the
City from time to time shall be  permitted.  Each Owner  shall have  reciprocal,
nonexclusive easements over and across the Common Areas to grade, establish, and
maintain drainage  patterns.  This easement shall not permit drainage flow which
materially  adversely affects an Owner's use of its Parcel. All grading shall be
done pursuant to plans and  specifications  approved by City and the Agency,  so
long as the Agency has any direct or indirect interest in a Parcel.

                 2.1.4 Locations.  The location of the Building Areas and Common
Areas on a Parcel  shall be as shown on the  plans  and  specifications  for the
construction  of any  improvement  on a Parcel,  which plans and  specifications
shall be approved by City and the Agency so long as the Agency has any direct or
indirect  interest  in a Parcel.  There must be  sufficient  Common  Area on a


                                       7

<PAGE>

parcel to provide parking in the ratios required by Section 2.2.3.

                 2.1.5  Easements  Appurtenant  to the Parcels.  Easements  that
benefit or burden  any  Parcel  shall be  appurtenant  to that  Parcel and shall
automatically   accompany  the  conveyance  of  the  Parcel,   even  though  the
description  in the  instrument of conveyance may refer only to the fee title to
the Parcel.

                 2.1.6 Right to Repair. The reciprocal  easements granted herein
shall include the right of the Owner to any Parcel,  but not the obligation,  to
construct,   reconstruct,   maintain,   repair  and   replace  any  Common  Area
Improvements  and/or Common Utility Facilities on any other Parcel in accordance
with Section 2.4.3.

                 2.1.7  Effectiveness  of the  Easements.  The  Parcels  are not
developed  as of the date of this  Declaration.  As a result,  the  Parking  and
Access  easements  will not be  effective  as to a Parcel  until the Common Area
Improvements are first  constructed on such Parcel.  The Owner of a Parcel shall
be  obligated  to  construct  or  cause  the  construction  of the  Common  Area
Improvements  to  be  located  on  such  Parcel,  as  shown  on  the  plans  and
specifications   for  such   improvements   approved  in  accordance  with  this
Declaration,  and as  further  provided  in  Section  2.2.5 at the time it first
constructs Building Improvements on the Parcel.

                 2.1.8 Interim Access.  Prior to the  construction of the Common
Area  Improvements  on a Parcel,  each Owner shall have an access  easement over
that  Parcel so as to  provide  access  from the public  streets to the  Owner's
Parcel.

        Section 2.2 Use of Common Area.

        2.2.1 General.  The Common Area shall be used for Access and Parking and
for Services, and Activities and for no other purposes except those specifically
described herein,  without the prior written consent of City, the Agency so long
as the Agency has any direct or indirect interest in a Parcel, and the Owners of
the Parcels.  The Common Area shall be used in  compliance  with all  applicable
laws including,  without limitation, all laws relating to environmental matters,
and in compliance with all rules and regulations promulgated pursuant to Section
2.4.2. All the Services and Activities permitted within the Common Area shall be
performed  with  reason  and  judgment  so as not to  create  a  nuisance  or to
unreasonably  interfere with other uses of the Common Area including the serving
and  supplying of the loading areas of the Building  Areas.  All of the activity
permitted  within the Common Areas including the construction and maintenance of
improvements located thereon,  shall be reasonably conducted so construction and
maintenance of improvements located


                                       8

<PAGE>

thereon,  shall be reasonably conducted so as not to interfere,  in any material
respect,  with the  primary  purpose  to the  Common  Areas  which is to provide
parking for the visitors,  customers, invitees and employees of those businesses
located  within the Building  Improvements  on the Parcels and for the servicing
and supplying of such businesses.

                 2.2.2 Standard of Operations.  Each Owner shall keep, maintain,
repair,  manage and operate  their  respective  Parcels and  buildings,  whether
occupied or unoccupied,  located  thereon in compliance with all applicable laws
and in good and clean order, operation,  condition and repair in conformity with
first-class  standards  for retail  projects,  in such a manner as to establish,
maintain and present,  at all times,  the  appearance of a clean,  well-painted,
well-managed,  attractive,  and well-coordinated  operation. In addition, at any
time  when a Parcel  has not been  improved,  the  Owner  thereof  shall at such
Owner's sole cost and expense,  keep the unimproved Parcel in a neat and orderly
condition and clear of all trash.

                 2.2.3  Parking.  Parking  ratios for each  Parcel  shall at all
times comply with all applicable  legal  requirements as specified in the Policy
Plan and as approved by the City. No changes in the number of parking spaces, or
in the  configuration  of the Common Area from that shown on the approved  plans
and  specifications for a Parcel shall be made without the prior written consent
of the  City,  the  Agency so long as the  Agency  has any  direct  or  indirect
interest  in a Parcel,  and of the Owners of the  Parcels.  The  approval of the
Owners shall not be unreasonably withheld.

                 2.2.4 Fees for Use of the Common  Area.  Except as  provided in
Section  2.2.6,   persons  using  the  Common  Areas  in  accordance  with  this
Declaration shall not be charged any fee for such use unless such fee is imposed
by a  governmental  entity  with  jurisdiction  over the Parcel or  improvements
thereon.

                 2.2.5  Construction  of Common  Area  Improvements.  Each Owner
whose  Parcel does not as of the date hereof have  improvements  in the Building
Area on such Parcel shall construct,  at such Owner's sole cost and expense, the
Common Area Improvements  shown on the plans and specifications for such Parcel,
approved  in  accordance  with this  Declaration,  at such time as the  Building
Improvements to be located in the Building Areas are constructed. No Owner shall
be obligated to construct Common Area  Improvements  unless and until such Owner
constructs  Building  Improvements  within the  Building  Area.  All Common Area
Improvements  shall be constructed in accordance  with plans and  specifications
approved  by City,  the Agency so long as the Agency has any direct or  indirect
interest  in the  Parcels,  and by the Owners of the  Parcels.  Approval  by the
Agency or an Owner shall not be unreasonably withheld.


                                        9

<PAGE>

                 2.2.6 Parking  Charges.  No system of charges or validation for
parking in the Common Area shall be instituted  unless the system is approved by
all the Owners and is either necessary to prevent use of the Common Area parking
facilities  by persons  other than  Permitees  or results in  increased  parking
efficiency  provided  the cost  thereof  does not  exceed  the  benefit  derived
therefrom.

                 2.2.7 Pylon Signs. The Owner of Parcel 1 intends to construct a
pylon sign as part of the  Common  Area  Improvements  on its Parcel in order to
identify the theater to be developed on that parcel. At least sixty (60) but not
more than one hundred  eighty (180) days prior to the date the Owner of Parcel 1
intends to commence  construction  of that pylon sign, that Owner shall offer to
the other Owners the reasonable  opportunity to have use of advertising space on
the pylon sign on reasonable terms that assure that each participating  Owner is
paying a fair share of the cost of constructing and maintaining the pylon sign.

        Section 2.3 Maintenance

                 2.3.1  Standards.  The Owners  shall  maintain the Common Area,
Common  Area  Improvements,  and  Common  Utility  Facilities  in a  first-class
condition  and repair.  The  maintenance  is to conform `in type,  quantity  and
quality to the design and  specifications  previously  approved  for such Common
Area Improvement in accordance with this Declaration, and shall include, without
limitations, the following:

                       2.3.1.1  Maintaining  the paved surfaces and striping and
wheel stops in a level,  smooth and evenly  covered  condition  with the type of
surfacing  material  originally  installed  or such  substitute  as shall in all
material  respects be  substantially  equivalent to the original with respect to
function and durability;

                       2.3.1.2 Removing all papers, mud and sand, debris,  filth
and refuse and  sweeping or blowing  the  Common Areas to the extent  reasonably
necessary  to keep the Common Areas in a clean and orderly  condition;  provided
that each Owner shall contain all trash within suitable  enclosures,  shall keep
such enclosures free of debris and grease,  shall obtain trash removal  services
adequate for the uses of the  improvements  located on such Owner's Parcel,  and
shall take all  reasonable  steps at such  Owner's  cost to limit  refuse in the
Building Areas and the Common Areas

                       2.3.1.3  Placing,  keeping  in repair and  replacing  any
necessary and appropriate directional signs, markers and lines;


                                       10

<PAGE>

                       2.3.1.4 Operating, keeping in repair and replacing, where
necessary, such artificial lighting facilities as shall be reasonably required;

                       2.3.1.5  Installing and  maintaining  the landscaping and
sprinkler systems installed in the Common Area;

                       2.3.1.6  Provision of adequate  water and  electricity to
the Common Area Improvements; and

                       2.3.1.7   Provision   of  any  other   items  of  repair,
replacement  or  maintenance  that may be needed  from time to time to  properly
maintain the Common Area,  the Common Area  Improvements  and the Common Utility
Facilities.

                 2.3.2 Security.  Each Owner shall provide adequate security for
the Common Area,  including providing any security or security measures required
by the City pursuant to the Policy Plan.

                 2.3.3 Common Area Expenses.  The Agency hereby  covenants,  and
each  Owner of any  Parcel or part  thereof by  acceptance  of a deed  therefor,
whether or not it shall be so  expressed in such deed,  covenants  and agrees to
pay for the Common Area expenses applicable to such Owner's Parcel under Section
2.3.1 or Section 2.3.2.

                 2.3.4 Common Area  Operation,  Maintenance  and Repair.  At all
times, each Owner of a Parcel shall have the obligation to operate, maintain and
repair the Common Areas and Common Area  Improvements on such Owner's  Parcel(s)
at its own expense  without  contribution  by any other  Owner.  Common  Utility
Facilities on a Parcel which  exclusively  serve another Parcel or Parcels shall
be  maintained  by the Owner or Owners of the other  Parcel or  Parcels.  Common
Utility  Facilities on a Parcel which serve the Parcel on which they are located
shall be  maintained  by the Owner of that Parcel at its own expense and without
contribution by any other Owner even though such facilities may also serve other
Parcels.

                 2.3.5  Owner's  Cooperation.  Each  Owner  agrees  that it will
cooperate in all reasonable respects to facilitate the maintenance and operation
of the Common Area  Improvements  and Common Utility  Facilities  located on its
Parcel(s) for the benefit of the other Parcels. Any maintenance and repair shall
be carried out with as little  interference  as is reasonably  possible with the
business  operations  located on any Parcel not owned by such Owner.


                                       11

<PAGE>

         Section 2.4 Operations.

                 2.4.1 Rules and Regulations, Owners' Association. Any Owner may
propose  rules and  regulations  of  general  application  for the  supervision,
control and use of the Common  Area,  including,  without  limitation,  employee
parking. All rules and regulations must be approved by the Agency so long as the
Agency has any direct or indirect interest in a Parcel, and by the Owners of the
Parcels,  which approvals shall not be  unreasonably  withheld or delayed.  Such
rules and  regulations  shall apply to all  Parcels,  and each Owner of a Parcel
shall be obligated to enforce such rules and regulations in a manner  consistent
with this Declaration.  The Owners may delegate to the Association the authority
to establish rules and regulations for the Common Area or other responsibilities
under this Declaration including the provision of security.

                 2.4.2 Termination of Owner's Obligations.  If any Owner sells a
Parcel owned by it, then such Owner shall have no further  obligation under this
Declaration  with  respect  to the  Parcel  thus  sold  after  the  date  of the
conveyance, other than obligations arising prior to the date of the conveyance.

                 2.4.3  Owner's  Failure  to Pay or Perform  Obligations.  If an
Owner  (the  "Non-Performing  Owner")  fails  to pay  any  sum  due  under  this
Declaration,  including without limitation,  any of the Common Area Expenses, or
to perform any obligation under this Declaration,  within ten (10) business days
after  notice from the Agency  (whether or not the Agency  retains any direct or
indirect interest in a Parcel) or from any other Owner, then the Agency, or such
other Owner (the "Performing Owners"), as the case may be, shall have the right,
but not the  obligation,  to make such  payment or perform  such  obligation  on
behalf of the  Non-Performing  Owner.  If any Owner fails or refuses at any time
to  pay then,  after written  demand and failure to pay within ten (10) business
days after receipt of such demands,  legal action may be instituted by any Owner
against the Non-Performing Owner for reimbursement,  plus interest at the lesser
of (i) two (2)  percentage  points  over  the  then  current  reference  rate of
interest as  announced  by the Bank of America,  N.T. & S.A.  main  office,  San
Francisco,  California  or (ii) the maximum rate  permitted by law (the "Default
Rate").  If any Owner  defaults  under  this  Declaration,  any other  Owner may
institute  legal action against the defaulting  Owner for specific  performance,
declaratory  relief,  damages or other available remedy. In addition to recovery
of the  sum  or  sums  expended  on  behalf  of the  Non-Performing  Owner,  the
prevailing Owner shall be entitled to receive from the Non-Performing Owner such
amount as the court may  adjudge to be  reasonable  attorneys'  fees,  including
without  limitation,  attorneys'  fees incurred in executing  upon any judgment.
Pursuant to Article 8 hereof,  any and all delinquent amounts together with said
interest shall be a lien and charge


                                       12

<PAGE>

upon all of the Parcel or Parcels of such Owner  subject  to, and junior to, and
shall in no way impair or defeat the lien or charge of any bona fide mortgage or
deed of trust upon the same or any part thereof at any time given or made.

                 2.4.4   Effect  of   Agreements   Between   Owner  and  Tenant.
Notwithstanding anything contained herein to the contrary, if a particular lease
between an Owner and its tenant with respect to the calculation, time and method
of billing and payment of Common Area Expenses is different  from the provisions
of this  Declaration,  the lease provisions shall prevail between said Owner and
its tenants, but as among the Owners, this Declaration shall prevail.

                 2.4.5 Direct Payment of Metered  Utility  Services.  Each Owner
shall be solely  responsible  for the payment of utility  charges for separately
metered utility services to such Owner's Parcel, including,  without limitation,
the Common Areas located on such Owner's Parcel.


                        ARTICLE 3. TAXES AND ASSESSMENTS

        Section 3.1 Taxes to be Segregated and Paid Promptly.  As to any portion
of the  Parcels,  it is  intended  and  agreed  that all real  estate  taxes and
assessments  which may be levied,  assessed  or charged by any public  authority
against  that  Parcel or any part  thereof,  shall be  segregated  to the extent
reasonably  possible and be paid prior to delinquency by the respective Owner of
said Parcel.

        Section  3.2 Right to  Contest.  If any Owner shall deem any real estate
tax or assessment  (including the rate thereof or the assessed  valuation of the
property in question or any other aspect thereof) to be paid by said Owner to be
excessive  or  illegal,  said Owner  shall  have the right,  at its own cost and
expense, to contest the same by appropriate  proceedings,  and nothing contained
in this  Section 3.2 shall  require the Owner to pay any such real estate tax or
assessment  as long as (a) no other  Owner's  Parcel  could be  affected by such
failure to pay,  and (b) the amount or validity  thereof  shall be  contested in
good  faith.  If the  failure  to pay such tax would  affect  any other  Owner's
Parcel,  such other  Owner shall have the right to pay such tax and shall have a
lien on the  non-paying  Owner's  Parcel for the  amount so paid.  Any such lien
shall be  subject  to,  and  junior to, and shall in no way impair or defeat the
lien or charge of any bona fide  mortgage  or deed of trust upon the same or any
part thereof at any time given or made.

        Section 3.3 Assessments.  Any assessment, for public improvements levied
against a Parcel shall be paid solely by the Owner of that Parcel.


                                       13

<PAGE>


                ARTICLE 4.  BUILDING HEIGHT, SETBACK/ARCHITECTURAL
                            AND LANDSCAPING APPROVAL/ENVIRONMENTAL MATTERS

        Section 4.1 Building Height and Setbacks.  The Owners covenant and agree
that the height of all  structures on a Parcel shall be limited to the permitted
heights under the Policy Plan, as it currently  exists or is amended or replaced
by other plans or regulations in the future.  The Owners covenant and agree that
except  as set  forth in the next  sentence,  no  building  structures  shall be
erected within the Building Setback.  Such Building Setback may be improved with
Common Area Improvements, Common Utility Facilities and landscaping.

        Section 4.2  Architectural and Landscaping  Approvals.  All improvements
located in the Building Areas, and landscaping,  shall be constructed,  altered,
remodeled,  painted  or  replaced  in  accordance  with  the  Policy  Plan as it
currently  exists or is amended or replaced by other plans or regulations in the
future and all other applicable laws.

        Section 4.3 Environmental Matters.  Except for materials stored and used
in accordance with an approved  permitted or conditionally  permitted use and in
accordance  with  all  applicable  laws,  no toxic or  hazardous  substances  or
materials shall be discharged from, used, disposed of or stored on any Parcel.


                      ARTICLE 5. IDEMNIFICATION/INSURANCE

        Section 5.1 Indemnification.  Each Owner ("Indemnitor") hereby agrees to
defend, indemnify and save the other Owners and each of them (collectively,  the
"Indemnitee")  harmless from and against any and all liability damage,  expense,
causes of action,  suits, claims or judgments suffered by the Indemnitee arising
from personal  injury,  death or property damage and occurring from the exercise
by the Indemnitor of its rights hereunder, the breach of any provision hereof by
such  Indemnitor,  or the failure of the  Indemnitor to fulfill its  obligations
hereunder.  No Indemnitor  shall be  responsible  for the  negligence or willful
misconduct of any other Owner.

        Section 5.2 Insurance.

                 5.2.1  Comprehensive  General Liability  Insurance.  Each Owner
shall procure and maintain in full force and effect  throughout the term of this
Declaration  comprehensive  general  liability  insurance  and  property  damage
insurance  against claims for personal injury,  death or property  damage,  each
Owner's insurance to afford protection to the limit of not less than Two Million
Dollars ($2,000,000.00) for injury or death of a single person, and to the limit
of not less than Five Million Dollars


                                       14

<PAGE>

($5,000,000.00)  for  injury  or  death  of  more  than  one  person  in any one
occurrence, and to the limit of not less than Two Hundred Fifty Thousand Dollars
($250,000.00)  for property damage.  Such insurance may be written by additional
premises  endorsement  on any master  policy of  insurance  carried by the Owner
which may cover  other  property in  addition  to the  property  covered by this
Declaration.  Such  insurance  shall  provide that the same may not be cancelled
without  thirty (30) days' prior  written  notice to the other  Owners and shall
name the Agency as an  additional  insured so long as Agency owns a Parcel.  The
amount of coverage required hereunder may be increased (but not decreased) every
three  (3)  years,  on or  about  July 1 of such  year,  to a then  commercially
reasonable  amount  agreed to by the Agency so long as the Agency has any direct
or indirect interest in any Parcel and the Owners of the Parcels.

                 5.2.2 Casualty Insurance.  Each Owner shall procure a policy or
policies  of  insurance  insuring  against  the  perils  insured  against by the
standard  fire  and  extended  coverage  insurance,  including  glass  breakage,
vandalism and signage coverage, in an amount equal to one hundred percent (100%)
of the replacement value of the Common Area Improvements located on such Owner's
Parcel,  exclusive  of  foundation  and  excavations,  as such  value  shall  be
determined  on an annual  basis.  No Owner  shall have the right to elect not to
obtain such  insurance but all Owners shall have the right to obtain  additional
insurance.

                 5.2.3 Insurers and Additional  Insureds.  Policies of insurance
provided  for in this  Section 5.2 shall be issued by  companies  rated A XII or
better in "Best's  Key Rating  Guide."  Each Owner  shall  provide to each other
Owner  certificates,  upon  written  request,  evidencing  the  fact  that  such
insurance has been obtained.

                 5.2.4  Waiver  of  Subrogation  and  Other  Provisions  of  the
Policies.  Each Owner's  policy of insurance  described  herein shall  contain a
waiver by said insurer of any and all rights of  subrogation  against each other
Owner, and their officers,  employees,  agents,  associates and representatives,
and said insurance policy shall provide that any "non-control" provision in said
policy is excluded or superseded by an endorsement  providing that the insurance
obtained  pursuant to this  Section.  5.2 shall not be  prejudiced by any act or
omission  of any of the  insureds  when such act or  omission  is not within the
actual  knowledge  and  control of all of the  insureds  collectively  and shall
likewise  not be  prejudiced  by any failure of the  insureds,  individually  or
collectively,  to comply  with any  warranty  or  condition  with  regard to any
portion  of any Parcel or the  improvements  thereon  over  which  each  insured
individually,  or the insureds  collectively,  have no control.  Said  insurance
policy shall provide that it may not be canceled, suspended or avoided


                                       15

<PAGE>

in whole or in part by reason of any act,  omission  or breach of any  covenant,
condition or restriction contained herein.


                 ARTICLE 6. DAMAGE AND DESTRUCTION/CONDEMNATION

        Section 6.1 Damage and Destruction. Subject to the following provisions,
upon any damage or  destruction  of any portion of a Parcel,  the Owner  thereof
shall promptly restore or repair the Common Area Improvements thereon which have
been damaged or destroyed,  at such Owner's cost without  contribution  from the
other Owners except to the extent that such damage or  destruction  is caused by
or results from the act or omission of such other Owner or its agents, employees
or tenants.  If an Owner fails to commence  repair or  restoration of the Common
Area Improvements  within a reasonable  period,  not to exceed ninety (90) days,
and/or  thereafter  fails to diligently  pursue the completion of such repair or
restoration,  such Owner shall be in default hereunder, and any other Owner may,
in addition to any other remedy, take the actions permitted under Section 2.4.3.

        Section 6.2 Condemnation.  In the event of any condemnation (by any duly
constituted  authority  for a  public  or  quasi-public  use),  or  deed in lieu
thereof,  of  all  or any  part  of  the  Parcels,  the  portion  of  the  award
attributable  to the value of any land and  improvements  within the Common Area
shall be payable only to the Owner(s)  thereof,  and no claim  therefor shall be
made by other  Owners of any other  portion of the Parcels;  provided,  however,
that all  other  Owners  of the  parcels  may file  collateral  claims  with the
condemning  authority  over and above the value of the land taken and for losses
related to rights  such other  Owners or their  tenants  have in any Common Area
being  condemned.  The  Owner  of any  portion  of the area so  condemned  shall
promptly  repair and  restore  the  remaining  portion of the area owned by such
Owner  as  nearly  as  practical  to  its  condition  immediately  prior  to the
condemnation,  at such Owner's cost, without contributions from any other Owner.
Upon any such taking, the easement rights granted hereunder shall terminate with
respect to the  portion  so taken but shall  continue  in force and effect  with
respect with any portion not so taken.

                        ARTICLE 7. RIGHTS OF MORTGAGEES

        Any notice served upon any Owner shall be served  concurrently  upon any
Mortgagee  of the Parcel  owned by such Owner that has  previously  notified the
Owners of the Parcels of such  Mortgagee's  address,  in accordance with Section
9.5. No breach of any  covenant,  condition  or  restriction  contained  in this
Declaration  shall render  invalid the lien of any Mortgage.  Any payment by any
Mortgagee for any delinquent assessments shall


                                       16

<PAGE>

have the same  force  and  effect  as if made by the  delinquent  Owner and such
Mortgagee shall have all rights of subrogation  against said delinquent Owner as
may be available to such Mortgagee  under its Mortgage  and/or under  applicable
law. All of the  easements,  covenants,  conditions and  restrictions  contained
herein shall inure to the benefit of and be binding upon any Owner of any Parcel
whose title is derived through foreclosure, trustee's sale, deed in lieu thereof
of  otherwise.  Any  Mortgagee  or  purchaser  therefrom  who takes title to any
Parcel,  pursuant to a foreclosure of the lien of such Mortgage,  the acceptance
of a deed in lieu of  foreclosure  of such  Mortgage  or a sale under a power of
sale included in such Mortgage, shall take title free of any lien on such Parcel
arising under this Declaration which accrued prior to the date such Mortgagee or
purchaser  takes title thereto,  and such Mortgagee or purchaser shall be liable
for the  obligations  that  shall  accrue  only  during  the period of time such
Mortgagee or purchaser is the Owner of such Parcel.

                             ARTICLE 8. LIEN RIGHTS

        Section 8.1 Agreement to Pay.  Each Owner  covenants and agrees for each
Parcel  owned by it that  such  ownership,  and the  ownership  thereof  by each
successor  and assign of such party,  is  expressly  made subject to the payment
obligations imposed under this Declaration, including, without limitation, those
imposed  pursuant to  Sections  2.3 and 2.4 of this  Declaration.  Each Owner on
becoming an Owner of a Parcel and each ground  lessee of a Parcel  covenants and
agrees,  to pay the  sums  required  for  such  Parcel  in  accordance  with the
provisions  of this  Declaration,  and to allow the party  entitled  thereto  to
enforce any payments due under Section  2.4.3,  and any liens  imposed  pursuant
thereto,  in  accordance  with the  provisions  of this  Declaration.  No Owner,
tenant, lessee,  mortgagee or beneficiary may be relieved from the obligation to
pay any sum by waiving the use or  enjoyment of all or any portion of the Common
Areas,  or  Common  Area  Improvements,  or by  abandoning  some  or  all of its
Parcel(s).

        Section 8.2 Lien and Personal  Obligation of Owner.  Until paid in full,
any sum payable by an Owner or a ground lessee of an Owner ("Debtor") to another
Owner  pursuant  to  this  Declaration,  together  with  all  collection  costs,
including reasonable attorneys' fees (collectively, the "Debt"), shall be a lien
upon the Parcel and the improvements thereon, whether or not Debtor then owns or
occupies the Parcel. Each such Debt shall also be the personal obligation of the
Debtor who owned or occupied the subject Parcel at the time the Debt arose.  The
personal  obligation  shall not pass to  successors  in title of a Debtor unless
expressly  assumed by such  successors.  Such  assumption  shall not relieve the
Debtor's obligation unless the Owner to whom the obligation is owed so agrees.


                                       17

<PAGE>

        Section 8.3  Imposition of Lien. If any Owner  determines  that any lien
shall be imposed for one of the  purposes  specified in this  Declaration,  such
Owner  shall  provide  written  notice  to the  Owner  of each  Parcel,  and any
Mortgagee of whom the Owner has been notified in accordance with Article 7, upon
which  such  lien is to be  imposed,  describing  the  amount  due,  the  reason
therefor,  and the date upon which  payment  was due. If said amount is not paid
within ten (10) days after the  effective  date of such notice,  interest  shall
accrue  upon  such sum as  provided  in  Section  2.4.3.  At any time  after the
occurrence of any  delinquency in the payment of any such sum, the Owner seeking
reimbursement  may thereafter elect to file and record a Notice of Claim of Lien
against the Parcel of the defaulting  Owner in the Office of the County Recorder
of Solano  County.  The amount of the sums due, plus any costs of collection and
interest  assessed in accordance  with this  Declaration  shall be a lien on the
Owner's Parcel and the improvements located thereon from and after the time such
Notice of Claim of Lien is recorded.

        Section  8.4  Notice  of  Claim  of Lien.  Any  Notice  of Claim of Lien
prepared  with  respect  to any amount  due under  this  Declaration  shall be a
statement under oath and shall describe the amount of the delinquency (including
collection costs and attorneys' fees is known), the person(s) on whom demand was
made which shall  include any Mortgagee  having given notice in accordance  with
Article 7, the date on which  demand  for  payment  was made,  the basis for the
amount  due, a legal  description  of the  Parcel,  the name of the Owner of the
Parcel to be liened, the name and address of the claimant,  and a statement that
such sum is due and owing under this  Declaration.  Such Notice of Claim of Lien
shall be executed and acknowledged by a person having authority to execute deeds
on behalf of the claimant.  If the delinquent sum, (including related collection
charges) is paid or otherwise satisfied in full, the party recording such notice
shall record a notice of satisfaction and release of lien.

        Section 8.5  Foreclosure  Under Lien. The party recording such Notice of
Lien Claim may enforce such lien  established  hereunder by filing an action for
judicial  foreclosure  or by recording a notice of default in the form described
in the California Civil Code to commence a nonjudicial  foreclosure  under power
of sale. Any nonjudicial  foreclosure  under power of sale shall be conducted in
accordance with the requirements of California Civil Code that are applicable to
nonjudicial  foreclosures of Mortgages,  under power of sale,  provided that the
party  recording the Notice of Lien Claim may appoint its attorney,  any officer
or  director,  or any title  insurance  company  authorized  to do  business  in
California to conduct the sale in the role of trustee.  The party recording such
notice  may bid on the  Parcel  at the sale in the role of  trustee.  The  party
recording such notice may bid on the Parcel at the sale. The party acquiring the
Parcel at the sale may hold, lease, mortgage


                                       18

<PAGE>

and convey and acquire Parcel free of all rights of redemption after nonjudicial
sale. If the Parcel Owner's default is cured before the last date for redemption
as  described  in the  California  Civil  Code,  or before the  completion  of a
judicial foreclosure,  including a payment of all costs and expenses incurred by
the party recording the Notice of Lien Claim, the party recording such Notice of
Lien Claim shall record a notice of  satisfaction  and release of lien, and upon
receipt of written  request by the Owner of the  Parcel,  a notice of  recission
rescinding the declaration of default and demand for sale.

        Section  8.6 Other.  No Owner  shall be limited to one form of action in
enforcing  and  collecting  such sums.  Each Owner may  commence  and maintain a
lawsuit  directly  on the debt  without  waiving  its right to enforce  its lien
against the  Owner's  Parcel(s)  for the  delinquent  assessment.  In any action
instituted by any Owner to collect  delinquent  sums, the prevailing party shall
be entitled to recover costs and reasonable attorneys' fees.

                            ARTICLE 9. MISCELLANEOUS

        Section 9.1  Declaration  Runs With the Land. The reciprocal  easements,
covenants,  conditions and restrictions set forth herein shall be appurtenant to
and shall run with the Parcels and shall  benefit and bind each Owner during his
period of ownership, whether by operation of law or otherwise for the benefit of
the other Owner's Parcel(s). Any person acquiring an interest in a Parcel or any
portion  thereof  shall be bound by this  Declaration  only as to the  Parcel or
portion of the Parcel acquired by such person.

        Section 9.2 Enforcement.  In addition to the rights, powers and remedies
given in this  declaration  to any party or its  successor,  including,  without
limitation,  the assessment powers provided for herein, each Owner may, in their
own absolute  discretion,  at any time, and from time to time,  exercise any and
all rights and powers, and pursue any and all remedies now or hereafter given at
law or in equity,  including  but not limited to any rights or remedies  granted
herein or by California or federal case, statutory or regulatory law. The Agency
and  Owners  acknowledge  and  agree  that  they  have  bargained  for  specific
performance of the covenants, conditions,  restrictions,  rights, easements, and
rights-of-way  contained in this Declaration,  and all other provisions  hereof,
and that  each  Owner  entitled  to  enforcement  of the terms  hereof  shall be
entitled  to  injunctive   relief,   including  but  not  limited  to  temporary
restraining  orders,  preliminary  injunctions and permanent  injunctions,  both
mandatory and prohibitory.  In the event of breach or threatened  breach of this
Declaration,  only a record Owner of any Parcel, or the Agency so long as Agency
has any  direct  or  indirect  interest  in any  Parcel,  shall be  entitled  to
institute proceedings, at law


                                       19

<PAGE>

or in equity,  for full and adequate relief from the consequences of said breach
or threatened breach.

        Section 9.3 No Public Dedication.  Neither the fact that the Agency is a
public  agency nor  anything  herein  contained  shall  cause any portion of any
Parcel to be deemed to be given or  dedicated  to the general  public or for the
general public or for any public purpose  whatsoever,  it being the intention of
the Agency that this Declaration  shall be strictly limited to the Parcels.  Use
of any portion  thereof  (other than any use  expressly  allowed by a written or
recorded map,  agreement,  deed or dedication) is by permission,  and subject to
the control of the Owner thereof.  Notwithstanding any other provision herein to
the  contrary,  the Owners of the  Parcels  affected  thereby  may  periodically
restrict  ingress  to and  egress  from any  Parcel in order to prevent a public
prescriptive easement from arising by reasons of continued public use.

        Section  9.4  Effect  of a  Breach.  A breach by any Owner of any of its
obligations hereunder shall not terminate the easements and other rights granted
to such Owner hereunder.

        Section 9.5 Notices. All notices and demands of any kind which any Owner
or Mortgagee  may be required or may desire to serve on the other in  connection
with this Declaration shall be in writing and may be served by personal delivery
or  Registered  or Certified  Mail,  return  receipt  requested or by a reliable
overnight  air  courier  service.  Any  notices or demands so served by courier,
Registered  or Certified  Mail shall be deposited in the United  States Mail, or
with the courier with postage  thereon  fully  prepaid  addressed to the parties
entitled to notice.

        Any such communication shall be deemed to have been given at the time of
personal  delivery or upon receipt or rejection if mailed as required  hereunder
or one day after mailing if sent by reliable  overnight  courier.  Any Owner may
change the address at which it is to receive notice of and additional parties to
receive notice by so notifying the other Owners in writing.

        Notices to the Agency shall be addressed as follows:

                      City of Vacaville Redevelopment Agency
                      650 Merchant Street
                      Vacaville, CA 95688
                      Attn: Executive Director

        The Agency or an Owner when selling a Parcel shall provide the purchaser
with the  addresses of the other Owners as well as the address of any  Mortgagee
who has requested notices.

        Section 9.6 Estoppels.  Any Owner shall, from time to time upon not less
than fifteen (15) days notice from any other Owner,


                                       20

<PAGE>

execute and deliver to such other  Owner(s) a  certificate  in  recordable  form
stating that this  Declaration is unmodified and in full force and effect or, if
modified,  that this Declaration is in full force and effect,  as modified,  and
stating  the  modifications  and  stating  whether or not, to be the best of its
knowledge, any Owner is in default in any respect under this Declaration, and if
in default,  and that no facts exist that would  entitle such Owner to enforce a
lien or specifying such facts.

        Section 9.7  Governing  Law. This  Declaration  shall be governed by the
laws of the State of California.

        Section 9.8 Attorneys'  Fees. If there is any legal action or proceeding
or arbitration  to enforce or interpret any provision of this  Declaration or to
protect or establish any right or remedy of any party, the unsuccessful party to
such  action or  proceeding  or  arbitration  whether  such action or settled or
prosecuted  to final  judgment,  shall pay to the  prevailing  party as  finally
determined,  all  costs  and  expenses,  including  attorneys'  fees and  costs,
incurred by such  prevailing  party in such action or proceeding or arbitration,
in  enforcing  such  judgment,  and in  connection  with any  appeal  from  such
judgment.  Attorneys'  fees and costs  incurred in enforcing  any judgment or in
connection with any appeal shall be recoverable  separately from and in addition
to any other amount  included in such  judgment.  This section is intended to be
severable  from the other  provisions of this  Declaration,  and the  prevailing
party's  rights  under this  Section  shall not merge into any judgment and this
Section and any judgment  shall  survive until all such fees and costs have been
paid.

        Section 9.9 No Third Party Beneficiaries.  Except as herein specifically
provided,  no rights,  privileges  or immunities  conferred  upon Owners by this
Declaration  shall  insure to the  benefit of any  tenant,  customer,  employee,
visitor or invitee  of the  Parcels,  or any other  third  party;  nor shall any
tenant, customer, employee, visitor or invitee of the Parcels or any other third
party  be  deemed  to be a  third  party  beneficiary  of any of the  provisions
contained herein.

        Section 9.10 Further Assurances.  Each Owner and Mortgagee shall execute
such other and further  documents and  instruments  reasonably  requested by any
other Owner or Mortgagee to more clearly  evidence and carry out the  provisions
of this Declaration.

        Section 9.11 No Joint  Venture.  Nothing  contained in this  Declaration
shall be deemed or construed to create the  relationship  of principal and agent
or create any partnership, joint venture or other association between any of the
Owners.


                                       21

<PAGE>

        Section 9.12 Allocation of  Responsibilitv.  Any person acquiring fee or
leasehold title to any Parcel shall be bound by this  Declaration only as to the
rights and  obligations  pertaining  to the Parcel  acquired by such person.  In
addition,  such person shall be bound by the Declaration  only during the period
such  person is the fee or  leasehold  Owner of such  Parcel or  portion  of the
Parcel,  and such person's  obligations  shall survive and shall not be released
only as to obligations, liabilities, or responsibilities that accrue during said
period.  Although persons may be released from liability under this section, the
easements,  covenants and restrictions in this Declaration  shall continue to be
benefits to and servitudes  upon said Parcels  running with the land. A landlord
and tenant may agree upon a different  method of allocating  duties imposed upon
Parcel which  agreement shall be controlling as to said Owner and tenant but not
as to the Owners of any other Parcels.

        Section  9.13 No Merger.  This  Declaration  shall not be subject to the
doctrine of merger.

        Section  9.14 No Waiver.  The  failure to  exercise  any right or remedy
shall not be deemed a waiver of that right or remedy  unless the party  entitled
to that right or remedy has so agreed, expressly and in writing, and the failure
to so exercise any right or remedy shall not preclude the party entitled thereto
from  later  exercising  any such  right or remedy.  The  written  waiver of any
default  hereunder  given by only one party shall not be binding  upon the other
parties  hereto if such  default was by a third  party.  Any  written  waiver of
default  shall not  constitute a continuing  waiver or waiver of any other same,
similar,  or different events of default on any future  occasion,  unless such a
waiver of such future  defaults is expressed,  in writing,  with  precision.  No
course of dealing between any party hereto, or any Owner,  tenant, or other user
of the Parcels or any encumbrancer  thereof, in exercising any rights under this
Declaration shall operate as a waiver of such rights,  nor shall any such delay,
unless agreed to in writing by the parties entitled to enforce this Declaration,
constitute a waiver of any  obligation  or default.  No waiver of default  shall
extend to or impair any other  obligation not expressly  waived,  nor impair any
right otherwise consequent on such covenant, condition or obligation. Any waiver
may be given subject to satisfaction of conditions stated therein.

        Section 9.15 Time is of the Essence.  Time is of the essence with regard
to  performance  under the terms and  provisions  of this  Declaration,  and any
amendment,  modification  or revision  thereof,  with respect to the actions and
obligations  of each person bound by the terms hereof.  No extension of time for
payment for any sum due hereunder shall operate to release,  discharge,  modify,
change,  or affect the original  liability as established  hereunder,  either in
whole or in part. In accepting


                                       22

<PAGE>

an interest in any Parcel each Owner, tenant,  lessee, user, and mortgagee,  and
trust  deed  beneficiary  shall be deemed  to take its  interest  knowingly  and
willingly subject to this time is of the essence clause.

        Section  9.16  Severability.   If  any  provision  of  this  Declaration
conflicts with  applicable law or is declared  invalid,  such provision shall be
severed  from the  document and the  remainder  shall  continue to be given full
force and effect.

        Section 9.17  Interpretation.  Section  headings or captions used herein
are for convenience and do not in any way limit,  define or amplify the scope or
intent of any provision.

        Section 9.18  Approvals.  Whenever  approvals  are  required  under this
Declaration  such approval shall not be  unreasonably  withheld or delayed.  The
Agency, the City and any Owner shall not have any responsibility or liability of
any nature to any person or entity  for the  improvements  built on the basis of
plans  and  specifications  approved  by the  Agency,  the City  and the  Owners
pursuant to this  Declaration,  and the Owner and/or ground lessee,  whose plans
are approved shall defend, indemnify and hold the Agency, the City and all other
Owners harmless from any liability arising out of such approvals.  All approvals
shall be made in a non-discriminatory manner.

        Section 9.19 Amendment and Termination. The terms of the Declaration may
only be (i) amended by an instrument  signed by the Agency so long as the Agency
has any  direct  or  indirect  interest  in any  Parcel,  and the  Owners of the
Parcels, or (ii) terminated prior to the end of the term by an instrument signed
by all of the record  Owners of all the Parcels.  Any  amendment or  termination
shall be recorded in the Official Records of Solano County, California.

        Section 9.20  Annexation of Parcels.  Notwithstanding  the provisions of
Section 9.19,  this  Declaration  shall be amended to annex  additional  parcels
within the area  governed by the Policy Plan as parcels  that will be subject to
this  Declaration  if the Agency  requests such  amendment and the owners of the
parcels to be annexed agree in a writing in recordable  form to be bound by this
Declaration. Upon such amendment the Owners shall record in the Official Records
of Solano County documents to evidence that amendment.

        Section  9.21  Counterparts.   This  Declaration  may  be  executed,  in
counterparts,  each of which shall be  considered  an original  and all of which
together shall constitute one and the same instrument.

                            ARTICLE 10. ARBITRATION


                                       23

<PAGE>

        Section 10.1  Arbitration.  Any dispute  arising under this  Declaration
shall be submitted to arbitration.  Subject to subsection (e) below the judgment
or award  rendered  in any such  arbitration  shall  be final  binding  upon the
parties.  The  arbitration  shall be  conducted  and  determined  in the City of
Vacaville,  State of California, in accordance with the then prevailing rules of
the American  Arbitration  Association  ("AAA") and the provisions of California
Code of Civil  Procedure  Section 1283.05 or any successor or amended statute or
law  containing  similar  provisions,  except to the extent that the  procedures
mandated by said rules, statutes and laws shall be modified by the provisione of
Article 10.

                 (a) An Owner shall  submit a demand for  arbitration to the AAA
specifying  the  issue to be  determined,  in which  case the other  party  must
participate  and be bound.  The AAA shall  assist  the  parties in  selecting  a
neutural arbitrator in accordance with its then prevailing rules.

                 (b) The  arbitrator  shall conduct the  arbitration as provided
herein and shall render a decision within sixty (60) days after appointment.  In
the event of a  failure,  refusal  or  inability  of the  arbitrator  to act,  a
successor  shall be appointed in accordance  with then  applicable  rules of the
AAA.

                 (c) Each party shall pay  one-half  of the fee and  expenses of
the arbitrator,  including the fees of any expert or authority  consulted by the
arbitrator.  The prevailing  party, in the event the arbitrator  determines that
one party  prevails,  shall recover its reasonable  attorneys' fees and costs in
accordance with Section 9.8

                 (d) The arbitrator  shall have the right to consult experts and
competent authorties regarding factual information,  or evidence pertaining to a
determination of the matter being arbitrated, but any such consultation shall be
made in the  presence  of both  parties  with full  right on their part to cross
examine.  The arbitrator shall hold a hearing, at which both parties may present
evidence  and cross  examine  witnesses,  prior to the  arbitrator  rendering  a
decision.  The arbitrator's decision and award shall be rendered in writing with
counterpart copies to each party.

                 (e) If any Owner so elects,  the judgment or award  rendered in
any such  arbitration  may be entered in the  Superior  Court of Solano  County,
California.  The Superior  Court may enter  judgment  upon any award,  either by
confirming the award or by vacating or correcting the award.  The Superior Court
may vacate or correct an award only if the vacation or  correction is based upon
any of the grounds in the California Arbitration Act.


                                       24

<PAGE>

                                ARTICLE 11. TERM

        Section 11.1 Term. The covenants,  conditions and restriction  contained
in this Declaration shall be recorded and shall run with the land and be binding
upon each and all of the  Owners  for a period  of sixty  (60)  years  after the
recording date hereof. The easements will remain in effect in perpetuity.

        Section 11.2 Effectiveness. This Declaration though executed on the date
above written, shall only be effective upon, from and after its recording in the
office of the County Recorder for Solano County, California.

                             ARTICLE 12. ASSOCIATION

        Section 12.1  Formation.  Not later than  substantial  completion of the
Common Area  Improvements and Building  Improvements on two of the parcels,  the
Owners shall form an association (the  "Association") to carry out the functions
described  in  Section  12.2  for  those   Parcels  on  which  the  Common  Area
Improvements and Building  Improvements have been substantially  completed.  The
Association may be an unincorporated  association,  non-profit  corporation,  or
other entity as determined  by the Owners.  Each of the Owners shall be a member
or participant in the Association. The Agency shall have the right to review and
approve the articles,  bylaws or other  organizational or governing documents of
the Association of any amendments  thereto.  The Agency's  approval shall not be
unreasonably withheld.

        Section 12.2 Functions.  The Association shall have  responsibility  for
such regular maintenance and operation functions in the Common Area and relating
to the Common Area  Improvements  as are reasonably  performed in common for all
the  Parcels  rather  than by the  Owner of each  Parcel.  The  Owners  may also
delegate to the  Association  such other matters under this  Declaration  as the
Owners agree should be delegated to the Association.

        Section  12.3  Association  Decisions.  The  by-laws or other  governing
documents  of the  Association  shall  provide  for  decisions  to be  made by a
majority vote of the Owners with the votes of the Owners  weighted in accordance
with the  number  of  square  feet of  enclosed  building  area in the  Building
Improvements on each Owner's Parcel.


                                       25

<PAGE>

        Section 12.4 Allocation of Costs.  The costs incurred by the Association
in  fulfillment  of its tasks under this  Declaration  shall be allocated to and
paid by the Owners in the same manner those costs would be  allocated  among the
Owners,  pursuant to Section 2.3.3. and 2.3.4. of this Declaration if each Owner
rather than the Association performed the tasks performed by the Association.

        Executed as of the date first written above.

                                        VACAVILLE REDEVELOPMENT
                                        AGENCY, a public body
                                        corporate and politic


                                        By: /s/ John P. Thompson
                                            -----------------------------

                                        Name: John P. Thompson
                                             ----------------------------

                                        Title: City Manager
                                              ---------------------------
                                              Executive Director


                                       26

<PAGE>

                             NOTARY ACKNOWLEDGMENT


STATE OF CALIFORNIA         }ss
COUNTY OF SOLANO            }
          ------------------

On August 27,  1997,  before me, Cheri Dee Barrieau, a Notary Public  in and for
   ----------------              ------------------
said State, personally appeared John P. Tompson
                           -----------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
personally  known to me (or proved to me on the basis of satisfactory  evidence)
to be the  person  whose  name  is  subscribed  to  the  within  instrument  and
acknowledged  to me that he executed the same in his  authorized  capacity,  and
that by his signature on the  instrument the person or the entity upon behalf of
which the person acted, executed the instrument.

                                        ----------------------------------------
WITNESS my hand and official  seal.               CHERI DEE BARRIEAU
                                         [SEAL]     COMM. #1088902
                                                 NOTARY PUBLIC - CALIFORNIA
                                                     SOLANO COUNTY
                                             My Comm. Expires Feb. 28, 2000
                                        ----------------------------------------

Signature /s/ Cheri Dee Barrieau
          ----------------------

                                          (This area for official notary seal)




           OPTIONAL:


DESCRIPTION OF ATTACHED DOCUMENT

   Declaration - CC&R'S
-------------------------
Title or Type of Document


-------------------------
Date of Document


<PAGE>

ORIGINAL

Escrow No. 504421SJAM

WHEN RECORDED MAIL TO:                            We  hereby  certify   that the
Vacaville Redevelopment Agency                    attached  is a true and  exact
C/O Housing & Redevelopment                       copy     of   the   instrument
40 Eldridge Avenue, Suites 1-5                    recorded in the office of  the
Vacaville, CA 95688                               County Recorder of the  County
Attn: Special Projects                            of Solano, State of California
                                                  on 4-6-99 under Recorder's
                                                  Serial No. 99-29264
                                                       Placer Title Co.
                                                  By   R ??????



                                    AMENDMENT
                                       of
          RECIPROCAL EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS
                                    for the
                       ANNEXATION OF AN ADDITIONAL PARCEL

This document (the "Amendment") shall amend the Reciprocal Easements, Covenants,
Conditions  and   Restrictions   (the   "CC&R's")   executed  by  the  Vacaville
Redevelopment  Agency, dated August 27, 1997, and recorded on September 29, 1997
as document number 1997-0064270, in the official records of Solano County.

As provided for in Section 9.20-Annexation of Parcels of the CC&R's, the purpose
of this  Amendment is to annex an  additional  parking lot parcel (the  "Annexed
Parcel") which is owned by the Vacaville  Redevelopment Agency, and is described
by legal  description  in the attached  Exhibit "A" and shown on the plan in the
attached  Exhibit "B" of this  Amendment.  The Annexed Parcel is within the area
governed by the City of  Vacaville  Basic  Policy Plan dated  January,  1996 and
revised  August,  1998. The Agency has requested that the Annexed Parcel be made
subject to the covenants contained in the CC&R's.

As stated in Section 9.20 of the CC&R's,  the Annexed  Parcel will be subject to
the covenants  contained in the CC&R's which are covenants running with the land
pursuant to applicable law,  including,  but not limited to, Section 1468 of the
California Civil Code.

It is hereby stated by the Vacaville  Redevelopment Agency that the CC&R's shall
be amended to include the annexation of the Annexed Parcel, as described above.


Vacaville Redevelopment Agency

/s/ John P. Thompson          4/2/99
------------------------------------
John P. Thompson
Executive Director

                        (NOTARY ACKNOWLEDGMENT REQUIRED)

<PAGE>

                                  EXHIBIT A

                               LEGAL DESCRIPTION

         All that real  property  in the City of  Vacaville,  County of  Solano,
State of California, described as follows:

         Being a portion of Parcel 7 as shown on the Parcel  Map,  filed in Book
40 of Parcel Maps,  Page 67,  Solano  County  Records,  being more  particularly
described as follows:

         COMMENCING  at the  southwest  corner of said  Parcel 7, also being the
northwest  corner of Parcel 2 of said Parcel Map, said corner being the POINT OF
BEGINNING for this  described  easement;  thence along the westerly line of said
Parcel 7, North 00"07'13" East, 0.48 feet, thence continuing along said westerly
line North 02"37'03" West,  290.20 feet,  thence  continuing along the northerly
line of said Parcel 7 the following six (6) courses:  (1) North  31"50'06" East,
36.14 feet;  (2) thence South  89"53'56"  East,  109.77  feet;  (3) thence South
00"07'13"  West,  8.00 feet; (4) thence South  89"53'56"  East,  20.00 feet; (5)
thence  00"07'13"  East,  7.90 feet; (6) thence North 82"51'04" East, 20.0 feet;
(5) thence North  00"07'13"  East,  7.90 feet; (6) thence North  89"51'04" East,
1.10 feet;  thence leaving said northerly line South 00"07'13" West, 321.19 feet
to a point on the line common to Parcel 2 and Parcel 7 of said map; thence along
said common line North 89"52'47" West, 136.00 feet to the POINT OF BEGINNING.

Containing 45,656 square feet (1.05 acres), more or less.




                                                  LICENSED LAND SURVEYOR

                                                   LARRY E. JOHNSON
                                                     Exp. 12-31-01
                                                       No. 4991

                                                  STATE OF CALIFORNIA




<PAGE>


                                  EXHIBIT "B"




                                GRAPHIC OMITTED


                          METES AND BOUNDS DESCRIPTION
                              FOR PARKING EASEMENT



<PAGE>

STATE OF CALIFORNIA )
                    )ss
COUNTY OF SOLANO    )


On April 2, 199_,  before  me,  the  undersigned,  a Notary  Public,  personally
appeared John P. Thompson, personally known to me to be the person whose name is
subscribed to the within  instrument,  and  acknowledged to me that  he/she/they
executed  the  same  in  his/her/their  authorized  capacity(ies),  and  that by
his/her/their  signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.


WITNESS my hand and official seal.                ------------------------------
                                                   SEAL   CAROL J. YOUNT
                                                         Commission #1108644
                                                        Notary Public-California
                                                            Solano County
                                                  My Comm. Expires Sep. 20, 2000
                                                  ------------------------------

/s/ Carol J. Yount
------------------
Carol J. Yount

<PAGE>

                                  EXHIBIT "D"

                            Penn Environmental Logo



                              Asbestos-Containing
                                Material Survey

                           Two-story Office Building
                    Intersection of Davis and Mason Streets
                              Vacaville, California



                             A Report Prepared For:

                                Mr. David Gouin
             City of Vacaville, Office of Housing and Redevelopment
                         40 Eldridge Avenue, Suites 1-5
                             Vacaville, California


                              A Report Prepared By:

                               Penn Environmental
                        1261 Travis Boulevard, Suite 380
                             Fairfield, California


                                January 4, 1999

                           Project Number: PE98-2344



           1261 Travis Blvd., Suite 380 o Fairfield, California 94533
                  o Phone (707) 421-1595 o Fax: (707) 425-0257


  ???                                                            tw
-------                                                       --------


<PAGE>

I. Introduction

Penn Environmental was retained by Mr. David Gouin of City of Vacaville,  Office
of Housing  and  Redevelopment  Agency to perform  an  investigative  survey for
asbestos-containing  material (ACM) within the two-story office building located
in the southeastern corner of the intersection  between Davis and Mason Streets,
in the city of Vacaville,  California.  The purpose of the survey was to locate,
sample and analyze visible and accessible suspect ACM within that location.

On December 29, 1998,  representative  bulk  samples of suspect  materials  were
collected  from various  locations at each unit. The inspection was performed by
Mr. Eric J. Zamb, a Cal/OSHA Certified Asbestos Consultant (#96-1934).


II. Survey Methodology

Penn  Environmental  began the survey with a thorough  pre-investigation  of the
structure which provided the inspector with the opportunity to identify  suspect
ACM. After the  pre-investigation,  a detailed  inspection  was  conducted.  The
inspector  collected  samples of material  including  resilient  sheet  flooring
(linoleum),  12" x 12" floor tile and  mastic,  9" x 9" floor  tile and  mastic,
ceiling  tile,  composite  wall  samples  of  sheetrock  with  associated  joint
compound,  carpet  adhesive,   basecove  mastic,  stucco,  and  various  roofing
materials.

Samples  collected  were placed in plastic bags,  sealed and labeled with sample
identification numbers. Each sample was given a unique number which included the
sampling date, the sampler's employee number, and the index number of the sample
collected on that day.

Samples  collected were analyzed by Environmental  Hazards Services in Richmond,
Virginia.  Bulk samples were examined by Polarized Light  Microscopy  (PLM) with
Dispersion Staining as recommended by the U.S. Environmental  Protection Agency.
Laboratory results are attached as Appendix A.

III. Analytical Results
<TABLE>
The following is a summary of material locations and analytical results.
<CAPTION>
 Sample#          Location               Description                       Percent Asbestos
 -------          --------               -----------                       ----------------
<S>               <C>                    <C>                               <C>
122998-801        Main Entrance/         White 12" x 12" Floor Tile        8 in Floor Tile
                  Foyer                  w/Black Streaks and               18 in Tile Mastic
                                         Mastic

122998-802        Main Entrance/Foyer Ceiling Tile                          None Detected


                                      -1-
<PAGE>

 Sample#          Location               Description                       Percent Asbestos
 -------          --------               -----------                       ----------------
122998-803        Telephone Room         Off-white 12" x 12" Floor         4 in Floor Tile
                                         Tile and Mastic                   10 in Tile Mastic

122998-804        Office - First Floor   Sheetrock/Joint Compound          None Detected

122998-805        Office - First Floor   Carpet Adhesive                   None Detected

122998-806        Office - First Floor   2' x 4' Ceiling Tile              None Detected

122998-807        Rear Entrance          Sheetrock/Joint Compound          None Detected

122998-808        Kitchen #2             2' x 4' Ceiling Tile              None Detected

122998-809        Kitchen #3             Light Green 9" x 9" Floor         4 in Floor Tile
                                         Tile and Mastic                   12 in Tile Mastic

122998-810        Female Restroom        Sheetrock/Joint Compound          None Detected
                  First Floor

122998-811        Office - 2nd Floor     Carpet Mastic                     None Detected

122998-812        Office - 2nd Floor     2' x 4' Ceiling Tile              None Detected

122998-813        Stairway               Sheetrock/Joint Compound          None Detected

122998-814        Hallway - 2nd Floor    2' x 4' Ceiling Tile              None Detected

122998-815        Storage - 2nd Floor    Sheetrock/Joint Compound          None Detected

122998-816        Storage - 2nd Floor    Baseboard Mastic                  None Detected

122998-817        Roof - Partial Wall    Partial Wall Pier Flashing        None Detected

122998-818        Roof                   Field Tar                         None Detected

122998-819        Roof - Base of         Tar                               None Detected
                  Mechanical Equipment

122998-820        Exterior               Brick Mortar                      None Detected

122998-821        Exterior               Stucco                            None Detected
</TABLE>

                                      -2-

<PAGE>

IV.     Summary of Results

Asbestos containing  material (ACM), as defined by the Environmental  Protection
Agency  (EPA),  is any  material  which  contains  greater  than one  percent of
asbestos as  determined  by PLM  analysis.  According  to this  definition,  the
following materials are considered asbestos containing:

o    12" x 12" and 9" x 9" Floor Tile (Sample Numbers  122998-801,  803 & 809) -
     All  floor  tile  within  the  structure  contains  between 4 and 8 percent
     asbestos.  The floor tile is located  within the following  areas:


       - First floor foyer and  kitchen  within  the  southwest  corner  of  the
         building;
       - First floor  maintenance  closet and telephone room on the west side of
         the building;
       - Kitchen  and  neighboring  file room  in the center of the first floor;
         and
       - Second  floor  stairway  landing  and  storage  area  in the  southwest
         corner of the building.

o    Floor Tile Mastic (Sample Numbers  122998-801,  803 & 809) - All floor tile
     mastic within the structure  contains  between 10 and 18 percent  asbestos.
     The floor tile mastic is located within the following areas:

       - First  floor  foyer and  kitchen  within  the  southwest  corner of the
         building;
       - First floor maintenance closet  and  telephone room on the west side of
         the building;
       - Kitchen  and  neighboring  file room  in the center of the first floor;
         and
       - Second floor stairway  landing and storage area in the southwest corner
         of the building.

All  remaining  samples  reported  non-detectable  concentrations  of  asbestos,
meaning no asbestos fibers were detected during analysis.

V.      Recommendations

Prior to demolition  activities,  all  asbestos-containing  materials  should be
removed by a certified asbestos abatement contractor.


                                      -3-