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California-Redwood City-Electronic Arts Business Park Option Agreement, Agreement of Purchase and Sale and Escrow Instructions - Electronic Arts Redwood Inc. and Spieker Properties LP

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                                OPTION AGREEMENT,

                         AGREEMENT OF PURCHASE AND SALE

                                       AND

                               ESCROW INSTRUCTIONS

                                       FOR

                                  ZONES 2 AND 4

                          ELECTRONIC ARTS BUSINESS PARK

                           REDWOOD SHORES, CALIFORNIA


<PAGE>

<TABLE>

                                                 TABLE OF CONTENTS
<CAPTION>

<S>               <C>                                                                          <C>
ARTICLE 1:        DEFINITIONS..................................................................Page 1

ARTICLE 2:        OPTION TO PURCHASE...........................................................Page 6
         2.1      Payment of Option Price......................................................Page 6
         2.2      Exercise of Option...........................................................Page 6
         2.3      Approval of Title Condition..................................................Page 7
                  2.3.1    Title Report and Survey.............................................Page 7
                  2.3.2    Objectionable Title Matters and Permitted Exceptions................Page 7
                  2.3.3    Cure of Objectionable Title Matters.................................Page 7
                  2.3.4    Removal of Liens....................................................Page 7
         2.4      Items to be Delivered Outside of Escrow......................................Page 8
                  2.4.1    Property Records and Documents......................................Page 8
                  2.4.2    Buyer's Financial Statements; Financial Condition...................Page 8
                  2.4.3    Return of Documents; Copies of Buyer Reports........................Page 8
         2.5      Due Diligence................................................................Page 8
         2.6      Effect of Exercise of Option.................................................Page 9

ARTICLE 3:        COVENANT OF PURCHASE AND SALE AND
                  INSTRUCTIONS TO ESCROW AGENT.................................................Page 9
         3.1      Payment of Purchase Price....................................................Page 9
                  3.1.1    Deposit.............................................................Page 9
                           3.1.1.1  Deposit Amount and Payment ................................Page 9
                           3.1.1.2  Investment of Deposit. ....................................Page 9
                           3.1.1.3  Application of Deposit ....................................Page 9
                           3.1.1.4  EINs ......................................................Page 9
                  3.1.2    Down Payment and Other Funds Required for Closing...................Page 9
                  3.1.3    Balance of Purchase Price...........................................Page 10
         3.2      Escrow Deposits..............................................................Page 10
                  3.2.1    Instruments for Conveyance of the Property .........................Page 10
                  3.2.2    Other Escrow Deposits by Seller.....................................Page 10
                  3.2.2    Other Escrow Deposits by Buyer......................................Page 11
         3.3      Prorations and Credits.......................................................Page 11
                  3.3.1    Prorated Items......................................................Page 11
                           3.3.1.1  Taxes .....................................................Page 11
                           3.3.1.2  Association Assessments ...................................Page 11
                           3.3.1.3  Other Revenue and Expenses ................................Page 11
                  3.3.2    Determination of Prorations and Credits.............................Page 12
                  3.3.3    Utility Charges.....................................................Page 12
         3.4      Closing Costs................................................................Page 12
                  3.4.1    Allocation of Closing Costs.........................................Page 12
                  3.4.2    Preliminary Closing Statement.......................................Page 13
         3.5      Closing......................................................................Page 13

                                      -i-
<PAGE>
                  3.5.1    Time and Place......................................................Page 13
                  3.5.2    Closing Instructions................................................Page 13
         3.6      Cancellation of Escrow Without Closing.......................................Page 14
         3.7      Supplemental Escrow Agreement................................................Page 15
ARTICLE 4:        FURTHER AGREEMENTS BETWEEN BUYER AND SELLER
                  (OF NO CONCERN TO ESCROW AGENT EXCEPT AS
                  EXPRESSLY REFERENCED IN ARTICLES 1 OR 3).....................................Page 15
         4.1      Warranties, Representations and Covenants....................................Page 15
                  4.1.1    By Seller...........................................................Page 15
                  4.1.2    By Buyer............................................................Page 17
                  4.1.3    Survival............................................................Page 18
         4.2      Conditions to Buyer's Obligation.............................................Page 19
                  4.2.1    Performance of Seller's Obligations.................................Page 19
                  4.2.2    Accuracy of Warranties and Representations..........................Page 19
                  4.2.3    City Approvals......................................................Page 19
         4.3      Conditions to Seller's Obligation............................................Page 19
                  4.3.1    Performance of Buyer's Obligations..................................Page 19
                  4.3.2    No Material Change in Financial Condition...........................Page 19
                  4.3.3    Satisfactory Title..................................................Page 20
                  4.3.4    Accuracy of Warranties and Representations..........................Page 20
         4.4      Indemnities..................................................................Page 20
                  4.4.1    Buyer's Activities on the Property..................................Page 20
                  4.4.2    Survival............................................................Page 20
         4.5      Damage, Destruction or Condemnation..........................................Page 20
                  4.5.1    Termination Rights..................................................Page 20
                  4.5.2    If No Termination...................................................Page 20
                  4.5.3    Materiality.........................................................Page 21
         4.6      Assignment by Buyer..........................................................Page 21
         4.7      Rights of Parties Upon Default...............................................Page 21
                  4.7.1    Seller's Rights ....................................................Page 21
                  4.7.2    Buyer's Rights .....................................................Page 22
         4.8      Termination..................................................................Page 22
                  4.8.1    By Buyer............................................................Page 22
                  4.8.2    By Seller...........................................................Page 22
                  4.8.3    Effect of Termination...............................................Page 22
         4.9      Brokerage Commission.........................................................Page 23
         4.10     Post-Closing Prorations and Adjustments......................................Page 23
                  4.10.1   Real Estate Taxes and Assessments...................................Page 23
                  4.10.2   Determinations of Post-Closing Prorations and Adjustments...........Page 23
         4.11     Design Review................................................................Page 24
         4.12     Buyer's Covenants and Agreements.............................................Page 24
                  4.12.1   Agreement for Covenants Running With the Land.......................Page 24
                  4.12.2   Development Agreement...............................................Page 24
                  4.12.3   Payment for Improvements............................................Page 25


                                      -ii-
<PAGE>

                  4.12.4   Facility Charges, School Facilities Fees and Proposed
                           Impact Fees.........................................................Page 26
                  4.12.5   Surplus Earth Material..............................................Page 27
                  4.12.6   San Carlos Airport..................................................Page 27
                  4.12.7   Density; Height of Construction.....................................Page 27
                  4.12.8   No Construction Area................................................Page 28
         4.13     Enforcement Costs............................................................Page 28
         4.14     Notices......................................................................Page 29
         4.15     Binding Effect...............................................................Page 30
         4.16     Entire Agreement; Modification...............................................Page 30
         4.17     Captions.....................................................................Page 30
         4.18     Interpretation...............................................................Page 30
         4.19     Mutual Cooperation; Further Assurances.......................................Page 30
         4.20     Exhibits.....................................................................Page 30
         4.21     Counterparts.................................................................Page 31
         4.22     Governing Law................................................................Page 31
         4.23     Recording....................................................................Page 31
         4.24     TIME OF THE ESSENCE..........................................................Page 31
         4.25     Confidentiality..............................................................Page 31
         4.26     Buyer's Financing Covenants; Remedies........................................Page 32
                  4.26.1   Permits and Legal Requirements......................................Page 32
                  4.26.2   Notices of Change...................................................Page 32
                  4.26.3   Insurance...........................................................Page 32
                  4.26.4   Financial Covenants and Future Financial Condition..................Page 33
                  4.26.5   Environmental Compliance............................................Page 33
                  4.26.6   Default and Remedies................................................Page 33

Exhibit
-------

    A         Description of Property
    B         Form of Grant Deed
    C         Form of Transferor's Certification of Non-Foreign Status
    D         Form of Seller's Closing Certificate
    E         Exceptions to Seller's Representations and Warranties
    F         Schedule of Property Records
    G         Form of Assumption and Covenants Agreement
    H         Terms of Surplus Earth Materials Option
    I         Form of Assignment of Sewage Treatment Capacity
    J         Form of Assignment and Assumption of Development Agreement and Permits
    K         Form of Promissory Note
    L         Form of Deed of Trust
    M         Form of Continuing Guaranty
    N         No Build Zones
    O         Form of Easement Agreement
    P         Form of Exercise Notice
</TABLE>

                                     -iii-

<PAGE>


                                OPTION AGREEMENT,
                         AGREEMENT OF PURCHASE AND SALE
                                       AND
                               ESCROW INSTRUCTIONS
                                       FOR
                                  ZONES 2 AND 4
                          ELECTRONIC ARTS BUSINESS PARK
                           REDWOOD SHORES, CALIFORNIA



         THIS AGREEMENT AND THESE ESCROW INSTRUCTIONS  ("Agreement") are made as
of April 5, 1999,  by and between  ELECTRONIC  ARTS  REDWOOD,  INC.,  a Delaware
corporation  ("Seller"),  and Spieker  Properties,  L.P., a  California  limited
partnership ("Buyer").

         Article 1 of this  Agreement  consists of definitions  used  throughout
this Agreement.

         Article 2 of this Agreement  consists of the Option to Purchase granted
to Buyer, and includes certain instructions to Escrow Agent.

         Article 3 of this Agreement  constitutes  instructions  to Escrow Agent
(defined below), as well as agreements between Buyer and Seller.

         Article 4 of this  Agreement  consists  of further  agreements  between
Buyer and  Seller,  with which  Escrow  Agent need not be  concerned  (except as
otherwise  directed  in  Article  3).  Escrow  Agent  may rely  entirely  on the
instructions  contained in Article 3; however,  as between Buyer and Seller, the
provisions  of  Article 4 shall  control if there is any  inconsistency  between
those provisions and the instructions in Article 3.

         NOW, in consideration of the mutual covenants and conditions  contained
herein, Seller and Buyer hereby agree as follows:

ARTICLE 1:  DEFINITIONS

The following terms, wherever used in this Agreement,  shall have the respective
meanings set forth below:

         1.1 Broker.  "Broker" means The Commercial  Property  Services Company,
1740 Technology Drive, Suite 180, San Jose, California 95110.

         1.2 Buyer's  Closing  Documents.  "Buyer's  Closing  Documents" has the
meaning specified in Section 3.2.3.

                                      -1-
<PAGE>

         1.3 Buyer's Title Policy.  "Buyer's Title Policy" means a standard CLTA
Owner's Policy of Title Insurance in the amount of the Purchase Price,  insuring
fee  title  to the  Property  in Buyer  subject  only to  Permitted  Exceptions,
together with such endorsements as the Title Company commits to issue.

         1.4 Closing  Date.  "Closing  Date"  means the date upon which  Closing
occurs,  which shall be two (2) business days after the Parties have secured the
City Approvals  required pursuant to Section 4.3.3;  provided,  however,  in the
event title to the Property has not been conveyed to Seller by FFLP on or before
the said Closing  Date,  the Closing Date shall be delayed up to sixty (60) days
after the Option Date to permit such conveyance.

         1.5  Closing.  "Closing"  means  the  recordation  of the  Deed  in the
Official Records of San Mateo County, California, concurrently with the delivery
of the Down Payment, the Note, the Deed of Trust, and the Guaranty.

         1.6  Contract  Assignment.   "Contract   Assignment"  has  the  meaning
specified in Section 3.2.1.

         1.7 Days and Business  Days.  The term "day" means a calendar  day, and
the term  "Business Day" means any day on which  commercial  banks are generally
open for business in the State of  California.  Any period of time  specified in
this  Agreement  which  would  otherwise  end upon a  non-Business  Day shall be
extended to, and shall end upon, the next following Business Day.

         1.8 Deed.  "Deed"  means a grant  deed in the form  attached  hereto as
Exhibit B, conveying the Property to Buyer.

         1.9  Deed of  Trust.  "Deed  of  Trust"  means a deed of trust of Buyer
substantially in the form of Exhibit L attached hereto covering the Property and
securing  the  Note.  The Deed of Trust  shall be a first  priority  lien on the
Property.

         1.10 Deposit. "Deposit" shall have the meaning ascribed to that term in
Section 3.1.1.

         1.11 Development Agreement.  "Development Agreement" means that certain
Development  Agreement  dated as of November 7, 1996,  by and between  Flatirons
Funding,  Limited Partnership,  a Delaware limited partnership,  and the City of
Redwood City (the  "City") and  recorded  November 8, 1996,  as  Instrument  No.
96-138988,  Official Records, San Mateo County,  California,  as amended by that
First Amendment to Development Agreement dated as of April 15, 1998 and recorded
on April 15, 1998, as Instrument  No.  98-054809,  Official  Records,  San Mateo
County,  California;  that First Amendment to Development  Agreement dated as of
April 6, 1998 and recorded on August 25, 1998 (recorded to correct typographical
errors of the First  Amendment  recorded on April 15, 1998),  as Instrument  No.
98-135753,  Official  Records,  San Mateo  County,  California;  and that Second
Amendment to Development  Agreement  dated as of August 31, 1998 and recorded on
September 2, 1998, as Instrument  No.  98-141937,  Official  Records,  San Mateo
County, California.

                                      -2-
<PAGE>

         1.12  District  Agreement.  "District  Agreement"  means  that  certain
Development  Agreement  GID 1-64,  dated June 16, 1982,  by and between  Redwood
Shores Properties (as assignee of Redwood Shores,  Inc.),  City, and the Redwood
City  General  Improvement  District No. 1-64,  and  recorded  July 8, 1982,  as
Instrument No. 82-057195,  Official Records,  San Mateo County,  California,  as
amended.

         1.13 Down Payment.  "Down Payment" means that amount equal to seventeen
percent (17%) of the Purchase Price.

         1.14  Effective  Date.  "Effective  Date"  means the date  first  above
written.

         1.15 Environmental Laws. "Environmental Laws" means any federal, state,
local or  administrative  agency  ordinance,  law,  rule,  regulation,  order or
requirement relating to environmental conditions or Hazardous Substances.

         1.16 Environmental  Report.  "Environmental  Report" means that certain
"Environmental  Site  Assessment"  dated  February 7, 1995,  prepared by Applied
Geosciences, Inc. together with that certain "Phase II Subsurface Investigation"
dated February 13, 1995,  prepared by Applied  Geosciences,  Inc.,  covering the
Property.

         1.17 Escrow  Agent.  "Escrow  Agent"  means the Title  Company,  acting
through its offices at 1737 North First Street, Suite 100, San Jose,  California
95112, Attn: Susan Melton.

         1.18 Escrow.  "Escrow" means the escrow  established by and pursuant to
this Agreement,  with Escrow Agent,  for purposes of  consummating  the sale and
purchase of the Property in accordance with this Agreement.

         1.19 Exercise Notice.  "Exercise Notice" means the notice from Buyer to
Seller  whereby  Buyer  elects to exercise  its option to purchase  set forth in
Article 2, such notice to be in the form of Exhibit P attached hereto.

         1.20 FFLP.  "FFLP" means  Flatirons  Funding,  Limited  Partnership,  a
Delaware limited partnership.

         1.21 Gross Building Floor Area.  "Gross  Building Floor Area" or "GBFA"
means the sum total of all floor areas  contained  within the exterior  walls of
office  buildings and special purpose  accessory  structures,  including but not
limited to cafeteria, day care, fitness and conferencing facilities, constructed
on the Property including stairways,  elevator shafts, other shafts,  mechanical
rooms, vents, and internal support  facilities,  but excluding those portions of
mechanical  or utility  structures  and storage areas located on the roof to the
extent such structures are not considered by the City as building floor area for
purposes of  determining  parking  requirements,  traffic  generation,  building
density or other similar  development  limitations  under  existing  development
regulations.

                                      -3-
<PAGE>

         1.22  Guaranty.  "Guaranty"  means the  corporate  guaranty  of Spieker
Properties, Inc. substantially in the form of Exhibit M attached hereto provided
by Buyer as additional security for the Note.

         1.23 Hazardous Substance.  "Hazardous Substance" means any petroleum or
petroleum-related  product,  any materials  containing  friable  asbestos or any
other  hazardous  or  toxic  waste  or  substance  (as  such  terms  are used in
applicable  federal  and/or  state  Laws  regulating  the  generation,  storage,
transportation,  discharge,  disposal,  release or  removal  of  environmentally
hazardous substances).

         1.24 Last Closing Date. "Last Closing Date" means [60 days after Option
Date].

         1.25 Laws. "Laws" means any and all:

                  (i) Constitutions,  statutes,  ordinances, rules, regulations,
         orders,  rulings  or  decrees  of  the  United  States,  the  State  of
         California, or of the county and any municipality in which the Property
         is located or any authority, agency, division, district, court or other
         authority thereof; and

                  (ii)  Agreements  with  or  covenants  or  commitments  to any
         government  agency or other  authority which are binding upon Seller or
         any of the Property (including, without limitation, any requirements or
         conditions for the use or enjoyment of any license,  permit,  approval,
         authorization  or consent  legally  required  for the  operation of the
         Property).

         1.26  Note.  "Note"  means a  promissory  note in the form of Exhibit K
attached hereto, secured by the Deed of Trust and the Guaranty.

         1.27 Option Date. "Option Date" means April 9, 1999.

         1.28 Option Price.  "Option Price" means $250,000.00 (Two Hundred Fifty
Thousand Dollars).

         1.29 Park. "Park" means the Electronic Arts Business Park.

         1.30 Park CC&Rs.  "Park CC&Rs" shall mean that certain  Declaration  of
Covenants,  Conditions,  Easements  and  Restrictions  of  the  Electronic  Arts
Business  Park,  dated  September 3, 1998,  and recorded  September 18, 1998, as
Instrument No. 98-150182 in the Official Records, San Mateo County, California.

         1.31 Parties and Party.  "Parties"  means Buyer and Seller together and
"Party" may mean either Buyer or Seller, as the case may be.

         1.32 Permit. "Permit" means any permit,  certificate,  license or other
form of authorization or approval issued by a government agency or authority and
legally  required for the proper  operation and use of the Property  (including,
without  limitation,  any conditional  use



                                      -4-
<PAGE>

permits and zoning  variances)  to the extent held and  assignable  by Seller or
otherwise transferable with the Property.

         1.33 Permitted Exceptions.  "Permitted  Exceptions" means (i) liens for
real property taxes and  assessments  for the current year, not yet  delinquent,
(ii) liens or encumbrances  arising out of any activity of Buyer with respect to
the Property, (iii) the Development Agreement;  (iv) the District Agreement, (v)
covenants,  conditions,  easements, and restrictions of record approved by Buyer
pursuant to Section 2.3,  (vi) the Park CC&Rs,  (vii)  standard  "printed  form"
exceptions and exclusions from coverage  customarily included within the form of
the Buyer's Title  Policy,  and (viii) any other matter deemed to be a Permitted
Exception pursuant to Section 2.3.

         1.34 Property.  "Property"  means (1) that certain parcel  described in
Exhibit A hereto,  together with (2) all appurtenant rights (including,  without
limitation,  rights of access to adjoining streets and rights-of-way,  water and
riparian rights, and easements).

         1.35 Purchase  Price.  "Purchase  Price" means the gross purchase price
being paid by Buyer to Seller for the Property,  namely  $35,500,000.00  (Thirty
Five Million Five Hundred Thousand Dollars).

         1.36 Right of Way Easement. "Right of Way Easement" means that easement
from FFLP to Buyer set forth in Exhibit O.

         1.37 RSP. "RSP" means Redwood  Shores  Properties,  a California  joint
venture general partnership.

         1.38 Seller's Closing  Documents.  "Seller's Closing Documents" has the
meaning specified in Section 3.2.2.

         1.39 Seller's Knowledge. "Seller's Knowledge" means the actual (and not
the constructive)  current knowledge of James F. Healey,  who is responsible for
asset management of the Property, and does not imply any inspection, examination
or other  inquiry  undertaken  by Seller or said  individual  to  determine  the
accuracy of any  representation,  warranty or other  statement made "to Seller's
Knowledge" in this Agreement or in any of Seller's Closing Documents.

         1.40  Seller's  Title  Policy.  "Seller's  Title  Policy" means an ALTA
Lender's Policy of Title  Insurance in the amount of the Note,  showing title to
the  Property  vested in Buyer,  subject only to the first deed of trust lien of
the Deed of Trust and to the Permitted Exceptions.

         1.41  Shores  CC&Rs  means  that  certain  The Shores  Business  Center
Declaration of Covenants,  Conditions,  Restrictions  and Charges for Commercial
Development  dated January 8, 1981, and recorded February 6, 1981, as Instrument
No. 69666AS, Official Records, San Mateo County, California.

                                      -5-
<PAGE>

         1.42  Survey.  "Survey"  means that  certain  ALTA  survey of the Park,
prepared by  Bohley/Maley  Associates,  as job number 97023 and  certified as of
March 27, 1998, by Lisa M. Maley, L.S.

         1.43 Title Report. "Title Report" means the Preliminary Report prepared
by Title Company pursuant to Section 2.3.1.

         1.44  Title  Company.   "Title  Company"  means  First  American  Title
Insurance Company.

         1.45 Title Policies. "Title Policies" means, collectively,  the Buyer's
Title Policy and the Seller's Title Policy.

         1.46  Other  Definitions.  Terms  defined  in any  other  part  of this
Agreement shall have the defined meanings wherever  capitalized  herein. As used
in this Agreement,  the terms "herein,"  "hereof" and "hereunder"  refer to this
Agreement in its entirety and are not limited to any specific sections;  and the
term "person" means any natural  person,  other legal entity,  or combination of
natural  persons  and/or  other  legal  entities  acting  as  a  unit.  Wherever
appropriate  in this  Agreement,  the  singular  shall be deemed to refer to the
plural and the plural to the singular,  and pronouns of certain genders shall be
deemed to comprehend either or both of the other genders.

ARTICLE 2:  OPTION TO PURCHASE

In  accordance  with and subject to the terms of this  Agreement,  Seller grants
Buyer an option to purchase the Property in consideration for Buyer's payment to
Seller of the Option Price.  No later than two Business Days after the Effective
Date,  Buyer shall open Escrow by delivery of a copy of this Agreement to Escrow
Agent,  and Escrow Agent shall promptly notify Seller of such delivery and shall
evidence its agreement to act as Escrow Agent  hereunder by  countersigning  and
delivering to each Party a copy of this Agreement.

         2.1 Payment of Option  Price.  Concurrently  with the execution of this
Agreement, Buyer shall pay to Seller the Option Price. The Option Price shall be
deemed fully earned and not refundable except as expressly  provided herein, and
Seller  may  deposit  the  Option  Price  in  Seller's   own  accounts   without
restrictions. At the Closing, the Option Price shall be applied against the Down
Payment.

         2.2 Exercise of Option. At any time on or before 5:00 p.m. Pacific Time
on the Option Date,  Buyer may elect to purchase the Property in accordance with
the terms of this  Agreement by  delivering  the Exercise  Notice in the form of
Exhibit P to Seller in  accordance  with the  provisions of Section 4.14 hereof,
and by simultaneously  depositing the Deposit into Escrow in accordance with the
provisions of Section 3.1.1 hereof.  Delivery of the Exercise Notice and Deposit
shall be irrevocable except as specifically provided herein.

                                      -6-
<PAGE>

         2.3      Approval of Title Condition.

                  2.3.1 Title Report and Survey.  Within two (2)  business  days
         after the Effective Date,  Seller shall deliver the Survey to Buyer and
         shall  cause Title  Company to prepare the Title  Report and to deliver
         the Title  Report  to  Buyer,  together  with  copies  of all  recorded
         documents referenced in the Title Report or on the Survey.

                  2.3.2  Objectionable  Title Matters and Permitted  Exceptions.
         Buyer shall promptly  review the Title Report and shall within ten (10)
         days after receipt  thereof  advise Seller in writing of any exceptions
         to or defects in Seller's title to which Buyer objects  ("Objectionable
         Title Matters"). In case any exceptions to or defects in Seller's title
         may be first  disclosed to or discovered by Buyer after delivery of the
         Title  Report,  Buyer shall have five (5) days to review and approve or
         object to such  exceptions,  in the latter  case such  objections  also
         becoming  Objectionable Title Matters. All exceptions and other defects
         disclosed  by the Title  Report or the  Survey  or as  disclosed  to or
         discovered by Buyer after delivery of the Title Report and which Seller
         has not elected to cure in accordance with Section 2.3.3,  shall,  from
         and  after  the  Option  Date,  be  deemed  Permitted  Exceptions.   No
         exceptions for a mortgage,  deed of trust, or other consensual lien for
         repayment of money shall be deemed to be a Permitted Exception.

                  2.3.3 Cure of Objectionable  Title Matters.  Seller shall have
         no obligation to cure any  Objectionable  Title Matter.  Seller may, at
         Seller's option, elect to cure any Objectionable Title Matter by any of
         the following, delivered to Buyer prior to the Option Date:

                           (i)  Where  such  Objectionable  Title  Matter  would
                  otherwise  be within the scope of  coverage  of Buyer's  Title
                  Policy,  written confirmation from the Title Company that such
                  Objectionable  Title  Matter  will  not  be  scheduled  as  an
                  exception in Buyer's Title Policy,

                           (ii) Written confirmation from the Title Company that
                  it will affirmatively insure Buyer against loss resulting from
                  such Objectionable  Title Matter, by an endorsement to Buyer's
                  Title  Policy  in a form  reasonably  satisfactory  to  Buyer,
                  provided  that Buyer shall not be  obligated to incur any cost
                  or  liability   with  respect  to  an   endorsement   over  an
                  Objectionable Title Matter, or

                           (iii) Seller's  unconditional  written undertaking to
                  take,  at or before  Closing,  such steps as the Title Company
                  requires to accomplish either (i) or (ii) above.

                  2.3.4 Removal of Liens.  Notwithstanding  any other  provision
         hereof,  Seller  shall obtain the full  reconveyance,  release or other
         discharge,  of record, at or prior to Closing, or any mortgage, deed of
         trust or other consensual lien created by Seller, Seller shall instruct
         the Escrow Agent to pay all such liens from funds in Escrow, and Seller
         shall convey the Property to Buyer free of any such lien.

                                      -7-
<PAGE>

         2.4      Items to be Delivered Outside of Escrow.

                  2.4.1 Property Records and Documents.  Within 2 days after the
         Effective  Date,  Seller shall deliver to Buyer,  or make  available to
         Buyer in Seller's  office,  each of the items specified in the schedule
         of Property  Records  attached  hereto as Exhibit F, to the extent such
         item is within  Seller's  possession  or  control.  On  receipt of such
         items,  Buyer shall  acknowledge  that it has received  delivery of the
         items  indicated  to be  delivered  to it on  Exhibit F and that it has
         generally had access, at such location, to the other items indicated on
         Exhibit F.

                  2.4.2 Buyer's Financial Statements; Financial Condition. Buyer
         shall  submit to Seller,  for  approval  by Seller,  Buyer's  financial
         statements  for its two most  recent  fiscal  years and a  year-to-date
         financial  statement for the period from the date of the last financial
         statement.  After review of Buyer's  financial  statements,  Seller may
         request,  in its sole  discretion,  additional  collateral  for Buyer's
         obligations  under the Note.  If Buyer fails or refuses to provide such
         additional collateral,  Seller may terminate this Agreement without any
         further  liability to Buyer and Seller shall  promptly repay the Option
         Price to Buyer.  Buyer  shall not be  entitled  to any  interest on the
         Option Price.

                  2.4.3 Return of Documents;  Copies of Buyer  Reports.  If this
         Agreement terminates without Closing,  each party shall promptly return
         to the other each item provided pursuant to this Section 2.4, and shall
         diligently  undertake  either to have  delivered to such other party or
         destroyed  every  copy,  digest or summary  made of any such item;  and
         Buyer  shall  also  furnish  Seller  with  the  original  or a true and
         complete copy of each survey, inspection report and other written study
         concerning the Property  which Buyer  obtained from other sources,  but
         without any representation or warranty by Buyer.

         2.5 Due Diligence. During the period between the Effective Date and the
Option Date,  Buyer shall conduct its due  diligence,  including but not limited
to, the following:

                  (i)    The environmental integrity of the Property;

                  (ii)   All other  aspects  of the  physical  condition  of the
                         Property;

                  (iii)  The condition of Seller's title to the Property;

                  (iv)   The condition of the  entitlements  and permits for the
                         Property;

                  (v)    The operating history of the Property;

                  (vi)   Acquisition  of a commitment  from the Title Company to
                         issue Buyer's  Title Policy in accordance  with Section
                         2.7.2.

                                      -8-
<PAGE>

         2.6 Effect of Exercise of Option. Upon Buyer's delivery of the Exercise
Notice to Seller,  Buyer  shall be deemed to have  waived all its due  diligence
requirements  and to have accepted the Property in accordance  with the terms of
this  Agreement  with title  subject to the  Permitted  Exceptions as determined
under Section 2.3 hereof.

ARTICLE 3:  COVENANT OF PURCHASE AND SALE AND INSTRUCTIONS TO ESCROW AGENT

Upon Buyer's exercise of the Option to purchase granted in Article 2 hereof,  in
accordance  with and  subject  to the terms and  conditions  of this  Agreement,
Seller shall sell and convey the Property to Buyer, and Buyer shall purchase and
accept the Property from Seller,  for the Purchase Price. In connection with the
administration of Escrow and Closing,  Buyer and Seller hereby agree, and advise
and instruct Escrow Agent, as follows:

         3.1      Payment of Purchase Price.

                  3.1.1 Deposit.

                           3.1.1.1 Deposit Amount and Payment. Concurrently with
                  delivery  of the  Exercise  Notice,  Buyer  shall  deliver the
                  Deposit  into  Escrow.  For  purposes of this  Agreement,  the
                  "Deposit" shall be that amount equal to the difference between
                  the  Down  Payment  and  the  Option  Price,  or  the  sum  of
                  $5,785,000.00 (Five Million Seven Hundred Eighty Five Thousand
                  Dollars).

                           3.1.1.2  Investment  of Deposit.  The Deposit,  while
                  held  in  Escrow,  shall  be  held by the  Escrow  Agent  in a
                  federally-insured,  interest-bearing  account  with a national
                  banking association.  All interest earned on the Deposit while
                  in Escrow shall be added to, and become part of, the Deposit.

                           3.1.1.3  Application of Deposit.  If Buyer, in breach
                  of its obligations under this Agreement, fails to purchase the
                  Property,  Seller upon  termination of this Agreement shall be
                  entitled to retain the Deposit as liquidated  damages (and not
                  as a penalty),  as provided in Section 4.7 (with which  Escrow
                  Agent need not  otherwise be  concerned  after its delivery of
                  the Deposit to  Seller).  At  Closing,  the  Deposit  shall be
                  applied against the Down Payment.

                           3.1.1.4 EINs. For Escrow Agent's information, Buyer's
                  Employer  Identification  Number is  94-3188774  and  Seller's
                  Employer Identification Number is 94-2838567.

                  3.1.2 Down Payment and Other Funds  Required for Closing.  Not
         later than five (5) Business  Days after the Option  Date,  Buyer shall
         deposit in Escrow  current funds in an amount equal to Buyer's share of
         Closing costs under Section 3.4, plus or minus (as the case may be) the
         net amount of prorations and other credits under Section 3.3.

                                      -9-
<PAGE>

                  3.1.3.  Balance  of  Purchase  Price.  Not later than five (5)
         Business Days after the Option Date,  Buyer shall deposit in Escrow the
         Note and Deed of Trust for the balance of the Purchase Price.  The Note
         shall  bear  interest  at the rate of  seven  percent  (7%) per  annum.
         Principal and interest shall be payable in level quarterly  payments of
         principal  and  interest,   due  the  twentieth  day  of  March,  June,
         September,  and December of each year,  commencing  September 20, 1999,
         with a final  payment of all unpaid  principal  and  accrued and unpaid
         interest due on June 20, 2001.  Buyer shall have no right to prepay the
         Note.  Seller  shall  have the right to call all or any  portion of the
         outstanding principal upon thirty (30) days written notice.

         3.2      Escrow Deposits.

                  3.2.1  Instruments  for Conveyance of the Property.  Except as
         noted in this  Section  3.2.1,  not later than five (5)  Business  Days
         after the Option Date, Seller shall deposit or cause to be deposited in
         Escrow:

                           (i) The Deed; provided the Deed may be deposited into
                  Escrow up to two (2)  Business  Days  after the deed from FFLP
                  conveying  title to the Property to Seller is  deposited  into
                  Escrow if such date is later than the date specified above.

                           (ii) Two counterparts of an assignment and assumption
                  agreement (the "Contract  Assignment"),  substantially  in the
                  form  attached  hereto as  Exhibit J,  assigning  to Buyer the
                  Development Agreement and the Permits.

                           (iii) Two counterparts of a covenants  agreement (the
                  "Covenants  Agreement") in the form attached hereto as Exhibit
                  G, in accordance with Section 4.13.1 hereof.

                           (iv) Right of Way Easement.

                  3.2.2  Other  Escrow  Deposits  by Seller.  In addition to the
         deposits  required  under Section  3.2.1,  Seller shall also deposit in
         Escrow, at least one Business Day prior to the Closing Date:

                           (i)  A  Certificate  of  Non-Foreign  Ownership  with
                  respect   to   the   Property   (a   "FIRPTA    Certificate"),
                  substantially  in the  form  attached  hereto  as  Exhibit  C,
                  together with the California equivalent thereof.

                           (ii)   A   certificate,    dated   as   of   Closing,
                  substantially  in the form attached  hereto as Exhibit D, that
                  all of the warranties and  representations of Seller contained
                  in Section 3.2.1 are true and correct in all material respects
                  as of the Closing Date,  except for matters  specified in such
                  certificate ("Seller's Closing Certificate").

                                      -10-
<PAGE>

                           (iii) Such other  documents as the Title  Company may
                  reasonably  require to effect Closing (but without  materially
                  increasing  Seller's  obligations,   liabilities  or  expenses
                  hereunder).

         Each of the  documents  specified in this Section and in Section  3.2.1
         ("Seller's  Closing  Documents")  shall have been duly executed and, if
         appropriate, acknowledged, by Seller.

                  3.2.3  Other  Escrow  Deposits  by Buyer.  In  addition to the
         deposit of funds under Section 3.1.2 and documents under Section 3.1.3,
         Buyer shall  deposit in Escrow,  not later than five (5) Business  Days
         after the Option Date:

                           (i) The Note.

                           (ii) The Deed of Trust.

                           (iii) The Guaranty.

                           (iv) Two counterparts of the Contract Assignment.

                           (v) Two counterparts of the Covenants Agreement.

                           (vi) Such other  documents  as the Title  Company may
                  reasonably  require to effect Closing (but without  materially
                  increasing  Buyer's   obligations,   liabilities  or  expenses
                  hereunder);  provided  that  for  any  documents  which  Title
                  Company first request after the Option Date,  Buyer shall have
                  five (5)  Business  Days  after such  request to deposit  such
                  documents into Escrow.

         Each of the  documents  specified  in this  Section  ("Buyer's  Closing
Documents")  shall have been duly executed and, if appropriate,  acknowledged by
Buyer.

         3.3      Prorations and Credits.

                  3.3.1 Prorated  Items.  The following  items shall be prorated
         between  Seller  and Buyer as of  12:00:01  a.m.,  local  time,  on the
         Closing Date:

                           3.3.1.1 Taxes.  All real estate taxes and assessments
                  (including, without limitation, the current year's installment
                  of any bond  assessments) and all personal property taxes with
                  respect to the Property.

                           3.3.1.2 Association Assessments.  All Assessments due
                  the Shores Business Center  Association or the Electronic Arts
                  Business Park Association.

                           3.3.1.3  Other   Revenue  and  Expenses.   All  other
                  periodic  revenues and periodic  charges  attributable  to the
                  Property,   but  excluding   insurance   premiums.



                                      -11-
<PAGE>

                  (Seller's   insurance  with  respect  to  the  Property  shall
                  terminate as of Closing and shall not be assigned to Buyer.)

                  3.3.2 Determination of Prorations and Credits.  The prorations
         and credits  provided for in this Section 3.3 shall be effected through
         Escrow, based upon:

                           (i) In the case of real estate taxes and assessments,
                  the most recent available tax bill for the Property;

                           (ii) In the case of all other prorations and credits,
                  a proration  statement  which Buyer and Seller  shall  jointly
                  prepare  and  deliver to Escrow  Agent not later than five (5)
                  Business  Days after the Option  Date,  to be updated at least
                  two (2) Business Days prior to the Closing Date.

         After  taking all such  prorations  and credits into  account,  the net
         amount  owing to Seller or Buyer (as the case may be) shall be added to
         or deducted from the proceeds of the Down Payment  payable to Seller at
         Closing.

                  3.3.3 Utility  Charges.  Notwithstanding  any other  provision
         hereof,  use  charges for any utility  serving  the  Property  shall be
         prorated  only if Seller and Buyer are  unable to  arrange  for a final
         billing  to  Seller   through  the  day  preceding   Closing,   without
         interruption of such utility service. The Parties shall cooperate, each
         using reasonable  efforts,  to make such  arrangements for each utility
         serving the Property.

         3.4      Closing Costs.

                  3.4.1  Allocation  of Closing  Costs.  Closing  costs shall be
         allocated between Buyer and Seller as follows:

                           (i) Seller shall pay:

                                    (A) Applicable County transfer taxes; and

                                    (B) Recording charges.

                           (ii) Buyer shall pay:

                                    (A) All costs  associated  with the issuance
                           of the Title Policies,  including without limitation,
                           the  charges  for any  title  insurance  endorsements
                           requested  by  Buyer,  and the  cost of  updating  or
                           replacing the Survey;

                                    (B) Escrow  Agent's  fees and  expenses  for
                           administering Escrow; and

                                      -12-
<PAGE>

                                    (C) All fees charges and expenses related to
                           Buyer's  financing  for the  purchase of the Property
                           (including,   without   limitation,   any  additional
                           premium for a lender's policy of title insurance).

         Any other  charges and  expenses  incurred by Escrow Agent in effecting
         Closing shall be allocated  between the Parties in accordance  with the
         custom of the  county in which the  Property  is  located.  Each of the
         parties  shall  pay  the  fees  of  its  attorneys,   accountants   and
         consultants.

                  3.4.2 Preliminary Closing Statement. At least one Business Day
         prior to the Closing  Date,  Escrow  Agent shall  prepare and submit to
         each of Buyer and Seller preliminary  Closing  statements,  showing the
         Parties'  respective  amounts of Closing  costs,  the  Deposit  balance
         (including  interest earned to such date), the net credit due to Seller
         or Buyer under  Section 3.3 and the net amount of funds  required to be
         deposited by Buyer in order to effect Closing hereunder.

         3.5      Closing.

                  3.5.1 Time and Place.  Closing  shall take place at the Escrow
         Agent's  offices,  as soon as the  conditions  specified in clauses (i)
         through (iii) of Section 3.5.2 are satisfied. If Escrow Agent is unable
         to close  Escrow by the Last Closing  Date in  compliance  with Section
         3.5.2,  Escrow Agent shall hold Escrow open and effect  Closing as soon
         as it is able to do so in compliance with such provision, unless Escrow
         Agent  receives   written  demand  from  either  Buyer  or  Seller  for
         cancellation  of Escrow (in which event,  Escrow Agent shall proceed in
         accordance with Section 3.6).

                  3.5.2    Closing Instructions.  As soon as:

                           (i) Seller has delivered into Escrow Seller's Closing
                  Documents   and  Buyer  has  approved  each  of  the  same  as
                  satisfying the requirements of this Agreement; and

                           (ii)  Buyer  has  delivered  into  Escrow  the  funds
                  required  to effect  Closing  hereunder  and  Buyer's  Closing
                  Documents,  and Seller has approved Buyer's Closing  Documents
                  as satisfying the requirements of this Agreement; and

                           (iii) Title Company is prepared (a) to issue to Buyer
                  the Buyer's  Title Policy in the amount of the Purchase  Price
                  subject only to the Permitted  Exceptions  and (b) to issue to
                  Seller the  Seller's  Title  Policy in the amount of the Note,
                  subject only to the first deed of trust lien as to the Deed of
                  Trust and to the Permitted Exceptions; and

                           (iv) City has  delivered  to Escrow  the duly  signed
                  resolutions authorizing and approving the Contracts Assignment
                  in accordance with Section 4.12.2;

                                      -13-
<PAGE>

                  Escrow Agent shall cause the Title  Company to record the Deed
                  and shall then close Escrow by:

                           (iv) Disbursing the funds in Escrow as follows:

                                    (A) To cover  Closing  costs and  payment of
                           commissions to Seller's Broker;

                                    (B)  To  Seller,  the  amount  of  the  Down
                           Payment, plus the net credit, if any, to Seller under
                           Section 3.3 and minus (1) the net credit,  if any, to
                           Buyer  under  Section 3.3 and (2)  Seller's  share of
                           Closing costs; and

                                    (C) To Buyer,  any funds remaining in Escrow
                           after  the  foregoing   disbursement  to  Seller  and
                           payment of all of the Closing costs;

                           (v)  Delivering  to  Buyer  a  copy  of the  Deed  as
                  recorded,  showing the recording data thereon, and the rest of
                  Seller's Closing Documents; and

                           (vi) Delivering to Seller Buyer's Closing Documents.

         3.6  Cancellation  of Escrow  Without  Closing.  After the Last Closing
Date,  upon  receiving a written  demand from either Party for  cancellation  of
Escrow,  Escrow Agent shall promptly  deliver a copy of such demand to the other
Party and shall then proceed as follows:

                  (i) If, by close of business on the fifth  Business  Day after
         Escrow  Agent  gives  the  other  Party  a  copy  of  such  demand  for
         cancellation,  Escrow  Agent has not  received  from such  other  Party
         written instructions which conflict in any way with such demand, Escrow
         Agent shall  cancel  Escrow,  disburse  the Deposit as directed in such
         demand (or, if no  directions  are given in such demand  regarding  the
         Deposit,  disburse  the Deposit to Seller) and return  every other item
         deposited in Escrow to the Party which deposited the same; or

                  (ii) If, by close of business on the fifth  Business Day after
         Escrow  Agent  gives  the  other  Party  a  copy  of  such  demand  for
         cancellation,   Escrow   Agent   has   received   conflicting   written
         instructions from such other Party,  Escrow Agent shall take no further
         actions  with  respect to Escrow  (other than to continue to invest and
         reinvest  the  Deposit  as  provided  in Section  3.1.1)  except (A) in
         accordance with joint written  instructions of Seller and Buyer or (B),
         upon advice of Escrow  Agent's  legal  counsel,  in  accordance  with a
         certified  copy of the order or judgment of court;  provided,  however,
         that if Seller  and Buyer  have not  provided  Escrow  Agent with joint
         written  instructions  as to the  disposition  of Escrow (and all items
         deposited  therein) within 60 days after Escrow Agent's receipt of such
         demand for cancellation, Escrow Agent shall have the right (at any time
         thereafter)  to commence an action in  interpleader  against Seller and
         Buyer and,  in  connection  therewith,  to deposit  all funds and other
         items held in Escrow  with the



                                      -14-
<PAGE>

         court hearing such action,  whereupon Escrow Agent shall be relieved of
         all further obligations and duties with respect to Escrow.

Buyer and Seller,  jointly and  severally,  shall hold  harmless  and  indemnify
Escrow  Agent  from  and  against  any  costs  and  expenses  incurred  by it in
connection with any interpleader action commenced pursuant to clause (ii) above.
Upon  cancellation  of Escrow,  either  pursuant to this  Section or other joint
written instructions of the Parties, Buyer and Seller shall each pay one-half of
Escrow Agent's reasonable and customary cancellation fees.

         3.7 Supplemental Escrow Agreement.  Buyer and Seller shall execute such
supplemental  escrow  instructions  or supplemental  escrow  agreement as Escrow
Agent may reasonably  request,  provided the provisions of such  instructions or
agreement do not materially  conflict with the provisions of this Agreement.  In
the  event  of  any  conflict  between  this  Agreement  and  such  supplemental
instructions, this Agreement shall control.

ARTICLE 4:  FURTHER AGREEMENTS BETWEEN BUYER AND SELLER (OF NO CONCERN TO ESCROW
            AGENT EXCEPT AS EXPRESSLY REFERENCED IN ARTICLES 1 OR 3)

         4.1      Warranties, Representations and Covenants.

                  4.1.1 By Seller.  Seller hereby  warrants,  represents  and/or
         covenants  to Buyer  that,  except as  disclosed  in Exhibit E attached
         hereto:

                           (i) Title to the  Property is held of record by FFLP.
                  Seller has the contractual right and ability to acquire record
                  title to the Property at or before the Closing  hereunder.  In
                  all other respects,  Seller has full right and power to convey
                  the Property in accordance with this Agreement.

                           (ii) To Seller's  Knowledge,  Seller has not received
                  written  notice  from  any  government  authority,  agency  or
                  officer  that the current  condition,  occupancy or use of the
                  Property causes a material violation of any applicable Law.

                           (iii) There are no  lawsuits  pending or, to Seller's
                  Knowledge,  threatened  whose outcome could  adversely  affect
                  title to or the use, occupancy or operation of the Property or
                  Seller's  ability to convey any of the Property to Buyer under
                  this Agreement  (including,  without  limitation,  actions for
                  condemnation).

                           (iv) Seller is a  corporation  organized and existing
                  under the laws of the State of Delaware;  is in good  standing
                  and qualified to do business in every other jurisdiction where
                  such  qualification  is  legally  required;  has full power to
                  enter  into this  Agreement  and to  fulfill  its  obligations
                  hereunder;  and has caused this  Agreement to be duly executed
                  and delivered to Buyer.

                                      -15-
<PAGE>

                           (v)  No  government  or  third  party   approvals  or
                  consents are required for Seller's  execution and delivery of,
                  or  performance  of its  obligations  under,  this  Agreement.
                  Seller's  execution and  performance  of this Agreement do not
                  and will not  violate,  and are not  restricted  by, any other
                  contractual  obligation  or any Law to which Seller is a party
                  or by which Seller or any of the Property is bound.

                           (vi) With respect to environmental  matters affecting
                  the Property:

                                    (A) To Seller's  Knowledge,  the Property is
                           not in  violation  of any of the  Environmental  Laws
                           (hereinafter defined). Neither Seller nor to Seller's
                           Knowledge   any  third   party  has  engaged  in  any
                           operations  or   activities   upon,  or  any  use  or
                           occupancy of the  Property,  or any portion  thereof,
                           for  the  purpose  of or in  any  way  involving  the
                           handling,   manufacture,   treatment,  storage,  use,
                           generation,  release, discharge, refining, dumping or
                           disposal of any Hazardous Substance (whether legal or
                           illegal,  accidental or intentional)  on, under or in
                           the Property,  or transported any Hazardous Substance
                           to, from or across the Property.

                                    (B)  No   Hazardous   Substance   has   been
                           constructed,  deposited, stored, or otherwise located
                           on, under or in the Property by Seller or to Seller's
                           Knowledge by any third party.

                                    (C) Seller has not received  notice,  nor is
                           Seller  aware,  that  any  Hazardous   Substance  has
                           migrated  from other  properties  upon or beneath the
                           Property.

                           (vii)  Except for  Broker,  Seller has not engaged or
                  dealt with any broker,  finder or similar  agent in connection
                  with the transaction contemplated by this Agreement.

                           (viii) During the period from the  Effective  Date to
                  Closing, Seller shall:

                                    (A)  Maintain  the  Property  in its present
                           condition   and  state  of  repair  and   maintenance
                           (subject  to  casualty  damage and to normal wear and
                           tear); and

                                    (B) Take reasonable measures to preserve and
                           enforce all of its rights and  remedies  with respect
                           to the Property and the Development Agreement.

                           (ix)  During the period  from the  Effective  Date to
                  Closing,  Seller shall not do anything else which would impair
                  its  title to any of the  Property  or  materially  alter  the
                  operation of the Property.

                                      -16-
<PAGE>

                           (x)  During  the period  from the  Effective  Date to
                  Closing,   Seller   shall   provide  to  Buyer,   its  agents,
                  consultants,  accountants  and  counsel  upon 24 hours'  prior
                  notice (which may be by telephone or facsimile  transmission),
                  (A)  access  at  all  reasonable  times  to  all  of  Seller's
                  contracts,  books and records and other documents,  pertaining
                  to the  period  of time  commencing  February  15,  1995,  and
                  relating to the acquisition, occupancy, operation, maintenance
                  and  repair  of  the   Property  by  Seller   (excluding   any
                  appraisals,  internal valuations or attorney-client privileged
                  materials),  with the right to make photocopies  thereof,  (B)
                  subject to the foregoing exclusions,  access to all such other
                  information  pertaining  to  the  period  of  time  commencing
                  February  15,  1995  regarding  the  Property  and in Seller's
                  possession  or control  (including  copies of such  contracts,
                  books and records and other documents) as Buyer may reasonably
                  request,  and (C)  access to the  Property  at all  reasonable
                  times for  purposes  of  conducting  (at  Buyer's  expense and
                  liability)  any  examinations,  surveys and tests as Buyer may
                  reasonably require;  provided,  however,  that Buyer shall not
                  have any  right  to  conduct  any  drilling,  boring  or other
                  intrusive  or  destructive  testing  of the  Property  without
                  Seller's prior written consent.

                  4.1.2  By  Buyer.   Buyer  hereby  warrants,   represents  and
                  covenants to Seller that:

                           (i) Buyer is a limited  partnership  duly  organized,
                  validly  existing and in good  standing  under the laws of the
                  state of  California;  is in good standing and qualified to do
                  business in every other  jurisdiction where such qualification
                  is  legally  required;  has  full  power to  enter  into  this
                  Agreement and to fulfill its  obligations  hereunder;  and has
                  caused this  Agreement to be duly  executed  and  delivered to
                  Seller.

                           (ii) No government or other third-party  approvals or
                  consents are required for Buyer's execution and delivery of or
                  performance of its obligations under, this Agreement.  Buyer's
                  execution and  performance  of this  Agreement do not and will
                  not violate,  and are not restricted by any other  contractual
                  obligation or  applicable  Law to which Buyer is a party or by
                  which Buyer is otherwise bound.

                           (iii)  There are no  lawsuits  pending or, to Buyer's
                  knowledge,  threatened  whose outcome could  adversely  affect
                  Buyer's  ability to purchase the Property under this Agreement
                  or to make payments required under the Note.

                           (iv) Buyer's Financial  Statements have been and will
                  be prepared in accordance with generally  accepted  accounting
                  principles  and  do  or  will  fairly  present  the  financial
                  condition of the Buyer for the period covered.

                           (v) Except for Broker, Buyer has not engaged or dealt
                  with any broker,  finder or similar agent in  connection  with
                  the transaction contemplated by this Agreement.

                                      -17-
<PAGE>

                           (vi) BUYER'S PURCHASE OF THE PROPERTY  HEREUNDER WILL
                  BE "AS-IS,  WHERE IS,  WITH ALL  FAULTS"  AND,  EXCEPT FOR THE
                  WARRANTIES,  REPRESENTATIONS AND COVENANTS OF SELLER EXPRESSLY
                  SET FORTH IN  SECTION  4.1.1,  BUYER  WILL BE  CONCLUDING  THE
                  PURCHASE OF THE PROPERTY  BASED SOLELY ON ITS  INSPECTION  AND
                  INVESTIGATION  OF THE  PROPERTY AND ON ALL  DOCUMENTS  RELATED
                  THERETO.  WITHOUT LIMITING THE FOREGOING,  BUYER  ACKNOWLEDGES
                  THAT SELLER HAS NOT MADE ANY  REPRESENTATIONS  AND WARRANTIES,
                  EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.1.1, ON WHICH BUYER
                  IS  RELYING  AS  TO  ANY  MATTERS   CONCERNING   THE  PROPERTY
                  (INCLUDING,   WITHOUT  LIMITATION,   THE  LAND,  IMPROVEMENTS,
                  DEVELOPMENT  RIGHTS,  POWER TRANSMISSION  LINES, TAXES, BONDS,
                  PERMISSIBLE   USES,   WATER  OR  WATER   RIGHTS,   TOPOGRAPHY,
                  UTILITIES,  ZONING,  SOIL, SUBSOIL, THE PURPOSES FOR WHICH THE
                  PROPERTY  IS  TO  BE  USED,  LATENT  OR  PATENT  PHYSICAL,  OR
                  ENVIRONMENTAL  CONDITIONS,  VALUATION,  OPERATING  HISTORY  OR
                  PROJECTIONS,  DRAINAGE,  ENVIRONMENTAL OR BUILDING LAWS, RULES
                  OR  REGULATIONS,  ANY WORK TO BE  PERFORMED  OR SERVICES TO BE
                  PROVIDED PURSUANT TO THE DEVELOPMENT  AGREEMENT,  OR ANY OTHER
                  REPRESENTATIONS  OR  WARRANTIES).  UPON  CLOSING,  BUYER SHALL
                  ASSUME THE RISK THAT ADVERSE MATERIAL  MATTERS,  INCLUDING BUT
                  NOT LIMITED TO ADVERSE PHYSICAL AND ENVIRONMENTAL  CONDITIONS,
                  MAY EXIST ON THE PROPERTY.

                  AS A MATERIAL PART OF THE CONSIDERATION TO SELLER FOR THE SALE
                  OF THE PROPERTY. BUYER HEREBY IRREVOCABLY WAIVES, AND RELEASES
                  SELLER  (AND  SELLER'S  SHAREHOLDERS,  AFFILIATES,  DIRECTORS,
                  OFFICERS,    EMPLOYEES   AND   AGENTS,    INCLUDING   (WITHOUT
                  LIMITATION),   BROKER,   ELECTRONIC   ARTS,  INC.  (AND  THEIR
                  RESPECTIVE  DIRECTORS,  OFFICERS,  EMPLOYEES  AND  AFFILIATES)
                  FROM,  ANY AND ALL CLAIMS (OTHER THAN FOR  INTENTIONAL  FRAUD)
                  BASED ON ANY WARRANTY OR  REPRESENTATION  (INCLUDING,  WITHOUT
                  LIMITATIONS,  THOSE IMPLIED BY LAW) NOT EXPRESSLY CONTAINED IN
                  THIS  AGREEMENT;   OR  ANY  MISREPRESENTATION  OR  FAILURE  TO
                  DISCLOSE  INFORMATION  RELATING TO THE  PROPERTY  OTHER THAN A
                  CLAIM BASED ON A REPRESENTATION OR WARRANTY  CONTAINED HEREIN;
                  OR ANY  DEFAULTS,  DEFECTS,  INADEQUACIES,  OR  OTHER  MATTERS
                  RELATED  EITHER  DIRECTLY  OR  INDIRECTLY  TO THE  WORK  TO BE
                  PERFORMED   OR  SERVICES  TO  BE  PROVIDED   PURSUANT  TO  THE
                  DEVELOPMENT AGREEMENT.

                  4.1.3  Survival.  Except  as  provided  below,  the  foregoing
         warranties,  representations and covenants (and the Parties' respective
         liability for any breach  thereof)



                                      -18-
<PAGE>

         shall  survive  Closing and shall not be deemed to merge in the Deed or
         any  other  instrument.  Notwithstanding  any other  provision  of this
         Agreement or Seller's Closing Documents, any claim based on a breach of
         Seller's representations, warranties, and covenants in Section 4.1.1 or
         in Seller's  Closing  Certificate  shall be forever  barred,  and Buyer
         shall bring no action  thereon,  unless (A) Buyer gives Seller  written
         notice of such  claim  within  one  hundred  eighty  (180)  days of the
         Closing  Date,  describing  with  particularity  in  such  notice  each
         representation,  warranty,  or covenant of Seller which Buyer claims to
         have been breached and the facts on which such claim is based,  and (B)
         Buyer commences action on such claim on or before the first anniversary
         of the Closing Date.

         4.2  Conditions  to Buyer's  Obligation.  Buyer's  obligation  to close
Escrow  shall  be  subject  to  timely  satisfaction  of each  of the  following
conditions:

                  4.2.1  Performance  of Seller's  Obligations.  Performance  by
         Seller  of all of  Seller's  obligations  under  this  Agreement  to be
         performed at or before Closing.

                  4.2.2 Accuracy of Warranties and Representations. The accuracy
         in all material respects,  as of Closing, of each of the warranties and
         representations of Seller set forth in Section 4.1.1.

                  4.2.3 City  Approvals.  Approval by the City within sixty (60)
         days  after  the  Option  Date  of the  Assignment  and  Assumption  of
         Development  Agreement in accordance with Section 4.12.2,  and delivery
         by the City of an  Estoppel  Certificate  pursuant to Section 27 of the
         Development Agreement substantially in the form of Exhibit Q.

                  4.2.4 Satisfactory Title. Acquisition of a commitment from the
         Title Company to issue Buyer's Title Policy in accordance  with Section
         3.5.2.

If any of the foregoing  conditions is not timely  satisfied (or waived by Buyer
in  writing),  Buyer shall have the right to  terminate  this  Agreement  before
Closing by written  notice of such  termination to Seller and Escrow Agent given
at any time prior to the  satisfaction of such  condition;  but once Closing has
occurred  all of the  foregoing  conditions,  to the  extent  not  satisfied  at
Closing,  shall be deemed to have been irrevocably  waived. If this Agreement is
terminated prior to Closing and provided Buyer has cooperated in good faith with
Seller's  efforts to secure City approval of the  Assignment of the  Development
Agreement in accordance with Section  4.12.2,  all funds deposited by Buyer with
the Escrow Agent shall  promptly be returned to Buyer and Seller shall  promptly
repay the Option Price (without interest) to Buyer.

         4.3  Conditions to Seller's  Obligation.  Seller's  obligation to close
Escrow  shall  be  subject  to the  timely  satisfaction  of each of the  follow
conditions:

                  4.3.1 Performance of Buyer's Obligations. Performance by Buyer
         of all of Buyer's  obligations  under this Agreement to be performed at
         or before Closing.

                                      -19-
<PAGE>

                  4.3.2 No Material Change in Financial  Condition.  No material
         adverse  change in Buyer's  financial  condition  between the Effective
         Date  and  the  Closing  Date.   Buyer  shall  provide  Seller  with  a
         certificate  to that effect at least three (3)  business  days prior to
         the Closing Date, together with a year-to-date  financial statement for
         the period since the most recent annual financial statement.

                  4.3.3 Satisfactory Title. Acquisition of a commitment from the
         Title Company to issue Seller's Title Policy in accordance with Section
         3.5.2.

                  4.3.4 Accuracy of Warranties and Representations. The accuracy
         in all material respects,  as of Closing, of each of the warranties and
         representations of Buyer set forth in Section 4.1.2.

If any such condition is not timely  satisfied (or waived by Seller in writing),
Seller  shall  have the right to  terminate  this  Agreement  before  Closing by
written  notice of such  termination to Buyer and Escrow Agent given at any time
prior to the  satisfaction of such condition;  but once Closing has occurred all
of the foregoing  conditions,  to the extent not satisfied at Closing,  shall be
deemed to have been irrevocably waived.

         4.4      Indemnities.

                  4.4.1 Buyer's  Activities  on the  Property.  Buyer shall hold
         harmless, indemnify and defend FFLP and Seller from and against any and
         all  claims,   liability  and  losses,  and  expenses  related  thereto
         (including  reasonable attorneys' fees), which FFLP or Seller incurs by
         reason of any damage to the  Property  caused  by, or any  third-person
         claim  against FFLP or Seller  arising or asserted to arise out of, any
         activity of Buyer, or any of Buyer's agents,  conducted on the Property
         prior to Closing. Buyer shall, with reasonable  promptness,  repair any
         damage caused to the Property by any such activity.

                  4.4.2  Survival.  The provisions  of, and Buyer's  obligations
         under,  this Section 4.4 shall survive  Closing or  termination of this
         Agreement. The indemnifications contained in this Section 4.4 shall run
         to the  benefit  of FFLP and Seller  and their  respective  constituent
         partners,   shareholders,   directors,   officers,  employees,  agents,
         successors and assigns.

                                      -20-
<PAGE>

         4.5      Damage, Destruction or Condemnation.

                  4.5.1 Termination  Rights. If, prior to Closing,  the Property
         suffers any material damage, destruction or taking by eminent domain (a
         "Casualty"),  Buyer shall have the right, at its election, to terminate
         this Agreement, by written notice given to the Seller prior to the Last
         Closing Date. If a Casualty  occurs fewer than ten Business Days before
         the  Last  Closing  Date,  Seller  shall  have  the  right  in its sole
         discretion to extend the Last Closing Date until the tenth Business Day
         after the  occurrence  of such  Casualty in order for Buyer to make the
         election permitted by this Section.

                  4.5.2 If No  Termination.  In the event that a Casualty occurs
         and Buyer either does not have or does not elect to exercise a right to
         terminate this  Agreement,  this Agreement shall continue in force and,
         upon  Closing,  Buyer  shall be  entitled  to all  insurance  proceeds,
         condemnation  awards  or other  amounts  which  have  been  paid or may
         thereafter  be payable  to FFLP or Seller by any  person in  connection
         with such Casualty  ("Proceeds"),  and at Closing Seller shall pay over
         to Buyer the amount of any Proceeds  already received by FFLP or Seller
         and shall  assign  Buyer all of Seller's  or FFLP's  rights to Proceeds
         which may then be or thereafter become payable.

                  4.5.3 Materiality. For purposes hereof, a material Casualty is
         one in which the extent of the damage,  destruction or taking (measured
         by the cost of repairing or replacing  the damaged,  destroyed or taken
         portion  of the  Property)  exceeds  twenty-five  percent  (25%) of the
         Purchase Price.

         4.6  Assignment by Buyer.  Because Buyer has been selected by Seller to
purchase this Property through a bid process and the identity of the Buyer is of
the utmost  important to Seller,  prior to Closing  Buyer shall have no right to
assign or transfer its rights  under this  Agreement  except with prior  written
consent  of Seller,  which  Seller may in its sole  discretion  deny;  provided,
however,  that Seller will not unreasonably  withhold its consent if Buyer seeks
to assign its rights under this Agreement to a corporation or partnership  which
is at least fifty  percent (50%) owned by Buyer.  Sale of shares or  partnership
interests  or  other  ownership  units  in  Buyer  (other  than on a  nationally
recognized  stock  exchange or  over-the-counter  market)  shall  constitute  an
assignment subject to the terms of this Section. Seller shall have no obligation
to respect any  assignment  in violation of this Section and such an  assignment
shall  constitute a material  breach of this Agreement on the part of Buyer.  No
assignment  shall  relieve  or excuse  Buyer of its  obligations  and  liability
hereunder. Seller's consent to any one assignment shall not be deemed consent to
any other assignment or a waiver of the requirement for its consent to any other
assignment.

         4.7      Rights of Parties Upon Default.

                  4.7.1  Seller's  Rights.  IF CLOSING FAILS TO OCCUR UNDER THIS
         AGREEMENT  DUE TO A  DEFAULT  ON THE  PART OF  BUYER,  SELLER  SHALL BE
         ENTITLED,  AS ITS SOLE AND EXCLUSIVE  REMEDY ON ACCOUNT OF SUCH FAILURE
         AND IN  CONSIDERATION OF ITS WITHDRAWAL OF THE



                                      -21-
<PAGE>

         PROPERTY FROM THE MARKET DURING THE TERM OF THIS AGREEMENT,  TO RECEIVE
         AND RETAIN, AS LIQUIDATED DAMAGES (AND NOT AS A PENALTY),  THE DEPOSIT;
         AND  SELLER  SPECIFICALLY  WAIVES  ANY RIGHT  SPECIFICALLY  TO  ENFORCE
         BUYER'S OBLIGATION HEREUNDER TO PURCHASE THE PROPERTY.

         BUYER  AND  SELLER   ACKNOWLEDGE  THAT  SUCH  LIQUIDATED   DAMAGES  ARE
         REASONABLE IN AMOUNT  CONSIDERING ALL OF THE CIRCUMSTANCES  EXISTING ON
         THE DATE OF THIS  AGREEMENT,  INCLUDING THE PARTIES'  ESTIMATION OF THE
         POSSIBLE RANGE OF DAMAGES TO SELLER IN THE EVENT OF SUCH A BREACH,  THE
         DIFFICULTY AND  IMPRACTICABILITY  OF  ASCERTAINING  OR PROVING WITH ANY
         DEGREE OF CERTAINTY  THE AMOUNT OF SUCH DAMAGES AND THE DESIRE OF BUYER
         TO LIMIT  ITS  POTENTIAL  LIABILITY  TO  SELLER  IN THE EVENT OF SUCH A
         BREACH.  THE FOREGOING  SHALL NOT,  HOWEVER,  LIMIT SELLER'S RIGHTS AND
         REMEDIES TO ENFORCE  OBLIGATIONS OF BUYER UNDER SECTIONS 2.4.2,  2.4.3,
         4.4.1, and 4.13 (INCLUDING  COSTS OF ENFORCING THIS LIQUIDATED  DAMAGES
         PROVISION) OR, IF CLOSING OCCURS,  TO ENFORCE ANY OTHER  OBLIGATIONS OF
         BUYER HEREUNDER.

                  /s/                                    /s/
              ----------------                      -----------------
              Buyer's Initials                      Seller's Initials

                  4.7.2  Buyer's  Rights.  IF CLOSING  FAILS TO OCCUR UNDER THIS
         AGREEMENT  DUE TO A  DEFAULT  ON THE  PART OF  SELLER,  BUYER  SHALL BE
         ENTITLED,  AS ITS SOLE AND EXCLUSIVE REMEDY ON ACCOUNT OF SUCH FAILURE,
         TO THE FOLLOWING:  (i)  REIMBURSEMENT  OF BUYER'S ACTUAL  OUT-OF-POCKET
         COSTS INCURRED IN ITS REVIEW AND INVESTIGATION OF THE PROPERTY, PAYABLE
         UPON DELIVERY TO SELLER OF VALID RECEIPTS THEREFOR;  (ii) RETURN OF THE
         OPTION PRICE (WITHOUT  INTEREST  THEREON);  (iii) RELEASE AND RETURN OF
         THE DEPOSIT AND ANY OTHER FUNDS  DEPOSITED  BY BUYER INTO  ESCROW;  AND
         (iv)  SOLELY IF  CLOSING  FAILS TO OCCUR  UNDER THIS  AGREEMENT  DUE TO
         SELLER'S  INTENTIONAL  FAILURE TO DELIVER  DOCUMENTS INTO ESCROW AND TO
         CLOSE THE PURCHASE AND SALE HEREUNDER, LIQUIDATED DAMAGES IN THE AMOUNT
         OF $1,000,000;  AND BUYER SPECIFICALLY WAIVES ANY RIGHT SPECIFICALLY TO
         ENFORCE  SELLER'S  OBLIGATION  HEREUNDER  TO SELL  THE  PROPERTY;  AND,
         FURTHER,  BUYER  SPECIFICALLY  WAIVES ANY RIGHT TO RECORD A LIS PENDENS
         AGAINST THE PROPERTY OR ANY PART  THEREOF,  IN THE OFFICIAL  RECORDS OF
         SAN MATEO COUNTY.

         BUYER AND SELLER ACKNOWLEDGE THAT SUCH THE SPECIFIED LIQUIDATED DAMAGES
         ARE NOT BY WAY OF A PENALTY AND ARE  REASONABLE  IN AMOUNT  CONSIDERING
         ALL OF THE  CIRCUMSTANCES



                                      -22-
<PAGE>

         EXISTING  ON  THE  DATE  OF  THIS  AGREEMENT,  INCLUDING  THE  PARTIES'
         ESTIMATION  OF THE  POSSIBLE  RANGE OF DAMAGES TO BUYER IN THE EVENT OF
         SUCH A BREACH, THE DIFFICULTY AND  IMPRACTICABILITY  OF ASCERTAINING OR
         PROVING WITH ANY DEGREE OF CERTAINTY THE AMOUNT OF SUCH DAMAGES AND THE
         DESIRE OF SELLER TO LIMIT ITS POTENTIAL LIABILITY TO BUYER IN THE EVENT
         OF SUCH A BREACH.  THE  FOREGOING  SHALL NOT,  HOWEVER,  LIMIT  BUYER'S
         RIGHTS AND REMEDIES TO ENFORCE OBLIGATIONS OF SELLER UNDER SECTION 4.13
         (INCLUDING COSTS OF ENFORCING THIS LIQUIDATED DAMAGES PROVISION).

         4.8      Termination.

                  4.8.1 By Buyer.  If Buyer has and timely  exercises  any right
         hereunder  to  terminate  this  Agreement,  Buyer shall be  immediately
         entitled  to the return of the  Deposit  and all  undisbursed  interest
         earned thereon while in Escrow and,  promptly upon receiving  notice of
         such  termination,  Seller shall join with Buyer in a written notice to
         Escrow  Agent  acknowledging  the  termination  of this  Agreement  and
         instructing  Escrow  Agent to return the Deposit to Buyer and to return
         every other item  deposited in Escrow to the Party which  deposited the
         same.  In  addition,  Seller  shall  promptly  repay the  Option  Price
         (without interest) to Buyer.

                  4.8.2  By  Seller.  If  Seller  has and  exercises  any  right
         hereunder  to  terminate  this  Agreement  for a breach by Buyer of its
         obligations,  warranties or  representations  hereunder,  promptly upon
         receiving notice of such termination  Buyer shall join with Seller in a
         written notice to Escrow Agent  acknowledging  the  termination of this
         Agreement and  instructing  the Title Company to deliver the Deposit to
         Seller and to return all other funds and every other item  deposited in
         Escrow to the Party which deposited the same. If Seller terminates this
         Agreement for any other reason, including without limitation,  pursuant
         to the provisions of Sections 2.4.2, 4.3 (except as a result of Buyer's
         breach),  and  4.5.1,  Seller  shall  promptly,  upon  Buyer's  written
         request,   join  with  Buyer  in  a  written  notice  to  Escrow  Agent
         acknowledging the termination of this Agreement and instructing  Escrow
         Agent to return  the  Deposit to Buyer and to return  every  other item
         deposited  in Escrow to the Party which  deposited  the same and Seller
         shall promptly repay the Option Price (without interest) to Buyer.

                  4.8.3  Effect of  Termination.  Upon any  termination  of this
         Agreement, neither Party shall have any further obligation or liability
         to the other hereunder except (i) any remaining obligation or liability
         of Buyer under Section 2.4.3 (for return,  destruction and/ or delivery
         of  documents  to  Seller)  or under  Section  4.4.1  (with  respect to
         activities  of  Buyer  or its  agents  upon  the  Property),  (ii)  any
         liability  which either Party may have  hereunder by reason of the fact
         that  such  termination  either  (A) was  wrongfully  made by it or (B)
         resulted  from  a  breach  of  its   warranties,   covenants  or  other
         obligations hereunder, and (iii) any obligation under Section 4.13.

                                      -23-
<PAGE>

         4.9 Brokerage Commission. Upon Closing, Seller shall pay any commission
due to Broker,  in connection  with the sale and purchase of the Property as set
forth in this Agreement,  under a separate, written agreement between Seller and
Broker.  Nothing  contained  herein shall be deemed to make Broker a third-party
beneficiary  of this Agreement or to create any obligation on the part of either
Party to close the sale and purchase of the Property for Broker's benefit.  Each
Party shall hold  harmless,  indemnify and defend the other from and against any
claim or  liability  for a  commission,  fee or other  compensation  to  broker,
salesman,  finder or  similar  intermediary,  and for any  expenses  (including,
without  limitation,  reasonable  attorneys'  fees and expenses)  related to the
defense of any such claim,  which  results  constitute  a breach of such Party's
representation, contained in Section 4.1.1(vii) or Section 4.1.2(iv).

         4.10  Post-Closing  Prorations  and  Adjustments.  After  Closing,  the
Parties shall make the following additional prorations and settlements:

                  4.10.1  Real  Estate   Taxes  and   Assessments.   If  Closing
         prorations of real estate taxes and assessments are based on other than
         the current  year's tax bill,  within 30 days after such bill is issued
         to Buyer,  Buyer shall recompute such proration.  If such recomputation
         results in a larger proration credit to Seller,  Buyer shall pay Seller
         the  additional  amount  due  Seller  within  such  30  days.  If  such
         recomputation  results in a larger  proration  credit to Buyer,  Seller
         shall pay Buyer the  additional  amount due Buyer  within 30 days after
         receiving Buyer's written recomputation of such proration,  accompanied
         by a copy of such tax bill.

                  4.10.2   Determinations   of   Post-Closing   Prorations   and
         Adjustments.  Except where expressly  provided  otherwise,  Buyer shall
         make the required  determinations  and computations of all post-Closing
         prorations  and  other   adjustments   under  this  Section  4.10  (the
         "Post-Closing  Prorations")  and shall provide Seller with a reasonably
         detailed written summary of each Post-Closing  Proration,  concurrently
         with or prior to making any payment to or  requesting  any payment from
         Seller under this Section 4.10 with respect thereto.  Seller shall have
         the right to audit all of Buyer's  books and records  pertaining to the
         Post-Closing  Prorations.  For this purpose, Buyer shall allow Seller's
         designated  representatives  access to such books and  records,  at the
         Property  or  Buyer's  principal  place of  business  within the United
         States, at any time during normal business hours, and Seller shall have
         the right to make  copies of such books and  records  (and the right to
         use Buyer's  photocopying  equipment to make such copies,  paying Buyer
         its actual  out-of-pocket cost for such copying).  Except to the extent
         that Seller,  before the second  anniversary of the Closing Date, gives
         Buyer written  notice of objections  to Buyer's  determinations  of the
         Post-Closing  Prorations,  Buyer's  determinations  and computations of
         such  prorations and adjustments  shall be conclusive,  if made in good
         faith and with full  disclosure  to Seller.  If Seller  does give Buyer
         timely  written  notice of  objection to Buyer's  determination  of any
         Post-Closing  Proration  and the  Parties  are unable to  resolve  such
         objection by mutual agreement  within 30 days thereafter,  either Party
         shall have the right to submit such dispute to binding  arbitration by,
         and  under  the   applicable   rules  of,  the   American   Arbitration
         Association,  in San Mateo or San Francisco counties,  California.  The
         arbitrator  in  such  arbitration   shall,  to  the  extent  reasonably
         necessary to



                                      -24-
<PAGE>

         the enforcement of Seller's rights  hereunder,  order the production to
         Seller of any or all of Buyer's  books and  records  pertaining  to the
         Post-Closing  Prorations.  The arbitrator shall endeavor to resolve any
         such submitted  dispute and render a written award within 90 days after
         the arbitrator's appointment.

         4.11 Design Review.  The Property is subject to the Shores CC&Rs, which
provides for design review of any proposed  improvements  to be  constructed  by
Buyer.  Pursuant to the Shores CC&Rs,  the Shores  Business  Center  Association
Architectural  Review Committee ("Shores Review Committee") has been formed, and
said  Review  Committee  has  promulgated  Guidelines.  Buyer  acknowledges  its
receipt,  review and  acceptance  of the Shores  CC&Rs and the  Guidelines,  and
agrees  that it shall,  at all  times,  comply  with said  Shores  CC&Rs and the
Guidelines and any existing or future supplements or amendments  thereto.  Buyer
agrees that it shall inform itself of the procedures of the Review Committee and
shall comply with such procedures, including, without limitation, lead times for
the submission of plans and documents to be reviewed.

         4.12 Buyer's  Covenants  and  Agreements.  Buyer hereby  covenants  and
agrees with Seller as follows:

                  4.12.1  Agreement for  Covenants  Running With the Land. On or
         before  Closing,  Buyer and FFLP shall execute in  recordable  form and
         deliver into Escrow, for recording at Closing,  that certain "Covenants
         Agreement"  in the form attached  hereto as Exhibit G. At Closing,  the
         Covenants Agreement shall be recorded against the Property  immediately
         after the Grant Deed and prior to the recording of any other documents,
         instruments or conveyances.

                  4.12.2 Development Agreement.  Buyer acknowledges receipt of a
         copy of the  Development  Agreement.  Buyer further  acknowledges it is
         aware of the terms  thereof,  including in  particular,  the  following
         provisions:

                    Section 3:       Term

                    Section 4:       Land Use: Density; and Intensity; including
                                     provisions  concerning  minimum and maximum
                                     Gross  Building  Floor Area,  minimum,  and
                                     maximum height.

                    Section 5:       Project Timing.

                    Section 6:       Project Review and Approval Process.

                    Section 8:       The   Facilities   and   Site   Evaluation;
                                     including the  obligation to dedicate lands
                                     for right and left  turn  lanes on  Redwood
                                     Shores    Parkway,    and   including   the
                                     obligation   to  comply  with   engineering
                                     design standards and construction standards
                                     developed  by  Declarant  pursuant  to said
                                     Section.

                    Section 9:       Facilities Fees and other Exactions.

                                      -25-
<PAGE>

                    Section 11:      On-Site   Privately   Owned   Improvements;
                                     including  the  obligation of Owner to fund
                                     such   Improvements   located   on  Owner's
                                     Parcels.

                    Section 12:      Traffic Assessment District.

                    Section 17:      Construction Requirements

                    Section 20:      Annual Review;  including the obligation to
                                     initiate such review and  demonstrate  good
                                     faith compliance with Owner's Parcel.

                    Section 24:      Events of Default;  Remedies;  Termination;
                                     Attorneys' Fees.

                  Promptly upon Buyer's delivery of the Exercise Notice,  Seller
         shall  undertake to obtain the City's approval of the Assignment of the
         Development  Agreement and Permits in accordance with Section 29 of the
         Development  Agreement.  Buyer shall  cooperate fully and in good faith
         with  Seller in  connection  with  obtaining  such  approval  and shall
         promptly  deliver any  documents or other  information  required by the
         City in its discretion to process the request for approval.

                  4.12.3 Payment for Improvements. Buyer acknowledges and agrees
         that Seller  shall not be required to pay any funds,  perform any acts,
         or dedicate, donate or grant any property (whether real or personal) to
         satisfy any condition  imposed on development of the Property,  whether
         such condition is imposed by a  governmental  authority or entity or by
         the  terms of any  recorded  document  which  constitutes  a  Permitted
         Exception.  Buyer  acknowledges and agrees that the construction of any
         and all improvements and utilities  required to be installed within the
         perimeter of the Property in order to serve the Property,  as developed
         by Buyer (collectively, the "On-Site Improvements"),  and all costs and
         expenses of such On-Site Improvements,  shall be the sole and exclusive
         responsibility of Buyer, including,  without limitation, the following:
         (i) the  obligation  to pay for,  construct,  furnish  or  install  and
         maintain  all  on-site  utility   extensions  to  serve  the  Property,
         including, without limitation, water from the public water lines within
         the public  streets,  sanitary  and storm  sewers from the public sewer
         system within the public streets, electricity and gas from the off-site
         facilities   designated  by  Pacific  Gas  &  Electric   Company,   and
         electricity and gas by payment or reimbursement to the electric and gas
         utility  company in excess of the extension  allowance  (if any);  (ii)
         payment for all City, District or utility company connection, extension
         or hook-up fees,  facilities  fees,  license fees or charges for water,
         sewer,  electricity,  gas, telephone,  garbage or other utility service
         for the Property or any part thereof;  (iii) addition or removal of any
         fill required in order to alter the  elevation of the Property,  or any
         part thereof;  and (iv) any grading,  piling,  excavation,  bulkhead or
         foundation work required for the Property.  Buyer further  acknowledges
         and  agrees  that  none  of  Seller's   representatives   and  Seller's
         affiliates  has made any  covenants,  representations,  warranties,  or
         undertakings,  of any nature  whatsoever,  concerning  or regarding the
         availability,  quantity or quality of water,  gas, sewer,  telephone or
         electrical services available to or at the Property. Buyer acknowledges
         and agrees that it is the responsibility of Buyer to deal directly with
         any and all utility companies in order to procure all utility services.
         Buyer further



                                      -26-
<PAGE>

         acknowledges that the costs of extending  utilities to the Property may
         exceed the utility company's free extension allowance, if any, and that
         Buyer  shall be solely  responsible  for all such  costs.  The  parties
         acknowledge that Buyer has further improvement  obligations relative to
         the  Property,  as such  obligations  are set  forth  in the  Covenants
         Agreement.

                  4.12.4 Facility  Charges,  School Facilities Fees and Proposed
         Impact Fees. Buyer acknowledges (i) that FFLP and the City have entered
         into a Development  Agreement  which during its term sets the amount of
         facilities  fees and other  exactions  which may be charged by the City
         for the issuance of building  permits for the  Property;  (ii) that the
         City has  adopted an  ordinance  and  recorded an  agreement  requiring
         property  owners to pay a  facilities  fee as a condition  precedent to
         receiving a building  permit,  and that said  ordinance  and  agreement
         applies to the Property;  (iii) that an application fee may be required
         by the Architectural  Review Committees described in Section 4.11; (iv)
         that a fire  service fee and  participation  in the cost of a reclaimed
         water system  program may be imposed upon Buyer and the Property by the
         City; (v) that the Belmont  School  District and the Sequoia Union High
         School  District  have adopted a requirement  that the property  owners
         within  said  districts  pay a  school  facilities  fee as a  condition
         precedent to receiving a building permit (the "School Facilities Fees")
         and that  said  requirement  applies  to the  Property;  (vi)  that the
         Sequoia  Union  High  School  District  has  formed a  landscaping  and
         lighting  maintenance  assessment  district,  and that such  assessment
         district includes the Property;  and (vii) that a  multi-jurisdictional
         traffic  assessment  district for improvements to Highway 101 and other
         area-wide   traffic   improvements  has  been  proposed  and  is  being
         considered  by the City and other  nearby  cities  (including,  without
         limitation,  the City of Belmont and the City of San Carlos), that such
         assessment  district  would include the Property and that in Section 12
         of the Development Agreement, FFLP has waived objection, subject to the
         limitations in Section 12 of the  Development  Agreement,  on behalf of
         itself,  its successors and assigns,  including Buyer, to the formation
         thereof.  Buyer  acknowledges and agrees that Buyer, and neither Seller
         nor FFLP,  shall be solely  responsible  for the  payment of the City's
         facilities  fee and  the  School  Facilities  Fees  and  for all  other
         charges,  taxes,  fees or costs,  of any nature  whatsoever,  which are
         imposed  or  incurred  after  Closing  and which are  related  (whether
         directly or  indirectly) to the  development of the Property,  it being
         specifically agreed that neither Seller nor FFLP has and shall not have
         any  responsibility  or liability of any nature  whatsoever  to pay, or
         contribute to the payment of, any of the fees, costs,  taxes or charges
         contemplated  in this  Agreement and imposed or incurred from and after
         the  Closing.  Buyer  acknowledges  that  pursuant  to the  Development
         Agreement,  Seller or FFLP may be required to prepay certain facilities
         fees to the City which could be credited  against  facilities  fees and
         exactions   Buyer  would   otherwise   be  required  to  pay.  If  such
         circumstance occurs,  Buyer shall,  simultaneously with Buyer's payment
         of facilities  fees and other exactions to the City,  reimburse  Seller
         the full amount of any such credit Buyer  receives.  The  provisions of
         this  Section  4.12.4 are solely for the  benefit of Seller,  Buyer and
         FFLP and not for the benefit of any other person or entity  (including,
         without  limitation,  the Belmont School District and the Sequoia Union
         High  School  District),  and no party  other than FFLP and Seller (and
         Seller's  successors  and  assigns)  shall be  entitled  to rely on the
         provisions of this section or receive any benefit  therefrom or enforce
         against Buyer any of the provisions of this section.

                                      -27-
<PAGE>

                  4.12.5 Surplus Earth Material.  Buyer  acknowledges  that FFLP
         has  granted  RSP,  its   successors   and  assigns  an  exclusive  and
         irrevocable option to acquire surplus earth material generated from the
         development of the Property and that FFLP and RSP executed and recorded
         a Memorandum  thereof.  The terms,  provisions,  and  conditions of the
         option,  as set forth in  Section  11.8 of that  certain  Agreement  of
         Purchase and Sale by and between RSP and FFLP  predecessor  in interest
         ("Terms")  and the  Memorandum  of Option  are set  forth as  Exhibit H
         hereto. Buyer agrees that it is bound, as to the Property, as successor
         in interest to FFLP,  to the Terms and the  Memorandum  of Option,  and
         undertakes to comply with each and every term, provision, and condition
         thereof imposed upon FFLP thereby as it applies to the Property.

                  4.12.6 San Carlos Airport. Buyer acknowledges that (i) the San
         Carlos  Airport  and its  flight  path  are in close  proximity  to the
         Property,  and  (ii)  that  the  San  Mateo  County  Airport  Land  Use
         Commission  has been  presented with and is considering an amendment to
         the San  Mateo  County  Airport  Land Use Plan  which  would,  in part,
         require  local land owners within the Redwood  Shores  Project to grant
         avigation  easements  to  the  County.  Buyer  acknowledges  that  such
         proximity to the San Carlos Airport, and any proposed amendments to the
         San Mateo County  Airport Land Use Plan may have an impact or effect on
         the  Property  or  Buyer's  use of  the  Property,  including,  without
         limitation,  (a) the production of noise,  odors,  pollution,  traffic,
         glare and/or other impacts,  and (b) requiring that  development of the
         Property be  conditioned  on the granting of an  avigation  easement(s)
         and/or other restrictions (collectively,  the "Airport Matters"). Buyer
         expressly   acknowledges   and  agrees  that   Seller   shall  have  no
         responsibility for any costs,  expenses,  liabilities or obligations of
         any kind or nature  whatsoever  arising out of or in any way related to
         the Airport Matters.

                  4.12.7 Density;  Height of  Construction.  Buyer  acknowledges
         that  matters of density  and height of  buildings  constructed  on the
         Property are governed by the terms of the Development  Agreement and of
         that  certain  Covenants  Agreement  by and  between RSP and FFLP dated
         February 14, 1995,  and recorded  February 15, 1995, as Instrument  No.
         95015506,  Official Records, San Mateo County,  California, as the same
         has  been  amended,  and by  other  factors  such  as  available  sewer
         capacity. Buyer covenants and agrees to the following restrictions with
         respect to the improvements to be constructed on the Property:

                                                             Zone 2     Zone 4

                  Maximum Square Footage of GBFA            200,000    140,000
                  Minimum Number of Stories per Building          4          4
                  Maximum Number of Stories per Building          8          8
                  Maximum Height of Permitted Structures    130 Ft.    130 Ft.

         subject to the following conditions:


                                      -28-
<PAGE>

                                    (a)  The  Maximum  Square  Footage  of  GBFA
         assumes  that Buyer  secures  adequate  sewer  capacity  to permit such
         construction.  Seller  has  advised  Buyer  that FFLP has  received  an
         assignment from RSP of allocation of sewage treatment capacity with the
         South Bayside System  Authority  sufficient to permit FFLP to construct
         up to 885,000 square feet of GBFA in the Park, which has been confirmed
         in that certain Second Amendment to Development  Agreement dated August
         31, 1998,  by and between the City and FFLP (the  "Second  Amendment").
         Furthermore,  the  City,  pursuant  to the  Development  Agreement,  as
         amended by the Second Amendment,  has agreed to sell to FFLP additional
         sanitary sewage treatment capacity up to 25,000 gallons per day ("gpd")
         at  $2.50  per  gpd,  as  needed  to  permit  construction  of the full
         1,000,000  square feet of GBFA  authorized for office space in the Park
         by the Development  Agreement.  At Closing,  Seller shall cause FFLP to
         assign  to Buyer,  by an  Assignment  in the form of  Exhibit I hereto,
         sufficient sewage treatment  capacity from its rights received from RSP
         to construct an aggregate 340,000 square feet of GBFA in Zones 2 and 4.
         Buyer  acknowledges that the foregoing  assignments are the entirety of
         what Seller can and will offer to Buyer for sewage  treatment  capacity
         and Seller has no further or greater obligation to Buyer. If additional
         sewage  treatment  capacity  is still  required,  Buyer must  purchase,
         lease, or otherwise acquire such capacity on the open market at Buyer's
         sole expense.

                                    (b)  The   Maximum   Height   of   Permitted
         Structures  is  calculated  as the height to the  highest  point of the
         building and all superstructures above mean sea level.

                  4.12.8 No Construction  Area. Buyer, on behalf of itself,  its
         successors and assigns, covenants that it shall not construct, nor seek
         or accept any  authorization  to  construct,  any  structure or portion
         thereof (excluding landscaping,  surface roadways and parking,  awnings
         or other protrusions over entrance  doorways,  covered walkways,  patio
         facilities,  related  outbuildings  not to exceed  fifteen (15) feet in
         height,  and related  installations  such as light  standards) in those
         portions  of  Zone  2  described  in  Exhibit  N  attached  hereto  and
         incorporated  herein.  Buyer shall  execute and record at Closing  such
         documents  as Seller  shall  reasonably  request  to  memorialize  this
         obligation of record.

         4.13.  Enforcement  Costs.  Should either Party institute any action or
proceeding to enforce any  provision of this  Agreement or for damages by reason
of an alleged breach of any provision hereof (including,  without limitation, an
arbitration  proceeding  under  Section  4.10),  the  prevailing  Party shall be
entitled  to receive all costs and  expenses  (including  reasonable  attorneys'
fees)  incurred  by such  prevailing  Party in  connection  with such  action or
proceeding.

         A Party entitled to recover costs and expenses under this Section shall
also be  entitled  to  recover  all costs  and  expenses  (including  reasonable
attorneys'  fees)  incurred in the  enforcement  of any  judgment or  settlement
obtained in such action or proceeding  and  provision  (and in any such judgment
provision  shall  be  made  for the  recovery  of such  postjudgment  costs  and
expenses).

                                      -29-
<PAGE>

         4.14  Notices.  Except  in the  case  (if  any)  where  this  Agreement
expressly provides for an alternate form of communication,  any notice, consent,
demand or other  communication  to be  delivered to a Party  hereunder  shall be
deemed  delivered  and  received  when made in writing  and  transmitted  to the
applicable Party either by receipted  courier  service,  or by the United States
Postal  Service,  first class  registered or certified  mail,  postage  prepaid,
return receipt requested,  or by electronic facsimile  transmission  ("Fax"), at
the address or addresses  indicated  for such Party below  (and/or to such other
address as such Party may from time to time by written  notice  designate to the
other):

                  If to Seller:         Electronic Arts Redwood, Inc.
                                        207 Redwood Shores Parkway
                                        Redwood City, California  94065
                                        Fax No.  (650) 628-1384
                                        Attn:  James F. Healey, President

                  and a copy to:        Electronic Arts, Inc.
                                        207 Redwood Shores Parkway
                                        Redwood City, California  94065
                                        Fax No.  (650) 628-1422
                                        Attn: Ruth Kennedy, General Counsel


                  and a copy to:        Nossaman, Guthner, Knox & Elliott, LLP
                                        50 California Street, 34th Floor
                                        San Francisco, CA  94111
                                        Fax No. (415) 398-2438
                                        Attention:  David L. Kimport, Esq.

                  If to Buyer:          Spieker Properties, L.P.
                                        1255 Treat Boulevard Ste 150
                                        Walnut Creek, Ca. 94596
                                        Fax No.:  925-935-5619
                                        Attention:  Peter H. Schnugg

                  with a copy to:       Spieker Properties, L.P.
                                        2180 Sand Hill Road
                                        Menlo Park, Ca. 94526
                                        Fax No.:
                                        Attention: Sara Steppe, General Counsel

and  shall be  deemed  delivered  and  received  only upon  actual  delivery  or
attempted  delivery (as  evidenced by receipt) or upon  completion  of facsimile
transmission (as evidenced by telecopier  confirmation sheet) provided that such
facsimile  transmission  is confirmed  within three  Business  Days by duplicate
notice delivered as otherwise provided herein.

                                      -30-
<PAGE>

         4.15 Binding Effect.  Except as otherwise  expressly  provided  herein,
this  Agreement  shall bind and inure to the  benefit of the  Parties  and their
respective successors and assigns.

         4.16 Entire  Agreement;  Modification.  This Agreement  constitutes the
entire agreement between the Parties pertaining to the subject matter hereof and
supersedes  all prior  agreements,  understandings  and  representations  of the
Parties  with  respect  to  the  subject  matter  hereof   (including,   without
limitation, any letter of intent or other such written proposal). This Agreement
may not be modified,  amended,  supplemented or otherwise  changed,  except by a
writing executed by both Parties.

         4.17  Captions.  Article  and  section  headings  used  herein  are for
convenience  of  reference  only and shall not  affect the  construction  of any
provision of this Agreement.

         4.18  Interpretation.  Each  Party  acknowledges  that it and its legal
counsel have  participated  substantially  in the drafting of this Agreement and
agree  that,  accordingly,  in  the  interpretation  and  construction  of  this
Agreement,  no ambiguity,  real or apparent,  in any  provision  hereof shall be
construed  against  either  Party by  reason  of the  role of such  Party or its
counsel in the drafting of such provision.

         4.19  Mutual  Cooperation;   Further  Assurances.   The  Parties  shall
cooperate  with each other as reasonably  necessary to effect the  provisions of
this  Agreement,  shall  use  reasonable  and  good  faith  efforts  to  satisfy
conditions to Closing and, at and after Closing,  shall each execute and deliver
such  additional  instruments  or other  documents  as the other may  reasonably
request to  accomplish  the  purposes  and intent of this  Agreement;  provided,
however, that nothing in this Section shall be deemed to enlarge the obligations
of the  Parties  hereunder  or to  require  either  Party to incur any  material
expense or liability not otherwise required of it hereunder.

         4.20     Exhibits. Each of the following Exhibits hereto:

                  Exhibit           Title
                  -------           -----
                  A                 Description of Property
                  B                 Form of Deed
                  C                 Form of Transferor's Certification of
                                    Non-Foreign Status
                  D                 Form of Seller's Closing Certificate
                  E                 Exceptions to Seller's Warranties and
                                    Representations
                  F                 Schedule of Property Records
                  G                 Form of Covenants Agreement
                  H                 Terms of Surplus Earth Materials Option
                  I                 Form of Assignment of Sewage Treatment
                                    Capacity
                  J                 Form of Assignment and Assumption of
                                    Development Agreement and Permits
                  K                 Form of Note
                  L                 Form of Deed of Trust
                  M                 Form of Guaranty

                                      -31-
<PAGE>

                  N                 No Build Zones
                  O                 Right of Way Easement
                  P                 Exercise Notice

is hereby incorporated herein.

         4.21  Counterparts.  This Agreement,  and any amendment hereto,  may be
executed  in  any  number  of  counterparts   and  by  each  Party  on  separate
counterparts,  each of which when so executed and  delivered  shall be deemed an
original and all of which taken together  shall  constitute but one and the same
instrument.

         4.22 Governing  Law. This Agreement  shall be deemed to be an agreement
made under the laws of California  and for all purposes shall be governed by and
construed in accordance with such laws.

         4.23  Recording.  Neither this  Agreement  nor any notice or memorandum
hereof shall be recorded in any public record.  A violation of this  prohibition
shall constitute a material breach of this Agreement.

         4.24 TIME OF THE ESSENCE. TIME IS OF THE ESSENCE OF THIS AGREEMENT, AND
OF EACH COVENANT,  AGREEMENT AND CONDITION REPRESENTED HEREOF WHICH PROVIDES FOR
NOTICE  TO BE GIVEN OR ACTION  TAKEN ON A  SPECIFIC  DATE OR WITHIN A  SPECIFIED
PERIOD OF TIME.

         4.25  Confidentiality.  Buyer  and its  representatives  shall  hold in
strictest  confidence the terms of this  transaction,  the contents of all items
delivered  to Buyer  pursuant  to  Section  2.4,  and all  data and  information
obtained  with  respect  to the  Property  or  Seller or its  business,  whether
obtained  before or after the Effective  Date,  and until after the Option Date,
the  existence  of this  Agreement,  and shall not  disclose the same to others;
provided, however, that it is understood and agreed that Buyer may disclose such
data and  information to employees,  consultants,  accountants  and attorneys of
Buyer  provided  that  such  persons  agree in  writing  to treat  such data and
information  confidentially  and not to disclose any such information or data to
others.  In the event of a breach or threatened  breach by Buyer or its agent or
representatives  of this Section 4.25, Seller shall be entitled to an injunction
restraining  Buyer  from  disclosing,  in whole or in  part,  such  confidential
information.  Nothing  herein  shall be  construed  as  prohibiting  Seller from
pursuing  any other  available  remedy at law or in  equity  for such  breach or
threatened breach. Prior to Closing,  Buyer and Seller shall confer and agree on
a press  release  to be  issued  jointly  by Buyer  and  Seller  disclosing  the
transaction  and the appropriate  time for making such release.  Buyer shall not
issue any press releases with respect to the  transaction  contemplated  in this
Agreement  without Seller's prior written  approval.  Notwithstanding  the first
sentence in this  Section,  Buyer  shall be  permitted  to make any  disclosures
necessary to comply with SEC rules and regulations, or any other applicable laws
and regulations  governing  Buyer.  Subject to the foregoing,  any press release
regarding  this  transaction  shall be subject to the prior written  approval of
both parties. The provisions of this Section 4.25 shall survive Closing.

                                      -32-
<PAGE>

         4.26 Buyer's  Financing  Covenants;  Remedies.  Until the Note has been
paid in full, Buyer covenants and agrees with the Seller as follows:

                  4.26.1 Permits and Legal Requirements.  Buyer will comply with
and keep in effect all  permits and  approvals  obtained  from any  governmental
bodies that relate to Buyer's  ownership  and  operation of the Property and the
development  and   construction  on  the  Property  of  one  or  more  buildings
(collectively,  the "Buildings"),  together with parking, landscaping and common
areas  and  all  infrastructure   required  of  Buyer  in  connection  with  the
development   and   construction   of   the   Buildings    (collectively,    the
"Improvements").   Buyer  will  comply  with  all   existing  and  future  laws,
regulations,  orders, and requirements of all governmental,  judicial,  or legal
authorities having jurisdiction over the Property or the Improvements,  and with
all recorded restrictions affecting the Property.

                  4.26.2  Notices of Change.  Buyer  shall give  Seller  written
notice of any material  adverse change,  fact, or  circumstance  relating to the
business of Buyer or of the interest of Seller under this  Agreement,  which may
materially  affect Buyer's ability to make payments pursuant to the Note, within
five (5) days of such change, fact, or circumstance.

                  4.26.3  Insurance.  Buyer  shall  purchase  and  maintain  all
insurance  required by its construction  lender and its permanent lender.  Buyer
shall at its own cost,  and at all times,  provide,  maintain,  and keep in full
force and effect:

                           (a) Policies of  insurance  insuring the Property and
         the  Improvements  against loss or damage by risks embraced in coverage
         of the type now known as the broad form of all-risk, extended coverage,
         including,   without   limitation,   coverage  against  loss  by  fire,
         vandalism,  and  malicious  mischief,  in an  amount  not less than the
         lesser  of (i) the  Note;  or (ii)  the  full  replacement  cost of the
         Improvements  (exclusive of the cost of excavations,  foundations,  and
         footings   below  the  lowest   basement   floor,   but  including  any
         Improvements  hereafter made);  subject to reasonable  deductibles from
         the loss payable for any casualty.

                           (b)   Comprehensive   public   liability   insurance,
         including  coverage for  completed  operations  for two years after the
         construction of such Improvements has been completed, on an "occurrence
         basis"  against  claims  for  "personal  injury,"  including,   without
         limitation,  bodily injury, death or property damage,  occurring on, in
         or about the  Property  and the  adjoining  streets and  sidewalks,  or
         arising from or connected with the use, conduct or operation of Buyer's
         business or interest, in an amount of not less than ONE MILLION DOLLARS
         ($1,000,000) per occurrence and THREE MILLION DOLLARS  ($3,000,000) per
         annum,  in the aggregate,  with respect to personal  injury or death of
         one or more persons and with respect to damage to property.

                           (c)  Such  other  insurance  against  such  risks  or
         hazards,  or other risks and hazards,  and in such amounts, as may from
         time to time be reasonably required by Seller.

                                      -33-
<PAGE>

                  All  policies  of  insurance  shall  be  issued  by  companies
licensed  to do business in  California  with a financial  rating of at least A+
rating in the most recent edition of Best's Insurance Reports, shall contain the
Standard  Non-Contributory  mortgagee  clause  and the  Standard  Lender's  Loss
Payable Clause, or their equivalents, in favor of Seller, and shall provide that
the proceeds  thereof  shall be payable to Seller to the extent of its interest.
In the event of the  foreclosure of the Deed of Trust or other transfer of title
to the  Property in  extinguishment,  in whole or in part,  of the  indebtedness
secured hereby, all right, title and interest of Buyer in and to any policy then
in force shall pass to the purchaser or grantee.  Seller shall be furnished with
a  certificate  of  insurance  of each  policy  required to be provided by Buyer
hereunder,  which policy shall provide that it shall not be modified or canceled
without thirty (30) days' written notice to Seller.

                  4.26.4  Financial Covenants and Future Financial Condition.

                           (a) Buyer shall not, as  disclosed  in its  financial
         statements  previously  presented  to and  approved  by Seller,  suffer
         material adverse change, and shall not suffer any lien, judgment, writs
         or attachment or other obligation  which may materially  affect Buyer's
         ability  to  make  payments  pursuant  to the  Note  without  immediate
         disclosure thereof to Seller in writing.

                           (b) Buyer shall  deliver,  or caused to be delivered,
         to  Seller  audited  year  end  financial  statements,  prepared  by  a
         certified  public  accounting  firm,  of Buyer  within  90 days of each
         fiscal year end.

                  4.26.5  Environmental   Compliance.   Except  as  specifically
disclosed  to  and  permitted  by  Seller,   Buyer  shall  not  use,   generate,
manufacture,  produce,  store, release,  discharge,  or dispose of any Hazardous
Substance  on, under or about the Property  (including  leasehold  interests) or
transport  to or from the  Property  any  Hazardous  Substance,  in each case in
violation of applicable Requirements of Law.

                  4.26.6  Default and Remedies.  In the event:

                           (a) Buyer fails to make any payment of  principal  or
                  interest to Seller  under the Note within  three (3)  Business
                  Days after receipt of written notice from Seller; or

                           (b)  Buyer  fails  to  comply  with any  covenant  or
                  obligation contained in this Agreement,  the Note, the Deed of
                  Trust, or the Guaranty,  and does not cure that failure within
                  thirty  (30)  days,  unless  such  failure is capable of being
                  cured but is not reasonably capable of being cured within such
                  thirty (30) day period and Buyer commences action to cure such
                  failure  within such thirty (30) day period and diligently and
                  continuously prosecutes such action to completion; or

                           (c) (i) A petition  for relief  under any  present or
                  future   state   or   federal   law   regarding    bankruptcy,
                  reorganization  or  other  relief  to  debtors  is filed by or

                                      -34-
<PAGE>

                  against Buyer (and, if filed against Buyer,  is not discharged
                  within  thirty (30) days of the date of such  filing);  (ii) a
                  receiver,  liquidator,  sequestrator,  trustee, conservator or
                  other similar official of any property of Buyer, is appointed;
                  (iii)  Buyer  makes a general  assignment  for the  benefit of
                  creditors,  becomes  insolvent,  or  unable  to pay its  debts
                  generally as they mature;  (iv) an  attachment or execution is
                  levied against any substantial portion of the Property; or (v)
                  a  liquidation  or  dissolution  of Buyer  or a  filing  by or
                  against Buyer of a petition for  liquidation or dissolution of
                  Buyer; or

                           (d) An event of default occurs under any lien or deed
                  of trust having priority over the Deed of Trust,

then Seller may exercise any one or more of the following rights or remedies:

                  (i) Any right or  remedy  it has  under the Note,  the Deed of
         Trust, or the Guaranty; or

                  (ii) Declare the principal of and interest on the  obligations
         owing under the Note immediately due and payable; or

                  (iii) Pursue any other action available to Seller at law or in
         equity.

                  All of Seller's  rights and remedies will be  cumulative.  The
exercise of any rights of Seller  hereunder  shall not in any way  constitute  a
cure or waiver of a default  hereunder or elsewhere,  or invalidate any act done
pursuant to any notice of default, or prejudice Seller in the exercise of any of
its other rights hereunder or elsewhere  unless, in the exercise of said rights,
Seller realizes all amounts owed to it hereunder. Notwithstanding the foregoing,
whether or not Seller  elects to employ any or all of the remedies  available to
it upon a default, Seller shall not be liable for the construction or failure to
construct or complete or protect the  Improvements or for payment of any expense
incurred in  connection  with the exercise of any remedy  available to Seller or
for the construction or completion of the Improvements or for the performance of
any other obligation of Buyer.


                                      -35-
<PAGE>


         IN WITNESS  WHEREOF,  the  Parties  have caused  this  Agreement  to be
executed  and  delivered by their  respective  representatives,  thereunto  duly
authorized, as of the date first above written.

                                      SELLER:

                                      ELECTRONIC ARTS REDWOOD, INC.
                                      a Delaware corporation



                                      By: /s/ E. Stanton McKee
                                          -------------------------------------
                                      Name: E. Stanton McKee
                                            -----------------------------------
                                      Title: Exec Vice President
                                             ----------------------------------


                                      BUYER:

                                      Spieker Properties, L.P.,
                                      a California limited Partnership

                                      By: Spieker Properties, Inc.,
                                          a Maryland corporation


                                      By: /s/ Peter H. Schnugg
                                          -------------------------------------
                                      Name: Peter H. Schnugg
                                            -----------------------------------
                                      Title: Senior Vice President
                                             ----------------------------------

                                      The undersigned  agrees to serve as Escrow
                                      Agent under the foregoing Agreement:



                                      By:
                                          -------------------------------------
                                          Susan Melton, Escrow Officer



                                      -36-
<PAGE>


                                    EXHIBIT A


                             DESCRIPTION OF PROPERTY


PARCEL I:

Parcel 1, as shown on Parcel Map No. 98-6 filed  September  2, 1998,  Book 70 of
Parcel Maps, pages 78 and 79, San Mateo County Records.

PARCEL II:

Parcel 2, as shown on Parcel Map No. 98-6 filed  September  2, 1998,  Book 70 of
Parcel Maps, pages 78 and 79, San Mateo County Records.

PARCEL III:

Non-exclusive  easements  appurtenant to Parcels I and II above for utilities as
defined in that certain  Easement and Covenants  Agreement dated March 27, 1997,
by and between Shores Business Center Association and Flatirons Funding, Limited
Partnership,  recorded March 27, 1997,  Document No. 97034607,  San Mateo County
Records, as amended by First Amendment to Easement and Covenants Agreement dated
August 31, 1998, recorded September 2, 1998,  Document No. 98-141940,  San Mateo
County Records ("First  Amendment") over under and across that area described as
"Utility Easement No. l -- Parcel A" in Exhibit D of the First Amendment.

PARCEL IV:

Non-exclusive  easements  appurtenant  to Parcel I above for  ingress/egress  as
defined in that certain  Easement and Covenants  Agreement dated March 27, 1997,
by and between Shores Business Center Association and Flatirons Funding, Limited
Partnership,  recorded March 27, 1997,  Document No. 97034607,  San Mateo County
Records, as amended by First Amendment to Easement and Covenants Agreement dated
August 31, 1998, recorded September 2, 1998,  Document No. 98-141940,  San Mateo
County Records ("First  Amendment") over under and across that area described as
"Ingress/Egress Easement No. 2 -- Parcel B" in Exhibit D of the First Amendment.

PARCEL V:

Non-exclusive  easements  appurtenant to Parcels I and II above for utilities as
defined in that certain  Easement and Covenants  Agreement dated March 27, 1997,
by and between Shores Business Center Association and Flatirons Funding, Limited
Partnership,  recorded March 27, 1997,  Document No. 97034607,  San Mateo County
Records, as amended by First Amendment to



                                      -1-
<PAGE>

Easement and Covenants  Agreement dated August 31, 1998,  recorded  September 2,
1998, Document No. 98-141940,  San Mateo County Records ("First Amendment") over
under and across that area described as "Utility  Easement No. 9 -- Parcel B" in
Exhibit D of the First Amendment.

PARCEL VI:

Easements  appurtenant  to Parcels I and II above for the  purposes set forth in
Sections 11.4(a),  11.4(c), 11.5, 11.6 and 11.7 in the Declaration of Covenants,
Conditions,  Easements and  Restrictions  Electronic Arts Business Park recorded
September 18, 1998, Document No. 98-150182, San Mateo County Records.


A.P. No.:         095-221-080                               JPN 127 086 000 01 A
                  095-221-090                                   127 086 000 02 A
                  095-221-110
                  095-233-130
                  095-233-140


                                      -2-
<PAGE>

                                    EXHIBIT B


RECORDING REQUESTED BY AND                  x
WHEN RECORDED MAIL TO:                      x
                                            x
                                            x
                                            x
                                            x
--------------------------------------------------------------------------------
                                             Above Space for Recorder's Use Only

                                     FORM OF
                                   GRANT DEED

         The undersigned  Grantor declares that Documentary  Transfer Tax is not
part of the  public  records  and is being  paid in  accordance  with a separate
statement:

         FOR  VALUE  RECEIVED,   ELECTRONIC  ARTS  REDWOOD,   INC.,  a  Delaware
corporation  ("Grantor"),   grants  to   __________________________________,   a
_______________________ ("Grantee"), all that certain real property ("Property")
located in the City of Redwood City,  County of San Mateo,  State of California,
as more particularly described on Exhibit A attached hereto.

         RESERVING THEREFROM easements as set forth in Sections 11.4, 11.5, 11.6
and 11.7 in the Declaration of Covenants, Conditions, Easements and Restrictions
Electronic  Arts  Business  Park  recorded  September  18,  1998,  Document  No.
98-150182, San Mateo County Records.

         AND RESERVING THEREFROM the non-exclusive right to use and enjoy and to
grant and to convey to others on a non-exclusive  basis the easements  described
as Parcels III, IV, and V in Exhibit A hereof.

         This Grant Deed is made by Grantor and accepted by Grantee  subject to:
(i)  non-delinquent  real property  taxes and  assessments;  (ii) all covenants,
conditions,  restrictions and easements and all rights of way, encumbrances, and
all other  exceptions to title of record;  (iii) all matters  ascertainable by a
reasonable inspection or survey of the Property;  and (iv) all matters affecting
the  condition  of title to the  Property  suffered  or  created  by or with the
written consent of Grantee.

                            [Continued on Next Page]


MAIL TAX STATEMENTS:

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

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

                                      -1-
<PAGE>



         IN WITNESS  WHEREOF,  Grantor has executed this Grant Deed this ___ day
of __________, 1999.

                                        GRANTOR:

                                        ELECTRONIC ARTS REDWOOD, INC., a
                                        Delaware corporation



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


                                      -2-
<PAGE>


                              SEPARATE STATEMENT OF
                            DOCUMENTARY TRANSFER TAX



County Recorder
San Mateo County

Dear Sir/Madam:

         In  accordance  with Revenue and Taxation  Code  Section  11932,  it is
requested that this  Statement of  Documentary  Transfer Tax due not be recorded
with the attached deed, but be affixed to the deed after  recordation and before
return as directed on the deed.

         The deed names the undersigned,  as Grantor, and ______________________
__________________________,  a __________________________,  as Grantee. The real
property being transferred is located in the City of Redwood City, County of San
Mateo, State of California, as more particularly described in the attached deed.

         The amount of the documentary  transfer tax due on the attached deed is
$______________, computed on the basis of:

         (__) computed on the consideration or value of property conveyed; or

         (__) computed on the  consideration or value less liens or encumbrances
              remaining at the time of sale.


                                        Very truly yours,

                                        ELECTRONIC ARTS REDWOOD, INC., a
                                        Delaware corporation



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



                                      -3-
<PAGE>

                                    EXHIBIT C


                                     FORM OF
                TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS



         To   inform   Name,   entity,   jurisdiction   of  Buyer  or   nominees
("Transferee"),  that  withholding  of tax under  Section  1445 of the  Internal
Revenue Code of 1986,  as amended (the  "Code"),  will not be required  upon the
transfer of certain real  property to  Transferee  by  ELECTRONIC  ARTS REDWOOD,
INC., a Delaware corporation,  the undersigned hereby certifies the following on
behalf of Transferor:

         1.  Transferor  is  not a  foreign  corporation,  foreign  partnership,
foreign trust, or foreign estate (as those terms are defined in the Code and the
Income Tax Regulations promulgated thereunder);

         2. Transferor's U.S. employer identification number is 94-2838567; and

         3. Transferor's  office address is 207 Redwood Shores Parkway,  Redwood
City, California 94065.

         Transferor  understands that this Certification may be disclosed to the
Internal  Revenue Service by Transferee and that any false  statement  contained
herein could be punished by fine, imprisonment, or both.

         Under  penalty of perjury the  undersigned  declares that he or she has
examined this  Certification  and to the best of his/her knowledge and belief it
is true, correct and complete,  and the undersigned further declares that he/she
has authority to sign this document on behalf of Transferor.


Dated: ___________________              ELECTRONIC ARTS REDWOOD, INC.,
                                        a Delaware corporation



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


                                      -1-
<PAGE>

                                    EXHIBIT D


                                     FORM OF
                          SELLER'S CLOSING CERTIFICATE



         ELECTRONIC ARTS REDWOOD, INC. ("Seller"),  a Delaware corporation,  and
_________________________ ("Buyer"), a __________________________,  have entered
into that certain Agreement of Purchase and Sale and Escrow  Instructions  dated
Insert date of Agreement (the "Purchase Agreement").  Seller hereby certifies to
Buyer  that,  as of the  date  of  this  certificate,  the  representations  and
warranties contained in Section 3.2.1 of the Purchase Agreement, as qualified by
references to Seller's Knowledge,  are true in all material respects,  except as
otherwise  expressly  disclosed in the schedule of  exceptions  attached to this
Certificate.


Dated: ___________________              ELECTRONIC ARTS REDWOOD, INC.,
                                        a Delaware corporation



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


                                      -1-
<PAGE>

                                    EXHIBIT E


              EXCEPTIONS TO SELLER'S REPRESENTATIONS AND WARRANTIES



         Nothing in this schedule  constitutes  an admission of any liability or
obligation  of Buyer to any third party,  nor an admission to any third party of
Buyer's  interests.  Documents  referenced  herein form an integral part of this
disclosure and are  incorporated  herein by reference for all purposes set forth
herein.  Matters  reflected  in this  schedule  are not  necessarily  limited to
matters  required by the  Agreement  to be  reflected  herein;  such  additional
matters are included for  informational  purposes only.  Capitalized  terms used
herein and not otherwise defined herein shall have the meanings ascribed to them
in the Agreement.

         Section 3.2.1(vi)

         1.       Equipment  used for staging  materials,  storage of  hazardous
                  substances and other construction-related  functions have been
                  operated on the Property and have traversed the property, in a
                  manner consistent with accepted construction practices.

         2.       The possible  presence of Hazardous  Substances in the soil of
                  the  Property,  as set forth in the  Preliminary  Geotechnical
                  Report issued by Treadwell and Rollo, dated as of February 14,
                  1995,  and the Phase I and Phase II reports  issued by Applied
                  Geosciences.

         Section 3.2.1(viii)

         1.       Prior to Closing,  Seller may engage in  hydro-seeding  of the
                  Property.

         2.       Seller  may  install  roads,  sidewalks  and  landscaping,  in
                  accordance with the Landscaping  Drawings  prepared by the SWA
                  Group dated February 12, 1997 and the Civil Drawings  prepared
                  by Bohley, Malley Associates dated as of February 12, 1997.



                                      -1-
<PAGE>

                                    EXHIBIT F

                          SCHEDULE OF PROPERTY RECORDS


1.       ALTA survey of the Real Property,  prepared by Bohley/Maley Associates,
         as job number  97023 and  certified  as of March 27,  1998,  by Lisa M.
         Maley, L.S.

2.       Applications dated January 6, 1996, for (a) a Vesting Tentative Map and
         (b) a Planned Development Permit with schedules and exhibits.

3.       Development  Agreement  dated as of  November  7, 1996,  by and between
         Flatirons Funding, Limited Partnership, a Delaware limited partnership,
         and the  City of  Redwood  City  and  recorded  November  8,  1996,  as
         Instrument  No.  96-138988,   Official   Records,   San  Mateo  County,
         California,  as amended by First  Amendment  to  Development  Agreement
         dated April 15, 1998 and recorded  April 15, 1998,  as  Instrument  No.
         98-054809,  Official Records,  San Mateo County,  California,  by First
         Amendment to  Development  Agreement  dated April 6, 1998, and recorded
         August 25,  1998,  as  Instrument  No.  98-135753  (recorded to correct
         typographical  errors in  document  recorded  April 15,  1998),  and by
         Second Amendment dated August 31, 1998 and recorded  September 2, 1998,
         as  Instrument  No.  98-141937,  Official  Records,  San Mateo  County,
         California.

4.       Phase I and  Phase II  Environmental  Assessment  Reports  prepared  by
         Applied  Geosciences,  Inc.,  dated  February 7, 1995, and February 13,
         1995, respectively.

5.       Preliminary  Geotechnical  Investigation prepared by Treadwell & Rollo,
         Inc., dated February 14, 1995.

6.       All real  estate  tax  assessments  and bills  affecting  the  Property
         (including,  without limitation,  special  assessments) for the current
         tax year.

7.       Covenants,  Conditions,  Easements and  Restrictions  of the Electronic
         Arts  Business  Park dated August 31, 1998 and recorded  September  18,
         1998, as Instrument No. 98-150182,  Official Records, San Mateo County,
         California.

8.       Covenants  Agreement  by and  between  Redwood  Shores  Properties  and
         Flatirons Funding,  Limited  Partnership,  dated February 14, 1995, and
         recorded  February 15,  1995,  as  Instrument  No.  95015506,  Official
         Records,  San Mateo County,  California,  as amended by an Amendment to
         Covenants Agreement, dated March 27, 1997.

9.       Assignment of Sewage Treatment Capacity dated February 14, 1995, by and
         between  Redwood  Shores  Properties  and  Flatirons  Funding,  Limited
         Partnership.

10.      Shores Center Development Handbook.

11.      Documents concerning Entitlements.


                                      -1-
<PAGE>

                                    EXHIBIT G




RECORDING REQUESTED BY, AND                          )
WHEN RECORDED MAIL TO:                               )
                                                     )
Nossaman, Guthner, Knox & Elliott, LLP               )
50 California Street, 34th Floor                     )
San Francisco, California  94111                     )
Attention:  David L. Kimport, Esq.                   )
                                                     )
--------------------------------------------------------------------------------

                                     FORM OF
                       ASSUMPTION AND COVENANTS AGREEMENT


         THIS ASSUMPTION AND COVENANTS AGREEMENT ("Covenants Agreement") is made
and entered into as of this ___ day of __________________,  1999, by and between
FLATIRONS  FUNDING,   LIMITED  PARTNERSHIP,   a  Delaware  limited  partnership,
("FFLP"),  and  __________________________,   a  _______________________________
("Buyer")  (FFLP and  Buyer  are the  "Parties"  to this  Covenants  Agreement).
ELECTRONIC ARTS REDWOOD,  INC., a Delaware  corporation  ("EAR") is a party with
respect to Sections 1.3, 6, and 9 only.

                                    RECITALS

         A. Concurrent with the recording of this Covenants Agreement,  FFLP has
sold and conveyed to EAR and EAR has sold and  conveyed to Buyer,  and Buyer has
purchased from EAR,  approximately 13.85 gross acres of vacant land comprised of
two (2) legal lots in the City of Redwood City, County of San Mateo, California,
as more  particularly  described  in Exhibit A attached  hereto  (the  "Conveyed
Property").

         B.  FFLP is the  owner of four (4)  legal  lots in the City of  Redwood
City, County of San Mateo, California, as more particularly described in Exhibit
B attached hereto (the "Retained Property").  (The term "Property" alone is used
occasionally to refer to either the Retained  Property or the Conveyed  Property
as the context may require and the term  "Properties"  is used  occasionally  to
refer to the Conveyed Property and the Retained Property collectively.)

         C. FFLP  acquired the  Conveyed  Property,  the  Retained  Property and
certain  other  real   property  in  the  vicinity  of  the  Conveyed   Property
(collectively,  the  "Project") on February



                                      -1-
<PAGE>

15,  1995.  The  Project  has common or related  service  needs,  infrastructure
components (including  landscaping,  parks,  utilities,  sewer, drainage,  road,
highway components), and building density limitations.

         D. In connection with its acquisition of the Project, FFLP entered into
that certain  Covenants  Agreement  dated February 14, 1995, by and between FFLP
and Redwood Shores Properties, and recorded February 15, 1995, as Instrument No.
95-015506,  Official  Records,  San Mateo County,  California,  as amended by an
Amendment to Covenants  Agreement  dated March 27, 1997,  and recorded March 27,
1997,  as  Instrument  No.  97-034602,   Official  Records,  San  Mateo  County,
California ("Redwood Shores Covenants Agreement").

         E. As a material  inducement  and condition to EAR selling the Conveyed
Property to Buyer, and as an integral part of the  negotiations  between EAR and
Buyer as to the purchase  price,  terms and  conditions  of sale of the Conveyed
Property by EAR,  Buyer has agreed to execute this  Covenants  Agreement  (i) to
assume FFLP's duties and obligations with respect to the Conveyed Property under
the Redwood Shores Covenants Agreement; (ii) to create personal covenants of the
Parties  and their  Successors  (as  defined  in Section 4 below) to and for the
exclusive  benefit of each other and their  Designated  Assigns  (as  defined in
Section 4 below) and (iii) to also create covenants  running with the land under
California Civil Code Section 1468 in favor of and benefiting the Properties.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency  of which is  hereby  acknowledged  by each of FFLP and  Buyer,  the
parties agree as follows:

         1.       Assumption of Redwood Shores Covenants Agreement.

                  1.1 Assignment.  FFLP, for itself, its successors and assigns,
expressly and unconditionally  assigns to Buyer, its successors and assigns, all
of its rights and benefits under the Redwood Shores  Covenants  Agreements  with
respect to the Conveyed Property.  FFLP expressly hereby (i) designates Buyer as
being  entitled  to enforce  all  provisions  of the  Redwood  Shores  Covenants
Agreement insofar as they affect the Conveyed Property in the same manner and to
the same extent as FFLP has heretofore been entitled;  (ii) designates  Buyer as
being  entitled to  participate  in amendments to the Redwood  Shores  Covenants
Agreement insofar as they affect the Conveyed Property in the same manner and to
the same extent as FFLP has heretofore  been  entitled;  and (iii) declares that
Buyer is FFLP's "Assign" as that term is used in Section 3 of the Redwood Shores
Covenants Agreement.

                  1.2 Assumption. Buyer, for itself, its successors and assigns,
expressly and unconditionally  assumes all of the obligations and liabilities of
FFLP under the Redwood Shores  Covenants  Agreement with respect to the Conveyed
Property  arising  from and after the date  hereof,  and agrees to  perform  and
comply with all  covenants of FFLP with respect to the Conveyed  Property as set
forth in the Redwood  Shores  Covenants  Agreement.  Buyer  covenants that Buyer
shall at all times fully comply with, and the development,  construction and use
of the

                                      -2-
<PAGE>

Conveyed  Property  and  Improvements  shall at all times be in full  compliance
with, the Redwood Shores Covenants Agreement.

                  1.3 Indemnification.  Buyer shall indemnify and hold FFLP, its
successors and assigns, and including EAR, its successors and assigns,  harmless
from any and all liability, cost, loss, damage, or expense, including attorney's
fees,  arising  out  of  Buyer's  failure  to  observe  and  perform  any of the
obligations,  liabilities, and covenants hereby assumed. EAR shall indemnify and
hold Buyer,  its  successors  and assigns,  harmless from any and all liability,
cost, loss, damage, or expense,  including attorney's fees, arising out of EAR's
or FFLP's  failure to observe and perform any of the  obligations,  liabilities,
and covenants hereby retained.

         2. Mutual  Covenants.  In connection with and as a material  inducement
and  condition to EAR's sale of the Conveyed  Property to Buyer,  FFLP and Buyer
make the following covenants.  Each of these covenants shall constitute both (i)
the  personal  covenants of the  covenantor  and its  Successors  to and for the
exclusive  benefit of the covenantee  and its Designated  Assigns (as defined in
Section  4  below),  and (ii)  covenants  running  with the land in favor of and
benefiting the Retained Property or the Conveyed Property, as the case may be.

                  2.1 Buyer's Covenant Not to Exceed Density. Buyer covenants to
FFLP that at all times  during  the term of this  covenant  (as such term is set
forth in Section 6 below)  the  Buildings  on the  Conveyed  Property  shall not
contain more than an aggregate  three hundred forty  thousand  (340,000)  square
feet  of  Gross  Building  Floor  Area  (as  defined  below)  in  Zones 2 and 4,
distributed  among Zones 2 and 4 in  accordance  with that  certain  Development
Agreement  dated  November 7, 1996,  by and between FFLP and the City of Redwood
City and recorded November 8, 1996, as Instrument No. 96-138988, as the same may
be amended from time to time (the "Development Agreement"); and that Buyer shall
not develop and construct  more than an aggregate  340,000  square feet of Gross
Building Floor Area on Zones 2 and 4 on the Conveyed  Property.  The term "Gross
Building Floor Area" shall mean the sum total of all areas contained  within the
exterior  walls  of all  Buildings  including,  without  limitation,  stairways,
elevator shafts,  other shafts,  mechanical  rooms,  vents, and internal support
facilities, but excluding those portions of mechanical or utility structures and
storage  areas  located  on the  roof  to the  extent  such  structures  are not
considered  by the City as  building  floor  area for  purposes  of  determining
parking  requirements,  traffic  generation,  building  density or other similar
development limitations.

                  2.2 FFLP's Covenant Not to Exceed  Density.  FFLP covenants to
Buyer that at all times  during the term of this  covenant  (as such term is set
forth in Section 6 below)  the  Buildings  on the  Retained  Property  shall not
contain  more than six hundred  sixty  thousand  (660,000)  square feet of Gross
Building Floor Area for office space nor more than 50,000 square feet of special
purpose accessory  structures and that FFLP shall not develop and construct more
than 660,000  square feet of Gross Building Floor Area for office space nor more
than 50,000 square feet of special purpose accessory  structures on the Retained
Property.  Moreover,  FFLP  covenants  to  Buyer  that  it  shall  not  commence
construction  of more than 550,000  square feet of Gross Building Floor Area for
office space nor of more than 50,000  square feet of special



                                      -3-
<PAGE>

purpose  accessory  structures  (including all  construction  commenced from and
after November 8, 1996) on the Retained Property prior to November 8, 2000.

                  2.3  Compliance  with  Declaration.  Each of  Buyer  and  FFLP
covenants to the other that it shall at all times fully  comply  with,  and that
the development,  construction and use of the Conveyed  Property or the Retained
Property, as the case may be, and the Improvements shall at all times be in full
compliance  with,  the  Declaration  of  Covenants,  Conditions,  Easements  and
Restrictions  of the  Electronic  Arts Business Park dated August 31, 1998,  and
recorded in the Official  Records of San Mateo County on September  18, 1998, as
Document No. 98-150182 ("Park Declaration").

                  2.4 Buyer's  Covenant Not to Build.  Buyer shall not construct
any structure or portion  thereof  within that portion of the Conveyed  Property
described in Exhibit C attached  hereto and  incorporated  herein by  reference;
except  for  landscaping,   surface  roadways  and  parking,  awnings  or  other
protrusions over entrance doorways,  covered walkways, outdoor patio facilities,
related  outbuildings not exceeding  fifteen (15) feet in height above the grade
of the Property,  as of the date hereof, and related installations such as light
standards.

         3. Benefit and Burden of Covenants  Generally;  Equitable  Enforcement.
Buyer and FFLP acknowledge and agree that the assumptions set forth in Section 1
above and the covenants set forth in Section 2 above relate to the use,  repair,
maintenance, improvement and development of, or payment of taxes and assessments
on, the Project or some part thereof,  and that these  covenants are intended to
both bind Buyer and Buyer's  Successors (as defined in Section 4 hereof) for the
personal benefit of FFLP and FFLP's Designated  Assigns (as defined in Section 4
hereof), or to bind FFLP and FFLP's Successors for the personal benefit of Buyer
and Buyer's Designated  Assigns,  as the case may be, as more fully set forth in
Section 4 below,  and to burden the  Conveyed  Property  for the  benefit of the
Retained  Property,  or to burden the  Retained  Property for the benefit of the
Conveyed  Property,  as the case may be, as more  fully  set forth in  Section 5
below.  Each of Buyer and FFLP  acknowledges and agrees that the assumptions set
forth in Section 1 and the  covenants set forth in Section 2 above and all other
terms and provisions of this Covenants  Agreement have been  negotiated  between
Buyer and FFLP in an arm's length commercial  transaction between sophisticated,
knowledgeable  parties,  each possessing  substantial  experience in real estate
transactions  and  represented  by  independent  counsel;  that  this  Covenants
Agreement  has been an integral  part of  negotiations  concerning  the purchase
price,  terms and conditions of the sale of the Conveyed Property to Buyer; that
the Parties'  execution,  delivery and  recording  of this  Covenants  Agreement
constitutes a material part of their agreement to purchase and sell the Conveyed
Property and that the Parties would not close the sale of the Conveyed  Property
to Buyer  without  the  execution,  delivery  and  recording  of this  Covenants
Agreement;  that each Party has a legitimate  personal  business interest in the
other's  development and  construction of the  Improvements on their  respective
Property in conjunction  with the continued  development and sale of the balance
of the Project;  that the purchase price paid by Buyer for the Conveyed Property
takes into account the  assumption  set forth in Section 1 and the covenants set
forth in Section 2 above (including, without limitation, the density limitations
set forth in  Sections  2.1 and 2.2 and the  covenant  not to build set forth in

                                      -4-
<PAGE>

Section  2.4);  and that it is and shall be equitable  for the Parties and their
Designated  Assigns or any  beneficial  owner of the  Property,  in its sole and
absolute  discretion  and without any obligation to do so, to enforce any breach
of  these  covenants  by a  Party  or its  Successors  in  accordance  with  the
provisions of Section 8.3 below,  notwithstanding that the use of the respective
Property unrestricted by said covenants might be more profitable to its owner or
that  enforcement of these  covenants  might  financially  benefit the enforcing
Party or its Designated Assigns.

         4. Covenants as Personal Covenants. Each of Buyer and FFLP acknowledges
and agrees  that each of the  covenants  assumed as set forth in Section 2 above
constitutes a personal  covenant of the  covenanting  Party and its  successors,
assigns,  transferees,   grantees,  devisees,   executors,   administrators  and
representatives   (collectively  "Successors")  (whether  such  Successors  have
succeeded  to the  Party's  interest in the  respective  Property in whole or in
part,  directly,  indirectly  (whether  by merger,  consolidation,  liquidation,
reorganization,  sale of assets or sale of stock of the Party),  by operation of
law or  through  foreclosure,  deed in lieu of  foreclosure,  trustee's  sale or
otherwise),  to and for the sole benefit of (i) the other Party (the  "Benefited
Party") and only such of the Benefited Party's successors, assigns, transferees,
grantees, heirs, devisees, executors, administrators and representatives (x) who
hold an  interest  in real  property  within the  Project  and (y) who have been
expressly  designated by the Benefited Party (in a written designation  document
recorded by the  Benefited  Party  against  the  applicable  Property)  as being
entitled  to  enforce  all or certain  specified  provisions  of this  Covenants
Agreement (collectively, a Party's "Designated Assigns") and (ii) the beneficial
owner(s) of the  Benefited  Party's  Property.  Buyer further  acknowledges  and
agrees  that  the  indemnification  obligation  set  forth  in  Section  1 above
constitutes a personal  covenant of Buyer and Buyer's  Successors  (whether such
Buyer's  Successors have succeeded to Buyer's  interest in the Property in whole
or in part, directly, indirectly (whether by merger, consolidation, liquidation,
reorganization,  sale of assets or sale of stock of Buyer),  by operation of law
or  through  foreclosure,  deed  in  lieu  of  foreclosure,  trustee's  sale  or
otherwise),  to and for the  sole  benefit  of (i) FFLP  and  FFLP's  Designated
Assigns and  including  EAR and (ii) the  beneficial  owner(s)  of the  Retained
Property.  The indemnity and defense obligations set forth in this Section shall
survive for twenty (20) years after the date of  recordation  of this  Covenants
Agreement  notwithstanding  that a Party may no longer  possess  any  beneficial
ownership  interest in the Property.  Except as expressly set forth above and in
Section 5 below, the covenants set forth in Section 2 above shall not be for the
benefit of or  enforceable  by any other person or entity owning any property in
the  Project.  Neither  FFLP  or  Buyer  or  their  Designated  Assigns  nor the
beneficial  owner(s) of either the Retained  Property or the  Conveyed  Property
shall have any  obligation to enforce any such  covenants for the benefit of any
other person or entity.

         5.  Covenants  Running With the Land.  All covenants  and  restrictions
contained in Section 2 above shall also be  covenants  running with the land for
the benefit of the Retained Property,  or the Conveyed Property, as the case may
be, and shall, in any event, and without regard to technical  classification  or
designation,  legal or otherwise,  be to the fullest extent permitted by law and
equity,  binding  for the  benefit  of and in favor of, and  enforceable  by any
person (including, without limitation, the Parties and their Designated Assigns)
having  any



                                      -5-
<PAGE>

beneficial  ownership in the Retained Property or the Conveyed Property,  as the
case may be. Buyer and FFLP  acknowledge and agree that given the close vicinity
of the  Conveyed  Property  and the  Retained  Property,  that the  development,
construction and operation of the Improvements on the Properties pursuant to the
covenants in Section 2 above shall  directly  benefit  each Party's  Property by
enhancing the value of each Party's Property.

         6. Term.  The  Assumption  and  Indemnification  set forth in Section 1
shall be of the same duration as that of the Redwood Shores Covenants Agreement.
The covenants set forth in Sections 2.1, 2.2, and 2.4 above shall  automatically
terminate  and become  null and void on the date  twenty  (20)  years  after the
recordation date of this Covenants Agreement. The covenants set forth in Section
2.3 above shall be of the same duration as that of the Park Declaration.

         7. Priority of Mortgage  Lien. No violation or breach of the covenants,
conditions, restrictions,  provisions or limitations contained in this Covenants
Agreement shall defeat or render invalid or in any way impair the lien or charge
of any mortgage or deed of trust or security  interest  recorded  against either
the Conveyed  Property or the Retained  Property;  provided,  however,  that any
subsequent owner of the Conveyed Property or Retained Property,  as the case may
be,  or  portion  thereof  shall  constitute  a  Successor  and be bound by such
remaining  covenants,  conditions,  restrictions,  limitations,  and provisions,
whether  such  owner's  title  was  acquired  by  foreclosure,  deed  in lieu of
foreclosure, trustee's sale or otherwise.

         8.       Defaults: No Waiver of Rights; Remedies.

                  8.1  Defaults.  If a Party should  breach any of the covenants
set  forth  herein  or  default  in the  performance  of any of its  obligations
hereunder,  then the other  Party,  its  Designated  Assigns  or the  beneficial
owner(s) of a Property  shall have the immediate  and absolute  right to enforce
any or all of the remedies set forth in Section 8.3 below  without the necessity
of providing the breaching  Party with any notice of the default or  opportunity
to cure the default.

                  8.2  No  Waiver  of  Rights.  Any  failures  or  delays  by  a
non-breaching  Party or its Designated  Assigns or the beneficial  owner(s) of a
Property to provide any default notices to a breaching Party or to assert any of
their rights and remedies as to any breach or default by a breaching Party under
this  Covenants  Agreement  shall  not  deprive  them of  their  right  to later
institute and maintain any actions or proceedings  which they or any one of them
may deem  necessary  to protect,  assert or enforce any such rights or remedies.
Each Party  acknowledges  and agrees that the other Party  reserves the right to
determine whether or not and when, if at all, it will seek to enforce any of its
rights and  remedies  with  respect to a breach of any of the  covenants in this
Covenants  Agreement  and that any delay of or  reservation  in  enforcing  such
rights and  remedies  shall not  constitute  a waiver or  relinquishment  of any
future  enforcement  of this  Covenants  Agreement by a Party or its  Designated
Assigns or the beneficial owner(s) of a Property.

                                      -6-
<PAGE>

                  8.3  Remedies.   A  Party,  its  Designated   Assigns  or  the
beneficial owner(s) of a Property may institute any legal or equitable action to
cure,  correct, or remedy any default, to recover damages for any default, or to
obtain  any  other  remedy  consistent  with  the  purposes  of  this  Covenants
Agreement, including, without limitation, specific performance and/or injunctive
relief (both mandatory and  prohibitory),  abatement  proceedings,  constructive
trust or  equitable  liens.  The  rights  and  remedies  of the  Parties,  their
Designated Assigns and/or the beneficial owner of a Property are cumulative, and
the exercise by the Parties, their Designated Assigns or the beneficial owner of
a Property  of one or more of such  rights or remedies  shall not  preclude  the
exercise by it, at the same or different  times, of any other rights or remedies
for the same default or any other default.

         9.       General Provisions.

                  9.1  Attorneys'  Fees. In the event of litigation  between the
parties in connection with this Covenants Agreement,  the prevailing party shall
be entitled to its  reasonable  costs and expenses  incurred in connection  with
such litigation, including reasonable attorneys' fees and costs.

                  9.2 No Merger.  None of the terms,  covenants,  agreements  or
conditions heretofore agreed upon in writing in any other agreements between the
parties to this Covenants Agreement with respect to obligations to be performed,
kept or  observed  by Buyer or FFLP in  respect  to said  Conveyed  Property  or
Retained  Property  or any part  thereof  shall be deemed to be merged with this
Covenants Agreement.

                  9.3 Construction. Headings in this Covenants Agreement are for
convenience  and  reference  use  only,  and  are not  part  of  this  Covenants
Agreement,  and  shall  be of no legal  force or  effect.  When the  context  so
requires,  words in the masculine,  feminine or neuter gender shall include each
other  gender;  and words in the  singular or plural  shall  include each other.
Recitals A through E above and Exhibits A, B, and C, are incorporated  into this
Covenants Agreement by this reference.  This Covenants Agreement is executed and
delivered in the State of  California,  and shall be  construed  and enforced in
accordance with, and governed by, the laws of the State of California.

                  9.4  Notices.  Any  notice,  demand  or  request  which may be
permitted,  required or desired to be given in  connection  with this  Covenants
Agreement shall be given in writing and directed as follows:

                  If to FFLP:             Flatirons Funding, Limited Partnership
                                          c/o ML Leasing Equipment Corp.
                                          North Tower, 27th Floor
                                          World Financial Center
                                          250 Vesey Street
                                          New York, New York 10281-1327
                                          Attn:  Jean M. Tomaselli

                                    -7-
<PAGE>


                  With a copy to:         Electronic Arts Redwood, Inc.
                                          207 Redwood Shores Parkway
                                          Redwood City, California 94065
                                          Attn: James F. Healey, President

                  and a copy to:          Nossaman, Guthner, Knox & Elliott, LLP
                                          50 California Street, 34th Floor
                                          San Francisco, California  94111
                                          Attn:  Michael B. Wilmar, Esq.

                  If to Buyer:





                  With a copy to:




Notices shall be either (i) personally  delivered (including delivery by Federal
Express or other courier  service) to the offices set forth above, in which case
they shall be deemed  delivered  on the date of delivery to said  offices;  (ii)
sent by telecopy,  in which case they shall be deemed delivered on the date sent
(provided,  however,  that any notices  sent by  telecopy  shall also be sent by
overnight  courier on the same day);  or (iii) sent by certified  mail,  postage
prepaid,  return receipt requested, in which case they shall be deemed delivered
on the date shown on the  receipt  unless  delivery is refused or delayed by the
addressee,  in which event the notice  shall be deemed  delivered on the date of
deposit in the United States mail.  The addresses and  addressees may be changed
by giving notice of such change in the manner provided for in this Section 9.4.

                  9.5  Severability.  In the event any portion of this Covenants
Agreement  shall be  declared  by any  court  of  competent  jurisdiction  to be
invalid,  illegal or  unenforceable,  such portion shall be deemed  severed from
this Covenants  Agreement,  and the remaining parts of this Covenants  Agreement
shall remain in full force and effect, as fully as though such invalid,  illegal
or unenforceable portion had never been part of this Covenants Agreement.

                  9.6  Due  Execution.  The  persons  executing  this  Covenants
Agreement on behalf of Buyer, FFLP, and EAR, respectively, represent and warrant
that they have the right,  power,  legal  capacity and authority to execute this
Covenants Agreement and to bind the party for whom they are signing.

                                      -8-
<PAGE>

                  9.7      No Liability of Parties.

                           (a) FFLP. None of FFLP, FFLP's Designated  Assigns or
the  beneficial  owner(s) of the  Retained  Property or any of their  respective
present  or  future  partners,  officers,   directors,   shareholders,   agents,
employees,  guarantors,  parents,  subsidiaries or affiliates, and including EAR
(collectively  the "FFLP  Parties")  shall be directly or  indirectly  liable or
responsible  for any loss,  claim,  cause of  action,  liability,  indebtedness,
damage or injury of any kind or  character  to any  person,  entity or  property
(collectively,  "Claims")  arising from any construction on, or occupancy or use
of, any of the Conveyed Property or Improvements, including, without limitation,
any  Claims  caused  by,  or  arising  from:  (i) any  defect  in any  building,
structure,  grading,  fill,  landscaping or other  improvements  on the Conveyed
Property or in any on-site or off-site  improvement or other facility;  (ii) any
act or  omission  of  Buyer or any of  Buyer's  agents,  employees,  independent
contractors,  licensees  or  invitees;  (iii) any  accident  in, on or about the
Conveyed  Property or  Improvements,  or any fire,  flood,  or other casualty or
hazard  or Act of God  thereon;  (iv)  the  failure  of  Buyer,  any of  Buyer's
licensees,   employees,  invitees,  agents,  independent  contractors  or  other
representatives  to  maintain  all or any part of the  Conveyed  Property or the
Improvements in a safe  condition;  and (v) any nuisance made or suffered on any
part of the Conveyed  Property or  Improvements.  In addition,  none of the FFLP
Parties  shall be liable to Buyer or any other party on the basis of any actions
or failure to act under this Covenants Agreement, including, without limitation,
mistakes of judgment, negligent or otherwise, unless and to the extent resulting
from the FFLP Parties' intentional torts or willful misconduct.

                           (b) Buyer. None of Buyer,  Buyer's Designated Assigns
or the beneficial  owner(s) of the Conveyed  Property or any of their respective
present or future partners, officers, directors, shareholders,  members, agents,
employees,  guarantors,  parents,  subsidiaries or affiliates  (collectively the
"Buyer  Parties") shall be directly or indirectly  liable or responsible for any
loss, claim, cause of action, liability,  indebtedness,  damage or injury of any
kind or character  to any person,  entity or property  (collectively,  "Claims")
arising  from any  construction  on, or occupancy or use of, any of the Retained
Property or Improvements,  including,  without limitation, any Claims caused by,
or arising  from:  (i) any defect in any  building,  structure,  grading,  fill,
landscaping or other  improvements on the Retained Property or in any on-site or
off-site improvement or other facility;  (ii) any act or omission of FFLP or any
of FFLP's agents, employees, independent contractors, licensees or invitees, and
including  EAR;  (iii) any  accident  in, on or about the  Retained  Property or
Improvements,  or any fire,  flood,  or other  casualty  or hazard or Act of God
thereon; (iv) the failure of FFLP, any of FFLP's licensees, employees, invitees,
agents,  independent contractors or other representatives to maintain all or any
part of the Retained  Property or the Improvements in a safe condition;  and (v)
any  nuisance  made  or  suffered  on any  part  of  the  Retained  Property  or
Improvements.  In addition, none of the Buyer Parties shall be liable to FFLP or
any other  party on the  basis of any  actions  or  failure  to act  under  this
Covenants  Agreement,  including,  without  limitation,  mistakes  of  judgment,
negligent  or  otherwise,  unless  and to the  extent  resulting  from the Buyer
Parties' intentional torts or willful misconduct.

                                      -9-
<PAGE>

                  9.8      Limitation on Liability.

                           (a) Buyer. Notwithstanding anything set forth in this
Agreement to the contrary,  the  officers,  directors,  shareholders,  partners,
members,  and direct and  indirect  owners of Buyer  shall not be liable for any
debts or other  obligations  of Buyer or in respect of any claims  against Buyer
arising  under this  Covenants  Agreement,  and any such debts,  obligations  or
claims  shall be  satisfied  solely  out of the  assets  of Buyer.  No  personal
judgment shall be sought or obtained against any officer, director, shareholder,
partner, member, or direct or indirect owner of Buyer.

                           (b) EAR.  Notwithstanding  anything set forth in this
Agreement to the contrary,  the  officers,  directors,  shareholders,  partners,
members, and direct and indirect owners of EAR shall not be liable for any debts
or other  obligations  of EAR or in respect of any claims  against  EAR  arising
under this Covenants Agreement,  and any such debts, obligations or claims shall
be  satisfied  solely out of the assets of EAR.  No personal  judgment  shall be
sought or obtained against any officer, director, shareholder,  partner, member,
or direct or indirect owner of EAR.

                  9.9  Certain   Obligations   of  FFLP   Non-Recourse.   FFLP's
obligations  hereunder  are  intended  to be  the  obligations  of  the  limited
partnership and of the  corporations  which are the managing general partner and
any other general  partner  thereof only, and no recourse for the payment of any
amount due under this  Covenants  Agreement  or for any claim  based  thereon or
otherwise in respect thereof,  shall be held against any limited partner of FFLP
or any incorporator, shareholder, officer, director or affiliate, as such, past,
present or future of such corporate  managing  general  partner or other general
partner or of any corporate  limited partner or of any successor  corporation to
such  corporate  managing  general  partner  or  other  general  partner  or any
corporate  limited  partner of FFLP,  or against any direct or  indirect  parent
corporation of such corporate  managing general partner or other general partner
or of any limited  partner of FFLP or any other  subsidiary  or affiliate of any
such direct or indirect  parent  corporation  or any  incorporator,  shareholder
officer or director,  as such,  past,  present or future,  of any such parent or
other  subsidiary  or  affiliate,  it being  understood  that  FFLP is a limited
partnership  formed for the  purpose of  acquiring  and owning the  Project  and
acting as lessor to Electronic Arts Redwood,  Inc., on the express understanding
aforesaid. Nothing contained in this Section 9.9 shall be construed to limit the
exercise  or  enforcement,  in  accordance  with  the  terms  of this  Covenants
Agreement  and any other  documents  referred to herein,  of rights and remedies
against the limited partnership or the corporate managing general partner or any
other general  partner of FFLP or the assets of the limited  partnership  or the
corporate managing general partner or any other general partner of FFLP. As used
in this Section 9.9, "affiliate" means any other person controlling,  controlled
by or under direct or indirect  common control with such person;  "person" means
any individual,  corporation,  partnership,  limited liability company,  private
limited  company,  joint  venture,   association   joint-stock  company,  trust,
unincorporated  association,  organ of  government  or any  agency or  political
subdivision  thereof;  and "control," when used with any specified person, means
the power to direct the  management  and  policies of such  person,  directly or
indirectly,  whether through the ownership of voting



                                      -10-
<PAGE>

securities,   by  contract  or  otherwise;   and  the  terms  "controlling"  and
"controlled" have meanings correlative to the foregoing.

                  9.10  Amendment.  This  Covenants  Agreement may be amended or
modified only by a written amendment  executed and acknowledged by each of Buyer
and FFLP, (and EAR if such amendment or  modification  would affect EAR's rights
or obligations under this Covenants Agreement),  and their respective Successors
(if any), Designated Assigns (if any, and if and to the extent Buyer or FFLP has
granted  them the  right  to  participate  in any  amendments  to this  Covenant
Agreement in the recorded  designation  document referred to in Section 4 above)
and the beneficial  owner(s) of the Retained Property or the Conveyed  Property,
as the case may be, and recorded with the San Mateo County  recorder.  The party
recording  such  amendment  shall  be  entitled  to rely on  such  executed  and
acknowledged amendment as the valid, enforceable and insurable amendment to this
Covenants Agreement.  Each Party shall deliver to any of its Successor copies of
all  amendments  to this  Covenants  Agreement  (with  written  evidence of such
notification  to the other  Party),  all as more  fully  set forth in  Section 4
above.

         THIS  COVENANTS  AGREEMENT  IS  EXECUTED  as of the date first  written
above.


                                    FLATIRONS FUNDING, LIMITED PARTNERSHIP,
                                    a Delaware limited partnership

                                    By:     Flatirons Capital, Inc.
                                            Managing General Partner

                                            By:
                                               --------------------------------
                                            Its:
                                                 ------------------------------


                                    BUYER

                                    -----------------------------------------,
                                    a
                                       ------------------------


                                    By:
                                        --------------------------------------
                                    Its:
                                        --------------------------------------

                                      -11-
<PAGE>

FOR VALUABLE  CONSIDERATION,  the receipt and adequacy of which is  acknowledged
hereby, the undersigned executes this Assignment and becomes a party thereto for
the purposes of Sections 1.3, 6, and 9 only.


                                        ELECTRONIC ARTS REDWOOD, INC., a
                                        Delaware corporation



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


                                      -12-
<PAGE>


                                    EXHIBIT H



                                      -1-
<PAGE>

                                    EXHIBIT I


                                     FORM OF
                     ASSIGNMENT OF SEWAGE TREATMENT CAPACITY



                  THIS ASSIGNMENT  ("Assignment") is made and entered into as of
___________________,   1999,   by  and  between   FLATIRONS   FUNDING,   LIMITED
PARTNERSHIP, ("Assignor"), and _____________________________________________,  a
__________________ ("Assignee").

                                    RECITALS

                  A.  Electronic  Arts Redwood,  Inc.  ("EAR") and Assignee,  as
successor-in-interest,  are parties to that  certain  Agreement  of Purchase and
Sale dated ______________ (the "Purchase  Agreement") whereby EAR agreed to sell
to Assignee, and Assignee agreed to purchase from EAR, certain real property (as
more  particularly  described  in Exhibit "A" of the  Purchase  Agreement)  (the
"Property"),  all in  accordance  with the terms and  conditions of the Purchase
Agreement.

                  B.  Pursuant to the  Purchase  Agreement,  EAR agreed to cause
Assignor to assign to  Assignee,  at the closing  under the  Purchase  Agreement
("Closing"),  a sufficient  allocation of sewage treatment capacity from sources
available  to Assignor to permit  Assignee to  construct  up to an  aggregate of
Three Hundred Forty Thousand  (340,000) square feet of Gross Building Floor Area
on Zones 2 and 4 ("Maximum  Square  Footage") (but no more) on the Property.  As
used in this  Assignment,  the term "Gross  Building Floor Area" or "GBFA" means
the sum total of all floor  areas  contained  within the  exterior  walls of all
Buildings  including,  without  limitation,  stairways,  elevator shafts,  other
shafts, mechanical rooms, vents, and internal support facilities,  but excluding
those portions of mechanical or utility  structures and storage areas located on
the  roof to the  extent  such  structures  are not  considered  by the  City as
building floor area for purposes of determining  parking  requirements,  traffic
generation, building density or other similar development limitations.

                  C. Assignor holds certain rights to sewage treatment  capacity
applicable  to the Property and other lands owned by Assignor  consisting of (a)
rights to sufficient sewage treatment  capacity to construct 885,000 square feet
of GBFA for office use derived by mesne  assignments from a grant by the City of
Redwood City (the "City") to Mobil Oil Estates  (Redwood)  Limited  dated May 1,
1978 (the "Mobil Rights") which the City and Assignor  confirmed in that certain
Second  Amendment to  Development  Agreement  dated  August 31,  1998,  ("Second
Amendment") and (b) rights to purchase additional sewage treatment capacity from
the City up to 25,000  gallons per day ("gpd"),  as needed,  at $2.50 per gpd as
confirmed  in and  pursuant to the Second  Amendment  (the  "Purchase  Rights").
Assignor intends to assign to



                                      -1-
<PAGE>

Assignee  sufficient  sewage treatment  capacity from the Mobil Rights to enable
Assignee to construct the Maximum Square Footage.

                  NOW,  THEREFORE,  for good  and  valuable  consideration,  the
receipt and sufficiency of which are hereby acknowledged,  Assignor and Assignee
hereby agree as follows:

                  1.  Assignment.   Assignor  hereby  assigns  to  Assignee  the
following rights to sewage treatment capacity (the "Sewage Capacity Rights"):

                           (a)  Assignor  assigns  to  Assignee  from its  Mobil
Rights  sufficient  sewage  treatment  capacity  with the South  Bayside  System
Authority  ("SBSA") to permit  construction  of 340,000  square feet of GBFA for
office use.

                           (b) If for any  reason  the  foregoing  grant  is not
sufficient to permit Assignee to construct the Maximum Square Footage,  Assignee
must purchase,  lease, or otherwise acquire any needed sewage treatment capacity
on the open market.  Neither City,  EAR, nor Assignor is in any way obligated to
provide Assignee with sewage treatment  capacity except as set forth herein, and
in particular, neither EAR nor Assignor has any obligation to assign to Assignee
any of the Purchase Rights. City has agreed in the Development  Agreement to use
its best efforts to assist Assignor in obtaining any additional  capacity deemed
necessary, and Assignor, to the extent such agreement of the City is assignable,
hereby assigns to Assignee such agreement of the City to use best efforts.

                           (c)  Assignee   acknowledges   and  agrees  that  the
foregoing  assignment of Sewage Capacity Rights specifically  excludes any right
by  Assignee  to sell,  assign,  convey or  otherwise  transfer in any way (and,
therefore,   Assignee  is  specifically  prohibited  from  selling,   assigning,
conveying or otherwise  transferring  in any way) such Sewage Capacity Rights to
any third party for any use outside the  Property.  Any Sewage  Capacity  Rights
assigned hereunder but not actually required by Assignee for the construction of
the  Maximum  Square  Footage  shall  revert  to  Assignor.   Assignee   further
acknowledges  and agrees that,  other than the limited  assignment of the Sewage
Capacity Rights hereunder, Assignor is not assigning,  conveying or transferring
to  Assignee  any other  right,  title or  interest  of  Assignor  of any nature
whatsoever.

                  2.  Representations  and Warranties.  Assignor  represents and
warrants that it holds  sufficient  Sewage  Capacity Rights to enable it to make
this  Assignment  and  that it has due  power  and  authorization  to make  this
Assignment.

                  3. No Further Obligations. Neither Assignor nor EAR shall have
any  obligation  or liability  whatsoever  with  respect to the Sewage  Capacity
Rights, including,  without limitation, any obligation to obtain the City's, the
SBSA's or any other  governmental or other entity's  approval or consent to this
Assignment, or to incur any costs, expenses or other liabilities or pay any fees
(whether  directly or  indirectly),  dedicate  any land,  provide any parking or
reduce the  density  on, or the  allotment  of sewage  treatment  capacity  with
respect to, any other  property owned by Assignor or EAR, or in any other manner
adversely  affect  Assignor or EAR or any  property  owned by Assignor or EAR or
take any action  whatsoever  with  respect to the Sewage


                                      -2-
<PAGE>

Capacity Rights or in pursuit of any development rights or approvals whatsoever.
Notwithstanding  the  foregoing,  Assignor  shall  cooperate  with  and  provide
Assignee all  reasonable  assistance in perfecting  Assignee's  Sewage  Capacity
Rights hereunder.

                  4.  Attorneys'  Fees. In the event of  litigation  between the
parties  with  respect  to this  Assignment,  the  prevailing  party  (by way of
settlement,  dismissal or final  judgment)  shall be entitled to its  reasonable
costs and  expenses  incurred in  connection  with such  litigation,  including,
without limitation,  reasonable attorneys' fees. For purposes of this provision,
"prevailing  party" shall  include a party which  dismisses  such  litigation in
exchange  for  payment  of the  sum  allegedly  due,  performance  of  covenants
allegedly breached, or consideration substantially equal to the relief sought in
the litigation.

                  5. Certain Obligations  Non-Recourse.  Assignor's  obligations
hereunder are intended to be the  obligations of the limited  partnership and of
the  corporations  which are the managing  general partner and any other general
partner  thereof  only,  and no recourse for the payment of any amount due under
this  Agreement or for any claim based thereon or otherwise in respect  thereof,
shall be held  against  any limited  partner of  Assignor  or any  incorporator,
shareholder, officer, director or affiliate, as such, past, present or future of
such  corporate  managing  general  partner or other  general  partner or of any
corporate  limited  partner or of any successor  corporation  to such  corporate
managing  general  partner or other  general  partner or any  corporate  limited
partner of Assignor,  or against any direct or indirect  parent  corporation  of
such  corporate  managing  general  partner or other  general  partner or of any
limited  partner of Assignor or any other  subsidiary  or  affiliate of any such
direct or indirect parent corporation or any incorporator,  shareholder  officer
or  director,  as such,  past,  present or future,  of any such  parent or other
subsidiary  or  affiliate,  it  being  understood  that  Assignor  is a  limited
partnership  formed for the purpose of  acquiring  and owning the  Property  and
acting as lessor to Electronic Arts Redwood,  Inc., on the express understanding
aforesaid.  Nothing  contained in this Section 6 shall be construed to limit the
exercise or enforcement,  in accordance with the terms of this Agreement and any
other documents  referred to herein,  of rights and remedies against the limited
partnership  or the  corporate  managing  general  partner or any other  general
partner of Assignor or the assets of the limited  partnership  or the  corporate
managing  general partner or any other general  partner of Assignor.  As used in
this Section 6, "affiliate" means any other person controlling, controlled by or
under direct or indirect  common  control with such person;  "person"  means any
individual, corporation, partnership, limited liability company, private limited
company, joint venture,  association joint-stock company, trust,  unincorporated
association, organ of government or any agency or political subdivision thereof;
and "control,"  when used with any specified  person,  means the power to direct
the  management  and policies of such person,  directly or  indirectly,  whether
through the ownership of voting  securities,  by contract or otherwise;  and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

                  6.  Governing  Law. This  Assignment  shall be governed by and
construed in accordance with the laws of the State of California.

                                      -3-
<PAGE>

                  IN WITNESS WHEREOF,  the parties have executed this Assignment
as of the date first written above.

                  ASSIGNOR:            FLATIRONS FUNDING, LIMITED PARTNERSHIP
                                       a Delaware limited partnership



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


                  ASSIGNEE:            ---------------------------------------,
                                       a
                                         ------------------------------


                                        By:
                                            -----------------------------------



                                      -4-
<PAGE>

                                    EXHIBIT J


RECORDING REQUESTED BY, AND                          )
WHEN RECORDED MAIL TO:                               )
                                                     )
Nossaman, Guthner, Knox & Elliott, LLP               )
50 California Street, 34th Floor                     )
San Francisco, California  94111                     )
Attention:  David L. Kimport, Esq.                   )
                                                     )
--------------------------------------------------------------------------------

                                     FORM OF
                          ASSIGNMENT AND ASSUMPTION OF
                        DEVELOPMENT AGREEMENT AND PERMITS


         THIS  ASSIGNMENT  AND ASSUMPTION  AGREEMENT is made as of  ___________,
1999, by and between FLATIRONS FUNDING, LIMITED PARTNERSHIP,  a Delaware limited
partnership ("Assignor"), and ____________________,  a ________________________,
whose address is ________________________________________________  ("Assignee").
ELECTRONIC ARTS REDWOOD,  INC., a Delaware  corporation ("EAR"), is a party with
respect to Sections 3 through 13 only.

                                    RECITALS


                  A. EAR and Assignee  entered  into that  certain  Agreement of
Purchase and Sale dated  ___________________,  1999 (the  "Purchase  Agreement")
whereby EAR agreed to sell to  Assignee,  and Assignee  agreed to purchase  from
EAR, certain real property as more particularly  described in Exhibit "A" of the
Purchase  Agreement  (the  "Property"),  which  consists of Zones 2 and 4 as set
forth  in the  Development  Agreement,  all in  accordance  with the  terms  and
conditions of the Purchase Agreement.

                  B.  Pursuant to the  Purchase  Agreement,  EAR agreed to cause
Assignor  to assign  to  Assignee,  and  Assignee  to  assume,  the  Development
Agreement  dated  November  7, 1996,  by and  between  Assignor  and the City of
Redwood City and recorded November 8, 1996, as Instrument No. 96-138988,  as the
same may be amended from time to time (the "Development Agreement"), as the same
applies to or affects the Property;  and further to cause  Assignor to assign to
Assignee all permits,  licenses,  governmental approvals, and development rights
pertaining  to the  Property,  to the  extent of  Seller's  rights,  title,  and
interest  therein  and  thereto  and  ability  to assign  the same  (the  "Other
Rights"), subject to the terms and conditions set forth in this Assignment.

                                      -1-
<PAGE>

         NOW,  THEREFORE,  in consideration of the foregoing,  and of the mutual
covenants and conditions  herein contained,  the parties hereto  (together,  the
"Parties," and each sometimes a "Party") hereby act and agree as follows:

         1.  Assignment.  Assignor  hereby  assigns,  sets over and transfers to
Assignee,  and  Assignee  hereby  takes and accepts  from  Assignor,  (A) all of
Assignor's  rights in, under and to the  Development  Agreement as it applies to
the Property and to all benefits and privileges  hereafter  accruing to Assignor
thereunder,  including without limitation Assignee's right to build an aggregate
340,000 square feet of Gross Building Floor Area (as that term is defined in the
Development  Agreement and subject to the restrictions set forth in Section 4(e)
of the Development Agreement) distributed among Zones 2 and 4 in accordance with
the Development  Agreement,  and, (B) to the extent assignable,  all of Seller's
right, title and interest (if any) in and to of the Other Rights.

         2.  Assumption of Obligations  and  Liabilities  by Assignee.  Assignee
hereby  expressly  and  unconditionally  assumes  all  of  the  obligations  and
liabilities  of Assignor  under the  Development  Agreement as it applies to the
Property  accruing  from and  after the date  hereof.  Assignee  covenants  that
Assignee  shall at all  times  fully  comply  with,  and  that the  development,
construction  and use of the Property  shall at all times be in full  compliance
with the Development Agreement.

         3.  Covenant and  Indemnification.  Assignor  and Assignee  covenant to
perform  all  their  respective  obligations  under the  Development  Agreement.
Assignee  shall  indemnify  and hold  Assignor and EAR harmless from any and all
liability, cost, loss, damage, or expense, including attorneys fees, arising out
of  Assignee's  failure  to  observe  or  perform  any  of  the  obligations  or
liabilities so assumed.  EAR shall indemnify and hold Assignee harmless from any
and all liability,  cost, loss,  damage, or expense,  including  attorneys fees,
arising  out of  FFLP's  or EAR's  failure  to  observe  or  perform  any of its
obligations  or liabilities  under the  Development  Agreement  other than those
expressly assumed by Assignee hereunder.

         4. No Impairment of Purchase Agreement Provisions. Nothing contained in
this Assignment shall be deemed to limit,  waive or otherwise  derogate from any
warranty,  representation,  covenant  or  indemnification  made in the  Purchase
Agreement  by either  Party,  or to waive or  abrogate  any limits on  liability
specified in the Purchase Agreement, and none of such provisions in the Purchase
Agreement  shall be  deemed  to have  merged  into the  assignment  made by this
Assignment. To the extent any rights granted under the Development Agreement may
be limited or restricted  by terms of the Purchase  Agreement or of that certain
Assumption and Covenants  Agreement  dated as of August 31, 1998, by and between
Assignor  and  Assignee  ("Covenants  Agreement"),  the  terms  of the  Purchase
Agreement or the Covenants Agreement shall prevail.

                                      -2-
<PAGE>

         5. Further  Assurances.  Assignor shall promptly execute and deliver to
Assignee any additional  instrument or other document which Assignee  reasonably
requests to evidence or better effect the assignment contained herein.

         6.  Counterparts.  This  Assignment  may be  executed  in any number of
counterparts and by each Party on a separate  counterpart or counterparts,  each
of which when so executed and  delivered  shall be deemed an original and all of
which taken together shall constitute but one and the same instrument.

         7.  Governing Law. This  Assignment  shall be deemed to be an agreement
made under the laws of the State of  California  and for all  purposes  shall be
governed by and construed in accordance with such laws.

         8. Binding Effect.  This Assignment  shall be binding upon and inure to
the benefit of each of the Parties and its successors and assigns.

         9. Warranty of Signers.  Each individual  executing and delivering this
Assignment  on behalf of a Party  hereby  represents  and  warrants to the other
Party that such  individual has been duly  authorized and empowered to make such
execution and delivery.

         10.  Notices.  Any notice,  demand or request  which may be  permitted,
required  or desired to be given in  connection  with this  Assignment  shall be
given in writing and directed as follows:

                  If to Assignor:       Flatirons Funding Limited Partnership
                                        c/o ML Leasing Equipment Corp.
                                        North Tower, 27th Floor
                                        World Financial Center
                                        250 Vesey Street
                                        New York, New York 10281-1327
                                        Attn:  Jean M. Tomaselli

                  With a copy to:       Electronic Arts Redwood, Inc.
                                        207 Redwood Shores Parkway
                                        Redwood City, California 94065
                                        Attn: James F. Healey, President

                  and a copy to:        Nossaman, Guthner, Knox & Elliott, LLP
                                        50 California Street, 34th Floor
                                        San Francisco, California  94111
                                        Attn:  Michael B. Wilmar, Esq.

                  If to Assignee:




                                      -3-
<PAGE>


                  With a copy to:




Notices shall be either (i) personally  delivered (including delivery by Federal
Express or other courier  service) to the offices set forth above, in which case
they shall be deemed  delivered  on the date of delivery to said  offices;  (ii)
sent by telecopy,  in which case they shall be deemed delivered on the date sent
(provided,  however,  that any notices  sent by  telecopy  shall also be sent by
overnight  courier on the same day);  or (iii) sent by certified  mail,  postage
prepaid,  return receipt requested, in which case they shall be deemed delivered
on the date shown on the  receipt  unless  delivery is refused or delayed by the
addressee,  in which event the notice  shall be deemed  delivered on the date of
deposit in the United States mail.  The addresses and  addressees may be changed
by giving notice of such change in the manner provided for in this Section 10.

         11.  No  Liability.  None  of  Assignor,  Assignor's  Assigns,  or  the
beneficial owner(s) of the Property or any of their respective present or future
partners,  officers,  directors,  shareholders,  agents, employees,  guarantors,
parents, subsidiaries or affiliates, and including Electronic Arts Redwood, Inc.
(collectively the "Assignor  Parties") shall be directly or indirectly liable or
responsible  for any loss,  claim,  cause of  action,  liability,  indebtedness,
damage or injury of any kind or  character  to any  person,  entity or  property
(collectively,  "Claims")  arising from any construction on, or occupancy or use
of, any of the Property or  Improvements,  including,  without  limitation,  any
claims  caused by, or arising from:  (i) any defect in any building,  structure,
grading,  fill,  landscaping  or other  improvements  on the  Property or in any
on-site or off-site  improvement or other facility;  (ii) any act or omission of
Assignee  or any  of  Assignee's  agents,  employees,  independent  contractors,
licensees  or  invitees;  (iii) any  accident  in, on or about the  Property  or
Improvements,  or any fire,  flood,  or other  casualty  or hazard or Act of God
thereon; (iv) the failure of Assignee,  any of Assignee's licensees,  employees,
invitees,  agents,  independent contractors or other representatives to maintain
all or any part of the Property or the Improvements in a safe condition; and (v)
any nuisance  made or suffered on any part of the Property or  Improvements.  In
addition,  none of the Assignor Parties shall be liable to Assignee or any other
party on the basis of any  actions  or  failure  to act under  this  Assignment,
including,  without  limitation,  mistakes of judgment,  negligent or otherwise,
unless and to the extent resulting from the Assignor Parties'  intentional torts
or willful misconduct.

         12.      Limitation on Liability.

                  (a)  Assignee.  Notwithstanding  anything  set  forth  in this
Assignment to the contrary,  the officers,  directors,  shareholders,  partners,
members,  and direct and indirect owners



                                      -4-
<PAGE>

of Assignee  shall not be liable for any debts or other  obligations of Assignee
or in respect of any claims against Assignee arising under this Assignment,  and
any such  debts,  obligations  or claims  shall be  satisfied  solely out of the
assets of Assignee. No personal judgment shall be sought or obtained against any
officer, director, shareholder,  partner, member, or direct or indirect owner of
Assignee.

                  (b) EAR. Notwithstanding anything set forth in this Assignment
to the contrary, the officers, directors,  shareholders,  partners, members, and
direct  and  indirect  owners of EAR shall not be liable  for any debts or other
obligations  of EAR or in respect of any claims  against EAR arising  under this
Assignment,  and any such debts, obligations or claims shall be satisfied solely
out of the  assets of EAR.  No  personal  judgment  shall be sought or  obtained
against  any  officer,  director,  shareholder,  partner,  member,  or direct or
indirect owner of EAR.

         13.   Certain   Obligations   of  Assignor   Non-Recourse.   Assignor's
obligations  hereunder  are  intended  to be  the  obligations  of  the  limited
partnership and of the  corporations  which are the managing general partner and
any other general  partner  thereof only, and no recourse for the payment of any
amount due under this  Assignment or for any claim based thereon or otherwise in
respect  thereof,  shall be held against any limited  partner of Assignor or any
incorporator,  shareholder,  officer,  director  or  affiliate,  as such,  past,
present or future of such corporate  managing  general  partner or other general
partner or of any corporate  limited partner or of any successor  corporation to
such  corporate  managing  general  partner  or  other  general  partner  or any
corporate limited partner of Assignor,  or against any direct or indirect parent
corporation of such corporate  managing general partner or other general partner
or of any limited  partner of Assignor or any other  subsidiary  or affiliate of
any such direct or indirect parent corporation or any incorporator,  shareholder
officer or director,  as such,  past,  present or future,  of any such parent or
other  subsidiary or affiliate,  it being  understood that Assignor is a limited
partnership  formed for the  purpose of  acquiring  and owning the  Project  and
acting as lessor to Electronic Arts Redwood,  Inc., on the express understanding
aforesaid.  Nothing contained in this Section 13 shall be construed to limit the
exercise or enforcement, in accordance with the terms of this Assignment and any
other documents  referred to herein,  of rights and remedies against the limited
partnership  or the  corporate  managing  general  partner or any other  general
partner of Assignor or the assets of the limited  partnership  or the  corporate
managing  general partner or any other general  partner of Assignor.  As used in
this Section 13, "affiliate" means any other person  controlling,  controlled by
or under direct or indirect common control with such person;  "person" means any
individual, corporation, partnership, limited liability company, private limited
company, joint venture,  association joint-stock company, trust,  unincorporated
association, organ of government or any agency or political subdivision thereof;
and "control,"  when used with any specified  person,  means the power to direct
the  management  and policies of such person,  directly or  indirectly,  whether
through the ownership of voting  securities,  by contract or otherwise;  and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

                                      -5-
<PAGE>

         IN WITNESS  WHEREOF,  the Parties  have caused  this  Assignment  to be
executed  and  delivered by their  respective  representatives,  thereunto  duly
authorized, as of the date first above written.

                                       ASSIGNOR

                                       FLATIRONS FUNDING, LIMITED PARTNERSHIP,
                                       a Delaware limited partnership



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

                                       ASSIGNEE

                                       ---------------------------------------,
                                       a
                                         ----------------------------

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



                                      -6-
<PAGE>

FOR VALUABLE  CONSIDERATION,  the receipt and adequacy of which is  acknowledged
hereby, the undersigned executes this Assignment and becomes a party thereto for
the purposes of Sections 3 through 13 only.

                                       ELECTRONIC ARTS REDWOOD, INC., a
                                       Delaware corporation




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





                                      -7-
<PAGE>


                                    EXHIBIT K

                                     FORM OF
                                 PROMISSORY NOTE

                                                        Redwood City, California
$____________________                                     ________________, 1999


         FOR     VALUE     RECEIVED,     the     undersigned,     [Buyer],     a
__________________________  (herein  called  "Maker"),  and subject to the terms
hereof,  hereby  promises  to pay on or  before  June 20,  2001 to the  order of
ELECTRONIC ARTS REDWOOD,  INC., a Delaware corporation (herein together with all
subsequent  holders  hereof called  "Holder"),  at 207 Redwood  Shores  Parkway,
Redwood City, California,  or at any other address identified by Holder for that
purpose,  in lawful money of the United State of America,  the  principal sum of
_______________________  Dollars ($___________),  together with interest thereon
at the rate of _____ percent  (__%) per annum until paid.  This Note is executed
and delivered pursuant to that certain Agreement of Purchase and Sale and Escrow
Instructions between Maker and Holder dated ______________,  1999 (the "Purchase
Agreement").

         1.Payment.  Principal and interest shall be payable in level  quarterly
installments of ________________________  Dollars ($_____________) each, due the
twentieth day of March,  June,  September,  and December of each year  ("payment
dates"),  commencing  September 20, 1999, and continuing until paid in full. The
entire principal and all accrued and unpaid  interest,  if any, shall be due and
payable  on June 20,  2001.  Notwithstanding  the  foregoing,  Holder may demand
payment of all or any part of the  outstanding  principal on a payment date upon
thirty (30) days prior written notice to Maker.

         2. Security.  This Note is secured by a Deed of Trust and Assignment of
Rents ("Deed of Trust") of even date  herewith  encumbering  certain  unimproved
real property  ("Property")  in the City of Redwood  City,  County of San Mateo,
State of California and by [description of Guaranty] (the "Guaranty").

         3. Default;  Acceleration.  Failure to pay an  installment of principal
and interest  when due shall,  upon three (3) business  days notice from Holder,
constitute  a default  hereunder.  In addition to any other  remedies  specified
herein, upon the occurrence of any default in payment hereunder,  or of an event
of  default  specified  in the  Purchase  Agreement,  the Deed of Trust,  or the
Guaranty, Holder shall have the option of declaring the principal balance hereof
and all accrued and unpaid interest to be immediately due and payable.

         4. No Prepayment. Except upon demand by Holder pursuant to Section 1 or
acceleration by Holder pursuant to Section 3, this Note may not be prepaid.

                                      -1-
<PAGE>

         5.  Maker's  Waiver.  Maker  and  all  endorsers  of this  Note  hereby
severally  waive  demand,  presentment,  notice of dishonor,  notice of default,
notice of protest and  nonpayment  and diligence in taking any action to collect
any sums owed under this Note.

         6. Waiver.  No waiver of any default or failure of condition  under the
terms of this Note, the Deed of Trust, or the Guaranty shall be implied from any
failure of Holder to take, or any delay by Holder in taking, action with respect
to any default or failure of condition, or from any previous waiver. A waiver of
any term in this  Note  must be made in  writing  and  shall be  limited  to the
express written terms of such waiver.

         7.  Attorneys'  Fees. In the event Holder incurs any attorneys' fees or
other costs because of Maker's  default or to enforce or defend any provision of
this Note, Maker shall pay reasonable  attorneys' fees and all costs incurred by
Holder.  All costs and fees incurred by Holder  together  with interest  thereon
shall be added to the principal owing hereunder and shall also be secured by the
Deed of Trust.

         8.  Time of  Essence.  Time is of the  essence  with  respect  to every
provision hereof.

         9.  Controlling  Law.  This Note shall be  construed,  interpreted  and
enforced in accordance with laws of the State of California.

         10. Remedies  Cumulative.  The remedies of Holder as provided herein or
in the  Deed of  Trust  or in the  Guaranty  or in law or in  equity,  shall  be
cumulative  and  concurrent,  and may be pursued  singularly,  successively,  or
together at the sole discretion of the Holder,  and may be exercised as often as
occasion  therefor  shall  occur;  and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or a release thereof.

         11.  Purchase  Money Note.  This Note is given as part of the  purchase
price for the Property.

         12.  Binding  Nature.  The terms,  covenants and  conditions  contained
herein  shall be binding  upon the heirs,  successors  and  assigns of Maker and
shall inure to the benefit of the successors and assigns of Holder.

                                       [BUYER], a _____________________________




                                       By:_____________________________________

                                       Name:___________________________________

                                       Title:__________________________________



                                      -2-
<PAGE>

                                    EXHIBIT L

Recording requested by:

And when recorded mail to:

NOSSAMAN, GUTHNER, KNOX & ELLIOTT, LLP
50 California Street, 34th Floor
San Francisco, California  94111
Attention:  David L. Kimport, Esq.

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

                    SPACE ABOVE THIS LINE FOR RECORDER'S USE


                                     FORM OF
                                  DEED OF TRUST

         ATTENTION:  COUNTY  RECORDER--THIS  INSTRUMENT COVERS GOODS THAT ARE OR
         ARE TO BECOME FIXTURES ON THE REAL PROPERTY  DESCRIBED HEREIN AND IS TO
         BE FILED FOR RECORD IN THE RECORDS  WHERE DEEDS OF TRUST ON REAL ESTATE
         ARE RECORDED.  ADDITIONALLY,  THIS INSTRUMENT  SHOULD BE  APPROPRIATELY
         INDEXED, NOT ONLY AS A DEED OF TRUST, BUT ALSO AS A FINANCING STATEMENT
         COVERING GOODS THAT ARE OR ARE TO BECOME  FIXTURES ON THE REAL PROPERTY
         DESCRIBED  HEREIN.  THE MAILING  ADDRESSES OF THE TRUSTOR  (DEBTOR) AND
         BENEFICIARY  (SECURED PARTY) ARE SET FORTH IN SECTION 5.06 OF THIS DEED
         OF TRUST.


                  THIS DEED OF TRUST AND FIXTURE  FILING  (this "Deed of Trust")
dated  as of  _____________,  1999,  for  reference  purposes  only,  is made by
______________________,  a _______________________  ("Trustor"), whose principal
place  of  business  is  ______________________  ___________________,  to  FIRST
AMERICAN TITLE COMPANY,  as Trustee  ("Trustee"),  for the benefit of ELECTRONIC
ARTS REDWOOD, INC., a Delaware corporation ("Beneficiary"), whose address is 207
Redwood Shores Parkway, Redwood City, California 94065.

                  THIS DEED OF TRUST is given in  connection  with that  certain
Promissory  Note made as of  _______________,  1999 by  Trustor  to the order of
Beneficiary (the "Note")

                  FOR   GOOD   AND   VALUABLE   CONSIDERATION,   including   the
indebtedness  herein  recited  and the trust  herein  created,  the  receipt and
adequacy of which are hereby  acknowledged,  Trustor hereby irrevocably  grants,
transfers,  sets over,  conveys and assigns to Trustee,  IN TRUST, WITH POWER OF
SALE,  for the benefit and  security  of  Beneficiary,  under and subject to the
terms and  conditions  hereinafter  set forth,  all rights,  titles,  interests,
estates,  power and privileges that Trustor now has or may hereafter  acquire in
or to the  following  property  and  interests  therein  to the  extent the same
constitute   real   property   under  the  laws  of  the  State  of   California
(collectively, the "Trust Estate"):

                                       1
<PAGE>

                  THAT  CERTAIN  REAL  PROPERTY  in San Mateo  County,  State of
California,  more  particularly  described  on  Exhibit A  attached  hereto  and
incorporated herein by this reference (the "Land");

                  TOGETHER  WITH any and all  buildings,  landscaping  and other
improvements  now or  hereafter  erected in or on the Land,  including,  without
limitation, the fixtures,  attachments,  appliances,  equipment,  machinery, and
other articles  attached to said buildings and improvements  (collectively,  the
"Improvements," and together with the Land, the "Property"),  all of which shall
be deemed and construed to be a part of the realty;

                  TOGETHER WITH all interests,  estates or other claims, both in
law and in  equity,  which  Trustor  now  has or may  hereafter  acquire  in the
Property;

                  TOGETHER  WITH all  easements,  rights-of-way  and  rights now
owned or hereafter acquired by Trustor used in connection with the Property as a
means of access to the Property,  including,  without limiting the generality of
the foregoing,  all rights pursuant to any trackage  agreement and all rights to
the nonexclusive use of common drive entries,  and all tenements,  hereditaments
and appurtenances thereof and thereto, and all water and water rights and shares
of stock evidencing the same;

                  TOGETHER WITH all oil and gas and other  mineral  rights in or
pertaining to the Land,  if any, and all royalty,  leasehold and other rights of
Trustor pertaining thereto;

                  TOGETHER  WITH all  right,  title  and  interest  now owned or
hereafter  acquired by Trustor in and to any land lying within the  right-of-way
of any street, open or proposed,  adjoining the Land, and any and all sidewalks,
alleys and strips and gores of land adjacent to or used in  connection  with the
Land or the Property;

                  TOGETHER WITH all furniture, furnishings, fixtures, equipment,
appliances, machinery, attachments,  construction materials and supplies, goods,
agreements  with  architects  and  engineers  relating  to  the  design  of  the
Improvements,  plans and  specifications  and  permits for the  development  and
construction  of the  Improvements,  agreements  with  contractors  and  vendors
relating to the  construction and  installation of the  Improvements,  and other
personal property (to the extent any of which constitute personal property under
applicable  law) (the "Personal  Property"),  and all  replacements,  additions,
substitutions and proceeds thereof or thereto, now or hereafter owned by Trustor
or in  which  Trustor  now or  hereafter  has any  rights  and  which  is now or
hereafter  located on or at, or affixed or  attached  to, or used in  connection
with the ownership,  development,  design, construction,  operation, management,
maintenance or repair of the Property or the Improvements; and

                  TOGETHER WITH all the estate,  interest,  right,  title, other
claim or demand,  both in law and in equity,  including  claims or demands  with
respect to the  proceeds of  insurance  in effect with  respect  thereto,  which
Trustor now has or may hereafter acquire in the Property, and any and all awards
made for the taking by eminent domain,  or by any proceeding or purchase in lieu
thereof,  of the  whole  or any  part of the  Trust  Estate  including,  without
limitation,  any award resulting from a change of grade of streets and any award
for severance damages (collectively, "Proceeds").

FOR THE PURPOSE OF SECURING:

         1. Payment and  performance  of all  obligations  of Trustor  under the
Note, as the same may be modified,  amended, restated and supplemented from time
to time.

         2.  Performance of all  obligations of Trustor under this Deed of Trust
and performance of each covenant and agreement of Trustor in this Deed of Trust,
and all modifications, amendments, replacements, extensions and renewals thereof
and substitutions therefor.

                                       2
<PAGE>

         3. Payment of all sums advanced by  Beneficiary to protect the security
of this Deed of Trust or the Trust Estate,  with interest thereon at the rate of
11% per annum (the "Advance Interest Rate").

         This Deed of Trust, the Note, and any other  instrument  (excluding any
guaranty or  indemnity  not secured by this Deed of Trust)  given to evidence or
further  secure the payment and  performance of any  indebtedness  or obligation
secured  hereby  may  hereafter  be  referred  to   collectively  as  the  "Loan
Instruments."  Capitalized  terms  used but not  defined  herein  shall have the
meanings set forth in the Note.

TO PROTECT THE PREMISES AND THE SECURITY GRANTED BY THIS DEED OF TRUST,  TRUSTOR
HEREBY COVENANTS AND AGREES AS FOLLOWS:


                                    ARTICLE I
                       COVENANTS AND AGREEMENTS OF TRUSTOR

         1.01.  Payment of Secured  Obligations.  Trustor shall pay when due the
principal,  interest,  premium, if any, and all other amounts due to Beneficiary
under the Loan Instruments; the principal of and interest on any sum advanced in
the future and secured by this Deed of Trust;  and the principal of and interest
on any other sum secured by this Deed of Trust.

         1.02. Maintenance,  Repair,  Alterations.  Trustor: (i) shall maintain,
keep and  preserve  the Trust Estate in good  condition  and repair;  (ii) shall
comply with all laws, ordinances, rules, regulations,  covenants, conditions and
restrictions now or hereafter  affecting the Trust Estate or any part thereof or
requiring any alteration or  improvement to be made thereon or thereto,  subject
to Trustor's  right to contest  Impositions as defined in Subsection  1.08(a) of
this Deed of Trust in  accordance  with the  provisions  of  Subsection  1.08(d)
hereof; (iii) shall not commit,  suffer or permit any act to be done in, upon or
to the Trust  Estate or any part  thereof in  violation  of any law,  ordinance,
rule,  regulation  or  order;  (iv)  shall not  commit  or  permit  any waste or
deterioration of the Trust Estate; (v) shall keep and maintain abutting grounds,
sidewalks, roads, parking and landscape areas in good and neat order and repair;
(vi) will not take any action  which,  if taken (or fail to take any action,  if
not taken), would increase in any way the risk of fire or other hazard occurring
to or  affecting  the  Property  or  otherwise  would  impair  the  security  of
Beneficiary in the Trust Estate; (vii) shall not abandon the Trust Estate or any
portion  thereof  or  leave  the  Property  unprotected,  unguarded,  vacant  or
deserted,  provided, however, nothing in this clause (vii) shall require Trustor
to protect or guard the Property more than a prudent  operator  would protect or
guard  property  similar to the Property  under the same or similar  conditions;
(viii) shall secure and maintain in full force and effect all permits  necessary
for the use,  occupancy and  operation of the Trust  Estate;  and (ix) except as
otherwise  prohibited  or restricted  by the Loan  Instruments,  or any of them,
shall do any and all other acts which may be reasonably necessary to protect and
preserve the value of the Trust Estate and the rights of Trustee and Beneficiary
with respect thereto.

         1.03.  Required Insurance.

                  (a) Trustor shall at all times provide, maintain, keep in full
force and effect or cause to be provided, maintained, and kept in full force and
effect,  at no expense to Trustee or  Beneficiary,  policies of  standard  broad
form/all-risk insurance excluding earthquake in such form and amounts, with such
deductibles,  and issued by companies,  associations or organizations reasonably
satisfactory to Beneficiary.

                  (b) All  policies of  insurance  required by the terms of this
Deed of Trust or the Note shall  either have  attached  thereto a lender's  loss
payable  endorsement  for the benefit of  Beneficiary  in form  satisfactory



                                       3
<PAGE>

to Beneficiary or shall name Beneficiary as additional insured and shall contain
an  endorsement  or  agreement  by the insurer that any loss shall be payable in
accordance with the terms of such policy  notwithstanding  any act or negligence
of Trustor or any party holding under  Trustor which might  otherwise  result in
forfeiture of said  insurance and the further  agreement of the insurer  waiving
all rights of setoff, counterclaim and deduction against Trustor.

         1.04.  Delivery  of  Policies;  Payment of  Premium.  At  Beneficiary's
option,  Trustor  shall  furnish  Beneficiary  with an original  certificate  of
insurance  for each  policy of  insurance  required  under  Section  1.03 hereof
setting forth the coverage,  the limits of liability,  the deductibles,  if any,
the name of the carrier,  the policy number,  and the period of coverage,  which
certificates  shall have been executed by authorized  officials of the companies
issuing such insurance,  or by agents or  attorneys-in-fact  authorized to issue
said  certificates (in which event each such certificate shall be accompanied by
a notarized  affidavit,  agency  agreement or power of attorney  evidencing  the
authority of the  signatory to issue such  certificate  on behalf of the insurer
named therein). If Beneficiary consents, Trustor may provide any of the required
insurance through blanket policies carried by Trustor and covering more than one
location,  or by  policies  procured by a tenant or other  party  holding  under
Trustor; provided, however, all such policies shall be in form and substance and
issued by companies satisfactory to Beneficiary. At least thirty (30) days prior
to the expiration of each required policy,  Trustor shall deliver to Beneficiary
evidence  satisfactory  to Beneficiary of the payment of premium and the renewal
or replacement of such policy  continuing  insurance in form as required by this
Deed of Trust. All such policies shall contain a provision that, notwithstanding
any contrary agreement between Trustor and the insurance company,  such policies
will  not  be  canceled,  allowed  to  lapse  without  renewal,  surrendered  or
materially  amended  (which  term shall  include any  reduction  in the scope or
limits of coverage)  without at least thirty (30) days' prior written  notice to
Beneficiary.  All consents and approvals of Beneficiary required by this Section
1.04 shall be given or withheld in the reasonable discretion of Beneficiary.  If
Trustor fails to provide,  maintain, keep in force or deliver to Beneficiary the
policies  of  insurance  required  by this  Deed of  Trust or by any of the Loan
Instruments,  Beneficiary  may (but shall have no  obligation  to) procure  such
insurance,  or single interest  insurance for such risks covering  Beneficiary's
interests,  and Trustor will pay all premiums  therefor  promptly upon demand by
Beneficiary;  and until such payment is made by Trustor,  the amount of all such
premiums,  together with interest thereon at the Advance Interest Rate, shall be
secured by this Deed of Trust.

         l.05.  Casualties.  Trustor shall give prompt written notice thereof to
Beneficiary  after the  happening of any casualty to or in  connection  with the
Trust Estate or any part thereof, whether or not covered by insurance.

         1.06.  Assignment  of  Policies  Upon  Foreclosure.  In  the  event  of
foreclosure  of this Deed of Trust or other  transfer of title or  assignment of
the Trust  Estate in  extinguishment,  in whole or in part,  of the debt secured
hereby,  then,  except with respect to blanket policies of insurance  carried by
Trustor,  all right,  title and interest of Trustor in and to all other policies
of  insurance  required by Section 1.03 hereof and any  unearned  premiums  paid
thereon  shall,  without  further  act,  be  assigned  to and shall inure to the
benefit of and pass to the  successor in interest to Trustor or the purchaser or
grantee of the Trust Estate, and Trustor hereby irrevocably appoints Beneficiary
its  lawful  attorney-in-fact  to execute an  assignment  thereof  and any other
document  necessary to effect such transfer.  The foregoing power of attorney is
coupled with an interest and cannot be revoked.

         1.07.  Subrogation: Waiver of Offset.

                  (a)  Trustor  waives  any and all  right to  claim or  recover
against Beneficiary,  its officers,  employees, agents and representatives,  for
loss of or damage  to  Trustor,  the Trust  Estate,  Trustor's  property  or the
property of others under  Trustor's  control from any cause  insured  against or
required  to be  insured  against  by the  provisions  of this  Deed  of  Trust;
provided,  however,  that this waiver of subrogation shall not be effective with
respect to any policy of  insurance  permitted or required by this Deed of Trust
if (i) such policy  prohibits,  or if



                                       4
<PAGE>

coverage  thereunder would be reduced as a result of, such waiver of subrogation
and (ii)  Trustor is unable to obtain from a carrier  issuing  such  insurance a
policy  that,  by special  endorsement  or  otherwise,  permits such a waiver of
subrogation.

                  (b) Except as otherwise specifically provided herein, all sums
payable by Trustor  pursuant to this Deed of Trust shall be paid without notice,
demand,  counterclaim,  setoff,  deduction  or defense  and  without  abatement,
suspension,   deferment,  diminution  or  reduction,  and  the  obligations  and
liabilities  of Trustor  hereunder  shall in no way be released,  discharged  or
otherwise  affected (except as expressly  provided herein) by reason of: (i) any
damage to or destruction of or any  condemnation  or similar taking of the Trust
Estate  or  any  part  thereof;   (ii)  any  restriction  or  prevention  of  or
interference by any unaffiliated third party with any use of the Trust Estate or
any part thereof; (iii) any title defect or encumbrance or any eviction from the
Property  or any  part  thereof  by  title  paramount  or  otherwise;  (iv)  any
bankruptcy, insolvency,  reorganization,  composition,  adjustment, dissolution,
liquidation  or other like  proceeding  relating to  Beneficiary,  or any action
taken  with  respect  to this  Deed of  Trust  by any  trustee  or  receiver  of
Beneficiary,  or by any  court,  in any such  proceeding;  (v) any  claim  which
Trustor has or might have  against  Beneficiary;  (vi) any default or failure on
the part of  Beneficiary to perform or comply with any of the terms hereof or of
any other  agreement  with Trustor;  or (vii) any other  occurrence  whatsoever,
whether  similar or  dissimilar to the  foregoing;  whether or not Trustor shall
have notice or knowledge of any of the foregoing.  Except as expressly  provided
herein,  Trustor  waives  all rights now or  hereafter  conferred  by statute or
otherwise to any abatement,  suspension,  deferment,  diminution or reduction of
any sum secured hereby and payable by Trustor.

         1.08  Taxes and Impositions.

                  (a)  Trustor   shall  pay,  or  cause  to  be  paid  prior  to
delinquency,  all real property taxes and assessments,  general and special, and
all other  taxes and  assessments  of any kind or nature  whatsoever  including,
without limitation,  non-governmental  levies or assessments such as maintenance
charges, levies or charges resulting from covenants, conditions and restrictions
affecting the Trust Estate, which are assessed or imposed upon the Trust Estate,
or upon  Trustor as owner or  operator  of the Trust  Estate,  or become due and
payable,  and which create, may create or appear to create a lien upon the Trust
Estate or any part thereof,  or upon any personal  property,  equipment or other
facility  used  in the  operation  or  maintenance  thereof  (all  of the  above
hereinafter referred to,  collectively,  as "Impositions");  provided,  however,
that if, by law,  any such  Imposition  is payable,  or may at the option of the
taxpayer be paid,  in  installments,  Trustor may pay the same or cause it to be
paid,  together  with  any  accrued  interest  on the  unpaid  balance  of  such
Imposition, in installments as the same become due and before any fine, penalty,
interest or cost may be added thereto for the nonpayment of any such installment
and interest.

                  (b) If at any  time  after  the  date  hereof  there  shall be
assessed or imposed (i) a tax or assessment on the Trust Estate in lieu of or in
addition to the Impositions  payable by Trustor  pursuant to subsection  1.08(a)
hereof,  or (ii) a license fee, tax or  assessment  imposed on  Beneficiary  and
measured  by or based in whole (or in part) upon the  amount of the  outstanding
obligations secured hereby,  then all (or said part of) such taxes,  assessments
or fees shall be deemed to be included within the term  "Impositions" as defined
in  subparagraph  (a) hereof,  and Trustor  shall pay and  discharge the same as
herein provided with respect to the payment of Impositions.  If Trustor fails to
pay such  Impositions  prior to  delinquency  or if Trustor is prohibited by law
from  paying  such  Impositions,  Beneficiary  may at  its  option  declare  all
obligations   secured  hereby  together  with  all  accrued  interest   thereon,
immediately due and payable.  Anything to the contrary  herein  notwithstanding,
Trustor  shall have no  obligation to pay any  franchise,  estate,  inheritance,
income,  excess  profits  or  similar  tax  levied  on  Beneficiary  or  on  the
obligations secured hereby.

                                       5
<PAGE>

                  (c) Subject to the  provisions of Subsection  1.08(d) and upon
request by Beneficiary,  Trustor shall deliver to Beneficiary within thirty (30)
days  after  the date upon  which any such  Imposition  is  delinquent  official
receipts of the appropriate  taxing  authority,  or other proof  satisfactory to
Beneficiary, evidencing the payment thereof.

                  (d) Trustor shall have the right before any delinquency occurs
to  contest  or  object to the  amount or  validity  of any such  Imposition  by
appropriate legal proceedings,  but this shall not be deemed or construed in any
way as  relieving,  modifying  or extending  Trustor's  covenant to pay any such
Imposition  at the time and in the manner  provided  herein  unless  Trustor has
given prior written notice to  Beneficiary of Trustor's  intent to so contest or
object to an Imposition,  and unless, at Beneficiary's  sole option, (i) Trustor
shall demonstrate to Beneficiary's satisfaction that the legal proceedings shall
conclusively  operate  to  prevent  the sale of the  Trust  Estate,  or any part
thereof,  to  satisfy  such  Imposition  prior  to final  determination  of such
proceedings; or (ii) Trustor shall furnish a good and sufficient bond, surety or
other assurances of payment as requested by and satisfactory to Beneficiary;  or
(iii) Trustor shall  demonstrate to Beneficiary's  satisfaction that Trustor has
provided a good and  sufficient  undertaking  as may be required or permitted by
law to accomplish a stay of any such sale.

                  (e)  Trustor  shall not suffer,  permit or initiate  the joint
assessment  of any real and  personal  property  which may  constitute  all or a
portion of the Trust Estate or suffer,  permit or initiate  any other  procedure
whereby  the  lien of the  real  property  taxes  and the  lien of the  personal
property  taxes shall be  assessed,  levied or charged to the Trust  Estate as a
single lien.

         1.09.  Utilities.  Trustor shall pay or shall cause to be paid when due
all utility  charges  which are  incurred  for the  benefit of the Trust  Estate
(excluding  therefrom utility charges, if any, incurred by tenants which are not
the obligation of the Trustor to pay under the terms of the leases) or which may
become a charge or lien against the Trust Estate for gas, electricity,  water or
sewer  services  furnished  to the Trust  Estate  and all other  assessments  or
charges of a similar nature, whether public or private,  affecting or related to
the Trust Estate or any portion thereof,  whether or not such taxes, assessments
or charges are or may become liens thereon.

         1.10. Defense of Actions and Costs.  Trustor,  at no cost or expense to
Beneficiary  or  Trustee,  shall  appear in and defend any action or  proceeding
purporting  to affect  the  security  hereof,  the other Loan  Instruments,  any
additional or other security for the obligations secured hereby, the interest of
Beneficiary,  or the  rights,  powers  or duties of  Beneficiary  hereunder.  If
Beneficiary elects to become a party to such action or proceeding,  or is made a
party thereto or to any other action or proceeding,  of whatever kind or nature,
concerning the Note, this Deed of Trust, any of the Loan Instruments,  the Trust
Estate or any part  thereof  or  interest  therein,  or the  occupancy  thereof,
Trustor shall to the extent such action or proceeding  relates to or arises from
events  occurring  subsequent  to Trustor's  acquisition  of the  Property:  (i)
indemnify,  defend and hold Trustee and Beneficiary harmless from all liability,
damage, cost and expense incurred by Trustee and Beneficiary, or either of them,
by reason of said action or proceeding (including, without limitation, Trustee's
fees and expenses,  the fees of attorneys for Trustee and for  Beneficiary,  and
other expenses, of whatever kind or nature,  incurred by Trustee or Beneficiary,
or either of them,  as a result of such  action or  proceeding),  whether or not
such action or proceeding  is prosecuted to judgment or decision;  and (ii) upon
written notice from Trustee or Beneficiary, assume the investigation and defense
of said action or  proceeding,  including the  employment of counsel  reasonably
acceptable  to  Beneficiary  and  the  payment  of  all  expenses.   Trustee  or
Beneficiary, as the case may be, shall have the right to employ separate counsel
in any action or  proceeding  and to  participate  in the defense  thereof,  but
unless such separate  counsel is employed with the Trustor shall not be required
to pay the fees and expenses of such separate counsel.

                  Notwithstanding the foregoing,  however, this provisions shall
not require Trustor to indemnify  Beneficiary or Trustee for any claims,  costs,
fees,  expenses or liabilities  arising from (i) the gross negligence or



                                       6
<PAGE>

willful  misconduct of  Beneficiary or Trustee and/or (ii) related to or arising
from  events  or  conditions  occurring  prior  to  Trustor's   acquisition  and
possession  of the  Property.  Immediately  upon  demand  therefor by Trustee or
Beneficiary, Trustor shall pay thereto an amount equal to Trustor's liability to
such person under this Section 1.10, together with interest thereon from date of
expenditure at the Advance  Interest  Rate;  and until paid,  such sums shall be
secured hereby.

         1.11.  Action by Beneficiary to Preserve Trust Estate. If Trustor fails
to make any payment or to do any act as and in the manner provided in any of the
Loan Instruments,  Beneficiary, in its own discretion,  without obligation so to
do,  without  releasing  Trustor  from any  obligation,  and subject only to the
notice and cure  provisions of the Note,  may make or do the same in such manner
and to such extent as  Beneficiary  may deem  necessary  to protect the security
hereof.  In  connection  therewith  (without  limiting  their  general and other
powers,  whether  conferred  herein,  in  another  Loan  Instrument  or by law),
Beneficiary  shall have and is hereby given the right,  but not the  obligation:
(i) to  enter  upon  and  take  possession  of the  Trust  Estate;  (ii) to make
additions,  alterations,  repairs and  improvements  to the Trust  Estate  which
Beneficiary  may  consider  necessary or proper to keep the Trust Estate in good
condition  and  repair;  (iii)  to  appear  and  participate  in any  action  or
proceeding  affecting or which may affect the  security  hereof or the rights or
powers of Beneficiary or Trustee;  (iv) to pay, purchase,  contest or compromise
any  encumbrance,  claim,  charge,  lien  or  debt  which  in  the  judgment  of
Beneficiary  may affect or appears to affect the  security of this Deed of Trust
or to be prior or superior  hereto;  and (v) in exercising  such powers,  to pay
necessary  expenses,  including  employment  of  counsel or other  necessary  or
desirable  consultants.  Trustor  shall,  immediately  upon  demand  therefor by
Beneficiary  pay to  Beneficiary  an  amount  equal to all  costs  and  expenses
incurred by it in connection  with the exercise by  Beneficiary of the foregoing
rights including,  without limitation,  costs of evidence of title, court costs,
appraisals,  surveys and receiver's,  trustee's and attorneys'  fees,  costs and
expenses whether or not an action is actually commenced in connection therewith,
together  with  interest  thereon  from  the  date  of such  expenditures  until
Beneficiary has been repaid such amount at the Advance  Interest Rate and, until
paid, said sums shall be secured hereby.

         1.12.  Survival  of  Warranties.  Trustor  shall  fully and  faithfully
satisfy  and  perform  the   obligations  of  Trustor   contained  in  the  Loan
Instruments,  each  agreement of Trustor  incorporated  by reference  therein or
herein and each agreement the  performance of which is secured  hereby,  and any
modification or amendment thereof. All representations, warranties and covenants
of Trustor  contained in any such Loan  Instrument or agreement  between Trustor
and Beneficiary shall survive the execution and delivery hereof and shall remain
continuing  obligations  of  Trustor  during  any time when any  portion  of the
obligations secured hereby remain outstanding.

         1.13.  Condemnation  and Other Awards.  Immediately  upon its obtaining
knowledge of the institution or the threatened institution of any proceeding for
the  condemnation  or other taking for public or  quasi-public  use of the Trust
Estate or any part thereof,  or if the same be taken or damaged by reason of any
public improvement or condemnation proceeding, or in any other manner, or should
Trustor  receive  any notice or other  information  regarding  such  proceeding,
action, taking or damage,  Trustor shall promptly notify Trustee and Beneficiary
of such fact.  Trustor shall then, if requested by  Beneficiary,  file or defend
its rights  thereunder  and  prosecute  the same with due diligence to its final
disposition  and  shall  cause  any  award  or  settlement  to be  paid  over to
Beneficiary for disposition  pursuant to the terms of this Deed of Trust. If the
Trust  Estate or any part  thereof  is taken or  diminished  in  value,  or if a
consent  settlement  is  entered,  by or under  threat of such  proceeding,  all
compensation,  awards,  damages,  rights of  action,  proceeds  and  settlements
payable  to  Trustor  by  virtue  of its  interest  in  the  Trust  Estate  (the
"Condemnation  Proceeds") shall be and hereby are assigned,  transferred and set
over  unto  Beneficiary  to be held by it,  in  trust,  subject  to the lien and
security interest of this Deed of Trust. Any such Condemnation Proceeds shall be
first applied to reimburse  Trustee and  Beneficiary for all costs and expenses,
including  reasonable attorneys fees, incurred in connection with the collection
of such award or settlement and costs of any  restoration  of the Property.  The
balance of such award or  settlement  shall be  applied in  accordance  with the
terms of the Note, as  applicable.  Application  or release of the  Condemnation
Proceeds  as  provided  herein



                                       7
<PAGE>

shall not cure or waive any default or notice of default hereunder or invalidate
any act done pursuant to such notice.

         1.14. Additional Security. No other security now existing, or hereafter
taken, to secure the obligations  secured hereby nor the liability of any maker,
surety, guarantor or endorser with respect to such obligations,  or any of them,
shall be impaired or affected by the  execution  of this Deed of Trust;  and all
additional  security  shall be taken,  considered  and held as  cumulative.  The
taking of additional security, execution of partial releases of the security, or
any extension of the time of payment of the indebtedness  shall not diminish the
force,  effect or lien of this Deed of Trust and shall not  affect or impair the
liability  of any maker,  surety,  guarantor or endorser for the payment of said
indebtedness. In the event Beneficiary at any time holds additional security for
any of the  obligations  secured  hereby,  it may  enforce  the sale  thereof or
otherwise realize upon the same, at its option, either before, concurrently,  or
after a sale is made hereunder.

         1.15. Inspections. Beneficiary, Trustee and the agents, representatives
or workers of each of them,  are authorized to enter upon  reasonable  notice at
any  reasonable  time upon or in any part of the Trust Estate for the purpose of
inspecting  the same and for the  purpose  of  performing  any of the acts it is
authorized  to  perform  hereunder  or  under  the  terms  of any  of  the  Loan
Instruments.

         1.16.  Liens.  Except for liens,  encumbrances  and charges approved by
Beneficiary  in writing,  Trustor shall pay and promptly  discharge when due, at
Trustor's cost and expense,  all liens,  encumbrances and charges upon the Trust
Estate, or any part thereof or interest therein;  provided that the existence of
any mechanic's, laborer's,  materialman's,  supplier's or vendor's lien or right
thereto shall not  constitute a violation of this Section 1.16 if payment is not
yet due under the contract which is the foundation  thereof and if such contract
does  not  postpone  payment  for more  than  forty-five  (45)  days  after  the
performance  thereof.  Trustor shall have the right to contest in good faith the
validity of any such lien,  encumbrance or charge,  provided Trustor shall first
deposit with Beneficiary a bond or other security satisfactory to Beneficiary in
such amounts as  Beneficiary  shall  reasonably  require,  but not more than one
hundred fifty percent  (150%) of the amount of the claim,  and provided  further
that Trustor shall thereafter diligently proceed to cause such lien, encumbrance
or charge to be removed and  discharged.  If Trustor shall fail either to remove
and discharge  any such lien,  encumbrance  or charge or to deposit  security in
accordance with the preceding sentence, if applicable,  then, in addition to any
other  right or  remedy  of  Beneficiary,  Beneficiary  may,  but  shall  not be
obligated to,  discharge the same,  without  inquiring into the validity of such
lien,  encumbrance  or charge nor into the  existence  of any  defense or offset
thereto,  either by paying the amount  claimed to be due,  or by  procuring  the
discharge of such lien, encumbrance or charge by depositing in a court a bond or
the amount  claimed or  otherwise  giving  security  for such claim,  or in such
manner as is or may be prescribed by law. Trustor shall, immediately upon demand
therefor by  Beneficiary,  pay to  Beneficiary  an amount equal to all costs and
expenses  incurred by Beneficiary in connection with the exercise by Beneficiary
of the  foregoing  right to  discharge  any such  lien,  encumbrance  or charge,
together with interest  thereon from the date of such expenditure at the Advance
Interest   Rate,   and,  until  paid,   such  sums  shall  be  secured   hereby.
Notwithstanding the foregoing,  Beneficiary  consents to the lien of any deed(s)
of trust securing  financing for the construction of the  Improvements  provided
such lien shall be  subordinate  to the lien of this Deed of Trust.  Beneficiary
further agrees to execute such  agreements  and/or other documents as reasonably
requested by the beneficiary of any such subordinate deed of trust in connection
with any financing of the Improvements,  including reasonable amendments to this
Deed of Trust,  provided  the same  shall not  materially  impair the first lien
priority position of this Deed of Trust or Beneficiary's rights hereunder or the
adequacy of the Property to secure Trustor's obligations hereunder.

         1.17.  Beneficiary's  Powers.  Without  affecting  the liability of any
other person  liable for the payment of any  obligation  herein  mentioned,  and
without  affecting  the lien or charge of this Deed of Trust upon any portion of
the Trust  Estate not then or  theretofore  released  as  security  for the full
amount of all unpaid obligations,



                                       8
<PAGE>

Beneficiary  may, from time to time and without notice (i) release any person so
liable,  (ii)  extend  the  maturity  or  alter  any of the  terms  of any  such
obligation, (iii) grant other indulgences,  (iv) release or reconvey or cause to
be  released  or  reconveyed  at any time at  Beneficiary's  option any  parcel,
portion or all of the Trust Estate,  (v) take or release any other or additional
security for any obligation herein mentioned, or (vi) make compositions or other
arrangements  with  debtors  in  relation  thereto.   By  accepting  payment  or
performance of any obligation secured by this Deed of Trust after the payment or
performance  thereof  is due or after  the  filing of a notice  of  default  and
election to sell, Beneficiary shall not have thereby waived its right to require
prompt  payment  or  performance,  when due,  of all other  obligations  secured
hereby, or to declare a default for failure so to pay or perform,  or to proceed
with the sale under any notice of default and election to sell theretofore given
by  Beneficiary,  or with  respect  to any unpaid  balance  of the  indebtedness
secured hereby.  The acceptance by Beneficiary of any sum in an amount less than
the sum then due shall not  constitute a waiver of the  obligation of Trustor to
pay the  entire sum then due.  Trustor's  failure to pay the entire sum then due
shall  continue  to be a  default,  notwithstanding  the  acceptance  of partial
payment, and, until the entire sum then due shall have been paid, Beneficiary or
Trustee  shall at all times be entitled to declare a default and to exercise all
the remedies  herein  conferred,  and the right to proceed with a sale under any
notice of default and election to sell shall in no way be  impaired,  whether or
not such amounts are received  prior or subsequent  to such notice.  No delay or
omission  of  Trustee  or  Beneficiary  in the  exercise  of any  right or power
hereunder shall impair such right or power or any other right or power nor shall
the same be construed to be a waiver of any default or any acquiescence therein.

         1.18.  Environmental Compliance.

                  (a) As used in this Deed of Trust,  the following  definitions
shall apply:

                           (i)  "Environmental  Laws"  shall  mean all  federal,
state and local laws,  ordinances,  rules and  regulations  now or  hereafter in
force, as amended from time to time, in any way relating to or regulating  human
health  or  safety,  or  industrial  hygiene  or  environmental  conditions,  or
protection of the  environment,  or pollution or contamination of the air, soil,
surface  water or  groundwater,  and  includes the  Comprehensive  Environmental
Response,  Compensation  and Liability Act of 1980, 42 U.S.C.  ss 9601, et seq.,
the Resource  Conservation  and Recovery Act, 42 U.S.C.  ss 6901,  et seq.,  the
Clean Water Act, 33 U.S.C.  ss 1251, et seq.,  the Hazardous  Substance  Account
Act,  California  Health and Safety Code ss 25100,  et seq.,  the Medical  Waste
Management  Act,  California  Health and Safety Code ss 25015,  et seq., and the
Porter-Cologne  Water Quality  Control Act,  California  Water Code ss 13000, et
seq.

                           (ii) "Hazardous  Substances" shall mean any substance
or  material  that is  described  as a toxic or  hazardous  substance,  waste or
material or a pollutant or contaminant,  or words of similar  import,  in any of
the Environmental Laws, and includes asbestos, petroleum (including crude oil or
any fraction thereof,  natural gas, natural gas liquids,  liquefied natural gas,
or synthetic gas usable for fuel, or any mixture thereof),  petroleum  products,
polychlorinated  biphenyls,  urea formaldehyde,  radon gas,  radioactive matter,
medical waste, and chemicals which may cause cancer or reproductive toxicity.

                           (iii)  "Person"  shall mean any natural  person,  any
organization  or legal entity of any kind,  and any  government or  governmental
agency or authority of any kind,  including  the U.S.  Environmental  Protection
Agency,  the  California  Environmental  Protection  Agency  and the  California
Department of Toxic Substances Control.

                           (iv)  "Release"  shall  mean any  spilling,  leaking,
pumping,  pouring,  emitting,  emptying,   discharging,   injecting,   escaping,
leaching,  dumping  or  disposing  into the  environment,  including  continuing
migration,  of  Hazardous  Substances  into or through  soil,  surface  water or
groundwater.

                                       9
<PAGE>

                  (b)  Trustor  shall not use,  produce,  process,  manufacture,
generate,  treat, handle, store or dispose of any Hazardous Substances in, on or
under the  Trust  Estate,  or use the Trust  Estate  for any such  purposes,  or
Release  any  Hazardous   Substances  into  any  air,  soil,  surface  water  or
groundwater comprising the Trust Estate, or permit any Person using or occupying
the Trust Estate or any part thereof to do any of the  foregoing.  The preceding
sentence  shall not prohibit the ordinary use of Hazardous  Substances  normally
used in the operation or maintenance of properties  similar to the Trust Estate,
provided  that the  amount of such  Hazardous  Substances  does not  exceed  the
quantity  necessary for the normal operation and maintenance of the Trust Estate
in the  ordinary  course of business  and the use,  storage and disposal of such
Hazardous  Substances  strictly comply with all applicable  Environmental  Laws.
Trustor shall  comply,  and shall cause all Persons using or occupying the Trust
Estate or any part thereof to comply,  with all Environmental Laws applicable to
the  Trust  Estate,  or the  use or  occupancy  thereof,  or any  operations  or
activities  therein or thereon.  Trustor shall obtain all permits,  licenses and
approvals  required  by all  applicable  Environmental  Laws  for  the  use  and
occupancy of, and all operations  and  activities  in, the Trust Estate,  comply
fully with all such permits,  licenses and approvals, and keep all such permits,
licenses  and  approvals  in full force and effect.  Immediately  after  Trustor
obtains any information  indicating that any Hazardous Substances may be present
or any  Release or  threatened  Release  of any  Hazardous  Substances  may have
occurred  in, on or under the Trust  Estate (or any nearby real  property  which
could migrate to the Trust  Estate) or that any  violation of any  Environmental
Laws may have occurred at the Trust Estate, Trustor shall give notice thereof to
Beneficiary with a reasonably detailed  description of the event,  occurrence or
condition in question.  Trustor shall immediately  furnish to Beneficiary copies
of all written  communications  received by Trustor  from any Person  (including
notices,  claims or  citations  that any  Release or  threatened  Release of any
Hazardous  Substances or any violation of any Environmental Laws has actually or
allegedly  occurred)  or given by Trustor to any Person  concerning  any past or
present  Release or  threatened  Release of any Hazardous  Substances  in, on or
under the Trust Estate (or any nearby real  property  which could migrate to the
Trust Estate) or any past or present violation of any Environmental  Laws at the
Trust Estate. If Beneficiary  obtains any information that Beneficiary  believes
in good faith indicates a reasonable  possibility that any Hazardous  Substances
may be present or any Release or threatened Release of any Hazardous  Substances
may have  occurred in, on or under the Trust Estate (or any nearby real property
which could migrate to the Trust  Estate) or any violation of any  Environmental
Laws may have occurred at the Trust Estate,  then Trustor shall,  at the expense
of  Trustor,  promptly  after  a  request  by  Beneficiary,   have  a  qualified
environmental  engineer investigate the presence,  Release or threatened Release
of  such   Hazardous   Substances   and  the  existence  of  such  violation  of
Environmental  Laws and  prepare  and  submit to  Beneficiary  a written  report
containing the findings and conclusions  resulting from such investigation.  The
environmental   engineer  who  will  prepare  the  report,   the  scope  of  the
investigation to be undertaken (which may include soil and groundwater sampling)
and the  methodology  to be used  shall be  subject  to the  prior  approval  of
Beneficiary.  Beneficiary (and its representatives) shall have the right, at all
reasonable  times and after  reasonable  prior notice (except no notice shall be
required in an  emergency),  to inspect the Trust  Estate and every part thereof
and to review all books,  records  and files of Trustor  relating to any past or
present  Release or  threatened  Release of any Hazardous  Substances  in, on or
under the Trust  Estate or any past or present  violation  of any  Environmental
Laws  at  the  Trust   Estate.   Trustor   shall  give   Beneficiary   (and  its
representatives)  access  to the Trust  Estate  and every  part  thereof  at all
reasonable  times (and at any time in an emergency) for such  purposes.  Trustor
shall promptly furnish in writing to Beneficiary all information  concerning any
past or present Release or threatened Release of any Hazardous Substances in, on
or under the Trust Estate or any past or present  violation of any Environmental
Laws at the Trust Estate that is requested from time to time by Beneficiary.

                  (c) If any  Release or  threatened  Release  of any  Hazardous
Substances  in, on or under the Trust  Estate  exists or occurs,  Trustor  shall
immediately  give notice of the  condition  to  Beneficiary,  and Trustor  shall
promptly  clean up and remove all  Hazardous  Substances  and  restore the Trust
Estate  (the  "Remediation  Work").  Trustor  shall  comply  with the orders and
directives  of all  Persons  having  jurisdiction  over the Trust  Estate or the
Remediation Work. Trustor shall submit to Beneficiary,  for Beneficiary's  prior
approval,  complete plans and specifications for all Remediation Work to be done
by Trustor  before any  Remediation  Work is


                                       10
<PAGE>

performed,  except  in an  emergency.  Such  plans and  specifications  shall be
prepared by qualified licensed  engineers or contractors  approved in writing by
Beneficiary,  shall  comply  with all  applicable  Environmental  Laws and other
applicable  laws,  ordinances,  rules  and  regulations,  shall  be  in  a  form
sufficient  to secure the  approval of all Persons  with  jurisdiction  over the
Trust Estate or the  Remediation  Work, and shall be otherwise  satisfactory  to
Beneficiary.  Trustor shall cause all Remediation Work to be performed in a good
and workmanlike manner by a qualified licensed contractor approved in writing by
Beneficiary,  under  the  supervision  of  a  qualified  environmental  engineer
approved  in  writing  by   Beneficiary,   in  accordance  with  the  plans  and
specifications for the Remediation Work approved in writing by Beneficiary,  and
in compliance with all applicable  Environmental Laws and other applicable laws,
ordinances,  rules and regulations.  Trustor shall obtain all required  permits,
licenses and approvals for the Remediation Work,  prosecute the Remediation Work
diligently,  and complete the Remediation Work in a timely manner. Trustor shall
pay for all Remediation  Work,  including the cost of plans and  specifications,
utilities,  permits, fees, taxes and insurance premiums in connection therewith.
Trustor  shall,  on demand,  pay to  Beneficiary  all direct costs and reimburse
Beneficiary  for all expenses  incurred by  Beneficiary  in connection  with any
review,  approval or inspection by Beneficiary relating to any Remediation Work,
together with interest  thereon from the date of  expenditure  until paid at the
Advance  Interest Rate except to the extent the  Remediation  Work relates to or
arises from events or conditions  occurring  prior to Trustor's  acquisition and
possession of the Property.  Under no circumstances  shall Beneficiary be liable
to Trustor for any damage,  loss, cost or expense incurred by Trustor on account
of any plans and specifications for the Remediation Work, the performance of any
Remediation  Work, or any delay in completion of any Remediation  Work except to
the extent the  Remediation  Work relates to or arises from events or conditions
occurring prior to Trustor's acquisition and possession of the Property. Trustor
shall furnish to Beneficiary,  promptly upon receipt or  preparation,  copies of
all  reports,  studies,  analyses,  investigations,  contracts,  correspondence,
claims, complaints,  pleadings and other information and communications received
or prepared by Trustor at any time in connection with any  Remediation  Work, or
any past or present  Release or threatened  Release of any Hazardous  Substances
in, on or under the Trust  Estate  (or any  nearby  real  property  which  could
migrate  to  the  Trust  Estate),  or  any  past  or  present  violation  of any
Environmental Laws at the Trust Estate. Beneficiary shall have the right, but no
obligation,  to participate in any action or proceeding  relating to any past or
present  Release or  threatened  Release of any Hazardous  Substances  in, on or
under the Trust Estate,  or any past or present  violation of any  environmental
Laws at the Trust Estate,  or the  necessity for or adequacy of any  Remediation
Work.

                  (d) Trustor shall  indemnify and defend  Beneficiary  (and its
directors,  officers,  employees,  agents and representatives)  against and hold
Beneficiary (and its directors, officers, employees, agents and representatives)
harmless  from all claims,  demands,  liabilities,  losses,  damages,  costs and
expenses  (collectively,  "Claims")  in any way  arising  from,  relating  to or
connected with the existence,  location,  nature, use, generation,  manufacture,
storage, disposal,  handling, or present or future Release or threatened Release
of any Hazardous  Substances in, on or under the Trust Estate, or any present or
future violation of any Environmental Laws at the Trust Estate, or any breach of
any  representation  or warranty  made by Trustor in this Deed of Trust,  or any
failure to perform any  obligation  of Trustor in  accordance  with this Deed of
Trust  except  to the  extent  such  Claims  relate to or arise  from  events or
conditions  occurring  prior to  Trustor's  acquisition  and  possession  of the
Property.   The  foregoing   indemnification   shall  include  all  expenses  of
investigation and monitoring, costs of containment,  abatement, removal, repair,
cleanup, restoration and remedial work, penalties and fines, attorneys' fees and
disbursements,  and other  response  costs.  If  Trustor  fails to  perform  any
obligation of Trustor in accordance with this Deed of Trust,  Beneficiary  shall
have the right,  but no  obligation,  to perform  such  obligation  on behalf of
Trustor.  Trustor  shall,  on demand,  pay to  Beneficiary  all sums expended by
Beneficiary in the performance of any such obligations of Trustor, together with
interest thereon from the date of expenditure until paid at the Advance Interest
Rate. If any Event of Default occurs under this Deed of Trust, Beneficiary shall
have  the  right,  but no  obligation,  at the  expense  of  Trustor,  to have a
comprehensive  environmental  assessment of the Trust Estate, including soil and
groundwater  sampling and in scope  satisfactory to Beneficiary,  prepared by an
engineer  selected by  Beneficiary  in order to ascertain  whether any hazardous
substances  are present or any Release or  threatened


                                       11
<PAGE>

Release  of any  Hazardous  Substances  has  occurred  in, on or under the Trust
Estate (or any nearby real property  which could migrate to the Trust Estate) or
any  violation of any  Environmental  Laws exists at the Trust  Estate.  Trustor
shall,  on demand,  pay to  Beneficiary  all sums  expended  by  Beneficiary  in
connection with any such comprehensive  environmental assessment,  together with
interest thereon from the date of expenditure until paid at the Advance Interest
Rate.

                  (e) The  obligation  of Trustor  under this  Section  1.18 are
separate  from and in  addition  to the  payment  and  performance  of the other
obligations  under  this Deed of Trust and the Note.  The  liability  of Trustor
under this Section 1.18 shall not be limited to or measured by the amount of the
indebtedness owed under the Note or this Deed of Trust or the value of the Trust
Estate.  Trustor shall be fully and  personally  liable for all  obligations  of
Trustor  under  this  Section  1.18 and a separate  action  may be  brought  and
prosecuted  against  Trustor under this Section  1.18.  The liability of Trustor
under this Section 1.18 shall not be subject to any  limitation set forth in the
Note or elsewhere  in this Deed of Trust,  or the  recourse of  Beneficiary  for
satisfaction  of  such  obligations.  Trustor  agrees  that  no  action  for the
enforcement  of or recovery of damages under this Section 1.18 shall  constitute
an action within the meaning of California Code of Civil Procedure ss 726, which
shall not apply to this Section  1.18,  and no judgment  against  Trustor in any
action  pursuant to this  Section 1.18 shall  constitute  a money  judgment or a
deficiency  judgment within the meaning of California Code of Civil Procedure ss
ss 580a,  580b,  580d or 726. This Section 1.18 and the  obligations  of Trustor
hereunder  shall  survive,  and  remain in full  force  and  effect  after,  any
reconveyance  of this  Deed of Trust or any  foreclosure  of this  Deed of Trust
(whether by  judicial  action,  exercise  of the power of sale,  deed in lieu of
foreclosure,  or otherwise) with respect to any past,  present or future Release
or  threatened  Release of any  Hazardous  Substances  in, on or under the Trust
Estate or any past, present or future violation of any Environmental Laws at the
Trust  Estate  which  occurred,  or the  onset of which  occurred,  before  such
reconveyance  or foreclosure,  and  Beneficiary  shall have the right to enforce
this Section 1.18 after any such reconveyance or foreclosure. Trustor waives the
right to assert any statute of limitations  as a bar to the  enforcement of this
Section 1.18 or to any action brought to enforce this Section 1.18. This Section
1.18 shall not affect,  impair or waive any rights or remedies of Beneficiary or
Trustor  or any  obligations  of  Beneficiary  or of  Trustor  with  respect  to
Hazardous  Substances  created  or  imposed  by  Environmental  Laws  (including
Beneficiary's rights of reimbursement or contribution under Environmental Laws).
The remedies in this Section 1.18 are cumulative and in addition to all remedies
provided by law.

         1.19.  Other  Instruments.  Except as otherwise  expressly  provided in
Subsection 1.08(d) hereof with respect to Impositions,  Trustor shall punctually
pay all amounts due and payable,  and shall promptly and  faithfully  perform or
observe  each and  every  other  obligation  or  condition  to be  performed  or
observed,  under  each deed of trust,  mortgage  or other  lien or  encumbrance,
lease, sublease, declaration,  covenant, condition,  restriction, license, order
or other  instrument  or agreement  which affects or appears to affect the Trust
Estate, whether at law or in equity.


                                   ARTICLE II


                              INTENTIONALLY OMITTED


                                       12
<PAGE>


                                   ARTICLE III
                               SECURITY AGREEMENT

         3.01.   Creation  of  Security  Interest.   Trustor  hereby  grants  to
Beneficiary a security  interest in the Personal  Property and in all amounts of
money  now or at any  time  hereafter  deposited  with or in the  possession  of
Beneficiary  (all of the  foregoing  items are referred to  collectively  as the
"Collateral")  for the  purpose of securing  the  indebtedness  and  obligations
secured by this Deed of Trust.

         3.02.  Warranties,  Representations  and Covenants of Trustor.  Trustor
hereby warrants, represents and covenants as follows:

                  (a) Except for the security  interest granted hereby,  Trustor
is, and as to portions of the  Collateral  to be acquired  after the date hereof
will be,  the sole  owner  of the  Collateral,  free  from  any  lien,  security
interest,  encumbrance or adverse claim thereon of any kind whatsoever.  Trustor
shall notify  Beneficiary of, and shall indemnify and defend Beneficiary and the
Collateral  against,  all claims and demands of all persons at any time claiming
the Collateral or any part thereof or any interest therein.

                  (b) The  Collateral  is not,  and shall not be, used or bought
for personal, family or household purposes.

                  (c) The Personal  Property shall be kept on or at the Property
and Trustor shall not remove the Personal Property from the Property without the
prior  consent of  Beneficiary,  except for such  portions  or items of Personal
Property as are  consumed or worn out in ordinary  usage,  all of which  Trustor
shall promptly replace with new items of equal or better quality.

                  (d)  Trustor  maintains  a place of  business  in the State of
California  at the  address  set forth in this Deed of Trust and  Trustor  shall
immediately  notify  Beneficiary  in  writing  of any  change  in its  place  of
business.

                  (e) At the request of  Beneficiary,  Trustor shall execute one
or more financing  statements and continuations and amendments  thereof pursuant
to  the  Uniform   Commercial  Code  of  California  in  form   satisfactory  to
Beneficiary,  and  Trustor  shall pay the cost of filing  the same in all public
offices whenever and wherever filing is deemed by Beneficiary to be necessary or
desirable.

                  (f) All  covenants  and  agreements of Trustor in this Deed of
Trust  relating  to the Trust  Estate  shall be deemed to apply to the  Personal
Property whether or not expressly referred to herein.

                  (g) This Deed of Trust  constitutes  a security  agreement  as
that term is used in the Uniform  Commercial  Code of  California.  This Deed of
Trust is also a financing statement (fixture filing),  covers goods which are or
are to  become  fixtures,  and is to be  recorded  in the real  estate  records.
Trustor is the record owner of the Property.


                                   ARTICLE IV
                              REMEDIES UPON DEFAULT

         4.01. Event of Default.  Any of the following events shall be deemed to
be an event of default ("Event of Default") hereunder:

                                       13
<PAGE>

                  (a)      Default  shall be made in the  payment,  when due, of
                           any sum secured  hereby and such default is not cured
                           within  ten (10) days of  written  notice to  Trustor
                           that such sums are due; or

                  (b)     There  shall  occur a breach of or  default  under any
                          other  covenant,  agreement or  obligation  of Trustor
                          contained  herein,  and such  breach or default  shall
                          remain  unremedied  for  thirty  (30)  days  following
                          written  notice to Trustor of such default unless such
                          default  cannot  reasonably  be  remedied  within such
                          thirty (30) day period and provided Trustor  commences
                          and  diligently  proceeds to remedy the default within
                          such period;

                  (c)     There shall occur a default  under the Note beyond any
                          applicable grace period; or

                  (d)     There  shall  occur a  default  under any of the other
                          Loan Instruments.

         4.02.   Acceleration  Upon  Default:   Additional  Remedies.  Upon  the
occurrence of an Event of Default,  Beneficiary may, at its option,  declare all
indebtedness  and  obligations  secured hereby to be immediately due and payable
without any presentment,  demand,  protest or notice of any kind; and whether or
not Beneficiary exercises said option, Beneficiary may:

                  (a) Either in person or by agent, with or without bringing any
action or proceeding, appointed by a court and without regard to the adequacy of
its security,  enter upon and take  possession of the Trust Estate,  or any part
thereof,  in its own name or in the  name of  Trustee,  and do any act  which it
deems necessary or desirable to preserve the value, marketability or rentability
of the Trust Estate,  or part thereof or interest  therein,  increase the income
therefrom or protect the security hereof and, with or without taking  possession
of the Trust Estate. The entering upon and taking possession of the Trust Estate
shall not cure or waive any default or notice of default hereunder or invalidate
any act done in response  to such  default or pursuant to such notice of default
and, notwithstanding the continuance in possession by Trustee,  Beneficiary or a
receiver of all or any portion of the Trust Estate,  the Trustee or  Beneficiary
shall be  entitled  to  exercise  every  right  provided  for in any of the Loan
Instruments  or by law upon  occurrence  of any Event of Default,  including the
right to exercise the power of sale;

                  (b)  Commence an action to  foreclose  this Deed of Trust as a
mortgage,  appoint a receiver,  or  specifically  enforce  any of the  covenants
hereof;

                  (c)  Deliver to Trustee a written  declaration  of default and
demand for sale, and a written notice of default and election to cause Trustor's
interest in the Trust Estate to be sold, which notice the Trustee or Beneficiary
shall cause to be duly filed for record in the Official Records of the County in
which the Land is located; or

                  (d) Exercise all other rights and remedies provided herein, in
any Loan Instrument or other document or agreement now or hereafter securing all
or any portion of the obligations secured hereby, or provided by law.

         4.03.  Foreclosure By Power of Sale.

                  (a) Should  Beneficiary  elect to foreclose by exercise of the
power of sale  herein  contained,  Beneficiary  shall  notify  Trustee and shall
deposit  with  Trustee  this Deed of Trust and such  receipts  and  evidence  of
expenditures made and secured hereby as Trustee may require.

                                       14
<PAGE>

                  (b) Upon  receipt of such  notice  from  Beneficiary,  Trustee
shall cause to be recorded,  published  and  delivered to Trustor such Notice of
Default and Election to Sell as is then required by law. Trustee shall,  without
demand on  Trustor,  after lapse of such time as may then be required by law and
after recordation of such Notice of Default and after Notice of Sale having been
given as  required by law,  sell the Trust  Estate at the time and place of sale
fixed by it in said Notice of Sale,  either as a whole,  or in separate  lots or
parcels or items,  and in such order as Beneficiary may direct Trustee so to do,
at public  auction to the highest  bidder for cash in lawful money of the United
States  payable at the time of sale.  Trustee shall deliver to such purchaser or
purchasers  thereof its good and sufficient deed or deeds conveying the property
so sold, but without any covenant or warranty,  express or implied. The recitals
in such deed of any matter or fact shall be conclusive proof of the truthfulness
thereof.  Any  person  including,   without  limitation,   Trustor,  Trustee  or
Beneficiary may purchase at such sale.

                  (c)  After   deducting   all  costs,   fees  and  expenses  of
Beneficiary and Trustee, including costs of evidence of title in connection with
sale, Beneficiary shall apply the proceeds of sale in the following priority, to
payment of (i) first, all sums expended under the terms hereof, not then repaid,
with accrued interest at the Advance Interest Rate; (ii) second,  all other sums
then secured hereby;  and (iii) the remainder,  if any, to the person or persons
legally entitled thereto.

                  (d) Subject to California  Civil Code Section  2924g,  Trustee
may  postpone  sale  of  all or  any  portion  of the  Trust  Estate  by  public
announcement  at such time and place of sale,  and from time to time  thereafter
may postpone such sale by public announcement or subsequently  noticed sale, and
without   further  notice  make  such  sale  at  the  time  fixed  by  the  last
postponement, or may, in its discretion, give a new notice of sale.

                  (e) A sale of less than the  whole of the Trust  Estate or any
defective or irregular sale made  hereunder  shall not exhaust the power of sale
provided  for  herein;  and  subsequent  sales may be made  hereunder  until all
obligations secured hereby have been satisfied, or the entire Trust Estate sold,
without defect or irregularity.

         4.04.  Intentionally Omitted.

         4.05.  Application of Funds After Default.  Except as otherwise  herein
provided,  upon the occurrence and during the continuance of an Event of Default
hereunder, Beneficiary may, at any time without notice, apply any or all sums or
amounts received and held by Beneficiary to pay insurance premiums, Impositions,
or either of them, or as rents or income of the Trust Estate, or as insurance or
condemnation  proceeds,  and all other sums or amounts  received by  Beneficiary
from or on  account  of  Trustor or the Trust  Estate,  or  otherwise,  upon any
indebtedness or obligation of Trustor  secured hereby,  in such manner and order
as  Beneficiary  may  elect,  notwithstanding  that  said  indebtedness  or  the
performance  of  said  obligation  may  not  yet be  due.  The  receipt,  use or
application  of any such sum or amount  shall  not be  construed  to affect  the
maturity of any indebtedness secured by this Deed of Trust, or any of the rights
or powers of Beneficiary or Trustee under the terms of the Loan Instruments,  or
any of the obligations of Trustor or any guarantor  under the Loan  Instruments;
or to cure or waive  any  default  or notice  of  default  under any of the Loan
Instruments or to invalidate any act of Trustee or Beneficiary.

         4.06. Costs of Enforcement. If any Event of Default occurs, Beneficiary
and  Trustee,  and each of them,  may employ an attorney or attorneys to protect
their rights hereunder.  Trustor promises to pay to Beneficiary,  on demand, the
reasonable  fees and  expenses of such  attorneys  and all other actual costs of
enforcing  the  obligations   secured  hereby  including,   without  limitation,
recording  fees, the expense of a Trustee's Sale  Guarantee,  Trustee's fees and
expenses, receivers' fees and expenses, and all other expenses, of whatever kind
or nature,  incurred by Beneficiary and Trustee, and each of them, in connection
with the  enforcement of the  obligations  secured  hereby,


                                       15
<PAGE>

whether or not such  enforcement  includes the filing of a lawsuit.  Until paid,
such  sums  shall by  secured  hereby  and  shall  bear  interest,  from date of
expenditure, at the Advance Interest Rate.

         4.07.  Remedies Not  Exclusive.  Trustee and  Beneficiary,  and each of
them,  shall be entitled to enforce payment and performance of any  indebtedness
or  obligation  secured  hereby and to exercise all rights and powers under this
Deed of Trust or under any Loan  Instrument or other agreement or any law now or
hereafter in force,  notwithstanding  some or all of the said  indebtedness  and
obligations secured hereby may now or hereafter be otherwise secured, whether by
guaranty,  mortgage,  deed of trust,  pledge,  lien,  assignment  or  otherwise.
Neither  the  acceptance  of this Deed of Trust nor its  enforcement  whether by
court action or pursuant to the power of sale or other powers herein  contained,
shall  prejudice or in any manner  affect  Trustee's or  Beneficiary's  right to
realize upon or enforce any other  security now or hereafter  held by Trustee or
Beneficiary,  it being  agreed that Trustee and  Beneficiary,  and each of them,
shall be entitled to enforce  this Deed of Trust and any other  security  now or
hereafter held by Beneficiary or Trustee in such order and manner as they may in
their absolute discretion determine. No remedy herein conferred upon or reserved
to Trustee or Beneficiary is intended to be exclusive of any other remedy herein
or by law provided or permitted,  but each shall be  cumulative  and shall be in
addition to every other remedy given  hereunder or now or hereafter  existing at
law or in equity or by statute.  Every power or remedy  given by any of the Loan
Instruments  to  Trustee  or  Beneficiary  or to  which  either  of them  may be
otherwise entitled may be exercised, concurrently or independently, from time to
time and as often as may be deemed  expedient  by  Trustee or  Beneficiary,  and
either of them may pursue inconsistent remedies.

         4.08.  Request For Notices.  Trustor hereby requests that a copy of any
notice of default and a copy of any notice of sale  hereunder be mailed to it at
the addresses specified for Trustor in Section 4.06 hereof.


                                    ARTICLE V
                     MISCELLANEOUS COVENANTS AND AGREEMENTS

         5.01. Amendments. This instrument cannot be waived, changed, discharged
or terminated  orally,  but only by an instrument in writing signed by the party
against whom  enforcement  of any waiver,  change,  discharge or  termination is
sought.  A copy of said  instrument  shall be sent by said  party  to all  other
parties in the manner specified in Section 5.06 hereof.

         5.02.  Trustor's  Waiver  of  Rights.  Trustor  waives,  to the  extent
permitted by law, (i) the benefit of all laws now existing or that may hereafter
be enacted  providing  for any  appraisement  before  sale of any portion of the
Trust Estate,  and, whether now existing or hereafter  arising or created,  (ii)
all rights of redemption, valuation,  appraisement, stay of execution, notice of
election  to mature or declare  due the whole of the  secured  indebtedness  and
marshaling in the event of  foreclosure of the liens hereby  created,  and (iii)
all rights and remedies which Trustor may have or be able to assert by reason of
the laws of the State of  California  pertaining  to the rights and  remedies of
sureties;  provided,  however,  nothing contained herein shall be deemed to be a
waiver of Trustor's rights under Section 2924c of the California Civil Code.

         5.03.  Statement by Trustor.  Trustor shall, within ten (10) days after
written  notice  thereof  from  Beneficiary,  deliver to  Beneficiary  a written
statement  setting  forth the  amounts  then  unpaid and secured by this Deed of
Trust and stating  whether any offset or defense exists against  payment of such
amounts.

         5.04. Beneficiary Statement.  For any statement or accounting requested
by Trustor or any other entitled person pursuant to Section 2943 or Section 2954
of the  California  Civil Code or pursuant to any other  provision of applicable
law, or any other  document or instrument  furnished to Trustor by  Beneficiary,
Beneficiary  may charge the maximum  amount  permitted by law at the time of the
request  therefor,  or if  there be no such  maximum,  then in


                                       16
<PAGE>

accordance with  Beneficiary's  customary charges therefor or the actual cost to
Beneficiary therefor, whichever is more.

         5.05.  Reconveyance  by  Trustee.  So long  as no  default  shall  have
occurred in the performance or observance of Trustor's covenants, agreements and
obligations  under the Note,  then upon written  request of Beneficiary  stating
that all sums and obligations secured hereby have been paid and fully performed,
and  upon  surrender  by  Beneficiary  of this  Deed of  Trust  to  Trustee  for
cancellation and retention and upon payment by Trustor of Trustee's fees and the
costs and  expenses of  executing  and  recording  any  requested  Reconveyance,
Trustee shall reconvey to Trustor,  or to the person or persons legally entitled
thereto,  without warranty, any portion of the Trust Estate then held hereunder.
The recitals in any such  reconveyance of any matter of fact shall be conclusive
proof of the truthfulness  thereof.  The grantee in any such reconveyance may be
described as "the person or persons legally entitled thereto."

         5.06.  Notices.  All  notices  and other  communications  to be made or
permitted to be made hereunder to any party hereto shall be in writing and shall
be  delivered  to the  addresses  shown below or such other  addresses  that the
parties may  provide to one another in  accordance  herewith.  Such  notices and
other  communications  shall  be  given by any of the  following  means:  (a) by
personal service; (b) by prepaid telegram;  (c) by national express air courier,
provided such courier maintains written verification of actual delivery;  or (d)
by facsimile,  provided such  facsimile  transmission  is confirmed by sending a
written  copy of same by  national  express  air  courier.  Any  notice or other
communication  given by  subsection  (a) or (c) above shall be deemed  effective
upon the date of receipt or of refusal to accept  delivery  by the party to whom
such  notice  or  other  communication  has  been  sent.  Any  notice  or  other
communication  given by subsection (b) or (d) above shall be deemed effective on
the Business Day  immediately  following  the date on which the  telegraphic  or
facsimile transmission, as applicable, occurs.

         To Beneficiary:            Electronic Arts, Redwood, Inc.
                                    207 Redwood Shores Parkway
                                    Redwood City, California  94065
                                    Fax:  (650) 628-________
                                    Attn:  James F. Healy, President

         with a copy to:            Nossaman, Guthner, Knox & Elliott, LLP
                                    50 California Street, 34th Floor
                                    San Francisco, California  94111
                                    Attn:  David L. Kimport, Esq.

         To Trustor:







         with a copy to:



                                       17
<PAGE>



         5.07. Acceptance by Trustee.  Trustee accepts this Trust when this Deed
of Trust is duly  executed  and  acknowledged  and is made a  public  record  as
provided by law.

         5.08. Captions.  The captions or headings at the beginning of Articles,
Sections and Subsections hereof are for the convenience of the parties,  are not
a part of this Deed of Trust, and shall not be used in construing it.

         5.09. Invalidity of Certain Provisions. Every provision of this Deed of
Trust is intended to be severable.  In the event any term or provision hereof is
declared to be illegal,  invalid or unenforceable for any reason whatsoever by a
court of competent jurisdiction, such illegality, invalidity or unenforceability
shall not affect the balance of the terms and provisions hereof, which terms and
provisions  shall remain  binding and  enforceable.  If the lien of this Deed of
Trust is invalid or  unenforceable as to any part of the debt, or if the lien is
invalid or  unenforceable  as to any part of the Trust Estate,  the unsecured or
partially  secured  portion  of the debt shall be  completely  paid prior to the
payment of the remaining and secured or partially  secured  portion of the debt,
and all payments made on the debt,  whether  voluntary or under  foreclosure  or
other  enforcement  action or procedure,  shall be considered to have been first
paid on and applied to the full payment of that portion of the debt which is not
secured or fully secured by the lien of this Deed of Trust.

         5.10. No Merger of Leases.  Upon the foreclosure of the lien created by
this Deed of Trust on the Trust Estate  pursuant to the provisions  hereof,  any
lease or sublease  then  existing and  affecting all or any portion of the Trust
Estate shall not be destroyed or terminated by  application of the law of merger
or as a matter of law or as a result of such foreclosure  unless  Beneficiary or
any purchaser at such foreclosure sale shall so elect. No act by or on behalf of
Beneficiary or any such purchaser shall constitute a termination of any lease or
sublease unless  Beneficiary or such purchaser shall give written notice of such
termination  to such tenant or  subtenant.  If both the  lessor's  and  lessee's
estate under any lease or any portion  thereof  which  constitutes a part of the
Trust  Estate shall at any time become  vested in one owner,  this Deed of Trust
and the lien created  hereby shall not be destroyed or terminated by application
of the doctrine of merger unless Beneficiary so elects as evidenced by recording
a written  declaration so stating,  and, unless and until Beneficiary so elects,
Beneficiary shall continue to have and enjoy all of the rights and privileges of
Beneficiary hereunder as to the separate estates.

         5.11.  Governing  Law.  This  Deed of Trust  shall be  governed  by and
construed in accordance with the laws of the State of California.

         5.12.  Statute  of  Limitations.  Except  insofar  as now or  hereafter
prohibited by law, the right to plead,  use or assert any statute of limitations
as a plea or defense or bar of any kind, or for any purpose, to any debt, demand
or  obligation  secured or to be secured  hereby,  or to any  complaint or other
pleading  or  proceeding  filed,  instituted  or  maintained  for the purpose of
enforcing  this  Deed of Trust or any  rights  hereunder,  is  hereby  waived by
Trustor.

         5.13.  Joint  and  Several  Obligations.  Should  this Deed of Trust be
signed by more than one party, all obligations  herein contained shall be deemed
to be the joint and several  obligations  of each party  executing  this Deed of
Trust. Any married person signing this Deed of Trust agrees that recourse may be
had against  community  assets and against his or her separate  property for the
satisfaction of all obligations contained herein.

         5.l4. Interpretation.  In this Deed of Trust the singular shall include
the plural and the  masculine  shall  include the  feminine  and neuter and vice
versa,  if the  context  so  requires;  and  the  word  "person"  shall  include
corporation, partnership or other form of association.

         5.15.  Trust  Irrevocable:  No  Offset.  The  Trust  created  hereby is
irrevocable by Trustor. No offset or claim that Trustor now or may in the future
have against  Beneficiary  shall relieve Trustor from paying the indebtedness or
performing any other obligation contained herein or secured hereby.

                                       18
<PAGE>

         5.16. Corrections. Trustor shall, upon request of Beneficiary, promptly
correct any defect,  error or omission  which may be  discovered in the contents
hereof  or  in  the  execution  or  acknowledgment  hereof,  and  will  execute,
acknowledge and deliver such further instruments and do such further acts as may
be necessary or as may be reasonably  requested by Beneficiary to carry out more
effectively the purposes  hereof,  to subject to the lien and security  interest
hereby  created  any of  Trustor's  properties,  rights or  interest  covered or
intended to be covered hereby, or to perfect and maintain such lien and security
interest.

         5.17. Further Assurances.  Trustor, Beneficiary and Trustee agree to do
or to cause to be done such  further  acts and things and to execute and deliver
or  to  cause  to  be  executed  and  delivered  such  additional   assignments,
agreements,  powers and  instruments,  as any of them may reasonably  require or
deem advisable to keep valid and effective the charges and lien hereof, to carry
into effect the  purposes of this Deed of Trust or to better  assure and confirm
unto any of them their rights, powers and remedies hereunder;  and, upon request
by  Beneficiary,  shall supply  evidence of fulfillment of each of the covenants
herein contained concerning which a request for such evidence has been made.

         5.18.  Execution of Documents by Trustee. At any time, and from time to
time,  without  liability  therefor and without notice,  upon written request of
Beneficiary and  presentation of this Deed of Trust,  and without  affecting the
personal  liability  of  any  person  for  payment  of the  indebtedness  or the
performance of any other obligation secured hereby or the effect of this Deed of
Trust upon the remainder of said Trust Estate, Trustee may (i) reconvey any part
of said Trust  Estate,  (ii) consent in writing to the making of any map or plat
thereof,  (iii)  join in  granting  any  easement  thereon,  or (iv) join in any
extension agreement, agreement subordinating the lien or charge hereof, or other
agreement or  instrument  relating  hereto or to the Trust Estate or any portion
thereof.

         5.19. Appointment of Successor Trustee. Trustee or any successor acting
hereunder may resign and thereupon be  discharged of the trusts  hereunder  upon
thirty (30) days'  written  notice to  Beneficiary.  Regardless  of whether such
resignation occurs,  Beneficiary may, from time to time,  substitute a successor
or successors to any Trustee named herein or acting hereunder in accordance with
any statutory  procedure for such substitution;  or if Beneficiary,  in its sole
discretion,  so elects,  Beneficiary may substitute such successor or successors
by recording  in the office of the recorder of the county or counties  where the
Land is situated, an instrument executed by Beneficiary, and containing the name
of the original Trustor,  Trustee and Beneficiary  hereunder,  the book and page
where  this  Deed of Trust is  recorded  and the  name  and  address  of the new
Trustee,  which instrument  shall be conclusive proof of proper  substitution of
such successor Trustee or Trustees,  who shall succeed,  without conveyance from
the  predecessor  Trustee,  all its  title,  estate,  rights,  powers and duties
hereunder.

         5.20.  Successors and Assigns. This Deed of Trust applies to, inures to
the  benefit  of  and  binds   Trustor  and  its  heirs,   legatees,   devisees,
administrators,  personal  representatives,  executors  and the  successors  and
assigns thereof, Trustee and Beneficiary. As used herein, the term "Beneficiary"
shall mean the  holder or holders of the Note from time to time,  whether or not
named as Beneficiary herein; the term "Trustee" shall mean the trustee appointed
hereunder from time to time, whether or not notice of such appointment is given;
and  the  term   "Trustor"   shall  mean  the  Trustor   named  herein  and  the
successors-in-interest, if any, of said named Trustor in and to the Trust Estate
or any part  thereof.  If  there  be more  than  one  Trustor  hereunder,  their
obligations shall be joint and several.

         5.21.  Priority.  This  Deed of Trust is  intended  to have and  retain
priority over all other liens and encumbrances upon the Trust Estate,  excepting
only: (i) such impositions as at the date hereof have, or by law gain,  priority
over  the  lien  created  hereby;  (ii)  covenants,  conditions,   restrictions,
easements,  and rights of way which are of record or are disclosed of record and
which  affect the Trust  Estate on the date  hereof;  and (iii)  leases,  liens,
encumbrances  and other  matters  as to which  Beneficiary  hereafter  expressly
subordinates the lien of this



                                       19
<PAGE>

Deed of Trust by written  instrument in recordable  form.  Under no circumstance
shall Beneficiary be obligated or required to subordinate the lien hereof to any
lease, lien, encumbrance, covenant or other matter affecting the Trust Estate or
any  portion  thereof.   Beneficiary  may,  however,  at  Beneficiary's  option,
exercisable in its sole and absolute  discretion,  subordinate  the lien of this
Deed of Trust, in whole or in part, to any or all leases, liens, encumbrances or
other matters  affecting all or any portion of the Trust Estate by executing and
recording in the Office of the County  Recorder of the County and State in which
the Land is located, a unilateral  declaration of such subordination  specifying
the lease,  lien,  encumbrance  or other matter or matters to which this Deed of
Trust shall thereafter be subordinate.  Notwithstanding the foregoing,  upon the
request  of  Trustor,   Beneficiary  agrees  to  execute  a  nondisturbance  and
attornment agreement with tenant(s) under any lease(s) of the Property providing
that so long as such  tenant is not in default  of the terms of its lease,  upon
and following a foreclosure of this Deed of Trust, Beneficiary shall not disturb
the possession of such tenant in accordance with the terms of its lease.

         5.22.  Financing Statement and Fixture Filing.

                  (a) This Deed of Trust  constitutes a financing  statement and
fixture filing in the Official  Records of the County Recorder of the County and
State in which the  Property is located with respect to any and all Fixtures (as
hereinafter  defined)  included with the term  "Improvements" as used herein and
with respect to any goods, collateral or other personal property that may now be
or hereafter become Fixtures. As used herein, the term "Fixtures" shall mean all
fixtures located upon or within the  Improvements or now or hereafter  installed
in,  or used in  connection  with any of the  Improvements,  including,  but not
limited to, any and all partitions,  screens, awnings, motors, engines, boilers,
furnaces,  pipes,  plumbing,  elevators,  cleaning and sprinkler  systems,  fire
extinguishing apparatus and equipment,  water tanks, heating,  ventilating,  air
conditioning, and air cooling equipment,  refrigerators, washer and dryer units,
and gas and electric  machinery,  appurtenances  and  equipment,  whether or not
permanently affixed to the Property or Improvements.

                  (b)  It  is  understood   and  agreed  that,  to  protect  the
Beneficiary  against the effect of California  Commercial  Code Section 9313, as
amended  from  time to time,  in the  event  that (x) any  Fixture  owned by the
Trustor in the Trust Estate,  or any part  thereof,  is replaced or added to, or
any new Fixture  owned by the Trustor is installed  by the Trustor,  and in each
case such  Fixture  has a cost or fair  market  value in excess of Ten  Thousand
Dollars  ($10,000.00),  and (y) such  Fixture is or may be subject to a security
interest held by a seller or any other party:

                           (i)  Trustor  or any  owner of all or any part of the
Trust Estate shall,  before the  replacement,  addition,  or installation of any
such Fixture, obtain the prior written approval of the Beneficiary, and give the
Beneficiary  written  notice  that a  security  agreement  with  respect to such
Fixture  has  been  or will be  consummated,  which  notice  shall  contain  the
following information:

                                    (A)     a description  of the Fixtures to be
                                            replaced,  added  to,  installed  or
                                            substituted;

                                    (B)     a recital of the  location  at which
                                            the Fixtures will be replaced, added
                                            to, installed or substituted;

                                    (C)     a statement  of the name and address
                                            of  the  holder  and  amount  of the
                                            security interest; and

                                    (D)     the  date  of the  purchase  of such
                                            Fixtures.

                                       20
<PAGE>

                  Neither this  subparagraph  nor any consent by the Beneficiary
pursuant to this  subparagraph  shall constitute an agreement to subordinate any
right of the  Beneficiary in Fixtures or other property  covered by this Deed of
Trust.

                           (ii) The Beneficiary may, at its option, at any time,
pay the balance due under said  security  agreement and the amount so paid shall
be (A)  secured  by this Deed of Trust  and shall be a lien on the Trust  Estate
enjoying the same  priorities  vis-a-vis  the estates and  interests  encumbered
hereby as this Deed of Trust,  and (B)  payable on demand  with  interest at the
Advance  Interest  Rate  from the time of such  payment  as  aforesaid;  and the
Beneficiary  shall have the privilege of acquiring by assignment from the holder
of said  security  interest any and all contract  rights,  accounts  receivable,
chattel paper,  negotiable or non-negotiable  instruments,  or other evidence of
the Trustor's indebtedness for such Fixtures,  and, upon acquiring such interest
aforesaid by assignment,  shall have the right to enforce the security  interest
as  assignee  thereof,  in  accordance  with the  terms  and  provisions  of the
California  Commercial Code, as amended or supplemented,  and in accordance with
the law.

                           (iii)  Whether  or not the  Beneficiary  has  paid or
taken an assignment of such security interest,  if at any time the Trustor shall
be in default  under the security  agreement  covering  the Fixtures  beyond the
applicable  cure period  therefor,  if any, as specified  therein,  such default
shall be a material breach of the Trustor's  covenants under this Deed of Trust,
and shall at the option of the Beneficiary  constitute a default under this Deed
of Trust.

                           (iv) The provisions of  subparagraphs  (ii) and (iii)
above  shall not apply if the goods  which may become  Fixtures  are of at least
equivalent value and quality as any property being replaced and if the rights of
the party holding such security interest have been expressly subordinated, at no
cost to the  Beneficiary,  to the  lien  of  this  Deed  of  Trust  in a  manner
satisfactory to the Beneficiary, including, without limitation, at the option of
the Beneficiary,  providing to the Beneficiary a satisfactory opinion of counsel
to the effect that this Deed of Trust  constitutes a valid and subsisting  first
lien on such  Fixtures  which is not  subordinate  to the lien of such  security
interest under any applicable law, including, without limitation, the provisions
of Section 9313 of the California Commercial Code.


                  IN WITNESS  THEREOF,  Trustor has caused this Deed of Trust to
be executed by its duly  authorized  agents and  representatives  as of the date
first above written.

                                       TRUSTOR
                                       ______________________, a _______________



                                       By:_____________________________________

                                       Name:___________________________________

                                       Title:__________________________________



                                       21
<PAGE>


                                    EXHIBIT A
                          Legal Description of the Land


                                      -1-
<PAGE>

                                    EXHIBIT M


                                     FORM OF
                               CONTINUING GUARANTY



         To induce ELECTRONIC ARTS REDWOOD,  INC.  (hereinafter called "Lender")
to    grant    credit    and    or    make    financial     accommodation     to
____________________________,   a   _____________________________   (hereinafter
called  "Borrower")  and in  consideration  thereof of any loans,  advances,  or
financial accommodations heretofore or hereafter granted by Lender to or for the
account  of  Borrower,   the  undersigned   (hereinafter   called   "Guarantor")
unconditionally  guarantees and promises to pay Lender,  or order, on demand, in
lawful money of the United  States,  any and all  indebtedness  (as  hereinafter
defined)  of  Borrower  to Lender  under any  existing  or future  agreement  or
otherwise,  and also  guarantee  the due  performance  by Borrower of all of its
obligations under all existing and future contracts and agreements with Lender.

         1. The word  "indebtedness"  means the loan  evidenced  by that certain
Promissory Note made by Borrower to Lender in the original  principal  amount of
________________________________Dollars    ($________________)   (the   "Note"),
secured by a deed of trust on the property  located at Redwood  Shores,  Redwood
City, California,  as described in Exhibit A attached hereto,  together with all
renewals,  extensions,  modifications  and/or  substitutions of or for the Note,
including all principal, interest, collection costs and expenses relating to the
Note or any  collateral  for the Note.  Collection  costs and expenses  include,
without limitation,  all of Lender's attorneys' fees and legal expenses, whether
or not suit is instituted, and all foreclosure expenses.

         2. This Guaranty is a Continuing  Guaranty which shall remain effective
until all of the  indebtedness  has been finally paid in full,  at which time it
shall be of no further force or effect.

         3. The obligations  hereunder are joint and several, and independent of
the obligations of Borrower, and a separate action or actions may be brought and
prosecuted  against  Guarantor,  whether action is brought  against  Borrower or
whether  Borrower is joined in any such action or actions,  and Guarantor waives
the benefit of any statute of limitations affecting their liability hereunder or
the enforcement hereof.

         4. Guarantor  authorizes  Lender,  without notice or demand and without
affecting their liability hereunder, from time to time to (a) renew, compromise,
extend,  accelerate  or  otherwise  change the time for payment of, or otherwise
change  the terms of the  indebtedness  or any part  thereof;  (b) take and hold
security for the payment of this Guaranty or the  indebtedness  guaranteed,  and
exchange,  enforce, waive and release any such security; (c) apply such security
and direct the order or manner of sale thereof as Lender in its sole  discretion
may determine; and (d) assign, without notice, this Guaranty in whole or in part
and/or Lender's rights hereunder to anyone at any time.

                                      -1-
<PAGE>

         5. Guarantor  waives all rights and defenses arising out of an election
of  remedies  by  Lender,  even  though  that  election  of  remedies,  such  as
nonjudicial  foreclosure  with respect to security for a guaranteed  obligation,
has  destroyed  Guarantor's  rights of  subrogation  and  reimbursement  against
Borrower by the  operation  of Section  580d of the Code of Civil  Procedure  or
otherwise,  and/or any similar law of California,  or of any other State,  or of
the United States.  Guarantor  waives any right to require Lender to (a) proceed
against  Borrower;  (b)  proceed  against  or  exhaust  any  security  held from
Borrower; or (c) pursue any other remedy in Lender's power whatsoever. Guarantor
waives any  defense  arising  by reason of any  disability  or other  defense of
Borrower  or by  reason  of the  cessation  from  any  cause  whatsoever  of the
liability of Borrower.  Guarantor  also agrees that nothing  shall  discharge or
satisfy  the  liability  of  Guarantor  hereunder  except the full  payment  and
performance of all of Borrower's  debts and obligations to Lender with interest.
Guarantor  waives  all  presentments,   demands  for  performance,   notices  of
nonperformance,  protests,  notices of protest, notices of dishonor,  notices of
default,  notices of  acceptance of this Guaranty and all other notices to which
Guarantors or any of them might  otherwise be entitled,  and the right to a jury
trial in any action  hereunder  or arising  out of  Lender's  transactions  with
Borrower.

         6. Guarantor agrees that it is its  responsibility  to keep informed of
the  financial  status of  Borrower  and of any  circumstance  which may  affect
Guarantor's  obligations or Borrower,  and Guarantor  recognizes and agrees that
Lender is not obligated to keep  Guarantor  informed of any such  circumstances.
Where Borrower is a corporation or partnership it is not necessary for Lender to
inquire into the powers of Borrower,  of the  officers,  directors,  partners or
agents acting or purporting to act on its behalf,  and any indebtedness  made or
created  in  reliance  upon  the  professed  exercise  of such  powers  shall be
guaranteed hereunder.

         7.  Guarantor  agrees to pay a reasonable  attorney's fee and all other
costs and expenses  which may be incurred by Lender in the  enforcement  of this
Guaranty or any claim hereunder or under any other instrument or guaranty.

         8. No termination or  modification  of this Guaranty shall be effective
for any  purpose  unless it is in writing  and  executed by an officer of Lender
authorized to do so.

         9. All acts and  transactions  hereunder and the rights and obligations
of  the  parties  hereto  shall  be  governed,  construed,  and  interpreted  in
accordance with the laws of the State of California.

         10.  Guarantor  shall  deliver,  or caused to be  delivered,  to Lender
audited year end financial statements, prepared by a certified public accounting
firm,  of  Guarantor  within 90 days of each fiscal year end and, if  reasonably
requested by Lender, more frequently (but in no event more than quarterly).

                                      -2-
<PAGE>

         IN  WITNESS  WHEREOF,  the  undersigned  Guarantor  has  executed  this
Guaranty this ____ day of __________, 1999.

                                       GUARANTOR:

                                       ___________________, a

                                       __________________



                                       By:_____________________________________

                                       Name:___________________________________

                                       Title:__________________________________





                                      -3-
<PAGE>


                                    EXHIBIT N

                                LEGAL DESCRIPTION
                                       of
                               NO-BUILD ZONE No. 1
                            Lands of Electronic Arts



All that real  property  being a portion  of Parcel 2, as shown on that  certain
Parcel Map entitled  "Parcel Map No. 98-6," recorded in Volume 70 of Parcel Maps
at Pages 78-79, Records of San Mateo County, State of California, bounded to the
northwest by the northwesterly  property line of said Parcel 2, designated North
43 degrees 19'38" East 169.07 feet,  bounded to the southeast by a line parallel
to and offset 127.00 feet southeasterly from said northwesterly properly line of
said Parcel 2, bounded to the  southwest by the  southwesterly  property line of
said Parcel 2, and bounded to the northeast by the  northeasterly  property line
of said Parcel 2.




                                LEGAL DESCRIPTION
                                       of
                               NO-BUILD ZONE No. 2
                            Lands of Electronic Arts



All that real  property  being a portion  of Parcel 2, as shown on that  certain
Parcel Map entitled  "Parcel Map No. 98-6," recorded in Volume 70 of Parcel Maps
at Pages 78-79, Records of San Mateo County, State of California, bounded to the
northeast by the  northeasterly  property  line of said Parcel 2, bounded to the
southwest  by a line  parallel to and offset 79.00 feet  southwesterly  from the
northeasterly  property line of said Parcel 2 designated North 46 degrees 40'22"
West 292.00  feet,  bounded to the  northwest  by a line  parallel to and offset
127.00 feet southeasterly from said northwesterly properly line of said Parcel 2
designated  North 43  degrees  19'38"  East  169.07  feet,  and  bounded  to the
southeast by a line  parallel to and offset 400.00 feet  southeasterly  from the
northwesterly  property line of said Parcel 2 designated North 43 degrees 19'38"
East 169.07 feet.



                                      -1-
<PAGE>

                                    EXHIBIT O

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:



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

                    SPACE ABOVE THIS LINE FOR RECORDER'S USE


                                     FORM OF
                               EASEMENT AGREEMENT
                                    (ACCESS)


         This  Easement  Agreement is made this _____ day of  _________________,
1999, by and between FLATIRONS FUNDING, LIMITED PARTNERSHIP,  a Delaware limited
partnership  ("FFLP"),  ELECTRONIC  ARTS REDWOOD,  INC., a Delaware  corporation
("EAR"), and _____________________, a _____________________ ("Buyer").

         WHEREAS,  FFLP is the owner of certain real property located in Redwood
City, San Mateo County,  California,  more  particularly  described in Exhibit A
attached hereto, hereinafter referred to as the "Servient Tenement;" and

         WHEREAS,  EAR is the  lessee  of the  Servient  Tenement  and  adjacent
buildings; and

         WHEREAS,  Buyer is the owner of certain real  property  adjacent to the
Servient  Tenement,  more  particularly  described in Exhibit B attached hereto,
hereinafter referred to as the "Dominant Tenement;" and

         WHEREAS,  EAR as of the date hereof has sold the  Dominant  Tenement to
Buyer,  and one of the  conditions  of the sale is that FFLP grants the easement
described  herein  to  Buyer,  its  successors  and  assigns,  on the  terms and
conditions hereinafter set forth; and

         WHEREAS,  FFLP wishes to grant the  easement  and EAR  consents to such
grant;

         NOW, THEREFORE, it is agreed as follows:

         1. Grant of Easement.  FFLP hereby grants to Buyer,  its successors and
assigns, in perpetuity, as appurtenant to the Dominant Tenement, a non-exclusive
right-of-way  easement  as  described  in  Section  2 below  (the  "Right-of-Way
Easement").  Persons designated in Section 2 as entitled to use the Right-of-Way
Easement are collectively referred to as "Permittees."

                                      -1-
<PAGE>

         2.  Description of Right-Of-Way  Easement.  The  Right-of-Way  Easement
granted herein is a right-of-way for Buyer, its successors, assigns, and tenants
of the buildings  located or to be located on the Dominant  Tenement,  and their
respective employees,  agents,  visitors, and invitees, to cross that portion of
the Servient Tenement described in Exhibit C attached hereto en route to or from
the entrance to the buildings located or to be located on the Dominant Tenement.

         3. Maintenance,  Repair, and Replacement. FFLP shall be responsible for
the  maintenance,  repair,  and  replacement  of the right of way located on the
Servient Tenement.

                  (a)  Costs.  FFLP  shall be  responsible  for the cost of such
maintenance,  repair, or replacement;  provided,  however, that if any repair or
maintenance to the right of way is required by reason of the negligence, willful
misconduct or other fault of Buyer or its Permittees,  unless  otherwise  agreed
Buyer  shall  be  obligated  to pay  for the  entire  cost  of  such  repair  or
maintenance.  If FFLP  initially  pays the cost of such  maintenance  or repair,
Buyer shall remit  payment in full to FFLP within thirty (30) days from the date
of receipt of a written request for payment from FFLP. Nothing contained in this
Agreement  shall limit the right of Buyer to charge,  allocate,  pass through or
apportion all or any part of such expense to any Permittees of Buyer.

                  (b)  Access.  For  purposes  of  repairing,   maintaining,  or
replacing the right of way, FFLP shall have the right to temporarily  suspend or
block  use of or access to  portions  of the  Servient  Tenement  to the  extent
reasonably  necessary to undertake  such repairs or  maintenance,  without being
deemed  to be in  violation  of the  terms  and  conditions  of this  Agreement;
provided, however, that, except in an emergency, such work shall be performed at
times and in a manner  reasonably  convenient to the continued and uninterrupted
operation of the businesses located on the Dominant Tenement.

                  (c)  Reallocation  of  Obligations.   Maintenance  and  repair
obligations and costs may be reallocated  between the parties and/or  additional
or substitute  parties in the future by an amendment to this  Agreement  signed,
acknowledged and duly recorded by the parties.

         4. Damage and Destruction;  Eminent Domain.  In the event of any damage
to or destruction of all or any portion of the Servient Tenement, or a taking of
all or any portion of the  Servient  Tenement by power of eminent  domain,  FFLP
shall rebuild and restore the remainder, if any, of the Servient Tenement to the
extent possible.  In the event of a taking by power of eminent domain of part or
all of the Servient Tenement, the obligations of FFLP pursuant to this Agreement
shall  cease as of the date of the taking  with  respect  to the  portion of the
Servient Tenement so taken.  Nothing contained herein shall be construed to give
Buyer any interest in any award or payment made to FFLP in  connection  with any
exercise of eminent domain or transfer in lieu thereof  affecting any portion of
the Servient Tenement.

         5.  Payment  of  Property  Taxes.  FFLP  shall  pay or cause to be paid
promptly  when  due  all  real  property  taxes  and  other  special  taxes  and
assessments  which may be levied or  assessed  against  the  Servient  Tenement;
provided,  however,  that in the event any real property  taxes or other special
taxes or assessments are separately  assessed or levied against Buyer's interest
under this Agreement,  Buyer shall pay or cause to be paid promptly when due all
such taxes or assessments.

                                      -2-
<PAGE>

         6. Insurance.  Each of FFLP and Buyer shall provide, keep in force, and
maintain  commercial  general  liability  insurance with a reputable and solvent
insurance company covering their respective  interests in the Servient Tenement.
Such policies (a) shall insure against bodily injury,  death and property damage
with a combined  single limit of coverage of not less than Five Million  Dollars
($5,000,000);  (b) shall name the other party and EAR as an additional  insured;
and (c) shall be increased from time to time to amounts reasonable and customary
for similar  properties in the area where the Servient Tenement is located.  All
such policies  shall provide that the same shall not be canceled  without thirty
(30) days' prior written  notice to the named and additional  insureds.  Each of
FFLP and Buyer shall provide the other with  certificates of insurance on July 1
of each year and upon any renewal or replacement  of insurance  during the year.
If a party fails to procure the required  insurance,  the other party may obtain
such insurance in the defaulting  party's name and bill the defaulting party for
such costs.

         7. Indemnity.  Buyer shall indemnify,  defend and hold harmless against
all penalties, losses, liability and claims of any nature whatsoever, including,
without limitation,  claims or liabilities for loss or damage to property or for
injury to or death of persons, and all costs and attorneys' fees, arising out of
the activities of Buyer or its Permittees  upon or using the Servient  Tenement;
provided, however, that the foregoing indemnification shall not apply to matters
resulting  directly or indirectly  from the negligence or willful  misconduct of
FFLP or EAR, or their respective  successors,  assigns,  tenants,  visitors,  or
invitees.

         8. Default.  In the event a party hereunder breaches or defaults in its
obligations  hereunder,  the  other  party may sue for  damages  in the event of
failure to pay money or seek specific  performance  in the event of a failure to
maintain or repair.  Neither  party may block or inhibit  access to the Servient
Tenement as a result of a breach or default hereunder.

         9. EAR Consent and Assumption. FFLP hereby assigns and delegates all of
its duties and obligations  hereunder to EAR, its successors and assigns, for so
long as EAR, its  successors and assigns,  are tenants of the Servient  Tenement
under lease from FFLP or its successors or assigns.  EAR accepts such assignment
and delegation,  hereby consents to FFLP's  granting the within  easements,  and
hereby subordinates its leasehold interest to the within easements.

         10.  Mortgages.  No  breach  of this  Agreement  shall  defeat,  render
invalid,  diminish or impair the lien of any first  mortgage or deed of trust on
the  Servient  Tenement  made in good  faith and for value,  but the  covenants,
conditions and restrictions contained herein shall be binding upon and effective
against any mortgagee who acquires title to either of the Parcels or any portion
thereof  by  foreclosure,  trustee's  sale,  deed  in  lieu  of  foreclosure  or
otherwise,  pursuant  to a mortgage or deed of trust  created  after the date of
this Agreement.

         11. Entire  Agreement.  This instrument  contains the entire  agreement
between the parties  relating to the rights herein  granted and the  obligations
herein  assumed.  Any oral  representations  or  modifications  concerning  this
instrument shall be of no force or effect except in a subsequent modification in
writing, signed by the party to be charged.

                                      -3-
<PAGE>

         12. Attorney's Fees. In the event of any controversy, claim, or dispute
relating to this instrument or the breach thereof, the prevailing party shall be
entitled to recover from the losing party reasonable expenses,  attorney's fees,
and costs.

         13. Binding Effect. This instrument shall be binding on and shall inure
to the benefit of the heirs, executors, administrators,  successors, and assigns
of FFLP, EAR, and Buyer, and each of them.

         14. No Dedication.  Nothing contained in this Agreement shall be deemed
to be a gift or dedication of any portion of the Servient Tenement to or for the
general public or for any public purposes whatsoever. It is the intention of the
parties that this  Agreement  shall be strictly  limited to and for the purposes
expressed herein.

         15. Covenants Running With the Land. All of the provisions, agreements,
rights,  powers,  covenants,   conditions  and  obligations  contained  in  this
Agreement  shall be  binding  upon and shall  inure to the  benefit of the FFLP,
Buyer,  EAR  and  their  respective  successors  (by  merger,  consolidation  or
otherwise),  assigns,  and  representatives,  and all other persons acquiring an
interest  in  all or  any  portion  of the  Servient  Tenement  or the  Dominant
Tenement.  All of the provisions of this Agreement  shall  constitute  covenants
running  with  the  land  and  equitable  servitudes  pursuant  to any  and  all
applicable laws.

         16. Estoppel Certificates.  Either FFLP, EAR, or Buyer may, at any time
and from time to time,  in  connection  with the sale,  transfer,  financing  or
refinancing  of its  Tenement,  deliver  a written  notice to the other  parties
requesting  that the other  parties  execute a certificate  certifying  that the
requesting  party is not in default in the performance of its obligations  under
this  Agreement or, if in default,  describing  therein the nature and amount of
any default.  Such  certificate  shall be executed and returned  within ten (10)
days following the receipt of the notice from the requesting party. Failure by a
party to execute and return the certificate within the specified period shall be
deemed an admission by such party that the  requesting  party is current and not
in default in the performance of its obligations under this Agreement.  Any such
certificate may be relied upon by all transferees, mortgagees, and deed of trust
beneficiaries.

         17.  Certain  Obligations  of  FFLP  Non-Recourse.  FFLP's  obligations
hereunder are intended to be the  obligations of the limited  partnership and of
the  corporations  which are the managing  general partner and any other general
partner  thereof  only,  and no recourse for the payment of any amount due under
this  Easement  Agreement or for any claim based thereon or otherwise in respect
thereof,  shall be held against any limited partner of FFLP or any incorporator,
shareholder, officer, director or affiliate, as such, past, present or future of
such  corporate  managing  general  partner or other  general  partner or of any
corporate  limited  partner or of any successor  corporation  to such  corporate
managing  general  partner or other  general  partner or any  corporate  limited
partner of FFLP, or against any direct or indirect  parent  corporation  of such
corporate  managing  general  partner or other general partner or of any limited
partner  of FFLP or any other  subsidiary  or  affiliate  of any such  direct or
indirect  parent  corporation  or  any  incorporator,   shareholder  officer  or
director,  as  such,  past,  present  or  future,  of any such  parent  or other
subsidiary or affiliate,  it being understood that FFLP is a limited partnership
formed for the purpose of


                                      -4-
<PAGE>

acquiring  and owning  property  including  the Servient  Tenement and acting as
lessor to Electronic Arts Redwood, Inc., on the express understanding aforesaid.
Nothing contained in this Section 17 shall be construed to limit the exercise or
enforcement,  in accordance  with the terms of this  Easement  Agreement and any
other documents  referred to herein,  of rights and remedies against the limited
partnership  or the  corporate  managing  general  partner or any other  general
partner  of FFLP or the  assets  of the  limited  partnership  or the  corporate
managing  general  partner or any other general partner of FFLP. As used in this
Section 17,  "affiliate"  means any other person  controlling,  controlled by or
under direct or indirect  common  control with such person;  "person"  means any
individual, corporation, partnership, limited liability company, private limited
company, joint venture,  association joint-stock company, trust,  unincorporated
association, organ of government or any agency or political subdivision thereof;
and "control,"  when used with any specified  person,  means the power to direct
the  management  and policies of such person,  directly or  indirectly,  whether
through the ownership of voting  securities,  by contract or otherwise;  and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

         IN WITNESS  WHEREOF,  the parties  hereto have  executed  this Easement
Agreement as of the date first-above written.

                                       FLATIRONS FUNDING, LIMITED PARTNERSHIP,
                                       a Delaware limited partnership

                                       By:      Flatirons Capital, Inc.
                                                Managing General Partner

                                       By:  ___________________________________

                                       Its:  __________________________________



                                       _______________________________,

                                       a  _______________________



                                       By:  ___________________________________

                                       Its:  __________________________________




                                       ELECTRONIC ARTS REDWOOD, INC.,
                                       a Delaware corporation


                                       By:  ___________________________________

                                       Name:  _________________________________

                                       Title:  ________________________________


                                      -5-
<PAGE>

                                 Acknowledgment

State of California
County of _____________


         On  ________________,  1999,  before me,  ____________________________,
personally appeared _________________________________________  [personally known
to me or proved to me on the basis of satisfactory evidence] to be the person[s]
whose name[s] _______________  ____________________________________  [is or are]
subscribed   to   the   within   instrument   and   acknowledged   to  me   that
_______________________   [he  or  she   or   they]   executed   the   same   in
______________________________    [his    or    her   or    their]    authorized
______________________  [capacity  or  capacities],  and  that by [his or her or
their]  signature[s] on the instrument the person[s],  or the entity upon behalf
of which the person[s] acted, executed the instrument.

         WITNESS my hand and official seal.



____________________________________              _____________________________
[Signature]                                                   [Seal]


                                      -1-
<PAGE>

                                    EXHIBIT P


                                     FORM OF
                                 EXERCISE NOTICE


Electronic Arts, Redwood, Inc.
207 Redwood Shores Parkway
Redwood City, California  94065
Attn:  James F. Healy, President


                  Re:      Option Agreement,  Agreement of Purchase and Sale and
                           Joint  Escrow  Instructions,  dated  _______________,
                           1999 (the "Purchase  Agreement")  between  Electronic
                           Arts      Redwood,      Inc.      ("Seller")      and
                           ______________________________("Buyer")

Gentlemen and Ladies:

         This  letter  constitutes  the  Exercise  Notice  contemplated  by  the
above-referenced  Purchase Agreement and is delivered to exercise Buyer's option
granted under the Purchase Agreement to purchase the Property (as defined in the
Purchase  Agreement)  on the  terms and for the  price  stated  in the  Purchase
Agreement.

         Buyer hereby  expressly  confirms to Seller that Buyer has completed to
its  satisfaction  the  inspection and review  contemplated  by Article 2 of the
Purchase  Agreement.  Buyer  further  confirms  that it has  deposited  the full
Deposit (as defined in the Purchase Agreement) with the Escrow Agent.

         Accordingly,  Buyer is  prepared  to proceed  with the  purchase of the
Property in accordance with the terms of the Purchase  Agreement subject only to
the  satisfaction  or waiver of the  conditions  described in Section 4.2 of the
Purchase Agreement.

                                Very truly yours,

                                       [BUYER]


                                       By:_____________________________________

                                       Name:___________________________________

                                       Title:__________________________________



                                      -1-
<PAGE>

                                    EXHIBIT Q

                                     FORM OF
                              ESTOPPEL CERTIFICATE


TO:      [BUYER]

Re:      Development Agreement dated November 7, 1996

         The undersigned The City of Redwood City (the "City")  understands that
         [BUYER] has  contracted to purchase that certain real property  located
         in  Redwood  City,  California,  identified  as  Zones  2 and 4 of  the
         Electronic Arts Business Park (the "Property"), which is subject to the
         terms and conditions of that certain Development  Agreement dated as of
         November  7,  1996,   by  and  between   Flatirons   Funding,   Limited
         Partnership,  a Delaware limited partnership ("FFLP"), and the City and
         recorded  November  8, 1996,  as  Instrument  No.  96-138988,  Official
         Records,  San  Mateo  County,  California,  as the same may be  amended
         through the date hereof (the "Development Agreement").  The City hereby
         certifies the  following  information  with respect to the  Development
         Agreement  and agrees that you and your  assigns may rely upon the same
         in purchasing said real property:

         1. The Development Agreement is in full force and effect, constitutes a
         binding obligation of the parties, and has not been modified or amended
         either  orally or in  writing  except by (i) that  First  Amendment  to
         Development  Agreement dated as of April 15, 1998 and recorded on April
         15, 1998, as Instrument  No.  98-054809,  Official  Records,  San Mateo
         County, California;  (ii) that First Amendment to Development Agreement
         dated as of April 6, 1998 and recorded on August 25, 1998  (recorded to
         correct  typographical  errors of the First Amendment recorded on April
         15, 1998), as Instrument No.  98-135753,  Official  Records,  San Mateo
         County,  California;  and (iii) that Second  Amendment  to  Development
         Agreement  dated as of August 31,  1998 and  recorded on  September  2,
         1998, as Instrument No. 98-141937,  Official Records, San Mateo County,
         California.

         2. The City finds that FFLP has demonstrated good faith compliance with
         the terms of the Development Agreement and has met all its obligations,
         both monetary and non-monetary, under the Development Agreement.

         3. The City asserts no claim of default under the Development Agreement
         and to the best of the City's knowledge and belief, there is no default
         by FFLP under the Development Agreement.

                            Dated:  __________, 1999.

                                              Very truly yours,

                                              THE CITY OF REDWOOD CITY


                                              By
                                                 _______________________________

                                                       Michael Church
                                                       Planning and
                                                       Redevelopment Manager


                                      -1-