Document:

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                                                                    Exhibit 4.2

                            FORM OF DEPOSIT AGREEMENT

         This DEPOSIT AGREEMENT is made and entered into as of _________, 200__
by and among Saul Centers, Inc., a Maryland corporation (the "Company"),
___________, a national banking association, as Depositary, and all holders from
time to time of Receipts (as hereinafter defined) issued hereunder.

                                   WITNESSETH:

         WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of the Company's Preferred Stock
(as hereinafter defined) with the Depositary for the purposes set forth in this
Deposit Agreement and for the issuance hereunder of the Receipts evidencing
Depositary Shares representing a fractional interest in the Preferred Stock
deposited; and

         WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed to this Deposit Agreement, with appropriate insertions, modifications
and omissions, as hereinafter provided in this Deposit Agreement;

         NOW, THEREFORE, in consideration of the premises contained herein, it
is agreed by and among the parties hereto as follows:

                                    ARTICLE I

                                   DEFINITIONS

         The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Deposit Agreement and the
Receipts:

         SECTION 1.01. "Articles of Incorporation" shall mean the Articles of
Incorporation, as amended and supplemented from time to time, of the Company.

         SECTION 1.02. "Articles Supplementary" shall mean the Articles
Supplementary Classifying ________ Shares of Preferred Stock as _____% Series
____________ Preferred Stock filed with the State Department of Assessments and
Taxation of the State of Maryland establishing the Preferred Stock as a series
of Preferred Stock of the Company.

         SECTION 1.03. "Common Stock" shall mean shares of the Company's common
stock, $.01 par value per share.

         SECTION 1.04. "Company" shall mean Saul Centers, Inc., a Maryland
corporation, and its successors.

         SECTION 1.05. "Corporate Office" shall mean the corporate office of the
Depositary at which at any particular time its business in respect of matters
governed by this

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Deposit Agreement shall be administered, which at the date of this Deposit
Agreement is located at

         SECTION 1.06. "Deposit Agreement" shall mean this agreement, as the
same may be amended, modified or supplemented from time to time.

         SECTION 1.07. "Depositary" shall mean ________________, a company or
corporation having its principal office in the United States, and any successor
as depositary hereunder.

         SECTION 1.08. "Depositary Share" shall mean a _____________ fractional
interest of a share of Preferred Stock deposited with the Depositary hereunder
and the same proportionate interest in any and all other property received by
the Depositary in respect of such share of Preferred Stock and held under this
Deposit Agreement, all as evidenced by the Receipts issued hereunder. Subject to
the terms of this Deposit Agreement, each owner of a Depositary Share is
entitled, proportionately, to all the rights, preferences and privileges of the
Preferred Stock represented by such Depositary Share, including the dividend and
distribution, voting, redemption, conversion and liquidation rights contained in
the Articles Supplementary.

         SECTION 1.09. "Depositary's Agent" shall mean one or more agents
appointed by the Depositary as provided, and for the purposes specified, in
Section 7.05.

         SECTION 1.10. "Ownership Limit" shall have the meaning set forth in
Article VI, Section 4 of the Company's Articles of Incorporation.

         SECTION 1.11. "Preferred Stock" shall mean shares of the Company's
_______% Series _____________________ Preferred Stock, $.01 par value per share,
heretofore validly issued, fully paid and non-assessable.

         SECTION 1.12. "Receipt" shall mean a Depositary Receipt issued
hereunder to evidence one or more Depositary Shares, whether in definitive or
temporary form, substantially in the form set forth as Exhibit A hereto.

         SECTION 1.13. "record date" shall mean the date fixed pursuant to
Section 4.04.

         SECTION 1.14. "record holder" or "holder" as applied to a Receipt shall
mean the person in whose name a Receipt is registered on the books maintained by
the Depositary for such purpose.

         SECTION 1.15. "Registrar" shall mean _______________, or any bank or
trust company appointed to register ownership and transfers of Receipts or the
deposited Preferred Stock, as the case may be, as herein provided.

         SECTION 1.16. "Securities Act" shall mean the Securities Act of 1933,
as amended.

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         SECTION 1.17. "Transfer Agent" shall mean _______________, or any bank
or trust company appointed to transfer the Receipts or the deposited Preferred
Stock, as the case may be, as herein provided.

                                   ARTICLE II

             FORM OF RECEIPTS, DEPOSIT OF PREFERRED STOCK, EXECUTION
          AND DELIVERY, TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS

         SECTION 2.01. Form and Transferability of Receipts. Definitive Receipts
shall be engraved or printed or lithographed with steel-engraved borders and
underlying tint and shall be substantially in the form set forth in Exhibit A
annexed to this Deposit Agreement, with appropriate insertions, modifications
and omissions, as hereinafter provided. Pending the preparation of definitive
Receipts, the Depositary, upon the written order of the Company, delivered in
compliance with Section 2.02, shall execute and deliver temporary Receipts which
may be printed, lithographed, typewritten, mimeographed or otherwise
substantially of the tenor of the definitive Receipts in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the persons executing such Receipts may determine, as evidenced by
their execution of such Receipts. If temporary Receipts are issued, the Company
and the Depositary will cause definitive Receipts to be prepared without
unreasonable delay. After the preparation of definitive Receipts, the temporary
Receipts shall be exchangeable for definitive Receipts upon surrender of the
temporary Receipts at the Corporate Office or such other offices, if any, as the
Depositary may designate, without charge to the holder. Upon surrender for
cancellation of any one or more temporary Receipts, the Depositary shall execute
and deliver in exchange therefor definitive Receipts representing the same
number of Depositary Shares as represented by the surrendered temporary Receipt
or Receipts. Such exchange shall be made at the Company's expense and without
any charge therefor. Until so exchanged, the temporary Receipts shall in all
respects be entitled to the same benefits under this Deposit Agreement, and with
respect to the Preferred Stock deposited, as definitive Receipts.

         Receipts shall be executed by the Depositary by the manual or facsimile
signature of a duly authorized signatory of the Depositary, provided that if a
Registrar (other than the Depositary) shall have been appointed then such
Receipts shall also be countersigned by manual signature of a duly authorized
signatory of the Registrar. No Receipt shall be entitled to any benefits under
this Deposit Agreement or be valid or obligatory for any purpose unless it shall
have been executed as provided in the preceding sentence. The Depositary shall
record on its books each Receipt executed as provided above and delivered as
hereinafter provided.

         Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Depositary Shares. All Receipts shall be
dated the date of their issuance.

         Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Company or required to comply with
any applicable law or regulation or with the rules and regulations of any
securities exchange or interdealer quotation system upon which the Preferred
Stock, the Depositary Shares or the Receipts may be listed or quoted or to
conform

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with any usage with respect thereto, or to indicate any special limitations or
restrictions to which any particular Receipts are subject, in each case, as
directed by the Company.

         Title to any Receipt (and to the Depositary Shares evidenced by such
Receipt) that is properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement shall be transferable by delivery with the
same effect as in the case of a negotiable instrument; provided, however, that
until a Receipt shall be transferred on the books of the Depositary as provided
in Section 2.04, the Depositary may, notwithstanding any notice to the contrary,
treat the record holder thereof at such time as the absolute owner thereof for
the purpose of determining the person entitled to dividends or other
distributions, the exercise of any redemption or voting rights or to any notice
provided for in this Deposit Agreement and for all other purposes.

         SECTION 2.02. Deposit of Preferred Stock; Execution and Delivery of
Receipts in Respect Thereof. Concurrently with the execution of this Deposit
Agreement, the Company is delivering to the Depositary a certificate or
certificates, registered in the name of the Depositary and evidencing ________
shares of Preferred Stock, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement, in form
satisfactory to the Depositary, together with (i) all such certifications as may
be required by the Depositary in accordance with the provisions of this Deposit
Agreement and (ii) a written letter of instruction of the Company directing the
Depositary to execute and deliver to, or upon the written order of, the person
or persons stated in such order a Receipt or Receipts for the Depositary Shares
representing such deposited Preferred Stock. The Depositary acknowledges receipt
of the deposited Preferred Stock and related documentation and agrees to hold
such deposited Preferred Stock in an account to be established by the Depositary
at the Corporate Office or at such other office as the Depositary shall
determine. The Company hereby appoints the Depositary as the Registrar and
Transfer Agent for the Preferred Stock deposited hereunder and the Depositary
hereby accepts such appointment and, as such, will reflect changes in the number
of shares (including any fractional shares) of deposited Preferred Stock held by
it by notation, book-entry or other appropriate method.

         If required by the Depositary, Preferred Stock presented for deposit by
the Company at any time, whether or not the register of stockholders of the
Company is closed, shall also be accompanied by an agreement or assignment, or
other instrument satisfactory to the Depositary, that will provide for the
prompt transfer to the Depositary or its nominee of any distribution or right to
subscribe for additional Preferred Stock or to receive other property that any
person in whose name the Preferred Stock is or has been registered may
thereafter receive upon or in respect of such deposited Preferred Stock, or in
lieu thereof such agreement of indemnity or other agreement as shall be
satisfactory to the Depositary.

         Upon receipt by the Depositary of a certificate or certificates for
Preferred Stock deposited hereunder, together with the other documents specified
above, and upon registering such Preferred Stock in the name of the Depositary,
the Depositary, subject to the terms and conditions of this Deposit Agreement,
shall execute and deliver to, or upon the order of, the person or persons named
in the written order delivered to the Depositary referred to in the first
paragraph of this Section 2.02 a Receipt or Receipts for the number of whole
Depositary Shares representing the Preferred Stock so deposited and registered
in such name or names as may be

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requested by such person or persons. The Depositary shall execute and deliver
such Receipt or Receipts at the Corporate Office, except that, at the request,
risk and expense of any person requesting such delivery, such delivery may be
made at such other place as may be designated by such person.

         Other than in the case of splits, combinations or other
reclassifications affecting the Preferred Stock, or in the case of distributions
of Preferred Stock, if any, there shall be deposited hereunder not more than the
number of shares constituting the Preferred Stock as set forth in the Articles
Supplementary, as such may be amended.

         The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary to
perform its obligations under this Deposit Agreement.

         SECTION 2.03. Optional Redemption of Preferred Stock for Cash. Whenever
the Company shall elect to redeem shares of deposited Preferred Stock for cash
in accordance with the provisions of the Articles Supplementary, it shall
(unless otherwise agreed in writing with the Depositary) give the Depositary not
less than 30 days' prior written notice of the date of such proposed redemption
and of the number of such shares of Preferred Stock held by the Depositary to be
redeemed and the applicable redemption price, as set forth in the Articles
Supplementary, including the amount, if any, of accrued and unpaid dividends
thereon to and including the date fixed for redemption. The Depositary shall
mail, first-class postage prepaid, notice of the redemption of Preferred Stock
and the proposed simultaneous redemption of the Depositary Shares representing
the Preferred Stock to be redeemed, not less than 30 nor more than 60 days prior
to the date fixed for redemption of such Preferred Stock and Depositary Shares
(the "redemption date"), to the record holders of the Receipts evidencing the
Depositary Shares to be so redeemed, at the addresses of such holders as the
same appear on the records of the Depositary. No failure to give such notice or
any defect thereto or in the mailing thereof shall affect the sufficiency of
notice or validity of the proceedings for redemption except as to a holder to
whom notice was defective or not given. A redemption notice which has been
mailed in the manner provided herein shall be conclusively presumed to have been
duly given on the date mailed whether or not the holder received the redemption
notice. The Company shall provide the Depositary with such notice, and each such
notice shall state: the redemption date; the redemption price and accrued and
unpaid dividends payable on the redemption date; the number of shares of
deposited Preferred Stock and Depositary Shares to be redeemed; if fewer than
all the Depositary Shares held by any holder are to be redeemed, the number of
such Depositary Shares held by such holder to be so redeemed; the place or
places where Receipts evidencing the Depositary Shares to be redeemed are to be
surrendered for payment of the redemption price and accrued and unpaid dividends
payable on the redemption date; and that from and after the redemption date
dividends in respect of the Preferred Stock represented by the Depositary Shares
to be redeemed will cease to accrue. If fewer than all of the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall
be redeemed pro rata (as nearly as may be practicable without creating
fractional Depositary Shares) or by any other equitable method determined by the
Company that will not result in a violation of the Ownership Limit.

         In the event that notice of redemption has been made as described in
the immediately preceding paragraph and the Company shall then have paid or
caused to be paid in full to The

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Depositary the redemption price (determined pursuant to the Articles
Supplementary) of the Preferred Stock deposited with The Depositary to be
redeemed (including any accrued and unpaid dividends to and including the
redemption date), the Depositary shall redeem the number of Depositary Shares
representing such Preferred Stock so called for redemption by the Company and
from and after the redemption date (unless the Company shall have failed to pay
for the shares of Preferred Stock to be redeemed by it as set forth in the
Company's notice provided for in the preceding paragraph), all dividends in
respect of the shares of Preferred Stock called for redemption shall cease to
accrue, the Depositary Shares called for redemption shall be deemed no longer to
be outstanding and all rights of the holders of Receipts evidencing such
Depositary Shares (except the right to receive the redemption price plus all
accrued and unpaid dividends to and including the redemption date) shall, to the
extent of such Depositary Shares, cease and terminate. Upon surrender in
accordance with said notice of the Receipts evidencing such Depositary Shares
(properly endorsed or assigned for transfer, if the Depositary or applicable law
shall so require), such Depositary Shares shall be redeemed at a redemption
price of $________ per Depositary Share plus all accrued and unpaid dividends to
and including the redemption date. The foregoing shall be further subject to the
terms and conditions of the Articles Supplementary. In the event of any conflict
between the provisions of this Deposit Agreement and the provisions of the
Articles Supplementary, the provisions of the Articles Supplementary will govern
and the Company will instruct the Depositary accordingly.

         If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with payment of the redemption
price for and all other amounts payable in respect of the Depositary Shares
called for redemption, a new Receipt evidencing such holder's Depositary Shares
evidenced by such prior Receipt that are not called for redemption.

         The Company acknowledges that the bank accounts maintained by the
Depositary in connection with the performance of the services described herein
will be in the name of the Depositary and that the Depositary may receive
investment earnings in connection with the investment at the Depositary's risk
and for its benefit of funds held in those accounts from time to time.

         SECTION 2.04. Registration of Transfers of Receipts. The Company hereby
appoints the Depositary as the Registrar and Transfer Agent for the Receipts and
the Depositary hereby accepts such appointment and, as such, shall register on
its books from time to time transfers of Receipts upon any surrender thereof by
the holder in person or by a duly authorized attorney, agent or representative,
properly endorsed or accompanied by a properly executed instrument of transfer
or endorsement and including a guarantee of the signature thereon by a
participant in a signature guarantee medallion program approved by the
Securities Transfer Association (a "Signature Guarantee"), together with
evidence of the payment of any transfer taxes as may be required by applicable
law. Upon such surrender, the Depositary shall execute a new Receipt or Receipts
and deliver the same to or upon the order of the person entitled thereto
evidencing the same aggregate number of Depositary Shares evidenced by the
Receipt or Receipts surrendered.

         SECTION 2.05. Combinations and Split-ups of Receipts. Upon surrender of
a Receipt or Receipts at the Corporate Office or such other office as the
Depositary may designate

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for the purpose of effecting a split-up or combination of Receipts, subject to
the terms and conditions of this Deposit Agreement, the Depositary shall execute
and deliver a new Receipt or Receipts in the authorized denominations requested
evidencing the same aggregate number of Depositary Shares evidenced by the
Receipt or Receipts surrendered.

         SECTION 2.06. Surrender of Receipts and Withdrawal of Preferred Stock.
Any holder of a Receipt or Receipts may withdraw any or all of the deposited
Preferred Stock represented by the Depositary Shares evidenced by such Receipt
or Receipts and all money and other property, if any, represented by such
Depositary Shares by surrendering such Receipt or Receipts at the Corporate
Office or at such other office as the Depositary may designate for such
withdrawals. After such surrender, without unreasonable delay, the Depositary
shall deliver to such holder, or to the person or persons designated by such
holder as hereinafter provided, the number of whole or fractional shares of such
Preferred Stock and all such money and other property, if any, represented by
the Depositary Shares evidenced by the Receipt or Receipts so surrendered for
withdrawal, but holders of such whole or fractional shares of Preferred Stock
will not thereafter be entitled to deposit such Preferred Stock hereunder or to
receive Depositary Shares therefor. If the Receipt or Receipts delivered by the
holder to the Depositary in connection with such withdrawal shall evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of whole or fractional shares of deposited Preferred
Stock to be withdrawn, the Depositary shall at the same time, in addition to
such number of whole or fractional shares of Preferred Stock and such money and
other property, if any, to be withdrawn, deliver to such holder, or (subject to
Section 2.04) upon his order, a new Receipt or Receipts evidencing such excess
number of Depositary Shares. Delivery of such Preferred Stock and such money and
other property being withdrawn may be made by the delivery of such certificates,
documents of title and other instruments as the Depositary may deem appropriate,
which, if required by the Depositary, shall be properly endorsed or accompanied
by a properly executed instrument of transfer or endorsement.

         If the deposited Preferred Stock and the money and other property being
withdrawn are to be delivered to a person or persons other than the record
holder of the Receipt or Receipts being surrendered for withdrawal of Preferred
Stock, such holder shall execute and deliver to the Depositary a written order
so directing the Depositary and the Depositary may require that the Receipt or
Receipts surrendered by such holder for withdrawal of such shares of Preferred
Stock be properly endorsed in blank or accompanied by a properly executed
instrument of transfer or endorsement in blank with a Signature Guarantee.

         The Depositary shall deliver the deposited Preferred Stock and the
money and other property, if any, represented by the Depositary Shares evidenced
by Receipts surrendered for withdrawal at the Corporate Office, except that, at
the request, risk and expense of the holder surrendering such Receipt or
Receipts and for the account of the holder thereof, such delivery may be made at
such other place as may be designated by such holder.

         SECTION 2.07. Limitations on Execution and Delivery, Transfer,
Split-up, Combination. As a condition precedent to the execution and delivery,
transfer, split-up, combination, surrender or exchange of any Receipt, the
Depositary, any of the Depositary's Agents or the Company may require any or all
of the following: (i) payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made

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such payment, the reimbursement to it) of any tax or other governmental charge
with respect thereto (including any such tax or charge with respect to the
Preferred Stock being deposited or withdrawn); (ii) the production of proof
satisfactory to it as to the identity and genuineness of any signature (or the
authority of any signature), including a Signature Guarantee; and (iii)
compliance with such regulations, if any, as the Depositary or the Company may
establish consistent with the provisions of this Deposit Agreement as may be
required by any securities exchange upon which the deposited Preferred Stock,
the Depositary Shares or the Receipts may be included for quotation or listed.

         The deposit of Preferred Stock may be refused, the delivery of Receipts
against Preferred Stock may be suspended, the transfer of Receipts may be
refused, and the transfer, split-up, combination, surrender, exchange or
redemption of outstanding Receipts may be suspended (i) during any period when
the register of stockholders of the Company is closed or (ii) if any such action
is deemed reasonably necessary or advisable by the Depositary, any of time
Depositary's Agents or the Company at any time or from time to time because of
any requirement of applicable law or of any government or governmental body or
commission, or under any provision of this Deposit Agreement.

         SECTION 2.08. Lost Receipts, etc. In case any Receipt shall be
mutilated or destroyed or lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, provided that the holder thereof
provides the Depositary with (i) evidence reasonably satisfactory to the
Depositary of such destruction, loss or theft of such Receipt, of the
authenticity thereof and of his ownership thereof and (ii) reasonable
indemnification and the provision of an open penalty surety bond, in each case,
satisfactory to the Depositary and the Company and holding the Depositary and
the Company harmless.

         SECTION 2.09. Cancellation and Destruction of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy such Receipts so cancelled.

                                  ARTICLE III

           CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY

         SECTION 3.01. Filing Proofs, Certificates and Other Information. Any
person presenting Preferred Stock for deposit or any holder of a Receipt may be
required from time to time to file such proof of residence or other information
and to execute such certificates as the Depositary or the Company may reasonably
deem necessary or proper. The Depositary or the Company may withhold or delay
the delivery of any Receipt, the transfer, redemption or exchange of any
Receipt, the withdrawal of the deposited Preferred Stock represented by the
Depositary Shares evidenced by any Receipt, the distribution of any distribution
or the sale of any rights or of the proceeds thereof, until such proof or other
information is filed or such certificates are executed.

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         SECTION 3.02. Payment of Fees and Expenses. Holders of Receipts shall
be obligated to make payments to the Depositary of certain fees and expenses, as
provided in Section 5.09, or provide evidence reasonably satisfactory to the
Depositary that such fees and expenses have been paid. Until such payment is
made, transfer of any Receipt or any withdrawal of the Preferred Stock or money
or other property, if any, represented by the Depositary Shares evidenced by
such Receipt may be refused, any distribution may be withheld, and any part or
all of the Preferred Stock or other property represented by the Depositary
Shares evidenced by such Receipt may be sold for the account of the holder
thereof (after attempting by reasonable means to notify such holder a reasonable
number of days prior to such sale). Any distribution so withheld and the
proceeds of any such sale may be applied to any payment of such fees or
expenses, the holder of such Receipt remaining liable for any deficiency.

         SECTION 3.03. Representations and Warranties as to Preferred Stock. In
the case of the initial deposit of the Preferred Stock hereunder, the Company
and, in the case of subsequent deposits thereof, each person so depositing
Preferred Stock under this Deposit Agreement, shall be deemed thereby to
represent and warrant that such Preferred Stock and each certificate therefor
are valid and that the person making such deposit is duly authorized to do so.
The Company hereby further represents and warrants that such Preferred Stock,
when issued, will be validly issued, fully paid and non-assessable. Such
representations and warranties shall survive the deposit of the Preferred Stock
and the issuance of Receipts.

         SECTION 3.04. Representation and Warranty as to Receipts and Depositary
Shares. The Company hereby represents and warrants that the Receipts, when
issued, will evidence legal and valid interests in the Depositary Shares and
each Depositary Share will represent a legal and valid fractional interest in a
share of deposited Preferred Stock represented by such Depositary Share. Such
representation and warranty shall survive the deposit of the Preferred Stock and
the issuance of Receipts evidencing the Depositary Shares.

                                   ARTICLE IV

                          THE PREFERRED STOCK; NOTICES

         SECTION 4.01. Dividends and Other Cash Distributions. Whenever the
Depositary shall receive any dividend or other cash distributions on the
deposited Preferred Stock, including any cash received upon redemption of any
shares of Preferred Stock pursuant to Section 2.03, the Depositary shall,
subject to Section 3.02, distribute to record holders of Receipts on the record
date fixed pursuant to Section 4.04 such amounts of such sum as are, as nearly
as practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders; provided, however, that, in case
the Company or the Depositary shall be required by law to withhold and shall
withhold from any cash distribution in respect of the Preferred Stock an amount
on account of taxes or as otherwise required by law, regulation or court
process, the amount made available for distribution or distributed in respect of
Depositary Shares shall be reduced accordingly. The Depositary shall distribute
or make available for distribution, as the case may be, only such amount,
however, as can be distributed without attributing to any holder of Receipts a
fraction of one cent, and any balance not so distributable shall be held by the
Depositary (without liability for interest thereon) and shall be

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added to and be treated as part of the next sum received by the Depositary for
distribution to record holders of Receipts then outstanding.

         SECTION 4.02. Distributions Other Than Cash. Whenever the Depositary
shall receive any distribution other than cash on the deposited Preferred Stock,
the Depositary shall, subject to Section 3.02, distribute to record holders of
Receipts on the record date fixed pursuant to Section 4.04 such amounts of the
securities or property received by it as arc, as nearly as practicable, in
proportion to the respective numbers of Depositary Shares evidenced by the
Receipts held by such holders, in any manner that the Depositary and the Company
may deem equitable and practicable for accomplishing such distribution. If in
the opinion of the Depositary after consultation with the Company, such
distribution cannot be made proportionately among such record holders, or if for
any other reason (including any requirement that the Company or the Depositary
withhold an amount on account of taxes), the Depositary deems, after
consultation with the Company, such distribution not to be feasible, the
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including the sale (at public or private sale) of the securities or property
thus received, or any part thereof at such place or places and upon such terms
as it may deem proper. The net proceeds of any such sale shall, subject to
Section 3.02, be distributed or made available for distribution, as the case may
be, by the Depositary to record holders of Receipts as provided by Section 4.01
in the case of a distribution received in cash. The Company shall not make any
distribution of such securities or property to the holders of Receipts unless
the Company shall have provided to the Depositary an opinion of counsel stating
that such securities or property have been registered under the Securities Act
or do not need to be registered in order to be freely transferable.

         SECTION 4.03. Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names deposited Preferred Stock is registered on the books of the Company any
rights, preferences or privileges to subscribe for or to purchase any securities
or any rights, preferences or privileges of any other nature, the offering of
such rights, preferences or privileges shall in each such instance be
communicated to the Depositary and thereafter made available by the Depositary
to the record holders of Receipts in such manner as the Company shall instruct
(including by the issue to such record holders of warrants representing such
rights, preferences or privileges); provided, however, that (a) if at the time
of issue or offer of any such rights, preferences or privileges the Company
determines upon advice of its legal counsel that it is not lawful or feasible to
make such rights, preferences or privileges available to the holders of Receipts
(by the issue of warrants or otherwise) or (b) if and to the extent instructed
by holders of Receipts who do not desire to exercise such rights, preferences or
privileges, the Depositary shall then, if so instructed by the Company, and if
applicable laws or the terms of such rights, preferences or privileges so
permit, sell such rights, preferences or privileges of such holders at public or
private sale, at such place or places and upon such terms as it may deem proper.
The net proceeds of any such sale shall, subject to Section 3.01 and Section
3.02, be distributed by the Depositary to the record holders of Receipts
entitled thereto as provided by Section 4.01 in the case of a distribution
received in cash. The Company shall not make any distribution of such rights,
preferences or privileges, unless the Company shall have provided to the
Depositary an opinion of counsel stating that such rights, preferences or
privileges have been registered under the Securities Act or do not need to be
registered in order to be freely transferable.

                                       10

<PAGE>

         If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company agrees that it will promptly file a
registration statement pursuant to the Securities Act with respect to such
rights, preferences or privileges and securities and use its reasonable best
efforts and take all steps available to it to cause such registration statement
to become effective sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise such rights,
preferences or privileges. In no event shall the Depositary make available to
the holders of Receipts any right, preference or privilege to subscribe for or
to purchase any securities unless and until such a registration statement shall
have become effective or unless the offering and sale of such securities to such
holders are exempt from registration under the provisions of the Securities Act
and the Company shall have provided to the Depositary an opinion of counsel to
such effect.

         If any other action under the law of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to holders
of Receipts, the Company agrees to use its reasonable best efforts to take such
action or obtain such authorization, consent or permit sufficiently in advance
of the expiration of such rights, preferences or privileges to enable such
holders to exercise such rights, preferences or privileges.

         SECTION 4.04. Notice of Distributions; Fixing of Record Date for
Holders of Receipts. Whenever any dividend or other cash distributions shall
become payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall at any time be offered, with respect to the
deposited Preferred Stock, or whenever the Depositary shall receive notice of
(i) any meeting at which holders of such Preferred Stock are entitled to vote or
of which holders of such Preferred Stock are entitled to notice or (ii) any
election on the part of the Company to redeem any shares of such Preferred
Stock, the Depositary shall in each such instance fix a record date (which shall
be the same date as the record date, if any, fixed by the Company with respect
to the Preferred Stock) for the determination of the holders of Receipts (a) who
shall be entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof, (b) who shall be entitled to
give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting or (c) whose Depositary Shares are to be so
redeemed.

         SECTION 4.05. Voting Rights. Upon receipt of notice of any meeting at
which the holders of deposited Preferred Stock are entitled to vote, the
Depositary shall, as soon as practicable thereafter, mail to the record holders
of Receipts a notice, which shall be provided by the Company and which shall
contain (i) such information as is contained in such notice of meeting, (ii) a
statement that the holders of Receipts at the close of business on a specified
record date fixed pursuant to Section 4.04 will be entitled, subject to any
applicable provision of law, to instruct the Depositary as to the exercise of
the voting rights pertaining to the amount of Preferred Stock represented by
their respective Depositary Shares and (iii) a brief statement as to the manner
in which such instructions may be given. Upon the written request of a holder of
a Receipt on such record date, the Depositary shall vote or cause to be voted
the amount of Preferred Stock represented by the Depositary Shares evidenced by
such Receipt in accordance with the instructions set forth in such request. To
the extent any such instructions request the voting of a fractional interest of
a share of deposited Preferred Stock, the Depositary shall

                                       11

<PAGE>

aggregate such interest with all other fractional interests resulting from
requests with the same voting instructions and shall vote the number of whole
votes resulting from such aggregation in accordance with the instructions
received in such requests. Each share of Preferred Stock is entitled to votes
and, accordingly, each Depositary Share is entitled to vote(s). The Company
hereby agrees to take all reasonable action that may be deemed necessary by the
Depositary in order to enable the Depositary to vote such Preferred Stock or
cause such Preferred Stock to be voted. In the absence of specific instructions
from the holder of a Receipt, the Depositary will abstain from voting to the
extent of the Preferred Stock represented by the Depositary Shares evidenced by
such Receipt. The Depositary shall not be required to exercise discretion in
voting any Preferred Stock represented by the Depositary Shares evidenced by
such Receipt.

         SECTION 4.06. Changes Affecting Preferred Stock and Reclassifications,
Recapitalizations, etc. Upon any change in par or stated value, split-up,
combination or any other reclassification of Preferred Stock, or upon any
recapitalization, reorganization, merger, amalgamation or consolidation
affecting the Company or to which it is a party or sale of all or substantially
all of the Company's assets, the Depositary shall, upon the instructions of the
Company, (i) make such adjustments in (a) the fraction of an interest
represented by one Depositary Share in one share of Preferred Stock and (b) the
ratio of the redemption price per Depositary Share to the redemption price of a
share of Preferred Stock, in each case as may be required by or as is consistent
with the provisions of the Articles Supplementary to frilly reflect the effects
of such change in liquidation preference, split-up, combination or other
reclassification of stock, or of such recapitalization, reorganization, merger,
amalgamation, consolidation or sale and (ii) treat any shares of stock or other
securities or property (including cash) that shall be received by the Depositary
in exchange for or upon conversion of or in respect of the Preferred Stock as
new deposited property under this Deposit Agreement, and Receipts then
outstanding shall thenceforth represent the proportionate interests of holders
thereof in the new deposited property so received in exchange for or upon
conversion of or in respect of such Preferred Stock. In any such case the
Depositary may, in its discretion, with the approval of the Company, execute and
deliver additional Receipts, or may call for the surrender of all outstanding
Receipts to be exchanged for new Receipts specifically describing such new
deposited property. Anything to the contrary herein notwithstanding, holders of
Receipts shall have the right from and after the effective date of any such
change in par or stated value, split-up, combination or other reclassification
of the Preferred Stock or any such recapitalization, reorganization, merger,
amalgamation or consolidation or sale of substantially all the assets of the
Company to surrender such Receipts to the Depositary with instructions to
convert, exchange or surrender the Preferred Stock represented thereby only into
or for, as the case may be, the kind and amount of shares of stock and other
securities and property and cash into which the deposited Preferred Stock
evidenced by such Receipts might have been converted or for which such Preferred
Stock might have been exchanged or surrendered immediately prior to the
effective date of such transaction, subject to any subsequent change in par or
stated value, split-up, combination or other reclassification or any subsequent
recapitalization, reorganization, merger, amalgamation or consolidation or sale
of substantially all the assets. The Company shall cause effective provision to
be made in the charter of the resulting or surviving corporation (if other than
the Company) for protection of such rights as may be applicable upon exchange of
the deposited Preferred Stock for securities or property or cash of the
surviving corporation in connection with the transactions set forth above. The
Company shall cause any such surviving

                                       12

<PAGE>

corporation (if other than the Company) expressly to assume the obligations of
the Company hereunder.

         SECTION 4.07. Inspection of Reports. The Depositary shall make
available for inspection by holders of Receipts at the Corporate Office and at
such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that are
both received by the Depositary as the holder of deposited Preferred Stock and
made generally available to the holders of the Preferred Stock. In addition, the
Depositary shall transmit certain notices and reports to the holders of Receipts
as provided in Section 5.05.

         SECTION 4.08. Lists of Receipt Holders. Promptly upon request from time
to time by the Company, the Depositary shall furnish to the Company a list, as
of a recent date specified by the Company, of the names, addresses and holdings
of Depositary Shares of all persons in whose names Receipts are registered on
the books of the Depositary.

         SECTION 4.09. Fax and Regulatory Compliance. The Depositary shall be
responsible for (i) preparing and mailing of Form 1099s for all open and closed
accounts, (ii) all applicable withholding related to payments made with respect
to the Receipts, including, without limitation, withholding required pursuant to
Sections 1441, 1442, 1445 and 3406 of the Internal Revenue Code of 1986, as
amended, (iii) mailing Form W-9s to new holders of Receipts without a certified
taxpayer identification number, (iv) processing certified Form W-9s, (v)
preparing and tiling of state information returns and (vi) providing escheatment
services.

         SECTION 4.10. Withholding. Notwithstanding any other provision of this
Deposit Agreement to the contrary, in the event that the Depositary determines
that any distribution in property is subject to any tax which the Depositary is
obligated by applicable law to withhold, the Depositary may dispose of all or a
portion of such property in such amounts and in such manner as the Depositary
deems necessary and practicable to pay such taxes, by public or private sale,
and the Depositary shall distribute the net proceeds of any such sale or the
balance of any such property after deduction of such taxes to the holders of
Receipts entitled thereto in proportion to the number of Depositary Shares held
by them, respectively; provided, however, that in the event the Depositary
determines that such distribution of property is subject to withholding tax only
with respect to some but not all holders of Receipts, the Depositary will use
its best efforts (i) to sell only that portion of such property distributable to
such holders that is required to generate sufficient proceeds to pay such
withholding tax and (ii) to effect any such sale in such a manner so as to avoid
affecting the rights of any other holders of Receipts to receive such
distribution in property.

                                   ARTICLE V

                         THE DEPOSITARY AND THE COMPANY

         SECTION 5.01. Maintenance of Offices, Agencies and Transfer Books by
the Depositary and the Registrar. The Depositary shall maintain at the Corporate
Office facilities for the execution and delivery, transfer, surrender and
exchange, split-up, combination and redemption of Receipts and deposit and
withdrawal of Preferred Stock and at the offices of the

                                       13

<PAGE>

Depositary's Agents, if any, facilities for the delivery, transfer, surrender
and exchange, split-up, combination and redemption of Receipts and deposit and
withdrawal of Preferred Stock, all in accordance with the provisions of this
Deposit Agreement.

         The Depositary shall keep books at the Corporate Office for the
registration and transfer of Receipts, which books at all reasonable times shall
be open for inspection by the record holders of Receipts as provided by
applicable law. The Depositary may close such books, at any time or from time to
time, when deemed expedient by it in connection with the performance of its
duties hereunder. The Depositary may maintain such books in customary electronic
form.

         If the Receipts or the Depositary Shares evidenced thereby or the
Preferred Stock represented by such Depositary Shares shall be listed on the New
York Stock Exchange, Inc. or any other stock exchange, or quoted on any
interdealer quotation system, the Depositary may, with the approval of the
Company, appoint a Registrar (acceptable to the Company) for registration of
such Receipts or Depositary Shares in accordance with the requirements of such
stock exchange or quotation system. Such Registrar (which may be the Depositary
if so permitted by the requirements of such Exchange) may be removed and a
substitute registrar appointed by the Depositary upon the request or with the
approval of the Company. If the Receipts, such Depositary Shares or such
Preferred Stock are listed on one or more other stock exchanges or quotation
systems, the Depositary will, at the request and expense of the Company, arrange
such facilities for the delivery, transfer, surrender, redemption and exchange
of such Receipts, such Depositary Shares or such Preferred Stock as maybe
required by applicable law or applicable stock exchange or quotation system
regulations.

         SECTION 5.02. Prevention or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company. None of the Depositary, any
Depositary's Agent, any Registrar or the Company shall incur any liability to
any holder of any Receipt, if by reason of any provision of any present or
future law or regulation thereunder of the United States of America or of any
other governmental authority or, in the case of the Depositary, the Depositary's
Agent or the Registrar, by reason of any provision, present or future, of the
Articles of Incorporation or the Articles Supplementary or, in the case of the
Company, the Depositary, the Depositary's Agent or the Registrar, by reason of
any act of God or war or other circumstance beyond the control of the relevant
party, the Depositary, any Depositary's Agent, the Registrar or the Company
shall be prevented or forbidden from doing or performing any act or thing that
the terms of this Deposit Agreement provide shall be done or performed; nor
shall the Depositary, any Depositary's Agent, any Registrar or the Company incur
any liability to any holder of a Receipt by reason of any nonperformance or
delay, caused as aforesaid, in the performance of any act or thing that the
terms of this Deposit Agreement provide shall or may be done or performed, or by
reason of any exercise of, or failure to exercise, any discretion provided for
in this Deposit Agreement.

         SECTION 5.03. Obligations of the Depositary, the Depositary's Agents,
the Registrar and the Company. Each of the Depositary, any Depositary's Agent
and any Registrar shall at all times act in good faith and shall use its best
efforts within reasonable time limits to insure the accuracy of all services
performed pursuant to this Agreement. None of the Depositary, any Depositary's
Agent, any Registrar or the Company assumes any obligation or shall be subject
to any liability under this Deposit Agreement or any Receipt to holders of

                                       14

<PAGE>

Receipts other than from acts or omissions arising out of conduct constituting
bad faith, gross negligence or willful misconduct in the performance of such
duties as are specifically set forth in this Deposit Agreement.

         None of the Depositary, any Depositary's Agent, any Registrar or the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to the deposited Preferred Stock,
Depositary Shares or Receipts that in its reasonable opinion may involve it in
expense or liability, unless indemnity reasonably satisfactory to it against all
expense and liability be famished as often as may be required.

         None of the Depositary, any Depositary's Agent, any Registrar or the
Company shall be liable for any action or any failure to act by it in reliance
upon the written advice of legal counsel or accountants, or information provided
by any person presenting Preferred Stock for deposit, any holder of a Receipt or
any other person believed by it in good faith to be competent to give such
advice or information. The Depositary, any Depositary's Agent, any Registrar and
the Company may each rely and shall each be protected in acting upon any written
notice, request, direction or other document believed by it in good faith to be
genuine and to have been signed or presented by the proper party or panics.

         In the event the Depositary shall receive conflicting claims, requests
or instructions from any holders of Receipts, on the one hand, and the Company,
on the other hand, the Depositary shall be entitled to act on such claims,
requests or instructions received from the Company, and shall be entitled to the
full indemnification set forth in Section 5.06 hereof in connection with any
action so taken.

         The Depositary shall not be responsible for any failure to carry out
any instruction to vote any of the deposited Preferred Stock or for the manner
or effect of any such vote made, as long as any such action or non-action is in
good faith and does not result from negligence or willful misconduct of the
Depositary. The Depositary undertakes, and any Registrar shall be required to
undertake, to perform such duties and only such duties as are specifically set
forth in this Deposit Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Depositary or any Registrar.

         The Depositary, its parent, affiliate, or subsidiaries, any
Depositary's Agent, and any Registrar may own, buy, sell or deal in any class of
securities of the Company and its affiliates and in Receipts or Depositary
Shares or become pecuniarily interested in any transaction in which the Company
or its affiliates may be interested or contract with or lend money to or
otherwise act as fully or as freely as if it were not the Depositary or the
Depositary's Agent hereunder. The Depositary may also act as transfer agent or
registrar of any of the securities of the Company and its affiliates or act in
any other capacity for the Company or its affiliates.

         It is intended that neither the Depositary nor any Depositary's Agent
shall be deemed to be an "issuer" of the securities under the federal securities
laws or applicable state securities laws, it being expressly understood and
agreed that the Depositary and any Depositary's Agent are acting only in a
ministerial capacity as Depositary for the deposited Preferred Stock; provided,
however, that the Depositary agrees to comply with all information reporting and

                                       15

<PAGE>

withholding requirements applicable to it under law or this Deposit Agreement in
its capacity as Depositary.

         Neither the Depositary (or its officers, directors, employees or
agents) nor any Depositary's Agent makes any representation or has any
responsibility as to the validity of the registration statement pursuant to
which the Depositary Shares are registered under the Securities Act, the
deposited Preferred Stock, the Depositary Shares, the Receipts (except its
countersignature thereon) or any instruments referred to therein or herein, or
as to the correctness of any statement made therein or herein; provided,
however, that the Depositary is responsible for its representations in this
Deposit Agreement and for the validity of any action taken or required to be
taken by the Depositary in connection with this Deposit Agreement.

         The Company represents that it has registered the deposited Preferred
Stock and the Depositary Shares for sale in accordance with applicable
securities laws.

         SECTION 5.04. Resignation and Removal of the Depositary; Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by notice of its election to do so delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.

         The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor depositary and its acceptance of such appointment as
hereinafter provided.

         In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If a successor depositary shall not have been appointed in 60 days,
the resigning Depositary may petition a court of competent jurisdiction to
appoint a successor depositary. Every successor depositary shall execute and
deliver to its predecessor and to the Company an instrument in writing accepting
its appointment hereunder, and thereupon such successor depositary, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor and for all purposes shall be the
Depositary under this Deposit Agreement, and such predecessor, upon payment of
all sums due it and on the written request of the Company, shall promptly
execute and deliver an instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign, transfer and deliver
all rights, title and interest in the deposited Preferred Stock and any moneys
or property held hereunder to such successor and shall deliver to such successor
a list of the record holders of all outstanding Receipts. Any successor
depositary shall promptly mail notice of its appointment to the record holders
of Receipts.

         Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act. Such successor
depositary may execute the Receipts either in the name of the predecessor
depositary or in the name of the successor depositary.

                                       16

<PAGE>

         SECTION 5.05. Notices, Reports and Documents. The Company agrees that
it will deliver to the Depositary, and the Depositary will, promptly after
receipt thereof transmit to the record holders of Receipts, in each case at the
address recorded in the Depositary's books, copies of all notices and reports
(including financial statements) required by law, by the rules of any national
securities exchange or interdealer quotation system upon which the Preferred
Stock, the Depositary Shares or the Receipts are listed or quoted or by the
Articles of Incorporation and the Articles Supplementary to be furnished by the
Company to holders of the deposited Preferred Stock and, if requested by the
holder of any Receipt, a copy of this Deposit Agreement, the form of Receipt,
the Articles Supplementary and the form of Preferred Stock. Such transmission
will be at the Company's expense and the Company will provide the Depositary
with such number of copies of such documents as the Depositary may reasonably
request. In addition, the Depositary will transmit to the record holders of
Receipts at the Company's expense such other documents as may be requested by
the Company.

         SECTION 5.06. Indemnification by the Company. The Company agrees to
indemnify the Depositary, any Depositary's Agent and any Registrar against, and
hold each of them harmless from, any liability, costs and expenses (including
reasonable attorneys' fees) that may arise out of, or in connection with, its
acting as Depositary, Depositary's Agent or Registrar, respectively, under this
Deposit Agreement and the Receipts, except for any liability arising out of the
willful misconduct, gross negligence, or bad faith on the part of any such
person or persons. The obligations of the Company set forth in this Section 5.06
shall survive any succession of any Depositary, Registrar or Depositary's Agent
or termination of this Deposit Agreement.

         SECTION 5.07. Indemnification by the Depositary. The Depositary agrees
to indemnify the Company against, and hold the Company harmless from, any
liability, costs and expenses (including reasonable attorneys' fees) that may
arise out of, or in connection with, the refusal or failure of any of the
Depositary, any Depositary's Agent or the Registrar to comply with the terms of
this Deposit Agreement, or which arise out of the willful misconduct, gross
negligence, or bad faith on the part of any such person or persons; provided,
however, that the Depositary's aggregate liability hereunder with respect to,
arising from, or arising in connection with this Deposit Agreement, or from all
services provided or omitted to be provided under this Deposit Agreement,
whether in contract, or in tort, or otherwise, is limited to, and shall not
exceed, the amounts paid hereunder by the Company to the Depositary as fees and
charges under this Agreement or otherwise, but not including reimbursable
expenses, during the six (6) calendar months immediately preceding the event for
which recovery from the Depositary is being sought. The obligations of the
Depositary set forth in this Section 5.07 shall survive any succession of the
Company or termination of this Deposit Agreement.

         SECTION 5.08. Damages. The Depositary shall not be liable for any
incidental, indirect, special or consequential damages of any nature whatsoever,
including, but not limited to, loss of anticipated profits (collectively,
"Special Damages"), occasioned by breach of any provision of this Agreement by
the Depositary even if apprised of the possibility of such damages. The Company
shall not be liable to the Depositary for Special Damages occasioned by breach
of any provision of this Agreement by the Company even if apprised of the
possibility of such damages.

                                       17

<PAGE>

         SECTION 5.09. Fees, Charges and Expenses. No charges and expenses of
the Depositary or any Depositary's Agent hereunder shall be payable by any
person, except as provided in this Section 5.09. The Company shall pay all
transfer and other taxes and governmental charges arising solely from the
existence of this Deposit Agreement. The Company shall also pay all fees and
expenses of the Depositary in connection with the initial deposit of the
Preferred Stock and the initial issuance of the Depositary Shares evidenced by
the Receipts, any redemption of the Preferred Stock at the option of the Company
and all withdrawals of the Preferred Stock by holders of Receipts, in each case,
in the amount and manner set forth in that certain Transfer Agency and Service
Agreement, dated as of ___________, 200__, by and between the Company and the
Depositary (as the same may be amended, modified, supplemented or replaced from
time to time by the parties, the "Transfer Agency and Service Agreement"). If a
holder of Receipts requests the Depositary to perform duties not required under
this Deposit Agreement, the Depositary shall notify the holder of time cost of
the performance of such duties prior to the performance thereof. Upon approval
of such cost by such holder, such holder will thereafter be liable for the
charges and expenses related to such performance. All other fees and expenses of
the Depositary and any Depositary's Agent hereunder and of any Registrar
(including, in each case, fees and expenses of counsel) incident to the
performance of their respective obligations hereunder will be promptly paid by
the Company pursuant to the terms of Transfer Agency and Service Agreement (or,
if such agreement is no longer in effect, pursuant to such terms as the Company
and the Depositary shall agree in good faith, which terms shall be at least as
favorable to the Depositary as those contained in such agreement as last in
effect). The Depositary shall present its statement for fees and expenses to the
Company every month or at such other intervals as the Company and the Depositary
may agree.

                                   ARTICLE VI

                            AMENDMENT AND TERMINATION

         SECTION 6.01. Amendment. The form of the Receipts and any provision of
this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable; provided, however, that no such amendment (other
than any change in the fees of any Depositary, Registrar or Transfer Agent that
are payable by the Company) which (i) shall materially and adversely alter the
rights of the holders of Receipts or (ii) would be materially and adversely
inconsistent with the rights granted to the holders of the Preferred Stock
pursuant to the Articles Supplementary shall be effective unless such amendment
shall have been approved by the holders of Receipts evidencing at least 66 2/3
of the Depositary Shares then outstanding. In no event shall any amendment
impair the right, subject to the provisions of Section 2.06 and Section 2.07 and
Article III, of any holder of any Depositary Shares to surrender the Receipt
evidencing such Depositary Shares with instructions to the Depositary to deliver
to the holder the deposited Preferred Stock and all money and other property if
any, represented thereby, except in order to comply with mandatory provisions of
applicable law. Every holder of an outstanding Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold such Receipt,
to consent and agree to such amendment and to be bound by this Deposit Agreement
as amended thereby.

                                       18

<PAGE>

         SECTION 6.02. Termination. This Deposit Agreement may be terminated by
the Company upon not less than 30 days' prior written notice to the Depositary
if (i) such termination is necessary to preserve the Company's status as a real
estate investment trust under the Internal Revenue Code of 1986, as amended (or
any successor provision), or (ii) the holders of Receipts evidencing at least a
majority of the Depositary Shares then outstanding consent to such termination,
whereupon the Depositary shall deliver or make available to each holder of a
Receipt, upon surrender of the Receipt held by such holder, such number of whole
or fractional shares of deposited Preferred Stock as are represented by the
Depositary Shares evidenced by such Depositary Receipt, together with any other
property held by the Depositary in respect of such Receipt. In the event that
this Deposit Agreement is terminated pursuant to clause (i) of the immediately
preceding sentence, the Company hereby agrees to use its reasonable best efforts
to list or quote the Preferred Stock issued upon surrender of the Receipt
evidencing the Depositary Shares represented thereby on a national securities
exchange or interdealer quotation system. This Deposit Agreement will
automatically terminate if (i) all outstanding Depositary Shares shall have been
redeemed pursuant to Section 2.03 or (ii) there shall have been made a final
distribution in respect of the deposited Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the holders of Receipts entitled thereto.

         Upon the termination of this Deposit Agreement, (i) the Company shall
be discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Section 5.06 and Section 5.09 and (ii) the Depositary shall be discharged from
all obligations under this Deposit Agreement except for its obligations to the
Company under Section 5.07.

                                  ARTICLE VII

                                  MISCELLANEOUS

         SECTION 7.01. Counterparts. This Deposit Agreement may be executed in
any number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Deposit Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Corporate Office and
the respective offices of time Depositary's Agents, if any, by any holder of a
Receipt.

         SECTION 7.02. Exclusive Benefits of Parties. This Deposit Agreement is
for the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.

         SECTION 7.03. Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.

                                       19

<PAGE>

         SECTION 7.04. Notices. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to the Company at:

         Saul Centers, Inc.
         7501 Wisconsin Avenue, Suite 1500
         Bethesda, Maryland 20814
         Attention:  Corporate Secretary
         Telephone No.:  (301) 986-6200

or at any other address of which the Company shall have notified the Depositary
in writing.

         Any notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or suit by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to the Depositary at the Corporate Office to the
attention of the General Counsel.

         Any notices given to any record holder of a Receipt hereunder or tinder
the Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary or, if such holder
shall have filed with the Depositary in a timely manner a written request that
notices intended for such holder he mailed to some other address, at the address
designated in such request.

         Delivery of a notice sent by mail, or by telegram or telex or
telecopier shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a telegram
or telex or telecopier message) is deposited, postage prepaid, in a post office
letter box. The Depositary or the Company may, however, act upon any telegram or
telex or telecopier message received by it from the other or from any holder of
a Receipt, notwithstanding that such telegram or telex or telecopier message
shall not subsequently be confirmed by letter as aforesaid.

         SECTION 7.05. Depositary's Agents. The Depositary may from time to time
appoint Depositary's Agents to act in any respect for the Depositary for the
purposes of this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of such Depositary's
Agents. The Depositary will notify the Company of any such action.

         SECTION 7.06. Holders of Receipts Are Parties. The holders of Receipts
from time to time shall be deemed to be parties to this Deposit Agreement amid
shall be bound by all of the terms and conditions hereof and of the Receipts by
acceptance of delivery thereof.

         SECTION 7.07. Governing Law. This Deposit Agreement and the Receipts
and all rights hereunder and thereunder and provisions hereof and thereof shall
be governed by, and construed in accordance with, the law of the State of
_________ applicable to agreements made and to be performed in said State.

                                       20

<PAGE>

         SECTION 7.08. Inspection of Deposit Agreement and Articles
Supplementary. Copies of this Deposit Agreement and the Articles Supplementary
shall be filed with the Depositary and the Depositary's Agents and shall be open
to inspection during business hours at the Corporate Office and the respective
offices of the Depositary's Agents, if any, by any holder of any Receipt.

         SECTION 7.09. Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or to have any bearing upon the meaning or interpretation
of any provision contained herein or in the Receipts.

         IN WITNESS WHEREOF, Saul Centers, Inc. and ___________ have caused this
Deposit Agreement to be duly executed on their behalf as of the day amid year
first above set forth and all holders of Receipts shall become parties hereto by
and upon acceptance by them of delivery of Receipts issued in accordance with
the terms hereof.

                                   SAUL CENTERS, INC.

                                   By:
                                      ------------------------------------
                                         Name:
                                         Title:

                                   [NAME OF DEPOSITARY]

                                   By:
                                      ------------------------------------
                                         Name:
                                         Title:

                                       21

<PAGE>

                                    EXHIBIT A

                                 Form of Receipt

[SAUL CENTERS GRAPHIC]

         Temporary Receipt Exchangeable for Definitive Engraved Receipt When
Ready for Delivery

         IMPORTANT NOTICE--RESTRICTIONS ON TRANSFER AND OWNERSHIP

         The Depositary Shares represented by this Depositary Receipt are
subject to restrictions on ownership and transfer for the Corporation's
maintenance of its status as a "real estate investment trust" under the Internal
Revenue Code of 1986, as amended. The charter of Saul Centers, Inc. generally
prohibits any person from acquiring or holding, beneficially or constructively,
in excess of 5.0% in value of its combined outstanding common stock and
preferred stock, with the exception of entities affiliated with B. Francis Saul
II, which are restricted to 24.9% in value of the Corporation's combined
outstanding common and preferred stock. Its Board of Directors may exempt a
person from this ownership limit under specified conditions. Absent an exemption
or a waiver, shares of stock that are purportedly transferred in excess of the
ownership limit will be void ab initio and will be automatically transferred to
a trust for the exclusive benefit of one or more charitable beneficiaries, and
the purported transferee will not acquire any rights in such shares.

         DEPOSITARY RECEIPT FOR DEPOSITARY SHARES EACH REPRESENTING OF A
                SHARE OF _____% SERIES _________ PREFERRED STOCK
                                       OF
                               SAUL CENTERS, INC.
              INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND

DEPOSITARY SHARES

THIS DEPOSITARY RECEIPT IS TRANSFERABLE
IN _______________, OR NEW YORK, NY

SEE REVERSE FOR CERTAIN DEFINITIONS

CUSIP

_________________, as Depositary (the "Depositary"), hereby certifies that
___________ is the registered owner of Depositary Shares ("Depositary Shares"),
each Depositary Share representing ___________ of one share of Series
_____________ Preferred Stock (the "Stock"), of Saul Centers, Inc., a Maryland
corporation (the "Corporation"), on deposit with the Depositary, subject to the
terms and entitled to the benefits of the Deposit Agreement, dated as of
________, 200__ (the "Deposit Agreement"), among the Corporation, the Depositary
and all holders from time to time of Depositary Receipts. By accepting this
Depositary Receipt, the holder hereof becomes a party to and agrees to be bound
by all the terms and conditions of the

                                      A-1

<PAGE>

Deposit Agreement. This Depositary Receipt shall not be valid or obligatory for
any purpose or be entitled to any benefits under the Deposit Agreement unless it
shall have been executed by the Depositary by the manual and or facsimile
signature of a duly authorized officer.

         The Corporation is authorized to issue Common Stock and one or more
series or classes of Preferred Stock. The Corporation will furnish without
charge to each receipt holder, who so requests in writing, a statement of the
rights, preferences, privileges and restrictions granted to or imposed upon the
respective classes of shares and upon the holders thereof, a copy of the
Corporation's Charter and Bylaws, and a copy of the Deposit Agreement. Any such
request shall be made to the Corporation at the principal office of the
Corporation at 7501 Wisconsin Avenue, Suite 1500, Bethesda, Maryland 20814,
Attention: Secretary.

         This Depositary Receipt is continued on the reverse hereof and the
additional provisions therein set forth (including, without limitation, those
relating to redemption) for all purposes have the same effect as if set forth at
this place.

Dated:

                                 Countersigned

                                 -------------------------------------------,
                                 Depositary, Transfer Agent and Registrar

                                 By:

                                 -------------------------------------------
                                 AUTHORIZED OFFICER

                                      A-2

<PAGE>

                               SAUL CENTERS, INC.

         THE DEPOSITARY SHARES REPRESENTED BY THIS DEPOSITARY RECEIPT ARE
SUBJECT TO THE PROVISIONS OF THE CHARTER AND BYLAWS OF THE CORPORATION,
INCLUDING, BUT NOT LIMITED TO, (1) SECTION __ OF THE ARTICLES SUPPLEMENTARY
RELATING TO THE STOCK, WHICH CONFERS UPON THE CORPORATION THE RIGHT, ON OR AFTER
_____________, 20__, TO CALL FOR REDEMPTION THE STOCK, (2) SECTION ___ OF THE
ARTICLES SUPPLEMENTARY AND ARTICLE VI, SECTION 4 OF THE CHARTER OF THE
CORPORATION WHICH IMPOSE CERTAIN RESTRICTIONS ON TRANSFER OR OWNERSHIP OF THE
COMMON STOCK AND THE PREFERRED STOCK (INCLUDING THE STOCK AND, ACCORDINGLY, THE
DEPOSITARY SHARES REPRESENTING THE STOCK, AND THE DEPOSITARY RECEIPTS EVIDENCING
THE DEPOSITARY SHARES) OF THE CORPORATION FOR THE PURPOSE OF THE CORPORATION'S
MAINTENANCE OF ITS STATUS OF A "REAL ESTATE INVESTMENT TRUST" UNDER THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, INCLUDING PROVISIONS THEREOF WHICH PROVIDE (A)
THAT GENERALLY NO PERSON MAY ACQUIRE OR HOLD, BENEFICIALLY OR CONSTRUCTIVELY, IN
EXCESS OF 5.0% IN VALUE OF THE CORPORATION'S COMBINED OUTSTANDING SHARES OF
COMMON STOCK AND PREFERRED STOCK (INCLUDING THE STOCK), WITH THE EXCEPTION OF
entities affiliated with B. Francis Saul II, which are restricted to 24.9% in
value of the Corporation's combined outstanding common and preferred stock; AND
(B) THAT ABSENT AN EXEMPTION OR WAIVER BY THE CORPORATION'S BOARD OF DIRECTORS,
SHARES OF STOCK THAT ARE PURPORTEDLY TRANSFERRED IN EXCESS OF THE OWNERSHIP
LIMIT WILL BE VOID AB INITIO AND WILL BE AUTOMATICALLY TRANSFERRED TO A TRUST
FOR THE EXCLUSIVE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES, AND THE
PURPORTED TRANSFEREE WILL NOT ACQUIRE ANY RIGHTS IN SUCH SHARES. THE TERMS
"PERSON", "BENEFICIALLY OWN" AND "CONSTRUCTIVELY OWN", AS USED ABOVE SHALL HAVE
THE MEANINGS ASCRIBED IN THE CHARTER OF THE CORPORATION, A COPY OF WHICH WILL BE
SENT WITHOUT CHARGE TO EACH HOLDER HEREOF WHO SO REQUESTS.

         1. THE DEPOSIT AGREEMENT. Depositary Receipts, of which this Depositary
Receipt is one, are made available upon the terms and conditions set forth in
the Deposit Agreement, dated as of ____________, 200__ (the "Deposit
Agreement"), among the Company, the Depositary and all holders from time to time
of Depositary Receipts. The Deposit Agreement (copies of which are on file at
the principal office maintained by the Depositary which at the time of the
execution of the Deposit Agreement is located at _____________________ (the
"Depositary's Office") and at the office of any agent of the Depositary) sets
forth the rights of holders of Depositary Receipts and the rights and duties of
the Depositary. The statements made on the face and the reverse of this
Depositary Receipt are summaries of certain provisions of the Deposit Agreement
and are subject to the detailed provisions thereof to which reference is hereby
made. In the event of any conflict between the provisions of this Depositary
Receipt and the provisions of the Deposit Agreement, the provisions of the
Deposit Agreement will govern.

                                      A-3

<PAGE>

         2. DEFINITIONS. Unless otherwise expressly herein provided, all defined
terms used in this summary of the Deposit Agreement shall have the meanings
ascribed thereto in the Deposit Agreement.

         3. REDEMPTION OF STOCK. Whenever the Company shall elect to redeem
shares of Stock, it shall (unless otherwise agreed in writing with the
Depositary) give the Depositary not less than 30 days' prior written notice of
the date of such proposed redemption and of the number of such shares of Stock
held by the Depositary to be so redeemed and the applicable redemption price,
including the amount, if any, of accrued and unpaid dividends thereon to and
including the date fixed for redemption. The Depositary shall mail, first-class
postage prepaid, notice of the redemption of Stock and the proposed simultaneous
redemption of the Depositary Shares representing the Stock to be redeemed, not
less than 30 nor more than 60 days prior to the date fixed for redemption of
such Stock and Depositary Shares, to the record holders of the Depositary
Receipts evidencing the Depositary Shares to be so redeemed, at the addresses of
such holders as the same appear on the records of the Depositary. On the date of
such redemption, the Depositary shall redeem the number of Depositary Shares
representing such redeemed Stock; provided, that the Company shall then have
paid or caused to be paid in full to time Depositary the redemption price of the
Stock to be redeemed, plus any accrued and unpaid dividends payable with respect
thereto to the date of any such redemption. If fewer than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall
be determined pro rata or by any other equitable method determined by the
Company that will not result in a violation of the Ownership Limit. Notice
having been mailed as aforesaid, from and after the redemption date (unless the
Company shall have failed to provide the funds necessary to redeem the shares of
Stock represented by the Depositary Shares called for redemption), all dividends
on the shares of Stock so called for redemption shall cease to accrue, the
Depositary Shares called for redemption shall be deemed no longer to be
outstanding and all rights of the holders of Depositary Receipts evidencing such
Depositary Shares (except the right to receive the redemption price plus all
accrued and unpaid dividends to and including the redemption date) shall, to the
extent of such Depositary Shares, cease and terminate. Upon surrender in
accordance with said notice of the Depositary Receipts evidencing such
Depositary Shares (properly endorsed or assigned for transfer, if the Depositary
or applicable law shall so require), such Depositary Shares shall be redeemed at
a redemption price per Depositary Share equal to the same fraction of the
redemption price per share paid with respect to the shares of Stock as the
fraction each Depositary Share represents of a share of Stock plus the same
fraction of all money and other property, if any, represented by such Depositary
Shares, including all amounts paid by the Company in respect of accrued and
unpaid dividends to and including the redemption date on the shares of Stock to
be so redeemed. The foregoing is further subject to the terms and conditions of
the Articles Supplementary. If fewer than all of the Depositary Shares evidenced
by this Depositary Receipt are called for redemption, the Depositary will
deliver to the holder of this Depositary Receipt upon its surrender to the
Depositary, together with the redemption payment, a new Depositary Receipt
evidencing the Depositary Shares evidenced by such prior Depositary Receipt and
not called for redemption.

         4. SURRENDER OF DEPOSITARY RECEIPTS AND WITHDRAWAL OF STOCK. The holder
hereof may withdraw any or all of the deposited Stock represented by the
Depositary Shares evidenced hereby and all money and other property, if any,
represented by

                                      A-4

<PAGE>

such Depositary Shares by surrendering this Depositary Receipt at the corporate
office or at such other office as the Depositary may designate for such
withdrawals. After such surrender, without unreasonable delay, the Depositary
shall deliver to the holder hereof, or to the person or persons designated by
the holder hereof in accordance with the Deposit Agreement, the number of whole
or fractional shares of such Stock and all such money and other property, if
any, represented by the Depositary Shares evidenced by this Depositary Receipt
surrendered for withdrawal, but the holder of such whole or fractional shares of
Stock shall not thereafter be entitled to deposit such Stock under the Deposit
Agreement or to receive Depositary Shares therefor. However, if this Depositary
Receipt evidences a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of whole or fractional shares of
deposited Stock to be withdrawn, the Depositary shall at the same time, in
addition to such number of whole or fractional shares of Stock and such money
and other property, if any, to be withdrawn, deliver to such holder a new
Depositary Receipt or Depositary Receipts evidencing such excess number of
Depositary Shares.

         5. TRANSFERS, SPLIT-UPS, COMBINATIONS. Subject to the Deposit
Agreement, this Depositary Receipt is transferable on the books of the
Depositary upon surrender of this Depositary Receipt to the Depositary, properly
endorsed or accompanied by a properly executed instrument of transfer or
endorsement, and upon such transfer the Depositary shall sign and deliver a
Depositary Receipt or Depositary Receipts to or upon the order of the person
entitled thereto, all as provided in and subject to the Deposit Agreement. This
Depositary Receipt may be split into other Depositary Receipts or combined with
other Depositary Receipts into one Depositary Receipt evidencing the same
aggregate number of Depositary Shares evidenced by the Depositary Receipt or
Depositary Receipts surrendered; provided, however, that the Depositary shall
not issue any Depositary Receipt evidencing a fractional Depositary Share.

         6. CONDITIONS TO SIGNING AND DELIVERY, TRANSFER, ETC., OF DEPOSITARY
RECEIPTS. Prior to the execution and delivery, registration of transfer,
split-up, combination, surrender or exchange of this Depositary Receipt, the
Depositary, any of the Depositary's Agents or the Company may require any or all
of the following: (i) payment to it of a stun sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any tax or other governmental charge with respect
thereto; (ii) production of proof satisfactory to it as to the identity and
genuineness of any signature; and (iii) compliance with such regulations, if
any, as the Depositary or the Company may establish consistent with the Deposit
Agreement.

         7. SUSPENSION OF DELIVERY, TRANSFER, ETC. The deposit of Stock maybe
refused, the delivery of this Depositary Receipt against Stock may be suspended,
the registration of transfer of Depositary Receipts maybe refused, and the
registration of transfer, split-up, combination, surrender, exchange or
redemption of this Depositary Receipt may be suspended (i) during any period
when the register of stockholders of the Company is closed or (ii) if any such
action is deemed reasonably necessary or advisable by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to time because of
any requirement of applicable law or of any government or governmental body or
commission, or under any provision of the Deposit Agreement.

                                      A-5

<PAGE>

         8. AMENDMENT. The form of the Depositary Receipts and any provision of
the Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable; provided, however, that no such amendment (other
than any changes in the fees of any Depositary or Registrar or Transfer Agent
payable by the Company) which (i) shall materially and adversely alter the
rights of holders of Depositary Receipts or (ii) would be materially and
adversely inconsistent with the rights granted to the holders of the Stock
pursuant to the Articles Supplementary shall be effective unless such amendment
shall have been approved by the holders of Depositary Receipts evidencing at
least a majority of the Depositary Shares then outstanding. The holder of this
Depositary Receipt at the time any such amendment becomes effective shall be
deemed, by continuing to hold this Depositary Receipt, to consent and agree to
such amendment and to be bound by the Deposit Agreement as amended thereby. In
no event shall any amendment impair the right of the holder of Depositary Shares
to surrender this Depositary Receipt evidencing the Depositary Shares with
instructions to the Depositary to deliver to the holder the Stock and all money
and other property, if any, represented thereby, except in order to comply with
mandatory provisions of applicable law.

         9. CHARGES AND EXPENSES. The Company will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangement, except such charges as are expressly provided in the
Deposit Agreement to be at the expense of holders of Depositary Receipts.

         10. TITLE TO DEPOSITARY RECEIPTS. Title to this Depositary Receipt,
when properly endorsed or accompanied by a properly executed instrument of
transfer, is transferable by delivery with the same effect as in the case of a
negotiable instrument; provided, however, that the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the person
entitled to distribution of dividends or other distributions or to any notice
provided for in the Deposit Agreement and for all other purposes.

         11. DIVIDENDS AND DISTRIBUTIONS. Whenever the Depositary shall receive
any dividend or other cash distributions on the Stock, the Depositary shall,
subject to the provisions of the Deposit Agreement, distribute to record holders
of Depositary Receipts such amounts of such sums as are, as nearly as
practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Depositary Receipts held by such holders; provided, however,
that in case the Company or the Depositary shall be required by law to withhold
and does withhold from any cash distribution in respect of the Stock an amount
on account of taxes or as otherwise required by law, regulation or court
process, the amount made available for distribution or distributed in respect of
Depositary Shares shall be reduced accordingly. The Depositary shall distribute
or make available for distribution, as the case may be, only such amount,
however, as can be distributed without attributing to any holder of Depositary
Receipts a fraction of one cent, and any balance not so distributable shall be
held by the Depositary (without liability for interest thereon) and shall be
added to and be treated as part of the next sum received by the Depositary for
distribution to record holders of Depositary Receipts then outstanding.

                                      A-6

<PAGE>

         12. SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES. If the Company
shall at any time offer or cause to be offered to the persons in whose name
Stock is registered on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance, subject to the provisions of the Deposit
Agreement, be made available by the Depositary to the record holders of
Depositary Receipts in such manner as the Company shall instruct.

         13. NOTICE OF DISTRIBUTIONS, FIXING OF RECORD DATE. Whenever (i) any
dividend or other distributions shall become payable, or any distribution other
than cash shall be made, or any rights, preferences or privileges shall at any
time be offered, with respect to the Stock, (ii) the Depositary shall receive
notice of any meeting at which holders of Stock are entitled to vote or of which
holders of Stock are entitled to notice or (iii) the Depositary shall receive
notice of any election on the part of the Company to redeem any shares of Stock,
the Depositary shall in each such instance fix a record date (which shall be the
same date, if any, as the record date fixed by the Company with respect to the
Stock) for the determination of the holders of Depositary Receipts (x) who shall
be entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof, or (y) who shall be entitled
to give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting or (z) whose Depositary Shares are to be so
redeemed.

         14. VOTING RIGHTS. Upon receipt of notice of any meeting at which the
holders of Stock are entitled to vote the Depositary shall, as soon as
practicable thereafter, mail to the record holders of Depositary Receipts a
notice, which shall contain (i) such information as is contained in such notice
of meeting, (ii) a statement that the holders may, subject to any applicable
restrictions, instruct the Depositary as to the exercise of the voting rights
pertaining to the Stock represented by their respective Depositary Shares, and
(iii) a brief statement as to the manner in which such instructions may be
given. Upon the written request of a holder of this Depositary Receipt on such
record date the Depositary shall vote or cause to be voted the Stock represented
by the Depositary Shares evidenced by this Depositary Receipt in accordance with
the instructions set forth in such request. The Company hereby agrees to take
all action that may be deemed necessary by the Depositary in order to enable the
Depositary to vote such Stock or cause such Stock to be voted. In the absence of
specific instructions from the holder of this Depositary Receipt, the Depositary
will abstain from voting to the extent of the Stock represented by the
Depositary Shares evidenced by this Depositary Receipt.

         15. REPORTS, INSPECTION OF TRANSFER BOOKS. The Depositary shall
transmit to the record holders of Depositary Receipts copies of all reports and
communications received from the Company that are received by the Depositary as
the holder of Stock. The Depositary shall keep books at the Corporate Office for
the registration and transfer of Depositary Receipts, which books at all
reasonable times will be open for inspection by the record holders of Depositary
Receipts as provided by applicable law.

         16. LIABILITY OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS, THE REGISTRAR
AND THE COMPANY. None of the Depositary, any Depositary's Agent, the Registrar
or the Company shall incur any liability to any holder of this Depositary
Receipt, if by

                                      A-7

<PAGE>

reason of any provision of any present or future law or regulation thereunder of
the United States of America or of any governmental authority or, in the case of
the Depositary, any Depositary's Agent or the Registrar, by reason of any
provision, present or future, of the Articles of Incorporation or the Articles
Supplementary or, in the case of the Company, the Depositary, any Depositary's
Agent or the Registrar, by reason of any act of God or war or other
circumstances beyond the control of the relevant party, the Depositary, any
Depositary's Agent, the Registrar or the Company shall be prevented or forbidden
from doing or performing any act or thing that the terms of the Deposit
Agreement provide shall be done or performed; nor shall the Depositary, any
Depositary's Agent, the Registrar or the Company incur any liability to any
holder of this Depositary Receipt (i) by reason of any nonperformance or delay,
caused as aforesaid, in the performance of any act or thing that the terms of
the Deposit Agreement provide shall or may be done or performed, or (ii) by
reason of any exercise of, or failure to exercise, any discretion provided for
in the Deposit Agreement.

         17. OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS, THE
REGISTRAR AND THE COMPANY. None of the Depositary, any Depositary's Agent, the
Registrar or the Company assumes any obligation or shall be subject to any
liability under the Deposit Agreement or this Depositary Receipt to the holder
hereof or other persons, other than for its gross negligence, willful misconduct
or bad faith. None of the Depositary, any Depositary's Agent, the Registrar or
the Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to Stock, Depositary Shares or
Depositary Receipts that in its reasonable opinion may involve it in expense or
liability, unless indemnity reasonably satisfactory to it against all expense
and liability be furnished as often as may be required. None of the Depositary,
any Depositary's Agent, the Registrar or the Company will be liable for any
action or failure to act by it in reliance upon the written advice of or
information from legal counsel or accountants or information provided by any
person presenting Stock for deposit, any holder of any Depositary Receipt or any
other person believed by it in good faith to be competent to give such advice or
information.

         18. TERMINATION OF DEPOSIT AGREEMENT. The Deposit Agreement maybe
terminated by the Company upon not less than 30 days' prior written notice to
the Depositary if (i) such termination is necessary to preserve the Company's
status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (or any successor provision), or (ii) the holders of a majority
of the Depositary Receipts consent to such termination, whereupon the Depositary
shall deliver or make available to each holder of a Depositary Receipt, upon
surrender of the Depositary Receipt held by such holder, such number of whole or
fractional shares of deposited Stock as are represented by the Depositary Shares
evidenced by such Depositary Receipt, together with any other property held by
the Depositary in respect of such Depositary Receipt. Upon the termination of
the Deposit Agreement, (i) the Company shall be discharged from all obligations
thereunder except for its obligations to the Depositary, any Depositary's Agent
and any Registrar under Sections 5.06 and 5.09 of the Deposit Agreement and (ii)
the Depositary shall be discharged from all obligations under the Deposit
Agreement except for its obligations to the Company under Section 5.07 of the
Deposit Agreement.

         19. GOVERNING LAW. The Deposit Agreement and this Depositary Receipt
and all rights thereunder and hereunder and provisions hereof and thereof shall
be governed by, and

                                      A-8

<PAGE>

construed in accordance with, the law of the State of ________ without giving
effect to principles of conflict of laws.

         The following abbreviations, when used in the inscription on the face
of this Depositary Receipt shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right of survivorship and not as tenants in common

<TABLE>
<S>                         <C>                                  <C>                    <C>

UNIF GIFT MIN ACT--                                              Custodian
                                    --------------------------                          ---------------------------
                                              (Cust)                                              (Minor)

                                    UNDER Uniform Gifts to Minors Act

                                    --------------------------
                                              (State)

UNIF GIFT MIN ACT--                                              Custodian (until age                              )
                                    --------------------------                          ---------------------------
                                              (Cust)

                                    --------------------------   under Uniform Transfers
                                              (Minor)

                  to Minors Act
                                    --------------------------
                                              (State)

                  Additional abbreviations may also be used though not in the
                  above list.

                  For Value Received, _______________ hereby sell, assign and transfer unto

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

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

PLEASE INSERT SOCIAL SECURITY OR OTHER
        IDENTIFYING NUMBER OF ASSIGNEE

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

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

                          (Please print or typewrite name amid address including postal zip code of assignee)

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

========================================================================================================================
</TABLE>

                                      A-9

<PAGE>

<TABLE>
<CAPTION>

 Depositary Shares represented by the within Depositary Receipt, and do hereby irrevocably constitute and appoint

========================================================================================================================
<S>                                                                            <C>

      Attorney to transfer the said Depositary Shares on the books of the within
named Depositary with full power of substitution

Dated                                                         Signed
                  -----------------------------------                           -----------------------------------

NOTICE: THE SIGNATURE FO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS DEPOSITARY RECEIPT IN EVERY PARTICULAR, WITHOUT
ALTERNATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed:
========================================================================================================================

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-16.

========================================================================================================================
</TABLE>

                                      A-10EXHIBIT 10.1

                           ASSET ACQUISITION AGREEMENT

DATE     :        August 21, 2003

BETWEEN  :        Quang Vuong
                  ----------------
                  ________________                                "Seller"

AND      :        Smog Centers of California LLC
                  3790 Via de la Valle, Suite 103
                  Del Mar, California 92014                       "Buyer"

                                    RECITALS

         A. Seller owns and operates a business engaged in the motor vehicle
smog emissions testing under the name of Broadway Smog Check ("Seller's
Business") located at 7319 Broadway, Lemon Grove, California. Seller owns and
maintains certain assets in connection with Seller's Business.

         B. Buyer desires to acquire all of the assets used or useful, or
intended to be used, in the operation of Seller's Business, and Seller desires
to sell such assets to Buyer.

            NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is agreed as follows:

         1. AGREEMENT TO SELL AND PURCHASE. Subject to the terms and conditions
herein set forth, Seller hereby agrees to sell and Buyer agrees to purchase
certain assets of Seller, as described in Section 2 herein.

         2. ASSETS SOLD. The following constitute the assets sold pursuant to
this Agreement (all of which are collectively referred to herein as the
"Assets"):

            2.1 EQUIPMENT. All machinery, equipment, tools, office equipment,
computers, furniture, trade fixtures, and all other tangible personal property
of Seller's Business including those items listed on Schedule 2.1 (the
"Equipment").

            2.2 INTANGIBLE ASSETS. All intangible assets used in Seller's
Business including, but not limited to, Seller's name, telephone numbers,
contract rights and business relationships with its customers and suppliers,
customer lists, all of Seller's intellectual property rights if any, and all of
Seller's business records for three (3) years prior to the Closing Date.
Subsequent to the Closing Date, Seller shall have the right to have access to
and to make copies of those business records of Seller which are in Buyer's
possession as may be reasonably required.

            2.3 LEASES All real property leases listed in Schedule 2.3
("Leases").

Page 1.  Asset Acquisition Agreement
<PAGE>
         3. LIABILITIES. Buyer shall assume and pay those liabilities of Seller
which are listed in Schedule 3 (the "Liabilities") and the Leases and shall hold
Seller harmless from any liability thereon. Buyer shall have no obligation as to
any liabilities of Seller which are not listed in Schedule 3.

         4. PURCHASE PRICE. The Purchase Price for the Assets shall be Sixty
Thousand Dollars ($60,000.00). Prior to the date of this Agreement, Buyer
tendered to Seller and Seller acknowledges receipt from Buyer of a downpayment
in the amount of Ten Thousand Dollars ($10,000.00). The balance of the Purchase
Price in the amount of Fifty Thousand Dollars ($50,000.00) will paid by Buyer to
Seller on the Closing Date. In addition to the balance of the Purchase Price,
Buyer shall reimburse Seller the sum of Three Thousand Four Hundred Dollars (
$3,400.00) paid by Seller for the continuation of a computer maintenance service
contract.

         5. CLOSING DATE AND CLOSING. This Agreement shall be closed at a place
mutually agreed upon by the Parties hereto. The Closing Date will be that date,
designed by Buyer and agreed to by Seller, which shall be not less than three
(3) nor more than ten (10) days after the conditions described in Section 8 of
this Agreement have been satisfied or waived. Closing shall occur on or before
July 30, 2003, or as soon thereafter as all conditions precedent to Closing have
occurred, and all necessary documents to be executed at Closing have been
prepared. On the Closing Date, the Parties, among other things, shall do the
following:

            5.1 TRANSFER OF TITLE. Seller shall transfer to Buyer, by bill of
sale or other documents of transfer, each in a form acceptable to Buyer,
containing warranties of title, free and clear of encumbrances and security
interests (except as otherwise agreed to herein or related to the Liabilities),
all of the Assets being sold pursuant to this Agreement.

            5.2 PAYMENT OF PURCHASE PRICE Buyer shall tender the balance of the
Purchase Price in the amount of Fifty Thousand Dollars ($50,000.00) and shall
also tender payment of Three Thousand Four Hundred Dollars ($3,400.00) as
described in Section 4 of this Agreement.

            5.3 POSSESSION. Seller shall deliver to Buyer possession of the
Assets.

            5.4 LEASES. Seller and Buyer shall execute forms of assignment as to
the Leases.

            5.5 MISCELLANEOUS. The Parties shall do all other things at the
Closing to consummate and effectuate this Agreement, all Documents, and all
other agreements, covenants and conditions set forth herein and therein.

            5.6 FURTHER ACTS. If, at any time after the Closing Date, any
further action by any of the Parties to this Agreement is necessary or desirable
to carry out the purposes of this Agreement and/or to vest in Buyer full title
to the assets sold hereunder, such party shall take all such necessary or
desirable action to cause such action to be taken.

Page 2.  Asset Acquisition Agreement
<PAGE>
         6. REPRESENTATIONS AND WARRANTIES BY SELLER. Seller represents and
warrants to Buyer as of the date of this Agreement and as of the Closing Date as
follows:

            6.1 NO OTHER SALE. Seller has not, and will not before the Closing
Date, offer or agree to sell Seller's Business or any of the Assets to any
person other than Buyer. Further, prior to the Closing Date, Seller will not
provide to any third parties information about Seller's business operations
other than which is traditionally provided in the ordinary course of business.

            6.2 CONDITION OF EQUIPMENT. The Equipment does not have and will not
have at the Closing Date any known material defects.

            6.3 TITLE. Seller owns absolute, clear and unencumbered title to all
of the Assets, and the same are now free and clear of all mortgages, liens,
pledges, security interests or encumbrances of any nature whatsoever. On the
Closing Date, the same shall be conveyed to Buyer free and clear of all
mortgages, liens, pledges, security interests and encumbrances of any nature
whatsoever, except as related directly to the Liabilities.

            6.4 COMPLIANCE WITH LAW. Seller has complied with, and is in
compliance with, all federal, state and local laws, rules, ordinances, decrees
and orders applicable to the operation if his business or to his owned or leased
properties, including, without limitation, applicable environmental, pollution
control and land use provisions. Seller has obtained all necessary permits,
licenses, variances, exemptions, orders and approvals from federal, state, local
and foreign regulatory bodies including, but not limited to, environmental
regulatory bodies, in order to conduct its business as presently conducted.
Seller has no notice or knowledge of any alleged violation relating to the
operation of Seller's Business or its owned or leased properties with regard to
any law, regulation or ordinance.

            6.5 NO APPROVAL OR NOTICES REQUIRED; NO CONFLICTS. The execution,
delivery and performance of this Agreement and each of the other agreements,
exhibits and documents referred to herein or necessary to effectuate this
Agreement (collectively, the "Documents" or individually, the "Document"), by
Seller and the consummation of the transactions contemplated hereby or thereby
will not:

                6.5.1 Constitute a violation of any provision of applicable law;

                6.5.2 Require any consent, approval, permit or authorization of
any person or governmental authority, except for the consent of the landlord and
lessor as to Buyer's assumption of the Lease, and the consent, where necessary,
of certain creditors as to the assumption of certain of the Liabilities.

                6.5.3 Result in a breach of or a default under (with or without
the giving of notice or lapse of time), acceleration or termination of, or the
creation in any party of the right to accelerate, terminate, modify or cancel
any agreement or other restriction, encumbrance, obligation or liability to
which Seller is a party or by which it is bound or to which any of the Assets
are subject.

Page 3.  Asset Acquisition Agreement
<PAGE>
            6.6 NO UNDISCLOSED LIABILITIES. Except for the Liabilities and other
liabilities of Seller set forth in contracts disclosed in this Agreement and as
set forth in Schedule 6.5, there are no liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise, applicable to Seller
or any of its assets, or arising from environmental conditions on, in or under
the real property and improvements upon and in which Seller's business operates
at 7319 Broadway, Lemon Grove, California, which may have adverse consequences
on Buyer.

            6.7 TAXES. Seller has timely filed or will timely file with the
appropriate governmental agencies all tax returns, information returns and
reports required to have been filed with respect to all periods ending on or
before the Closing Date. Seller has paid, or will pay, in full, as of the
Closing Date, all taxes, interest, penalties, assessments, deficiencies and
other charges ("Taxes"), the non-payment of which could result in the imposition
of Taxes on Buyer or the imposition of a lien on or in any of the Assets, or
that could otherwise result in a risk of forfeiture of any of the Assets. Seller
has not filed or entered into any election, consent or extension agreement which
extends any applicable statute of limitations. Seller has made adequate
provisions for all accrued and unpaid Taxes of Seller. To the best of Seller's
knowledge, Seller is not a party to any action or proceeding pending or
threatened by any governmental authority for assessment or collection of Taxes,
no unresolved claims for assessment or collection of such Taxes has been
asserted against it, and no audit or investigation by governmental authorities
is underway.

            6.8 REPRESENTATIONS IN OTHER DOCUMENTS. The representations and
warranties of Seller in all documents executed by Seller in connection with the
assignment to and/or assumption by Buyer of all of the Leases and all of the
Liabilities are true and accurate in all material respects as of the date of
such representation and warranty and as of the Closing Date.

            6.9 ASSETS. To the best knowledge of Seller, the Assets described in
Section 2 herein sets forth a complete and accurate list of all assets owned,
leased, or rented by Seller or licensed to Seller, and includes all property
required for use in the conduct of Seller's Business as presently conducted.

            6.10 ENVIRONMENTAL LAWS AND REGULATIONS. There are no Hazardous
Substances (as hereinafter defined) in, at, under or upon the Seller's Business,
and no spills, releases, discharges or disposals of Hazardous Substances have
occurred during the period in which the Seller Business has been owned or used
by Seller or are presently occurring on or under the Seller's Business or onto
any property adjacent to the Seller's Business, except for any of the foregoing
which are authorized by all applicable governmental authorities. The Seller'
Business does not now contain, nor, to the best knowledge of Seller, did the
Seller's Business heretofore contain, any storage tanks for any Hazardous
Substances. Seller has not received any notice or correspondence from any
governmental agency pertaining to Hazardous Substances, including notices of any
inquiry, potential proceeding or other action pending or threatened regarding
the condition of the Seller's Business. There is no Hazardous Substance on, in
or under the Seller's Business, and to the best knowledge of Seller, no
Hazardous Substance which existed at the location of Seller's Business prior to
the date on which Seller acquired or occupied the same. Seller has complied with
all applicable local, state and federal

Page 4.  Asset Acquisition Agreement
<PAGE>
environmental laws, regulations, ordinances and administrative and judicial
orders relating to the generation, recycling, use, sale, storage, handling,
transfer and disposal of any Hazardous Substances. Seller is not hereby waiving
any rights it has against its landlord under either of its real property leases.

         As used herein, "Hazardous Substances" shall mean any asbestos,
petroleum, gasoline, fuel, or any substance or material defined or designated as
hazardous or toxic waste, hazardous or toxic material, hazardous or toxic
substance, or other similar term, by any federal, state or local environmental
statute, regulation or ordinance presently in effect, including, without
limitation, any material or substance which is designated or defined as a
"hazardous substance", "hazardous waste" or "toxic substance" in (a) the Federal
Water Pollution Control Act, 33 U.S.C. ss.1251 et seq, and any amendments
thereto, (b) the Federal Resource Conservation and Recovery Act, 42 U.S.C.
ss.6901 et seq, and any amendments thereto, (c) the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss.9601 et seq, and any
amendments thereto, or (d) the Hazardous Material Transportation Act, 49 U.S.C.
ss.1801 et seq, and any amendments thereto.

            6.11 ABSENCE OF CHANGES. From the date of this Agreement to the
Closing Date, there has not been, to the best knowledge of Seller, with respect
to Seller's Business:

                6.11.1 Any transaction, agreement or commitment by Seller
relating to Seller's Business other than in the ordinary course of business and
consistent with past practice;

                6.11.2 Any transaction, agreement or commitment known to Seller,
or any event or events, that, individually or in the aggregate, has or have
materially interfered or could materially interfere with the normal and usual
operations of the business or business prospects of Seller's Business;

                6.11.3 Any action by Seller to permit or allow any of the Assets
(tangible or intangible) to be subjected to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge except for assessments for current
taxes not yet due and payable;

                6.11.4 Any sale, transfer or other disposition of any of the
Assets (tangible or intangible);

                6.11.5 Any agreement of Seller whether in writing or otherwise,
to take any action described in this Section 6.11

            6.12 CONTRACTS AND OTHER OBLIGATIONS. Except for contracts disclosed
in this Agreement (the "Material Contracts"), Seller will have no material
leases, employment contracts, contracts for services or maintenance or any other
form of agreement, commitment, covenant, or obligation of any kind, nature or
description which is not cancelable without penalty upon thirty (30) days'
notice. Each of the Material Contracts, is in full force and effect and there
exists no default or event of default or event, occurrence, condition or act
(including the execution and performance of this Agreement), which, with the
giving of notice, the lapse of time or the happening of any other

Page 5.  Asset Acquisition Agreement
<PAGE>
event or condition, would become a default or event of default thereunder.
Seller has not received notice that any party to any of the Material Contracts
intends to cancel, terminate or refuse to renew the same.

            6.13 LEGAL PROCEEDINGS; CLAIMS. There are no claims, actions, suits,
arbitrations, proceedings or investigations pending or threatened against
Seller, before or by any governmental or nongovernmental department, commission,
board, bureau, agency or instrumentality, whether federal, state, local or
foreign, or any other person, and there are no outstanding or unsatisfied
judgments, orders, decrees or stipulations to which Seller is a party, which
relate to either the Assets or the transaction contemplated herein, or which
would alone or in the aggregate have a material adverse effect upon the
business, business prospects, assets or financial condition of Seller.

            6.14 TRADEMARKS AND INTELLECTUAL PROPERTY. Seller has full and
unrestricted rights to use all trademarks and trade names now used by it in
connection with Seller's Business.

            6.15 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty made or to be made by Seller in this Agreement or in any other
Document furnished or to be furnished from time to time in connection herewith,
contains or will contain any misrepresentation of a material fact or omits or
will omit to state any material fact necessary to make the statements herein or
therein not misleading. There is no fact known to Seller which would materially
adversely affect, or which would, in the future, materially adversely affect,
the business, prospects, assets, property or condition (financial or otherwise)
of Seller's Business which has not been set forth in this Agreement, except
those facts concerning general economic, legislative, regulatory, or other
matters such as may generally impact all businesses of the type operated by
Seller.

         7. COVENANTS . Buyer and Seller each covenant and agree with the others
to perform and observe the following covenants (Buyer and Seller are referred to
collectively in this Agreement as "Parties", and individually, as "Party"):

            7.1 ACCESS TO PREMISES AND INFORMATION. At reasonable times before
the Closing Date, Seller will provide Buyer and its representatives with
reasonable access during business hours to the assets, titles, contracts, and
records of Seller and furnish such additional information concerning Seller's
Business as Buyer from time to time may reasonably request.

            7.2 ADVICE OF CLAIMS. From the date of this Agreement to and
including the Closing Date, Seller will promptly advise Buyer in writing of the
commencement or threat of any claims, litigation or proceedings against or
affecting Seller or the Assets, or any event that makes or is likely to make any
representation or warranty untrue, of which Seller has notice or knowledge.

            7.3 COOPERATION. The Parties will fully cooperate with the each
other and with the other Parties' counsel and accountants in connection with any
steps required to be taken as part of its obligations under this Agreement. Each
Party will use its best efforts to cause all conditions to this Agreement to be
satisfied as promptly as possible and to obtain all consents and approvals

Page 6.  Asset Acquisition Agreement

<PAGE>
necessary for its due and punctual performance of this Agreement and for the
satisfaction of the conditions hereof on its part to be satisfied. No Party
shall undertake any course of action inconsistent with this Agreement or which
would make any representations, warranties or agreements made by it in this
Agreement untrue or render any conditions precedent to this Agreement unable to
be satisfied at or prior to the Closing Date.

            7.4 CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE. Seller shall not
enter into any form of agreement, covenant or commitment or engage in any other
act prior to the Closing Date which may have adverse consequences on the Assets
or Buyer or render any representation or warranty of Seller in this Agreement
untrue.

            7.4 RISK OF LOSS. The risk of loss, damage or destruction to any of
the assets sold to Buyer under this Agreement shall be borne by Seller through
the Closing Date.

         8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of
Buyer to perform and observe the covenants, agreements and conditions hereof to
be performed and observed by it at or before the Closing Date shall be subject
to the satisfaction of the following conditions, any of which may be expressly
waived in writing by Buyer:

            8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
COVENANTS. The representations and warranties of Seller contained herein shall
have been true in all material respects when made and shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of such date, except to the extent that such
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true as of the specified date.
Seller shall have performed in all material respects all obligations and
agreements and complied in all material respects with all covenants and
conditions contained in this Agreement to be performed and complied with by it
or by them at or prior to the Closing Date.

            8.2 LEGAL PROCEEDINGS. No order of any court or administrative
agency shall be in effect which enjoins, restrains or prohibits consummation of
this Agreement, and no litigation, investigation or administrative proceeding
shall be pending or threatened which would enjoin, restrain or prohibit
consummation of this Agreement.

            8.2 TITLE. Seller shall have supplied to Buyer evidence satisfactory
to Buyer establishing Seller's good and marketable title to the Asset, free and
clear of all liens, mortgages, pledges, deeds of trust, security interests,
conditional sales agreements, charges, encumbrances and other adverse claims or
interests of any kind, except encumbrances arising out of the Liabilities
assumed by Buyer under Section 3.

            8.3 NO MATERIAL CHANGE. From the date of this Agreement to the
Closing Date, Seller shall not have suffered any material adverse change in its
financial condition, assets, liabilities, earnings, reserves, business, business
prospects or operations, which may have adverse consequences on Buyer.

Page 7.  Asset Acquisition Agreement
<PAGE>
            8.4 APPROVALS AND CONSENTS. All approvals and consents from third
parties which are necessary for the consummation of the transactions
contemplated hereby shall have been obtained, including but not limited to the
consent and approval of Buyer's commercial bank, and the consent to the
assumption by Buyer, as necessary, of the Liabilities described in Section 3.

Page 8.  Asset Acquisition Agreement

<PAGE>
         9. SURVIVAL AND INDEMNIFICATION

            9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement shall survive the Closing Date of this
Agreement. Any party learning of a misrepresentation or breach of warranty under
this Agreement shall as soon as practicable give notice in writing thereof to
the other party to this Agreement.

            9.2 INDEMNIFICATION OF BUYER. Seller agrees to defend, indemnify and
hold Buyer, its successors and assigns harmless from and against:

                9.2.1 Any and all claims, liabilities, and obligations of any
kind and description, contingent or otherwise, including attorney's fees and
expenses of litigation, known or unknown, arising out of or related to the
operation of the Seller's Business prior to the date of this Agreement.

                9.2.2 If any claim is asserted against Buyer which would give
rise to a claim by Buyer against Seller for indemnification under the provisions
of this section, Buyer shall promptly give written notice to Seller concerning
such claim, and Seller shall, at no expense to Buyer, defend the claim, to the
point of nonappealable final judgment. If Seller fails to take steps to defend
said claim within ten (10) days of Buyer providing written notice of said claim,
or if Seller and fails to sooner defend said claim when the nature of the claim
or date of service requires immediate defensive action, or if Seller at any time
abandons defense of such a claim, Buyer may undertake or continue the defense of
any such claims, with counsel of its own choosing, and shall be entitled to
indemnity from Seller for all costs of such defense, including but not limited
to, reasonable attorney's fees, court costs and incidental expenses of
litigation. If Buyer becomes entitled to payment of indemnity pursuant to this
section, Seller shall immediately pay to Buyer the amount of said indemnity
claim. Buyer shall not be entitled to indemnity from Seller except for the
obligations to defend set forth in this section, unless and until Buyer has
actually paid a claim, debt or other liability giving rise to a right of
indemnity under this section, or has incurred a legal obligation to do so. In
such event, Buyer shall be entitled to interest from Seller at the rate of
twelve (12%) percent per annum from the date of said payment until the indemnity
claim is paid.

            9.3 SURVIVAL OF INDEMNIFICATION. The provisions of this Section 9
shall survive the consummation of this Agreement and expressly are intended to
benefit each of the indemnified parties and will be binding on all successors
and assigns of the Buyer and Seller, respectively.

Page 9.  Asset Acquisition Agreement

<PAGE>
         10. MISCELLANEOUS PROVISIONS.

            10.1 BENEFIT. Subject to the provisions set forth herein restricting
assignment, this Agreement shall be binding upon and inure to the benefit of the
heirs, executors, administrators, successors and assigns of Seller and Buyer.

            10.2 NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:

         If to Seller, to:

         Quang Vuong
         ====================

         If to Buyer, to:

         Stephen D. Wilson
         3790 Via de la Valle, Suite 103
         Del Mar, California 92014
         Facsimile:_________________

            10.3 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of California without regard to its rules on conflict of laws.

            10.4 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

            10.5 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of will deemed to be an original and together shall
constitute one and same instrument.

            10.6 INCORPORATION OF EXHIBITS. All exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part of this
Agreement.

            10.7 ATTORNEY'S FEES. In the event the services of an attorney at
law are necessary to enforce any of the terms of this Agreement or to resolve
any disputes arising under this Agreement, the prevailing Party shall be
entitled to recover its attorney's fees from the losing Party as determined in
the appropriate trial and/or appellate court, bankruptcy court or on a Petition
for Review.

Page 10.  Asset Acquisition Agreement

<PAGE>
            10.8 ASSIGNMENT. The Parties may assign their rights and liabilities
arising under this Agreement or the Documents, only with the prior written
consent of the other parties, which consent shall not be unreasonably withheld,
provided, however, that any assignment of rights by the Seller shall be subject
to all of the terms and conditions of this Agreement, and any rights of setoff,
recoupment or defense of Buyer arising under this Agreement or any of the
Documents, and shall not relieve Seller of any liabilities under this Agreement.

            10.9 COMPLETE AGREEMENT. This Agreement and other agreements
referred to herein set forth the entire understanding of the parties hereto with
respect to the matters provided herein and supersede all prior agreements,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any of the parties or by any officer, employer or
representative of any party.

            10.10 REPRESENTATION BY COUNSEL. This Agreement, the Schedules
attached hereto and other Documents executed by the Parties have been prepared
by legal counsel for and on behalf of Buyer. Seller has been advised by Buyer to
obtain his own legal counsel in connection with this Agreement and the
transaction contemplated herein. Seller has informed Buyer that he has elected
not to seek the advice of his own legal counsel.

         IN WITNESS WHEREOF, the parties have executed this Agreement by their
respective authorized officers as of the date first above written.

         SMOG CENTERS OF CALIFORNIA LLC

         By:______________________________
              Manager

         ------------------------------------
         Quang Vuong

Page 11.  Asset Acquisition Agreement

<PAGE>

                                  SCHEDULE 2.1

                                    EQUIPMENT

                                 See Attachment

Page 12.  Asset Acquisition Agreement

<PAGE>

                                  SCHEDULE 2.3

                                     LEASES

   Real Estate Lease dated July 1, 2001 between Manuel Nunez, as Landlord, and
                           Vuong Quang Quoc, as Tenant

Page 13.  Asset Acquisition Agreement

<PAGE>

                                   SCHEDULE 3

                                   LIABILITIES

                                      None

Page 14.  Asset Acquisition Agreement

<PAGE>

                                  SCHEDULE 6.5

                              CONTRACT LIABILITIES

Page 15.  Asset Acquisition Agreement

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