OBIE MEDIA CORP, 10KSB, 1999-03-01

OBIE MEDIA CORP
10KSB, 1999-03-01
ADVERTISING

Previous: PACIFIC INNOVATIONS TRUST, NSAR-B, 1999-03-01

Next: VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST SER 130, 497J, 1999-03-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended: November 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission file Number: 000-21623

OBIE MEDIA CORPORATION
(Name of small business issuer in its charter)

93-0966515
Oregon (I.R.S. Employer
(State of incorporation) Identification No.)

4211 West 11th Avenue, Eugene, Oregon 97402
(Address of principal executive offices)

Issuer's telephone number: (541) 686-8400

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, without par value
(Title of class)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this Form 10-KSB, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year: $22,717,745

State the aggregate market value of the voting stock held by
nonaffiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within 60
days prior to the date of filing: $27,639,876 aggregate market value as of
December 31, 1998, based on the price at which the stock was sold.

Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 4,321,321 shares of
Common Stock, without par value, on February 23, 1999.

DOCUMENTS INCORPORATED BY REFERENCE
None

Transitional Small Business Disclosure Format (Check One): Yes ; No X
----

<PAGE>
TABLE OF CONTENTS

Part I

Item 1. Description of Business........................................ 2
Item 2. Description of Properties...................................... 9
Item 3. Legal Proceedings.............................................. 10
Item 4. Submission of Matters to a Vote of Shareholders................ 10

Part II

Item 5. Market for Common Stock and Related Shareholder Matters........ 11
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations ..................................... 12
Item 7. Financial Statements........................................... 17
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures...................................... 17

Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act............... 18
Item 10. Executive Compensation.......................................... 20
Item 11. Security Ownership of Certain Beneficial Owners and Management.. 23
Item 12. Certain Relationships and Related Transactions.................. 24
Item 13. Exhibits and Reports of Form 8-K................................ 25
Signatures ................................................................ 26
Financial Statements....................................................... F-1

<PAGE>
FORM 10-KSB

This Annual Report includes certain forward-looking statements that involve a
number of risks and uncertainties. The Company's actual results could differ
materially from the forward-looking statements. Factors that could cause or
contribute to such differences include: a decline in the demand for advertising
in the areas where the Company conducts its business; a deterioration of
business conditions generally in such areas; slower that expected acceptance of
the Company's innovative display products; competitive factors, including
increased competition and price pressures; changes in regulatory or other
external factors; failure to successfully conclude negotiations on pending
transactions or to successfully assimilate expanded operations, inability to
generate advertising revenues to meet contractual guarantees, and cancellation
or interruption of contracts with governmental agencies, as well as those
factors listed from time to time in the Company's SEC reports, including, but
not limited to, the factors discussed in Exhibit 99.1 filed in connection with
this Annual Report. Readers are cautioned not to place undue reliance on the
Company's forward-looking statements, which speak only as of the date of this
Annual Report. The Company does not update its forward-looking statements.

Unless otherwise indicated, the information contained in this Annual Report has
been restated to give retroactive effect to 11-for-10 stock splits declared in
October 1997 and November 1998. Unless the context otherwise requires,
references in this Annual Report to "Obie Media," the "Company," "we," "us" or
"our" are to Obie Media Corporation and its subsidiaries. We have derived some
information in this Annual Report from government and industry sources. Although
we believe this information is reliable, we have not independently verified it.

<PAGE>
PART I

ITEM 1. DESCRIPTION OF BUSINESS

Company Overview

Obie Media Corporation is an out-of-home advertising company which markets
advertising space primarily on transit vehicles and outdoor advertising displays
(billboards and wallscapes). As of November 30, 1998, the Company had 33
exclusive agreements with transit districts in the United States and Canada to
operate transit advertising displays. The markets in which these transit
districts are located include seven of the 30 largest U.S. markets--Dallas;
Portland, Oregon; Cleveland; Sacramento; Hartford; Ft. Lauderdale; and
Cincinnati--and the third largest Canadian market, Vancouver, British Columbia.
Since our initial public offering ("IPO") in November 1996, the number of
vehicles on which we have the right to operate transit advertising displays has
increased from approximately 1,200 to over 7,000. We also operate and generally
own approximately 760 advertising displays on billboards and walls in
Washington, Oregon, California and Idaho. The Company was formed in 1987 as a
subsidiary of Obie Industries Incorporated ("Obie Industries"), a family-owned
outdoor advertising business. To facilitate its IPO, the Company was separated
from Obie Industries in November 1996.

In August 1998, our wholly-owned Canadian subsidiary, Obie Media Limited, began
selling transit advertising displays for BC Transit on approximately 1,500
transit vehicles in British Columbia. BC Transit is the transit authority for
substantially all of the transit districts in British Columbia, including
Vancouver (Canada's third largest market) and Victoria.

In September 1998, we acquired P & C Media ("P & C"), which has operated in the
out-of-home advertising industry for over 50 years. P & C has 19 agreements with
transit districts, including districts located in Hartford and Stamford,
Connecticut; Fort Lauderdale and West Palm Beach, Florida; Cincinnati and
Cleveland, Ohio; Richmond, Virginia; and Milwaukee, Wisconsin. As of November
30, 1998, P & C's transit agreements covered approximately 3,200 vehicles.

Obie Media began serving as the exclusive transit advertising provider for the
Tri-County Metropolitan Transit District of Oregon ("Tri-Met") in 1994, pursuant
to a five-year agreement. In 1996, Tri-Met extended its contract with Obie Media
through June 30, 2001. The Federal Transit Administration ("FTA"), which
provides substantial monies to transit districts, has taken the position that
transit advertising contracts may not exceed five years in length. At the
request of the FTA, Tri-Met and Obie Media have agreed that our agreement with
Tri-Met will terminate on June 30, 1999.

In December 1998, Tri-Met and Obie Media negotiated a settlement for damages
resulting from the early termination of the contract. Under the terms of the
settlement, Obie Media will receive cash payments and other financial benefits,
and will transfer to Tri-Met, transit benches on which the Company sells
advertising. In addition, the Company will retain a significant residual value
of advertising contracts in existence at June 30, 1999, for up to one year. The
Company expects the settlement to result in a pre-tax gain of more than $800,000
during fiscal 1999. As a result of the settlement, the Company does not expect
that fiscal 1999 income and cash flows will be significantly affected in the
event we are unable to renew our agreement with Tri-Met for the period after
June 30, 1999. In December 1998, Obie Media submitted its response to Tri-Met's
request for proposal for a new multi-year contract beginning July 1, 1999. In
February 1999, Tri-Met advised us that Obie Media was in second place in the
proposal process. Tri-Met is expected to make a final decision in March 1999.

Industry Overview

The out-of-home advertising industry includes displays on buses, trains, taxis,
subways, transit benches and shelters, billboards, wallscapes on urban
buildings, and displays in shopping centers, malls, airports, stadiums, movie
theaters and supermarkets. The industry has grown significantly in recent years.
According to estimates of the Outdoor Advertising Association of America (the
"OAAA"), between 1993 and 1997, annual revenues generated by the out-of-home
advertising industry increased 35.6% to $4.0 billion from $2.95 billion,
representing a compound annual growth rate of 8.0%.

2
<PAGE>
The out-of-home medium offers several advantages to advertisers. As compared
with television, newspapers, magazines and direct mail marketing, out-of-home
advertising offers repetitive consumer impacts at a relatively low
cost-per-thousand-impressions, a commonly used advertising measurement. Because
of its cost-effective nature, out-of-home advertising is a good vehicle to build
mass-market support. Out-of-home advertising can also be used to target a
defined audience in a specific location. This allows local businesses to
concentrate on a particular geographic area or demographic group. Additionally,
increases in automobile travel times due to highway congestion and continued
migration of businesses and residences from cities to outlying suburbs has
increased consumer exposure to out-of-home advertising.

As of 1997, the OAAA estimated that there were approximately 396,000 outdoor
advertising displays in the United States, operated by more than 500 companies.

Transit advertising represents a significant portion of the out-of-home
advertising industry. The OAAA estimated that, out of 60,000 transit buses
operating in 1997 in the United States, 37,600 carried advertising. Transport
Canada estimated that approximately 13,000 urban transit vehicles were in use in
Canada in 1996. Transit districts range in size from very large districts with
thousands of vehicles to small districts with 10 or fewer vehicles. Advertising
displays represent a significant source of revenue to transit districts.

The out-of-home advertising industry includes several large advertising and
media companies with operations in multiple markets. It also includes many small
and local companies operating a limited number of displays in a single or a few
local markets. There has been, and we expect there will continue to be,
consolidation in the out-of-home advertising industry.

Obie Media Strategy

Obie Media's overall business strategy is to expand upon our national presence
to become a leader in the out-of-home advertising industry. Our strategy is to
increase our revenues and improve our profitability by delivering to local,
regional and national advertisers efficient access to one or multiple markets.
The following are components of our strategy:

o Growth Strategy. Obie Media's growth strategy is to increase our
penetration and revenue within our existing markets, as well as to enter
new markets. We expect to enter new markets primarily by obtaining
agreements with additional transit districts throughout the United States
and Canada. Once we enter a market, we seek to gain a greater share of the
overall advertising expenditures in the market by providing a wide variety
of products and services, including innovative transit advertising
products, to a broad range of local, regional and national advertisers. We
believe that, by obtaining additional transit advertising agreements, we
will increase our operating efficiencies and geographic diversity and
create additional bases from which to achieve further market penetration.
Additionally, we continuously evaluate opportunities to enter new markets
and increase our presence in existing markets through the selective
acquisition of out-of-home advertising companies or assets.

o Develop Regional Operating Centers ("Hubs"). We seek to increase our
revenues, profitability and operating efficiencies through our development
and use of regional operating centers, or hubs. In developing hubs, we seek
to establish an initial base of operations in a geographic region by
obtaining exclusive agreements with one or more significant transit
districts. We then seek to expand our market presence by bidding for
contracts with other transit districts in the region and by expanding the
range of non-transit products and services we offer there. We believe our
hub strategy results in revenue growth and cost savings by enabling us to
efficiently provide sales and administrative services to several
intra-regional markets from one strategically located operating base.

o Maintain a Large, Proactive Sales Force. We believe that our large,
proactive sales force that sells directly to local advertisers and, more
traditionally, to advertising agencies, enables us to increase

<PAGE>
display occupancy levels and maximize our advertising rates. We believe our
ratio of sales personnel to display inventory is higher than the industry
average. We devote significant resources to recruit and train individuals
who will excel in our culture. The sales force is motivated by an
incentive-based compensation program and supported by a network of
experienced local managers who operate under a centrally coordinated
marketing plan. We believe the size, quality and motivation of our sales
force provide us a competitive advantage.

o Increase Revenues From Existing Display Space. We seek to increase the
revenue potential of our available transit and outdoor advertising display
inventory by offering innovative transit products and increasing the
percentage of time our display space is occupied. Innovative transit
products we offer include vinyl displays that are physically larger than
traditional transit advertisements. These vinyl displays offer customers
greater impact while providing us more revenue from a given transit display
space. We seek to sell advertising on our transit and outdoor displays by
means of extended contracts, which enable us to fill display space that
would normally be vacant between traditional advertising campaigns.

o Attract New Advertisers Through Direct Local Sales. By selling directly to
local businesses not represented by advertising agencies, we seek to obtain
a larger share of the overall advertising expenditures in our markets and
broaden our customer base for out-of-home advertising. We dedicate
substantial resources to directly target local businesses whose advertising
expenditures may not typically include out-of-home advertising and
introduce them to the benefits of the medium. We offer comprehensive sales,
marketing and creative services that make it easier for these potential
customers to purchase out-of-home advertising.

Products and Markets

Obie Media offers advertisers a wide range of out-of-home advertising products,
including transit advertising and outdoor advertising displays. Our product mix
provides advertisers with significant flexibility in their advertising programs
and allows us to cross-sell multiple products and leverage our design and
production capabilities. We have also benefited from improvements in production
technology, including the use of computerized design, vinyl advertising copy and
improved lighting techniques. These improvements have facilitated a more
dynamic, colorful and creative use of the out-of-home medium.

Transit Advertising. As of November 30, 1998, the Company had 33 exclusive
agreements with transit districts in the United States and Canada to operate
transit advertising displays on over 7,000 transit vehicles. The markets in
which these transit districts are located include seven of the 30 largest U.S.
markets--Dallas; Portland, Oregon; Cleveland; Sacramento; Hartford; Ft.
Lauderdale; and Cincinnati--and the third-largest Canadian market, Vancouver,
British Columbia. In January and February, 1999, we began operating transit
advertising displays for transit districts in Madison, Wisconsin; Spokane,
Washington; Yakima, Washington; and London, Ontario (representing a total of
approximately 495 vehicles).

Pursuant to our transit advertising agreements, Obie Media is the exclusive
seller of exterior advertising on the transit vehicles operated by the
contracting transit districts. Typically, these agreements also provide us the
right to sell advertising on the interior of the vehicles.

Agreements with transit districts are awarded through a competitive proposal
process. Each transit district evaluates proposals based on a number of
criteria, but primarily on the basis of the minimum amount that the bidder
guarantees to pay to the district. A transit agreement typically requires the
transit advertising operator to guarantee to pay the transit district the
greater of a minimum stated amount or a percentage (usually over 50%) of the
advertising revenues generated by the operator's use of the district's vehicles.
Transit advertising operators often must post performance bonds to secure their
guarantees under their transit agreements. Obie Media's transit agreements
typically have terms of three to five years, with renewals or extensions either
unilaterally at the discretion of the transit district or upon the mutual
agreement of the district and Obie Media.

We also own and sell advertising on over 700 transit benches in Portland,
Oregon, approximately 100 transit shelters in Cincinnati and on approximately 22
walkway dioramas (a display similar to a "cut-out" billboard) in the Cleveland
airport. We believe these products complement our other product offerings and
intend to secure additional shelters, dioramas and transit benches in our
markets.

4
<PAGE>
Transit districts range in size from very large districts with thousands of
vehicles to small districts with 10 or fewer vehicles. Through our hub strategy
and proactive marketing to local advertisers, we are able to profitably offer
our services to both large and small transit districts. The following table sets
forth certain information about Obie Media's transit district agreements as of
November 30, 1998:

No. of Served
Transit District Agreements Vehicles Since

British Columbia
Vancouver 1136 1998 (1)
Victoria and 27 smaller districts 380 1998 (1)
Ohio
Cleveland 833 1997 (4)
Cincinnati 385 1981 (4)
Texas
Dallas 809 1997
Austin 303 1998
Oregon
Portland 726 1994 (2)
Eugene and Springfield 102 1980 (3)
Salem 54 1994
Wisconsin
Milwaukee 546 1992 (4)
Racine 50 1997 (4)
Kenosha 42 1996 (4)
Connecticut
Hartford and Stamford 380 1996 (4)
Bridgeport 50 1981 (4)
New Britain 30 1981 (4)
Waterbury 25 1981 (4)
California
Sacramento 246 1994
Santa Cruz 112 1997
Stockton 111 1989
Paratransit, Inc. (Sacramento) 86 1997
Monterey 72 1995
Yolo County 29 1997
Florida
Ft. Lauderdale 202 1998 (4)
West Palm Beach 139 1998 (4)
Gainesville 50 1981 (4)
Daytona Beach 45 1981 (4)
Virginia
Richmond 170 1984 (4)
Norfolk 160 1984 (4)
Roanoke 38 1984 (4)
Lynchburg 25 1984 (4)
Danville 14 1998 (4)
Petersburg 12 1988 (4)
Washington
Bremerton 115 1996

(1) Operations under these agreements began in August 1998; the Vancouver
agreement was signed in January 1999, and the Victoria agreement is expected to
be signed in March 1999.

(2) This agreement, by its terms, was scheduled to expire in 2001. However, at
the request of the Federal Transit Administration, the district and Obie Media
have agreed that the agreement will terminate on June 30, 1999. The district has
agreed to compensate us for the early termination of the agreement. See "Company
Overview," above.

5
<PAGE>
(3) This agreement was serviced by a division of Obie Industries (Obie Media's
parent corporation until 1996) prior to 1987, when Obie Media was formed.

(4) These dates reflect periods of service under agreements with P & C, which
Obie Media acquired in September 1998.

The above transit district agreements are scheduled to expire as follows:

Approximate
Number of
Vehicles
Number of Covered Under
Agreements Agreements
Calendar Scheduled to Scheduled to
Year (1) Expire Expire (2)

1999 5 1,025
2000 13 3,245
2001 3 1,025
2002 3 1,300
2003 4 400
2005 1 380

(1) In addition, four agreements covering a total of approximately 100 vehicles
are awarded on a year-to-year basis.

(2) Certain of our transit district agreements provide that they may be renewed
for additional one-year to five-year periods beyond the specified expiration
date, either unilaterally by the transit district or by mutual agreement of Obie
Media and the transit district. Some of our transit district agreements provide
that the transit district may terminate the agreement before the end of the
specified term at the convenience of the transit district, or if the transit
district determines that such termination is in its best interest or in the
public interest. We are not aware of any transit district agreement that has
been canceled under any such clause.

Transit Display Products. We offer traditional and innovative non-traditional
transit advertising products. Traditionally, transit advertisements have been
inserted into metal frames mounted on the exterior or interior of a bus.
Industry standard sizes include "Kings," "Queens," "Tails" and "Heads." While
still offering traditional advertising products, we also offer vinyl displays
that cover almost the entire side and/or rear of a bus. These vinyl products
create significant additional revenue potential per bus when compared to
traditional products. We believe these products also give us a competitive
advantage in bidding for transit advertising agreements in districts that use or
are willing to use them.

Outdoor Advertising Displays. Obie Media owns and operates approximately 760
billboards in Washington, Oregon, California and Idaho. Substantially all of our
billboards are bulletins. We have no 30-sheet or 8-sheet poster units. Our
bulletins are generally located on major thoroughfares and provide greater
impact and higher value than traditional posters.

We lease the property underlying our billboards, generally under 10-year leases
that give us renewal rights for two additional five-year periods. The lessor
typically reserves the right to cancel the lease if construction of permanent
improvements on the subject property conflicts with the billboard.

Most of our billboards were designed and installed within the last nine years,
and almost all are built of steel and engineered to withstand high winds. More
than two-thirds of our billboards are illuminated. The displays are insured
against damage caused to them by storms, vandalism and other causes.

Obie Media also leases, from others, building walls in urban areas for wallscape
displays. Wallscapes are painted on vinyl surfaces or directly on the sides of
buildings. We currently lease 7 building walls for wallscape displays in Seattle
and own a 50% interest in a corporation that leases, from others, 18 building
walls for wallscape displays in Portland. Pending regulatory approval, Obie
Media is also developing 19 wallscapes in Spokane.

6
<PAGE>
The following table gives the number of our outdoor displays, including the
wallscapes being developed in Spokane, at November 30, 1998:

Market Displays

Washington 458
Oregon 170
California 75
Idaho 61
-----
764

Sales and Service

In each of our principal markets, Obie Media maintains a large, high quality,
proactive sales force. We believe our ratio of sales personnel to display
inventory is higher than the industry average. At November 30, 1998, we had 83
sales and marketing employees. Our superior sales and service efforts are a key
element in maximizing our inventory occupancy levels.

We view our proactive sales efforts as an important part of our culture. In
hiring our sales force, we carefully screen applicants. We typically hire
college graduates who have demonstrated their suitability and aptitude to excel
in our unique sales environment. New sales employees undergo extensive training
and are supervised by regional sales managers with substantial advertising sales
experience. Obie Media and each of our sales representatives jointly establish
individual sales targets. We have monthly sales meetings with all our
salespeople to acknowledge and reward individuals who are meeting or exceeding
their targets. A sales representative's compensation depends significantly on
meeting or exceeding individual targets. Sales representatives also participate
in our broad-based stock option plan.

We are significantly expanding our national presence by growing in diverse
geographic areas. To complement our growth, we have added to our national sales
team working out of certain of our local offices by establishing national sales
and marketing offices in Los Angeles, Chicago and New York City. Our national
sales team services national advertising accounts, calls on customers in major
cities where we do not have sales offices and supports our sales force in local
markets.

We work directly with companies and advertising agencies in coordinating the
marketing, production and installation of advertising displays. Our sales
personnel also serve as customer service representatives, maintaining frequent
and regular contact with our advertising customers to resolve customer concerns
in the field. We believe that our high quality customer service contributes to
customer loyalty and improves renewal rates.

Out-of-home advertisements are traditionally sold for a few months at a time. To
increase occupancy, Obie Media employs several techniques to encourage customers
to commit to longer contracts, including offering incentives through our rate
structure and pricing policies. We sell certain innovative transit products
primarily by means of year-long contracts. We also sell space on almost all of
our outdoor advertising displays by means of extended contracts, and offer our
outdoor display customers the opportunity to rotate their advertisements among
several display faces within the same market.

Design and Production

We maintain our own design and production facilities. We offer advertisers
customized design and production services as well as display space. Charges for
design and production are typically added to the cost of the space and billed to
customers over the life of the advertising contract. We believe that our design
and production capabilities give us a significant competitive advantage in
direct sales to advertisers and brings new customers to the out-of-home
advertising medium.

Obie Media's design and production services are used primarily by direct sales
customers that are not represented by advertising agencies. The design
department works with these advertisers and our sales representatives to create
advertising copy, design and layout.

7
<PAGE>
We view transit advertising design and production as a distinct activity. We
attempt to achieve independent profitability in this operation. Customers that
are represented by advertising agencies generally arrange for the production of
their ads, with Obie Media providing installation services. We increasingly act
as a broker with respect to this production.

Customers

Obie Media maintains a broad base of local, regional and national advertising
customers. Most of our regional and national customers are represented by
advertising agencies. Customers represented by advertising agencies accounted
for approximately 66% of our pro forma gross revenues for fiscal 1998, giving
effect to the acquisition of P & C as if it had occurred on December 1, 1997.
Consistent with standard industry practice, advertising agencies working with
Obie Media typically retain 15% of the gross advertising revenues from their
accounts. Advertising agencies generally create the artistic design and written
content of their customers' advertising. They plan and implement their
customers' overall advertising campaign, including the selection of advertising
media. Obie Media's sales personnel, including our national sales team, are
trained to work closely with advertising agencies to service the needs of these
customers.

A key component of our sales and marketing strategy is the proactive marketing
of our services to local advertisers. Local advertisers tend to have smaller
advertising budgets and to require greater assistance from our production and
creative personnel to design and produce advertising copy. With respect to local
sales, we often expend significant sales efforts on educating potential
out-of-home advertising customers about the benefits of the medium and on
developing advertising strategies. While price and availability of display space
are important factors in local sales, service and customer relationships are
also critical. We believe that our strength in sales, design and service gives
us an advantage in local sales, and that our direct sales focus on local
companies significantly contributes to increased occupancy and renewal rates.
Further, we believe this focus is an important competitive advantage that
enables us to profitably serve small transit districts.

Competition

8
<PAGE>
In recent years, there has been consolidation among our competitors, including
consolidation between out-of-home advertising companies and broadcast or other
media. Several of our competitors, including diversified media companies, are
substantially larger, better capitalized, more widely known and have access to
substantially greater resources than we do. These traits may provide competitive
advantages, particularly in large advertising markets.

Transit. The transit advertising market has historically been fragmented,
consisting of a few national transit advertising companies with operations in
multiple markets and numerous small companies operating under one or a few
agreements. In large advertising markets, Obie Media encounters direct
competition for transit agreements from major transit advertising companies such
as TDI Worldwide, Inc., one of the largest transit advertising companies in the
United States and a dominant competitor in such markets. Competition among
transit advertising companies is primarily based on obtaining and retaining
agreements with transit districts. Agreements with transit districts are awarded
primarily on the basis of the minimum amount the bidder guarantees to the
district. Other factors which transit districts may consider in awarding
agreements are the financial resources of the bidder available to support its
minimum revenue guarantee, the bidder's business reputation and the soundness of
the bidder's marketing plan. The agreements generally give the operator the
exclusive right to provide transit advertising services within the transit
district. The number and nature of competitors for each agreement depend upon
the desirability of the market, including the number of vehicles operated by the
transit district, and the size and rank of the market.

Outdoor Advertising Displays. The outdoor advertising display market is also
fragmented. Several large outdoor advertising companies have operations in
multiple markets. Many more small companies operate a limited number of displays
in a single or a few local markets. Although some consolidation has occurred in
this segment of the out-of-home industry over the past few years, the OAAA
estimated that, as of 1997, there were approximately 396,000 outdoor displays in
the United States operated by more than 500 companies. The primary competitive
factors in the outdoor advertising display market are the location of a
company's displays and the price charged for their use.

Government Regulation

The government extensively regulates the outdoor advertising industry at the
federal, state and local levels. These laws and regulations limit the growth of
outdoor advertising companies and operate as a substantial barrier to entry in
the industry and, in limited circumstances, may restrict advertising content.
Construction of new outdoor structures has been substantially restricted to
commercial and industrial areas. Many jurisdictions also have restricted the
location, relocation, height and size of outdoor advertising structures. Some
jurisdictions also restrict the ability to enlarge or upgrade existing
structures, such as converting from wood to steel or from non-illuminated to
illuminated displays, and restrict the reconstruction of structures that are
substantially destroyed as a result of storms or other causes. Some
jurisdictions have enacted local laws and ordinances that prohibit wallscapes
and other outdoor advertising on urban buildings.

We believe our displays conform to current laws and regulations. When leasing
property for the installation of new outdoor advertising displays, we carefully
review applicable laws, including building, sign and zoning ordinances. Because
billboards are typically located adjacent to roads and highways, they are also
subject to removal through condemnation or other actions by governmental
entities in the event of road or highway improvement or expansion. While
compensation for such actions is generally available, under existing state and
local regulations, we may not be permitted to relocate any condemned displays.

In limited circumstances, governmental laws and regulations may also restrict
the content of outdoor advertising. For example, some states have banned all
outdoor advertising of tobacco products. In November 1998, 46 states signed a
settlement agreement with the four largest American tobacco companies. Among
other things, the agreement bans transit and outdoor advertising of the
companies' tobacco products in the 46 states. The U.S Congress has also
considered legislation that would severely restrict or ban such advertising.

The outdoor advertising industry is heavily regulated and existing or future
laws or regulations could adversely affect us. To date, our operations have not
been materially adversely affected by such laws and regulations.

9
<PAGE>
Employees

At November 30, 1998, we had 165 full-time and 5 part-time employees, of whom 83
were primarily engaged in sales and marketing, 19 were engaged in art design and
production, 35 were engaged in installation, construction or maintenance of
transit or outdoor advertising displays, and 33 were employed in financial,
administrative or similar capacities. None of our employees is covered by
collective bargaining agreements, except for 4 installers in Portland, Oregon
and 13 installers in British Columbia.

ITEM 2. DESCRIPTION OF PROPERTIES

Our headquarters are located in a 20,000 square foot facility in Eugene, Oregon.
The headquarters includes space for our centralized design and production
departments, as well as our accounting, credit, marketing and management
personnel. The headquarters is leased at market rates from Obie Industries, an
affiliate of Obie Media, pursuant to a lease under which Obie Media moved into
the facility and began paying rent in May 1997. Lease payments were $123,000 and
$171,000 during fiscal 1997 and 1998, respectively. Brian Obie, our Chairman of
the Board, President and Chief Executive Officer, is the President, a director
and the controlling shareholder of Obie Industries. Delores Mord, our Secretary
and a director of Obie Media, is Vice President, a director and a shareholder of
Obie Industries.

We lease local operating offices for sales, service and installation in Spokane,
Yakima, Bremerton and Silverdale, Washington; Portland and Salem, Oregon; Ft.
Lauderdale and Daytona Beach, Florida; Wallingford, Connecticut; Cleveland and
Cincinnati, Ohio; Langhorne, Pennsylvania; Dallas and Austin, Texas; Sacramento,
Monterey, Stockton and Santa Cruz, California; Norfolk, Virginia; Milwaukee and
Madison, Wisconsin; Vancouver, Victoria and Kamloops, British Columbia; and
London, Ontario. We also lease national sales offices in Los Angeles, Chicago
and New York City. Total lease payments for the forgoing leases were $97,000 and
$359,000 for fiscal 1997 and 1998, respectively.

We also lease parcels of property beneath outdoor advertising structures. Total
lease expenses for these leases in fiscal 1997 and 1998 were $658,000 and
$714,000, respectively. Our site leases are generally for a term of ten years,
with two five-year renewal options at our discretion.

ITEM 3. LEGAL PROCEEDINGS

We are not currently subject to any material litigation nor, to our knowledge,
is any material litigation threatened against Obie Media.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

No matters were submitted to a vote of Obie Media's shareholders during the
fourth quarter of fiscal 1998.

10
<PAGE>
PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Price Range of Common Stock

Since November 21, 1996, our Common Stock has been traded on the Nasdaq SmallCap
Market under the symbol "OBIE." The following table presents the high and low
bid prices of our Common Stock as reported by The Nasdaq Stock Market, as
adjusted to give retroactive effect to 11-for-10 stock splits declared by Obie
Media in October 1997 and November 1998:

Fiscal 1997 High Low
First Quarter ....................... $ 6.41 $5.47
Second Quarter ...................... 6.20 5.16
Third Quarter........................ 5.58 5.16
Fourth Quarter ...................... 8.24 5.16

Fiscal 1998 High Low
First Quarter ....................... $ 9.66 $8.18
Second Quarter ...................... 10.91 9.32
Third Quarter ....................... 15.00 9.32
Fourth Quarter ...................... 15.00 9.09

As of February 23, 1999, there were approximately 72 holders of record of the
Company's Common Stock. The Company believes the number of beneficial owners is
substantially greater than the number of record holders because a large portion
of the Company's outstanding Common Stock is held of record in "street name."

Dividends

The Company has not paid cash dividends on its Common Stock during the last two
fiscal years and does not anticipate doing so in the foreseeable future. The
Company plans to retain any future earnings to finance operations. In addition,
our credit agreements may limit our ability to pay dividends or make other
distributions on our Common Stock.

Recent Exempt Sales of Securities

In September 1998, as partial consideration for our acquisition of P & C, we:
(1) issued 55,000 shares of our Common Stock to Wayne P. Schur; (2) granted
options to purchase a total of 137,500 shares of our Common Stock to Mr. Schur;
and (3) granted an option to purchase 11,000 shares of our Common Stock to Mr.
Schur's attorney. With respect to Mr. Schur's options, the exercise price for
126,500 shares is $7.92 per share and for 11,000 shares is $9.32 per share. The
exercise price for the attorney's option is $9.32 per share. Options for 27,500
shares were exercisable on the date of grant, and the remaining 121,000 shares
are exercisable in equal increments on the first four anniversaries of September
1, 1998, subject to certain provisions regarding Mr. Schur's continued
employment with us. We also have agreed to issue up to 82,500 additional shares
of our Common Stock to Mr. Schur depending on P & C's performance through
November 30, 2001.

Issuance of the Common Stock and options was not registered under the Securities
Act of 1933, as amended (the "Securities Act") in reliance on the exemption from
registration contained in Section 4(2) of the Securities Act. Mr. Schur was the
President and sole shareholder of P & C and is a person sophisticated in the
business of P & C and Obie Media. He has been named Executive Vice President and
a director of Obie Media and will continue as President of P & C, one of our
wholly owned subsidiaries. Transfer of the shares issued to Mr. Schur is
restricted. The options are not transferable.

11
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINACIAL CONDITION AND
RESULTS OF OPERATIONS

Overview

Obie Media is an out-of-home advertising company, which markets advertising
space primarily on transit vehicles and outdoor advertising displays (billboards
and wallscapes). As of November 30, 1998, we had 33 exclusive agreements with
transit districts in the United States and Canada to operate transit advertising
displays. Since our IPO in November 1996, the number of vehicles on which we
have the right to operate transit advertising displays has increased from
approximately 1,200 to over 7,000. We also operate and generally own
approximately 760 advertising displays on billboards and walls in Washington,
Oregon, California and Idaho.

Our gross revenues increased from $14.6 million in fiscal 1997 to $25.2 million
in fiscal 1998, representing an increase of 72.4%. EBITDA increased from $2.8
million to $4.2 million in the same period, representing an increase of 48.6%.
Giving effect to the acquisition of P & C as if it had occurred on December 1,
1997, we achieved pro forma net revenues of $28.2 million and EBITDA of $4.3
million for the fiscal year ended November 30, 1998. EBITDA (earnings before
interest, taxes, depreciation and amortization) is defined as operating income
before depreciation and amortization.

Our growth is primarily the result of: (i) growth in our existing transit
advertising business, primarily resulting from agreements with additional
transit districts; (ii) the acquisition of P & C on September 1, 1998; and (iii)
the development of new outdoor advertising displays. As a result of these
factors, our operating performance is not necessarily comparable on a
period-to-period basis. We plan to continue a strategy of expanding through both
internal growth and acquisitions.

Our operating results are affected by general economic conditions, as well as
trends in the advertising industry. Based on industry sources, in recent years
outdoor advertising expenditures in the United States have increased more
rapidly than total U.S. advertising expenditures. However, this trend may not
continue and future outdoor advertising expenditures may grow more slowly than
expenditures for the advertising industry as a whole.

Our gross revenues are derived from the sale of advertising on out-of-home
advertising displays, primarily on transit vehicles under our transit district
agreements and on outdoor advertising displays we own or operate. Gross revenues
are a function of both the occupancy of these display spaces and the rates we
charge. We focus our sales effort on maximizing occupancy levels while
maintaining rate integrity in our markets. Over the past several years, our
transit advertising operations have expanded more rapidly than our outdoor
advertising operations. Revenues from transit advertising sales, as a percentage
of gross revenues, increased from 63.3% in fiscal 1997 to 77.0% in fiscal 1998.
Increases in our gross revenues over the last two fiscal years are primarily the
result of the increased number of transit vehicles and outdoor displays on which
we market advertising space and, to a lesser extent, rate increases.

Net revenues represent gross revenues less agency commissions. Consistent with
standard industry practice, advertising agencies working with Obie Media
typically retain 15% of the gross advertising revenues from their accounts.
While advertising agencies purchase the majority of the out-of-home advertising
that we sell, we believe our focus on direct sales to accounts not served by
advertising agencies has resulted in Obie Media recognizing agency commissions
that, as a percentage of our aggregate gross revenues, are lower than the
industry average. Customers represented by advertising agencies currently
account for approximately 66% of our gross revenues. Agency commissions, as a
percentage of our gross revenues, have risen recently, in large part because we
have obtained new transit agreements in a number of districts where the previous
providers made substantially all sales through advertising agencies.

Direct advertising expenses consist primarily of occupancy, production and
installation, and sales costs. Occupancy expense primarily consists of two
elements: (i) payments to transit districts for the right to sell advertising
displayed on their vehicles; and (ii) lease payments to owners of property on
which our outdoor advertising structures are located. Under our transit
agreements, we typically guarantee to pay the transit district the greater of a
minimum stated amount or a percentage (usually over 50%) of the advertising
revenues generated by our use of the district's vehicles. Occupancy expense also
includes the cost of illuminating outdoor displays and property taxes on the
outdoor advertising structures. Production and installation expenses consist
primarily of the costs of producing, shipping and installing the advertising
displays. Sales expenses consist primarily of the cost of staffing our sales
force.

12
<PAGE>
General and administrative expenses include costs related to individual markets,
as well as corporate expenses. Expenses related to individual markets include
expenses for the personnel and facilities required to administer that and
neighboring markets. Corporate general and administrative expenses represent
personnel and facilities costs for our executive offices and centralized staff
functions. We believe that, although general and administrative expenses will
increase on an absolute dollar basis as our revenues increase, such expenses
will decline as a percentage of revenues.

Start-up costs are the costs we incur in pursuing new transit district
agreements and the costs of establishing a sales force and office in a new
market prior to beginning to operate under a new agreement. These costs consist
primarily of travel expenses, various personnel costs, legal fees and the costs
of preparing our proposals in response to transit district requests for
proposals. The amount of start-up costs we will incur in the future will vary,
both in total amount and as a percentage of revenues, depending on the number
and complexity of proposals for new districts and our success in obtaining new
contracts.

Recent Developments

In August 1998, our wholly owned Canadian subsidiary, Obie Media Limited, began
selling transit advertising displays for BC Transit on approximately 1,500
transit vehicles in British Columbia. BC Transit is the transit authority for
substantially all of the transit districts in British Columbia, including
Vancouver (Canada's third largest market) and Victoria.

In September 1998, we acquired P & C, which has operated in the out-of-home
advertising industry for over 50 years. P & C has 19 agreements with transit
districts, including districts located in Hartford and Stamford, Connecticut;
Fort Lauderdale and West Palm Beach, Florida; Cincinnati and Cleveland, Ohio;
Richmond, Virginia; and Milwaukee, Wisconsin. As of November 30, 1998, P & C's
transit agreements covered approximately 3,200 vehicles.

Obie Media acquired P & C for an aggregate purchase price of $7.6 million in
cash, up to 137,500 shares of our Common Stock and options to purchase up to
148,500 additional shares of our Common Stock, of which $6.1 million and 55,000
shares were paid at closing, and options to purchase 27,500 shares were
exercisable on the closing date. The remaining $1.5 million of the cash purchase
price will be paid as follows: $500,000 on or before each of January 1, 2000 and
2001, and $250,000 on or before each of January 1, 2002 and 2003. The remaining
82,500 shares will be issued depending on P & C's performance through November
30, 2001, and the unvested options will become exercisable over four years,
subject to the terms of an employment agreement with Wayne Schur, P & C's former
shareholder. We financed the acquisition with borrowings.

The acquisition of P & C has been accounted for under the purchase method of
accounting, with Obie Media recording most of the purchase price as goodwill.
The amount of goodwill may increase in the future as additional stock options
vest and if additional shares are issued as a result of P & C's future
performance.

Obie Media began serving as the exclusive transit advertising provider for
Tri-Met in 1994, pursuant to a five-year agreement. In 1996, Tri-Met extended
its contract with Obie Media through June 30, 2001. The FTA, which provides
substantial monies to transit districts, has taken the position that transit
advertising contracts may not exceed five years in length. At the request of the
FTA, Tri-Met and Obie Media have agreed that our agreement with Tri-Met will
terminate on June 30, 1999.

In January 1999, we began operating transit advertising displays for transit
districts in Madison, Wisconsin; Spokane, Washington and London, Ontario
(representing a total of approximately 475 vehicles). In addition, in February
1999, we began operating transit advertising displays for a transit district in
Yakima, Washington (representing approximately 20 vehicles).

13
<PAGE>
Operating Results

Comparison of Years Ended November 30, 1997 and 1998

The following table presents certain items from our consolidated statements of
income (and EBITDA) as a percentage of gross revenues.

Year Ended
November 30,
---------------------
1997 1998
---------- --------
Transit advertising revenue.................. 63.3 % 77.0 %
Outdoor advertising revenue.................. 36.7 23.0
-------- --------
Gross revenue................................ 100.0 100.0
Less agency commissions...................... 9.0 9.9
-------- --------
Net revenues................................. 91.0 90.1
Operating expenses:
Direct advertising expense............... 54.7 58.7
General and administrative............... 15.4 14.4
Start-up costs........................... 1.6 0.4
-------- --------
EBITDA....................................... 19.3 16.6
Depreciation and amortization................ 4.6 3.7
-------- --------
Operating income............................. 14.7 12.9
Interest expense............................. 4.0 3.1
Minority interest............................ 0.1 -
Other income................................. 0.4 -
-------- --------
Income before income taxes and extraordinary item 11.0 9.8
Provision for income taxes................... 4.2 3.8
-------- --------
Net income................................... 6.8 % 6.0 %
======== ========

Revenues. Gross revenues increased $10.6 million, or 72.4%, from $14.6 million
in fiscal 1997 to $25.2 million in fiscal 1998. This increase was principally
due to transit advertising revenues associated with the operations of P & C
(which we acquired September 1, 1998), as well as the addition of new districts,
such as British Columbia (which we began operating in August 1998), and transit
districts operating less than a full year in 1997, primarily Dallas (which we
began operating in July 1997). Transit revenues increased $10.2 million, or
109.9%, from $9.3 million in fiscal 1997 to $19.4 million in fiscal 1998,
primarily due to the above factors. Outdoor advertising revenues increased
$423,000, or 7.9%, from $5.4 million in fiscal 1997 to $5.8 million in fiscal
1998, primarily due to higher rates and increased occupancy. Agency commissions
increased $1.2 million, or 89.1%, from $1.3 million in fiscal 1997 to $2.5
million in fiscal 1998, primarily due to the large proportion of existing agency
business in our new markets. As a result of the foregoing reasons, net revenues
increased $9.4 million, or 70.8%, from $13.3 million in fiscal 1997 to $22.7
million in fiscal 1998.

Direct Advertising Expenses. Direct advertising expenses increased $6.8 million,
or 84.8%, from $8.0 million in fiscal 1997 to $14.8 million in fiscal 1998. This
increase was primarily the result of increased revenues. Direct advertising
expenses increased, as a percentage of gross revenues, from 54.7% in fiscal 1997
to 58.7% in fiscal 1998, primarily due to the faster growth of the transit
advertising business, where costs, especially occupancy costs, are higher than
in the outdoor advertising business.

General and Administrative Expenses. General and administrative expenses
increased $1.4 million, or 61.8%, from $2.2 million in fiscal 1997 to $3.6
million in fiscal 1998. The increase resulted primarily from increased costs of
administering new transit districts and districts which operated for less than
all of fiscal 1997. General and administrative expenses, as a percentage of
gross revenues, decreased from 15.3% in fiscal 1997 to 14.4% in fiscal 1998.

14
<PAGE>
Start-Up Costs. Start-up costs decreased $130,000, or 55.1%, from $237,000 in
fiscal 1997 to $106,000 in fiscal 1998, primarily because of the costs we
incurred in fiscal 1997 when the then incumbent transit advertising operator in
Dallas, Texas unsuccessfully challenged the award of the Dallas contract to us.

Depreciation and Amortization Expenses. Depreciation and amortization expenses
increased $271,000, or 40.9%, from $664,000 in fiscal 1997 to $936,000 in fiscal
1998, primarily due to our investment in equipment in new markets, our upgrading
of computer capabilities in our existing operations and the amortization of
goodwill associated with the P & C acquisition. Depreciation and amortization
expenses are expected to increase in fiscal 1999 when goodwill from the P & C
acquisition will be amortized for a full year as compared to three months in
fiscal 1998. We are amortizing goodwill from the P & C acquisition of $7.8
million over 15 years using the straight-line method of amortization.

Operating Income. Due to the above factors, operating income increased $1.1
million, or 51.0%, from $2.2 million in fiscal 1997 to $3.3 million in fiscal
1998.

Interest Expense. Interest expense increased $192,000, or 32.8%, from $584,000
in fiscal 1997 to $776,000 in fiscal 1998, primarily due to the indebtedness
incurred in connection with the acquisition of P & C.

Provision for Income Taxes. Provision for income taxes increased $363,000, or
59.1%, from $614,000 for fiscal 1997 to $978,000 in fiscal 1998, primarily due
to the increase in income before income taxes. The increase in the provision for
income taxes is greater, in percentage terms, than the increase in income before
income taxes due to increased operations in higher tax rate jurisdictions,
including Canada.

Net Income. As a result of the foregoing factors, net income increased $501,000,
or 50.1%, from $1.0 million for fiscal 1997 to $1.5 million for 1998.

Seasonality

Obie Media's revenues and operating results historically have fluctuated by
season. Typically, our results of operations are strongest in the fourth quarter
and weakest in the first quarter of our fiscal year ending November 30. Our
transit advertising operations are more seasonal than our outdoor advertising
operations as our outdoor advertising display space, unlike our transit
advertising display space, is and has been sold nearly exclusively by means of
12-month contracts. We believe that the seasonality of our revenues and
operating results will increase as our transit advertising operations continue
to expand more rapidly than our outdoor advertising operations. This
seasonality, together with fluctuations in general and regional economic
conditions and the timing and expenses related to acquisitions, the obtaining of
new transit agreements and other actions we have taken to implement our growth
strategy, have contributed to fluctuations in our periodic operating results.
These fluctuations likely will continue. Accordingly, our results of operations
in any period may not be indicative of the results to be expected for any future
period.

Liquidity and Capital Resources

We have historically satisfied our working capital requirements with cash from
operations and revolving credit borrowings. Our working capital at November 30,
1997 and 1998 was $647,000 and $1.0 million, respectively. Acquisitions and
capital expenditures, primarily for the construction of new outdoor advertising
displays, have been financed primarily with borrowed funds. At November 30,
1998, Obie Media had outstanding borrowings of $16.3 million, of which $13.4
million was pursuant to long-term credit agreements, $1.5 million was pursuant
to the agreement to acquire P & C, and $1.4 million was pursuant to our
operating line of credit. Our indebtedness is collateralized by substantially
all of our assets. See Note 5 to our consolidated financial statements. At
November 30, 1998, available borrowing capacity under the line of credit, based
on collateralized accounts, was $2.6 million.

Obie Media's net cash provided by operations was $817,000 and $1.8 million in
fiscal 1997 and 1998, respectively. The increase was primarily due to increases
in net income, accrued expenses, accounts payable and income taxes payable,
offset in part by an increase in accounts receivable.

Net cash used in investing activities was $1.4 million and $8.0 million in
fiscal 1997 and 1998, respectively. The increase from fiscal 1997 was primarily
due to the $6.3 million used in the acquisition of P & C. Capital expenditures
totaled $1.4 million and $1.7 million in fiscal 1997 and 1998, respectively.

15
<PAGE>
Capital expenditures consist primarily of the cost of building outdoor
advertising displays and the cost of opening new offices. We have no material
future commitments for capital expenditures but anticipate that our capital
expenditures, exclusive of those related to any future acquisition, will
approximate $1.4 million in fiscal 1999.

Net cash provided by financing activities was $148,000 and $6.6 million in
fiscal 1997 and 1998, respectively. Cash provided in fiscal 1997 was primarily
from the float on Obie Media's payments. The increase from fiscal 1997 to fiscal
1998 was primarily due to borrowings used to finance the acquisition of P & C.

We expect to pursue a policy of continued growth through obtaining new transit
district agreements, acquiring out-of-home advertising companies or assets and
constructing new outdoor advertising displays. We intend to finance our future
expansion activities using a combination of internal and external sources. We
believe that internally generated funds and funds available for borrowing under
our bank credit facilities will be sufficient to satisfy all debt service
obligations and finance our operations, including anticipated capital
expenditures, but excluding possible acquisitions, through fiscal 1999. Future
acquisitions by Obie Media, if any, may require additional debt or equity
financing.

Year 2000 Compliance

The Year 2000 problem is the result of the inability of some computers and
computer software programs to accurately recognize, for dates after 1999, dates
which are often expressed as a two-digit number. The inability to accurately
recognize date information could adversely affect computer operations and
calculations or cause computer systems and computer-dependent mechanical systems
not to operate at all.

We are in various stages of assessing our internal technical and non-technical
systems to ascertain whether they are Year 2000 compliant. After conducting
certain tests, we have identified one information processing system that is not
Year 2000 compliant and have determined that the cost of replacing or updating
the system should not exceed $25,000. We believe that our information processing
systems used in financial reporting and record-keeping, and the majority of our
incidental software systems, are Year 2000 compliant or can be made compliant on
a timely basis without material cost. We are in the process of phasing out all
of our personal computer workstations that are not Year 2000 compliant. We do
not believe that a material number of our workstations will need to be replaced.
We have not yet definitively determined the extent to which our information
processing systems used in designing and producing artwork are Year 2000
compliant. Further, we have only generally assessed our non-technical systems
that may be dependent upon computer components, including telephone and
voice-mail systems, in order to identify systems that are not Year 2000
compliant.

We have engaged the services of a full-time information processing manager to,
among other duties, assist in identifying any Year 2000 issues that may arise in
our technical and non-technical systems and implement any necessary
modifications. We intend to complete our Year 2000 assessment of our internal
technical and non-technical systems by May 31, 1999 and to be Year 2000
compliant by November 30, 1999.

We have only generally assessed our relationships with third parties whose
inability to achieve timely Year 2000 compliance could have a material adverse
effect on our financial condition or results of operations. These third parties
are primarily transit districts, advertising agencies, vendors, banks, utilities
and freight companies whose failure to achieve timely Year 2000 compliance could
delay customer orders for our services, delay receipt of payments by customers
for services rendered and disrupt other aspects of our operations. We expect to
continue to evaluate Year 2000 issues with regard to our material relationships
with third parties through 1999. Certain of such third parties are subject to
stringent regulations which mandate that they achieve timely Year 2000
compliance. We do not believe that the commodities and services upon which we
rely are of a kind or nature which is particularly sensitive to Year 2000
issues. In addition, we believe that our diversified customer and supplier base
should prevent one or a few of our vendors' or customers' failure to be Year
2000 compliant from having a material adverse effect on our financial condition
or results of operations.

We have yet to determine the total estimated cost of our Year 2000 compliance
program. Expenditures through November 30, 1998 are immaterial. We do not expect
that Year 2000 compliance will have a material adverse effect on us. We believe
that a reasonably likely worst case scenario as to the effect on us

16
<PAGE>
of the Year 2000 compliance issue is that several of our large customers fail to
become Year 2000 compliant, thus delaying their advertising orders and reducing
our revenues. In addition, as stated above, we may replace or update an
information processing system which is not Year 2000 compliant at a cost that we
believe should not exceed $25,000.

We have not developed a contingency plan in the event we or any of the third
parties with which we have a material relationship fail to achieve timely Year
2000 compliance. We may develop a Year 2000 contingency plan depending on the
results of our internal and external assessment of Year 2000 issues. We will
continue to update our assessment of our Year 2000 readiness as we receive
updated information from our Year 2000 compliance program.

New Accounting Pronouncements

New accounting pronouncements are discussed in Note 1 to our consolidated
financial statements.

ITEM 7. FINANCIAL STATEMENTS

The financial statements and supplementary data required by this item are
included on pages F-1 to F-19 of this Annual Report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

Not applicable

17
<PAGE>
PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

MANAGEMENT

Directors and Executive Officers

Our directors and executive officers are as follows:

Name Age Position

Brian B. Obie 57 Chairman of the Board, President and
Chief Executive Officer (1)
Wayne P. Schur 53 Executive Vice President and Director (2)
Stephen F. Grover 57 Vice President and General Manager
James W. Callahan 46 Chief Financial Officer and Treasurer
Delores M. Mord 65 Secretary and Director (2)
Randall C. Pape 48 Director (3)
Stephen A. Wendell 57 Director (3)
Richard C. Williams 59 Director (1)

(1) Term on the Board of Directors expires in 2001.
(2) Term on the Board of Directors expires in 1999.
(3) Term on the Board of Directors expires in 2000.

Brian B. Obie is the Chairman of the Board, President and Chief Executive
Officer of Obie Media. He is a co-founder of Obie Media and has served as our
President and as a director since our inception in 1987. Since January 1998, he
has served as the Treasurer of Obie Media Limited, a British Columbia
corporation and one of our wholly owned subsidiaries, and, since September 1998,
as a director of P & C, another wholly owned subsidiary. Mr. Obie is also
employed by and is a director of Obie Industries, where he has served as
President since 1968. Obie Industries, which now operates as a real estate
management company, was Obie Media's parent corporation until 1996. Mr. Obie has
39 years of experience in the out-of-home advertising industry. He has been
Chairman of the Board of Centennial Bancorp, a bank holding company, since 1981.
He is a former mayor of Eugene, Oregon.

Wayne P. Schur was appointed Executive Vice President of Obie Media in September
1998. He was appointed a director of Obie Media in October 1998 and is also a
director of P & C. He was the President and sole or principal shareholder of P &
C from August 1981 to September 1998, when P & C was acquired by Obie Media. He
continues as President of P & C. Mr. Schur has 25 years of experience in the
out-of-home advertising industry.

Stephen F. Grover was appointed Vice President of Obie Media in September 1996
and has served as Obie Media's General Manager since 1994. Since July 1998, he
has also served as President of Obie Media Limited. He was Obie Media's General
Sales Manager from 1993 to 1994 and a Regional Manager from 1991 to 1992. Mr.
Grover has 32 years of experience in the out-of-home advertising industry.

James W. Callahan was appointed Chief Financial Officer and Treasurer of Obie
Media in 1996. Since September 1998, he has served as a director and as
Secretary and Treasurer of P & C. From 1994 to 1996, he was a consultant filling
the role of chief financial officer of Obie Media. From 1994 to 1997, Mr.
Callahan also served in the capacity of chief financial officer of Obie
Industries and its subsidiaries. From 1990 to 1994, he served as Chief Financial
Officer of Springfield Forest Products, Inc. Mr. Callahan was employed by Arthur
Andersen LLP from 1975 to 1990, most recently as a tax partner.

Delores M. Mord is a co-founder of Obie Media and has served as our Secretary
and as a director since our inception in 1987. She served as Vice President of
Obie Media until 1996. Ms. Mord has served as an officer (currently as Vice
President) and a director of Obie Industries since its formation in 1960. Ms.
Mord has 37 years of experience in the out-of-home advertising industry.

Randall C. Pape became a director of Obie Media in 1996. In 1981, he was named
President of Pape Bros., Inc., and since 1990 he has held the position of
President and Chief Executive Officer of The Pape Group,

18
<PAGE>
Inc., a supplier of capital equipment and services, which operates as a holding
company for Pape Bros., Inc., Flightcraft, Inc., Hyster Sales Company, Pape
Properties, Inc. and Industrial Finance Company. Since 1973, he has been
President and Chief Executive Officer of Liberty Financial Group, which is a
holding company for Liberty Federal Bank, SB, EcoSort LLC, Sanipac, Inc. and
Commercial Equipment Lease Corporation. Mr. Pape has also served as a director
of Northwest Natural Gas Company, a distributor of natural gas in Oregon and
Washington, since 1996.

Stephen A. Wendell became a director of Obie Media in 1996. Since November 1998,
Mr. Wendell has been a registered representative and investment advisory agent
with KMS Financial Services, Inc., an independent privately owned financial
services firm based in Seattle, Washington. From 1995 to February 1998, he was
Chief Financial Officer and a director of Umpqua Feather Merchants, Inc., a
manufacturer and distributor of fishing flies and related accessories. From 1992
to 1995, Mr. Wendell served as a consultant to Umpqua Feather Merchants, Inc.
and other companies, including companies providing advertising and food
services. Since 1993, Mr. Wendell has been the principal shareholder and
President of Continental Land and Cattle Company, a residential real estate
development company.

Richard C. Williams became a director of Obie Media in 1996. He has served as
President, Chief Executive Officer and a director of Centennial Bancorp since
1981. He has served as Vice Chairman of Centennial Bank, a wholly owned
subsidiary of Centennial Bancorp, since 1992, was its Chief Executive Officer
from 1992 until January 1998, and was its President from 1977 to 1992. He has
been a director of Centennial Bank since 1977. Mr. Williams also recently became
a director of Elmer's Restaurants, Inc., a franchisor and operator of
full-service, family-oriented restaurants.

Compliance with Section 16(a) of the Securities Exchange Act.

Our Articles provide that when we have six or more directors, our Board of
Directors will be divided into three classes (Class 1, Class 2 and Class 3),
with the members of each class serving for staggered three-year terms. We have
six directors, and our Chief Executive Officer, as authorized by our Bylaws, has
made the initial designation of directors to each of the three classes.
Accordingly, at each annual meeting of our shareholders, the number of directors
equal to the number of the directors in the class whose term expires at the time
of the meeting will be elected to hold office until the third succeeding annual
meeting. Our Articles limit the number of directors to nine.

Each officer serves at the discretion of our Board of Directors. No officer,
other than Mr. Schur, is subject to an agreement that requires the officer to
serve Obie Media for a specified number of years. Mr. Schur and Mr. Grover are
subject to non-competition agreements. There are no family relationships among
any of our directors or executive officers, except that Mr. Obie and Ms. Mord
are cousins.

Board Committees

Obie Media has two standing committees, an Audit Committee and a Compensation
Committee. It does not have a standing Nominating Committee. Stephen Wendell,
Randall Pape and Richard Williams serve on the Audit and Compensation Committees
of the Board of Directors. Mr. Wendell is chairman of the Audit Committee. Mr.
Williams is chairman of the Compensation Committee.

Section 16(a) of the Securities Exchange Act of 1934 requires our officers,
directors and 10% shareholders to file reports of stock ownership with the SEC.
Our officers, directors and 10% shareholders are required by SEC regulations to
furnish us with all Section 16(a) forms they file.

Based solely on our review of the copies of such forms that we received and
written representations from our officers and directors, we believe that all
required forms were timely filed with respect to fiscal 1998, except that
Stephen Wendell filed one report late (covering three purchases of shares) and
Richard Williams filed one report late (covering two purchases of shares).

19
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

Compensation of Directors

Executive officers receive no compensation for serving as directors of Obie
Media. All non-employee directors receive $5,000 for each year they serve as a
director. Upon becoming a director, Obie Media grants to each nonemployee
director a nonqualified stock option to purchase 5,000 shares of Common Stock
under our Restated 1996 Stock Incentive Plan (the "Stock Plan"). On the date of
each annual shareholder meeting, each nonemployee director is granted an
additional option to purchase 1,000 shares. Options granted to nonemployee
directors have a term of 15 years and an exercise price equal to the fair market
value of our Common Stock on the grant date. The options become exercisable by
the director at the rate of 20% per year of service.

Executive Compensation

The following table summarizes the compensation we paid during each of the last
three fiscal years to our chief executive officer and our other executive
officers whose salary and bonus exceeded $100,000 during fiscal 1998, together
with Wayne Schur, who became our Executive Vice President on September 1, 1998
in connection with the P & C acquisition (the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Securities All Other
Fiscal Salary Bonus Underlying Compensation
Year ($) ($) Options ($)(1)
-------- ----------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Brian B. Obie,
Chairman of the Board, President 1998 $166,632 $25,000 456 $3,749
and Chief Executive Officer 1997 157,200 25,000 - 3,568

Stephen F. Grover,
Vice President and 1998 $109,360 $25,774 11,324 $3,558
General Manager 1997 96,000 18,000 - 3,020

James W. Callahan,
Chief Financial Officer and 1998 $84,270 $16,000 236 $2,326
Treasurer 1997 79,500 15,000 - -

Wayne P. Schur,
Executive Vice President (2) 1998 $37,500 - 137,500 $ 250
1997 - - - -
</TABLE>

(1) Represents contributions made by us under our profit sharing and 401(k) plan
on behalf of the applicable Named Executive Officer.

(2) Schur did not receive any compensation from us during fiscal 1996 or 1997
and only received salary from us for the last three months of fiscal 1998. P & C
paid him an annual base salary of $200,000 in each of calendar 1997 and 1998
(paid through August 31, 1998), with bonuses of $110,000 and $30,000 in 1997 and
1998, respectively. In addition, P & C contributed $4,000 and $4,396 on his
behalf under a P & C profit sharing and 401(k) plan for 1997 and 1998,
respectively. Pursuant to Mr. Schur's employment agreement with us, his annual
salary from September 1998 to September 1999 is $150,000, with his salary
increasing by $25,000 each year through the five-year term of his employment
agreement.

20
<PAGE>
Stock Option Information

None of the Named Executive Officers exercised any options during fiscal 1998.

The following table sets forth certain information regarding options granted to
the Named Executive Officers during fiscal 1998:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year

% of Total
Options Per Market Potential Realizable Value at

Granted to Share Price on Assumed Annual Rates of Stock

Options Employees Exercise Grant Expiration Price Appreciation for Option Term
--------------------------------
Name Granted in 1998 Price Date Date 0% ($) 5% ($) 10% ($)
- ------------------- ----------- --------- -------- -------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brian B. Obie 456 (1) 0.2% $ 9.55 $9.55 1/1/13 205 3,046 7,474
Stephen F. Grover 11,000 (2) 5.2% 7/8/13 88,110 223,190
12.73 12.73 -
324 (1) 0.2% 1/1/13 146 2,164 5,310
9.55 9.55
James W. Callahan 236 (1) 0.1% 1/1/13 106 1,576 3,868
9.55 9.55
Wayne P. Schur 126,500 (3) 59.4% 9/1/13 378,235 1,246,025 2,578,070
7.92 10.91
11,000 (3) 5.2% 9/1/13 17,490 92,950 208,780
9.32 10.91
</TABLE>

(1) These options have a fifteen-year term and the shares subject to the options
become exercisable at a rate of 25%, 35% and 40%, respectively, on the third,
fourth and fifth anniversaries of the date of grant.

(2) This option has a fifteen-year term and becomes exercisable at a rate of 20%
of the shares subject to the option each year beginning on the first anniversary
of the date of grant.

(3) Mr. Schur's options have a ten-year term and become exercisable at the
following rate: 20% of the shares subject to the option immediately upon date of
grant; 22% of the shares subject to the option per year on each of the first,
second and third anniversaries of the date of grant; and 14% of the shares
subject to the option on the fourth anniversary of the date of grant.

The following table sets forth certain information regarding options held by the
Named Executive Officers at November 30, 1998:
<TABLE>
<CAPTION>
Aggregated Option Values at End of Fiscal Year

Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
November 30, 19980 November 30, 1998 ($)(1)
---------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
--------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Brian B. Obie...................... 456 $2,031
Stephen F. Grover.................. 12,100 29,474 $102,900 $169,793
James W. Callahan.................. 7,260 11,126 $61,740 $93,661
Wayne P. Schur..................... 27,500 110,000 $167,250 $653,600
</TABLE>
(1) On November 30, 1998, the market price of our Common Stock was $14.00 per
share. For purposes of the foregoing table, stock options with an exercise price
less than that amount are considered to be "in-the-money" and are considered to
have a value equal to (i) the difference between that amount and the exercise
price of the option multiplied by (ii) the number of the shares covered by the
stock option.

Restated 1996 Stock Incentive Plan. Our Stock Plan provides for the issuance of
363,000 shares of Common Stock to our employees, directors and consultants.
Shares may be issued pursuant to: (i) incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended ("ISO's"); (ii)
nonqualified stock options ("NSOs"); (iii) stock bonuses; and (iv) direct sales
of stock. ISOs may be issued only to our employees and will have a maximum term
of 10 years from the date of grant. The exercise price for ISOs may not be less
than 100% of the fair market value of our Common Stock at the time of the grant,
and the aggregate fair market value (as determined at the time of the grant) of
shares issuable upon the exercise of ISOs for the first time in any one calendar
year may not exceed
21
<PAGE>
$100,000. In the case of ISOs granted to holders of more than 10% of our Common
Stock, the exercise price may not be less than 110% of the fair market value of
our Common Stock at the time of the grant, and the term of the option may not
exceed five years. Under the Stock Plan, NSOs have a maximum term of 15 years
from the date of grant and must be granted at an exercise price not less than
85% of the fair market value of our Common Stock at the date of grant. Options
become exercisable in whole or in part from time to time as determined by the
Board's Compensation Committee, which administers the Stock Plan.

At November 30, 1998, options covering 191,461 shares were outstanding under the
Stock Plan, with a weighted average exercise price of $7.45 per share, and an
additional 159,560 shares remained available for future issuances under the
Stock Plan.

Schur Employment and Noncompetition Agreement; Change-in-Control Arrangement

Schur Employment and Noncompetition Agreement. In connection with our
acquisition of P & C in September 1998, we entered into a five-year employment
and noncompetition agreement with Wayne Schur, the Executive Vice President and
a director of Obie Media and the former shareholder of P & C. The agreement
contains noncompetition and nondisclosure provisions. Under the agreement, Mr.
Schur's annual salary initially is $150,000 and will increase by $25,000 in each
of the second through fifth years of his employment. The agreement provides that
we may terminate Mr. Schur's contract at any time after September 1, 2001
without "cause," as defined in the agreement. In that case, we generally would
be liable to Mr. Schur for a severance benefit payment equal to his annual
salary for the then upcoming contract year. The agreement further provides that
we may terminate his contract at any time for cause. In such case, we would be
liable to him only for salary and benefits earned by him through the date of
such termination. Pursuant to Mr. Schur's employment agreement, on September 1,
1998, we granted him an NSO for 137,500 shares of our Common Stock (the "Option
Shares"), of which 27,500 Option Shares were exercisable upon the grant date.
The remaining 110,000 Option Shares will be exercisable in equal increments on
the first, second, third and fourth anniversaries of September 1, 1998. If Mr.
Schur terminates his employment with Obie Media during the first three years of
his employment agreement, other than for breach of the agreement by us, he will
forfeit any Option Shares not exercisable as of the date of such termination.
Termination of Mr. Schur's employment for any other reason will not affect his
right to receive the Option Shares.

Change-in-Control Arrangement. Under the terms of the acquisition agreement by
which we acquired all of the outstanding stock of P & C from Mr. Schur, $1.5
million of the base purchase price and 82,500 shares of our common stock payable
to Mr. Schur were deferred. The acquisition agreement provides that a portion of
the deferred base purchase price is payable by us annually, with the final
payment to be made to Mr. Schur no later than January 1, 2003. However, the
agreement further provides that the entire unpaid purchase price is immediately
payable to Mr. Schur upon a "Change of Management" of Obie Media (other than a
Change of Management which results from the death or disability of Brian Obie).
Under the agreement, the term "Change of Management" means that Brian Obie no
longer serves as our Chief Executive Officer or that Mr. Obie (directly or
indirectly through immediate family members) fails to own at least 25% of our
outstanding Common Stock.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of Obie Media's Common Stock as of November 30, 1998 (i) each person
who is known by us to own beneficially more than 5% of our Common Stock; (ii)
each director of Obie Media; (iii) each of the Named Executive Officers; and
(iv) all directors and executive officers of Obie Media as a group.

Name and Address Amount and Nature Percentage of
of Beneficial Owner of Beneficial Ownership Common Stock

Brian B. Obie 2,119,270 (2)(3) 49.1
Eugene, Oregon

Delores M. Mord 426,471 (2)(3) 9.9
Eugene, Oregon

22
<PAGE>
Douglas D. Obie 273,818 (4) 6.3
Seattle, Washington

Christine Obie-Barrett 268,978 (5) 6.2
Eugene, Oregon

Wayne P. Schur 82,500 (6) 1.9
Langhorne, Pennsylvania

Randall C. Pape 14,520 (6) *
Coburg, Oregon

Stephen A. Wendell 10,670 (2)(6) *
Eugene, Oregon

Richard C. Williams 32,606 (2)(6) *
Eugene, Oregon

Steven F. Grover 12,100 (6) *
Eugene, Oregon

James W. Callahan 9,680 (6) *
Eugene, Oregon

All executive officers and directors
as a group (8 persons) 2,694,704 (2)(3)(6) 61.7

* Less than 1 percent of the outstanding shares.

(1) A person is considered to "beneficially own" any shares: (a) over which
such person exercises sole or shared voting or investment power; or (b)
of which such person has the right to acquire ownership at any time
within 60 days (e.g., through exercise of stock options). Voting and
investment power relating to the shares referenced in the table above
is exercised solely by the beneficial owner, except as indicated
otherwise.
(2) Includes shares owned by the spouses of the named persons as follows:
Brian B. Obie, 30,250 shares; Delores M. Mord, 103,713 shares; Stephen
A. Wendell, 4,730 shares; Richard C. Williams, 2,207 shares; and for
all officers and directors as a group, 140,900 shares. All named
persons disclaim beneficial ownership of shares owned by their spouses.

(3) Includes 13,113 shares owned by Obie Media's profit sharing and 401(k)
plan. Brian B. Obie and Delores M. Mord serve on the administrative
committee with responsibility for plan decisions.

(4) Includes 36,476 shares held by Douglas D. Obie as trustee for the
benefit of Christine Obie-Barrett's minor children. Also includes 6,369
shares beneficially owned by Douglas D. Obie's minor children, which
are held by Christine Obie-Barrett as trustee.
(5) Includes 6,369 shares held by Christine Obie-Barrett as trustee for the
benefit of Douglas D. Obie's minor children. Also includes 36,476
shares beneficially owned by Christine Obie-Barrett's minor children,
which are held by Douglas D. Obie as trustee.
(6) Includes shares subject to options exercisable within 60 days after
November 30, 1998, as follows: Wayne P. Schur, 27,500 shares; Randall
C. Pape, 2,420 shares; Stephen A. Wendell, 2,420 shares; Richard C.
Williams, 2,420 shares; Stephen F. Grover, 12,100 shares; James W.
Callahan 7,260 shares; and for all officers and directors as a group,
54,120 shares.

23
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our policy for transactions with affiliates, adopted following our IPO in
November 1996, provides that all proposed transactions by Obie Media with
directors, officers, 5% shareholders and their affiliates be entered into only
if such transactions are (i) on terms no less favorable to Obie Media than could
be obtained from unaffiliated parties, (ii) reasonably expected to benefit Obie
Media and (iii) approved by a majority of the disinterested, independent members
of our Board of Directors. Set forth below are descriptions of certain
transactions between Obie Media and our directors, officers or 5% shareholders
or their affiliates since December 1, 1996

Outdoor Advertising Displays

Until December 31, 1997, Obie Media leased outdoor advertising displays from MO
Partners, in which Brian Obie and Delores Mord hold partnership interests of
approximately 85% and 15%, respectively. The lease agreement required monthly
payments of a minimum base rent plus additional rent equal to 5% of the gross
revenues derived by Obie Media from advertising on the displays. The minimum
base rental payments were $9,000 per month in calendar 1997. The lease expired
at the end of 1997. Total lease expenses were $108,000 and $18,000 in fiscal
1997 and 1998, respectively. On December 31, 1997, we exercised our option,
granted in fiscal 1996, to purchase the outdoor advertising displays of MO
Partners for $698,000. Prior to the purchase of the outdoor displays from MO
Partners, we had guaranteed certain indebtedness of MO Partners, the outstanding
balance of which was $415,000 at November 30, 1997. We paid for the displays
with a promissory note. Upon the note's payment in full in April 1998, our
guaranty of the MO Partners debt was released. We believe the option price was
at least as favorable to us as would have been available from an unrelated party
through arms-length negotiations.

MO Partners also leases land to us for two outdoor advertising displays. Lease
payments for these properties equal 20% of the annual revenues we derive from
these displays. Lease payments were $12,000 in each of fiscal 1997 and 1998. We
believe that the terms of these leases are at least as favorable to us as would
be available with an unrelated third party through arms-length negotiations.

Office and Production Space

Prior to April 1997, Obie Media rented office and production space in three
locations in Eugene, Oregon from Obie Industries, our parent until 1996, and
another affiliated company. In April 1997, we consolidated our operations in
Eugene in a headquarters building at one of these locations. The headquarters
building is leased from Obie Industries at market rates. Our rental and lease
payments on these properties were $123,000 and $171,000 in fiscal 1997 and 1998,
respectively.

Personal Services

Brian Obie, our Chairman of the Board, President and Chief Executive Officer,
provides limited services to Obie Industries and its subsidiaries. Mr. Obie is
the President, a director and the controlling shareholder of Obie Industries. It
is estimated that Mr. Obie spends on average less than 5% of his time working on
Obie Industries matters.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1) Financial Statements. The Financial Statements are listed in the
Index to Consolidated Financial Statements on page F-1 of this Annual Report.

(a)(2) Exhibits:

Exhibit Description

3.1 Restated Articles of Incorporation, as amended (1)

3.2 Restated Bylaws, as amended (1)

4.1 See Articles 3, 4 and 8 of Exhibit 3.1 and Articles 1, 2, 5, 6 and 7 of
Exhibit 3.2(1)

24
<PAGE>
10.1* Restated 1996 Stock Incentive Plan

10.2 Form of Indemnification Agreement between the Company and its directors

10.3 Form of Indemnification Agreement between the Company and its officers

10.4 Lease between Obie Industries Incorporated and the Company, dated
November 12, 1996(2)

10.5 Amendment, dated July 15, 1997, to lease agreement between Obie
Industries Incorporated and the Company (2)

10.6 Restated and Amended Loan Agreement, dated as of September 1, 1998,
among the Company, Obie Media Limited, Philbin & Coine, Inc., and U.S.
Bank National Association, and related documents

10.7 Stock Purchase Agreement among Registrant and Philbin & Coine, Inc. and
Wayne P. Schur dated August 25, 1998 (3)

10.8* Employment Agreement, dated September 1, 1998, between the Company and
Wayne P. Schur

10.9* Non-Qualified Stock Option Agreement, dated September 1, 1998, between
the Company and Wayne P. Schur

21.1 List of Subsidiaries

23.1 Consent of Arthur Andersen LLP, Independent Accountants

27.1 Financial Data Schedule

99.1 Safe Harbor for Forward-Looking Statements under Private Securities
Litigation Reform Act of 1995: Certain Cautionary Statements

- ----------

*Management Contract or Compensatory Plan or Arrangement.

(1) Incorporated herein by reference from the Company's Registration Statement
on Form SB-2 (Registration No. 333-5728-LA), declared effective on November
21, 1996.

(2) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended November 30, 1997 filed February 27, 1998.

(3) Incorporated by reference to the Company's Form 8-K filed September 14,
1998.

Upon written request to James W. Callahan, Chief Financial Officer of Obie
Media Corporation, 4211 West 11th Avenue, Eugene, OR 97402, shareholders will be
furnished a copy of any exhibit, upon payment of $ .25 per page, which
represents the Company's reasonable expense in furnishing the exhibit requested.

(b) Reports on Form 8-K. In September and November 1998, the Company filed
Forms 8-K and 8-K/A announcing the acquisition of Philbin & Coine, Inc.
dba P&C Media, which forms are hereby incorporated by reference into
this annual report.

25
<PAGE>
SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

OBIE MEDIA CORPORATION

Dated: February 26, 1999 By/s/ Brian B. Obie
----------------
Brian B. Obie, President

In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

PRINCIPAL EXECUTIVE OFFICER AND
DIRECTOR:

Dated: February 26, 1999 By/s/ Brian B. Obie
----------------
Brian B. Obie, Chairman, President
and Chief Executive Officer

PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICERS:

Dated: February 26, 1999 By/s/ James W. Callahan
--------------------
James W. Callahan,
Chief Financial Officer and Treasurer

Dated: February 26, 1999 By/s/ Michael E. Hubbard
---------------------
Michael E. Hubbard,
Corporate Controller

DIRECTORS:

Dated: February 26, 1999 By/s/ Delores M. Mord
------------------
Delores M. Mord, Director

Dated: February , 1999 By
------------------
Randall C. Pape, Director

Dated: February 26, 1999 By/s/ Stephen A. Wendell
---------------------
Stephen A. Wendell, Director

Dated: February 26, 1999 By/s/ Richard C. Williams
----------------------
Richard C. Williams, Director

Dated: March 1, 1999 By/s/ Wayne P. Schur
-----------------
Wayne P. Schur, Director

26
<PAGE>
EXHIBIT INDEX

Exhibit*

10.1 Restated 1996 Stock Incentive Plan

10.2 Form of Indemnification Agreement between the Company and its directors

10.3 Form of Indemnification Agreement between the Company and its officers

10.6 Restated and Amended Loan Agreement, dated as of September 1, 1998,
among the Company, Obie Media Limited, Philbin & Coine, Inc., and U.S.
Bank National Association, and related documents

10.8 Employment Agreement, dated September 1, 1998, between the Company and
Wayne P. Schur

10.9 Non-Qualified Stock Option Agreement, dated September 1, 1998, between
the Company and Wayne P. Schur

21.1 List of Subsidiaries

23.1 Consent of Arthur Andersen LLP, Independent Accountants

27.1 Financial Data Schedule

99.1 Safe Harbor for Forward-Looking Statements Under Private Securities
Litigation Reform Act of 1995: Certain Cautionary Statements
- --------------

* See Item 13(a)(2) of this Annual Report for a list of all exhibits, including
those incorporated by reference.

27
<PAGE>
OBIE MEDIA CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Accountants F-2

Consolidated Balance Sheet as of November 30, 1997 and 1998 F-3

Consolidated Statements of Income for the years ended
November 30, 1997 and 1998 F-4

Consolidated Statements of Changes in Shareholders'Equity
(Deficit) for the years ended November 30, 1997 and 1998 F-5

Consolidated Statements of Cash Flows for the years ended
November 30, 1997 and 1998 F-6

Notes to Consolidated Financial Statements F-8

<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
of Obie Media Corporation:

We have audited the accompanying consolidated balance sheets of Obie Media
Corporation (an Oregon corporation) and subsidiaries as of November 30, 1997 and
1998, and the related consolidated statements of income, changes in
shareholders' equity (deficit) and cash flows for each of the two years in the
period ended November 30, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Obie Media Corporation and
subsidiaries as of November 30, 1997 and 1998, and the results of their
operations and their cash flows for each of the two years in the period ended
November 30, 1998 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP
/s/Arthur Andersen LLP

Portland, Oregon,
January 15, 1999 (except with respect to the matter
discussed in Note 10, as to which
the date is February 12, 1999)

<PAGE>
<TABLE>
<CAPTION>
OBIE MEDIA CORPORATION
----------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
AS OF NOVEMBER 30, 1997 AND 1998
--------------------------------

ASSETS
------
1997 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ - $ 326,140
Accounts receivable, net of allowance for doubtful
accounts of $146,692 and $291,938, respectively 2,878,360 6,719,218
Prepaid expenses and other current assets 790,234 1,156,061
Deferred income taxes 1,105,240 758,832
----------- -----------
Total current assets 4,773,834 8,960,251

PROPERTY AND EQUIPMENT, net 9,264,855 10,493,174

OTHER ASSETS:
Goodwill, net - 7,696,394
Other assets, net 245,733 497,512
----------- -----------
$14,284,422 $27,647,331
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Checks outstanding in excess of cash deposits $ 173,611 $ -
Current portion of long-term debt 859,323 1,511,276
Line of credit 742,864 1,414,877
Accounts payable 403,449 780,268
Accrued expenses 1,166,883 2,674,287
Income taxes payable - 299,090
Deferred revenue 781,204 1,247,470
----------- -----------
Total current liabilities 4,127,334 7,927,268
----------- -----------
DEFERRED INCOME TAXES 630,551 783,502

LONG-TERM DEBT, less current portion 5,695,219 13,354,395
----------- -----------
Total liabilities 10,453,104 22,065,165

MINORITY INTEREST IN SUBSIDIARY 35,424 35,424

COMMITMENTS (Note 8)

SHAREHOLDERS' EQUITY:
Preferred stock, without par value, 10,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, without par value; 20,000,000 shares
authorized, 4,241,034 and 4,315,728 shares
issued and outstanding, respectively 6,173,967 6,851,053
Options issued for common stock - 211,763
Accumulated deficit (2,378,073) (1,516,074)
----------- -----------
Total shareholders' equity 3,795,894 5,546,742
----------- -----------
$14,284,422 $27,647,331
=========== ===========
</TABLE>

F-3
<PAGE>
OBIE MEDIA CORPORATION
----------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1998
----------------------------------------------

1997 1998
----------- -----------
REVENUES:
Outdoor advertising $ 5,373,609 $ 5,796,230
Transit advertising 9,251,346 19,421,970
Less- Agency commissions (1,322,129) (2,500,455)
----------- -----------
Net revenues 13,302,826 22,717,745

OPERATING EXPENSES:
Direct advertising expenses 8,004,869 14,792,952
General and administrative 2,241,849 3,628,028
Start-up costs 236,743 106,375
Depreciation and amortization 664,207 935,545
----------- -----------
Operating income 2,155,158 3,254,845

OTHER (INCOME) EXPENSE:
Interest expense 584,258 776,001
Minority interest in subsidiary 8,017 -
Other (51,492) -
----------- -----------
INCOME BEFORE INCOME TAXES 1,614,375 2,478,844

PROVISION FOR INCOME TAXES 614,311 977,665
----------- -----------
NET INCOME $ 1,000,064 $ 1,501,179
=========== ===========

BASIC NET INCOME PER SHARE $ .24 $ .35
=========== ===========

DILUTED NET INCOME PER SHARE $ .23 $ .35
=========== ===========

The accompanying notes are an integral part of these consolidated statements.

F-4
<PAGE>
<TABLE>
<CAPTION>
OBIE MEDIA CORPORATION
----------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
--------------------------------------------------------------------
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1998
----------------------------------------------

Options
Issued for
Common Accumulated
Shares Amount Stock Deficit Total
--------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
BALANCE, November 30,
1996 4,235,000 $6,161,992 $ - $(3,378,137) $2,783,855

Additional initial
public offering
expenses - (24,788) - - (24,788)
Issuance of common
stock 6,050 36,875 - - 36,875
Purchase of
fractional shares
of common stock (16) (112) - - (112)
Net income - - - 1,000,064 1,000,064
--------- ---------- ---------- ------------- ----------
BALANCE, November 30,
1997 4,241,034 6,173,967 - (2,378,073) 3,795,894

Issuance of common
stock for benefit
plan and stock
option exercises 19,694 127,788 - - 127,788
Issuance of common
stock for the
acquisition of
business 55,000 512,500 - - 512,500
Purchase of property
from related party
in excess of net
book value - - - (639,180) (639,180)
Options issued for
common stock for
the acquisition of
business - - 211,763 - 211,763
Income tax benefit of
nonqualified stock
option exercises - 36,798 - - 36,798
Net income - - - 1,501,179 1,501,179
--------- ---------- ---------- ------------ ----------
BALANCE, November 30,
1998 4,315,728 $6,851,053 $ 211,763 $(1,516,074) $5,546,742
========= ========== ========== ============ ===========

</TABLE>
The accompanying notes are an integral part of these consolidated statements.

F-5
<PAGE>
<TABLE>
<CAPTION>
OBIE MEDIA CORPORATION
----------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1998
----------------------------------------------

1997 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,000,064 $ 1,501,179
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 664,207 935,545
Deferred income taxes 614,311 499,359
Minority interest in subsidiary 8,017 -
Change in assets and liabilities
net of effect of acquisition:
(Increase) decrease in-
Accounts receivable (1,328,167) (2,759,773)
Prepaid expenses and other assets (106,961) (231,977)
Increase (decrease) in-
Accounts payable (316,696) 337,735
Income taxes payable - 335,888
Accrued expenses 96,443 927,378
Deferred revenue 185,902 230,859
------------ ------------
Net cash provided by operating activities 817,120 1,776,193

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,439,617) (1,679,981)
Acquisition of business, net of cash acquired - (6,288,846)
Other investing activities - (36,259)
------------ ------------
Net cash used in investing activities (1,439,617) (8,005,086)
------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 55,885
Costs to issue common stock (24,788) -
Net borrowings (payments) on lines of credit 742,864 672,013
Checks outstanding in excess of cash deposits 173,611 (173,611)
Proceeds from long-term debt - 7,698,000
Net payments on long-term debt (744,018) (1,584,871)
Payments of debt issuance costs - (69,371)
Other financing activities (112) (43,012)
------------ ------------
Net cash provided by financing activities 147,557 6,555,033
------------ ------------
NET INCREASE IN CASH (474,940) 326,140

CASH, beginning of period 474,940 -
------------ ------------
CASH, end of period $ - $ 326,140
============ ============
(Continued)

F-6
<PAGE>
OBIE MEDIA CORPORATION
----------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1998
----------------------------------------------
(Continued)

1997 1998
------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Issuance of stock to employee benefit plan $ 36,875 $ 71,903
Note payable issued to acquire outdoor advertising
structures - 698,000
Issuance of common stock and stock options for the
acquisition of business - 724,263
Issuance of note payable for the acquisition of
business - 1,500,000
Costs associated with financing activities - 131,855
Income tax benefit of nonqualified stock option
exercises - 36,798
Interest capitalized 10,637 14,104

CASH PAID FOR INTEREST 571,445 850,626

CASH PAID FOR TAXES 7,890 138,216

</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-7
<PAGE>
OBIE MEDIA CORPORATION
----------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
NOVEMBER 30, 1997 AND 1998
--------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------

Company
- -------

Obie Media Corporation (the Company) is a full service out-of-home advertising
company which markets advertising space primarily on transit vehicles and
outdoor advertising displays (billboards and wallscapes). At November 30, 1998,
the Company had 33 exclusive agreements with transit districts in the United
States and Canada to operate transit advertising displays. These transit
districts are located in, among other advertising markets: Dallas; Portland,
Oregon; Cleveland; Sacramento; Hartford; Ft. Lauderdale; Cincinnati and
Vancouver, British Columbia. The Company also operates and generally owns
advertising displays on billboards and walls in Washington, Oregon, California
and Idaho.

On November 21, 1996, the Company completed an initial public offering (the
"IPO") of 1,210,000 shares of its common stock, raising $5,887,204, net of
expenses of $1,112,796. The net proceeds were used to reduce previously
outstanding debt.

Spin-Off
- --------

Prior to November 20, 1996, the Company was a subsidiary of Obie Industries
Incorporated. To facilitate the IPO, the Company was spun-off as a separate
entity.

Prior to the spin-off, the Company engaged in various transactions with
affiliates under common control. These transactions included advances of working
capital to affiliates for a discontinued business and for capital expenditures.
Such transactions resulted in a net receivable consisting of amounts receivable
from and payable to affiliated companies. As part of the spin-off, the net
receivable from affiliates totaling $1,752,480 was distributed by the
declaration of a dividend and, accordingly, increased the Company's accumulated
deficit.

Philbin & Coine, Inc. Acquisition
- ---------------------------------

On September 1, 1998, the Company acquired all of the outstanding stock of
Philbin & Coine, Inc., a New York corporation doing business as P&C Media
("P&C") in exchange for 55,000 newly issued shares of the Company's common stock
valued at $512,500, stock options for 27,500 shares of the Company's common
stock valued at $211,763 (Note 7), cash of approximately $6,100,000, a note for
$1,500,000 due in future years (Note 5) and fees and expenses of $191,497.
Additionally, subject to certain performance contingencies in the purchase
agreement, the Company will be required to issue up to an additional 82,500
shares of the Company's common stock to the former P&C shareholder in future
years. The value of any subsequently issued shares will be allocated to
goodwill.

Included in accounts receivable in the accompanying balance sheets at November
30, 1998 is a receivable from the former shareholder of P&C for approximately
$76,000, which relates to the acquisition of P&C.

The transaction has been accounted for as a purchase with the excess of the
purchase price over the fair value (which approximated historical carrying
value) of the net assets acquired allocated to goodwill. The operations of P&C
have been included in the accompanying financial statements since the date of
acquisition.

F-8
<PAGE>
A summary of the net assets acquired follows:

Working capital $ 408,123
Property and equipment 273,564
Other assets 11,680
Intangibles 7,822,393
----------
$8,515,760
==========

The following unaudited pro forma consolidated results of operations have been
prepared as if the acquisition of P&C had occurred as of the beginning of fiscal
year 1997 and 1998:

1997 1998
----------- -----------
Net revenue $19,422,850 $28,197,250
Operating income 1,266,971 2,847,366
Net income 621,396 1,054,648
Net income per share-
Basic $.14 $.24
Diluted $.14 $.24

These pro forma results are not necessarily indicative of what actually would
have occurred had the acquisition been completed as of the beginning of each of
the periods presented, nor are they necessarily indicative of the results that
will be obtained in the future.

Basis of Presentation

The consolidated financial statements include the Company, its wholly owned
subsidiary, Obie Media Limited, and its 50% owned subsidiary, OB Walls, Inc. All
significant intercompany accounts and transactions between the Company and its
subsidiaries have been eliminated in consolidation.

Foreign Currency Translation

The financial statements of the Company's foreign subsidiary, Obie Media
Limited, are translated into United States dollars using exchange rates at the
balance sheet date for assets and liabilities, and average exchange rates for
the period for revenues and expenses. The effect of the foreign currency
translation was insignificant for the year ended November 30, 1998.

Use of Estimates

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
Actual results could differ from those estimates.

Revenue Recognition

The Company has contracts to provide future advertising to its customers.
Advertising revenue is recognized ratably over the period the advertising is
displayed. Payments received and amounts billed for advertising revenue in
advance of display are deferred. Costs incurred for the production and
installation of outdoor advertising displays, which are not specifically
recoverable in the event the related contract is canceled, are expensed as
incurred. Costs incurred for the production and installation of displays for
transit advertising, which are paid for by the customer ratably over the term of
the advertising contract and are

F-9
<PAGE>
specifically recoverable in the event the related contract is canceled, are
deferred and recognized as expense as the related revenue is recognized over the
life of respective contracts.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash and accounts receivable. The Company
places its cash with high credit quality financial institutions. Concentrations
of credit risk with respect to accounts receivable are not significant due to
the large number of customers, and their dispersion across different industries
and geographic areas.

At November 30, 1998, the Company had agreements with 33 transit districts.
Customers advertising on transit vehicles owned by the six largest transit
districts of Portland, Oregon; Dallas; Cleveland; British Columbia; Milwaukee
and Cincinnati represented approximately 53% of the Company's total net revenues
for the year ended November 30, 1998. No single advertising customer represented
10% or more of the Company's revenues for any of the periods presented in the
accompanying financial statements.

Transit agreements range from one to five years and are subject to renewal
either at the discretion of the transit district or upon the mutual agreement of
the Company and the transit district. Generally, these agreements require the
Company to pay the transit district the greater of a percentage of the related
advertising revenues, net of the advertising production charges, or a guaranteed
minimum amount (Notes 8 and 10).

Fair Value of Financial Instruments

The Company's financial instruments consist of cash, accounts receivable,
accounts payable, accrued expenses and debt instruments. At November 30, 1997
and 1998, the fair value of the Company's financial instruments are estimated to
be equal to their reported carrying value. The carrying value of long-term debt
approximates fair value. The resulting estimates of fair value require
subjective judgments and are approximates. Changes in the methodologies and
assumptions could significantly affect the estimates.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided on the
straight-line method over the estimated useful lives. Additions and
improvements, including interest incurred during construction, are capitalized.
Normal repairs and maintenance are expensed as incurred. The cost and
accumulated depreciation of assets sold or otherwise retired are removed from
the accounts and the resulting gain or loss is recognized. Interest expense
incurred is capitalized in connection with the construction of properties and
equipment.

Goodwill and Other Long-Lived Assets

Goodwill resulting from the P&C acquisition is being amortized over 15 years
using the straight-line method and is net of amortization of $126,000 at
November 30, 1998. Goodwill and other long-lived assets are periodically
evaluated when facts and circumstances indicate that the value of such assets
may be impaired. Evaluations are based on undiscounted projected earnings. If
the valuation indicates that undiscounted earnings are insufficient to recover
the recorded assets, then the projected earnings are discounted to determine the
revised carrying value and a write-down for the difference is recorded.

Other assets include loan costs, which are stated at cost and amortized over the
life of the loan.

F-10
<PAGE>
Income Taxes

The Company uses the liability method to record deferred tax assets and
liabilities that are based on the difference between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. These
temporary differences result from the use of different accounting methods for
financial statement and tax reporting purposes.

Earnings Per Share

Beginning in the Company's fiscal year ended November 30, 1998, basic earnings
per share ("EPS") and diluted EPS are required to be computed using the methods
prescribed by Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share." Basic EPS is calculated using the weighted average number
of common shares outstanding for the period and diluted EPS is calculated using
the weighted average number of common shares and dilutive common equivalent
shares outstanding. Such amounts have been retroactively adjusted to reflect the
10-for-1 stock split which occurred in 1996, the 11-for-10 stock split which
occurred in November 1997 and the 11-for-10 stock split which occurred in
November 1998 (Note 7).

Following is a reconciliation of basic EPS and diluted EPS:
<TABLE>
<CAPTION>
Year Ended November 30, 1997
----------------------------------
Per Share
Income Shares Amount
---------- --------- ---------
<S> <C> <C> <C>
Basic EPS-
Income available to common shareholders $1,000,064 4,237,387 $0.24
Effect of dilutive securities-
Stock options - 52,965
---------- ---------
Diluted EPS-
Income available to common shareholders $1,000,064 4,290,352 $0.23
========== =========

Year Ended November 30, 1998
----------------------------------
Per Share
Income Shares Amount
---------- --------- ---------
Basic EPS-
Income available to common shareholders $1,501,179 4,263,327 $0.35
Effect of dilutive securities-
Stock options - 59,242
---------- ---------
Diluted EPS-
Income available to common shareholders $1,501,179 4,322,569 $0.35
========== =========
</TABLE>

New Accounting Pronouncements

Effective in its fiscal year ending November 30, 1999, the Company will be
required to adopt SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information." SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. SFAS No.
131 changes current practice under SFAS No. 14 by establishing a new framework
on which to base segment reporting (referred to as the "management" approach)
and also requires interim reporting of segment information. Management does not
expect that the impact of adoption of these pronouncements will be material to
the Company's financial position or results of operations.

F-11
<PAGE>
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for all derivative instruments.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. The
Company currently has no derivative instruments and, therefore, the adoption of
SFAS 133 will have no impact on the Company's financial position or results of
operations.

2. PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of the following:

November 30,
----------------------
1997 1998
-------- ----------
Prepaid leases $322,811 $ 379,435
Transit advertising production costs 294,991 500,297
Other 172,432 276,329
-------- ----------
$790,234 $1,156,061
======== ==========

3. PROPERTY AND EQUIPMENT:

Property and equipment consist of the following:
<TABLE>
<CAPTION>
November 30,
------------------------
1997 1998 Asset Lives
----------- ----------- -----------
<S> <C> <C> <C>
Outdoor advertising structures $10,577,588 $11,281,887 20 years
Other equipment and leaseholds 2,139,119 3,434,153 5-20 years
----------- -----------
12,716,707 14,716,040
Less- Accumulated depreciation 3,451,852 4,222,866
----------- -----------
$ 9,264,855 $10,493,174
=========== ===========
</TABLE>

4. ACCRUED EXPENSES:

Accrued expenses consist of the following:

November 30,
----------------------
1997 1998
---------- ----------
Transit district fees $ 753,571 $1,890,581
Payroll and related items 307,365 403,073
Other 105,947 380,633
---------- ----------
$1,166,883 $2,674,287
========== ==========

F-12
<PAGE>
5. FINANCING ARRANGEMENTS:

Long-term debt consists of the following:
<TABLE>
<CAPTION>
November 30,
-----------------------
1997 1998
---------- -----------
<S> <C> <C>
Term loan with U.S. Bank National Association ("U.S.
Bank"), as described below $6,340,000 $ 5,565,000
Note payable in annual payments of $12,000 plus interest
at 10%, with collateral of outdoor
advertising structures, due October 1999 24,000 12,000
Note payable in monthly payments of $5,900 including
interest at 10%, guaranteed by Brian B. Obie (the
Company's Chairman of the Board, President and Chief
Executive Officer), due April 2000 149,786 96,025
Note payable to U.S. Bank, as described below - 664,762
Notes payable in monthly payments of $2,219 including
interest ranging from 9% to 9.98%, with collateral of
several vehicles, maturing through November 2002 40,756 27,884
Bridge loan with U.S. Bank, as described below - 7,000,000
Note payable to former shareholder of P&C in certain
installment payments plus interest at 6%, due January 1,
2003 (Note 1) - 1,500,000

---------- -----------
6,554,542 14,865,671
Less- Current portion 859,323 1,511,276
---------- -----------
$5,695,219 $13,354,395
========== ===========
</TABLE>

The aggregate principal payments due on the above debt subsequent to November
30, 1998 are:

Fiscal Year Ending
November 30,

1999 $ 1,511,276
2000 2,736,136
2001 2,705,178
2002 2,455,524
2003 2,449,718
Thereafter 3,007,839
-----------
$14,865,671
===========

In October 1996, the Company received a $12,000,000 bridge loan from U.S. Bank,
which was used to refinance substantially all of the Company's then existing
debt. Upon the completion of the IPO, the outstanding balance on this bridge
loan was reduced to $7,000,000. Effective February 12, 1997, the outstanding
balance was converted to a seven-year term loan, payable in monthly
installments, due April 30, 2004. On September 1, 1998, the term of the loan was
amended to be due on December 15, 2003, payable in monthly installments, with
interest to be based, at the Company's option, partially at the London
Inter-Bank Offering rate ("LIBOR") plus 2% (7.25% at November 30, 1998) and the
remainder at U.S. Bank's prime rate plus .5% (8.25% at November 30, 1998). The
loan is collateralized by substantially all of the Company's assets.

F-13
<PAGE>
On August 1, 1998, the Company received a $698,000 loan from U.S. Bank, which
was used to pay a note due to an affiliated partnership (Note 8). The loan is
payable in monthly installments of $8,310 through July 15, 2005, with interest
to be based, at the Company's option, partially at LIBOR plus 2% (7.71875% at
November 30, 1998) and the remainder at U.S. Bank's prime rate plus .5% (8.25%
at November 30, 1998). The loan is collateralized by substantially all of the
Company's assets.

On September 1, 1998, the Company received a $7,000,000 bridge loan from U.S.
Bank, which was used to finance the Company's acquisition of P&C (Note 1) as
well as pay down certain indebtedness of P&C in connection with the acquisition.
The principal balance is due on August 31, 1999, or upon closing of a secondary
offering, whichever is earlier. Interest is based on LIBOR plus 2% (7.59375% at
November 30, 1998). The loan is collateralized by substantially all of the
Company's assets.

In the event that a secondary offering does not occur by August 31, 1999, or the
secondary offering does not provide sufficient net proceeds for repayment of the
$7,000,000 bridge loan, the Company, at its option, can convert the bridge loan
into a seven-year term loan, with the principal amount limited to the lesser of
$7,000,000 or the unpaid balance of the bridge loan principal and interest,
immediately following application of all net proceeds of any secondary offering.
The first monthly installment would be due on the 15th day of the first calendar
month following the closing of the term loan, with interest to be based, at the
Company's option, on LIBOR plus 2% or at U.S. Bank's prime rate plus 0.5%.
Therefore, at November 30, 1998, this loan is classified as long-term on the
balance sheet. The aggregate principal payments due on this debt subsequent to
November 30, 1998 are included in the five-year debt payout schedule above.

The Company also has a $4,000,000 operating line of credit with U.S. Bank. The
interest rate is at U.S. Bank's prime rate (8.0% at November 30, 1998) and the
line is collateralized by receivables, equipment, inventory and contract rights.
The outstanding balance on this line of credit at November 30, 1997 and 1998,
was $742,864 and $1,414,877, respectively.

The Company was in compliance with all loan covenants at November 30, 1998.

6. INCOME TAXES:

The provision for income taxes was a deferred provision of $614,311 for the year
ended November 30, 1997. For the year ended November 30, 1998, the provision for
income taxes included a current provision of $478,306 and a deferred provision
of $499,359.

F-14
<PAGE>
The tax effects of temporary differences that give rise to deferred tax assets
and liabilities are as follows:

November 30,
----------------------------
1997 1998
---------- ---------
Current deferred tax assets:
Deferred revenue $ 457,595 $ 621,895
Prepaid commissions 291,029 224,560
Allowance for doubtful accounts 56,652 112,746
Net operating loss carryforwards 442,565 -
Accrued expenses and other 6,001 25,468
---------- ---------
Total current deferred tax assets 1,253,842 984,669

Current deferred tax liabilities:
Prepaid fees and other (148,602) (225,837)
---------- ---------
Net current deferred tax assets $1,105,240 $ 758,832
========== =========

Noncurrent deferred tax liabilities:
Property and equipment $ 630,551 $ 783,502
========== =========

Based on management's assessment, it is more likely than not that the net
deferred tax assets will be realized through future taxable income.

Income tax expense for the years ended November 30, 1997 and 1998 differs from
the amounts computed by applying the U.S. federal income tax rate of 34% to
pretax income, as follows:

Year Ended November 30,
-----------------------
1997 1998
-------- --------
Computed "expected" tax expense $548,888 $842,807
Increase in income taxes resulting from-
State and local taxes, net of federal income
tax benefit 65,423 114,523
Other differences, net - 20,335
-------- --------
Actual income tax expense $614,311 $977,665
======== ========

F-15
<PAGE>
7. SHAREHOLDERS' EQUITY:

The Company's Restated Articles of Incorporation authorize the issuance of up to
20,000,000 shares of common stock and 10,000,000 shares of preferred stock
issuable in series ("Preferred Stock").

In connection with the Company's IPO, the Company's Articles of Incorporation
were amended and restated on October 1, 1996 to authorize a 10-for-1 stock
split. In October 1997, the Company declared an 11-for-10 stock split for
shareholders of record on November 21, 1997. In November 1998, the Company
declared an 11-for-10 stock split for shareholders of record on November 21,
1998.

Preferred Stock

The Board of Directors is authorized, without further shareholder authorization,
to issue Preferred Stock in one or more series and to fix the terms and
provisions of each series, including dividend rights and preferences, conversion
rights, voting rights, redemption rights and rights on liquidation, including
preferences over common stock.

Common Stock

Holders of common stock are entitled to one vote per share on all matters
requiring shareholder vote. Holders of common stock are entitled to receive
dividends when and as declared by the Board of Directors out of any funds
lawfully available therefor, and, in the event of liquidation or distribution of
assets, are entitled to participate ratably in the distribution of such assets
remaining after payment of liabilities, in each case subject to any preferential
rights granted to any series of Preferred Stock that may then be outstanding.

Stock Options

On September 1, 1998, the Company granted nonstatutory stock options to the
former shareholder of P&C, as part of the acquisition of P&C (Note 1),
exercisable for 137,500 shares of the Company's common stock. Additionally, as
part of the acquisition, the Company granted nonstatutory stock options to the
legal counsel of the P&C shareholder exercisable for 11,000 shares of the
Company's common stock. Of the 148,500 stock options granted, 27,500 were
exercisable on the date of grant at an exercise price of $7.92 per share, and
included in the purchase price for the acquisition of P&C (Note 1). The
remaining 110,000 options granted to the former shareholder of P&C are
exercisable in 27,500 increments on the annual anniversary dates of the
Company's employment agreement signed with the former P&C shareholder, subject
to certain provisions regarding the former P&C shareholder's employment with the
Company. These options will be recorded as additional goodwill once the
contingent provisions are met.

In addition, on October 2, 1996, the Company's Board of Directors and
shareholders adopted the 1996 Stock Incentive Plan (the "Plan"), which provides
for the issuance of 363,000 shares of common stock pursuant to Incentive Stock
Options ("ISOs"), Nonqualified Stock Options ("NSOs"), stock bonuses and stock
sales to employees, directors and consultants of the Company. ISOs may be issued
only to employees of the Company and will have a maximum term of ten years from
the date of grant. The exercise price for ISOs may not be less than 100% of the
fair market value of the common stock at the time of the grant, and the
aggregate fair market value (as determined at the time of the grant) of shares
issuable upon the exercise of ISOs for the first time in any one calendar year
may not exceed $100,000. In the case of ISOs granted to holders of more than 10%
of the voting power of the Company, the exercise price may not be less than 110%
of the fair market value of the common stock at the time of the grant, and the
term of the option may not exceed five

F-16
<PAGE>
years. NSOs may be granted at not less than 85% of the fair market value of the
common stock at the date of grant. Options become exercisable in whole or in
part from time to time as determined by the Board of Directors' Compensation
Committee, which administers the Plan. Activity under the Plan is summarized as
follows:

Weighted
Shares Shares Subject Average
Available for to Options Exercise
Grant Price
------------- -------------- ---------
BALANCES, November 30, 1996 222,035 140,965 $5.50
Options granted (20,570) 20,570 6.21
Options canceled 2,420 (2,420) 5.50
-------- -------
BALANCES, November 30, 1997 203,885 159,115 5.59
Options granted (72,150) 72,150 11.24
Options canceled 27,825 (27,825) 7.51
Options exercised - (11,979) 5.50
-------- -------
BALANCES, November 30, 1998 159,560 191,461 7.45
======== =======

Statement of Financial Accounting Standards No. 123

During 1995, the Financial Accounting Standards Board issued SFAS 123, which
defines a fair value based method of accounting for employee stock options and
similar equity instruments and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it also
allows an entity to continue to measure compensation cost for those plans using
the method of accounting prescribed by APB 25. Entities electing to continue to
use the accounting treatment in APB 25 must make pro forma disclosures of net
income and, if presented, earnings per share, as if the fair value based method
of accounting defined in SFAS 123 had been adopted.

The Company has elected to account for its stock-based compensation plans under
APB 25; however, the Company has computed, for pro forma disclosure purposes,
the value of all options granted during the years ended November 30, 1997 and
1998, using the Black-Scholes option pricing model as prescribed by SFAS 123
using the following weighted average assumptions for grants:

Year Ended
November 30,
---------------------
1997 1998
------- -------
Risk-free interest rate 6.25% 6.00%
Expected dividend yield 0% 0%
Expected lives 8 years 6 years
Expected volatility 55.84% 53.11%

F-17
<PAGE>
Using the Black-Scholes methodology, the total value of options granted during
the years ended November 30, 1997 and 1998, was $78,160 and $482,453,
respectively, which would be amortized on a pro forma basis over the vesting
period of the options (typically five years). The weighted average per share
fair value of options granted during the years ended November 30, 1997 and 1998,
was $4.60 and $7.36, respectively. If the Company had accounted for its
stock-based compensation plans in accordance with SFAS 123, the Company's net
income and net income per share would approximate the pro forma disclosures
below:

Year Ended November 30,
---------------------------------------------
1997 1998
--------------------- ----------------------
As As
Reported Pro Forma Reported Pro Forma
---------- --------- ---------- ----------
Net income $1,000,064 $931,396 $1,501,179 $1,396,956
Diluted net income per share $0.23 $0.22 $0.35 $0.33

The effects of applying SFAS 123 in this pro forma disclosure are not indicative
of future amounts. SFAS 123 does not apply to awards prior to January 1, 1995,
and additional awards are anticipated in future years.

The following table summarizes information about stock options outstanding at
November 30, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------------------------------- ------------------------
Weighted
Number Average Weighted Number Weighted
Range of Outstanding at Remaining Average Exercisable at Average
Exercise November 30, Contractual Exercise November 30, Exercise
Prices 1998 Life - Years Price 1998 Price
------------ -------------- ------------ --------- -------------- ----------
<S> <C> <C> <C> <C> <C>
$ 5.50 113,740 12.9 $ 5.50 45,496 $5.50
6.10-6.25 16,214 13.2 6.25 3,630 6.23
7.92 126,500 9.8 7.92 27,500 7.92
9.06-9.55 44,675 11.4 9.40 - -
10.00-10.23 5,500 14.4 10.14 - -
12.73-13.86 33,332 14.4 12.85 - -
------------ ------- ---- ------ ------ -----
$ 5.50-13.86 339,961 11.7 $ 7.74 76,626 $6.40
============ ======= ==== ====== ====== =====
</TABLE>
At December 31, 1997, 24,079 options were exercisable at a weighted average
exercise price of $5.50 per share.

8. COMMITMENTS AND CERTAIN RELATED PARTY TRANSACTIONS:

Transit Agreements

Certain transit agreements require the Company to remit to the transit district
the greater of a percentage of the related advertising revenues or a guaranteed
minimum amount. At November 30, 1998, future guaranteed minimum payments under
the transit agreements are as follows:

Fiscal Year Ending
November 30,

1999 $14,780,733
2000 14,473,484
2001 14,636,890
2002 10,209,046
2003 7,019,531
Thereafter 8,630,785

F-18
<PAGE>
Operating Leases

The Company leased outdoor advertising structures from an affiliated
partnership. The lease agreement required monthly payments of a minimum base
rent plus additional rent equal to 5% of the gross revenues derived from
advertising displayed on the structures. Minimum base rent payments were $8,500
per month through December 1996, and increased to $9,000 per month for the
following calendar year. The lease expired December 31, 1997. Total lease
expense pursuant to this lease was $108,397 and $17,981 for the years ended
November 30, 1997 and 1998, respectively.

In December 1997, the Company exercised its option to purchase the property
discussed above at a purchase price of $698,000. In accordance with generally
accepted accounting principles, the Company recorded only the book value carried
on the books of the affiliated partnership at the date of purchase. The
difference between the net book value of these assets and the purchase price has
been recorded as an addition to the Company's accumulated deficit.

The Company also rents office and production space from affiliates. Such rents
totaled $123,180 and $171,096 for the years ended November 30, 1997 and 1998,
respectively.

The Company leases parcels of property beneath outdoor advertising structures.
These leases are generally for a term of up to ten years, with two five-year
renewal options at the Company's discretion. The Company also leases facilities
for sales, service and installation for its operating offices. Total rent
expense pursuant to these leases was $755,486 and $1,073,074 for the years ended
November 30, 1997 and 1998, respectively.

At November 30, 1998, future minimum lease payments for all operating leases
described above are as follows:

Fiscal Year Ending
November 30,

1999 $1,391,974
2000 1,264,114
2001 1,140,144
2002 859,667
2003 659,753
Thereafter 1,961,171

9. EMPLOYEE BENEFIT PLAN:

Substantially all of the Company's employees who have met vesting requirements
participate in a defined contribution benefit plan that provides for
discretionary annual contributions by the Company. During the years ended
November 30, 1997 and 1998, the Company accrued $32,154 and $86,304,
respectively, as contributions to the plan. In 1997, the Company paid the 1996
accrued contribution through a contribution of 6,050 shares of its common stock
to the Plan and the balance in cash. In 1998, the Company paid the 1997 accrued
contribution through a contribution of 7,715 shares of its common stock to the
Plan and the balance in cash.

F-19
<PAGE>
10. SUBSEQUENT EVENT:

The Company has a contract to provide advertising sales services to the
Tri-County Metropolitan Transit District ("Tri-Met") in Portland, Oregon, which,
by its terms, was scheduled to expire in June 2001. The Company originally began
serving Tri-Met in January 1994, pursuant to a five-year agreement, which was
later extended for an additional two years. The Federal Transit Administration
("FTA"), which provides substantial monies to transit districts, has taken the
position that transit advertising contracts may not exceed five years in length.
At the request of the FTA, Tri-Met and the Company have agreed that the
Company's agreement with Tri-Met will terminate on June 30, 1999 and in December
1998 entered into an agreement to compensate the Company for early termination
of the existing contract. Tri-Met is soliciting proposals for transit
advertising sales services for a five-year term beginning July 1, 1999. In
December 1998, the Company submitted its response to Tri-Met's request for
proposal for a new multi-year contract beginning July 1, 1999. In February 1999,
the Company was advised by Tri-Met that it was in second place in the proposal
process. Tri-Met is expected to make a final decision in March 1999.

F-20

EXHIBIT 10.1

OBIE MEDIA CORPORATION
RESTATED 1996 STOCK INCENTIVE PLAN

Adopted by the Board of Directors and Sole Shareholder
on October 2, 1996

(Includes Amendments Approved by Board of Directors
Through July 8, 1998)

I. PURPOSE

The purpose of the Plan is to provide a means by which selected
Employees, Directors and Consultants may be given an opportunity to acquire
stock of the Company. The Company, by means of the Plan, seeks to retain the
services of persons who are currently Employees, Directors or Consultants, to
secure and retain the services of new Employees, Directors and Consultants, and
to provide incentives for such persons to exert maximum efforts for the success
of the Company. Accordingly, the Plan provides for granting Incentive Stock
Options, Nonqualified Stock Options, Stock Bonuses, and Sales of Stock or any
combination of the foregoing, as is best suited to the circumstances of the
particular person as provided herein.

II. DEFINITIONS

The following definitions shall be applicable throughout the Plan
unless specifically modified by any paragraph:

a. "1934 ACT" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute.

b. "AWARD" means, individually or collectively, any Option,
Stock Bonus or Sale of Stock.

c. "BOARD" means the Board of Directors of Obie Media
Corporation.

d. "CODE" means the Internal Revenue Code of 1986, as amended
and in effect from time to time, or any successor statute. Reference in
the Plan to any section

<PAGE>

of the Code shall be deemed to include any amendments or successor
provisions to any such section.

e. "COMMITTEE" means not less than two members of the Board
who are selected by the Board as provided in Paragraph A of Article IV.

f. "COMMON STOCK" means the shares of Common Stock of the
Company, without par value.

g. "COMPANY" means Obie Media Corporation.

h. "CONSULTANT" means any person engaged by the Company or a
Subsidiary to render services and who does not render such services as an
Employee or Director.

i. "DIRECTOR" means an individual elected to the Board by the
shareholders of the Company or by the Board under applicable corporate law
who is serving on the Board on the date the Plan is adopted by the Board or
is elected to the Board after such date.

j. "DISABILITY" means the condition of being permanently
"disabled" within the meaning of Section 22(e)(3) of the Code, namely being
unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.

k. "EMPLOYEE" means any person (including a Director) in an
employment relationship with the Company or a Subsidiary.

<PAGE>

l. "FAIR MARKET VALUE" means, as of any specified date:

(i) If the Common Stock is listed on any established
stock exchange, its fair market value shall be the closing sale price
of the Common Stock (or the average of the closing bid and asked
prices, if no sales were reported), as quoted on such exchange (or the
exchange with the greatest volume of trading in Common Stock) on the
business day preceding the date of such determination, as reported in
The Wall Street Journal or such other source as the Committee deems
reliable; or

(ii) If the Common Stock is quoted on the National
Association of Securities Dealers, Inc. Automated Quotation (Nasdaq)
System, its fair market value shall be the average of the closing bid
and asked prices for the Common Stock on the business day preceding
the date of such determination, as reported in The Wall Street Journal
or such other source as the Committee deems reliable; or

(iii) In the absence of an established market for the
Common Stock, the fair market value thereof shall be determined in
good faith by the Committee in such manner as it deems appropriate.

m. "HOLDER" means an Employee, Consultant or a Director who
has been granted an Award, and any assignee or transferee of such person as
permitted under the Plan. For purposes of Section G of Article VII, if an
Option has been transferred as permitted under the Plan, "Holder" shall
refer to the Employee, Consultant or Director who was granted the Award and
shall not refer to that person's assignee or transferor.

n. "INCENTIVE STOCK OPTION" means an incentive stock option
within the meaning of Section 422 of the Code.

o. "NONEMPLOYEE DIRECTOR" means a Nonemployee Director as
defined in Rule 16b-3(b)(3)(i). Solely for purposes of determining
eligibility for any stock incentive program for Nonemployee Directors,
"Nonemployee Director" means a

3
<PAGE>

director who is not an Employee on the date the Award is granted and has
not been an Employee during the prior two years.

p. "NONQUALIFIED STOCK OPTION" means a stock option other
than an Incentive Stock Option.

q. "OPTION" means an Award described in Article VII of the
Plan.

r. "OPTION AGREEMENT" means a written agreement between the
Company and a Holder with respect to an Option.

s. "PLAN" means the Restated 1996 Stock Incentive Plan of
Obie Media Corporation, as set forth herein and as it may be hereafter
amended from time to time.

t. "RULE 16b-3" means Rule 16b-3 promulgated by the
Securities and Exchange Commission under the 1934 Act, as such may be
amended from time to time, and any successor rule, regulation or statute
fulfilling the same or similar function.

u. "SALE OF STOCK" means any sale of stock as provided in
Article IX.

v. "STOCK BONUS" means an Award described in Article VIII.

w. "STOCK BONUS AGREEMENT" means a written agreement between
the Company and a Holder with respect to a Stock Bonus.

x. "STOCK SALE AGREEMENT" means a written agreement between
the Company and a Holder with respect to a Sale of Stock.

y. "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code; namely,
any corporation in

<PAGE>

which the Company directly or indirectly controls 50 percent or more of the
total combined voting power of all classes of stock having voting power.

III. EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan shall be effective as of October 2, 1996, the date of its
adoption by the Board, subject to its ratification and approval by the
shareholders of Obie Media Corporation on or before October 1, 1997. Until the
Plan has been approved by shareholders, any Awards made under the Plan shall be
conditioned upon such approval. No Awards may be granted under the Plan after
October 1, 2006. The Plan shall remain in effect until all Awards granted under
the Plan have been satisfied or expired.

IV. ADMINISTRATION

A. COMPOSITION OF COMMITTEE. The Plan shall be administered by a
committee which shall (i) be appointed by the Board and (ii) consist of two or
more Nonemployee Directors. If a Committee is not appointed by the Board, the
Plan shall be administered by the Board and all references in the Plan to a
Committee shall mean and refer to the Board.

B. AUTHORITY OF THE COMMITTEE. Subject to the provisions of the
Plan, the Committee shall have sole authority, in its discretion, to determine:
(i) which Employees, Directors and Consultants shall receive Awards; (ii) the
time or times when Awards shall be granted; (iii) the type or types of Awards to
be granted; and (iv) the number of shares of Common Stock which may be issued
under each Award. In making such determinations, the Committee may take into
account the nature of the services rendered by the respective individuals, their
present and potential contribution to the success of the Company, and such other
factors as the Committee in its discretion shall deem relevant. The Committee
shall also have such additional powers as are delegated to it by the Plan.
Subject to the express provisions of the Plan, the Committee is authorized to
construe the Plan and the respective agreements executed hereunder, to prescribe
such rules and regulations relating to the Plan as it may deem advisable to
carry out the Plan, and to determine the terms, restrictions and provisions of
each Award, including such terms, restrictions and provisions as shall be
requisite in the judgment of the Committee to cause designated Options to
qualify as Incentive Stock Options, and to make

<PAGE>

all other determinations necessary or advisable for administering the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in any agreement relating to an Award in the manner and to the
extent it shall deem expedient to carry the Award into effect. The
determinations of the Committee on the matters referred to in this Article IV
shall be conclusive.

C. LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any Award.

D. COSTS OF PLAN. The costs and expenses of administering the Plan
shall be borne by the Company.

V. ELIGIBILITY

Employees, Directors and Consultants are eligible to receive Options,
Stock Bonuses and Sales of Stock; PROVIDED, HOWEVER, only Employees are eligible
to receive Incentive Stock Options. Any Award may be granted on more than one
occasion to the same person, and may include an Incentive Stock Option, a
Nonqualified Stock Option, a Stock Bonus, a Sale of Stock or any combination
thereof.

VI. SHARES SUBJECT TO THE PLAN

A. AGGREGATE NUMBER OF SHARES. Subject to Article X, the aggregate
number of shares of Common Stock that may be issued under the Plan shall not
exceed 300,000 shares. Shares shall be deemed to have been issued under the
Plan only (i) to the extent actually issued and delivered pursuant to an Award,
or (ii) to the extent an Award is settled in cash. To the extent that an Award
lapses or the rights of its Holder terminate, any shares of Common Stock subject
to such Award shall again be available for the grant of an Award under the Plan.

B. STOCK OFFERED. The stock to be offered pursuant to the grant of
any Award may be authorized but unissued Common Stock or Common Stock previously
issued and outstanding and reacquired by the Company.

<PAGE>

VII. OPTIONS

A. OPTION PERIOD. The term of each Option shall be as specified by
the Committee at the date of grant, except that no Incentive Stock Option shall
be exercisable after the expiration of 10 years from the date of grant of such
Incentive Stock Option and no Nonqualified Stock Option shall be exercisable
after the expiration of 15 years from the date of grant of such Nonqualified
Stock Option.

B. LIMITATIONS ON EXERCISE OF OPTION. An Option shall be
exercisable in whole or in such installments and at such times as determined by
the Committee.

C. SPECIAL LIMITATIONS ON INCENTIVE STOCK OPTIONS. To the extent
that the aggregate Fair Market Value (determined at the time the respective
Incentive Stock Option is granted) of Common Stock with respect to which
Incentive Stock Options granted are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of
the Company exceeds $100,000, such Incentive Stock Options shall be treated as
Nonqualified Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other administrative
pronouncements, which of a Holder's Options will not constitute Incentive Stock
Options because of such limitation and shall notify the Holder of such
determination as soon as practicable after such determination. No Incentive
Stock Option shall be granted to an individual if, at the time the Option is
granted, such individual owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, unless (i) at the
time such Option is granted the exercise price is at least 110 percent of the
Fair Market Value of the Common Stock subject to the Option and (ii) such Option
by its terms is not exercisable after the expiration of five years from the date
of grant.

D. SEPARATE STOCK CERTIFICATES. Separate stock certificates shall
be issued by the Company for those shares acquired pursuant to the exercise of
an Incentive Stock Option and for those shares acquired pursuant to the exercise
of a Nonqualified Stock Option.

<PAGE>

E. OPTION AGREEMENT. Each Option shall be evidenced by an Option
Agreement in such form and containing such provisions not inconsistent with the
provisions of the Plan as the Committee from time to time shall approve,
including, without limitation, provisions to qualify an Incentive Stock Option
under Section 422 of the Code. An Option Agreement may provide for the payment
of the exercise price, in whole or in part, by the delivery of a number of
shares of Common Stock (plus cash if necessary) having a Fair Market Value (as
of the exercise date of the Option) equal to such exercise price. Moreover, an
Option Agreement may provide for a "cashless exercise" of the Option by
establishing procedures whereby the Holder, by a properly executed written
notice, directs: (i) an immediate market sale or margin loan respecting all or a
part of the shares of Common Stock to which the Holder is entitled upon exercise
of the Option; (ii) the delivery of the shares of Common Stock from the Company
directly to a brokerage firm; and (iii) the delivery of the exercise price from
sale or margin loan proceeds from the brokerage firm directly to the Company.
Such Option Agreement may also include, without limitation, provisions relating
to: (a) vesting of Options; (b) tax matters (including provisions covering any
applicable employee wage withholding requirements); and (c) any other matters
not inconsistent with the terms and provisions of this Plan that the Committee
shall in its sole discretion determine. The terms and conditions of the Option
Agreements need not be identical.

F. EXERCISE PRICE AND PAYMENT. The price at which a share of Common
Stock may be purchased upon exercise of an Option shall be determined by the
Committee, but such exercise price: (i) if the Option is an Incentive Stock
Option, shall not be less than the Fair Market Value of a share of Common Stock
on the date such Option is granted; (ii) if the Option is a Nonqualified Option,
shall be not less than 85 percent of the Fair Market Value of a share of Common
Stock on the date such Option is granted; and (iii) shall be subject to
adjustment as provided in Article X. An Option or portion thereof may be
exercised by delivery of an irrevocable notice of exercise to the Company. The
exercise price of an Option or portion thereof shall be paid in full in the
manner prescribed by the Committee.

G. TERMINATION OF EMPLOYMENT OR SERVICE.

1. In the event the employment or service of a Holder of an
Option by the Company terminates for any reason other than because of
Disability or death, such

<PAGE>

Option may be exercised at any time prior to the expiration date of the
Option or the expiration of three months after the date of such
termination, whichever is the shorter period, but only if and to the extent
the Holder was entitled to exercise the Option at the date of such
termination.

2. In the event the employment or service of a Holder of an
Option by the Company terminates because of Disability, such Option may be
exercised at any time prior to the expiration date of the Option or the
expiration of one year after the date of such termination, whichever is the
shorter period, but only if and to the extent the Holder was entitled to
exercise the Option at the date of such termination.

3. In the event of the death of a Holder of an Option while
employed by or providing service to the Company, such Option may be
exercised at any time prior to the expiration date of the Option or the
expiration of one year after the date of such death, whichever is the
shorter period, but only if and to the extent the Holder was entitled to
exercise the Option on the date of death. An Incentive Stock Option may be
exercised only by the person or persons to whom such Holder's rights under
the Option shall pass by the Holder's will or by the laws of descent and
distribution of the state or country of domicile at the time of death.

4. The Committee, at the time of grant or at any time
thereafter, may extend the three-month and one-year post-termination
exercise periods any length of time not later than the original expiration
date of the Option, and may increase the portion of the Option that is
exercisable, subject to such terms and conditions as the Committee may
determine.

5. To the extent that the Option of any deceased Holder or of
any Holder whose employment or service terminates is not exercised within
the applicable period, all further rights to purchase Common Stock pursuant
to such Option shall cease and terminate.

H. RIGHTS AS A SHAREHOLDER. The Holder of an Option under the Plan
shall have no rights as a shareholder with respect to the Common Stock subject
to such Option until

<PAGE>

the date of issue to the Holder of a stock certificate for such shares. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.

I. OPTIONS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS. Options may be granted under the Plan from time to time in
substitution for stock options held by individuals employed by corporations who
become Employees as a result of a merger or consolidation of the employing
corporation with the Company, or the acquisition by the Company of the assets of
the employing corporation, or the acquisition by the Company of stock of the
employing corporation with the result that such employing corporation becomes a
Subsidiary.

VIII. STOCK BONUS

A. STOCK BONUSES. The Committee may award shares of Common Stock
under the Plan as Stock Bonuses. The Committee may not require the recipient to
pay any monetary consideration other than cash necessary to satisfy any
applicable federal, state or local tax withholding requirements.

B. STOCK BONUS AGREEMENT. Shares awarded as a Stock Bonus shall be
subject to such terms, conditions and restrictions as shall be determined by the
Committee. At the time any Stock Bonus is granted under this Article VIII, the
Company and the Holder shall enter into a Stock Bonus Agreement setting forth
any terms, conditions and restrictions applicable to the Stock Bonus. The terms
and provisions of the respective Stock Bonus Agreements need not be identical.

IX. SALE OF STOCK

A. SALES OF STOCK. The Committee may sell shares of Common Stock
under the Plan for such consideration (including promissory notes and services)
as determined by the Committee, PROVIDED, that in no event shall the
consideration be less than 85 percent of the Fair Market Value of the Common
Stock at the time of issuance. The consideration to be paid for shares sold
under this Article IX to persons possessing more than 10 percent of the total

<PAGE>

combined voting power of all classes of stock of the Company or of a Subsidiary
shall not be less than 100 percent of the Fair Market Value of the Common Stock
at the time of issuance.

B. STOCK SALE AGREEMENT. Shares sold under this Article IX shall be
subject to the terms, conditions and restrictions determined by the Committee.
At the time any Award is granted under this Article IX, the Company and the
Holder shall enter into a Stock Sale Agreement setting forth the terms,
conditions and restrictions applicable to the Sale of Stock. The terms and
provisions of the respective Stock Sale Agreements need not be identical.

C. OTHER TERMS AND CONDITIONS. The Company may require any
purchaser of stock to pay to the Company in cash upon demand amounts necessary
to satisfy any applicable federal, state or local tax withholding requirements.

X. CHANGES IN CAPITAL STRUCTURE

A. If the outstanding Common Stock is hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split-up, combination of shares or dividend payable in
shares, appropriate adjustment shall be made by the Committee in the number and
kind of shares available for Awards. In addition, the Committee shall make
appropriate adjustment in the number and kind of shares as to which outstanding
Options, or portions thereof then unexercised, shall be exercisable, the
exercise price of such outstanding Options and all other matters deemed
appropriate by the Committee, so that the Holder's proportionate interest before
and after the occurrence of the event is maintained. Notwithstanding the
foregoing, the Committee shall have no obligation to effect any adjustment that
would or might result in the issuance of fractional shares, and any fractional
shares resulting from any adjustment may be disregarded or provided for in any
manner determined by the Committee. Any such adjustment made by the Committee
shall be conclusive. Any adjustment provided for in this Paragraph A of Article
X shall be subject to any required shareholder action. In the event of
dissolution of the Company or a merger, consolidation, plan of exchange or
similar transaction affecting the Company, in lieu of providing for Options as
provided above in this Paragraph A of Article X or in lieu of having the Options
continue unchanged, the Committee may, in its sole discretion,

<PAGE>

provide a 30-day period prior to such event during which Holders shall have the
right to exercise Options in whole or in part without any limitation on
exercisability and upon the expiration of such 30-day period all unexercised
Options shall immediately terminate.

B. The existence of the Plan and the Awards granted hereunder shall
not affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities senior to
or affecting Common Stock or the rights thereof, the dissolution or liquidation
of the Company, or any sale, lease, exchange or other disposition of all or any
part of its assets or business or any other corporate act or proceeding.

C. Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to Awards previously granted or the
exercise price per share, if applicable.

XI. AMENDMENT AND TERMINATION OF THE PLAN

The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Awards have not previously been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time; PROVIDED, that no change in any Award previously granted may be
made which would impair the rights of the Holder without the consent of the
Holder.

XII. MISCELLANEOUS

A. NO RIGHT TO AN AWARD. Neither the adoption of the Plan by the
Company nor any action of the Board or the Committee shall be deemed to give an
Employee, a Consultant or a Director any right to be granted an Award or any of
the rights hereunder except as may be

<PAGE>

evidenced by an Award or by an Option Agreement, Stock Bonus Agreement or Stock
Sale Agreement duly executed on behalf of the Company, and then only to the
extent and on the terms and conditions expressly set forth therein.

B. NO EMPLOYMENT RIGHTS CONFERRED. Nothing in the Plan shall (i)
confer upon any Employee any right with respect to continuation of employment
with the Company or (ii) interfere in any way with the right of the Company to
terminate the Employee's employment (or service as a Director, in accordance
with the Company's Restated Articles of Incorporation and applicable corporate
law, or service as a Consultant) at any time for any reason, with or without
cause.

C. OTHER LAWS; WITHHOLDING. The Company shall not be obligated to
issue any Common Stock pursuant to any Award granted under the Plan at any time
when the shares covered by such Award have not been registered under the
Securities Act of 1933, as amended, and such other state and federal laws, rules
or regulations as the Company or the Committee deems applicable and, in the
opinion of legal counsel for the Company, there is no exemption from the
registration requirements of such laws, rules or regulations available for the
issuance and sale of such shares. No fractional shares of Common Stock shall be
delivered, nor shall any cash be paid in lieu of fractional shares. The Company
shall have the right to deduct in connection with all Awards any taxes required
by law to be withheld and to require any payments required to enable it to
satisfy its withholding obligations. With the consent of the Committee, the
recipient of an Award may deliver shares of Common Stock to the Company to
satisfy any withholding obligation.

D. NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the
Plan shall be construed to prevent the Company from taking any corporate action
which is deemed by the Company to be appropriate or in its best interest,
whether or not such action would have an adverse effect on the Plan or any Award
granted under the Plan. No Employee, Consultant, Director, Holder, beneficiary
or other person shall have any claim against the Company as a result of any such
action.

<PAGE>

E. RESTRICTIONS ON TRANSFER.

1. An Award shall not be transferable otherwise than by will
or the laws of descent and distribution; PROVIDED, HOWEVER, that, with the
consent of the Committee, which consent may be withheld in its sole
discretion or conditioned on such requirements as the Committee shall deem
appropriate, all or any portion of a Nonqualified Stock Option may be
assigned or transferred to the optionee's immediate family (i.e., children,
grandchildren, spouse, parents and siblings), to trusts for the benefit of
the optionee's immediate family members, and pursuant to qualified domestic
relations orders. No consideration may be paid for the transfer of any
Nonqualified Stock Option, and, after any permitted transfer, the
Nonqualified Stock Option shall continue to be subject to the same terms
and conditions as were applicable to it immediately prior to its transfer,
except that: (i) subsequent transfers of transferred options shall be
prohibited except by will or the laws of descent and distribution; (ii) for
purposes of Section G of Article VII, the term "Holder" shall refer to the
original optionee; (iii) the events of termination of employment specified
in Section G of Article VII shall continue to be applied with respect to
the original optionee, following which the Nonqualified Stock Option shall
be exercisable by the transferee only to the extent, and for the periods
specified in Section G of Article VII; and (iv) the original optionee shall
remain subject to withholding taxes upon exercise of the Nonqualified Stock
Option by the transferee. Before permitting any transfer, the Committee
may require the transferee to agree in writing to be bound by all other
terms and conditions applicable to the Nonqualified Stock Option prior to
its transfer.

2. Incentive Stock Options may be exercisable during the
lifetime of the optionee only by the optionee, or by the optionee's
guardian or legal representative.

F. INFORMATION PROVIDED TO SHAREHOLDERS. At least annually, the
Company shall provide to shareholders financial statements and management's
discussion and analysis of financial condition and results of operations.

G. STOCK CERTIFICATES. The certificates representing shares awarded
under the Plan shall bear any legends required by the Committee.

<PAGE>

H. GOVERNING LAW. To the extent that federal laws (such as the Code
and the federal securities laws) do not otherwise control, the Plan shall be
construed in accordance with the laws of the state of Oregon.

I. HEADINGS. Headings contained in the Plan are for reference
purposes and shall not affect the meaning or interpretation of the Plan

EXHIBIT 10.2
OBIE MEDIA CORPORATION

AGREEMENT CONCERNING INDEMNIFICATION AND RELATED MATTERS
(DIRECTORS)

This Agreement is made as of , 1998, by and between
OBIE MEDIA CORPORATION, an Oregon corporation (the "Corporation"), and
(the "Director"), a director of the Corporation.

WHEREAS, it is essential to the Corporation to retain and attract as
directors of the Corporation the most capable persons available and persons who
have significant experience in business, corporate and financial matters; and

WHEREAS, the Corporation has identified the Director as a person
possessing the background and abilities desired by the Corporation and desires
the Director to serve as a director of the Corporation; and

WHEREAS, the substantial increase in corporate litigation may, from
time to time, subject directors to burdensome litigation, the risks of which
frequently far outweigh the advantages of serving in such capacity; and

WHEREAS, in recent times the cost of liability insurance has increased
and the availability of such insurance is, from time to time, severely limited;
and

WHEREAS, the Corporation and the Director recognize that serving as a
director of a corporation at times calls for subjective evaluations and
judgments upon which reasonable persons may differ and that, in that context, it
is anticipated and expected that directors of corporations will and do from time
to time commit actual or alleged errors or omissions in the good faith exercise
of their corporate duties and responsibilities; and

WHEREAS, it is the express policy of the Corporation to indemnify its
directors to the fullest extent permitted by law; and

WHEREAS, the Restated Articles of Incorporation of the Corporation
permit, and the Restated Bylaws of the Corporation require, indemnification of
the directors and officers of the Corporation to the fullest extent permitted by
law, including but not limited to the Oregon Business Corporation Act (the
"Act"), and the Act expressly provides that the indemnification provisions set
forth therein are not exclusive, and thereby contemplates that contracts may be
entered into between the Corporation and its directors and officers with respect
to indemnification; and

WHEREAS, the Corporation and the Director desire to articulate clearly
in contractual form their respective rights and obligations with regard to the
Director's service on behalf of the Corporation as a director and with regard to
claims for loss, liability, expense or damage which, directly or indirectly, may
arise out of or relate to such service.

<PAGE>

NOW THEREFORE, the Corporation and the Director agree as follows:

1. AGREEMENT TO SERVE.

The Director shall serve as a director of the Corporation for so long
as the Director is duly elected or until the Director tenders a resignation in
writing. This Agreement creates no obligation on either party to continue the
service of the Director for a particular term or any term.

2. DEFINITIONS.

As used in this Agreement:

(a) The term "Proceeding" shall include any threatened, pending
or completed action, suit or proceeding, whether formal or informal,
whether brought in the right of the Corporation or otherwise, and whether
of a civil, criminal, administrative or investigative nature, in which the
Director may be or may have been involved as a party, witness or otherwise,
by reason of the fact that the Director is or was a director of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether
or not serving in such capacity at the time any liability or expense is
incurred for which exculpation, indemnification or reimbursement can be
provided under this Agreement.

(b) The term "Expenses" includes, without limitation thereto,
expenses of investigations, judicial or administrative proceedings or
appeals, attorney, accountant and other professional fees and disbursements
and any expenses of establishing a right to indemnification under
Section 12 of this Agreement, but shall not include amounts paid in
settlement by the Director or the amount of judgments or fines against the
Director.

(c) References to "other enterprise" include, without
limitation, employee benefit plans; references to "fines" include, without
limitation, any excise taxes assessed on a person with respect to any
employee benefit plan; references to "serving at the request of the
Corporation" include, without limitation, any service as a director,
officer, employee or agent which imposes duties on, or involves services
by, such director, officer, employee or agent with respect to an employee
benefit plan, its participants, or its beneficiaries; and a person who
acted in good faith and in a manner such person reasonably believed to be
in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the
best interests of the Corporation" as referred to in this Agreement.

(d) References to the "Corporation" shall include, in addition
to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer or employee of

<PAGE>

such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this Agreement with respect to the
resulting or surviving corporation as such person would have with respect
to such constituent corporation if its separate existence had continued.

(e) For purposes of this Agreement, the meaning of the phrase
"to the fullest extent permitted by law" shall include, but not be limited
to:

(i) to the fullest extent authorized or permitted by any
amendments to or replacements of the Act adopted after the date of
this Agreement that increase the extent to which a corporation may
indemnify or exculpate its directors; and

(ii) to the fullest extent permitted by the provision of
the Act that authorizes or contemplates additional indemnification by
agreement, or the corresponding provision of any amendment to or
replacement of the Act.

3. LIMITATION OF LIABILITY.

(a) To the fullest extent permitted by law, the Director shall
have no monetary liability of any kind or nature whatsoever in respect of
the Director's errors or omissions (or alleged errors or omissions) in
serving the Corporation or any of its subsidiaries, their respective
shareholders or any other enterprise at the request of the Corporation, so
long as such errors or omissions (or alleged errors or omissions), if any,
are not shown by clear and convincing evidence to have involved:

(i) any breach of the Director's duty of loyalty to such
corporations, shareholders or enterprises;

(ii) any act or omission not in good faith or which
involved intentional misconduct or a knowing violation of law;

(iii) any unlawful distribution under Section 60.367 of the
Act (including, without limitation, dividends, stock repurchases and
stock redemptions);

(iv) any transaction from which the Director derived an
improper personal benefit; or

(v) profits made from the purchase and sale by the
Director of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provision of any state statutory law or common law.

<PAGE>

(b) Without limiting the generality of subparagraph (a) above
and to the fullest extent permitted by law, the Director shall have no
personal liability to the Corporation or any of its subsidiaries, their
respective shareholders or any other person claiming derivatively through
the Corporation, regardless of the theory or principle under which such
liability may be asserted, for:

(i) punitive, exemplary or consequential damages;

(ii) treble or other damages computed based upon any
multiple of damages actually and directly proved to have been
sustained;

(iii) fees of attorneys, accountants, expert witnesses or
professional consultants; or

(iv) civil fines or penalties of any kind or nature
whatsoever.

4. INDEMNITY IN THIRD-PARTY PROCEEDINGS.

The Corporation shall indemnify the Director in accordance with the
provisions of this Section 4 if the Director was or is a party to, or is
threatened to be made a party to, any Proceeding (other than a Proceeding by or
in the right of the Corporation to procure a judgment in its favor), against all
Expenses, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by the Director in connection with such Proceeding if the
Director acted in good faith and in a manner the Director reasonably believed
was in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, the Director, in addition, had no
reasonable cause to believe that the Director's conduct was unlawful. However,
the Director shall not be entitled to indemnification under this Section 4 in
connection with any Proceeding charging improper personal benefit to the
Director in which the Director is adjudged liable on the basis that personal
benefit was improperly received by the Director unless and only to the extent
that the court conducting such Proceeding or any other court of competent
jurisdiction determines upon application that, despite such adjudication of
liability, the Director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances of the case.

5. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION.

The Corporation shall indemnify the Director in accordance with the
provisions of this Section 5 if the Director was or is a party to, or is
threatened to be made a party to, any Proceeding by or in the right of the
Corporation to procure a judgment in its favor, against all Expenses actually
and reasonably incurred by the Director in connection with the defense or
settlement of such Proceeding if the Director acted in good faith and in a
manner the Director reasonably believed was in or not opposed to the best
interests of the Corporation. However, the Director shall not be entitled to
indemnification under this Section 5 in connection with any Proceeding in which
the Director has been adjudged liable to the Corporation unless and only to the
extent that the court conducting such Proceeding or any other court of competent
jurisdiction determines upon application that, despite such adjudication of
liability, the Director is fairly and

<PAGE>

reasonably entitled to indemnification for such Expenses in view of all the
relevant circumstances of the case.

6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY.

Notwithstanding any other provisions of this Agreement other than
Section 8, to the extent that the Director has been successful, on the merits or
otherwise, in defense of any Proceeding or in defense of any claim, issue or
matter therein, including the dismissal of an action without prejudice, the
Corporation shall indemnify the Director against all Expenses actually and
reasonably incurred in connection therewith.

7. ADDITIONAL INDEMNIFICATION.

Notwithstanding any limitation in Sections 4, 5 or 6, the Corporation
shall indemnify the Director to the fullest extent permitted by law with respect
to any Proceeding (including a Proceeding by or in the right of the Corporation
to procure a judgment in its favor), against all Expenses, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by the Director in
connection with such Proceeding.

8. EXCLUSIONS.

Notwithstanding any provision in this Agreement, the Corporation shall
not be obligated under this Agreement to make any indemnification in connection
with any claim made against the Director:

(a) for which payment is made to or required to be made to or on
behalf of the Director under any insurance policy, except with respect to
any deductible amount, self-insured retention or any excess amount to which
the Director is entitled under this Agreement beyond the amount of payment
under such insurance policy;

(b) if a court having jurisdiction in the matter finally
determines that such indemnification is not lawful under any applicable
statute or public policy;

(c) in connection with any Proceeding (or part of any
Proceeding) initiated by the Director, or any Proceeding by the Director
against the Corporation or its directors, officers, employees or other
persons entitled to be indemnified by the Corporation, unless:

(i) the Corporation is expressly required by law to make
the indemnification;

(ii) the Proceeding was authorized by the Board of
Directors of the Corporation; or

<PAGE>

(iii) the Director initiated the Proceeding pursuant to
Section 12 of this Agreement and the Director is successful in whole
or in part in such Proceeding; or

(d) for an accounting of profits made from the purchase and sale
by the Director of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provision of any state statutory law or common law.

9. ADVANCES FOR EXPENSES.

The Corporation shall pay the Expenses incurred by the Director in any
Proceeding (other than a Proceeding brought for an accounting of profits made
from the purchase and sale by the Director of securities of the Corporation
within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provision of any state statutory law or common law) in
advance of the final disposition of the Proceeding at the written request of the
Director, if the Director:

(a) furnishes the Corporation a written affirmation of the
Director's good faith belief that the Director is entitled to be
indemnified under this Agreement; and

(b) furnishes the Corporation a written undertaking to repay the
advance to the extent that it is ultimately determined that the Director is
not entitled to be indemnified by the Corporation. Such undertaking shall
be an unlimited general obligation of the Director but need not be secured.

Advances pursuant to this Section 9 shall be made no later than 10
days after receipt by the Corporation of the affirmation and undertaking
described in subparagraphs (a) and (b) above, and shall be made without regard
to the Director's ability to repay the amount advanced and without regard to the
Director's ultimate entitlement to indemnification under this Agreement. The
Corporation may establish a trust, escrow account or other secured funding
source for the payment of advances made and to be made pursuant to this
Section 9 or of other liability incurred by the Director in connection with any
Proceeding.

10. NONEXCLUSIVITY AND CONTINUITY OF RIGHTS.

The indemnification, advancement of Expenses, and exculpation from
liability provided by this Agreement shall not be deemed exclusive of any other
rights to which the Director may be entitled under any other agreement, articles
of incorporation, bylaws, vote of shareholders or directors, the Act, or
otherwise, both as to action in the Director's official capacity and as to
action in another capacity while holding such office or occupying such position.
The indemnification under this Agreement shall continue as to the Director even
though the Director may have ceased to be a director of the Corporation or a
director, officer, employee or agent of an enterprise related to the Corporation
and shall inure to the benefit of the heirs, executors, administrators and
personal representatives of the Director.

<PAGE>

11. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.

Any indemnification under Sections 4, 5, 6 or 7 shall be made no later
than 45 days after receipt of the written request of the Director, unless a
determination that the Director is not entitled to indemnification under this
Agreement is made within such 45-day period by:

(a) the Board of Directors by majority vote of a quorum
consisting of directors not at the time parties to the applicable
Proceeding;

(b) if such quorum cannot be obtained, majority vote of a
committee duly designated by the Board of Directors consisting solely of
two or more directors not at the time parties to the proceeding;

(c) special legal counsel selected by the Board of Directors or
its committee in the manner prescribed in subparagraph (a) or (b) above or,
if a quorum of the Board of Directors cannot be obtained under subparagraph
(a) above and a committee cannot be designated under subparagraph (b)
above, the special legal counsel shall be selected by majority vote of the
full Board of Directors, including directors who are parties to the
proceeding; or

(d) the shareholders of the Corporation.

12. ENFORCEMENT.

The Director may enforce any right to indemnification, advances or
exculpation provided by this Agreement in any court of competent jurisdiction
if:

(a) the Corporation denies the claim for indemnification,
advances or exculpation, in whole or in part; or

(b) the Corporation does not dispose of such claim within the
time period required by this Agreement.

It shall be a defense to any such enforcement action (other than an action
brought to enforce a claim for advancement of Expenses pursuant to, and in
compliance with, Section 9 of this Agreement) that the Director is not entitled
to indemnification or exculpation under this Agreement. However, except as
provided in Section 13 of this Agreement, the Corporation shall not assert any
defense to an action brought to enforce a claim for advancement of Expenses
pursuant to Section 9 of this Agreement if the Director has tendered to the
Corporation the affirmation and undertaking required thereunder. The burden of
proving by clear and convincing evidence that indemnification or exculpation is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or independent legal counsel) to
have made a determination prior to the commencement of such action that
indemnification or exculpation is proper in the circumstances because the
Director has met the applicable standard of conduct nor an actual

<PAGE>

determination by the Corporation (including its Board of Directors or
independent legal counsel) that indemnification or exculpation is improper
because the Director has not met such applicable standard of conduct, shall be
asserted as a defense to the action or create a presumption that the Director is
not entitled to indemnification or exculpation under this Agreement or
otherwise. The Director's expenses incurred in connection with successfully
establishing the Director's right to indemnification, advances or exculpation,
in whole or in part, in any Proceeding shall also be paid or reimbursed by the
Corporation.

The termination of any Proceeding by judgment, order, settlement,
conviction or upon a plea of NOLO CONTENDERE, or its equivalent, shall not, of
itself, create a presumption that:

(i) the Director is not entitled to indemnification under
Sections 4, 5 or 7 of this Agreement because the Director did not act in
good faith and in a manner which the Director reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
the Director's conduct was unlawful; or

(ii) the Director is not entitled to exculpation under
Section 3 of this Agreement.

13. NOTIFICATION AND DEFENSE OF CLAIM.

As a condition precedent to indemnification under this Agreement, not
later than 30 days after receipt by the Director of notice of the commencement
of any Proceeding the Director shall, if a claim in respect of the Proceeding is
to be made against the Corporation under this Agreement, notify the Corporation
in writing of the commencement of the Proceeding. The failure to properly
notify the Corporation shall not relieve the Corporation from any liability
which it may have to the Director: (a) unless the Corporation shall be shown to
have suffered actual damages as a result of such failure; or (b) otherwise than
under this Agreement. With respect to any Proceeding as to which the Director
so notifies the Corporation of the commencement:

(a) The Corporation shall be entitled to participate in the
Proceeding at its own expense.

(b) Except as otherwise provided in this Section 13, the
Corporation may, at its option and jointly with any other indemnifying
party similarly notified and electing to assume such defense, assume the
defense of the Proceeding, with legal counsel reasonably satisfactory to
the Director. The Director shall have the right to use separate legal
counsel in the Proceeding, but the Corporation shall not be liable to the
Director under this Agreement, including Section 9 above, for the fees and
expenses of separate legal counsel incurred after notice from the
Corporation of its assumption of the defense, unless (i) the Director
reasonably concludes that there may be a conflict of interest between the
Corporation and the Director in the conduct of the defense of the
Proceeding, or (ii) the Corporation does not use legal counsel to assume
the defense of such Proceeding. The Corporation shall not be entitled to
assume the defense of any Proceeding brought by or on

<PAGE>

behalf of the Corporation or as to which the Director has made the
conclusion provided for in (i) above.

(c) If two or more persons who may be entitled to
indemnification from the Corporation, including the Director, are parties
to any Proceeding, the Corporation may require the Director to use the same
legal counsel as the other parties. The Director shall have the right to
use separate legal counsel in the Proceeding, but the Corporation shall not
be liable to the Director under this Agreement, including Section 9 above,
for the fees and expenses of separate legal counsel incurred after notice
from the Corporation of the requirement to use the same legal counsel as
the other parties, unless the Director reasonably concludes that there may
be a conflict of interest between the Director and any of the other parties
required by the Corporation to be represented by the same legal counsel.

(d) The Corporation shall not be liable to indemnify the
Director under this Agreement for any amounts paid in settlement of any
Proceeding effected without its written consent, which shall not be
unreasonably withheld. The Director shall permit the Corporation to settle
any Proceeding that the Corporation assumes the defense of, except that the
Corporation shall not settle any action or claim in any manner that would
impose any penalty, limitation, disqualification or disenfranchisement on
the Director without the Director's written consent.

14. PARTIAL INDEMNIFICATION.

If the Director is entitled under any provision of this Agreement to
indemnification by the Corporation for some or a portion of the Expenses,
judgments, fines or amounts paid in settlement, actually and reasonably incurred
by the Director in connection with such Proceeding, but not, however, for the
total amount thereof, the Corporation shall nevertheless indemnify the Director
for the portion of such Expenses, judgments, fines or amounts paid in settlement
to which the Director is entitled.

15. INTERPRETATION AND SCOPE OF AGREEMENT.

Nothing in this Agreement shall be interpreted to constitute a
contract of service for any particular period or pursuant to any particular
terms or conditions. The Corporation retains the right, in its discretion, to
terminate the service relationship of the Director, with or without cause, or to
alter the terms and conditions of the Director's service all without prejudice
to any rights of the Director which may have accrued or vested prior to such
action by the Corporation.

16. SEVERABILITY.

If this Agreement or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, the remainder of this Agreement
shall continue to be valid and the Corporation shall nevertheless indemnify the
Director as to Expenses, judgments, fines and amounts paid in settlement with
respect to any Proceeding to the fullest extent permitted by any applicable
portion of this Agreement that shall not have been invalidated.

<PAGE>

17. SUBROGATION.

In the event of payment under this Agreement, the Corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the
Director. The Director shall execute all documents required and shall do all
acts that may be necessary to secure such rights and to enable the Corporation
effectively to bring suit to enforce such rights.

18. NOTICES.

All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given upon
delivery by hand to the party to whom the notice or other communication shall
have been directed, or on the third business day after the date on which it is
mailed by United States mail with first-class postage prepaid, addressed as
follows:

(a) If to the Director, to the address indicated on the
signature page of this Agreement.

(b) If to the Corporation, to

Obie Media Corporation
4211 West 11th Street
Eugene, Oregon 97402
Attention: Chairman

With a copy to:

Kenneth D. Stephens
Tonkon Torp LLP
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, Oregon 97204-2099

or to any other address as either party may designate to the other in writing.

19. COUNTERPARTS.

This Agreement may be executed in any number of counterparts, each of
which shall constitute the original.

20. APPLICABLE LAW.

This Agreement shall be governed by and construed in accordance with
the internal laws of the state of Oregon without regard to the conflict of laws
provisions thereof.

<PAGE>

21. SUCCESSORS AND ASSIGNS.

This Agreement shall be binding upon the Corporation and its
successors and assigns.

22. ATTORNEY FEES.

If any suit or action (including, without limitation, any bankruptcy
proceeding) is instituted to enforce or interpret any provision of this
Agreement, the prevailing party shall be entitled to recover from the party not
prevailing, in addition to other relief that may be provided by law, an amount
determined reasonable as attorney fees at trial and on any appeal of such suit
or action.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.

OBIE MEDIA CORPORATION DIRECTOR

By:
------------------------------------- -----------------------------------
Title:
---------------------------------- -----------------------------------
Address

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

EXHIBIT 10.3
OBIE MEDIA CORPORATION

AGREEMENT CONCERNING INDEMNIFICATION AND RELATED MATTERS
(OFFICERS)

This Agreement is made as of , 1998, by and between
OBIE MEDIA CORPORATION, an Oregon corporation (the "Corporation"), and
(the "Officer"), an officer of the Corporation.

WHEREAS, it is essential to the Corporation to retain and attract as
officers of the Corporation the most capable persons available and persons who
have significant experience in business, corporate and financial matters; and

WHEREAS, the Corporation has identified the Officer as a person
possessing the background and abilities desired by the Corporation and desires
the Officer to serve as an officer of the Corporation; and

WHEREAS, the substantial increase in corporate litigation may, from
time to time, subject corporate officers to burdensome litigation, the risks of
which frequently far outweigh the advantages of serving in such capacity; and

WHEREAS, in recent times the cost of liability insurance has increased
and the availability of such insurance is, from time to time, severely limited;
and

WHEREAS, the Corporation and the Officer recognize that serving as an
officer of a corporation at times calls for subjective evaluations and judgments
upon which reasonable persons may differ and that, in that context, it is
anticipated and expected that officers of corporations will and do from time to
time commit actual or alleged errors or omissions in the good faith exercise of
their corporate duties and responsibilities; and

WHEREAS, it is the express policy of the Corporation to indemnify its
officers to the fullest extent permitted by law; and

WHEREAS, the Restated Articles of Incorporation of the Corporation
permit, and the Restated Bylaws of the Corporation require, indemnification of
the officers of the Corporation to the fullest extent permitted by law,
including but not limited to the Oregon Business Corporation Act (the "Act"),
and the Act expressly provides that the indemnification provisions set forth
therein are not exclusive, and thereby contemplates that contracts may be
entered into between the Corporation and its officers with respect to
indemnification; and

WHEREAS, the Corporation and the Officer desire to articulate clearly
in contractual form their respective rights and obligations with regard to the
Officer's service on behalf of the Corporation as an officer and with regard to
claims for loss, liability, expense or damage which, directly or indirectly, may
arise out of or relate to such service.

<PAGE>

NOW THEREFORE, the Corporation and the Officer agree as follows:

1. AGREEMENT TO SERVE.

The Officer shall serve as an officer of the Corporation for so long
as the Officer is duly appoelected or until the Officer tenders a resignation
in writing. This Agreement creates no obligation on either party to continue
the service of the Officer for a particular term or any term.

2. DEFINITIONS.

As used in this Agreement:

(a) The term "Proceeding" shall include any threatened,
pending or completed action, suit or proceeding, whether formal or
informal, whether brought by or in the right of the Corporation or
otherwise, and whether of a civil, criminal, administrative or
investigative nature, in which the Officer may be or may have been involved
as a party, witness or otherwise, by reason of the fact that the Officer is
or was an officer of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, whether or not serving in such capacity at the time any
liability or expense is incurred for which exculpation, indemnification or
reimbursement can be provided under this Agreement.

(b) The term "Expenses" includes, without limitation thereto,
expenses of investigations, judicial or administrative proceedings or
appeals, attorney, accountant and other professional fees and disbursements
and any expenses of establishing a right to indemnification under
Section 12 of this Agreement, but shall not include amounts paid in
settlement by the Officer or the amount of judgments or fines against the
Officer.

<PAGE>

(e) For purposes of this Agreement, the meaning of the phrase
"to the fullest extent permitted by law" shall include, but not be limited
to:

(i) to the fullest extent authorized or permitted by
any amendments to or replacements of the Act adopted after the date of
this Agreement that increase the extent to which a corporation may
indemnify or exculpate its officers or directors; and

3. LIMITATION OF LIABILITY.

(a) To the fullest extent permitted by law, the Officer shall
have no monetary liability of any kind or nature whatsoever in respect of
the Officer's errors or omissions (or alleged errors or omissions) in
serving the Corporation or any of its subsidiaries, their respective
shareholders or any other enterprise at the request of the Corporation, so
long as such errors or omissions (or alleged errors or omissions), if any,
are not shown by clear and convincing evidence to have involved:

(i) any breach of the Officer's duty of loyalty to such
corporations, shareholders or enterprises;

(ii) any act or omission not in good faith or which
involved intentional misconduct or a knowing violation of law;

(iii) any unlawful distribution under Section 60.367 the
Act (including, without limitation, dividends, stock repurchases and
stock redemptions);

(iv) any transaction from which the Officer derived an
improper personal benefit; or

(v) profits made from the purchase and sale by the
Officer of securities of the Corporation within the meaning of Section
16(b) of the Securities Exchange Act of 1934, as amended, or similar
provision of any state statutory law or common law.

<PAGE>

(b) Without limiting the generality of subparagraph (a) above
and to the fullest extent permitted by law, the Officer shall have no
personal liability to the Corporation or any of its subsidiaries, their
respective shareholders or any other person claiming derivatively through
the Corporation, regardless of the theory or principle under which such
liability may be asserted, for:

(i) punitive, exemplary or consequential damages;

(ii) treble or other damages computed based upon any
multiple of damages actually and directly proved to have been
sustained;

(iii) fees of attorneys, accountants, expert witnesses or
professional consultants; or

(iv) civil fines or penalties of any kind or nature
whatsoever.

4. INDEMNITY IN THIRD-PARTY PROCEEDINGS.

The Corporation shall indemnify the Officer in accordance with the
provisions of this Section 4 if the Officer was or is a party to, or is
threatened to be made a party to, any Proceeding (other than a Proceeding by or
in the right of the Corporation to procure a judgment in its favor), against all
Expenses, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by the Officer in connection with such Proceeding if the
Officer acted in good faith and in a manner the Officer reasonably believed was
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, the Officer, in addition, had no reasonable
cause to believe that the Officer's conduct was unlawful. However, the Officer
shall not be entitled to indemnification under this Section 4 in connection with
any Proceeding charging improper personal benefit to the Officer in which the
Officer is adjudged liable on the basis that personal benefit was improperly
received by the Officer unless and only to the extent that the court conducting
such Proceeding or any other court of competent jurisdiction determines upon
application that, despite such adjudication of liability, the Officer is fairly
and reasonably entitled to indemnification in view of all the relevant
circumstances of the case.

5. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION.

The Corporation shall indemnify the Officer in accordance with the
provisions of this Section 5 if the Officer was or is a party to, or is
threatened to be made a party to, any Proceeding by or in the right of the
Corporation to procure a judgment in its favor, against all Expenses actually
and reasonably incurred by the Officer in connection with the defense or
settlement of such Proceeding if the Officer acted in good faith and in a manner
the Officer reasonably believed was in or not opposed to the best interests of
the Corporation. However, the Officer shall not be entitled to indemnification
under this Section 5 in connection with any Proceeding in which the Officer has
been adjudged liable to the Corporation unless and only to the extent that the
court conducting such Proceeding or any other court of competent jurisdiction
determines upon application that, despite such adjudication of liability, the
Officer is fairly and

<PAGE>

reasonably entitled to indemnification for such Expenses in view of all the
relevant circumstances of the case.

6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY.

Notwithstanding any other provisions of this Agreement other than
Section 8, to the extent that the Officer has been successful, on the merits or
otherwise, in defense of any Proceeding or in defense of any claim, issue or
matter therein, including the dismissal of an action without prejudice, the
Corporation shall indemnify the Officer against all Expenses actually and
reasonably incurred in connection therewith.

7. ADDITIONAL INDEMNIFICATION.

Notwithstanding any limitation in Sections 4, 5 or 6, the Corporation
shall indemnify the Officer to the fullest extent permitted by law with respect
to any Proceeding (including a Proceeding by or in the right of the Corporation
to procure a judgment in its favor), against all Expenses, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by the Officer in
connection with such Proceeding.

8. EXCLUSIONS.

Notwithstanding any provision in this Agreement, the Corporation shall
not be obligated under this Agreement to make any indemnification in connection
with any claim made against the Officer:

(a) for which payment is made to or required to be made to or
on behalf of the Officer under any insurance policy, except with respect to
any deductible amount, self-insured retention or any excess amount to which
the Officer is entitled under this Agreement beyond the amount of payment
under such insurance policy;

(b) if a court having jurisdiction in the matter finally
determines that such indemnification is not lawful under any applicable
statute or public policy;

(c) in connection with any Proceeding (or part of any
Proceeding) initiated by the Officer, or any Proceeding by the Officer
against the Corporation or its directors, officers, employees or other
persons entitled to be indemnified by the Corporation, unless:

(i) the Corporation is expressly required by law to
make the indemnification;

(ii) the Proceeding was authorized by the Board of
Directors of the Corporation; or

<PAGE>

(iii) the Officer initiated the Proceeding pursuant to
Section 12 of this Agreement and the Officer is successful in whole or
in part in such Proceeding; or

(d) for an accounting of profits made from the purchase and
sale by the Officer of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provision of any state statutory law or common law.

9. ADVANCES FOR EXPENSES.

The Corporation shall pay the Expenses incurred by the Officer in any
Proceeding (other than a Proceeding brought for an accounting of profits made
from the purchase and sale by the Officer of securities of the Corporation
within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provision of any state statutory law or common law) in
advance of the final disposition of the Proceeding at the written request of the
Officer, if the Officer:

(a) furnishes the Corporation a written affirmation of the
Officer's good faith belief that the Officer is entitled to be indemnified
under this Agreement; and

(b) furnishes the Corporation a written undertaking to repay
the advance to the extent that it is ultimately determined that the Officer
is not entitled to be indemnified by the Corporation. Such undertaking
shall be an unlimited general obligation of the Officer but need not be
secured.

Advances pursuant to this Section 9 shall be made no later than 10
days after receipt by the Corporation of the affirmation and undertaking
described in subparagraphs (a) and (b) above, and shall be made without regard
to the Officer's ability to repay the amount advanced and without regard to the
Officer's ultimate entitlement to indemnification under this Agreement. The
Corporation may establish a trust, escrow account or other secured funding
source for the payment of advances made and to be made pursuant to this
Section 9 or of other liability incurred by the Officer in connection with any
Proceeding.

10. NONEXCLUSIVITY AND CONTINUITY OF RIGHTS.

The indemnification, advancement of Expenses, and exculpation from
liability provided by this Agreement shall not be deemed exclusive of any other
rights to which the Officer may be entitled under any other agreement, articles
of incorporation, bylaws, vote of shareholders or directors, the Act, or
otherwise, both as to action in the Officer's official capacity and as to action
in another capacity while holding such office or occupying such position. The
indemnification under this Agreement shall continue as to the Officer even
though the Officer may have ceased to be an officer of the Corporation or a
director, officer, employee or agent of an enterprise related to the Corporation
and shall inure to the benefit of the heirs, executors, administrators and
personal representatives of the Officer.

<PAGE>

11. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.

Any indemnification under Sections 4, 5, 6 or 7 shall be made no later
than 45 days after receipt of the written request of the Officer, unless a
determination that the Officer is not entitled to indemnification under this
Agreement is made within such 45-day period by:

(a) the Board of Directors by majority vote of a quorum
consisting of directors not at the time parties to the applicable
Proceeding;

(b) if such quorum cannot be obtained, majority vote of a
committee duly designated by the Board of Directors consisting solely of
two or more directors not at the time parties to the proceeding;

(c) special legal counsel selected by the Board of
Directors or its committee in the manner prescribed in subparagraph
(a) or (b) above or, if a quorum of the Board of Directors cannot be
obtained under subparagraph (a) above and a committee cannot be
designated under subparagraph (b) above, the special legal counsel
shall be selected by majority vote of the full Board of Directors,
including directors who are parties to the proceeding; or

(d) the shareholders of the Corporation.

12. ENFORCEMENT.

The Officer may enforce any right to indemnification, advances or
exculpation provided by this Agreement in any court of competent jurisdiction
if:

(a) the Corporation denies the claim for indemnification,
advances or exculpation, in whole or in part; or

(b) the Corporation does not dispose of such claim within the
time period required by this Agreement.

It shall be a defense to any such enforcement action (other than an action
brought to enforce a claim for advancement of Expenses pursuant to, and in
compliance with, Section 9 of this Agreement) that the Officer is not entitled
to indemnification or exculpation under this Agreement. However, except as
provided in Section 13 of this Agreement, the Corporation shall not assert any
defense to an action brought to enforce a claim for advancement of Expenses
pursuant to Section 9 of this Agreement if the Officer has tendered to the
Corporation the affirmation and undertaking required thereunder. The burden of
proving by clear and convincing evidence that indemnification or exculpation is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or independent legal counsel) to
have made a determination prior to the commencement of such action that
indemnification or exculpation is proper in the circumstances because the
Officer has met the applicable standard of conduct nor an actual

<PAGE>

determination by the Corporation (including its Board of Directors or
independent legal counsel) that indemnification or exculpation is improper
because the Officer has not met such applicable standard of conduct, shall be
asserted as a defense to the action or create a presumption that the Officer is
not entitled to indemnification or exculpation under this Agreement or
otherwise. The Officer's expenses incurred in connection with successfully
establishing the Officer's right to indemnification, advances or exculpation, in
whole or in part, in any Proceeding shall also be paid or reimbursed by the
Corporation.

The termination of any Proceeding by judgment, order, settlement,
conviction or upon a plea of NOLO CONTENDERE, or its equivalent, shall not, of
itself, create a presumption that:

(i) the Officer is not entitled to indemnification under
Sections 4, 5 or 7 of this Agreement because the Officer did not act in
good faith and in a manner which the Officer reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
the Officer's conduct was unlawful; or

(ii) the Officer is not entitled to exculpation under Section 3
of this Agreement.

13. NOTIFICATION AND DEFENSE OF CLAIM.

As a condition precedent to indemnification under this Agreement, not
later than 30 days after receipt by the Officer of notice of the commencement of
any Proceeding the Officer shall, if a claim in respect of the Proceeding is to
be made against the Corporation under this Agreement, notify the Corporation in
writing of the commencement of the Proceeding. The failure to properly notify
the Corporation shall not relieve the Corporation from any liability which it
may have to the Officer: (a) unless the Corporation shall be shown to have
suffered actual damages as a result of such failure; or (b) otherwise than under
this Agreement. With respect to any Proceeding as to which the Officer so
notifies the Corporation of the commencement:

(a) The Corporation shall be entitled to participate in the
Proceeding at its own expense.

(b) Except as otherwise provided in this Section 13, the
Corporation may, at its option and jointly with any other indemnifying
party similarly notified and electing to assume such defense, assume the
defense of the Proceeding, with legal counsel reasonably satisfactory to
the Officer. The Officer shall have the right to use separate legal
counsel in the Proceeding, but the Corporation shall not be liable to the
Officer under this Agreement, including Section 9 above, for the fees and
expenses of separate legal counsel incurred after notice from the
Corporation of its assumption of the defense, unless (i) the Officer
reasonably concludes that there may be a conflict of interest between the
Corporation and the Officer in the conduct of the defense of the
Proceeding, or (ii) the Corporation does not use legal counsel to assume
the defense of such Proceeding. The Corporation shall not be entitled to
assume the defense of any Proceeding brought by or on

<PAGE>

behalf of the Corporation or as to which the Officer has made the
conclusion provided for in (i) above.

(c) If two or more persons who may be entitled to
indemnification from the Corporation, including the Officer, are parties to
any Proceeding, the Corporation may require the Officer to use the same
legal counsel as the other parties. The Officer shall have the right to
use separate legal counsel in the Proceeding, but the Corporation shall not
be liable to the Officer under this Agreement, including Section 9 above,
for the fees and expenses of separate legal counsel incurred after notice
from the Corporation of the requirement to use the same legal counsel as
the other parties, unless the Officer reasonably concludes that there may
be a conflict of interest between the Officer and any of the other parties
required by the Corporation to be represented by the same legal counsel.

(d) The Corporation shall not be liable to indemnify the
Officer under this Agreement for any amounts paid in settlement of any
Proceeding effected without its written consent, which shall not be
unreasonably withheld. The Officer shall permit the Corporation to settle
any Proceeding that the Corporation assumes the defense of, except that the
Corporation shall not settle any action or claim in any manner that would
impose any penalty, limitation, disqualification or disenfranchisement on
the Officer without the Officer's written consent.

14. PARTIAL INDEMNIFICATION.

If the Officer is entitled under any provision of this Agreement to
indemnification by the Corporation for some or a portion of the Expenses,
judgments, fines or amounts paid in settlement, actually and reasonably incurred
by the Officer in connection with such Proceeding, but not, however, for the
total amount thereof, the Corporation shall nevertheless indemnify the Officer
for the portion of such Expenses, judgments, fines or amounts paid in settlement
to which the Officer is entitled.

15. INTERPRETATION AND SCOPE OF AGREEMENT.

Nothing in this Agreement shall be interpreted to constitute a
contract of service for any particular period or pursuant to any particular
terms or conditions. The Corporation retains the right, in its discretion, to
terminate the service relationship of the Officer, with or without cause, or to
alter the terms and conditions of the Officer's service all without prejudice to
any rights of the Officer which may have accrued or vested prior to such action
by the Corporation.

16. SEVERABILITY.

If this Agreement or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, the remainder of this Agreement
shall continue to be valid and the Corporation shall nevertheless indemnify the
Officer as to Expenses, judgments, fines and amounts paid in settlement with
respect to any Proceeding to the fullest extent permitted by any applicable
portion of this Agreement that shall not have been invalidated.

<PAGE>

17. SUBROGATION.

In the event of payment under this Agreement, the Corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the
Officer. The Officer shall execute all documents required and shall do all acts
that may be necessary to secure such rights and to enable the Corporation
effectively to bring suit to enforce such rights.

18. NOTICES.

(a) If to the Officer, to the address indicated on the
signature page of this Agreement.

(b) If to the Corporation, to:

Obie Media Corporation
4211 West 11th Street
Eugene, Oregon 97402

With a copy to:

Kenneth D. Stephens
Tonkon Torp LLP
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, Oregon 97204-2099

or to any other address as either party may designate to the other in writing.

19. COUNTERPARTS.

This Agreement may be executed in any number of counterparts, each of
which shall constitute the original.

20. APPLICABLE LAW.

This Agreement shall be governed by and construed in accordance with
the internal laws of the state of Oregon without regard to the conflict of laws
provisions thereof.

<PAGE>

21. SUCCESSORS AND ASSIGNS.

This Agreement shall be binding upon the Corporation and its
successors and assigns.

22. ATTORNEY FEES.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.

OBIE MEDIA CORPORATION OFFICER:

By:
------------------------------------- -----------------------------------
Title:
---------------------------------- -----------------------------------
Address

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

EXHIBIT 10.6

RESTATED AND AMENDED
LOAN AGREEMENT

AMONG

OBIE MEDIA CORPORATION,

OBIE MEDIA LTD.,

PHILBIN & COINE, INC.

AND

U.S. BANK NATIONAL ASSOCIATION,
FORMERLY KNOWN AS UNITED STATES NATIONAL BANK OF OREGON

HERSHNER, HUNTER, ANDREWS, NEILL & SMITH, LLP

LAW OFFICES
180 EAST 11TH AVENUE
P.O. BOX 1475
EUGENE, OREGON 97440
FAX (541) 344-2025
TELEPHONE (541) 686-8511

<PAGE>

TABLE OF CONTENTS

PAGE

1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

2. THE REVOLVING LOAN. . . . . . . . . . . . . . . . . . . . . . . . . .7
2.1. MAXIMUM AMOUNT . . . . . . . . . . . . . . . . . . . . . . . .7
2.2. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . .7
2.3. REQUESTS FOR ADVANCES. . . . . . . . . . . . . . . . . . . . .8
2.4. REPRESENTATION AND WARRANTY OF CREDIT AVAILABILITY . . . . . .8
2.5. REVOLVING NOTE . . . . . . . . . . . . . . . . . . . . . . . .8
2.6. INTEREST RATE AND PAYMENT OF INTEREST. . . . . . . . . . . . .8
2.7. PAYMENT OF PRINCIPAL . . . . . . . . . . . . . . . . . . . . .9
2.8. REVIEW DATE. . . . . . . . . . . . . . . . . . . . . . . . . .9
2.9. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

3. TERM LOAN A . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.1. AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.2. TERM NOTE A. . . . . . . . . . . . . . . . . . . . . . . . . .9
3.3. PRIME AND/OR LIBOR BORROWING RATES . . . . . . . . . . . . . .9
3.4. COMPUTATION OF INTEREST. . . . . . . . . . . . . . . . . . . 10
3.5. PREPAYMENT PREMIUM . . . . . . . . . . . . . . . . . . . . . 10
3.6. REVOLVING TERM LOAN. . . . . . . . . . . . . . . . . . . . . 10

4. 1998/1999 CONSTRUCTION LOAN . . . . . . . . . . . . . . . . . . . . 11
4.1. MAXIMUM AMOUNT . . . . . . . . . . . . . . . . . . . . . . . 11
4.2. REQUESTS FOR ADVANCES. . . . . . . . . . . . . . . . . . . . 11
4.3. CONDITIONS OF ADVANCES . . . . . . . . . . . . . . . . . . . 11
4.4. REPRESENTATION AND WARRANTY. . . . . . . . . . . . . . . . . 12
4.5. CONSTRUCTION NOTE. . . . . . . . . . . . . . . . . . . . . . 12
4.6. INTEREST RATE AND PAYMENT OF INTEREST. . . . . . . . . . . . 12
4.7. PAYMENT OF PRINCIPAL . . . . . . . . . . . . . . . . . . . . 13
4.8. PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9. FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5. CONVERSION TO TERM LOAN . . . . . . . . . . . . . . . . . . . . . . 13
5.1. NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2. NEW CONSTRUCTION NOTE. . . . . . . . . . . . . . . . . . . . 13
5.3. INTEREST RATE ELECTION . . . . . . . . . . . . . . . . . . . 13
5.4. FIXED RATE . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5. PRIME AND/OR LIBOR BORROWING RATES . . . . . . . . . . . . . 14
5.6. COMPUTATION OF INTEREST. . . . . . . . . . . . . . . . . . . 15
5.7. PREPAYMENT PREMIUM . . . . . . . . . . . . . . . . . . . . . 15

Page i-RESTATED AND AMENDED LOAN AGREEMENT
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

PAGE

6. MO PARTNERS LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1. AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2. MO PARTNERS NOTE . . . . . . . . . . . . . . . . . . . . . . 16
6.3. INTEREST RATE AND PAYMENT OF INTEREST. . . . . . . . . . . . 16
6.4. COMPUTATION OF INTEREST. . . . . . . . . . . . . . . . . . . 17
6.5. PREPAYMENT PREMIUM . . . . . . . . . . . . . . . . . . . . . 17
6.6. FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

7. BRIDGE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1. MAXIMUM AMOUNT . . . . . . . . . . . . . . . . . . . . . . . 17
7.2. REQUESTS FOR ADVANCES. . . . . . . . . . . . . . . . . . . . 17
7.3. CONDITIONS OF ADVANCES . . . . . . . . . . . . . . . . . . . 17
7.4. REPRESENTATION AND WARRANTY. . . . . . . . . . . . . . . . . 18
7.5. BRIDGE NOTE. . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6. PRIME AND/OR LIBOR BORROWING RATES . . . . . . . . . . . . . 18
7.7. PAYMENT OF PRINCIPAL . . . . . . . . . . . . . . . . . . . . 19
7.8. PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.9. PREPAYMENT PREMIUM . . . . . . . . . . . . . . . . . . . . . 19
7.10. FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

8. TERM LOAN B . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.1. SECONDARY OFFERING.. . . . . . . . . . . . . . . . . . . . . 19
8.2. MAXIMUM AMOUNT . . . . . . . . . . . . . . . . . . . . . . . 19
8.3. SPECIAL CONDITIONS . . . . . . . . . . . . . . . . . . . . . 20
8.4. TERM NOTE B. . . . . . . . . . . . . . . . . . . . . . . . . 20
8.5. INTEREST RATE ELECTION . . . . . . . . . . . . . . . . . . . 20
8.6. FIXED RATE . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.7. PRIME AND/OR LIBOR BORROWING RATES . . . . . . . . . . . . . 21
8.8. COMPUTATION OF INTEREST. . . . . . . . . . . . . . . . . . . 22
8.9. PREPAYMENT PREMIUM . . . . . . . . . . . . . . . . . . . . . 22
8.10. REVOLVING TERM LOAN. . . . . . . . . . . . . . . . . . . . . 22
8.11. FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

9. LIBOR BORROWING RATE. . . . . . . . . . . . . . . . . . . . . . . . 23
9.1. ELECTION BY BORROWER . . . . . . . . . . . . . . . . . . . . 23
9.2. NOTICE TO BANK . . . . . . . . . . . . . . . . . . . . . . . 23
9.3. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . 24
9.4. ADDITIONAL COMPENSATION TO BANK. . . . . . . . . . . . . . . 24

Page ii-RESTATED AND AMENDED LOAN AGREEMENT
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

PAGE

9.5. YIELD MAINTENANCE CHARGE . . . . . . . . . . . . . . . . . . 24
9.6. PAYMENT OF INTEREST. . . . . . . . . . . . . . . . . . . . . 25
9.7. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 25

10. NOTES; SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.1. NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.2. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.3. PARTIAL RELEASE OF P&C STOCK . . . . . . . . . . . . . . . . 26

11. CONDITIONS TO EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . 26

12. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 27
12.1. EXISTENCE AND POWER. . . . . . . . . . . . . . . . . . . . . 27
12.2. AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . 27
12.3. SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . 27
12.4. ADVERTISING BUSINESS . . . . . . . . . . . . . . . . . . . . 27
12.5. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . 27
12.6. FINANCIAL CONDITION. . . . . . . . . . . . . . . . . . . . . 28
12.7. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.8. OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 28
12.9. GOOD TITLE . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.10. FIRST PRIORITY SECURITY INTEREST . . . . . . . . . . . . . . 28
12.11. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . 28
12.12. ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . 28
12.13. P&C PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . 28
12.14. ACCURACY OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . 29

13. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 29
13.1. INSPECTION RIGHTS. . . . . . . . . . . . . . . . . . . . . . 29
13.2. COLLATERAL AUDITS. . . . . . . . . . . . . . . . . . . . . . 29
13.3. KEEPING OF BOOKS AND RECORDS . . . . . . . . . . . . . . . . 29
13.4. CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . 29
13.5. OTHER OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . 29
13.6. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.7. FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . 30
13.8. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . 31
13.9. LANDLORD CONSENTS. . . . . . . . . . . . . . . . . . . . . . 31
13.10. NOTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 31

Page iii-RESTATED AND AMENDED LOAN AGREEMENT
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

PAGE

13.11. CASH FLOW COVERAGE RATIO . . . . . . . . . . . . . . . . . . 32
13.12. CASH FLOW LEVERAGE RATIO . . . . . . . . . . . . . . . . . . 32

14. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 33
14.1. LIQUIDATION, MERGER OR SALE OF ASSETS. . . . . . . . . . . . 33
14.2. GUARANTIES, LOANS AND INVESTMENTS. . . . . . . . . . . . . . 33
14.3. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.4. TYPE OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . 33

15. CASH COLLATERAL ACCOUNT . . . . . . . . . . . . . . . . . . . . . . 33

16. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
16.1. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . 34
16.2. CONSEQUENCES OF DEFAULT; BANK'S RIGHTS AND REMEDIES. . . . . 35

17. OUTSTANDING P&C LETTERS OF CREDIT. . . . . . . . . . . . . . . . . 35
17.1. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . 35
17.2. FIRST UNION CERTIFICATE. . . . . . . . . . . . . . . . . . . 35

18. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
18.1. ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . 36
18.2. OUT-OF-POCKET COSTS. . . . . . . . . . . . . . . . . . . . . 36
18.3. COLLECTION COSTS AND ATTORNEY FEES . . . . . . . . . . . . . 36
18.4. INTEGRATION; AMENDMENTS; CONFLICTING TERMS . . . . . . . . . 37
18.5. ENFORCEMENT AND WAIVER BY BANK . . . . . . . . . . . . . . . 37
18.6. BINDING EFFECT; ASSIGNMENT . . . . . . . . . . . . . . . . . 37
18.7. COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
18.8. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
18.9. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . 38
18.10. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . 38
18.11. COUNTERPARTS; EXECUTION BY FACSIMILE . . . . . . . . . . . . 38
18.12. STATUTORY DISCLOSURE . . . . . . . . . . . . . . . . . . . . 38

Page iv-RESTATED AND AMENDED LOAN AGREEMENT
<PAGE>

RESTATED AND AMENDED LOAN AGREEMENT

PARTIES:

OBIE MEDIA CORPORATION, an Oregon corporation (Obie)

OBIE MEDIA LTD., a British Columbia corporation (Obie BC)

PHILBIN & COINE, INC., a New York corporation (P&C)

(Obie, Obie BC and P&C, individually and jointly, are collectively referred
to in this Agreement as Borrower)

U.S. BANK NATIONAL ASSOCIATION, formerly known as United States National
Bank of Oregon (Bank)

RECITALS:

A. On October 31, 1996, Obie and Bank entered into a Loan
Agreement. That Loan Agreement was subsequently modified by a First Amendment of
Loan Agreement, a Second Amendment of Loan Agreement, a Third Amendment of Loan
Agreement and a Fourth Amendment of Loan Agreement. That Loan Agreement, as
modified, is referred to in this Agreement as the Original Loan Agreement.

B. The parties are entering into this Agreement for the purposes
of:

1. Restating the Original Loan Agreement to incorporate the
changes made in the subsequent amendments.

2. Adding Obie's wholly owned subsidiaries, Obie BC and
P&C, as co-borrowers under all Loans set forth in this Agreement.

3. Increasing the maximum amount of the Revolving Loan to
Four Million Dollars ($4,000,000) and adding a letter of credit sublimit in the
amount of Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) under
the Revolving Loan.

4. Adding a reducing, revolving feature to Term Loan A.

5. Providing a bridge loan in the maximum amount of Seven
Million Dollars ($7,000,000) to finance Obie's acquisition of P&C and to support
further growth; and, if Obie does not complete a secondary public offering
sufficient to pay in full the bridge loan, providing a take-out term loan to
Borrower in the maximum amount of Seven Million Dollars ($7,000,000).

Page 1-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

C. Obie, Obie BC and P&C are all related corporations engaged in
the transit and outdoor advertising business. Borrower desires to pool its
borrowing under this Agreement in order to, among other things, increase its
flexibility in allocating funds where they may best be utilized from time to
time. The Loans set forth in this Agreement are intended for the mutual benefit
of Obie, Obie BC and P&C. Specifically:

1. Each Borrower is entitled to request Advances under the
Revolving Loan and the 1998/1999 Construction Loan to finance its business.

2. Term Loan A is intended to provide working capital for
each Borrower.

3. The Bridge Loan will be used not only for Obie's
acquisition of P&C, but also to pay certain indebtedness of P&C.

D. Effective September 1, 1998, this Agreement shall supersede the
Original Loan Agreement. Except as specifically set forth in this Agreement, or
in documents executed pursuant to this Agreement, this Agreement does not
supersede any notes, security agreements, trust deeds, guaranties or other
documents executed pursuant to the Original Loan Agreement, and all such
collateral documents secure Borrower's obligations under this Agreement.

AGREEMENTS:

1. DEFINITIONS. As used in this agreement, the following terms
have the following meanings:

1.1. "1998/1999 Construction Loan" means the Loan defined as
the 1998/1999 Construction Loan in the Original Loan Agreement and the Loan
described in Paragraphs 4. and 5. of this Agreement.

1.2. "1998/1999 Construction Note" means any promissory note
evidencing the 1998/1999 Construction Loan, any promissory note substituted for
one or more of them, and any document evidencing a renewal, extension or
modification of one or more of them.

1.3. "Advance" means any one or more of the loans made by
Bank to Borrower pursuant to the Revolving Loan, the 1998/1999 Construction Loan
or Term Loan A.

1.4. "Affiliate" of any Person means any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
power or by contract or otherwise.

Page 2-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

1.5. "Agreement" means this Restated and Amended Loan
Agreement, as amended from time to time.

1.6. "Billboards" means one or more of the advertising signs
erected and/or maintained by Borrower pursuant to the Billboard Site Leases,
including all structures, devices, illumination and connections.

1.7. "Billboard Site Leases" means one or more of those
certain leases in which Borrower is the tenant (or the assignee of the tenant's
interest), pursuant to which Borrower has the right to construct and/or maintain
a Billboard on a site.

1.8. "Borrower" means Obie, Obie BC and P&C, individually and
jointly. All references to Borrower in this Agreement shall be deemed to mean
each and all of Obie, Obie BC and P&C.

1.9. "Borrowing Base" means, as at any date the amount
thereof is being determined, an amount equal to eighty percent (80%) of Eligible
Accounts calculated in accordance with GAAP, subject to reduction pursuant to
Paragraph 2.2..

1.10. "Bridge Loan" means the Loan described in Paragraph 7.

1.11. "Bridge Note" means any promissory note evidencing
the Bridge Loan, any promissory note substituted for one or more of them, and
any document evidencing a renewal, extension or modification of one or more
of them.

1.12. "Business Day" means any day other than a Saturday,
Sunday or other day that commercial banks in Portland, Oregon, Minneapolis,
Minnesota, or New York, New York, are authorized or required by law to close.

1.13. "Collateral" means all property in which a lien now or
hereafter exists in favor of Bank as security for all or any portion of the
Loan.

1.14. "Collateral Documents" means, collectively, the
mortgages, deeds of trust, security agreements, stock pledge agreements,
security assignments, financing statements and other similar documents at any
time delivered to Bank in connection with the transactions contemplated by the
Original Loan Agreement and this Agreement, and any document substituted for one
or more of them, and any document evidencing a renewal, extension or
modification of one or more of them.

1.15. "Eligible Account" means any right of Borrower to
payment for advertising design services or for advertising space on a Billboard
or mass transit vehicle, furnished pursuant to or in connection with a contract
for the sale of services or for the rental of advertising space, excluding any
accounts as to which (i) with respect to advertising design services, any amount
due thereon is payable more than ninety (90) days after the date of invoice;
(ii) with respect to

Page 3-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

advertising space rentals, payment is due more than thirty (30) days after the
then current date; (iii) amounts due thereon become past due under the original
terms thereof for such period as from time to time may be established by Bank;
(iv) the account debtor or other person obligated to make payment thereon
(individually and jointly referred to in this paragraph as "Account Debtor")
asserts or may assert an offset, defense, counterclaim or other right to avoid
or reduce liability thereon; (v) there shall occur as to any Account Debtor any
of the following events: death, dissolution, termination of existence, business
failure, insolvency, appointment of a receiver for any property, assignment for
the benefit of creditors, filing of a petition in bankruptcy or commencement of
any proceeding under any bankruptcy, insolvency or similar laws relating to the
relief of debtors; (vi) the Account Debtor does not meet credit standards
reasonably acceptable to Bank; (vii) the Account Debtor's obligations exceed the
maximum established by Bank for the Account Debtor; (viii) with respect to
advertising design services, payment is due for progress billings, precompletion
billings, deposits and other sums invoiced in anticipation of completion of the
services; (ix) with respect to advertising space rentals, any rent in excess of
thirty (30) days advance rent; (x) payment is due for service or late charges;
(xi) unless approved by Bank in writing, payment is contingent on any condition
whatsoever; (xii) the Account Debtor's obligations arise out of sales or other
transactions to or with Borrower or any of its Affiliates, or any owner, manager
or employee of Borrower or any of its Affiliates; (xiii) collection is not
enforceable by judicial proceedings within the United States of America or
Canada; (xiv) payment is due from the United States or Canadian government or
any agency thereof; or (xv) Bank, in its reasonable discretion, deems
unacceptable. Bank shall have reasonable discretion as to whether any account
is or remains an Eligible Account.

1.16. "Environmental Laws" means all local, state and federal
laws, rules, regulations and ordinances pertaining to human health or the
environment, including, without limitation, the federal statutes commonly known
as CERCLA and RCRA and any other federal or state environmental cleanup statutes
now or at any time hereafter in effect.

1.17. "Event of Default" means an event described in
Paragraph 16.1.

1.18. "Financial Statements" means any balance sheet or income
statement which has been furnished to Bank prior to the full execution of this
Agreement by Borrower and the balance sheets and statements of income, retained
earnings and changes in financial position that are furnished to Bank pursuant
to this Agreement.

1.19. "GAAP" means generally accepted accounting principles
consistently applied.

1.20. "Hazardous Substances" means any materials that, because
of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or the environment, and specifically includes, but is not limited to, any and
all hazardous, toxic or infectious substances, materials or wastes as defined or
listed under any Environmental Laws.

Page 4-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

1.21. "Laws" means all ordinances, statutes, rules,
regulations, orders, injunctions, writs or decrees of any government or
political subdivision or agency thereof, or any court or similar entity
established by any thereof.

1.22. "Letters of Credit" means those standby letters of
credit issued for Borrower's account in accordance with Paragraph 2.2.

1.23. "LIBOR Borrowing Rate" means the LIBOR Rate plus two
percent (2%). The LIBOR Borrowing Rate for each LIBOR Borrowing Rate Amount
shall be determined pursuant to Paragraph 9., as of the beginning of the
applicable LIBOR Interest Period, based on the then current LIBOR Rate, and,
except as otherwise provided in this Agreement, shall remain fixed during that
LIBOR Interest Period.

1.24. "LIBOR Borrowing Rate Amount(s)" means those portions of
a Principal Balance that, at any time, are accruing interest at a LIBOR
Borrowing Rate.

1.25. "LIBOR Interest Period" means, as to any LIBOR Borrowing
Rate Amount, a period of one, two, three or six months commencing on the date
the LIBOR Borrowing Rate becomes applicable; provided, however, that (1) the
first day of such LIBOR Interest Period must be a Business Day; (2) no LIBOR
Interest Period shall be selected which would extend beyond Maturity of the
Loan; (3) no LIBOR Interest Period shall extend beyond the date of any principal
payment required under the subject Loan, unless the sum of the following amounts
for that Loan equals or exceeds the amount of such principal payment: (i) the
Prime Borrowing Rate Amount for that Loan, plus (ii) LIBOR Borrowing Rate
Amounts for that Loan with LIBOR Interest Periods ending on or before the
scheduled date of that principal payment, plus (iii) if that Loan is a revolving
line of credit, principal amounts remaining unborrowed under that line of
credit; (4) any LIBOR Interest Period which would otherwise expire on a day
which is not a Business Day, shall be extended to the next succeeding Business
Day, unless the results of such extension would be to extend such LIBOR Interest
Period into another calendar month, in which event the LIBOR Interest Period
shall end on the immediately preceding Business Day; and (5) any LIBOR Interest
Period that begins on the last Business Day of a calendar month (or a day for
which there is no numerically corresponding day in the calendar month at the end
of such LIBOR Interest Period) shall end on the last Business Day of a calendar
month.

1.26. "LIBOR Rate" means, for any LIBOR Interest Period, the
rate per annum (computed on the basis of a 360 day year and the actual number of
days elapsed and rounded upward to the nearest 1/16 of 1%) established by Bank
as its LIBOR Rate, based on Bank's determination, on the basis of such factors
as Bank deems relevant, of the rate of interest at which U.S. dollar deposits
would be offered to Bank in the London interbank market at approximately 11:00
a.m. London time on the date which is two (2) Business Days prior to the first
day of such LIBOR Interest Period for delivery on the first day of such LIBOR
interest period for the number of months therein; provided, however, that Bank's
LIBOR Rate shall be adjusted to take into account the maximum reserves required
to be maintained for Eurocurrency liabilities by banks during each such LIBOR
Interest Period as specified in Regulation D of the Board of Governors

Page 5-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

of the Federal Reserve System or any successor regulation, and the maximum
assessment rate required to be paid by Bank to the Federal Deposit Insurance
Corporation insuring U.S. dollar deposits made at offices of Bank.

1.27. "Loan" means one or more of the 1998/1999 Construction
Loan, the Bridge Loan, the MO Partners Loan, the Revolving Loan, Term Loan A and
Term Loan B.

1.28. "Loan Documents" means the Original Loan Agreement,
this Agreement, each Note, each Collateral Document and all other documents and
instruments executed by Borrower in connection herewith.

1.29. "Maturity" means the time when the entire unpaid
Principal Balance of a Loan becomes due and payable, whether by agreement,
acceleration, demand or otherwise.

1.30. "MO Partners Loan" means the Loan defined as the MO
Partners Loan in the Original Loan Agreement and the Loan described in
Paragraph 6. of this Agreement.

1.31. "MO Partners Note" means any promissory note evidencing
the MO Partners Loan, any promissory note substituted for one or more of them,
and any document evidencing a renewal, extension or modification of one or more
of them.

1.32. "Note" means one or more of the 1998/1999 Construction
Note, the Bridge Note, the MO Partners Note, the Revolving Note, Term Note A and
Term Note B.

1.33. "Person" means any individual, corporation, partnership,
limited liability company, association, joint stock company, trust,
unincorporated organization, joint venture, court or government or political
subdivision or agency thereof.

1.34. "Prime Rate" means the rate identified and publicly
announced by Bank from time to time as its prime rate and does not necessarily
mean, for example, the lowest rate of interest which Bank collects for any
borrower or group of borrowers.

1.35. "Prime Borrowing Rate Amount" means that portion of a
Principal Balance that, at any time, is accruing interest at a variable interest
rate that is tied to the Prime Rate.

1.36. "Principal Balance" means, at any time, the unpaid
principal balance of a Loan.

1.37. "Records" means correspondence, memoranda, tapes, disks,
papers, books and other documents or transcribed information of any type,
whether expressed in ordinary or machine readable language.

Page 6-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

1.38. "Review Date" means the date on which Bank reviews the
basis for a Loan, and does not reflect any commitment by Bank to make Advances
under the Loan during any period either before or following that date.

1.39. "Revolving Loan" means the Loan defined as the Revolving
Loan in the Original Loan Agreement and the Loan described in Paragraph 2. of
this Agreement.

1.40. "Revolving Loan Dollar Limit" means Four Million Dollars
($4,000,000), subject to reduction pursuant to Paragraph 2.2.

1.41. "Revolving Note" means any promissory note evidencing
the Revolving Loan, any promissory note substituted for one or more of them, and
any document evidencing a renewal, extension or modification of one or more of
them.

1.42. "Secondary Offering" means a secondary offering by Obie
of shares of its common stock for sale to the public for the purpose of raising
the money required to pay the Bridge Loan in full.

1.43. "Stock Purchase Agreement" means the Stock Purchase
Agreement dated August ____, 1998 among Obie, Wayne P. Schur and P&C.

1.44. "Term Loan A" means the Loan defined as Term Loan A in
the Original Loan Agreement and the Loan described in Paragraph 3. of this
Agreement.

1.45. "Term Note A" means any promissory note evidencing Term
Loan A, any promissory note substituted for one or more of them, and any
document evidencing a renewal, extension or modification of one or more of them.

1.46. "Term Loan B" means the Loan described in Paragraph 8.

1.47. "Term Note B" means any promissory note evidencing Term
Loan B, any promissory note substituted for one or more of them, and any
document evidencing a renewal, extension or modification of one or more of them.

2. THE REVOLVING LOAN.

2.1. MAXIMUM AMOUNT. Subject to the terms and conditions of
this Agreement, Bank, at its option, may make Advances to Borrower from time to
time on a revolving credit basis in an aggregate principal amount not to exceed
at any one time outstanding an amount equal to the lesser of (i) the Revolving
Loan Dollar Limit; and (ii) the Borrowing Base then in effect.

2.2. LETTERS OF CREDIT. Subject to the terms and conditions
of this Agreement, as part of the Revolving Loan, Bank, at its option, may issue
Letters of Credit for

Page 7-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

Borrower's account from time to time; provided that the aggregate undrawn face
amount of all such Letters of Credit shall at no time exceed Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000). At all times, the aggregate face
amount of all outstanding Letters of Credit shall reduce the Revolving Loan
Dollar Limit, dollar for dollar. Prior to or in the absence of a Secondary
Offering (including during the term of Term Loan B), all outstanding Letters of
Credit shall reduce the Borrowing Base dollar for dollar, to the extent the
aggregate face amount of those Letters of Credit exceeds One Million Dollars
($1,000,000). However, after completion of the Secondary Offering, the
aggregate face amount of all outstanding Letters of Credit shall reduce the
Borrowing Base, dollar for dollar. At the time of issuance of each Letter of
Credit, Borrower shall pay Bank a fee equal to one and one-half percent (1.5%)
per annum of the face amount of the Letter of Credit, prorated for the term of
the Letter of Credit; provided that for "evergreen" Letters of Credit, Borrower
shall pay an initial fee based on the assumption that Bank will exercise its
first option to terminate that Letter of Credit, and Borrower shall pay an
additional fee each time Bank does not exercise an option to terminate, with
that additional fee prorated to Bank's next option to terminate. Prior to the
issuance of any Letter of Credit, Borrower will, at Bank's request, execute and
deliver to Bank its standard letter of credit agreement. Any payment made by
Bank to any Person on account of any Letter of Credit shall constitute an
Advance under the Revolving Loan.

2.3. REQUESTS FOR ADVANCES. Whenever Borrower desires to
request an Advance, including a Letter of Credit, Borrower shall give Bank
notice thereof in accordance with the Revolving Note.

2.4. REPRESENTATION AND WARRANTY OF CREDIT AVAILABILITY.
Each request by Borrower for an Advance shall be deemed to be Borrower's
representation and warranty that (i) the Advance may be made without exceeding
the Borrowing Base then in effect, and (ii) no Event of Default, or event which,
with notice or lapse of time, or both, would be an Event of Default, has
occurred or will occur as a result of making the Advance.

2.5. REVOLVING NOTE. The Revolving Loan shall be subject to
all of the terms and conditions of the Revolving Note and this Agreement.

2.6. INTEREST RATE AND PAYMENT OF INTEREST.

a. INTEREST RATE. Prior to an Event of Default,
Borrower shall pay interest on the Principal Balance of the Revolving Loan at a
variable interest rate equal to the Prime Rate. After an Event of Default, the
Principal Balance of the Revolving Loan shall bear interest at a variable
interest rate equal to the Prime Rate plus five percent (5%). The interest rate
shall be adjusted without notice effective on each day the Prime Rate changes.

b. PAYMENT OF INTEREST. Borrower shall pay accrued
interest on the fifteenth (15th) day of September, 1998, and on the fifteenth
(15th) day of every calendar month thereafter prior to Maturity, and at
Maturity.

Page 8-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

c. COMPUTATION OF INTEREST. All interest will be
computed at the applicable rate based on a three hundred sixty (360) day year
and applied to the actual number of days elapsed.

2.7. PAYMENT OF PRINCIPAL. The Principal Balance of the
Revolving Loan shall be due and payable on demand.

2.8. REVIEW DATE. The Review Date for the Revolving Loan is
April 30 of each calendar year.

2.9. FEES. Borrower shall pay Bank the following fees in
connection with the Revolving Loan:

a. INCREASE FEE. Contemporaneously with the
execution of this Agreement, Borrower shall pay Bank a fee for increasing the
maximum amount of the Revolving Loan in the amount of One Thousand Six Hundred
Sixty-Seven Dollars ($1,667).

b. ANNUAL FEE. Borrower shall also pay Bank an
annual loan fee for the Revolving Loan in the amount of Five Thousand Dollars
($5,000) on each Review Date, commencing April 30, 1999.

3. TERM LOAN A.

3.1. AMOUNT. The Principal Balance of Term Loan A on the
date of this Agreement is Five Million Seven Hundred Sixty Thousand Dollars
($5,760,000).

3.2. TERM NOTE A. Term Loan A shall be subject to all of the
terms and conditions of Term Note A and this Agreement.

3.3. PRIME AND/OR LIBOR BORROWING RATES. Borrower has
elected to have Term Loan A bear interest at Prime and/or LIBOR Borrowing Rates.

a. LIBOR BORROWING RATE. Borrower may elect from
time to time to have portions of the Principal Balance of Term Loan A accrue
interest at a LIBOR Borrowing Rate on the terms and conditions of Paragraph 9.

b. PRIME BORROWING RATE. Except for portions of
the Principal Balance of Term Loan A that are accruing interest at a LIBOR
Borrowing Rate, Borrower shall pay interest on the Principal Balance of Term
Loan A at a variable interest rate equal to the Prime Rate plus one-half of one
percent (0.5%). The interest rate shall be adjusted without notice effective on
each day the Prime Rate changes.

c. DEFAULT INTEREST RATE. Notwithstanding anything
in this Agreement to the contrary, upon the occurrence of an Event of Default,
the Prime Borrowing Rate

Page 9-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

Amount of Term Loan A shall thereafter accrue interest at a variable interest
rate equal to the Prime Rate plus five and one-half percent (5.5%), and each
outstanding LIBOR Borrowing Rate Amount shall accrue interest at a LIBOR
Borrowing Rate equal to the LIBOR Rate previously determined by Bank for the
LIBOR Borrowing Rate Amount plus seven percent (7%).

d. PAYMENT OF INTEREST. Borrower shall pay accrued
interest on the fifteenth (15th) day of September, 1998, and on the fifteenth
(15th) day of every calendar month thereafter prior to Maturity, and at
Maturity. In addition, with respect to all LIBOR Borrowing Rate Amounts,
accrued interest shall be paid on the last day of the applicable LIBOR Interest
Period.

e. PAYMENT OF PRINCIPAL. The remaining Principal
Balance of Term Loan A shall be paid in sixty-four (64) monthly installments.
The first such monthly installment shall be due and payable on September 15,
1998, and an additional monthly installment shall be due and payable on the
fifteenth (15th) day of each calendar month thereafter, to and including
December 15, 2003, when the unpaid balance of Term Loan A, principal and
interest, shall be paid in full. The first four (4) monthly installments shall
be in the amount of Sixty-five Thousand Dollars ($65,000) each. The next
fifty-nine (59) monthly installments shall be in the amount of Ninety-one
Thousand Six Hundred Sixty-seven Dollars ($91,667) each. The final monthly
installment shall be in the amount of Ninety-one Thousand Six Hundred
Forty-seven Dollars ($91,647).

f. PREPAYMENT. Subject to Paragraph 3.5,
prepayment may be made in whole or in part at any time. All prepayments shall
be applied first to the Prime Borrowing Rate Amount and then to any LIBOR
Borrowing Rate Amounts (in such order as Bank may determine in Bank's absolute
discretion), and then to accrued interest. Prepayments of principal shall be
applied to the remaining installments of principal in the order of their
maturity.

3.4. COMPUTATION OF INTEREST. All interest will be computed
at the applicable rate based on a three hundred sixty (360) day year and applied
to the actual number of days elapsed.

3.5. PREPAYMENT PREMIUM. Upon payment of all or any portion
of Term Loan A on a date other than the regularly scheduled due date for
payment, including, without limitation, voluntary prepayment or repayment upon
acceleration following an Event of Default, Borrower shall pay to Bank on
demand, with respect to all LIBOR Borrowing Rate Amounts, a yield maintenance
charge calculated in accordance with the attached Exhibit A.

3.6. REVOLVING TERM LOAN.

a. MAXIMUM AMOUNT. Term Loan A is a reducing,
revolving term loan. At any time, the maximum Principal Balance of Term Loan A
shall equal the Principal Balance that would then exist if all payments had been
made precisely when due.

Page 10-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

b. FUTURE ADVANCES. If Borrower prepays all or any
portion of Term Loan A, then Borrower may request future Advances under Term
Loan A. Whenever Borrower desires to request an Advance, Borrower shall give
Bank notice thereof in accordance with Term Note A. Following the Advance, the
Principal Balance of Term Loan A shall not exceed the maximum Principal Balance
of Term Loan A.

c. REPRESENTATION AND WARRANTY. Each request by
Borrower for an Advance shall be deemed to be Borrower's representation and
warranty that no Event of Default, or event which, with notice or lapse of time,
or both, would be an Event of Default, has occurred or will occur as a result of
making the Advance.

d. PAYMENTS OF PRINCIPAL. To the extent Borrower's
obligation to pay monthly installments of principal has been discharged as a
result of prepayments pursuant to paragraph 3.3.f., future Advances under Term
Loan A shall reinstate the obligation to pay those installments in the inverse
order of their maturity. Accordingly, Borrower's obligation to pay monthly
installments of principal shall not recommence until such time as those monthly
installments must recommence in order for Borrower to pay Term Loan A in full
not later than December 15, 2003, assuming all payments are made precisely when
due.

4. 1998/1999 CONSTRUCTION LOAN.

4.1. MAXIMUM AMOUNT. Subject to the terms and conditions of
this Agreement, Bank, at its option, may make Advances to Borrower from time to
time through April 30, 1999, in an aggregate principal amount not to exceed
Three Hundred Two Thousand Dollars ($302,000).

4.2. REQUESTS FOR ADVANCES. Whenever Borrower desires to
request an Advance, Borrower shall give Bank notice thereof in accordance with
the 1998/1999 Construction Note.

4.3. CONDITIONS OF ADVANCES. Borrower's right to request
each Advance is subject to the following conditions, which are for the benefit
of Bank and may be waived in whole or in part by Bank:

a. The proceeds of the Advance shall be used solely
for payment of the purchase price of a preexisting Billboard (including its
associated Billboard Site Lease), or for payment of the cost of constructing a
new Billboard.

b. The amount of each Advance shall not exceed
seventy-five percent (75%) of the lower of cost or market of a pre-existing
Billboard or seventy-five percent (75%) of the cost of constructing a new
Billboard, whichever is applicable, as determined by Bank in its reasonable
discretion.

Page 11-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

c. Borrower shall permit Bank to inspect the
Billboard site and shall deliver to Bank any information relating to the
Billboard that Bank may request, including, without limitation, the associated
Billboard Site Lease and any information relating to the purchase or
construction of the Billboard, as applicable.

d. The terms of any purchase or construction
contract, the terms of the associated Billboard Site Lease, and the adequacy of
the Billboard and the associated Billboard Site Lease as Collateral for the
Advance shall be acceptable to Bank, in Bank's absolute discretion.
Specifically, but without limitation, the associated Billboard Site Lease shall
include provisions substantially equivalent to those set forth in
Paragraph 13.9.

e. Borrower shall deliver to Bank such Collateral
Documents as Bank may require, in form satisfactory to Bank, for the purpose of
encumbering the Billboard and associated Billboard Site Lease with a first
priority security interest in favor of Bank, and securing the Advance and all
other obligations under the Loan Documents.

f. Borrower shall deliver to Bank any other
documents that Bank may request.

g. At the time of each Advance, Borrower shall pay
to Bank a loan fee in the amount of three-quarters of one percent (0.75%) of the
principal amount of that Advance.

h. No Advance shall be made after conversion of the
1998/1999 Construction Loan to a term loan pursuant to Paragraph 5.

4.4. REPRESENTATION AND WARRANTY. Each request by Borrower
for an Advance shall be deemed to be Borrower's representation and warranty that
no Event of Default, or event which, with notice or lapse of time, or both,
would be an Event of Default, has occurred or will occur as a result of making
the Advance.

4.5. CONSTRUCTION NOTE. The 1998/1999 Construction Loan
shall be subject to all of the terms and conditions of the 1998/1999
Construction Note and this Agreement.

4.6. INTEREST RATE AND PAYMENT OF INTEREST.

a. INTEREST RATE. Prior to an Event of Default,
Borrower shall pay interest on the Principal Balance of the 1998/1999
Construction Loan at a variable interest rate equal to the Prime Rate plus
one-half of one percent (0.5%). After an Event of Default, the Principal
Balance of the 1998/1999 Construction Loan shall bear interest at a variable
interest rate equal to the Prime Rate plus five and one-half percent (5.5%).
The interest rate shall be adjusted without notice effective on each day the
Prime Rate changes.

Page 12-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

c. COMPUTATION OF INTEREST. All interest will be
computed at the applicable rate based on a three hundred sixty (360) day year
and applied to the actual number of days elapsed.

4.7. PAYMENT OF PRINCIPAL. Subject to Paragraph 5., the
Principal Balance of the 1998/1999 Construction Loan shall be due and payable on
demand.

4.8. PREPAYMENT. Prepayment may be made in whole or in part
at any time. All prepayments shall be applied first to the Principal Balance
and then to accrued interest.

4.9. FEE. Upon closing of the 1998/1999 Construction Loan,
Borrower paid Bank a commitment fee for the 1998/1999 Construction Loan in the
amount of Seven Hundred Fifty-five Dollars ($755).

5. CONVERSION TO TERM LOAN. On the earlier of (a) the date that
the aggregate amount of Advances under the 1998/1999 Construction Loan equals
Three Hundred Two Thousand Dollars ($302,000), (b) Borrower's request or (c)
April 30, 1999, the 1998/1999 Construction Loan shall be converted to a term
loan upon the following terms and conditions:

5.1. NO DEFAULT. At the time of conversion, no Event of
Default shall have occurred or be continuing, and no event shall have occurred
or be continuing which, with notice or lapse of time, or both, would be an Event
of Default.

5.2. NEW CONSTRUCTION NOTE. At the time of conversion,
Borrower shall execute and deliver to Bank a new 1998/1999 Construction Note, in
a principal amount equal to the Principal Balance of the 1998/1999 Construction
Loan at the time of conversion, and in a form satisfactory to Bank. The
1998/1999 Construction Loan shall be subject to all of the terms of the
1998/1999 Construction Note and this Agreement.

5.3. INTEREST RATE ELECTION. At the time of conversion,
Borrower may elect to have the 1998/1999 Construction Loan bear interest at a
fixed rate pursuant to Paragraph 5.4., or at Prime and/or LIBOR Borrowing Rates
pursuant to Paragraph 5.5. Borrower may not alter Borrower's election after the
date of conversion.

5.4. FIXED RATE. If Borrower elects to have the 1998/1999
Construction Loan bear interest at a fixed rate, then:

a. INITIAL FIXED RATE. During the first
five (5) years of the term following conversion, the Principal Balance of the
1998/1999 Construction Loan shall bear interest at a fixed rate of two and
one-half percent (2.5%) above the most currently weekly rate for Five-

Page 13-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

Year Treasury Constant Maturities (as reported in Federal Reserve Statistical
Release H.15 or any successor publication reasonably selected by Bank),
calculated as of the date of conversion (the Initial Fixed Rate).

b. ADJUSTED FIXED RATE. On the due date of the
sixtieth (60th) monthly installment following conversion, the interest rate
shall be adjusted to a fixed rate of two and one-half percent (2.5%) above the
most currently weekly rate for Two-Year Treasury Constant Maturities (as
reported in Federal Reserve Statistical Release H.15 or any successor
publication reasonably selected by Bank), calculated as of the date of the
adjustment (the Adjusted Fixed Rate).

c. DEFAULT INTEREST RATE. Notwithstanding anything
in this Agreement to the contrary, upon the occurrence of an Event of Default,
the Principal Balance of the 1998/1999 Construction Loan shall thereafter accrue
interest at a fixed rate equal to the rate in effect immediately prior to the
Event of Default plus five percent (5%).

d. PAYMENT OF PRINCIPAL AND INTEREST. Following
conversion, the 1998/1999 Construction Loan shall be due and payable in
eighty-four (84) monthly installments of principal and interest; provided that
the unpaid balance of principal and interest shall be paid in full not later
than seven (7) years after the date of conversion. The first monthly
installment shall be due and payable on the fifteenth (15th) day of the first
calendar month following the conversion, and an additional monthly installment
shall be due and payable on the fifteenth (15th) day of every calendar month
thereafter. The first sixty (60) monthly installments shall be in the amount
necessary to amortize the Principal Balance of the 1998/1999 Construction Loan
upon conversion, together with interest at the Initial Fixed Rate, over a term
of eighty-four (84) months. The final twenty-four (24) monthly installments
shall be in the amount necessary to amortize the greater of (i) the Principal
Balance of the 1998/1999 Construction Loan immediately following the sixtieth
(60th) monthly installment or (ii) the Principal Balance of the 1998/1999
Construction Loan that would exist immediately following the sixtieth (60th)
monthly installment if all payments were made precisely when due, together with
interest at the Adjusted Fixed Rate, over a term of twenty-four (24) months.

e. PREPAYMENT. Subject to Paragraph 5.7.a.,
prepayment may be made in whole or in part at any time. All prepayments shall
be applied first to accrued interest and then to the Principal Balance.
Prepayments shall not affect the regularity or amount of the monthly
installments coming due thereafter.

5.5. PRIME AND/OR LIBOR BORROWING RATES. If Borrower elects
to have the 1998/1999 Construction Loan bear interest at Prime and/or LIBOR
Borrowing Rates, then:

a. LIBOR BORROWING RATE. Borrower may elect from
time to time to have portions of the Principal Balance of the 1998/1999
Construction Loan accrue interest at a LIBOR Borrowing Rate on the terms and
conditions of Paragraph 9.

Page 14-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

b. PRIME BORROWING RATE. Except for portions of
the Principal Balance of the 1998/1999 Construction Loan that are accruing
interest at a LIBOR Borrowing Rate, Borrower shall pay interest on the Principal
Balance of the 1998/1999 Construction Loan at a variable interest rate equal to
the Prime Rate plus one-half of one percent (0.5%). The interest rate shall be
adjusted without notice effective on each day the Prime Rate changes.

c. DEFAULT INTEREST RATE. Notwithstanding anything
in this Agreement to the contrary, upon the occurrence of an Event of Default,
the Prime Borrowing Rate Amount of the 1998/1999 Construction Loan shall
thereafter accrue interest at a variable interest rate equal to the Prime Rate
plus five and one-half percent (5.5%), and each outstanding LIBOR Borrowing Rate
Amount shall accrue interest at a LIBOR Borrowing Rate equal to the LIBOR Rate
previously determined by Bank for the LIBOR Borrowing Rate Amount plus seven
percent (7%).

d. PAYMENT OF INTEREST. Borrower shall pay accrued
interest on the fifteen (15th) day of the first calendar month following
conversion, and on the fifteenth (15th) day of every calendar month thereafter
prior to Maturity, and at Maturity. In addition, with respect to all LIBOR
Borrowing Rate Amounts, accrued interest shall be paid on the last day of the
applicable LIBOR Interest Period.

e. PAYMENT OF PRINCIPAL. Following conversion, the
Principal Balance of the 1998/1999 Construction Loan shall be paid in
eighty-four (84) equal monthly installments of one eighty-fourth (1/84th) of the
Principal Balance of the 1998/1999 Construction Loan upon conversion; provided
that the unpaid balance of principal and interest shall be paid in full not
later than seven (7) years after the date of conversion. The first monthly
installment shall be due and payable on the fifteenth (15th) day of the first
calendar month following conversion, and an additional monthly installment shall
be due and payable on the 15th day of every calendar month thereafter.

f. PREPAYMENT. Subject to Paragraph 5.7.b.,
prepayment may be made in whole or in part at any time. All prepayments shall
be applied first to the Prime Borrowing Rate Amount and then to any LIBOR
Borrowing Rate Amounts (in such order as Bank may determine in Bank's absolute
discretion), and then to accrued interest. Prepayments of principal shall be
applied to the remaining installments of principal in the inverse order of their
maturity.

5.6. COMPUTATION OF INTEREST. All interest will be computed
at the applicable rate based on a three hundred sixty (360) day year and applied
to the actual number of days elapsed.

5.7. PREPAYMENT PREMIUM. Upon payment of all or any portion
of the 1998/1999 Construction Loan on a date other than the regularly scheduled
due date for payment, including, without limitation, voluntary prepayment or
repayment upon acceleration following an Event of Default, Borrower shall pay to
Bank upon demand:

Page 15-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

a. If the 1998/1999 Construction Loan is bearing
interest at a fixed rate, a yield maintenance charge calculated in accordance
with Exhibit B.

b. If the 1998/1999 Construction Loan is bearing
interest at Prime and/or LIBOR Borrowing Rates, then with respect to all LIBOR
Borrowing Rate Amounts, a yield maintenance charge calculated in accordance with
Exhibit A.

6. MO PARTNERS LOAN.

6.1. AMOUNT. Bank has made a Loan to Obie in the principal
amount of Six Hundred Ninety-Eight Thousand Dollars ($698,000), to be used to
pay up to one hundred percent (100%) of the purchase price of certain Billboards
(and their associated Billboard Site Leases) that Obie has acquired from MO
Partners, a related Oregon general partnership. The Principal Balance of the MO
Partners Loan on the date of this Agreement is Six Hundred Eighty-Nine Thousand
Six Hundred Ninety Dollars Forty-Eight Cents ($689,690.48).

6.2. MO PARTNERS NOTE. The MO Partners Loan shall be subject
to all of the terms and conditions of the MO Partners Note and this Agreement.

6.3. INTEREST RATE AND PAYMENT OF INTEREST.

a. LIBOR BORROWING RATE. Borrower may elect from
time to time to have portions of the Principal Balance of the MO Partners Loan
accrue interest at a LIBOR Borrowing Rate on the terms and conditions of
Paragraph 9.

b. PRIME BORROWING RATE. Except for portions of
the Principal Balance of the MO Partners Loan that are accruing interest at a
LIBOR Borrowing Rate, Borrower shall pay interest on the Principal Balance of
the MO Partners Loan at a variable interest rate equal to the Prime Rate plus
one-half of one percent (0.5%). The interest rate shall be adjusted without
notice effective on each day the Prime Rate changes.

c. DEFAULT INTEREST RATE. Notwithstanding anything
in this Agreement to the contrary, upon the occurrence of an Event of Default,
the Prime Borrowing Rate Amount of the MO Partners Loan shall thereafter accrue
interest at a variable interest rate equal to the Prime Rate plus five and
one-half percent (5.5%), and each outstanding LIBOR Borrowing Rate Amount shall
accrue interest at a LIBOR Borrowing Rate equal to the LIBOR Rate previously
determined by Bank for the LIBOR Borrowing Rate Amount plus seven percent (7%).

Page 16-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

e. PAYMENT OF PRINCIPAL. The remaining Principal
Balance of the MO Partners Loan shall be paid in eighty-three (83) monthly
installments. The first monthly installment shall be due and payable on the
fifteenth (15th) day of September, 1998, and an additional monthly installment
shall be due and payable on the fifteenth (15th) day of every calendar month
thereafter, to and including July 15, 2005, when the unpaid balance of the MO
Partners Loan, principal and interest, shall be paid in full. The first
eighty-two (82) monthly installments shall be in the amount of Eight Thousand
Three Hundred Nine Dollars Fifty-Two Cents ($8,309.52) each. The final monthly
installment shall be in the amount of Eight Thousand Three Hundred Nine Dollars
Eighty-Four Cents ($8,309.84).

f. PREPAYMENT. Subject to Paragraph 6.5.,
prepayment may be made in whole or in part at any time. All prepayments shall
be applied first to the Prime Borrowing Rate Amount and then to any LIBOR
Borrowing Rate Amounts (in such order as Bank may determine in Bank's absolute
discretion), and then to accrued interest. Prepayments of principal shall be
applied to the remaining installments of principal in the inverse order of their
maturity.

6.4. COMPUTATION OF INTEREST. All interest will be computed
at the applicable rate based on a three-hundred sixty (360) day year and applied
to the actual number of days elapsed.

6.5. PREPAYMENT PREMIUM. Upon payment of all or any portion
of the MO Partners Loan on a date other than the regularly scheduled due date
for payment, including, without limitation, voluntary prepayment or repayment
upon acceleration following an Event of Default, Borrower shall pay to Bank upon
demand, with respect to all LIBOR Borrowing Rate Amounts, a yield maintenance
charge calculated in accordance with Exhibit A.

6.6. FEE. Upon closing of the MO Partners Loan, Borrower
paid to Bank a loan fee in the amount of one percent (1%) of the principal
amount of the MO Partners Loan.

7. BRIDGE LOAN.

7.1. MAXIMUM AMOUNT. Subject to the terms and conditions of
this Agreement, Bank, at its option, may make Advances to Borrower from time to
time through October 31, 1998, in an aggregate principal amount not to exceed
Seven Million Dollars ($7,000,000).

7.2. REQUESTS FOR ADVANCES. Whenever Borrower desires to
request an Advance, Borrower shall give Bank notice thereof in accordance with
the Bridge Note.

7.3. CONDITIONS OF ADVANCES. Borrower's right to request
each Advance is subject to the following conditions, which are for the benefit
of Bank and may be waived in whole or part by Bank:

Page 17-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

a. The proceeds of the initial Advance may be used
solely to pay the purchase price for P&C, pursuant to the Stock Purchase
Agreement, up to a maximum of Six Million Dollars ($6,000,000).

b. Remaining Advances may be used by Borrower for
working capital.

7.4. REPRESENTATION AND WARRANTY. Each request by Borrower
for an Advance shall be deemed to be Borrower's representation and warranty that
no Event of Default, or event which, with notice or lapse of time, or both,
would be an Event of Default, has occurred or will occur as a result of making
the Advance.

7.5. BRIDGE NOTE. The Bridge Loan shall be subject to all of
the terms and conditions of the Bridge Note and this Agreement.

7.6. PRIME AND/OR LIBOR BORROWING RATES.

a. LIBOR BORROWING RATE. Borrower may elect from
time to time to have portions of the Principal Balance of the Bridge Loan accrue
interest at a LIBOR Borrowing Rate on the terms and conditions of Paragraph 9.

b. PRIME BORROWING RATE. Except for portions of
the Principal Balance of the Bridge Loan that are accruing interest at a LIBOR
Borrowing Rate, Borrower shall pay interest on the Principal Balance of the
Bridge Loan at a variable interest rate equal to the Prime Rate plus one-half of
one percent (0.5%). The interest rate shall be adjusted without notice
effective on each day the Prime Rate changes.

c. DEFAULT INTEREST RATE. Notwithstanding anything
in this Agreement to the contrary, upon the occurrence of an Event of Default,
the Prime Borrowing Rate Amount of the Bridge Loan shall thereafter accrue
interest at a variable interest rate equal to the Prime Rate plus five and
one-half percent (5.5%), and each outstanding LIBOR Borrowing Rate Amount shall
accrue interest at a LIBOR Borrowing Rate equal to the LIBOR Rate previously
determined by Bank for the LIBOR Borrowing Rate Amount plus seven percent (7%).

d. PAYMENT OF INTEREST. Borrower shall pay accrued
interest on the fifteenth (15th) day of the first calendar month following the
closing of the Bridge Loan and on the fifteenth (15th) day of every calendar
month thereafter prior to Maturity, and at Maturity. In addition, with respect
to all LIBOR Borrowing Rate Amounts, accrued interest shall be paid on the last
day of the applicable LIBOR Interest Period.

e. COMPUTATION OF INTEREST. All interest will be
computed at the applicable rate based on a three hundred sixty (360) day year
and applied to the actual number of days lapsed.

Page 18-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

7.7. PAYMENT OF PRINCIPAL. The Principal Balance of the
Bridge Loan shall be due and payable on demand, or if no demand, upon closing of
the Secondary Offering or August 31, 1999, whichever is earlier.

7.8. PREPAYMENT. Subject to Paragraph 7.9, prepayment may be
made in whole or in part at any time. All prepayments shall be applied first to
the Prime Borrowing Rate Amount and then to any LIBOR Borrowing Rate Amounts (in
such order as Bank may determine in Bank's absolute discretion), and then to
accrued interest.

7.9. PREPAYMENT PREMIUM. Upon payment of all or any portion
of the Bridge Loan on a date other than the regularly scheduled due date for
payment, including, without limitation, voluntary prepayment or repayment upon
acceleration following an Event of Default, Borrower shall pay to Bank on
demand, with respect to all LIBOR Borrowing Rate Amounts, a yield maintenance
charge calculated in accordance with Exhibit A.

7.10. FEE. Contemporaneously with the execution of this
Agreement, Borrower shall pay to Bank a fee for the Bridge Loan in the amount of
Thirty-Five Thousand Dollars ($35,000).

8. TERM LOAN B.

8.1. SECONDARY OFFERING. With respect to the Secondary
Offering, Borrower represents and warrants to Bank that:

a. Borrower currently intends, and will exercise
its best efforts, to pursue and complete a Secondary Offering by August 31,
1999.

b. Borrower's best estimate of the net proceeds
(after payment of all associated costs and expenses) that will be raised by
Borrower through the Secondary Offering is Thirteen Million Dollars
($13,000,000).

c. If Borrower completes the Secondary Offering by
August 31, 1999, Borrower shall apply all net proceeds of the Secondary Offering
to the Bridge Loan, until that Loan is paid in full.

8.2. MAXIMUM AMOUNT. If the Secondary Offering is not
completed by August 31, 1999 or if the net proceeds of the Secondary Offering is
insufficient to pay the Bridge Loan in full, then, subject to the terms and
conditions of this Agreement, Bank shall make Term Loan B to Borrower in a
principal amount specified by Borrower, subject to a maximum equal to the lesser
of (i) Seven Million Dollars ($7,000,000) or (ii) the unpaid balance of the
Bridge Loan, principal and interest, immediately following application of all
net proceeds of any Secondary Offering.

Page 19-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

8.3. SPECIAL CONDITIONS. Bank's obligation to close Term
Loan B is subject to the following special conditions, which are for the benefit
of Bank and may be waived in whole or in part by Bank:

a. Term Loan B shall be closed not later than
September 1, 1999.

b. The Bridge Loan shall be paid in full, principal
and interest, at closing.

c. All representations and warranties of Borrower
contained in this Agreement shall continue to be true and complete as of the
closing date.

d. As of the closing date, no Event of Default
shall have occurred or be continuing, and no event shall have occurred or be
continuing that, with notice or passage of time, or both, would be an Event of
Default.

e. No material adverse change shall have occurred
in Borrower's financial condition since the date of this Agreement.

8.4. TERM NOTE B. At closing, Borrower shall execute and
deliver to Bank Term Note B in the principal amount of Term Loan B, and in a
form satisfactory to Bank. Term Loan B shall be subject to all of the terms and
conditions of Term Note B and this Agreement.

8.5. INTEREST RATE ELECTION. At the time of closing of Term
Loan B, Borrower may elect to have Term Loan B bear interest at a fixed rate
pursuant to Paragraph 8.6., or at Prime and/or LIBOR Borrowing Rates pursuant to
Paragraph 8.7. Borrower may not alter Borrower's election after closing.

8.6. FIXED RATE. If Borrower elects to have Term Loan B bear
interest at a fixed rate, then:

a. INITIAL FIXED RATE. During the first five (5)
years of the term of Term Loan B, the Principal Balance of Term Loan B shall
bear interest at a fixed rate of two and one-half percent (2.5%) above the most
current weekly rate for Five-Year Treasury Constant Maturities (as reported in
Federal Reserve Statistical Release H.15 or any successor publication reasonably
selected by Bank), calculated as of closing date (the Initial Fixed Rate).

b. ADJUSTED FIXED RATE. On the due date of the
sixtieth (60th) monthly installment under Term Loan B, the interest rate shall
be adjusted to a fixed rate of two and one-half percent (2.5%) above the most
current weekly rate for Two-Year Treasury Constant Maturities (as reported in
Federal Reserve Statistical Release H.15 or any successor publication reasonably
selected by Bank), calculated as of the date of the adjustment (the Adjusted
Fixed Rate).

Page 20-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

c. DEFAULT INTEREST RATE. Notwithstanding anything
in this Agreement to the contrary, upon the occurrence of an Event of Default,
the Principal Balance of Term Loan B shall thereafter accrue interest at a fixed
rate equal to the rate in effect immediately prior to the Event of Default plus
five percent (5%).

d. PAYMENT OF PRINCIPAL AND INTEREST. Term Loan B
shall be due and payable in eighty-four (84) monthly installments of principal
and interest; provided that the unpaid balance of Term Loan B, principal and
interest, shall be paid in full not later than August 31, 2006. The first
monthly installment shall be due and payable on the fifteenth (15th) day of the
first calendar month following the closing of Term Loan B, and an additional
monthly installment shall be due and payable on the fifteenth (15th) day of each
calendar month thereafter. The first sixty (60) monthly installments shall be
in the amount necessary to amortize the initial Principal Balance of Term
Loan B, together with interest at the Initial Fixed Rate, over a term of
eighty-four (84) months. The final twenty-four (24) monthly installments shall
be in the amount necessary to amortize the greater of (i) the Principal Balance
of Term Loan B immediately following the sixtieth (60th) monthly installment or
(ii) the Principal Balance of Term Loan B that would exist immediately following
the sixtieth (60th) monthly installment if all payments were made precisely when
due, together with interest at the Adjusted Fixed Rate, over a term of
twenty-four (24) months.

e. PREPAYMENT. Subject to Paragraph 8.9,
prepayment may be made in whole or in part at any time. All prepayments shall
be applied first to accrued interest and then to the Principal Balance.
Prepayments shall discharge Borrower's obligation to pay monthly installments of
principal and interest until such time as those monthly installments must
recommence in order for Borrower to pay the Loan in full not later than August
31, 2006, assuming all payments are made precisely when due.

8.7. PRIME AND/OR LIBOR BORROWING RATES. If Borrower elects
to have Term Loan B bear interest at Prime and/or LIBOR Borrowing Rates, then:

a. LIBOR BORROWING RATE. Borrower may elect from
time to time to have portions of the Principal Balance of Term Loan B accrue
interest at a LIBOR Borrowing Rate on the terms and conditions of Paragraph 9.

b. PRIME BORROWING RATE. Except for portions of
the Principal Balance of Term Loan B that are accruing interest at a LIBOR
Borrowing Rate, Borrower shall pay interest on the Principal Balance of Term
Loan B at a variable interest rate equal to the Prime Rate plus one-half of one
percent (0.5%). The interest rate shall be adjusted without notice effective on
each day the Prime Rate changes.

c. DEFAULT INTEREST RATE. Notwithstanding anything
in this Agreement to the contrary, upon the occurrence of an Event of Default,
the Prime Borrowing Rate Amount of Term Loan B shall thereafter accrue interest
at a variable interest rate equal to the Prime Rate plus five and one-half
percent (5.5%), and each outstanding LIBOR Borrowing Rate

Page 21-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

Amount shall accrue interest at a LIBOR Borrowing Rate equal to the LIBOR Rate
previously determined by Bank for the IBOR Borrowing Rate Amount plus seven
percent (7%).

d. PAYMENT OF INTEREST. Borrower shall pay accrued
interest on the fifteenth (15th) day of the first calendar month following the
closing of Term Loan B, and on the fifteenth (15th) day of every calendar month
thereafter prior to Maturity, and at Maturity. In addition, with respect to all
LIBOR Borrowing Rate Amounts, accrued interest shall be paid on the last day of
the applicable LIBOR Interest Period.

e. PAYMENT OF PRINCIPAL. The Principal Balance of
Term Loan B shall be paid in eighty-four equal (84) monthly installments of one
eighty-fourth (1/84th) of the Principal Balance of Term Loan B; provided that
the unpaid balance of Term Loan B, principal and interest, shall be paid in full
not later than August 31, 2006. The first monthly installment shall be due and
payable on the fifteenth (15th) day of the first calendar month following the
closing of Term Loan B, and additional monthly installment shall be due and
payable on the fifteenth (15th) day of every calendar month thereafter.

f. PREPAYMENT. Subject to Paragraph 8.9.,
prepayment may be made in whole or in part at any time. All prepayments shall
be applied first to the Prime Borrowing Rate Amount and then to any LIBOR
Borrowing Rate Amounts (in such order as Bank may determine in Bank's absolute
discretion), and then to accrued interest. Prepayments of principal shall be
applied to the remaining installments of principal in the order of their
maturity.

8.8. COMPUTATION OF INTEREST. All interest will be computed
at the applicable rate based on a three hundred sixty (360) day year and applied
to the actual number of days elapsed.

8.9. PREPAYMENT PREMIUM. Upon payment of all or any portion
of Term Loan B on a date other than the regularly scheduled due date for
payment, including, without limitation, voluntary prepayment or repayment upon
acceleration following an Event of Default, Borrower shall pay to Bank on
demand:

a. If Term Loan B is bearing interest at a fixed
rate, a yield maintenance charge calculated in accordance with Exhibit B.

b. If Term Loan B is bearing interest at Prime
and/or LIBOR Borrowing Rates, then with respect to all LIBOR Borrowing Rate
Amounts, a yield maintenance charge calculated in accordance with Exhibit A.

8.10. REVOLVING TERM LOAN.

a. MAXIMUM AMOUNT. Term Loan B is a reducing,
revolving term loan. At any time, the maximum Principal Balance of Term Loan B
shall equal the Principal Balance that would then exist if all payments had been
made precisely when due.

Page 22-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

b. FUTURE ADVANCES. If Borrower prepays all or any
portion of Term Loan B, then Borrower may request future Advances under Term
Loan B. Whenever Borrower desires to request an Advance, Borrower shall give
Bank notice thereof in accordance with Term Note B. Following the Advance, the
Principal Balance of Term Loan B shall not exceed the maximum Principal Balance
of Term Loan B.

d. MONTHLY PAYMENTS. To the extent Borrower's
obligation to pay monthly installments has been discharged as a result of
prepayments pursuant to paragraph 8.6.e. or 8.7.f., future Advances under Term
Loan B shall reinstate the obligation to pay those installments in the inverse
order of their maturity. Accordingly, Borrower's obligation to pay monthly
installments shall not recommence until such time as those monthly installments
must recommence in order for Borrower to pay Term Loan B in full not later than
August 31, 2006, assuming all payments are made precisely when due.

8.11. FEE. At the time of closing of Term Loan B, Borrower
shall pay Bank a loan fee in the amount of one percent (1%) of the principal
amount of Term Loan B, less Thirty-Five Thousand Dollars ($35,000), but in no
event less than zero (-0).

9. LIBOR BORROWING RATE.

9.1. ELECTION BY BORROWER. Borrower may obtain LIBOR
Borrowing Rate quotes from Bank between 8:00 a.m. and 10:00 a.m. (Portland,
Oregon, time) on any Business Day. Borrower may request a new Advance as a
LIBOR Borrowing Rate Amount, or conversion of a portion of a Prime Borrowing
Rate Amount to a LIBOR Borrowing Rate Amount, or a new LIBOR Interest Period for
a LIBOR Borrowing Rate Amount whose LIBOR Interest Period is expiring, only by
giving Bank notice in accordance with Paragraph 9.2. not later than 10:00 a.m.
on such date.

9.2. NOTICE TO BANK. Whenever Borrower desires to use the
LIBOR Borrowing Rate option, Borrower shall give Bank irrevocable notice (either
in writing or orally) between 8:00 a.m. and 10:00 a.m. (Portland, Oregon, time)
two (2) Business Days in advance of the desired effective date of such rate.
Any oral notice shall be given by, and any written notice or confirmation of an
oral notice shall be signed by, a Person authorized to execute and delivery
promissory notes to Bank on behalf of Borrower, and shall specify the requested
effective date of the rate, the LIBOR Interest Period, and whether Borrower is
requesting a new Advance as a LIBOR Borrowing Rate Amount, conversion of a
portion of a Prime Borrowing Rate Amount to a LIBOR Borrowing Rate Amount, or a
new LIBOR Interest Period for a LIBOR Borrowing Rate Amount whose LIBOR Interest
Period is expiring. Bank may, but need not, require that all oral notices be
confirmed in writing. Notwithstanding any other term of the Loan Agreement,

Page 23-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

Borrower may elect a LIBOR Borrowing Rate Amount only in the minimum principal
amount of Five Hundred Thousand Dollars ($500,000) and in larger integral
multiples of One Hundred Thousand Dollars ($100,000). Except as provided in
Paragraph 9.3., the LIBOR Borrowing Rate for each LIBOR Borrowing Rate Amount
shall remain fixed for the applicable LIBOR Interest Period.

9.3. TERMINATION. If at any time Bank's LIBOR Rate is
unascertainable or unavailable to Bank or if LIBOR Rate loans become unlawful,
the option to select the LIBOR Borrowing Rate shall terminate immediately. If
any LIBOR Borrowing Rates are then in effect, (i) each shall terminate
automatically with respect to the applicable LIBOR Borrowing Rate Amount (a) on
the last day of the applicable LIBOR Interest Period, if Bank may lawfully
continue to maintain such loans, or (b) immediately if Bank may not lawfully
continue to maintain such loans through such day, and (ii) the Prime Borrowing
Rate automatically shall become effective as to such amounts upon termination.

9.4. ADDITIONAL COMPENSATION TO BANK. If at any time after
the date of this amendment (i) any revision in or adoption of any applicable
law, rule or regulation or in the interpretation or administration thereof (a)
shall subject Bank or its Eurodollar lending office to any tax, duty or other
charge, or change the basis of taxation of payments to Bank with respect to any
loans bearing interest based on Bank's LIBOR Rate or (b) shall impose or modify
any reserve, insurance, special deposit or similar requirements against assets
of, deposits with or for the account of, or credit extended by Bank or its
Eurodollar lending office, or impose on Bank or its Eurodollar lending office
any other condition affecting any such loans, and (ii) the result of the
foregoing is (x) to increase the cost to Bank of making or maintaining any such
loans or (y) to reduce the amount of any sum receivable under the Loan Agreement
by Bank or its Eurodollar lending office, Borrower shall pay Bank within fifteen
(15) days after demand by Bank such additional amount as will compensate Bank
for such increased cost or reduction. The determination hereunder by Bank of
such additional amounts shall be conclusive in the absence of manifest error.
If Bank demands compensation under this paragraph, Borrower may, upon three (3)
Business Days' notice to Bank, pay the accrued interest on all LIBOR Borrowing
Rate Amounts as may be affected, together with any additional amounts payable
under Paragraph 9.5. Upon Borrower's paying such accrued interest and
additional costs, the Prime Borrowing Rate immediately shall be effective with
respect to the unpaid principal balance of such LIBOR Borrowing Rate Amounts.

9.5. YIELD MAINTENANCE CHARGE. Upon any termination of any
LIBOR Borrowing Rate (including, but not limited to, conversion to another rate)
or payment of all or any portion of any LIBOR Borrowing Rate Amount on a date
other than the last day of the then applicable LIBOR Interest Period, as the
case may be, including, without limitation, (i) voluntary prepayment, (ii)
acceleration following an Event of Default, or (iii) repayment in response to a
notice under Paragraph 9.4., Borrower shall pay to Bank on demand a yield
maintenance charge calculated in accordance with Exhibit A.

Page 24-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

9.6. PAYMENT OF INTEREST. If Borrower selects the LIBOR
Borrowing Rate, Borrower shall pay interest based on such rate, plus any other
applicable taxes or charges hereunder, even though Bank may have obtained the
funds loaned to Borrower from sources other than the applicable London interbank
market. Bank's determination of the LIBOR Borrowing Rate and any such taxes or
charges shall be conclusive in the absence of manifest error.

9.7. DEFAULT. Notwithstanding any other term of the Loan
Agreement, Borrower may not select the LIBOR Borrowing Rate if an event has
occurred that constitutes an Event of Default or which, with notice or lapse of
time, or both, would be an Event of Default.

10. NOTES; SECURITY.

10.1. NOTES. Contemporaneously with the execution of this
Agreement, Borrower shall execute and deliver to Bank a new Revolving Note, a
new Term Note A, a new 1998/1999 Construction Note and a Bridge Note, in form
and substance satisfactory to Bank. However, the execution and delivery of
these Notes shall not be deemed to pay or otherwise discharge any other Notes
evidencing the Loans. Contemporaneously with any closing of Term Loan B,
Borrower shall execute and deliver to Bank Term Note B in form and substance
satisfactory to Bank.

10.2. SECURITY.

a. THE COLLATERAL. All obligations of Borrower to
Bank under this Agreement and the Notes shall be secured by a first priority
security interest in:

(1) All of Borrower's now owned and
hereafter acquired inventory, accounts, equipment, fixtures, chattel paper,
documents, instruments, investment property, contract rights and general
intangibles; and all products and proceeds of the foregoing.

(2) All stock in P&C.

Bank does not intend to perfect its security interests in the Billboards and
Billboard Site Leases at the time of execution of this Agreement, but Bank
reserves the right to perfect those interests at any time and for any reason.

b. THE COLLATERAL DOCUMENTS. Contemporaneously
with the execution of this Agreement, Borrower shall execute and deliver or
cause to be executed and delivered to Bank such security agreements, Uniform
Commercial Code financing statements, deeds of trust, mortgages and other
security instruments covering the Collateral as Bank may require, each in a form
and substance satisfactory to Bank.

c. ADDITIONAL ACTS. At Bank's request, Borrower
from time to time shall execute and/or deliver to Bank such additional deeds of
trust, security agreements, Uniform Commercial Code financing statements and any
other documents and instruments

Page 25-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

(endorsed or assigned to Bank as Bank may request), which may be required under
applicable law or which Bank may request to effectuate the transactions
contemplated under this Agreement and to grant, preserve, protect and perfect
the validity and first priority of the security interests intended to be created
by the Collateral Documents.

d. TITLE INSURANCE AND TITLE REPORTS. At Bank's
request, Borrower from time to time shall deliver to Bank (i) a lender's title
insurance policy, naming Bank as the insured, acceptable to Bank as to amount,
insurer, form, coverage and exceptions, and showing the lien of Bank securing
the Loan as a first lien upon each Billboard and Billboard Site Lease worth
Fifty Thousand Dollars ($50,000) or more, and (ii) Status of Title or Lot Book
Reports, acceptable to Bank as to title company, form, coverage and exceptions,
and showing the Lien of Bank securing the Loan as a first lien upon each
Billboard and Billboard Site Lease worth less than Fifty Thousand Dollars
($50,000). Solely for purposes of this paragraph, the worth of a Billboard and
its associated Billboard Site Lease will be determined by Bank in its reasonable
discretion.

10.3. PARTIAL RELEASE OF P&C STOCK. Bank shall release from
the Collateral all stock in P&C upon the following conditions, which are for the
benefit of Bank and which may be waived in whole or in part by Bank:

a. The Bridge Loan shall be paid in full.

b. Term Loan B shall be paid in full, and all
rights of Borrower to future Advances under Term Loan B shall have terminated.

c. At the time of release, all representations and
warranties of Borrower contained in this Agreement shall continue to be true and
complete.

d. At the time of release, no Event of Default
shall have occurred or be continuing, and no event shall have occurred or be
continuing that, with the giving of notice or the passage of time or both, would
be an Event of Default.

e. No material adverse change shall have occurred
in the financial condition of Borrower since the date of this Agreement.

11. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to satisfaction of each of the following conditions
precedent:

11.1. Bank shall have received this Agreement, the new
Revolving Note, the new Term Note A, the new 1998/1999 Construction Note, the
Bridge Note, the Collateral Documents and each other Loan Document to which
Borrower is a party, each executed and delivered by a duly authorized
representative of the applicable parties thereto.

Page 26-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

11.2. Bank shall have received all documents and information
Bank may request relating to the authority for and validity of this Agreement
and the other Loan Documents, and to any other related matters, each in a form
and substance satisfactory to Bank.

11.3. Bank shall have received a written opinion of Tonkon
Torp LLP, counsel for Obie and P&C, and a written opinion of Owen-Bird, counsel
for Obie BC, each dated as of the date of this Agreement and addressed to Bank,
in a form and substance satisfactory to Bank.

11.4. Bank shall have received the fees referred to in
Paragraphs 2.9.a. and 7.10.

12. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants:

12.1. EXISTENCE AND POWER. Borrower is a duly organized and
validly existing corporation in its jurisdiction of incorporation and is duly
qualified and in good standing in each jurisdiction where the conduct of its
business or the ownership of its properties requires such qualification, and has
full power, authority and legal right to carry on its business as presently
conducted, to own and operate its properties and assets, and to execute, deliver
and perform the Loan Documents and all other documents to be executed and
delivered by it.

12.2. AUTHORIZATION. The execution, delivery and performance
by Borrower of the Loan Documents and all other documents to be executed,
delivered or performed by it and any borrowing in connection therewith have been
duly authorized by all necessary action, do not contravene any Law binding on it
or its organizational documents, and do not contravene the provisions of or
constitute a default under any agreement or instrument to which it is a party or
by which it may be bound or affected.

12.3. SUBSIDIARIES. Each of Obie BC and P&C is a wholly owned
subsidiary of Obie. Obie has no other subsidiaries or divisions, except OB
Walls, Inc., a fifty percent (50%) owned subsidiary, nor is Obie engaged in any
joint venture or partnership with any other Person. Neither Obie BC nor P&C has
any subsidiaries or divisions, and neither is engaged in any joint venture or
partnership with any other Person.

12.4. ADVERTISING BUSINESS. Borrower is the sole owner of all
of the billboard and mass transit advertising businesses currently conducted by
it. Specifically, but without limitation, Borrower is the sole owner of all
Billboards, Billboard Site Leases, advertising contracts with mass transit
districts, contracts for the sale of advertising design services, and contracts
for advertising space on Billboards and mass transit vehicles.

12.5. LITIGATION. There are no actions, proceedings,
investigations or claims pending against Borrower, or, to its knowledge,
threatened against or affecting Borrower, before any court, arbitrator,
governmental body or agency which would be likely to result in a judgment or
order against Borrower in excess of Twenty-five Thousand Dollars ($25,000).

Page 27-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

12.6. FINANCIAL CONDITION. All Financial Statements furnished
to Bank prior to the full execution of this Agreement by Borrower have been
prepared in accordance with GAAP, except as noted therein; and all such
Financial Statements fully and fairly represent the financial condition
presented at the dates thereof and the income and loss for the periods covered
thereby, and there have been no material adverse changes in Borrower's financial
condition or business from the date thereof to the date of this Agreement.

12.7. TAXES. Borrower has filed all tax returns and reports
required of it, and has paid all taxes payable by it which have become due
pursuant to such tax returns and all other taxes and assessments payable by
Borrower.

12.8. OTHER AGREEMENTS. Borrower is not in breach of or in
default under any agreement to which it is a party or which is binding on it or
any of its assets, which breach or default would have a material adverse effect
on Borrower's financial condition or operations.

12.9. GOOD TITLE. Borrower is the true and lawful owner of
and has good title to all Collateral and it will have good title to all such
Collateral acquired hereafter, free of any security interests, liens or
encumbrances, except in favor of Bank.

12.10. FIRST PRIORITY SECURITY INTEREST. Except as provided in
paragraph 17, the liens created or to be created in favor of Bank under the
Collateral Documents do and will at all times on and after the effective date of
this Agreement, constitute first priority security interests in the Collateral
as security for the Borrower's obligations under the Loan Documents.

12.11. COMPLIANCE WITH LAWS. Borrower is in compliance with
all applicable Laws. Without limiting the foregoing, Borrower represents and
warrants that (a) to the best of Borrower's actual knowledge, all conditions at
all present and former business premises of Borrower and its Affiliates, and all
activities at those business premises, have at all times conformed to all
applicable Environmental Laws, (b) to the best of Borrower's actual knowledge,
no Hazardous Substance has been released or discharged from any of those
premises or is otherwise present in the soil or water of, or stored at, any of
those premises, and (c) Borrower and its Affiliates are otherwise in compliance
with all environmental permits and all Environmental Laws applicable to their
properties or operations.

12.12. ENFORCEABILITY. This Agreement constitutes, and each
other Loan Document to which Borrower is a party, when executed and delivered to
Bank, will constitute, its legal, valid and binding obligation, enforceable in
accordance with its terms.

12.13. P&C PURCHASE AGREEMENT. Each of the representations and
warranties made by Obie in the Stock Purchase Agreement is true and correct,
and, to the best of their knowledge, each of the representations and warranties
made by P&C in the Stock Purchase Agreement is true and correct.

Page 28-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

12.14. ACCURACY OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty contained in this Agreement contains any untrue
statement of material fact or omits to state a material fact necessary to make
such representations or warranties not misleading.

13. AFFIRMATIVE COVENANTS. Until payment in full of all payment
obligations, and performance of all other obligations, of Borrower under the
Loan Documents, Borrower agrees that:

13.1. INSPECTION RIGHTS. At any reasonable time, and from
time to time, Borrower will permit Bank to examine and make copies of and
abstracts from its Records and books of account, to inspect the Collateral, to
visit its properties and to discuss its affairs, finances and accounts with any
of its owners, managers or representatives.

13.2. COLLATERAL AUDITS. Without limiting the provisions of
Paragraph 13.1., Borrower will permit Bank, by or through any of Bank's
representatives, attorneys or accountants, and at Borrower's expense, to conduct
periodic audits of and to verify the Collateral.

13.3. KEEPING OF BOOKS AND RECORDS. Borrower will keep
adequate records and books of account in which complete entries will be made, in
accordance with GAAP, reflecting all material financial transactions.

13.4. CONDUCT OF BUSINESS. Borrower shall preserve and
maintain its corporate existence and that of its Affiliates, and all of its
rights, privileges and franchises necessary or desirable in the normal conduct
of its business, and conduct its business in an orderly and efficient manner
consistent with good business practices.

13.5. OTHER OBLIGATIONS. Borrower will pay and discharge when
due all indebtedness, taxes and other obligations for which it is liable or to
which its income or property is subject and all claims for labor or materials
which, if unpaid, might become by law a lien upon its assets, unless it is
contesting the indebtedness, taxes, or other obligations in good faith and
provision has been made to the reasonable satisfaction of Bank for the payment
thereof in the event any such contest is determined adversely to it.
Specifically, but without limitation, Borrower will pay and perform when due all
obligations of the tenant under all Billboard Site Leases, whether now existing
or hereafter arising.

13.6. INSURANCE. Borrower will provide, maintain and deliver
to Bank policies of hazard, liability, key man life and other insurance with
respect to all of the Collateral owned by it, and with respect to its properties
and operations, carried with companies acceptable to Bank and in such amounts
and covering all such risks as Bank may require, with loss payable to Bank.
Specifically, but without limitation, Obie, as the owner, shall at all times
maintain key man life insurance on Brian Obie, as the insured, that will pay
Obie net death benefits (after any offsets or deductions) of not less than Two
Million Dollars ($2,000,000); shall keep that policy

Page 29-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

free of all liens and encumbrances; and shall not terminate, surrender, borrow
against or otherwise modify or amend that policy without the prior written
consent of Bank.

13.7. FINANCIAL INFORMATION.

a. As soon as available and in any event within
ninety (90) days after the end of its fiscal year, Borrower shall deliver to
Bank its CPA audited (i) consolidated balance sheet as of the end of that fiscal
year, (ii) related consolidated statements of income and retained earnings and
statement of changes in financial position for that year; and (iii) report, if
any, to management by the accountant that prepared the financial statements, in
each case audited by Arthur Andersen LLP or another certified public accountant
acceptable to Bank and prepared in accordance with GAAP. No document or report
shall contain a disclaimer of opinion or adverse opinion except such as Bank in
its sole discretion may determine to be immaterial.

b. As soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter, Borrower will furnish
to Bank its company-prepared balance sheet and statement of income as at the end
of such fiscal quarter, in each case prepared on a consolidated basis in
accordance with GAAP.

c. As soon as available and in any event within
thirty (30) days after filing, but in no event more than six (6) months after
the end of each tax year, Borrower and each of its Affiliates shall furnish to
Bank their federal income tax returns for that tax year.

d. As soon as available and in any event by noon on
the fifth (5th) Business Day of each month, Borrower shall furnish to Bank an
aging of accounts, and a borrower's certificate summarizing the status of the
Borrowing Base and the Loan, each prepared as of the close of business on the
last day of the preceding month and in a form reasonably acceptable to Bank.

e. As soon as available and in any event by noon on
the fifth (5th) Business Day of each month, Borrower shall furnish to Bank a
certificate prepared as of the first day of that month and in a form reasonably
acceptable to Bank, and executed by the president or chief financial officer of
Borrower, that (i) identifies all new Billboard Site Leases that arose during
the preceding month, (ii) identifies all Billboard Site Leases that expired or
otherwise terminated during the preceding month, (iii) represents that, except
as otherwise disclosed to Bank in writing, all Billboard Site Leases are in full
force and effect and that Borrower is not in any respect in default thereunder
(or specifying any events of default), and (iv) sets forth such other
information as Bank may request concerning the Billboards and Billboard Site
Leases.

f. As soon as available, one copy of each financial
statement, report, notice or proxy statement sent by Borrower to stockholders
generally and of each regular or periodic report, registration statement or
prospectus filed by Borrower with any securities exchange or governmental
authority.

Page 30-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

g. From time to time, Borrower shall furnish to
Bank all other statements, reports, tax returns and other information as Bank
may reasonably request concerning the financial condition and business affairs
of Borrower.

13.8. COMPLIANCE WITH LAWS. Borrower shall comply in all
material respects with all Laws (including but not limited to all securities and
Environmental Laws) and promptly provide written notice to Bank (1) of the
receipt of any notice of violation thereof from any Person which violation,
alone or together with any other such violations, could reasonably be expected
to have a material adverse effect on Borrower's business, assets, operations or
condition, financial or otherwise, and (2) upon becoming aware that any facility
at any time owned or operated by Borrower is being, or has been, subject to a
release of any Hazardous Substance. Without limiting the generality of the
foregoing, Borrower agrees that it will at all times comply with applicable laws
relating to disabled access, including, but not limited to, all applicable
titles of the Americans with Disabilities Act of 1990, as amended.

13.9. LANDLORD CONSENTS. Borrower shall exercise Borrower's
best efforts to include the following language in all future Billboard Site
Leases:

"Upon Lessee's request, Lessor agrees to execute, acknowledge
before a notary public, and permit Lessee to record a memorandum
of this Lease. Lessee may sell, assign or encumber its interest
in this Lease and any signs and improvements placed on the site
by Lessee. Any claim Lessor ever has to any such sign or
improvement is subject to the interest of a secured lender to
Lessee, and the lender may at any time remove the sign or
improvement. Upon written notice to Lessor of the name and
address of a secured lender to Lessee, Lessor agrees not to
terminate this Lease until the lender has been given written
notice of any default and the default has not been cured within
thirty (30) days after receipt of the notice. Lessor agrees to
promptly copy such lender on any other notices or correspondence
to Lessee. Lessor agrees to execute any documents or consents
necessary to allow such lender to file and perfect its secured
interest."

13.10. NOTIFICATION. Promptly after learning thereof, Borrower
will notify Bank of:

a. The occurrence of any Event of Default or other
event which, with notice or lapse of time, or both, would be an Event of
Default, and if such Event of Default or such other event is then continuing, a
certificate of its chief financial officer or other authorized representative
setting forth the details thereof and the action which it is taking or proposes
to take with respect thereto; and

Page 31-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

b. The details of any lien, litigation,
administrative proceeding or judgment involving Twenty-five Thousand Dollars
($25,000) or more (including but not limited to any arising from or related to
any Hazardous Substance or securities or Environmental Laws) arising after the
date hereof and affecting Borrower or any assets of Borrower.

13.11. CASH FLOW COVERAGE RATIO. Borrower shall maintain a
ratio of Cash Flow to Cash Requirements, on a consolidated basis, of:

a. Not less than 1.10 to 1 for the twelve (12)
month period ending on the last day of each fiscal quarter of Borrower, through
the fiscal quarter ending November 30, 1999.

b. Thereafter, not less than 1.25 to 1 for the
twelve (12) month period ending on the last day of each fiscal quarter of
Borrower.

c. For purposes of this paragraph:

(1) "Cash Flow" means, for the applicable
period, (i) Borrower's net income after taxes; plus (ii) amortization,
depreciation and other non-cash expenses deducted in calculating that net
income; minus (iii) any amounts paid by Borrower for the purchase or capital
lease of tangible or intangible assets that are not funded by long-term debt
(but not less than zero); all as reasonably determined by Bank on a consolidated
basis in accordance with GAAP.

(2) "Cash Requirements" means, for the
applicable period, (i) the regularly scheduled payments of principal by Borrower
upon long-term debt (including the Loans); plus (ii) any prepayments of
principal by Borrower upon long-term debt (excluding the Loans); plus (c) any
dividends or other distributions paid by Borrower to its shareholders; all as
reasonably determined by Bank on a consolidated basis in accordance with GAAP.

13.12. CASH FLOW LEVERAGE RATIO. Borrower shall maintain a
ratio of Interest-Bearing Debt to EBITDA, on a consolidated basis, of not more
than 4 to 1 for the twelve (12) month period ending on the last day of each
fiscal quarter of Borrower. For purposes of this paragraph:

a. "Interest-Bearing Debt" means Borrower's
aggregate interest-bearing debt as of the last day of the applicable period, as
reasonably determined by Bank on a consolidated basis in accordance with GAAP.
Interest-Bearing Debt specifically includes, without limitation, all Loans, all
loans from third Persons, all purchase money indebtedness and all capital leases
of Borrower. Interest Bearing Debt does not include Letters of Credit, but does
include any payment made by Bank on account of a Letter of Credit.

Page 32-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

b. "EBITDA" means, for the applicable period,
Borrower's net income after taxes, plus interest expense, income tax expense,
depreciation and amortization, as reasonably determined by Bank on a
consolidated basis in accordance with GAAP.

14. NEGATIVE COVENANTS. Until payment in full of all payment
obligations, and performance of all other obligations, of Borrower under the
Loan Documents, Borrower agrees that:

14.1. LIQUIDATION, MERGER OR SALE OF ASSETS. Borrower shall
not liquidate, dissolve or enter into any merger, consolidation or other
combination, nor sell, lease or dispose of any portion of its business or assets
except in the ordinary course of its business, without the Bank's prior written
consent, which shall not be unreasonably withheld.

14.2. GUARANTIES, LOANS AND INVESTMENTS.

a. Borrower shall not assume, guarantee, endorse or
otherwise become directly or contingently liable for, nor obligated to purchase,
pay or provide funds for payment of, any obligation or indebtedness of any other
Person.

b. Borrower shall not make or contract to make any
loan to any Person or purchase or otherwise acquire the capital stock of, or any
interest in, any Person; provided, however, that Borrower may acquire marketable
securities that are regularly traded in a nationally recognized United States
securities market, and provided that Borrower may make loans in an aggregate
principal amount not to exceed at any one time outstanding the amount of Fifty
Thousand Dollars ($50,000).

14.3. LIENS. Borrower shall not, at any time, grant a
security interest or other encumbrance on all or any of its presently owned or
hereafter acquired Collateral, except to Bank; provided, however, that Borrower
may grant purchase money security interests to secure purchase money
indebtedness that does not exceed Sixty Thousand Dollars ($60,000) in the
aggregate in any fiscal year of Borrower.

14.4. TYPE OF BUSINESS. Borrower shall not make any material
change in the character of its business.

15. CASH COLLATERAL ACCOUNT. Notwithstanding the provisions of any
other Loan Documents, except at such times as the unpaid balance, principal and
interest, of the Revolving Loan is zero ($0.00), Borrower hereby agrees to hold
all proceeds of collections on its accounts and of any other Collateral in trust
for Bank and to deliver such proceeds to Bank daily in the exact form in which
they are received, together with a collection report in form satisfactory to
Bank. Cash proceeds (including checks) of all such Collateral shall be
deposited in an account maintained with and under the sole control of Bank.
Provided no Event of Default, or event which, with notice or lapse of time, or
both, would be an Event of Default, has occurred, Bank may maintain sole control
over cash proceeds for one (1) full Business Day following the date of

Page 33-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

deposit, and thereafter shall apply those proceeds (a) first, to the unpaid
balance of the Revolving Loan, (b) second, Bank may, at its option, apply any or
all remaining proceeds to payment of any of Borrower's obligations to Bank that
are then due, and (c) third, Bank shall release any remaining proceeds to
Borrower. If any Event of Default, or any event which, with notice or lapse of
time, or both, would be an Event of Default, has occurred, Bank, in its
discretion, may apply any or all cash proceeds to payment of any of Borrower's
obligations to Bank, whether or not then due, or may release any such proceeds
or any portion thereof to Borrower.

16. DEFAULT.

16.1. EVENTS OF DEFAULT. The occurrence of any of the
following shall constitute an Event of Default under this Agreement:

a. Any failure to pay any portion of any principal,
interest or fees within ten (10) days after the due date thereof under this
Agreement, any Note or any other Loan Document;

b. Any failure (other than as specified in
Paragraph 16.1.a) by Borrower to perform or comply with any term of this
Agreement, any other Loan Document or any other agreement between Bank and
Borrower within twenty (20) days after written notice by Bank to Borrower
specifying the nature of the nonperformance with reasonable particularity;

c. Any indebtedness of Borrower under any note,
indenture, agreement, undertaking or obligation of any kind to any Person,
including Bank, becomes due by acceleration or otherwise and is not paid;
provided, however, that if Borrower objects in good faith to the validity or the
amount of any such indebtedness (except for indebtedness to Bank), then
Borrower, at its expense, may contest the validity or amount of that
indebtedness provided that, upon Bank's request, Borrower promptly provides a
bond, cash deposit or other security reasonably satisfactory to Bank to protect
Bank should the contest be unsuccessful;

d. Any security interest or lien created or
purported to be created by any Collateral Document shall cease to be, or shall
be asserted by any Person not to be, a valid, first priority security interest
or lien;

e. Any warranty, representation or statement made
or furnished to Bank by or on behalf of Borrower proves to have been false or
misleading in any material respect when made or furnished;

f. The commencement of any proceeding under any
bankruptcy or insolvency laws by or against, appointment of a receiver for any
part of the property of, insolvency or business failure of, or any attachment,
seizure or levy on any property of, Borrower;

Page 34-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

g. Any judgment or similar process in an amount in
excess of Twenty-Five Thousand Dollars ($25,000) individually or in the
aggregate shall be entered or filed against Borrower and remains unpaid,
unvacated, unbonded or unstayed for a period of thirty (30) days or more;

h. Borrower ceases to be an Affiliate of Brian
Obie, except upon Brian Obie's death.

16.2. CONSEQUENCES OF DEFAULT; BANK'S RIGHTS AND REMEDIES.
Time is of the essence of this Agreement. Upon the occurrence of any Event of
Default and at any time thereafter Bank may, at its sole option, do any one or
more of the following:

a. Without notice to Borrower, declare the entire
outstanding balance of principal and interest of the Loans immediately due and
payable, whereupon the same shall become immediately due and payable without
presentment, demand, protest or other requirements of any kind, all of which are
expressly waived by Borrower; and

b. Exercise any and all other rights and remedies
provided in the Loan Documents and in any related agreements and documents, and
as otherwise provided by Law.

Bank's rights under Paragraph 16.2.a. shall not be deemed to restrict any right
of Bank to demand payment in full of any Loan.

17. OUTSTANDING P&C LETTERS OF CREDIT.

17.1. REPRESENTATIONS AND WARRANTIES. At the time of
execution of this Agreement, First Union National Bank (First Union) has
financing statements of record against P&C (but not Obie or Obie BC) with
priority superior to that of Bank's lien. Borrower represents and warrants to
Bank that:

a. P&C's only outstanding obligations to First
Union relate to a $150,000 Letter of Credit issued by First Union in which
Broward County is the beneficiary, a $150,000 Letter of Credit issued by First
Union in which International Fidelity Insurance Co. is the beneficiary, a
$100,000 Letter of Credit issued by First Union in which Southwest Ohio Regional
Transit Authority is the beneficiary, and an $8,750 Letter of Credit issued by
First Union in which Southwest Ohio Regional Transit Authority is the
beneficiary (collectively, the P&C Letters of Credit).

b. No amount has been drawn against any P&C Letter
of Credit, and no event has occurred that could be grounds for drawing against
any P&C Letter of Credit.

17.2. FIRST UNION CERTIFICATE. Upon execution of this
Agreement, Borrower shall deliver to Bank the written certificates of First
Union confirming that:

Page 35-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

a. The representations in paragraph 17.1. are true.

b. Promptly upon termination of the P&C Letters of
Credit, First Union will terminate or otherwise satisfy all liens it may have
against P&C.

17.3. TERMINATION OF P&C LETTERS OF CREDIT. Promptly following
execution of this Agreement, Borrower shall cause the P&C Letters of Credit to
be terminated by substituting Letters of Credit issued by Bank pursuant to
paragraph 2.2., and shall cause First Union to terminate or otherwise satisfy
all liens it may have against P&C.

18. MISCELLANEOUS.

18.1. ARBITRATION. Bank and Borrower agree that all disputes,
claims and controversies between them, whether individual, joint, or class in
nature, relating in any way to this Agreement, the other Loan Documents or the
Loan, including without limitation contract and tort disputes, shall be
arbitrated pursuant to the Rules of the American Arbitration Association, upon
request of either party. No act to take or dispose of any Collateral shall
constitute a waiver of this arbitration provision or be prohibited by this
arbitration provision. This includes, without limitation, obtaining injunctive
relief or a temporary restraining order; foreclosing by notice and sale under
any deed of trust or mortgage; obtaining a writ of attachment or imposition of a
receiver; or exercising any rights relating to personal property, including
taking or disposing of such property with or without judicial process pursuant
to Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness or any act, or
exercise of any right, concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the Collateral,
shall also be arbitrated, provided, however, that no arbitrator shall have the
right or other power to enjoin or restrain any act of any party. Judgment upon
any award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing herein shall preclude any party from seeking equitable
relief from a court of competent jurisdiction. The statute of limitations,
estoppel, waiver, laches, and similar doctrines which would otherwise be
applicable in any action brought by a party shall be applicable in any
arbitration proceeding, and the commencement of any arbitration proceeding shall
be deemed the commencement of any action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.

18.2. OUT-OF-POCKET COSTS. Borrower agrees to pay Bank on
demand an amount equal to all out-of-pocket costs incurred by Bank in connection
with the preparation of this Agreement and the other Loan Documents and the
administration of the Loans (including, without limitation, title policy
premiums, recording and filing fees, inside and outside attorney fees,
environmental assessments).

18.3. COLLECTION COSTS AND ATTORNEY FEES. Whether or not
litigation or arbitration is commenced, Borrower promises to pay all costs of
collecting any amounts which may become due to Bank under this Agreement, any
Note, any Collateral Document or any other Loan Document. Without limiting the
foregoing, if litigation or

Page 36-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

arbitration is commenced to enforce or construe any term of this Agreement, the
prevailing party shall be entitled to recover from the other party all costs
thereof, including, but not limited to, such sums as the court or arbitrator(s)
may adjudge reasonable as attorney fees at trial, in any appellate proceeding
and in any proceeding under the Bankruptcy Code or receivership.

18.4. INTEGRATION; AMENDMENTS; CONFLICTING TERMS. This
Agreement, together with the other Loan Documents, comprises the entire
agreement of the parties on the subject matter hereof and supersedes and
replaces all prior agreements, oral and written, on that subject matter. No
alteration or amendment to this Agreement or any of the other Loan Documents
shall be effective unless given in writing and signed by the party or parties
sought to be bound by the alteration or amendment. If any term of any other
Loan Document expressly conflicts with the provisions of this Agreement, the
provisions of this Agreement shall control; provided, however, that the
inclusion of supplemental rights and remedies of Bank in any other Loan Document
shall not be deemed a conflict with this Agreement.

18.5. ENFORCEMENT AND WAIVER BY BANK. Bank shall have the
right at all times to enforce the provisions of this Agreement, the Notes and
all other Loan Documents in strict accordance with the terms of those documents,
notwithstanding any conduct or custom on the part Bank in refraining from so
doing at any time. The failure of Bank at any time to strictly enforce its
rights under such provisions shall not be construed as having created a custom
in any way contrary to the specific provisions of this Agreement or as having in
any way modified or waived the same. All rights and remedies of Bank are
cumulative and concurrent, and the exercise of any one right or remedy shall not
be deemed a waiver or release of any other right or remedy. Obie, Obie BC and
P&C, as Borrower, are jointly and severally liable for payment and performance
of Borrower's obligations under this Agreement.

18.6. BINDING EFFECT; ASSIGNMENT. This Agreement shall inure
to the benefit of, and shall be binding upon, the parties' respective successors
and permitted assigns. However, Borrower has no right to assign any of its
rights or obligations under this Agreement or any other Loan Document without
Bank's prior written consent.

18.7. COUNSEL. Each party acknowledges that each party has
been represented by counsel in connection with the preparation and execution of
this Agreement and the other Loan Documents, and that each party has thoroughly
reviewed those documents with that party's counsel. The rule of construction
that a written agreement is construed against the party preparing or drafting
the agreement shall specifically not apply to the interpretation of this
Agreement or the other Loan Documents.

18.8. NOTICES. Any notices required or permitted to be given
under the terms of this Agreement or any other Loan Documents shall be in
writing and may be given by personal delivery; first-class mail; certified mail,
return receipt requested; or nationally recognized overnight courier; directed
to the parties at the following addresses, or such other address as any party
may designate in writing prior to the time of the giving of such notice, or in
any other manner authorized by law:

Page 37-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

Borrower: 4211 West 11th Avenue
Eugene, OR 97402
Attention: Mr. Brian Obie

Bank: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, OR 97204

With a copy to: Attn: Larry Johnson
800 Willamette Street, Third Floor
Eugene, OR 97401

Any notice given shall be effective when actually received; or if given by
certified mail, then forty-eight (48) hours after deposit of such notice in the
United States mail with postage prepaid; or if given by overnight courier, then
twenty-four (24) hours after the deposit of such notice with the overnight
courier with delivery charges prepaid.

18.9. SEVERABILITY. If a court of competent jurisdiction
finds any provision of this Agreement to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.

18.10. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Oregon
without regard to conflicts of law principles.

18.11. COUNTERPARTS; EXECUTION BY FACSIMILE. This Agreement
may be executed in several counterparts, each of which will be deemed to be an
original and all of which together constitute one and the same agreement.
Delivery of an executed copy of this Agreement by telecopy, telex or other means
of electronic communication producing a printed copy will be deemed to be an
execution and delivery of this Agreement on the date of such communication by
the parties so delivering such a copy. The party so delivering such a copy via
electronic communication shall deliver an executed original of this Agreement to
the other party within two (2) days of the date of delivery of the copy sent via
electronic communication.

18.12. STATUTORY DISCLOSURE. By Oregon statute (ORS 41.580),
the following disclosure shall be made:

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE
BY BANK AFTER OCTOBER 3, 1989

Page 38-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL,
FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE INWRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK
TO BE ENFORCEABLE.

DATED as of September 1, 1998.

OBIE MEDIA CORPORATION U.S. BANK NATIONAL ASSOCIATION, formerly
known as United States National Bank Of
Oregon

By /s/ Brian Obie By /s/ Larry Johnson
--------------------------- ----------------------------------
Brian Obie, President Larry Johnson, Vice President

OBIE MEDIA LTD.

By /s/ Brian Obie
---------------------------
Brian Obie, Treasurer

PHILBIN & COINE, INC.

By /s/ Wayne P. Schur
---------------------------
Wayne P. Schur, President

Page 39-RESTATED AND AMENDED LOAN AGREEMENT

<PAGE>

YIELD MAINTENANCE - LIBOR

Subject to the terms of the Note* of which this exhibit is a part, Borrower
may prepay the principal balance in whole or in part on any payment due date
by paying, in addition to the principal payment, accrued interest and any
other sums due Lender at the time of prepayment, a yield maintenance charge
("YMC") as determined by the following formula and if YMC is greater than
zero:

YMC = p x (i - y) x f

Where:

p = the prepaid principal amount

i = the current interest rate on the Note

y = the most current yield rate ("Yield Rate") on Lender's LIBOR Base Rate*
as defined in the Note for the LIBOR Period* most closely matching the
term from the date of prepayment to the end of the Yield Maintenance
Period.

n = a fraction wherein the numerator is the number of days from the date of
prepayment to the end of the Yield Maintenance Period and the denominator
is 360.

-n
f = present value factor = 1 - (1 + y)
-----------
y

"Yield Maintenance Period" means the time period from the date of prepayment
to the earlier of the next scheduled interest rate adjustment date as defined
in the Note or the maturity date of the Note.

If Borrower shall submit a payment amount in excess of the principal,
interest and other amounts due Lender, the allocation of principal and YMC
shall be calculated based on the following formula:
a= p + YMC

Where:

a = the excess amount to be applied

p = the prepaid principal amount = a
---------------
f x (i - y) + 1

YMC = a - p

f, i and y have the same meaning as stated above.

Except as provided in the next sentence, any partial prepayment of the
outstanding balance shall not extend the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender shall
otherwise agree in writing. Upon any partial prepayment, Lender shall have
the option, in its sold and absolute discretion, to recalculate the monthly
installments due under the Note so that the amortization period remains the
same.

Borrower shall pay the YMC due under this exhibit whether the prepayment is
voluntary or involuntary (in connection with Lender's acceleration of the
unpaid principal balance of the Note) or Lender's deed of trust securing the
Note is satisfied or released by foreclosure (whether by power of sale or
judicial proceeding), deed in lieu of foreclosure or by any other means.
Notwithstanding any other provision herein to the contrary, Borrower shall
not be required to pay any YMC in connection with any prepayment occurring as
a result of the application of insurance proceeds or condemnation awards
under Lender's deed of Trust.

Should the LIBOR Base Rate not be available or discontinued, Lender shall
choose a comparable index in its sold and absolute discretion.

Lender's determination of the Yield Rate, LIBOR Base Rate, Yield Maintenance
Period and calculation of the formulas contained herein shall be conclusive
absent manifest error.

*For purposes of this exhibit, "Note" means "Agreement"; "LIBOR Base Rate"
means "LIBOR Rate"; and "LIBOR Period" means "LIBOR Interest Period."

<PAGE>

Yield Maintenance - LIBOR EXHIBIT A

YIELD MAINTENANCE - U.S. TREASURY SECURITY

Subject to the terms of the Note* of which this addendum is a part, Borrower
may prepay the principal balance in whole or in part on any payment due date
by paying, in addition to the principal payment, accrued interest and any
other sums due Lender at the time of prepayment, a yield maintenance charge
("YMC") as determined by the following formula and if YMC is greater than
zero:

YMC = p x (i - y) x f

p = the prepaid principal amount

i = the current interest rate on the Note

y = the most current yield rate ("Yield Rate") on the U.S. Treasury Security
with a term most closely matching the remaining term from the date of
the prepayment to the end of the Yield Maintenance Period, as reported
under the heading "Week Ending" ("Auction Average" for 3 or 6 month
Treasury Bills) in the most currently available Federal Reserve
statistical release H.15 (519) of the Board of Governors of the Federal
Reserve System.

n = the number of years, and any fraction thereof remaining between the
prepayment date and the end of the Yield Maintenance Period.

-n
f = present value factor = 1 - (1 + y)
-----------
y

If Borrower shall submit a payment amount in excess of the principal,
interest and other amounts due Lender, the allocation of the principal and YMC
shall be calculated based on the following formula:

a= p + YMC

Where:

a = the excess amount to be applied
p = the prepaid principal amount = a
---------------
f x (i - y) + 1

YMC = a - p

f, i and y have the same meaning as stated above.

Except as provided in the next sentence, any partial prepayment of the
outstanding balance shall not extend the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender shall
otherwise agree in writing. Upon any partial prepayment, Lender shall have
the option, in its sole discretion, to recalculate the monthly installments
due under the Note so that the amortization period remains the same.

Borrower shall pay the YMC due under this addendum whether the prepayment is
voluntary or involuntary (in connection with Lender's acceleration of the
unpaid balance of the Note) or Lender's deed of trust securing the Note is
satisfied or released by foreclosure (whether by power of sale or judicial
proceeding), deed in lieu of foreclosure or by any other means.
Notwithstanding any other provision herein to the contrary, Borrower shall
not be required to pay any YMC in connection with any prepayments occurring
as a result of the application of insurance proceeds or condemnation awards
under Lender's deed to Trust.

Should the Federal Reserve statistical release H.15 (519) not be available or
discontinued, Lender shall choose another source or comparable data in its
sold and absolute discretion.

Lender's determination of the Yield Rate, date of H.15 report, Yield
Maintenance Period and calculation of the formulas contained herein shall be
conclusive absent manifest error.

For purposes of this exhibit, "Note" means "Agreement."

<PAGE>

EXHIBIT B

PROMISSORY NOTE
(Revolving Note)

$4,000,000 Eugene, Oregon September 1, 1998

PARTIES:

OBIE MEDIA CORPORATION, an Oregon corporation (Obie)

OBIE MEDIA LTD., a British Columbia corporation (Obie BC)

PHILBIN & COINE, INC., a New York corporation (P&C)

(Obie, Obie BC and P&C, individually and jointly, are referred to in this
note as Borrower)

U.S. BANK NATIONAL ASSOCIATION, formerly known as United States National
Bank of Oregon (Bank)

AGREEMENTS:

1. PROMISE TO PAY. Upon demand, for value received, Borrower promises to
pay to Bank, or its order, the principal amount of Four Million United States
Dollars ($4,000,000), or so much as may be outstanding, together with interest
on the unpaid principal balance of each advance at the rate specified in this
note. Interest shall be calculated from the date of each advance until
repayment of each advance.

2. PAYMENT OF PRINCIPAL. Borrower shall pay the Principal Balance of
this note upon demand.

3. INTEREST RATE AND PAYMENT OF INTEREST.

3.1. DEFINITIONS. As used in this note, the following terms have
the following meanings:

a. "Prime Borrowing Rate" means a variable interest rate equal
to the Prime Rate.

b. "Prime Rate" means the rate identified and publicly
announced by Bank from time to time as its prime rate and does not necessarily
mean, for example, the lowest rate of interest which Bank collects for any
borrower or group of borrowers.

Page 1-PROMISSORY NOTE

<PAGE>

c. "Principal Balance" means, at any time, the unpaid principal
balance of this note.

d. "Related Documents" means, without limitation, all loan
agreements, mortgages, deeds of trust, security agreements, guaranties and all
other instruments, agreements and documents, whether now or hereafter existing,
relating to the indebtedness evidenced by this note.

3.2. PRIME BORROWING RATE. Borrower shall pay interest on the
Principal Balance at the Prime Borrowing Rate. The Prime Borrowing Rate shall
be adjusted without notice effective on each day the Prime Rate changes.

3.3. DEFAULT INTEREST RATE. Notwithstanding anything in this note to
the contrary, upon the occurrence of an Event of Default, the Principal Balance
shall thereafter accrue interest at a variable interest rate equal to the Prime
Rate plus five percent (5%).

3.4. PAYMENT OF INTEREST. Borrower shall pay accrued interest on the
fifteenth (15th) day of September, 1998, and on the fifteenth (15th) day of
every calendar month thereafter, and upon demand.

3.5. COMPUTATION OF INTEREST. All interest will be computed at the
applicable rate based on a three hundred sixty (360) day year and applied to the
actual number of days elapsed.

3.6. USURY. Notwithstanding anything in this note to the contrary, at
no time shall the Prime Borrowing Rate exceed the maximum rate permitted by
applicable law.

4. PREPAYMENT. Prepayment may be made in whole or in part at any time.
All prepayments shall be applied first to the Principal Balance and then to
accrued interest.

5. LINE OF CREDIT. This note evidences a revolving line of credit.
Advances under this note may be requested orally by Borrower or by an authorized
person. Bank may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions or directions by telephone or
otherwise to Bank are to be directed to the Eugene office of Bank's Corporate
Banking Division. Borrower agrees to be liable for all sums either (a) advanced
in accordance with the instructions of an authorized person or (b) credited to
any of Borrower's accounts with Bank, regardless of the fact that persons other
than those authorized to borrow have authority to draw against the accounts.
The Principal Balance may be evidenced by endorsements on this note or by Bank's
internal records, including daily computer printouts. Bank will have no
obligation to advance funds under this note if an Event of Default, or an event
which, with notice or lapse of time, or both, would be an Event of Default, has
occurred or will occur as a result of

Page 2-PROMISSORY NOTE

<PAGE>

making such advance, or if Bank has demanded payment of the Principal Balance
and accrued interest.

6. DEFAULT. Each of the following shall constitute an Event of Default
under this note:

6.1. Borrower fails to make any payment within ten (10) days after it
is due.

6.2. Any default under any Related Document or under any other
agreement between Bank and Borrower.

7. LATE CHARGE. If a payment is nineteen (19) days or more past due,
Borrower will be charged a late charge of five percent (5%) of the delinquent
payment. This right is in addition to Bank's other rights, including, without
limitation, Bank's acceleration rights.

8. NOTICES. Any notices required or permitted to be given under the
terms of this note shall be in writing and may be given by personal delivery;
first-class mail; certified mail, return receipt requested; or nationally
recognized overnight courier; directed to the parties at the following
addresses, or such other address as any party may designate in writing prior to
the time of the giving of such notice, or in any other manner authorized by law:

Borrower: 4211 West 11th Avenue
Eugene, OR 97402
Attention: Mr. Brian Obie

Bank: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, Oregon 97204

With a copy to: Attn: Larry Johnson
800 Willamette Street, Third Floor
Eugene, Oregon 97401

Page 3-PROMISSORY NOTE

<PAGE>

party. No act to take or dispose of any collateral shall constitute a waiver of
this arbitration provision or be prohibited by this arbitration provision. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; foreclosing by notice and sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness or any act, or exercise of any
right, concerning any collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral, shall also be
arbitrated, provided, however, that no arbitrator shall have the right or other
power to enjoin or restrain any act of any party. Judgment upon any award
rendered by any arbitrator may be entered in any court having jurisdiction.
Nothing herein shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel, waiver,
laches, and similar doctrines which would otherwise be applicable in any action
brought by a party shall be applicable in any arbitration proceeding, and the
commencement of any arbitration proceeding shall be deemed the commencement of
any action for these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration provision.

10. COLLECTION COSTS AND ATTORNEY FEES. Borrower agrees to pay upon
demand all of Bank's reasonable costs and expenses, including attorneys' fees
and Bank's legal expenses, incurred in connection with the enforcement of this
note. Costs and expenses include Bank's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

11. WAIVERS. Each maker, co-maker, endorser or guarantor of this note,
waives diligence, demand, presentment for payment, notice of non-payment,
protest and notice of protest and consents to all extensions of time and
renewals hereof, whether or not the extensions or renewals are longer than the
original period of the note, to any exchange or release of any security for the
indebtedness evidenced by this note, and to any release of any party liable on
this note or any Related Document.

12. GENERAL PROVISIONS. Time is of the essence of this note. All
obligations of any maker, co-maker, endorser or guarantor of this note are joint
and several. This note shall be governed by and construed and enforced in
accordance with the laws of the State of Oregon without regard to conflicts of
law principles. Bank's rights and remedies under this note and under any
Related Documents are cumulative.

Page 4-PROMISSORY NOTE

<PAGE>

an execution and delivery of this note on the date of such communication by the
parties so delivering such a copy. The party so delivering such a copy via
electronic communication shall deliver an executed original of this note to the
other party within one week of the date of delivery of the copy sent via
electronic communication.

14. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY
BANK AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH
ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
BANK TO BE ENFORCEABLE.

OBIE MEDIA CORPORATION

By: /s/ Brian Obie
------------------------------------
Brian Obie, President

OBIE MEDIA LTD.

By: /s/ Brian Obie
------------------------------------
Brian Obie, Treasurer

PHILBIN & COINE, INC.

By: /s/ Wayne P. Schur
------------------------------------
Wayne P. Schur, President

U.S. BANK NATIONAL ASSOCIATION, formerly
known as United States National Bank of Oregon

By: /s/ Larry Johnson
------------------------------------
Larry Johnson, Vice President

Page 5-PROMISSORY NOTE

<PAGE>

PROMISSORY NOTE
(Term Note A)

$5,760,000 Eugene, Oregon September 1, 1998

PARTIES:

OBIE MEDIA CORPORATION, an Oregon corporation (Obie)

OBIE MEDIA LTD., a British Columbia corporation (Obie BC)

PHILBIN & COINE, INC., a New York corporation (P&C)

(Obie, Obie BC and P&C, individually and jointly, are referred to in this
note as Borrower)

U.S. BANK NATIONAL ASSOCIATION, formerly known as United States National
Bank of Oregon (Bank)

AGREEMENTS:

1. PROMISE TO PAY. For value received, Borrower promises to pay to Bank,
or its order, the principal amount of Five Million Seven Hundred Sixty Thousand
Dollars ($5,760,000), together with interest thereon at the rates specified in
this note.

2. MAXIMUM PRINCIPAL BALANCE. The maximum unpaid Principal Balance
outstanding on this note, from time to time, shall be the Principal Balance that
would be outstanding if an original Principal Balance of Five Million Seven
Hundred Sixty Thousand Dollars ($5,760,000) were repaid in four (64)
consecutively monthly installments, on the fifteenth (15th) day of each calendar
month commencing September 15, 1998, as follows: Four monthly installments of
Sixty-Five Thousand Dollars ($65,000) each; followed by fifty-nine (59) monthly
installments of Ninety-one Thousand Six Hundred Sixty-Seven Dollars ($91,667)
each; followed by final monthly installment of Ninety-one Thousand Six Hundred
Forty-Seven Dollars ($91,647).

3. PAYMENT OF PRINCIPAL. The Principal Balance of this note shall be
paid in sixty-four (64) monthly installments. The first monthly installment
shall be due and payable on September 15, 1998, and an additional monthly
installment shall be due and payable on the fifteenth (15th) day of every
calendar month thereafter, to and including December 15, 2003, when the unpaid
balance of this note, principal and interest, shall be paid in full. The first
four (4) monthly installments shall be in the amount of Sixty-Five Thousand
Dollars ($65,000) each. The next fifty-nine (59) monthly installments shall be
in the amount of Ninety-one Thousand Six

Page 1-PROMISSORY NOTE

<PAGE>

Hundred Sixty-Seven Dollars ($91,667) each. The final monthly installment shall
be in the amount of Ninety-one Thousand Six Hundred Forty-seven Dollars
($91,647). All regularly scheduled payments of principal shall be applied:

3.1. First to any Prime Rate Borrowing Amounts, in such order as
Borrower may designate, or in the absence of such designation, in such order as
Bank may determine in Bank's absolute discretion; and

3.2. Second, to any LIBOR Borrowing Rate Amounts, in such order
as Borrower may designate, or in the absence of such designation, in such order
as Bank may determine in Bank's absolute discretion.

4. INTEREST RATE AND PAYMENT OF INTEREST.

4.1. DEFINITIONS. As used in this note, the following terms have
the following meanings:

a. "Business Day" means any day other than a Saturday,
Sunday or other day that commercial banks in Portland, Oregon, Minneapolis,
Minnesota, or New York, New York, are authorized or required by law to close.

b. "LIBOR Borrowing Rate" means the LIBOR Rate plus two
percent (2%). The LIBOR Borrowing Rate for each LIBOR Borrowing Rate Amount
shall be determined pursuant to Paragraph 4.3., as of the beginning of the
applicable LIBOR Interest Period, based on the then current LIBOR Rate, and,
except as provided in Paragraph 4.4., shall remain fixed during that LIBOR
Interest Period.

c. "LIBOR Borrowing Rate Amount(s)" means those portions
of the Principal Balance that, at any time, are accruing interest at a LIBOR
Borrowing Rate.

d. "LIBOR Interest Period" means, as to any LIBOR
Borrowing Rate Amount, a period of one, two, three or six months commencing on
the date the LIBOR Borrowing Rate becomes applicable; provided, however, that
(1) the first day of such LIBOR Interest Period must be a Business Day; (2) no
LIBOR Interest Period shall be selected which would extend beyond Maturity; (3)
no LIBOR Interest Period shall extend beyond the date of any principal payment
required under this note, unless the sum of the following amounts for this note
equals or exceeds the amount of such principal payment: (i) the Prime Borrowing
Rate Amount for this note, plus (ii) LIBOR Borrowing Rate Amounts for this note
with LIBOR Interest Periods ending on or before the scheduled date of that
principal payment; (4) any LIBOR Interest Period which would otherwise expire on
a day which is not a Business Day, shall be extended to the next succeeding
Business Day, unless the results of such extension would be to extend such LIBOR
Interest Period into another calendar month, in which event the LIBOR Interest
Period shall end on the immediately preceding Business Day; and (5) any LIBOR
Interest Period that begins on the last Business Day of a calendar month (or a
day for which there is no numerically corresponding

Page 2-PROMISSORY NOTE

<PAGE>

day in the calendar month at the end of such LIBOR Interest Period) shall end on
the last Business Day of a calendar month.

e. "LIBOR Rate" means, for any LIBOR Interest Period, the
rate per annum (computed on the basis of a 360 day year and the actual number of
days elapsed and rounded upward to the nearest 1/16 of 1%) established by Bank
as its LIBOR Rate, based on Bank's determination, on the basis of such factors
as Bank deems relevant, of the rate of interest at which U.S. dollar deposits
would be offered to Bank in the London interbank market at approximately 11:00
a.m. London time on the date which is two (2) Business Days prior to the first
day of such LIBOR Interest Period for delivery on the first (1st) day of such
LIBOR interest period for the number of months therein; provided, however, that
Bank's LIBOR Rate shall be adjusted to take into account the maximum reserves
required to be maintained for Eurocurrency liabilities by banks during each such
LIBOR Interest Period as specified in Regulation D of the Board of Governors of
the Federal Reserve System or any successor regulation, and the maximum
assessment rate required to be paid by Bank to the Federal Deposit Insurance
Corporation insuring U.S. dollar deposits made at offices of Bank.

f. "Maturity" means the time when the entire unpaid
Principal Balance becomes due and payable, whether by agreement, acceleration or
otherwise.

g. "Prime Borrowing Rate" means the Prime Rate plus
one-half of one percent (0.5%). The Prime Borrowing Rate shall be adjusted
without notice effective on each day the Prime Rate changes.

h. "Prime Rate" means the rate identified and publicly
announced by Bank from time to time as its prime rate and does not necessarily
mean, for example, the lowest rate of interest which Bank collects for any
borrower or group of borrowers.

i. "Prime Borrowing Rate Amount" means that portion of the
Principal Balance that, at any time, is accruing interest at the Prime Borrowing
Rate.

j. "Principal Balance" means, at any time, the unpaid
principal balance of this note.

k. "Related Documents" means, without limitation, all loan
agreements, mortgages, deeds of trust, security agreements, guaranties and all
other instruments, agreements and documents, whether now or hereafter existing,
relating to the indebtedness evidenced by this note.

4.2. PRIME BORROWING RATE. Except for portions of the Principal
Balance that are accruing interest at a LIBOR Borrowing Rate, Borrower shall pay
interest on the Principal Balance at the Prime Borrowing Rate. The Prime
Borrowing Rate shall be adjusted without notice effective on each day the Prime
Rate changes.

Page 3-PROMISSORY NOTE

<PAGE>

4.3. LIBOR BORROWING RATE.

a. Borrower may obtain LIBOR Borrowing Rate quotes from
Bank between 8:00 a.m. and 10:00 a.m. (Portland, Oregon, time) on any Business
Day. Borrower may request a new Advance as a LIBOR Borrowing Rate Amount, or
conversion of a portion of the Prime Borrowing Rate Amount to a LIBOR Borrowing
Rate Amount, or a new LIBOR Interest Period for a LIBOR Borrowing Rate Amount
whose LIBOR Interest Period is expiring, only by giving Bank notice in
accordance with Paragraph 4.3.b. not later than 10:00 a.m. on such date.

b. Whenever Borrower desires to use the LIBOR Borrowing
Rate option, Borrower shall give Bank irrevocable notice (either in writing or
orally) between 8:00 a.m. and 10:00 a.m. (Portland, Oregon, time) two (2)
Business Days in advance of the desired effective date of such rate. Any oral
notice shall be given by, and any written notice or confirmation of an oral
notice shall be signed by, a person authorized to execute and deliver promissory
notes to Bank on behalf of Borrower, and shall specify the requested effective
date of the rate, the LIBOR Interest Period, and whether Borrower is requesting
a new Advance as a LIBOR Borrowing Rate Amount, conversion of a portion of the
Prime Borrowing Rate Amount to a LIBOR Borrowing Rate Amount, or a new LIBOR
Interest Period for a LIBOR Borrowing Rate Amount whose LIBOR Interest Period is
expiring. Bank may, but need not, require that all oral notices be confirmed in
writing. Notwithstanding any other term of this note, Borrower may elect a
LIBOR Borrowing Rate Amount only in the minimum principal amount of Five Hundred
Thousand Dollars ($500,000) and in larger integral multiples of One Hundred
Thousand Dollars ($100,000). Except as provided in Paragraph 4.4., the LIBOR
Borrowing Rate for each LIBOR Borrowing Rate Amount shall remain fixed for the
applicable LIBOR Interest Period.

c. If at any time Bank's LIBOR Rate is unascertainable or
unavailable to Bank or if LIBOR Rate loans become unlawful, the option to select
the LIBOR Borrowing Rate shall terminate immediately. If any LIBOR Borrowing
Rates are then in effect (i) each shall terminate automatically with respect to
the applicable LIBOR Borrowing Rate Amount (a) on the last day of the applicable
LIBOR Interest Period, if Bank may lawfully continue to maintain such loans, or
(b) immediately if Bank may not lawfully continue to maintain such loans through
such day, and (ii) the Prime Borrowing Rate automatically shall become effective
as to such amounts upon termination.

Page 4-PROMISSORY NOTE

<PAGE>

within fifteen (15) days after demand by Bank such additional amount as will
compensate Bank for such increased cost or reduction. The determination
hereunder by Bank of such additional amounts shall be conclusive in the absence
of manifest error. If Bank demands compensation under this paragraph, Borrower
may, upon three (3) Business Days' notice to Bank, pay the accrued interest on
all LIBOR Borrowing Rate Amounts as may be affected, together with any
additional amounts payable under Paragraph 4.3.(e). Upon Borrower's paying such
accrued interest and additional costs, the Prime Borrowing Rate immediately
shall be effective with respect to the unpaid principal balance of such LIBOR
Borrowing Rate Amounts.

e. Upon any termination of any LIBOR Borrowing Rate
(including, but not limited to, conversion to another rate) or payment of all or
any portion of any LIBOR Borrowing Rate Amount on a date other than the last day
of the then applicable LIBOR Interest Period, as the case may be, including,
without limitation, (i) voluntary prepayment, (ii) acceleration following an
Event of Default, or (iii) repayment in response to a notice under Paragraph
4.3.d., Borrower shall pay to Bank on demand a yield maintenance charge
calculated pursuant to the attached Exhibit A.

f. If Borrower chooses the LIBOR Borrowing Rate, Borrower
shall pay interest based on such rate, plus any other applicable taxes or
charges hereunder, even though Bank may have obtained the funds loaned to
Borrower from sources other than the applicable London interbank market. Bank's
determination of the LIBOR Borrowing Rate and any such taxes or charges shall be
conclusive in the absence of manifest error.

g. Notwithstanding any other term of this note, Borrower
may not select the LIBOR Borrowing Rate if an event has occurred that
constitutes an Event of Default or which, with notice or lapse of time, or both,
would be an Event of Default.

4.4. DEFAULT INTEREST RATE. Notwithstanding anything in this
note to the contrary, upon the occurrence of an Event of Default, the Prime
Borrowing Rate Amount shall thereafter accrue interest at a Prime Borrowing Rate
equal to the Prime Rate plus five and one-half percent (5.5%), and each
outstanding LIBOR Borrowing Rate Amount shall accrue interest at a LIBOR
Borrowing Rate equal to the LIBOR Rate previously determined by Bank for that
LIBOR Borrowing Rate Amount plus seven percent (7%).

4.5. PAYMENT OF INTEREST. Borrower shall pay accrued interest on
the fifteenth (15th) day of September, 1998 and on the fifteenth (15th) day of
every calendar month thereafter. In addition, with respect to all LIBOR
Borrowing Rate Amounts, accrued interest shall be paid on the last day of the
applicable LIBOR Interest Period.

4.6. COMPUTATION OF INTEREST. All interest will be computed at
the applicable rate based on a three hundred sixty (360) day year and applied to
the actual number of days elapsed.

Page 5-PROMISSORY NOTE

<PAGE>

4.7. USURY. Notwithstanding anything in this note to the
contrary, at no time shall the Prime Borrowing Rate or any LIBOR Borrowing Rate
exceed the maximum rate permitted by applicable law.

5. PREPAYMENT. Prepayment may be made in whole or in part at any time.
All prepayments shall be applied:

5.1. First to any Prime Rate Borrowing Amounts, in such order as
Borrower may designate, or in the absence of such designation, in such order as
Bank may determine in Bank's absolute discretion;

5.2. Second, to any LIBOR Borrowing Rate Amounts, in such order
as Borrower may designate, or in the absence of such designation, in such order
as Bank may determine in Bank's absolute discretion; and

5.3. Then to accrued interest.

Prepayments of principal shall be applied to the remaining installments of
principal in the order of their maturity.

6. LINE OF CREDIT. This note evidences a reducing revolving line of
credit. Advances under this note may be requested orally by Borrower or by an
authorized person. Bank may, but need not, require that all oral requests be
confirmed in writing. All communications, instructions or directions by
telephone or otherwise to Bank are to be directed to the Eugene office of Bank's
Corporate Banking Division. Borrower agrees to be liable for all sums either
(a) advanced in accordance with the instructions of an authorized person or (b)
credited to any of Borrower's accounts with Bank, regardless of the fact that
persons other than those authorized to borrow have authority to draw against the
accounts. The Principal Balance may be evidenced by endorsements on this note
or by Bank's internal records, including daily computer printouts. To the
extent Borrower's obligation to pay monthly installments of principal has been
discharged as a result of prepayments pursuant to Paragraph 5., future advances
under this note shall reinstate the obligation to pay those installments in the
inverse order of their maturity. Accordingly, Borrower's obligation to pay
monthly installments of principal shall not recommence until such time as those
monthly installments must recommence in order for Borrower to pay this note in
full not later than December 15, 2003, assuming all payments are made precisely
when due. Bank will have no obligation to advance funds under this note if an
Event of Default, or an event which, with notice or lapse of time, or both,
would be an Event of Default, has occurred or will occur as a result of making
such advance.

7. LATE CHARGE. If a payment is nineteen (19) or more days past due,
Borrower will pay a late charge of five percent (5%) of the delinquent payment,
but not more than the maximum amount authorized by law.

Page 6-PROMISSORY NOTE

<PAGE>

8. DEFAULT. Each of the following shall constitute an Event of Default
under this note:

8.1. Borrower fails to make any payment within ten (10) days
after it is due.

8.2. Any default under any Related Document or under any other
agreement between Bank and Borrower.

9. ACCELERATION. Upon any Event of Default, Bank may, without notice,
declare the entire Principal Balance and all accrued interest immediately due
and payable.

10. NOTICES. Any notices required or permitted to be given under the
terms of this note shall be in writing and may be given by personal delivery;
first-class mail; certified mail, return receipt requested; or nationally
recognized overnight courier; directed to the parties at the following
addresses, or such other address as any party may designate in writing prior to
the time of the giving of such notice, or in any other manner authorized by law:

Borrower: 4211 West 11th Avenue
Eugene, OR 97402
Attention: Mr. Brian Obie

Bank: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, OR 97204

With a copy to: Attn: Larry Johnson
800 Willamette Street, Third Floor
Eugene, OR 97401

11. ARBITRATION. Bank and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
relating in any way to this note or the Related Documents, including without
limitation contract and tort disputes, shall be arbitrated pursuant to the Rules
of the American Arbitration Association, upon request of either party. No act
to take or dispose of any collateral shall constitute a waiver of this
arbitration provision or be prohibited by this arbitration provision. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; foreclosing by notice and sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property

Page 7-PROMISSORY NOTE

<PAGE>

with or without judicial process pursuant to Article 9 of the Uniform Commercial
Code. Any disputes, claims, or controversies concerning the lawfulness or
reasonableness or any act, or exercise of any right, concerning any collateral,
including any claim to rescind, reform, or otherwise modify any agreement
relating to the collateral, shall also be arbitrated, provided, however, that no
arbitrator shall have the right or other power to enjoin or restrain any act of
any party. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing herein shall preclude any party from
seeking equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in any action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of any arbitration proceeding
shall be deemed the commencement of any action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.

12. COLLECTION COSTS AND ATTORNEY FEES. Borrower agrees to pay upon
demand all of Bank's reasonable costs and expenses, including attorneys' fees
and Bank's legal expenses, incurred in connection with the enforcement of this
note. Costs and expenses include Bank's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

13. WAIVERS. Each maker, co-maker, endorser or guarantor of this note,
waives diligence, demand, presentment for payment, notice of non-payment,
protest and notice of protest and consents to all extensions of time and
renewals hereof, whether or not the extensions or renewals are longer than the
original period of the note, to any exchange or release of any security for the
indebtedness evidenced by this note, and to any release of any party liable on
this note or any Related Document.

14. GENERAL PROVISIONS. Time is of the essence of this note. All
obligations of any maker, co-maker, endorser or guarantor of this note are joint
and several. This note shall be governed by and construed and enforced in
accordance with the laws of the State of Oregon without regard to conflicts of
law principles. Bank's rights and remedies under this note and under any
Related Documents are cumulative.

15. EXECUTION BY FACSIMILE; COUNTERPARTS. This note may be executed in
several counterparts, each of which will be deemed to be an original and all
of which together constitute one and the same instrument. Delivery of an
executed copy of this note by telecopy, telex or other means of electronic
communication producing a printed copy will be deemed to be an execution and
delivery of this note on the date of such communication by the parties so
delivering such a copy. The party so delivering such a copy via electronic
communication shall deliver an executed original of this note to the other
party within one week of the date of delivery of the copy sent via electronic
communication.

Page 8-PROMISSORY NOTE

<PAGE>

16. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY
BANK AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH
ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
BANK TO BE ENFORCEABLE.

OBIE MEDIA CORPORATION

By: /s/ Brian Obie
----------------------------------
Brian Obie, President

OBIE MEDIA LTD.

By: /s/ Brian Obie
----------------------------------
Brian Obie, Treasurer

PHILBIN & COINE, INC.

By: /s/ Wayne P. Schur
----------------------------------
Wayne P. Schur, President

U.S. BANK NATIONAL ASSOCIATION, formerly known as
United States National Bank of Oregon

By: /s/ Larry Johnson
----------------------------------
Larry Johnson, Vice President

Page 9-PROMISSORY NOTE

<PAGE>

YIELD MAINTENANCE - LIBOR

Subject to the terms of the Note of which this exhibit is a part, Borrower may
prepay the principal balance in whole or in part on any payment due date by
paying, in addition to the principal payment, accrued interest and any other
sums due Lender at the time of prepayment, a yield maintenance charge ("YMC") as
determined by the following formula and if YMC is greater than zero:

YMC = p x (i - y) x f

Where:

p = the prepaid principal amount

i = the current interest rate on the Note

n = a fraction wherein the numerator is the number of days from the date of
prepayment to the end of the Yield Maintenance Period and the
denominator is 360.
-n
1 - (1 + y)
f = present value factor = ------------
y

"Yield Maintenance Period" means the time period from the date of prepayment to
the earlier of the next scheduled interest rate adjustment date as defined in
the Note or the maturity date of the Note.

If Borrower shall submit a payment amount in excess of the principal, interest
and other amounts due Lender, the allocation of principal and YMC shall be
calculated based on the following formula:

a = p + YMC

Where:

a = the excess amount to be applied
a
p = the prepaid principal amount = ----------------
f x (i - y) + 1

YMC = a - p

f, i and y have the same meaning as stated above.

Except as provided in the next sentence, any partial prepayment of the
outstanding balance shall not extend the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender shall
otherwise agree in writing. Upon any partial prepayment, Lender shall have the
option, in its sole and absolute discretion, to recalculate the monthly
installments due under the Note so that the amortization period remains the
same.

Borrower shall pay the YMC due under this exhibit whether the prepayment is
voluntary or involuntary (in connection with Lender's acceleration of the unpaid
principal balance of the Note) or Lender's deed of trust securing the Note is
satisfied or released by foreclosure (whether by power of sale or judicial
proceeding), deed in lieu of foreclosure or by any other means. Notwithstanding
any other provision herein to the contrary, Borrower shall not be required to
pay any YMC in connection with any prepayment occurring as a result of the
application of insurance proceeds or condemnation awards under Lender's deed of
Trust.

Should the LIBOR Base Rate not be available or discontinued, Lender shall choose
a comparable index in its sole and absolute discretion.

Lender's determination of the Yield Rate, LIBOR Base Rate, Yield Maintenance
Period and calculation of the formulas contained herein shall be conclusive
absent manifest error.

* For purposes of this exhibit, "LIBOR Base Rate" means "LIBOR Rate"; and "LIBOR
Period" means "LIBOR Interest Period."

Yield Maintenance - LIBOR EXHIBIT A

PROMISSORY NOTE
(1998/1999 Construction Note)

$302,000 Eugene, Oregon September 1, 1998

PARTIES:

OBIE MEDIA CORPORATION, an Oregon corporation (Obie)

OBIE MEDIA LTD., a British Columbia corporation (Obie BC)

PHILBIN & COINE, INC., a New York corporation (P&C)

(Obie, Obie BC and P&C, individually and jointly, are referred to in this
note as Borrower)

U.S. BANK NATIONAL ASSOCIATION, formerly known as United States National
Bank of Oregon (Bank)

AGREEMENTS:

1. PROMISE TO PAY. Upon demand, for value received, Borrower promises to
pay to Bank, or its order, the principal amount of Three Hundred Two Thousand
United States Dollars ($302,000), or so much as may be outstanding, together
with interest on the unpaid principal balance of each advance at the rate
specified in this note. Interest shall be calculated from the date of each
advance until repayment of each advance.

2. PAYMENT OF PRINCIPAL. Borrower shall pay the Principal Balance of
this note upon demand.

3. INTEREST RATE AND PAYMENT OF INTEREST.

3.1. DEFINITIONS. As used in this note, the following terms have the
following meanings:

a. "Prime Borrowing Rate" means a variable interest rate equal
to the Prime Rate plus one-half of one percent (0.5%).

Page 1-PROMISSORY NOTE

<PAGE>

c. "Principal Balance" means, at any time, the unpaid principal
balance of this note.

3.4. PAYMENT OF INTEREST. Borrower shall pay accrued interest on the
fifteenth (15th) day of September, 1998, and on the fifteenth (15th) day of
every calendar month thereafter, and upon demand.

3.5. COMPUTATION OF INTEREST. All interest will be computed at the
applicable rate based on a three hundred sixty (360) day year and applied to the
actual number of days elapsed.

3.6. USURY. Notwithstanding anything in this note to the contrary, at
no time shall the Prime Borrowing Rate exceed the maximum rate permitted by
applicable law.

4. PREPAYMENT. Prepayment may be made in whole or in part at any time.
All prepayments shall be applied first to the Principal Balance and then to
accrued interest.

5. LINE OF CREDIT. This note evidences a non-revolving construction line
of credit. Advances under this note may be requested orally by Borrower or by
an authorized person. Bank may, but need not, require that all oral requests be
confirmed in writing. All communications, instructions or directions by
telephone or otherwise to Bank are to be directed to the Eugene office of Bank's
Corporate Banking Division. Borrower agrees to be liable for all sums either
(a) advanced in accordance with the instructions of an authorized person or
(b) credited to any of Borrower's accounts with Bank, regardless of the fact
that persons other than those authorized to borrow have authority to draw
against the accounts. The Principal Balance may be evidenced by endorsements on
this note or by Bank's internal records, including daily computer printouts.
Bank will have no obligation to advance funds under this note if an Event of
Default, or an event which, with notice or lapse of time, or both, would be an
Event of Default, has occurred or will occur as a result of making the advance,
or if Bank has demanded payment of the Principal Balance and accrued interest.

Page 2-PROMISSORY NOTE

<PAGE>

6. DEFAULT. Each of the following shall constitute an Event of Default
under this note:

6.1. Borrower fails to make any payment within ten (10) days after it
is due.

6.2. Any default under any Related Document or under any other
agreement between Bank and Borrower.

7. LATE CHARGE. If a payment is nineteen (19) days or more past due,
Borrower will be charged a late charge of five percent (5.0%) of the delinquent
payment. This right is in addition to Bank's other rights, including, without
limitation, Bank's acceleration rights.

Borrower: 4211 West 11th Avenue
Eugene, Oregon 97402
Attention: Mr. Brian Obie

Bank: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, Oregon 97204

With a copy to: Attention: Larry Johnson
800 Willamette Street, Third Floor
Eugene, Oregon 97401

Page 3-PROMISSORY NOTE

<PAGE>

obtaining injunctive relief or a temporary restraining order; foreclosing by
notice and sale under any deed of trust or mortgage; obtaining a writ of
attachment or imposition of a receiver; or exercising any rights relating to
personal property, including taking or disposing of such property with or
without judicial process pursuant to Article 9 of the Uniform Commercial Code.
Any disputes, claims, or controversies concerning the lawfulness or
reasonableness or any act, or exercise of any right, concerning any collateral,
including any claim to rescind, reform, or otherwise modify any agreement
relating to the collateral, shall also be arbitrated, provided, however, that no
arbitrator shall have the right or other power to enjoin or restrain any act of
any party. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing herein shall preclude any party from
seeking equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in any action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of any arbitration proceeding
shall be deemed the commencement of any action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.

10. COLLECTION COSTS AND ATTORNEY FEES. Borrower agrees to pay upon
demand all of Bank's reasonable costs and expenses, including attorneys' fees
and Bank's legal expenses, incurred in connection with the enforcement of this
note. Costs and expenses include Bank's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals and any anticipated post-judgment
collection services. Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

11. WAIVERS. Each maker, co-maker, endorser or guarantor of this note
waives diligence, demand, presentment for payment, notice of non-payment,
protest and notice of protest and consents to all extensions of time and
renewals hereof, whether or not the extensions or renewals are longer than the
original period of the note, to any exchange or release of any security for the
indebtedness evidenced by this note, and to any release of any party liable on
this note or any Related Document.

13. EXECUTION BY FACSIMILE; COUNTERPARTS. This note may be executed in
several counterparts, each of which will be deemed to be an original and all of
which together constitute one and the same instrument. Delivery of an executed
copy of this note by telecopy, telex or other means of electronic communication
producing a printed copy will be deemed to be an execution and delivery of this
note on the date of such communication by the parties so delivering such a copy.
The party so delivering such a copy via electronic communication shall

Page 4-PROMISSORY NOTE

<PAGE>

deliver an executed original of this note to the other party within one week of
the date of delivery of the copy sent via electronic communication.

OBIE MEDIA CORPORATION

By: /s/ Brian Obie
---------------------------------------
Brian Obie, President

OBIE MEDIA LTD.

By: /s/ Brian Obie
---------------------------------------
Brian Obie, Treasurer

PHILBIN & COINE, INC.

By: /s/ Wayne P. Schur
---------------------------------------
Wayne P. Schur, President

U.S. BANK NATIONAL ASSOCIATION, formerly known as
United States National Bank of Oregon

By: /s/ Larry Johnson
---------------------------------------
Larry Johnson, Vice President

Page 5-PROMISSORY NOTE

<PAGE>

PROMISSORY NOTE
(MO Partners Note)

$689,690.48 Eugene, Oregon September 1, 1998

PARTIES:

OBIE MEDIA CORPORATION, an Oregon corporation (Obie)

OBIE MEDIA LTD., a British Columbia corporation (Obie BC)

PHILBIN & COINE, INC., a New York corporation (P&C)

(Obie, Obie BC and P&C, individually and jointly, are referred to in this
note as Borrower)

U.S. BANK NATIONAL ASSOCIATION, formerly known as United States National
Bank of Oregon (Bank)

AGREEMENTS:

1. PROMISE TO PAY. For value received, Borrower promises to pay to Bank,
or its order, the principal amount of Six Hundred Eighty-nine Thousand Six
Hundred Ninety Dollars and Forty-eight Cents in United States Dollars
($689,690.48), together with interest thereon at the rates specified in this
note.

2. PAYMENT OF PRINCIPAL. The Principal Balance of this note shall be
paid in eighty-three (83) monthly installments. The first eighty-two (82)
monthly installments shall be in the amount of Eight Thousand Three Hundred Nine
Dollars and Fifty-two Cents ($8,309.52) each. The final monthly installment
shall be in the amount of Eight Thousand Three Hundred Nine Dollars and
Eighty-four Cents ($8,309.84). The first (1st) monthly installment shall be due
and payable on September 15, 1998, and an additional monthly installment shall
be due and payable on the fifteenth (15th) day of every calendar month
thereafter, to and including July 15, 2005, when the unpaid balance of this
note, principal and interest, shall be paid in full. All regularly scheduled
payments of principal shall be applied:

2.1. First to any Prime Rate Borrowing Amounts, in such order as
Borrower may designate, or in the absence of such designation, in such order as
Bank may determine in Bank's absolute discretion; and

2.2. Second, to any LIBOR Borrowing Rate Amounts, in such order as
Borrower may designate, or in the absence of such designation, in such order as
Bank may determine in Bank's absolute discretion.

Page 1-PROMISSORY NOTE

<PAGE>

3. INTEREST RATE AND PAYMENT OF INTEREST.

3.1. DEFINITIONS. As used in this note, the following terms have
the following meanings:

b. "LIBOR Borrowing Rate" means the LIBOR Rate plus two
percent (2%). The LIBOR Borrowing Rate for each LIBOR Borrowing Rate Amount
shall be determined pursuant to Paragraph 3.3., as of the beginning of the
applicable LIBOR Interest Period, based on the then current LIBOR Rate, and,
except as provided in Paragraph 3.4., shall remain fixed during that LIBOR
Interest Period.

c. "LIBOR Borrowing Rate Amount(s)" means those portions of
the Principal Balance that, at any time, are accruing interest at a LIBOR
Borrowing Rate.

d. "LIBOR Interest Period" means, as to any LIBOR Borrowing
Rate Amount, a period of one, two, three or six months commencing on the date
the LIBOR Borrowing Rate becomes applicable; provided, however, that (1) the
first day of such LIBOR Interest Period must be a Business Day; (2) no LIBOR
Interest Period shall be selected which would extend beyond Maturity; (3) no
LIBOR Interest Period shall extend beyond the date of any principal payment
required under this note, unless the sum of the following amounts for this note
equals or exceeds the amount of such principal payment: (i) the Prime Borrowing
Rate Amount for this note, plus (ii) LIBOR Borrowing Rate Amounts for this note
with LIBOR Interest Periods ending on or before the scheduled date of that
principal payment; (4) any LIBOR Interest Period which would otherwise expire on
a day which is not a Business Day, shall be extended to the next succeeding
Business Day, unless the results of such extension would be to extend such LIBOR
Interest Period into another calendar month, in which event the LIBOR Interest
Period shall end on the immediately preceding Business Day; and (5) any LIBOR
Interest Period that begins on the last Business Day of a calendar month (or a
day for which there is no numerically corresponding day in the calendar month at
the end of such LIBOR Interest Period) shall end on the last Business Day of a
calendar month.

Page 2-PROMISSORY NOTE

<PAGE>

the Federal Reserve System or any successor regulation, and the maximum
assessment rate required to be paid by Bank to the Federal Deposit Insurance
Corporation insuring U.S. dollar deposits made at offices of Bank.

f. "Maturity" means the time when the entire unpaid
Principal Balance becomes due and payable, whether by agreement, acceleration or
otherwise.

g. "Prime Borrowing Rate" means the Prime Rate plus one-half
of one percent (0.5%). The Prime Borrowing Rate shall be adjusted without
notice effective on each day the Prime Rate changes.

i. "Prime Borrowing Rate Amount" means that portion of the
Principal Balance that, at any time, is accruing interest at the Prime Borrowing
Rate.

j. "Principal Balance" means, at any time, the unpaid
principal balance of this note.

3.2. PRIME BORROWING RATE. Except for portions of the Principal
Balance that are accruing interest at a LIBOR Borrowing Rate, Borrower shall pay
interest on the Principal Balance at the Prime Borrowing Rate. The Prime
Borrowing Rate shall be adjusted without notice effective on each day the Prime
Rate changes.

3.3. LIBOR BORROWING RATE.

a. Borrower may obtain LIBOR Borrowing Rate quotes from Bank
between 8:00 a.m. and 10:00 a.m. (Portland, Oregon, time) on any Business Day.
Borrower may request a new Advance as a LIBOR Borrowing Rate Amount, or
conversion of a portion of the Prime Borrowing Rate Amount to a LIBOR Borrowing
Rate Amount, or a new LIBOR Interest Period for a LIBOR Borrowing Rate Amount
whose LIBOR Interest Period is expiring, only by giving Bank notice in
accordance with Paragraph 3.3.b. not later than 10:00 a.m. on such date.

Page 3-PROMISORRY NOTE

<PAGE>

whether Borrower is requesting a new Advance as a LIBOR Borrowing Rate Amount,
conversion of a portion of the Prime Borrowing Rate Amount to a LIBOR Borrowing
Rate Amount, or a new LIBOR Interest Period for a LIBOR Borrowing Rate Amount
whose LIBOR Interest Period is expiring. Bank may, but need not, require that
all oral notices be confirmed in writing. Notwithstanding any other term of
this note, Borrower may elect a LIBOR Borrowing Rate Amount only in the minimum
principal amount of Five Hundred Thousand Dollars ($500,000) and in larger
integral multiples of One Hundred Thousand Dollars ($100,000). Except as
provided in Paragraph 3.4., the LIBOR Borrowing Rate for each LIBOR Borrowing
Rate Amount shall remain fixed for the applicable LIBOR Interest Period.

d. If at any time after the date of this note (i) any
revision in or adoption of any applicable law, rule or regulation or in the
interpretation or administration thereof (a) shall subject Bank or its
Eurodollar lending office to any tax, duty or other charge, or change the basis
of taxation of payments to Bank with respect to any loans bearing interest based
on Bank's LIBOR Rate or (b) shall impose or modify any reserve, insurance,
special deposit or similar requirements against assets of, deposits with or for
the account of, or credit extended by Bank or its Eurodollar lending office, or
impose on Bank or its Eurodollar lending office any other condition affecting
any such loans, and (ii) the result of the foregoing is (x) to increase the cost
to Bank of making or maintaining any such loans or (y) to reduce the amount of
any sum receivable under this note by Bank or its Eurodollar lending office,
Borrower shall pay Bank within fifteen (15) days after demand by Bank such
additional amount as will compensate Bank for such increased cost or reduction.
The determination hereunder by Bank of such additional amounts shall be
conclusive in the absence of manifest error. If Bank demands compensation under
this paragraph, Borrower may, upon three (3) Business Days' notice to Bank, pay
the accrued interest on all LIBOR Borrowing Rate Amounts as may be affected,
together with any additional amounts payable under Paragraph 3.3.e. Upon
Borrower's paying such accrued interest and additional costs, the Prime
Borrowing Rate immediately shall be effective with respect to the unpaid
principal balance of such LIBOR Borrowing Rate Amounts.

e. Upon any termination of any LIBOR Borrowing Rate
(including, but not limited to, conversion to another rate) or payment of all or
any portion of any LIBOR Borrowing Rate Amount on a date other than the last day
of the then applicable LIBOR Interest Period, as the case may be, including,
without limitation, (i) voluntary prepayment, (ii) acceleration following an
Event of Default, or (iii) repayment in response to a notice under Paragraph
3.3.d., Borrower shall pay to Bank on demand a yield maintenance charge
calculated pursuant to the attached Exhibit A.

Page 4-PROMISSORY NOTE

<PAGE>

g. Notwithstanding any other term of this note, Borrower may
not select the LIBOR Borrowing Rate if an event has occurred that constitutes an
Event of Default or which, with notice or lapse of time, or both, would be an
Event of Default.

3.4. DEFAULT INTEREST RATE. Notwithstanding anything in this note
to the contrary, upon the occurrence of an Event of Default, the Prime Borrowing
Rate Amount shall thereafter accrue interest at a Prime Borrowing Rate equal to
the Prime Rate plus five and one-half percent (5.5%), and each outstanding LIBOR
Borrowing Rate Amount shall accrue interest at a LIBOR Borrowing Rate equal to
the LIBOR Rate previously determined by Bank for that LIBOR Borrowing Rate
Amount plus seven percent (7%).

3.5. PAYMENT OF INTEREST. Borrower shall pay accrued interest on
the fifteenth (15th) day of September, 1998, and on the fifteenth (15th) day of
every calendar month thereafter. In addition, with respect to all LIBOR
Borrowing Rate Amounts, accrued interest shall be paid on the last day of the
applicable LIBOR Interest Period.

3.6. COMPUTATION OF INTEREST. All interest will be computed at the
applicable rate based on a three hundred sixty (360) day year and applied to the
actual number of days elapsed.

3.7. USURY. Notwithstanding anything in this note to the contrary,
at no time shall the Prime Borrowing Rate or any LIBOR Borrowing Rate exceed the
maximum rate permitted by applicable law.

4. PREPAYMENT. Prepayment may be made in whole or in part at any time.
All prepayments shall be applied:

4.1. First to any Prime Rate Borrowing Amounts, in such order as
Borrower may designate, or in the absence of such designation, in such order as
Bank may determine in Bank's absolute discretion;

4.2. Second, to any LIBOR Borrowing Rate Amounts, in such order as
Borrower may designate, or in the absence of such designation, in such order as
Bank may determine in Bank's absolute discretion; and

4.3. Then to accrued interest.

Prepayments of principal shall be applied to the remaining installments of
principal in the inverse order of maturity.

Page 5-PROMISSORY NOTE

<PAGE>

5. LATE CHARGE. If a payment is nineteen (19) or more days past due,
Borrower will pay a late charge of five percent (5%) of the delinquent payment,
but not more than the maximum amount authorized by law.

6. DEFAULT. Each of the following shall constitute an Event of Default
under this note:

6.1. Borrower fails to make any payment within ten (10) days after
it is due.

6.2. Any default under any Related Document or under any other
agreement between Bank and Borrower.

7. ACCELERATION. Upon any Event of Default, Bank may, without notice,
declare the entire Principal Balance and all accrued interest immediately due
and payable.

Borrower: 4211 West 11th Avenue
Eugene, OR 97402
Attention: Mr. Brian Obie

Bank: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, OR 97204

With a copy to: Attention: Larry Johnson
800 Willamette Street, Third Floor
Eugene, OR 97401

Page 6-PROMISSORY NOTE

<PAGE>

mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness or any act, or exercise of any
right, concerning any collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral, shall also be
arbitrated, provided, however, that no arbitrator shall have the right or other
power to enjoin or restrain any act of any party. Judgment upon any award
rendered by any arbitrator may be entered in any court having jurisdiction.
Nothing herein shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel, waiver,
laches, and similar doctrines which would otherwise be applicable in any action
brought by a party shall be applicable in any arbitration proceeding, and the
commencement of any arbitration proceeding shall be deemed the commencement of
any action for these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration provision.

10. COLLECTION COSTS AND ATTORNEY FEES. Borrower agrees to pay upon
demand all of Bank's reasonable costs and expenses, including attorneys' fees
and Bank's legal expenses, incurred in connection with the enforcement of this
note. Costs and expenses include Bank's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals and any anticipated post-judgment
collection services. Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

13. EXECUTION BY FACSIMILE; COUNTERPARTS. This note may be executed in
several counterparts, each of which will be deemed to be an original and all
of which together constitute one and the same instrument. Delivery of an
executed copy of this note by telecopy, telex or other means of electronic
communication producing a printed copy will be deemed to be an execution and
delivery of this note on the date of such communication by the parties so
delivering such a copy. The party so delivering such a copy via electronic
communication shall deliver an executed original of this note to the other
party within one week of the date of delivery of the copy sent via electronic
communication.

14. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY
BANK AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER

Page 7-PROMISSORY NOTE

<PAGE>

CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY BANK TO BE ENFORCEABLE.

OBIE MEDIA CORPORATION

By: /s/ Brian Obie
------------------------------------
Brian Obie, President

OBIE MEDIA LTD.

By: /s/ Brian Obie
------------------------------------
Brian Obie, Treasurer

PHILBIN & COINE, INC.

By: /s/ Wayne P. Schur
------------------------------------
Wayne P. Schur, President

U.S. BANK NATIONAL ASSOCIATION, formerly known as
United States National Bank of Oregon

By: /s/ Larry Johnson
------------------------------------
Larry Johnson, Vice President

Page 8-PROMISSORY NOTE

<PAGE>

YIELD MAINTENANCE - LIBOR

YMC = p x (i - y) x f

Where:

p = the prepaid principal amount

i = the current interest rate on the Note

n = a fraction wherein the numerator is the number of days from the date of
prepayment to the end of the Yield Maintenance Period and the
denominator is 360.

-n
1 - (1 + y)
f = present value factor = ------------
y

"Yield Maintenance Period" means the time period from the date of prepayment to
the earlier of the next scheduled interest rate adjustment date as defined in
the Note or the maturity date of the Note.

If Borrower shall submit a payment amount in excess of the principal, interest
and other amounts due Lender, the allocation of principal and YMC shall be
calculated based on the following formula:

a = p + YMC

Where:

a = the excess amount to be applied
a
p = the prepaid principal amount = ----------------
f x (i - y) + 1

YMC = a - p

f, i and y have the same meaning as stated above.

Except as provided in the next sentence, any partial prepayment of the
outstanding balance shall not extend the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender shall
otherwise agree in writing. Upon any partial prepayment, Lender shall have the
option, in its sole and absolute discretion, to recalculate the monthly
installments due under the Note so that the amortization period remains the
same.

Borrower shall pay the YMC due under this exhibit whether the prepayment is
voluntary or involuntary (in connection with Lender's acceleration of the unpaid
principal balance of the Note) or Lender's deed of trust securing the Note is
satisfied or released by foreclosure (whether by power of sale or judicial
proceeding), deed in lieu of foreclosure or by any other means. Notwithstanding
any other provision herein to the contrary, Borrower shall not be required to
pay any YMC in connection with any prepayment occurring as a result of the
application of insurance proceeds or condemnation awards under Lender's deed of
Trust.

Should the LIBOR Base Rate not be available or discontinued, Lender shall choose
a comparable index in its sole and absolute discretion.

Lender's determination of the Yield Rate, LIBOR Base Rate, Yield Maintenance
Period and calculation of the formulas contained herein shall be conclusive
absent manifest error.

* For purposes of this exhibit, "LIBOR Base Rate" means "LIBOR Rate"; and "LIBOR
Period" means "LIBOR Interest Period."

Yield Maintenance - LIBOR EXHIBIT A

PROMISSORY NOTE
(Bridge Note)

$7,000,000 Eugene, Oregon September 1, 1998

PARTIES:

OBIE MEDIA CORPORATION, an Oregon corporation (Obie)

OBIE MEDIA LTD., a British Columbia corporation (Obie BC)

PHILBIN & COINE, INC., a New York corporation (P&C)

(Obie, Obie BC and P&C, individually and jointly, are referred to in this
note as Borrower)

U.S. BANK NATIONAL ASSOCIATION, formerly known as United States National
Bank of Oregon (Bank)

AGREEMENTS:

1. PROMISE TO PAY. For value received, Borrower promises to pay to Bank,
or its order, the principal amount of Seven Million United States Dollars
($7,000,000), or so much as may be outstanding, together with interest on the
unpaid principal balance of each advance at the rate specified in this note.
Interest shall be calculated from the date of each advance until repayment of
each advance.

2. PAYMENT OF PRINCIPAL. Borrower shall pay the Principal Balance of
this note upon demand, or if no demand, upon the earlier of: (a) closing of the
Secondary Offering or (b) August 31, 1999.

3. INTEREST RATE AND PAYMENT OF INTEREST.

3.1. DEFINITIONS. As used in this note, the following terms have
the following meanings:

b. "LIBOR Borrowing Rate" means the LIBOR Rate plus two
percent (2%). The LIBOR Borrowing Rate for each LIBOR Borrowing Rate Amount
shall be determined

Page 1-PROMISSORY NOTE

<PAGE>

pursuant to Paragraph 3.3., as of the beginning of the applicable LIBOR Interest
Period, based on the then current LIBOR Rate, and, except as provided in
Paragraph 3.4., shall remain fixed during that LIBOR Interest Period.

c. "LIBOR Borrowing Rate Amount(s)" means those portions
of the Principal Balance that, at any time, are accruing interest at a LIBOR
Borrowing Rate.

f. "Maturity" means the time when the entire unpaid
Principal Balance becomes due and payable, whether by agreement, acceleration or
otherwise.

g. "Prime Borrowing Rate" means the Prime Rate plus
one-half of one percent (0.5%). The Prime Borrowing Rate shall be adjusted
without notice effective on each day the Prime Rate changes.

Page 2-PROMISSORY NOTE

<PAGE>

i. "Prime Borrowing Rate Amount" means that portion of the
Principal Balance that, at any time, is accruing interest at the Prime Borrowing
Rate.

j. "Principal Balance" means, at any time, the unpaid
principal balance of this note.

l. "Secondary Offering" means a secondary offering by Obie
of shares of its common stock for sale to the public for the purpose of raising
the money required to pay this note in full.

3.3. LIBOR BORROWING RATE.

Page 3-PROMISSORY NOTE

<PAGE>

oral notices be confirmed in writing. Notwithstanding any other term of this
note, Borrower may elect a LIBOR Borrowing Rate Amount only in the minimum
principal amount of Five Hundred Thousand Dollars ($500,000) and in larger
integral multiples of One Hundred Thousand Dollars ($100,000). Except as
provided in Paragraph 3.4., the LIBOR Borrowing Rate for each LIBOR Borrowing
Rate Amount shall remain fixed for the applicable LIBOR Interest Period.

e. Upon any termination of any LIBOR Borrowing Rate
(including, but not limited to, conversion to another rate) or payment of all or
any portion of any LIBOR Borrowing Rate Amount on a date other than the last day
of the then applicable LIBOR Interest Period, as the case may be, including,
without limitation, (i) voluntary prepayment, (ii) acceleration following an
Event of Default, or (iii) repayment in response to a notice under Paragraph
3.3.d., Borrower shall pay to Bank on demand a yield maintenance charge
calculated pursuant to the attached Exhibit A.

f. If Borrower chooses the LIBOR Borrowing Rate, Borrower
shall pay interest based on such rate, plus any other applicable taxes or
charges hereunder, even though

Page 4-PROMISSORY NOTE

<PAGE>

Bank may have obtained the funds loaned to Borrower from sources other than the
applicable London interbank market. Bank's determination of the LIBOR Borrowing
Rate and any such taxes or charges shall be conclusive in the absence of
manifest error.

3.5. PAYMENT OF INTEREST. Borrower shall pay accrued interest on
the fifteenth (15th) day of September, 1998, and on the fifteenth (15th) day of
every calendar month thereafter, and upon demand. In addition, with respect to
all LIBOR Borrowing Rate Amounts, accrued interest shall be paid on the last day
of the applicable LIBOR Interest Period.

3.6. COMPUTATION OF INTEREST. All interest will be computed at the
applicable rate based on a three hundred sixty (360) day year and applied to the
actual number of days elapsed.

3.7. USURY. Notwithstanding anything in this note to the contrary,
at no time shall the Prime Borrowing Rate or any LIBOR Borrowing Rate exceed the
maximum rate permitted by applicable law.

4. PREPAYMENT. Prepayment may be made in whole or in part at any time.
All prepayments shall be applied:

4.1. First to any Prime Rate Borrowing Amounts, in such order as
Borrower may designate, or in the absence of such designation, in such order as
Bank may determine in Bank's absolute discretion;

4.3. Then to accrued interest.

5. LINE OF CREDIT. This note evidences a non-revolving line of credit.
Advances under this note may be requested orally by Borrower or by an authorized
person. Bank may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions

Page 5-PROMISSORY NOTE

<PAGE>

or directions by telephone or otherwise to Bank are to be directed to the Eugene
office of Bank's Corporate Banking Division. Borrower agrees to be liable for
all sums either (a) advanced in accordance with the instructions of an
authorized person or (b) credited to any of Borrower's accounts with Bank,
regardless of the fact that persons other than those authorized to borrow have
authority to draw against the accounts. The Principal Balance may be evidenced
by endorsements on this note or by Bank's internal records, including daily
computer printouts. Bank will have no obligation to advance funds under this
note if an Event of Default, or an event which, with notice or lapse of time, or
both, would be an Event of Default, has occurred or will occur as a result of
making the advance, or if Bank has demanded payment of the Principal Balance and
accrued interest.

6. DEFAULT. Each of the following shall constitute an Event of Default
under this note:

6.1. Borrower fails to make any payment within ten (10) days after
it is due.

6.2. Any default under any Related Document or under any other
agreement between Bank and Borrower.

Borrower: 4211 West 11th Avenue
Eugene, Oregon 97402
Attention: Mr. Brian Obie

Bank: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, Oregon 97204

With a copy to: Attention: Larry Johnson
800 Willamette Street, Third Floor
Eugene, Oregon 97401

Any notice given shall be effective when actually received; or if given by
certified mail, then forty-eight (48) hours after deposit of such notice in the
United States mail with postage prepaid;

Page 6-PROMISSORY NOTE

<PAGE>

or if given by overnight courier, then twenty-four (24) hours after the deposit
of such notice with the overnight courier with delivery charges prepaid.

9. ARBITRATION. Bank and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
relating in any way to this note or the Related Documents, including without
limitation contract and tort disputes, shall be arbitrated pursuant to the Rules
of the American Arbitration Association, upon request of either party. No act
to take or dispose of any collateral shall constitute a waiver of this
arbitration provision or be prohibited by this arbitration provision. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; foreclosing by notice and sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness or any act, or exercise of any
right, concerning any collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral, shall also be
arbitrated, provided, however, that no arbitrator shall have the right or other
power to enjoin or restrain any act of any party. Judgment upon any award
rendered by any arbitrator may be entered in any court having jurisdiction.
Nothing herein shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel, waiver,
laches, and similar doctrines which would otherwise be applicable in any action
brought by a party shall be applicable in any arbitration proceeding, and the
commencement of any arbitration proceeding shall be deemed the commencement of
any action for these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration provision.

10. COLLECTION COSTS AND ATTORNEY FEES. Borrower agrees to pay upon
demand all of Bank's reasonable costs and expenses, including attorneys' fees
and Bank's legal expenses, incurred in connection with the enforcement of this
note. Costs and expenses include Bank's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals and any anticipated post-judgment
collection services. Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

Page 7-PROMISSORY NOTE

<PAGE>

without regard to conflicts of law principles. Bank's rights and remedies under
this note and under any Related Documents are cumulative.

OBIE MEDIA CORPORATION

By: /s/ Brian Obie
---------------------------------------
Brian Obie, President

OBIE MEDIA LTD.

By: /s/ Brian Obie
---------------------------------------
Brian Obie, Treasurer

PHILBIN & COINE, INC.

By: /s/ Wayne P. Schur
---------------------------------------
Wayne P. Schur, President

U.S. BANK NATIONAL ASSOCIATION, formerly
known as United States National Bank of
Oregon

By: /s/ Larry Johnson
---------------------------------------
Larry Johnson, Vice President

Page 8-PROMISSORY NOTE

<PAGE>

YIELD MAINTENANCE-LIBOR

Subject to the terms of the Note of which this exhibit is a part, Borrower
may prepay the principal balance in whole or in part on any payment due date
by paying, in addition to the principal payment, accrued interest and any
other sums due Lender at the time of prepayment, a yield maintenance change
("YMC") as determined by the following formula and if YMC is greater than
zero:

YMC = p x (i - y)x f

Where:

p = the prepaid principal amount

i = the current interest rate on the Note

n = a fraction wherein the numerator is the number of days from the date of
prepayment to the end of the Yield Maintenance Period and the
denominator is 360.

-n
f = present value factor = 1 -(1 + y)
-------------
y

"Yield Maintenance Period" means the time period from the date of prepayment
to the earlier of the next scheduled interest rate adjustment date as
defined in the Note or the maturity date of the Note.

Where:

a = the excess amount to be applied

p = the prepaid principal amount = a
--------------
f x(i - y) + 1

YMC = a - p

f, i and y have the same meaning as stated above.

Except as provided in the next sentence, any partial prepayment of the
outstanding balance shall not extend the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender shall
otherwise agree in writing. Upon any partial prepayment, Lender shall have
the option, in its sole and absolute discretion, to recalculate the monthly
installments due under the Note so that the amortization period remains the
same.

Should the LIBOR Base Rate not be available or discontinued. Lender shall
choose a comparable index in its sole and absolute discretion.

Lender's determination of the Yield Rate, LIBOR Base Rate, Yield Maintenance
Period and calculation of the formulas contained herein shall be conclusive
absent manifest error.

*For purposes of this exhibit, "LIBOR Base Rate" means "LIBOR Rate"; and
"LIBOR Period" means "LIBOR Interest Period."

Yield Maintenance - LIBOR EXHIBIT A

COMMERCIAL SECURITY AGREEMENT

PARTIES:

OBIE MEDIA CORPORATION, an Oregon corporation (Obie)

Address: 4211 West 11th Avenue
Eugene, OR 97402

OBIE MEDIA LTD., a British Columbia corporation (Obie BC)

Address: 4211 West 11th Avenue
Eugene, OR 97402

PHILBIN & COINE, INC., a New York corporation (P&C)

Address: 4211 West 11th Avenue
Eugene, OR 97402

(Obie, Obie BC and P&C, individually and jointly, are referred to in this
Agreement as Grantor)

U. S. BANK NATIONAL ASSOCIATION, formerly known as United States National
Bank of Oregon (Lender)

Address: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, OR 97204

AGREEMENTS:

1.1. "Advertising Contracts" means (a) all contracts relating to
the purchase, lease or license of advertising sites or advertising space on
billboards, buildings, benches or other public or private property, (b) all
contracts with transit authorities or transit companies relating to the
placement of advertising on mass transit vehicles, (c) all contracts relating to
the sale, lease or license of advertising space on mass transit vehicles,
billboards, buildings, benches or other

Page 1-COMMERCIAL SECURITY AGREEMENT

<PAGE>

public or private property, and (d) all contracts relating to the purchase or
sale of advertising or advertising services; whether now existing or hereafter
arising.

1.2. "Agreement" means this Commercial Security Agreement, as this
Commercial Security Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Commercial Security
Agreement from time to time.

1.3. "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:

a. All inventory, equipment and fixtures.

b. All rights to payment, specifically including, but not
limited to, all accounts, all rights to payment evidenced by an instrument or
chattel paper, and all rights to payment evidenced by a contract or other
general intangible; together with all guaranties of such rights to payment and
the security therefor and all interest of Grantor in the goods, services or
other property that gave rise to or that secures such rights to payment.

c. All contract rights, specifically including, but not
limited to, all Advertising Contracts.

d. All other goods, instruments, documents, chattel paper,
investment property and general intangibles.

In addition, the word "Collateral" includes all the following, whether now owned
or hereafter acquired, whether now existing or hereafter arising, and wherever
located:

a. All attachments, accessions, accessories, tools, parts,
supplies, increases, and additions to and all replacements of and substitutions
for any property described in this Collateral section.

b. All products and produce of any of the property
described in this Collateral section.

c. All accounts, contract rights, general intangibles,
instruments, rents, monies, payments, and all other rights, arising out of a
sale, lease, or other disposition of any of the property described in this
Collateral section.

d. All proceeds (including insurance proceeds) from the
sale, destruction, loss, or other disposition of any of the property described
in this Collateral section.

Page 2-COMMERCIAL SECURITY AGREEMENT

<PAGE>

e. All records and data relating to any of the property
described in this Collateral section, whether in the form of a writing,
photograph, microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software required to
utilize, create, maintain, and process any such records or data on electronic
media.

1.4. "Environmental Laws" means all local, state and federal laws,
rules, regulations and ordinances pertaining to human health or the environment,
including, without limitation, the federal statutes commonly known as CERCLA and
RCRA and any other federal or state environmental cleanup statutes now or at any
time hereafter in effect.

1.5. "Event of Default" means any of the Events of Default set
forth below in the section titled "Events of Default."

1.6. "Grantor" means Obie, Obie BC and P&C, individually and
jointly. All references to Grantor in this Agreement mean each and all of Obie,
Obie BC and P&C.

1.7. "Guarantor" means each and all of the guarantors, sureties,
and accommodation parties in connection with the Indebtedness.

1.8. "Hazardous Substances" means any materials that, because of
their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or the environment, and specifically includes, but is not limited to, any and
all hazardous, toxic or infectious substances, materials or wastes as defined or
listed under any Environmental Laws.

1.9. "Indebtedness" means the indebtedness evidenced by the Note,
including all principal and interest, together with all other indebtedness and
costs and expenses for which Grantor is responsible under this Agreement or
under any of the Related Documents. In addition, the word "Indebtedness"
includes all other obligations, debts and liabilities, plus interest thereon, of
Grantor to Lender, as well as all claims by Lender against Grantor whether
existing now or later; whether they are voluntary or involuntary, due or not
due, direct or indirect, absolute or contingent, liquidated or unliquidated;
whether Grantor may be liable individually or jointly with others; whether
Grantor may be obligated as guarantor, surety, accommodation party or otherwise;
whether recovery upon such indebtedness may be or hereafter may become barred by
any statute of limitations; and whether such indebtedness may be or hereafter
may become unenforceable as a result of bankruptcy, any statute of limitations
or any similar reason.

1.10. "Loan Agreement" means that certain Loan Agreement being
executed contemporaneously herewith, between Grantor and Lender, as that Loan
Agreement may be amended or modified from time to time.

Page 3-COMMERCIAL SECURITY AGREEMENT

<PAGE>

1.11. "Note" means one or more of (a) the Bridge Note, the MO
Partners Note, the Revolving Note, Term Note A, Term Note B and the 1998/1999
Construction Note (as those terms are defined in the Loan Agreement), (b) any
other promissory note now or hereafter delivered to Lender in connection with
the Indebtedness, (c) any promissory note substituted for one or more of them,
and (d) any document evidencing a renewal, extension or modification of one or
more of them.

1.12. "Related Documents" means, without limitation, all promissory
notes, loan agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.

2. GRANT OF SECURITY INTEREST. Grantor grants to Lender a security
interest in the Collateral to secure the Indebtedness and agrees that Lender
shall have the rights stated in this Agreement with respect to the Collateral,
in addition to all other rights which Lender may have by law.

3. RIGHT OF SETOFF. Grantor hereby grants Lender a contractual
possessory security interest in and hereby assigns, conveys, delivers, pledges
and transfers, as security, all of Grantor's right, title and interest in and to
Grantor's accounts with Lender (whether checking, savings, or some other
account), including all accounts held jointly with someone else and all accounts
Grantor may open in the future, excluding, however, all IRA, Keogh, and trust
accounts. Upon any Event of Default, or any event which with notice or lapse of
time or both would constitute an Event of Default, Grantor authorizes Lender, to
the extent permitted by applicable law, to charge or setoff all Indebtedness
against any and all such accounts.

4. OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as
follows:

4.1. PERFECTION OF SECURITY INTEREST. Grantor agrees to execute
such financing statements and to take whatever other actions are requested by
Lender to perfect and continue Lender's security interest in the Collateral.
Upon request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to Lender for
possession by Lender. Grantor hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to perfect
or to continue the security interest granted in this Agreement. Lender may at
any time, and without further authorization from Grantor, file a carbon,
photographic or other reproduction of any financing statement or of this
Agreement for use as a financing statement. Grantor will reimburse Lender for
all expenses for the perfection and the continuation of the perfection of
Lender's security interest in the Collateral. Grantor promptly will notify
Lender before any change in Grantor's name including any change to the assumed
business names of Grantor. This is a continuing Security Agreement and will

Page 4-COMMERCIAL SECURITY AGREEMENT

<PAGE>

continue in effect even though all or any part of the Indebtedness is paid in
full and even though for a period of time Grantor may not be indebted to Lender.

4.2. NO VIOLATION. The execution and delivery of this Agreement
will not violate any law or agreement governing Grantor or to which Grantor is a
party, and its articles of organization and operating agreement do not prohibit
any term or condition of this Agreement.

4.3. ENFORCEABILITY OF COLLATERAL. To the extent the Collateral
consists of accounts, contract rights, instruments, chattel paper, or general
intangibles, the Collateral is enforceable in accordance with its terms, is
genuine, and complies with applicable laws concerning form, content and manner
of preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact obligated as
they appear to be on the Collateral.

4.4. LOCATION OF THE COLLATERAL. Grantor, upon request of Lender,
will deliver to Lender in form satisfactory to Lender a schedule of real
properties and Collateral locations relating to Grantor's operations, including
without limitation the following: (a) all real property owned or being
purchased by Grantor; (b) all real property being rented or leased by Grantor;
(c) all storage facilities owned, rented, leased, or being used by Grantor; and
(d) all other properties where Collateral is or may be located. Except in the
ordinary course of its business, Grantor shall not remove the Collateral from
its existing locations without the prior written consent of Lender.

4.5. REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or
to the extent the Collateral consists of intangible property such as accounts,
the records concerning the Collateral) at Grantor's address shown above, or at
such other locations as are acceptable to Lender. Except in the ordinary course
of its business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other titled
property, Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside the State of
Oregon, without the prior written consent of Lender.

4.6. TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold
and accounts and general intangibles collected in the ordinary course of
Grantor's business, Grantor shall not sell, offer to sell, or otherwise transfer
or dispose of the Collateral. While Grantor is not in default under this
Agreement, Grantor may sell inventory, but only in the ordinary course of its
business and only to buyers who qualify as a buyer in the ordinary course of
business. A sale in the ordinary course of Grantor's business does not include
a transfer in partial or total satisfaction of a debt or any bulk sale. Grantor
shall not pledge, mortgage, encumber or otherwise permit the Collateral to be
subject to any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of Lender. This includes security interests even if junior in right to
the security interests granted under this Agreement. All proceeds from any
disposition of the

Page 5-COMMERCIAL SECURITY AGREEMENT

<PAGE>

Collateral (for whatever reason) shall be held in trust for Lender and shall not
be commingled with any other funds; provided however, this requirement shall not
constitute consent by Lender to any sale or other disposition. Upon receipt,
Grantor shall immediately deliver any such proceeds to Lender.

4.7. TITLE. Grantor represents and warrants to Lender that it
holds good and marketable title to the Collateral, free and clear of all liens
and encumbrances except for the lien of this Agreement, and except for liens and
encumbrances to which Lender has specifically consented. No financing statement
covering any of the Collateral is on file in any public office other than those
which reflect the security interest created by this Agreement or to which Lender
has specifically consented. Grantor shall defend Lender's right in the
Collateral against the claims and demands of all other persons.

4.8. COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall
require, and insofar as the Collateral consists of accounts, contract rights and
general intangibles, Grantor shall deliver to Lender schedules of such
Collateral, including such information as Lender may require, including without
limitation names and addresses of account debtors and agings of accounts,
contracts and general intangibles. Insofar as the Collateral consists of
inventory and equipment, Grantor shall deliver to Lender, as often as Lender
shall require, such lists, descriptions, and designations of such Collateral as
Lender may require to identify the nature, extent, and location of such
Collateral. Such information shall be submitted for Grantor and each of its
subsidiaries or related companies.

4.9. MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall
maintain all tangible Collateral in good condition and repair. Grantor will not
commit or permit damage to or destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives and agents shall have the
right at all reasonable times to examine, inspect, and audit the Collateral
wherever located. Grantor shall immediately notify Lender of all cases
involving the return, rejection, repossession, loss or damage of or to any
Collateral with a fair market value in excess of $25,000 individually or in the
aggregate; of any request for credit or adjustment or of any other dispute
arising with respect to the Collateral with a fair market value in excess of
$25,000 individually or in the aggregate; and generally of all happenings and
events materially affecting the Collateral or the value or the amount of the
Collateral.

4.10. TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all
taxes, assessments, liens, security interests, encumbrances and other claims
upon the Collateral, its use or operation, upon this Agreement, upon any Notes,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith conducting
an appropriate proceeding to contest the obligation to pay and so long as
Lender's interest in the Collateral is not jeopardized in Lender's reasonable
opinion. If the Collateral is subjected to a lien which is not discharged
within 15 days, Grantor shall deposit with Lender cash, a sufficient corporate
surety bond or other security satisfactory to Lender in an amount adequate to
provide for the discharge of the lien plus any interest, costs, attorneys' fees

Page 6-COMMERCIAL SECURITY AGREEMENT

<PAGE>

and other charges that could accrue as a result of foreclosure or sale of the
Collateral. In any contest Grantor shall defend itself and Lender and shall
satisfy any final adverse judgment before enforcement against the Collateral.
Grantor shall name Lender as an additional obligee under any surety bond
furnished in the contest proceedings.

4.11. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall
comply promptly with all laws, ordinances and regulations of all governmental
authorities applicable to the production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance or regulation and
withhold compliance during any proceeding, including appropriate appeals, so
long as Lender's interest in the Collateral, in Lender's reasonable opinion, is
not jeopardized.

4.12. HAZARDOUS SUBSTANCES. Grantor represents and warrants that,
to the best of Grantor's knowledge, the Collateral never has been, and never
will be so long as this Agreement remains a lien on the Collateral, used for the
generation, manufacture, storage, transportation, treatment, disposal, release
or threatened release of any Hazardous Substance. The representations and
warranties contained herein are based on Grantor's due diligence in
investigating the Collateral for Hazardous Substances. Grantor hereby (a)
releases and waives any future claims against Lender for indemnity or
contribution in the event Grantor becomes liable for cleanup or other costs
under any Environmental Laws, and (b) agrees to indemnify and hold harmless
Lender against any and all claims and losses resulting from a breach of this
provision of this Agreement, or as a result of a violation of any Environmental
Laws. Grantor's obligation to indemnify shall survive the payment of the
Indebtedness and the satisfaction of this Agreement.

4.13. MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and
maintain all risks insurance, including without limitation fire, theft and
liability coverage together with such other insurance as Lender may reasonably
require with respect to the Collateral, in form, amounts, coverages and basis
reasonably acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender
from time to time the policies or certificates of insurance in form satisfactory
to Lender, including stipulations that coverages will not be cancelled or
diminished without at least ten days prior written notice to Lender and not
including any disclaimer of the insurer's liability for failure to give such a
notice. In connection with all policies covering assets in which Lender holds
or is offered a security interest, Grantor will provide Lender with such loss
payable or other endorsements as Lender may require. If Grantor at any time
fails to obtain or maintain any insurance as required under this Agreement,
Lender may (but shall not be obligated to) obtain such insurance as Lender deems
appropriate, including if it so chooses "single interest insurance," which will
cover only Lender's interest in the Collateral.

4.14. APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly
notify Lender of any loss or damage to the Collateral. Lender may make proof of
loss if Grantor fails to do so within 15 days of the casualty. All proceeds of
any insurance on the Collateral, including accrued proceeds thereon, shall be
held by Lender as part of the Collateral. Lender, in

Page 7-COMMERCIAL SECURITY AGREEMENT

<PAGE>

its discretion, may apply any or all insurance proceeds to payment of any of
Grantor's obligations to Lender, whether or not then due, or may release any
such proceeds or any portion thereof to Grantor.

4.15. INSURANCE REPORTS. Grantor, upon request of Lender, shall
furnish to Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy; (d)
the property insured; (e) the then current value on the basis of which insurance
has been obtained and the manner of determining that value; and (f) the
expiration date of the policy. In addition, upon any Event of Default, or any
event which with notice or lapse of time or both would constitute an Event of
Default, Grantor shall upon request by Lender have an independent appraiser
satisfactory to Lender determine, as applicable, the cash value or replacement
cost of the Collateral.

5. GRANTOR'S RIGHT TO POSSESSION. Until any Event of Default, or any
event which with notice or lapse of time or both would constitute an Event of
Default, and except as otherwise provided below in the paragraphs entitled
"Payment" and "Advertising Contracts" and above in the paragraph titled
"Transactions Involving Collateral", Grantor may have possession of the tangible
personal property and beneficial use of all the Collateral and may use it in any
lawful manner not inconsistent with this Agreement or the Related Documents,
provided that Grantor's right to possession and beneficial use shall not apply
to any Collateral where possession of the Collateral by Lender is required by
law to perfect Lender's security interest in such Collateral. If Lender at any
time has possession of any Collateral, whether before or after an Event of
Default, Lender shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral if Lender takes such action for that purpose
as Grantor shall request or as Lender, in Lender's reasonable discretion, shall
deem appropriate under the circumstances, but failure to honor any request by
Grantor shall not of itself be deemed to be a failure to exercise
reasonable care. Lender shall not be required to take any steps necessary to
preserve any rights in the Collateral against prior parties, nor to protect,
preserve or maintain any security interest given to secure the Collateral.

6. PAYMENTS. Lender may at any time, or from time to time, collect any
of the Collateral consisting of accounts, contracts and general intangibles.
Lender may notify, or require Grantor to notify, any debtor of Grantor to make
payments owing to Grantor directly to Lender, and Lender may take control of the
cash and non-cash proceeds of that Collateral. This right may be exercised at
any time whether or not Grantor is in default hereunder. Each debtor shall be
entitled to conclusively rely upon any notice from Lender to make payment
directly to Lender, without inquiry as to whether or not Lender is entitled to
direct payments under the terms of this Agreement, and Grantor agrees to
indemnify and hold each debtor harmless from any claim or liability arising out
of such direct payment.

7. ADVERTISING CONTRACTS. Grantor shall promptly pay and perform all
obligations of Grantor under the Advertising Contracts, whether now existing or
hereafter arising.

Page 8-COMMERCIAL SECURITY AGREEMENT

<PAGE>

Grantor will furnish to Lender prompt notice of any claimed default on the part
of any party under the terms of any Advertising Contract. Grantor shall not
terminate any Advertising Contract, or modify or amend that contract, or grant
any concessions in connection with that contract, or consent to the assignment
of that contract, except in the ordinary course of Grantor's business. Grantor
shall appear in and defend, at no cost to Lender, any action or proceeding
arising under or in any manner connected with any Advertising Contract. If
requested by Lender, Grantor shall enforce any Advertising Contract and all
remedies available to Grantor in case of default under that contract. Nothing
herein shall be construed to impose any liability or obligation on Lender under
or with respect to any Advertising Contract. Grantor shall indemnify and hold
Lender harmless from any and all loss, liability or expense which Lender may
incur in connection with any Advertising Contract. Lender shall have the right
(but not the obligation), upon any failure by Grantor to perform any of its
obligations under any Advertising Contract, to take any action that Lender may
deem necessary or appropriate to protect its security, including, but not
limited to, performing any obligation of Grantor under the Advertising Contract;
terminating, modifying or amending that contract; and appearing in any action or
proceeding relating to that contract. All parties to any Advertising Contract
shall be entitled to conclusively rely upon any notice from Lender that Lender
is exercising its rights under this Agreement, and therefore deal directly with
Lender with respect to that contract, without inquiry as to whether or not
Lender is entitled to exercise its rights under the terms of this Agreement, and
Grantor agrees to indemnify and hold such third parties harmless from any claim
or liability arising out of such direct dealing with Lender. Nothing in this
Agreement shall require Lender to advance any monies for any purpose or to do
any act hereunder. Lender shall not be liable for any error or omission or
delay of any kind occurring in connection with any Advertising Contract or for
any damages resulting therefrom.

8. EXPENDITURES BY LENDER. If not discharged or paid when due, Lender
may (but shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the highest rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of a Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.

9. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:

Page 9-COMMERCIAL SECURITY AGREEMENT

<PAGE>

9.1. DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any
payment on the Indebtedness within ten days after the due date thereof.

9.2. OTHER DEFAULTS. Any default under any of the Related
Documents or under any other agreement between Lender and Grantor.

9.3. FALSE STATEMENTS. Any warranty, representation or statement
made or furnished to Lender by or on behalf of Grantor under this Agreement is
false or misleading in any material respect, either now or at the time made or
furnished.

9.4. DEFECTIVE COLLATERALIZATION. This Agreement or any of the
Related Documents ceases to be in full force and effect (including failure of
any collateral documents to create a valid and perfected first priority security
interest or lien) at any time and for any reason.

9.5. INSOLVENCY. The dissolution or termination of Grantor's
existence as a going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor's property, any assignment for the benefit of
creditors, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Grantor.

9.6. CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of
foreclosure or forfeiture proceedings, whether by judicial proceeding,
self-help, repossession or any other method, by any creditor of Grantor or by
any governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender. However, this Event of Default shall not apply if there
is a good faith dispute by Grantor as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if Grantor
gives Lender written notice of the creditor or forfeiture proceeding and
deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute.

9.7. EVENTS AFFECTING GUARANTOR. Any of the preceding events
occurs with respect to any Guarantor of any of the Indebtedness or such
Guarantor dies or becomes incompetent. Lender, at its option, may, but shall
not be required to, permit the Guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender, and,
in doing so, cure the Event of Default.

9.8. INSECURITY. Lender, in good faith, deems itself insecure.

10. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under
this Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Oregon Uniform Commercial Code. In addition, and
without limitation, Lender may exercise any one or more of the following rights
and remedies:

Page 10-COMMERCIAL SECURITY AGREEMENT

<PAGE>

10.1. ACCELERATE INDEBTEDNESS. Lender may declare the entire
Indebtedness, including any prepayment penalty which Grantor would be required
to pay, immediately due and payable, without notice.

10.2. ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to
Lender all or any portion of the Collateral and any and all certificates of
title and other documents relating to the Collateral. Lender may require
Grantor to assemble the Collateral and make it available to Lender at a place to
be designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time of
repossession, Grantor agrees Lender may take such other goods, provided that
Lender makes reasonable efforts to return them, at Lender's expense, to Grantor
after repossession.

10.3. SELL THE COLLATERAL. Lender shall have full power to sell,
lease, transfer, or otherwise deal with the Collateral or proceeds thereof in
its own name or that of Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Lender will give
Grantor reasonable notice of the time after which any private sale or any other
intended disposition of the Collateral is to be made unless Grantor has signed,
after an Event of Default occurs, a statement renouncing or modifying Grantor's
right to notification of sale. The requirements of reasonable notice shall be
met if such notice is given at least ten days before the time of the sale or
disposition. All expenses relating to the disposition of the Collateral,
including without limitation the expenses of retaking, holding, insuring,
preparing for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the highest Note default rate from date of expenditure until repaid.

10.4. APPOINT RECEIVER. To the extent permitted by applicable law,
Lender shall have the following rights and remedies regarding the appointment of
a receiver: (a) Lender may have a receiver appointed as a matter of right, (b)
the receiver may be an employee of Lender and may serve without bond, and (c)
all reasonable fees of the receiver and his or her attorney shall become part of
the Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the highest Note default rate from date of expenditure until repaid.

10.5. COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or
through a receiver, may collect the payments, rents, income, and revenues from
the Collateral. Lender may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the payments,
rents, income, and revenues therefrom and hold the same as security for the
Indebtedness or apply it to payment of the Indebtedness in such order of
preference as Lender may determine. Insofar as the Collateral consists of
accounts, contracts, general intangibles, insurance policies, instruments,
chattel paper, choses in action, or similar property, Lender may demand,
collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize
on the Collateral as Lender may determine, whether or not Indebtedness or
Collateral is then due. For these purposes, Lender may, on behalf of and in the
name of Grantor, receive,

Page 11-COMMERCIAL SECURITY AGREEMENT

<PAGE>

open and dispose of mail addressed to Grantor; change any address to which mail
and payments are to be sent; and endorse notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, Lender may notify account
debtors and obligors on any Collateral to make payments directly to Lender.

10.6. OBTAIN DEFICIENCY. If Lender chooses to sell any or all of
the Collateral, Lender may obtain a judgment for any deficiency remaining on the
Indebtedness due to Lender after application of all amounts received from the
exercise of the rights provided in this Agreement. Grantor shall be liable for
a deficiency even if the transaction described in this subsection is a sale of
accounts or chattel paper.

10.7. OTHER RIGHTS AND REMEDIES. Lender shall have all the rights
and remedies of a secured creditor under the provisions of the Uniform
Commercial Code, as it may be amended from time to time. In addition, Lender
shall have and may exercise any or all other rights and remedies it may have
available at law, in equity, or otherwise.

10.8. CUMULATIVE REMEDIES. All of Lender's rights and remedies,
whether evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor's failure to perform,
shall not affect Lender's right to declare a default and to exercise its
remedies.

11. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are
a part of this Agreement:

11.1. AMENDMENTS. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.

11.2. APPLICABLE LAW. This Agreement has been delivered to Lender
and accepted by Lender in the State of Oregon. If there is a lawsuit, Grantor
agree upon Lender's request to submit to the jurisdiction of the courts of Lane
County, State of Oregon. Subject to the provisions on arbitration, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Oregon.

Page 12-COMMERCIAL SECURITY AGREEMENT

<PAGE>

shall be arbitrated pursuant to the Rules of the American Arbitration
Association, upon request of either party. No act to take or dispose of any
Collateral shall constitute a waiver of this arbitration provision or be
prohibited by this arbitration provision. This includes, without limitation,
obtaining injunctive relief or a temporary restraining order; foreclosing by
notice and sale under any deed of trust or mortgage; obtaining a writ of
attachment or imposition of a receiver; or exercising any rights relating to
personal property, including taking or disposing of such property with or
without judicial process pursuant to Article 9 of the Uniform Commercial Code.
Any disputes, claims, or controversies concerning the lawfulness or
reasonableness or any act, or exercise of any right, concerning any Collateral,
including any claim to rescind, reform, or otherwise modify any agreement
relating to the Collateral, shall also be arbitrated, provided, however, that no
arbitrator shall have the right or other power to enjoin or restrain any act of
any party. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing herein shall preclude any party from
seeking equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in any action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of any arbitration proceeding
shall be deemed the commencement of any action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.

11.4. ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand
all of Lender's reasonable costs and expenses, including attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of this
Agreement. Costs and expenses include Lender's attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (and including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Grantor also shall pay all court costs and such additional
fees as may be directed by the court.

11.5. NOTICES. Any notices required or permitted to be given under
the terms of this Agreement or any Related Document shall be in writing and may
be given by personal delivery; first class mail; certified mail, return receipt
requested; or nationally recognized overnight courier; directed to the parties
at the following addresses, or such other address as any party may designate in
writing prior to the time of the giving of such notice, or in any other manner
authorized by law:

Grantor: 4211 West 11th Avenue
Eugene, OR 97402

Lender: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, OR 97204

Page 13-COMMERCIAL SECURITY AGREEMENT

<PAGE>

With a copy to: Attn: Larry Johnson
800 Willamette Street, Third Floor
Eugene, OR 97401

Any notice given shall be effective when actually received; or if given by
certified mail, then 48 hours after deposit of such notice in the United States
mail with postage prepaid; or if given by overnight courier, then 24 hours after
the deposit of such notice with the overnight courier with delivery charges
prepaid.

11.6. POWER OF ATTORNEY. Grantor hereby appoints Lender as its true
and lawful attorney-in-fact, irrevocably, with full power of substitution to do
the following: (a) to demand, collect, receive, receipt for, sue and recover
all sums of money or other property which may now or hereafter become due, owing
or payable from the Collateral; (b) to execute, sign and endorse any and all
claims, instruments, receipts, checks, drafts or warrants issued in payment for
the Collateral; (c) to settle or compromise any and all claims arising under the
Collateral, and, in the place and stead of Grantor, to execute and deliver its
release and settlement for the claim; and (d) to file any claim or claims or to
take any action or institute or take part in any proceedings, either in its own
name or in the name of Grantor, or otherwise, which in the discretion of Lender
may seem to be necessary or advisable. This power is given as security for the
Indebtedness, and the authority hereby conferred is and shall be irrevocable and
shall remain in full force and effect until renounced by Lender.

11.7. PREFERENCE PAYMENTS. Any monies Lender pays because of an
asserted preference claim in Grantor's bankruptcy will become a part of the
Indebtedness and, at Lender's option, shall be payable by Grantor as provided
above in the "EXPENDITURES BY LENDER" paragraph.

11.8. SEVERABILITY. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.

11.9. SUCCESSOR INTERESTS. Subject to the limitations set forth
above on transfer of the Collateral, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns.

11.10. WAIVER. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a

Page 14-COMMERCIAL SECURITY AGREEMENT

<PAGE>

waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by Lender,
nor any course of dealing between Lender and Grantor, shall constitute a waiver
of any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this Agreement,
the granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole discretion of
Lender.

11.11. EXECUTION BY FACSIMILE; COUNTERPARTS. This Agreement may be
executed in several counterparts, each of which will be deemed to be an original
and all of which together constitute one and the same instrument. Delivery of
an executed copy of this Agreement by telecopy, telex or other means of
electronic communication producing a printed copy will be deemed to be an
execution and delivery of this Agreement on the date of such communication by
the parties so delivering such a copy. The party so delivering such a copy via
electronic communication shall deliver an executed original of this Agreement to
the other party within one week of the date of delivery of the copy sent via
electronic communication.

11.12. STATUTORY DISCLOSURE. As required by Oregon statute (ORS
746.201(2)), the following disclosure is made:

WARNING

UNLESS YOU PROVIDE US WITH EVIDENCE OF THE INSURANCE COVERAGE AS
REQUIRED BY OUR CONTRACT OR LOAN AGREEMENT, WE MAY PURCHASE INSURANCE
AT YOUR EXPENSE TO PROTECT OUR INTEREST. THIS INSURANCE MAY, BUT NEED
NOT, ALSO PROTECT YOUR INTEREST. IF THE COLLATERAL BECOMES DAMAGED,
THE COVERAGE WE PURCHASE MAY NOT PAY ANY CLAIM YOU MAKE OR ANY CLAIM
MADE AGAINST YOU. YOU MAY LATER CANCEL THIS COVERAGE BY PROVIDING
EVIDENCE THAT YOU HAVE OBTAINED PROPERTY COVERAGE ELSEWHERE.

YOU ARE RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED BY
US. THE COST OF THIS INSURANCE MAY BE ADDED TO YOUR CONTRACT OR LOAN
BALANCE. IF THE COST IS ADDED TO YOUR CONTRACT OR LOAN BALANCE, THE
INTEREST RATE ON THE UNDERLYING CONTRACT OR LOAN WILL APPLY TO THIS
ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE YOUR
PRIOR COVERAGE LAPSED OR THE DATE YOU FAILED TO PROVIDE PROOF OF
COVERAGE.

THE COVERAGE WE PURCHASE MAY BE CONSIDERABLY MORE EXPENSIVE THAN
INSURANCE YOU CAN OBTAIN ON YOUR OWN AND

Page 15-COMMERCIAL SECURITY AGREEMENT

<PAGE>

MAY NOT SATISFY ANY NEED FOR PROPERTY DAMAGE COVERAGE OR ANY MANDATORY
LIABILITY INSURANCE REQUIREMENTS IMPOSED BY APPLICABLE LAW.

DATED: September 1, 1998.

OBIE MEDIA CORPORATION

By: /s/ Brian Obie
-----------------------------------
Brian Obie
President

OBIE MEDIA LTD.

By: /s/ Brian Obie
-----------------------------------
Brian Obie
Treasurer

PHILBIN & COINE, INC.

By: /s/ Wayne P. Schur
-----------------------------------
Wayne P. Schur
President

U.S. BANK NATIONAL ASSOCIATION

By: /s/ Larry Johnson
-----------------------------------
Larry Johnson
Vice President

Page 16-COMMERCIAL SECURITY AGREEMENT

<PAGE>
STOCK PLEDGE AGREEMENT

PARTIES:

OBIE MEDIA CORPORATION, an Oregon corporation (Obie)

Address: 4211 West 11th Avenue
Eugene, OR 97402

OBIE MEDIA LTD., a British Columbia corporation (Obie BC)

Address: 4211 West 11th Avenue
Eugene, OR 97402

PHILBIN & COINE, INC., a New York corporation (P&C)

Address: 4211 West 11th Avenue
Eugene, OR 97402

U.S. BANK NATIONAL ASSOCIATION, formerly known as United States National
Bank of Oregon (Lender)

Address: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, OR 97204

AGREEMENTS:

1. DEFINITIONS. The following words shall have the following meanings
when used in this Agreement. Terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial Code.
All references to dollar amounts shall mean amounts in lawful money of the
United States of America.

1.1. "Agreement" means this Stock Pledge Agreement, as this Stock
Pledge Agreement may be amended or modified from time to time, together with all
exhibits and schedules attached to this Stock Pledge Agreement from time to
time.

1.2. "Borrower" means Obie, Obie BC and P&C, individually and
jointly. All references to Borrower in this agreement mean each and all of
Obie, Obie BC and P&C.

Page 1-STOCK PLEDGE AGREEMENT

<PAGE>

1.3. "Collateral" means all capital stock of P&C, now owned or
hereafter acquired by, or in the name of, Grantor, together with all products
and proceeds thereof.

1.4. "Event of Default" means and includes any of the Events of
Default set forth below in the section titled "Events of Default."

1.5. "Grantor" means Obie.

1.6. "Guarantor" means and includes without limitation, each and
all of the guarantors, sureties, and accommodation parties in connection with
the Indebtedness.

1.7. "Indebtedness" means the indebtedness evidenced by the Note,
including all principal and interest, together with all other indebtedness and
costs and expenses for which Grantor or Borrower is responsible under this
Agreement or under any of the Related Documents. In addition, the word
"Indebtedness" includes all other obligations, debts and liabilities, plus
interest thereon, of Borrower, or any one or more of them, to Lender, as well as
all claims by Lender against Borrower, or any one or more of them, whether
existing now or later; whether they are voluntary or involuntary, due or not
due, direct or indirect, absolute or contingent, liquidated or unliquidated;
whether Borrower may be liable individually or jointly with others; whether
Borrower may be obligated as guarantor, surety, accommodation party or
otherwise; whether recovery upon such indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness may
be or hereafter may become otherwise unenforceable.

1.8. "Lender" means U.S. Bank National Association, its successors
and assigns.

1.9. "Loan Agreement" means that certain Loan Agreement being
executed contemporaneously herewith, between Borrower and Lender, as that Loan
Agreement may be amended or modified from time to time.

1.10. "Note" means one or more of the Bridge Note, the MO Partners
Note, the Revolving Note, Term Note A, Term Note B and the 1998/1999
Construction Note (as those terms are defined in the Loan Agreement), together
with all renewals of, extensions of, modifications of, refinancings of,
consolidations of and substitutions for any one or more of them.

1.11. "Related Documents" mean and include without limitation all
promissory notes, credit agreements, loan agreements, guaranties, security
agreements, mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with the
Indebtedness.

Page 2-STOCK PLEDGE AGREEMENT

<PAGE>

have by law. Contemporaneously with the execution of this Agreement, Grantor
shall deliver to Lender Stock Certificate Number 42, representing 170 shares of
common stock of P&C, and constituting all of the issued and outstanding stock of
P&C, together with a stock power endorsed in blank, to hold subject to the terms
of this Agreement. Grantor shall, in the future, similarly deposit any
certificates constituting products or proceeds of the Collateral or any
certificates representing additional stock of P&C acquired by Grantor in any
other manner, together with a stock power endorsed in blank with respect to each
such certificate.

3. REPRESENTATIONS AND WARRANTIES OF GRANTOR. Grantor represents and
warrants to Lender that:

3.1. Grantor has the full right, power and authority to enter into
this Agreement and to pledge the Collateral to Lender.

3.2. Grantor is the owner of the Collateral, free and clear of all
liens, encumbrances, or other matters that might affect title to the Collateral.

3.3. This Agreement creates a valid and enforceable perfected
security interest in all of the Collateral, subject to no other security
interest, lien or adverse claim; and no consent, filing, recording or
registration is required to perfect that security interest.

3.4. The authorized capital stock of P&C consists of ____________
shares of common stock, of which 170 shares are outstanding, validly issued,
fully paid, and nonassessable, all of which are owned by Grantor, and all of
which are pledged to Lender pursuant to this Agreement.

4. COVENANTS OF GRANTOR. Grantor agrees that:

4.1. Grantor shall not allow or grant any other lien or security
interest with respect to the Collateral.

4.2. Grantor shall not permit P&C to issue any shares of common or
preferred stock or securities convertible into common or preferred stock.

4.3. Grantor shall at all times own all of the issued and
outstanding stock of P&C.

4.4. Grantor shall procure, execute and deliver from time to time
any endorsements, assignments, financing statements, and other writings deemed
necessary or appropriate by Lender to perfect, maintain, and protect Lender's
security interest in the Collateral and its priority.

Page 3-STOCK PLEDGE AGREEMENT

<PAGE>

4.5. If any portion of the Collateral at any time consists of
uncertificated securities, Grantor shall promptly notify Lender thereof and
shall promptly take all action Lender deems necessary or desirable to perfect
the security interest of Lender under applicable law and to permit Lender to
exercise any of its rights and remedies hereunder; and Grantor agrees to provide
an opinion of counsel satisfactory to Lender with respect to any such pledge of
uncertificated securities promptly upon request of Lender.

5. AUTHORIZED ACTION BY LENDER; PROXY. Grantor irrevocably appoints
Lender as attorney-in-fact and grants Lender a proxy to do (but Lender shall not
be obligated and shall incur no liability to Grantor or any third party for
failure to do so), after and during the continuance of an Event of Default, any
act that Grantor is obligated by this Agreement to do and to exercise such
rights and powers as Grantor might exercise with respect to the Collateral.
With respect to voting the Collateral, this paragraph constitutes an irrevocable
appointment of a proxy, coupled with an interest, and shall continue until the
Indebtedness is paid in full.

6. VOTING SHARES; CUSTODY OF CERTIFICATES.

6.1. As long as no Event of Default has occurred, Grantor shall be
entitled to vote the Collateral.

6.2. If at any time or from time to time, with respect to the
Collateral, Grantor shall receive or shall become entitled to receive any
dividend or any other distribution, whether in securities or other property, for
any reason, including, without limitation, by way of liquidation, stock split,
spin-off, split-up or reclassification, combination of shares, or the like, or
in case of reorganization, consolidation, or merger, Grantor shall immediately
deliver all such securities or property, in pledge, to Lender as security for
the payment and performance of the obligations secured by this Agreement. P&C
shall make all such payments directly to Lender. Lender may endorse, in
Lender's name or in the name of Grantor, any and all instruments by which any
payment on the Collateral may be made and may take such action as Lender may
deem appropriate from time to time, in Lender's name or in the name of Grantor,
to enforce collection of the Collateral. For such purpose, Grantor appoints
Lender the attorney-in-fact of Grantor, under a power coupled with an interest,
with full power of substitution.

6.3. As long as the obligations secured by this Agreement remain
outstanding, Grantor will not transfer, whether by sale, gift, or otherwise, any
ownership interest in the Collateral without Lender's prior written approval.

7. STANDARD OF CARE. Lender shall use reasonable care in the custody and
preservation of the Collateral in the possession of Lender, but shall have no
duty to take any action to preserve, enforce or establish any rights against the
issuer or third parties.

8. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:

Page 4-STOCK PLEDGE AGREEMENT

<PAGE>

8.1. DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any
payment on the Indebtedness within ten (10) days after the due date thereof.

8.2. DEFAULT UNDER THIS AGREEMENT. Any failure (other than as
specified in Paragraph 8.1.) by Grantor or Borrower to perform or comply with
any other term of this Agreement within 20 days after written notice by Lender
to Grantor specifying the nature of the nonperformance with reasonably
particularity.

8.3. OTHER DEFAULTS. Any default under any of the Related
Documents or under any other agreement between Lender and any one or more of
Borrower and Grantor.

8.4. FALSE STATEMENTS. Any warranty, representation or statement
made or furnished to Lender by or on behalf of Grantor or Borrower under this
Agreement is false or misleading in any material respect, either now or at the
time made or furnished.

8.5. DEFECTIVE COLLATERALIZATION. This Agreement or any of the
Related Documents ceases to be in full force and effect (including failure of
any collateral documents to create a valid and perfected first priority security
interest or lien) at any time and for any reason.

8.6. INSOLVENCY. The dissolution or termination of Grantor's or
Borrower's existence as a going business, the insolvency of Grantor or Borrower,
the appointment of a receiver for any part of Grantor or Borrower's property,
any assignment for the benefit of creditors, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor or
Borrower.

8.7. CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of
foreclosure or forfeiture proceedings, whether by judicial proceeding,
self-help, repossession or any other method, by any creditor of Grantor or
Borrower or by any governmental agency against the Collateral or any other
collateral securing the Indebtedness. This includes a garnishment of any of
Grantor's or Borrower's deposit accounts with Lender. However, this Event of
Default shall not apply if there is a good faith dispute by Grantor or Borrower
as to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Grantor or Borrower gives Lender
written notice of the creditor or forfeiture proceeding and deposits with Lender
monies or a surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve or
bond for the dispute.

8.8. EVENTS AFFECTING GUARANTOR. Any of the preceding events
occurs with respect to any Guarantor of any of the Indebtedness or such
Guarantor dies or becomes incompetent. Lender, at is option, may, but shall not
be required to, permit the Guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender, and,
in doing so, cure the Event of Default.

Page 5-STOCK PLEDGE AGREEMENT

<PAGE>

8.9. INSECURITY. Lender, in good faith, deems itself insecure.

9. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under
this Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Oregon Uniform Commercial Code. In addition, and
without limitation, Lender may exercise any one or more of the following rights
and remedies:

9.1. ACCELERATE INDEBTEDNESS. Lender may declare the entire
Indebtedness, including any prepayment penalty which Borrower would be required
to pay, immediately due and payable, without notice.

9.2. REGISTER SHARES. Lender may register in Lender's name any or
all of the Collateral.

9.3. PROXY RIGHTS. Lender may exercise Lender's proxy rights with
respect to all or a portion of the Collateral. In such event, Grantor agrees to
deliver promptly to Lender further evidence of the grant of such proxy in any
form requested by Lender.

9.4. SELL THE COLLATERAL. Lender shall have full power to sell,
lease, transfer, or otherwise deal with the Collateral or proceeds thereof in
its own name or that of Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Lender will give
Grantor reasonable notice of the time after which any private sale or any other
intended disposition of the Collateral is to be made unless Grantor has signed,
after an Event of Default occurs, a statement renouncing or modifying Grantor's
right to notification of sale. The requirements of reasonable notice shall be
met if such notice is given at least ten days before the time of the sale or
disposition. All expenses relating to the disposition of the Collateral,
including without limitation the expenses of retaking, holding, insuring,
preparing for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the highest Note default rate from date of expenditure until repaid.

9.5. OBTAIN DEFICIENCY. Lender may obtain a judgment against
Borrower for any deficiency remaining on the Indebtedness due to Lender after
application of all amounts received from the exercise of the rights provided in
this Agreement.

9.6. OTHER RIGHTS AND REMEDIES. Lender shall have all the rights
and remedies of a secured creditor under the provisions of the Uniform
Commercial Code, as it may be amended from time to time. In addition, Lender
shall have and may exercise any or all other rights and remedies it may have
available at law, in equity, or otherwise.

9.7. CUMULATIVE REMEDIES. All of Lender's rights and remedies,
whether evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any

Page 6-STOCK PLEDGE AGREEMENT

<PAGE>

remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor or Borrower
under this Agreement, after Grantor or Borrower's failure to perform, shall not
affect Lender's right to declare a default and to exercise its remedies.

10. UNREGISTERED STOCK. At the time of any sale of the Collateral by
Lender, if all or any portion of the Collateral consists of restricted or
unregistered stock that is difficult to value and for which no public market
exists, then the parties agree that that Collateral is not subject to sale in a
"recognized market" as that term is described in ORS 79.5040. In that event,
Grantor and Lender wish to agree to reasonable standards for conducting a
commercially reasonable sale of the Collateral. Without limiting rights and
remedies otherwise available to Lender, the parties agree that compliance with
the following steps shall satisfy requirements of a commercially reasonable
sale:

10.1. The sale may be either a public or a private sale, at Lender's
discretion, and it may be for all or any portion of the Collateral.

10.2. Lender shall set a date for public sale of the Collateral, or
a date after which a private sale may occur, which date shall be not less than
ten days after the date notice of the sale is given to Grantor, and shall send
written notification to Grantor in advance regarding the date and the time of
the public sale, or the date after which a private sale may occur.

10.3. Any public sale shall take place at a site selected by Lender.

10.4. Immediately upon request, Grantor shall provide Lender with
information requested by Lender for compliance with state or federal securities
laws.

10.5. At any sale of the Collateral, Lender may restrict the
prospective bidders or purchasers to persons or entities who, by certain
representations made by them, would render registration of the sale under state
or federal securities law unnecessary.

11. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are
a part of this Agreement:

11.2. APPLICABLE LAW. This Agreement has been delivered to Lender
and accepted by Lender in the State of Oregon. If there is a lawsuit, Grantor
and Borrower agree upon Lender's request to submit to the jurisdiction of the
courts of Lane County, State of Oregon.

Page 7-STOCK PLEDGE AGREEMENT

<PAGE>

Subject to the provisions on arbitration, this Agreement shall be governed by
and construed in accordance with the laws of the State of Oregon.

11.3. ARBITRATION. Bank and Borrower agree that all disputes,
claims and controversies between them, whether individual, joint, or class in
nature, relating in any way to this Agreement or the Related Documents,
including without limitation contract and tort disputes, shall be arbitrated
pursuant to the Rules of the American Arbitration Association, upon request of
either party. No act to take or dispose of any Collateral shall constitute a
waiver of this arbitration provision or be prohibited by this arbitration
provision. This includes, without limitation, obtaining injunctive relief or a
temporary restraining order; foreclosing by notice and sale under any deed of
trust or mortgage; obtaining a writ of attachment or imposition of a receiver;
or exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness or any act, or exercise of any
right, concerning any Collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the Collateral, shall also be
arbitrated, provided, however, that no arbitrator shall have the right or other
power to enjoin or restrain any act of any party. Judgment upon any award
rendered by any arbitrator may be entered in any court having jurisdiction.
Nothing herein shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel, waiver,
laches, and similar doctrines which would otherwise be applicable in any action
brought by a party shall be applicable in any arbitration proceeding, and the
commencement of any arbitration proceeding shall be deemed the commencement of
any action for these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration provision.

11.4. ATTORNEYS' FEES; EXPENSES. Grantor and Borrower agree to pay
upon demand all of Lender's costs and expenses, including attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of this
Agreement. Lender may pay someone else to help enforce this Agreement, and
Grantor and Borrower shall pay the costs and expenses of such enforcement.
Costs and expenses include Lender's attorneys' fees and legal expenses whether
or not there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. Grantor and Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

Page 8-STOCK PLEDGE AGREEMENT

<PAGE>

Grantor and 4211 West 11th Avenue
Borrower: Eugene, OR 97402

Lender: Oregon Corporate Banking
555 S.W. Oak
PL-7 Corporate Loan Servicing Center
Portland, OR 97204

With a copy to: Attn: Larry Johnson
800 Willamette Street, Third Floor
Eugene, OR 97401

Any notice given shall be effective when actually received; or if given by
certified mail, then 48 hours after deposit of such notice in the United States
mail with postage prepaid; or if given by overnight courier, then 48 hours after
the deposit of such notice with the overnight courier with delivery charges
prepaid.

11.6. PREFERENCE PAYMENTS. Any monies Lender pays because of an
asserted preference claim in Borrower's bankruptcy will become a part of the
Indebtedness.

11.7. SEVERABILITY. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.

11.8. SUCCESSOR INTERESTS. Subject to the limitations set forth
above on transfer of the Collateral, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns.

11.9. WAIVER. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or any
other provision of this Agreement. No prior waiver by Lender, nor any course of
dealing between Lender and Grantor, shall constitute a waiver of any of Lender's
rights or of any of Grantor's obligations as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the granting of
such consent by Lender in any instance shall not constitute continuing consent
to subsequent instances where such consent is required and in all cases such
consent may be granted or withheld in the sole discretion of Lender.

Page 9-STOCK PLEDGE AGREEMENT

<PAGE>

11.10. EXECUTION BY FACSIMILE; COUNTERPARTS. This Agreement may be
executed in several counterparts, each of which will be deemed to be an original
and all of which together constitute one and the same instrument. Delivery of
an executed copy of this Agreement by telecopy, telex or other means of
electronic communication producing a printed copy will be deemed to be an
execution and delivery of this Agreement on the date of such communication by
the parties so delivering such a copy. The party so delivering such a copy via
electronic communication shall deliver an executed original of this Agreement to
the other party within one week of the date of delivery of the copy sent via
electronic communication.

DATED: September 1, 1998.

OBIE MEDIA CORPORATION

By: /s/ Brian Obie
------------------------------------
Brian Obie
President

OBIE MEDIA LTD.

By: /s/ Brian Obie
------------------------------------
Brian Obie
Treasurer

PHILBIN & COINE, INC.

By: /s/ Wayne P. Schur
------------------------------------
Wayne P. Schur
President

U.S. BANK NATIONAL ASSOCIATION

By: /s/ Larry Johnson
------------------------------------
Larry Johnson
Vice President

Page 10-STOCK PLEDGE AGREEMENT

EXHIBIT 10.8
EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into this 1st day of September, 1998
between OBIE Media Corporation, an Oregon corporation (the "Company"), and Wayne
P. Schur ("Executive").

RECITALS

WHEREAS, the Company is purchasing all of the outstanding capital stock of
Philbin & Coine, Inc., a New York corporation ("P & C"), pursuant to a Stock
Purchase Agreement dated August 25, 1998 among the Company, P & C and Executive
(the "Transaction");

WHEREAS, Executive is the record and beneficial owner of all of the
outstanding capital stock of P & C; and

WHEREAS, a condition to the closing of the Transaction is that the Company
and Executive enter into an employment and non-competition agreement.

NOW, THEREFORE, In consideration of the mutual promises and conditions
contained herein and other good and valuable consideration, the Company and
Executive hereby agree as follows:

SECTION 1. EMPLOYMENT

Subject to the terms and conditions contained herein, the Company hereby
agrees to employ Executive, and Executive hereby agrees to be and remain in
employ of the Company, upon the terms and conditions hereinafter set forth.
This Agreement is a contract for personal services of Executive and services
pursuant hereto may only be performed by Executive.

SECTION 2. TERM

The term of Executive's employment under this Agreement shall commence on
the date of this Agreement set forth above and shall, subject to earlier
termination as provided in Section 7, continue for a period of five years
thereafter (the "Employment Period"). At the end of the Employment Period, the
parties hereto will negotiate in good faith to arrive at a mutually acceptable
extension of the Employment Term for an additional five-year period.

SECTION 3. DUTIES

During the Employment Period, Executive shall serve as Executive Vice
President of the Company and as President of P & C (subject to its continued
operation as a separate entity from the Company), with such duties as are
associated with this position. Executive agrees to use his best efforts to
promote the interests of the Company and to devote his entire working time,
attention and energies to performance of his duties under this Agreement.
Executive shall at all

<PAGE>

times faithfully use the best of his abilities to perform the duties that may be
required of him by the Company's Board of Directors. Executive shall not be
required to relocate from the Philadelphia area.

SECTION 4. COMPENSATION

Subject to Section 7 of this Agreement, the Company agrees to pay a salary
of $150,000 per year less any federal and state withholding taxes or other
employment taxes, payable in substantially equal installments at the same
intervals as other senior executives of the Company are paid. The salary shall
increase by $25,000 in each of the second, third, fourth and fifth years of
employment.

SECTION 5. BENEFITS

Subject to Section 7 of this Agreement, the Company agrees to provide
Executive the following benefits:

5.1 INSURANCE. During the Employment Period, Executive shall be
eligible to participate in the Company's benefit plans in a manner commensurate
with the Company's other senior executives.

5.2 VACATION. Executive shall be entitled to 4 weeks of paid vacation
per calendar year. Vacation not used during a calendar year will be forfeited
and will not be accrued for use by Executive in subsequent calendar years.

5.3 EXPENSE REIMBURSEMENT. The Company shall reimburse Executive for,
or assume directly, Executive's travel and entertainment expenses that are
approved by the Company and are incurred reasonably and necessarily by Executive
in the performance of his duties under this Agreement, provided that Executive
accounts for such expenses and that such expenses are ordinary and necessary
business expenses of the Company within the meaning of Section 162 of the
Internal Revenue Code.

5.4 Automobile Allowance. The Company shall pay Executive an automobile
allowance of $500 per month, and shall reimburse employee for his gasoline,
maintenance and insurance expenses for his business use of a vehicle.

SECTION 6. STOCK OPTIONS

Executive shall be granted a non-statutory stock option for 135,000 shares
of the Company's common stock (the "Option Shares"). Twenty-five thousand of
the Option Shares will be exercisable upon the date of issuance. The remaining
100,000 Option Shares will become exercisable in 25,000 increments on each of
the first, second, third and fourth anniversaries of the date of this Agreement,
irrespective of whether Executive is employed at that time. Termination of this
Agreement by Executive during the first three years of the term of this

<PAGE>

Agreement for any reason other than breach by Company shall terminate
Executive's rights to any options which have not become exercisable as of the
date of such termination. Termination of this Agreement for any other reason
shall not affect Executive's right to receive the Option Shares. The exercise
price for the Option Shares shall be equal to $8.71 per share, with respect to
115,000 shares, and $10.25 with respect to 20,000 shares. In the event of
Executive's death, or total disability as defined in Section 7.3, all unvested
options shall become immediately exercisable. All other terms of the stock
options granted hereunder, including expiration, shall be governed by the terms
and conditions of the Company's stock option plan in effect on the date of this
Agreement.

SECTION 7. TERMINATION

7.1 FOR CAUSE. The Company may terminate Executive's employment at any
time for cause with immediate effect, upon delivering written notice thereof to
Executive. For purposes of this Agreement, "for cause" shall include: (A)
misconduct or dishonesty that adversely affects the Company, which is defined as
follows: (i) a willful act in conflict with the financial interests of the
Company, (ii) a willful act that could damage the reputation or customer/public
relations of the Company, (iii) a willful act outside of the normal course of
business that could subject the Company to liability, (iv) an act constituting
sexual harassment or other violation of the civil rights of the Company's
employees, (v) failure to obey any lawful instruction of the Board and (vi)
failure to comply with, or perform any duty required under, the terms of any
confidentiality, assignment of inventions or non-competition agreement that
Executive may have signed with the Company, (B) acts constituting the
unauthorized disclosure of any of the trade secrets or confidential information
of the Company, unfair competition with the Company or the inducement of any
customer or employee of the Company to breach any agreement with the Company,
(C) gross negligence or willful misconduct in the performance of Executive's
duties under this Agreement, (D) conviction of or entrance of a plea of guilty
or nolo contendere to a felony, or (E) conduct involving moral turpitude. Upon
termination for cause, the Company's sole and exclusive obligation will be to
pay Executive a pro rata portion of his Base Salary earned through the date of
termination, plus any employee benefits earned through the date of termination
in accordance with the applicable plans and this Agreement. Employee shall not
be entitled to any compensation after the date of such termination.

7.2 UPON DEATH. In the event of Executive's death during the term of
this Agreement, the Company's sole and exclusive obligation under this Agreement
will be to pay Executive's widow, or to his estate, if he is not survived by his
spouse, an amount equal to the annual salary payable to Executive during the
next year of this Agreement, unless death occurs during the last year of this
Agreement, in which case the payment shall be an amount equal to Executive's
annual salary at the date of death. Employee shall not be entitled to any other
compensation after the date of death.

7.3 UPON DISABILITY. This Agreement shall terminate, at the Company's
option, upon Executive's total disability. Executive's total disability means
his inability to perform substantially all of his duties under this Agreement by
reason of illness or accident for a period of three consecutive months. Upon
termination by reason of Executive's total disability, the

<PAGE>

Company's sole and exclusive obligation will be to pay Executive an amount equal
to the annual salary payable to Executive during the next year of this
Agreement, unless disability occurs during the last year of this Agreement, in
which case the payment shall be an amount equal to Executive's annual salary at
the date of disability. Executive shall not be entitled to any other
compensation after the date of such termination.

7.4 BY EXECUTIVE. Executive acknowledges and agrees that, if Executive
terminates his employment prior to expiration of the term of this Agreement, the
Company's sole and exclusive obligation will be to pay Executive a pro rata
portion of his Base Salary earned through the date of termination, plus any
employee benefits earned through the date of termination in accordance with the
applicable plans and this Agreement. Executive shall not be entitled to any
compensation after the date of such termination.

7.5 BY EXECUTIVE DUE TO A CHANGE OF MANAGEMENT. Executive shall have
the option to terminate this Agreement within 90 days following a change of
management of the Company. A "change of management" shall mean that Brian B.
Obie shall, for any reason, cease to be the Chief Executive Officer of the
Company or own, directly or indirectly through any member of his immediate
family, less than 25 percent of the Company's outstanding common stock. If
Executive terminates his employment pursuant to this Section 7.5 he will not be
bound by the non-compete obligations set forth in Section 8.1, and the Company's
sole and exclusive obligation will be to pay Executive a pro rata portion of his
Base Salary earned through the date of termination, plus any employee benefits
earned through the date of termination in accordance with the applicable plans
and this Agreement. Executive shall not be entitled to any compensation after
the date of such termination.

7.6 WITHOUT CAUSE. The Company may terminate Executive's employment at
any time after the third anniversary of the date of this Agreement without cause
with immediate effect, upon delivering written notice thereof to Executive. In
the event of such termination, the Company shall immediately pay to Executive a
one time payment equal to the annual salary payable to Executive during the next
year of this Agreement, unless termination occurs during the last year of this
Agreement, in which case the payment shall be an amount equal to Executive's
annual salary at the date of termination pro-rated for the remainder of such
year.

7.7 RETURN OF MATERIALS AT TERMINATION. In the event of any termination
of his employment, Executive will promptly deliver to the Company, all
documents, data, records and other information pertaining to his employment, and
Executive shall not take with him any Company documents or data, or any
reproduction or excerpt of any documents or data, including without limitation
documents containing or pertaining to any proprietary or confidential
information.

SECTION 8. COVENANT NOT TO COMPETE; NONSOLICITATION

In view of the unique value to the Company of Executive's services and
because of the confidential information to be obtained by or disclosed to
Executive as described above, Executive agrees as follows:

<PAGE>

8.1 NON-COMPETITION. During the term of this Agreement, and for a
period of two years after termination of this Agreement, Executive will not
directly or indirectly, as principal, owner, employee, consultant or agent,
engage in any business which competes with the business of the Company or P & C
as and where conducted as of the date of this Agreement and during the term of
the employment of Executive pursuant to this Agreement.

8.2 SAVINGS CLAUSE. If any court or arbitrator before which this
Section 8 is sought to be enforced should deem the restrictions contained herein
to be unreasonably broad in time or geographic scope, such restrictions shall be
modified to the extent necessary to be deemed reasonable by such court or
arbitrator and shall be enforceable as so modified.

SECTION 9. DISCLOSURE OF INFORMATION

During the course of his employment or any time thereafter, Executive
agrees not to disclose to any other person outside of the Company, firm,
corporation, or any other entity confidential financial information, marketing
strategies, or any other confidential or trade secret information of the Company
or P & C.

SECTION 10. DISCLOSURE TO COMPANY; INVENTIONS AND DESIGNS AS SOLE PROPERTY
OF COMPANY

Executive agrees promptly to disclose to the Company any and all
inventions, designs, discoveries, improvements, trade secrets, formulae,
techniques, processes and know-how, whether or not patentable and whether or not
reduced to practice, conceived or learned by Executive during the period of his
employment, either alone or jointly with others, which relate to or result from
the actual or anticipated business, work, research or investigations of the
Company, or which result, to any extent, from use of the Company's premises or
property (the work being thereafter collectively referred to as the
"Inventions").

Executive acknowledges and agrees that all the Inventions shall be the sole
property of the Company or any other entity designated by it, and Executive
hereby assigns to Company his entire right and interest in and to all
Inventions. The Company or any other entity designated by it shall be the sole
owner of all domestic and foreign rights pertaining to the Inventions.
Executive further agrees as to all the Inventions to assist the Company in every
way (at the Company's expense) to obtain and from time to time enforce
intellectual property rights in the Inventions in any and all countries. To
that end, by way of illustration, but not limitation, Executive will testify in
any suit or other proceeding involving any of the Inventions, execute all
documents which the Company reasonably determines to be necessary or convenient
for use in applying for and obtaining and enforcing intellectual property rights
in the Inventions. This Agreement shall continue beyond the termination of his
employment, but the Company shall compensate Executive at a reasonable rate
after such termination for time actually spent by Executive at the Company's
request on such assistance.

<PAGE>

SECTION 11. RESOLUTION OF DISPUTES

11.1 INJUNCTIVE RELIEF. Executive agrees that it would be difficult to
measure damages to the Company from any breach by Executive of the promises set
forth in Sections 8, 9 and 10 herein, that injury to the Company from any such
breach would be impossible to calculate, and that money damages would therefore
be an inadequate remedy for any such breach. Accordingly, Executive agrees that
if Executive shall breach any provisions of Sections 8, 9 and 10, or any of
them, the Company shall be entitled to seek injunctions or other appropriate
orders to restrain any such breach by Executive in a court of competent
jurisdiction without showing or proving any actual damage sustained by Company.

11.2 ARBITRATION. Executive understands that agreement to submit all
claims related to Executive's employment and the termination therefrom
(excluding workers' compensation and unemployment insurance disputes and claims
for breach of this Agreement for which injunctive relief is authorized under
Section 11.1 above) which cannot be resolved through direct discussion or
mediation, to final and binding arbitration is a condition of employment at the
Company. Executive and the Company agree to submit all claims relating to
Executive's employment and termination therefore to binding arbitration
including, but not limited to, violation of federal, state or local statutes
such as Title VII, 48 USC 2000e ET. SEQ., Age Discrimination in Employment Act,
Americans with Disabilities Act, Fair Labor Standards Act, state civil rights
statutes, wage statutes under both federal and state law and common law.
Arbitration under this provision shall be conducted under the Federal
Arbitration Act and the Commercial Arbitration Rules of the American Arbitration
Association. One arbitrator shall be selected under these rules and arbitration
shall be initiated in Portland, Oregon. EXECUTIVE ACKNOWLEDGES AND AGREES THAT
BY EXECUTING THIS AGREEMENT, EXECUTIVE IS WAIVING ANY RIGHT TO SEEK RESOLUTION
OF SUCH DISPUTES IN ANY OTHER FORUM.

SECTION 12. MISCELLANEOUS PROVISIONS

12.1 ASSIGNMENT. This Agreement is a personal contract and, except as
specifically set forth herein, the rights and interests of Executive herein may
not be sold, transferred or assigned. The rights and obligations of the Company
shall be binding upon and run in favor of the successors and assigns of the
Company. In the event of any attempted assignment or transfer of rights
hereunder contrary to the Agreement, the Company shall have no further liability
for payments hereunder.

12.2 WAIVER. The waiver by either party of the breach of any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach by the other party.

12.3 MODIFICATION. No amendment, modification, or discharge of this
Agreement shall be valid unless it is in writing and duly executed by the
parties.

<PAGE>

12.4 CONSTRUCTION. This Agreement shall be construed in accordance with
and governed by the laws of the State of Oregon.

12.5 ENTIRE AGREEMENT. This is a fully integrated agreement which
contains the entire agreement between the parties and supersedes any and all
prior agreements and understandings between the parties. There are no promises
or representations made on behalf of the Company to induce Executive to enter
into this Agreement which are not set forth herein.

12.6 NOTICES. All notices, requests, demands and other communications
required or permitted by this Agreement shall be given in writing and shall be
sufficient if personally delivered or mailed, postage prepaid by same-day or
overnight mail, or by certified mail return receipt requested, as follows:

If to the Company: Brian Obie, President
OBIE Media Corporation
4211 West 11th Avenue
Eugene, OR 97402

With a copy to: Kenneth D. Stephens
Tonkon Torp LLP
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, OR 97204-2099

If to Executive: Mr. Wayne P. Schur
8 Russell Court
Newtown, PA 18940

With a copy to: Stephen H. Frishberg
Flamm, Boroff & Bacine PC
220 Union Meeting Corporate Center
925 Harvest Drive
Blue Bell, PA 19422

12.7 SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.

12.8 ATTORNEY FEES. If any suit or action arising out of or related to
this Agreement is brought by any party, the prevailing party shall be entitled
to recover the costs and reasonable attorney fees incurred by such party in such
suit or action, including without limitation any post-arbitration or appellate
proceeding.

12.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

<PAGE>

12.10 LEGAL COUNSEL. Each party acknowledges that it or he has been
represented by independent counsel in connection with the preparation of this
Agreement, and the drafting of this Agreement by counsel for either party shall
not affect the interpretation hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

OBIE Media Corporation

By: /s/ Brian Obie /s/ Wayne P. Schur
-------------------------------- -----------------------------------
Wayne P. Schur
Its: President
-------------------------------

EXHIBIT 10.9
OBIE MEDIA CORPORATION

NON-QUALIFIED STOCK OPTION AGREEMENT

EFFECTIVE DATE: September 1, 1998

BETWEEN: Obie Media Corporation, an
Oregon corporation (the "Company")

AND: Wayne P. Schur (the "Optionee")
8 Russell Court, Newtown, PA 18940

Number of Option Shares: 125,000

Option Price per Share: 115,000 at $8.71
10,000 at $10.25

Vesting Schedule: Number of Number of Years After
Shares Vested Date of Agreement
------------- ---------------------
25,000 0 - Immediately Vested

27,500 1

27,500 2

27,500 3

17,500 4

The Shares at the $8.71 per Share price shall vest first.

The Company's Board of Directors (the "Board") has granted to the
Optionee an option to purchase shares of the Company's Common Stock, without par
value (the "Stock") upon and subject to the terms and conditions of this
Agreement.

<PAGE>

NOW, THEREFORE, the parties agree as follows:

1. GRANT; TERMS OF OPTION. Subject to the terms and conditions of this
Agreement, the Company grants to the Optionee the right and option (the
"Option") to purchase any part of an aggregate number of shares of the Company's
authorized but unissued Stock stated in the caption of this Agreement at the
price per share stated in the caption of this Agreement. It is the intent of the
Board that the Option not qualify as an "incentive stock option" under the tax
laws. The Option is granted upon the following terms and conditions:

(a) TERM OF OPTION. Subject to reductions in the Option term provided in
subparagraphs (c) and (e) below, the Option shall continue in effect
through the tenth anniversary of the date of this Agreement.

(b) TIMING OF RIGHT TO EXERCISE. Except as provided in subparagraph (c)
hereof, the Option may be exercised from time to time over the term of
the Option in the amounts specified in the vesting schedule set forth
in the caption of this Agreement. If the Optionee does not purchase in
any one year the full number of shares that the Optionee is then
entitled to purchase, the Optionee's rights shall be cumulative, and,
subject to the other provisions of this Agreement, the Optionee may
purchase those shares thereafter during the term of the Option.

(c) TERMINATION OF EMPLOYMENT. Except as provided in this subparagraph(c),
the Option shall not be exercised unless at the time of such exercise
the Optionee is in the employ of the Company or a Subsidiary and shall
have so served continuously since the effective date of this
Agreement. If the employment of the Optionee by the Company or
Subsidiary is terminated by Optionee prior to the third anniversary of
the date of this Option for any reason other than breach by the
Company of Optionee's Employment Agreement, the Option may be
exercised by the Optionee at any time prior to the expiration date of
the term of the Option, but only if and to the extent the Optionee was
entitled to exercise the Option at the date of such termination. If
the employment of the Optionee with the Company or Subsidiary
terminates for any other reason, the Option shall be deemed to be
fully vested and may be exercised by the Optionee at any time prior to
the expiration date of the term of the Option. To the extent that the
Option is not exercised within the applicable period, all further
rights to purchase shares pursuant to the Option shall cease and
terminate at the expiration of such period.

(d) MANNER OF EXERCISE. Shares may be purchased pursuant to the Option
only upon receipt by the Company of written notice from the Optionee
of the Optionee's desire to purchase, specifying the number of shares
the Optionee desires to purchase and the date on which the Optionee
desires to complete the purchase. The Option may not be exercised for
a fraction of a share. If required to comply with any applicable
federal or state securities laws, the notice also shall contain a
representation that it is the Optionee's intention to acquire the
shares for investment and not for resale. On the date specified for
completion of the

<PAGE>

purchase of the shares, the Optionee shall pay the Company the full
purchase price of the shares in cash or by such other method of
payment as shall be approved by the Board. No shares shall be
issued until full payment has been made, and the Optionee shall
have none of the rights of a shareholder until shares are issued.
Upon notification of the amount due and prior to or concurrently
with delivery of the certificate representing the shares, the
Optionee shall pay to the Company any amounts necessary to satisfy
applicable federal, state and local withholding tax requirements.

(e) CHANGES IN CAPITAL STRUCTURE. Except as provided in the final sentence
of this subparagraph (e), if the outstanding shares of Stock are
increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger,
consolidation, plan of exchange, recapitalization, reclassification,
stock split-up, combination of shares or dividend payable in shares,
the Board shall make appropriate adjustment in the number and kind of
shares as to which the Option, or portion thereof then unexercised,
shall be exercisable, the exercise price of the Option and all other
matters deemed appropriate by the Board, so that the Optionee's
proportionate interest shall be maintained as before the occurrence of
such event. Such adjustment in the Option shall be made without change
in the total price applicable to the unexercised portion of the Option
and with a corresponding adjustment in the option price per share. Any
such adjustment made by the Board shall be conclusive. In the event of
the dissolution of the Company or a merger, consolidation, plan of
exchange or similar transaction affecting the Company, in lieu of
adjusting the Option as described above or lieu of having the Option
continue unchanged, the Board may, in its sole discretion, provide a
30-day period immediately prior to such event during which the
Optionee shall have the right to exercise the Option in whole or in
part without any limitation on exercisability and upon the expiration
of such 30-day period any unexercised portion of the Option shall
immediately terminate.

2. CONDITIONS. The obligations of the Company under this Agreement shall
be subject to the approval of such state or federal authorities or agencies as
may have jurisdiction in the matter. The Company shall use its best efforts to
take such steps as may be required by state or federal law or applicable
regulations, including rules and regulations of the Securities and Exchange
Commission, any quotation system on which the Stock may then be traded and any
stock exchange on which the Stock may then be listed, in connection with the
issuance or sale of any shares acquired pursuant to this Agreement or the
trading or listing of such shares on any such system or exchange. The Company
shall not be obligated to issue or deliver shares under this Agreement if, upon
advice of its legal counsel, such issuance or delivery would violate state or
federal securities laws.

<PAGE>

3. NONTRANSFERABILITY.

(a) RESTRICTION. The Option is not transferable other than by will or
the laws of descent and distribution and, during the Optionee's
lifetime, may be exercised only by the Optionee.

(b) EXERCISE BY LEGAL REPRESENTATIVE OR SUCCESSOR. Whenever the word
"Optionee" is used in any provision of this Agreement under
circumstances when the provision should logically be construed to
apply to the Optionee's guardian, legal representative, executor,
administrator, or the person or persons to whom the Option may be
transferred by testamentary disposition or by the laws of descent
and distribution, the word "Optionee" shall be deemed to include
such person or persons.

4. LEGENDS. Certificates representing the shares subject to this
Agreement shall bear such legends as the Board shall deem appropriate to reflect
any restrictions on transfer imposed by federal or applicable state securities
laws.

5. CONTINUING RELATIONSHIP. Nothing in this Agreement shall confer upon
the Optionee any right to continue as an employee of the Company or any
Subsidiary or interfere in any way with the right of the Company or Subsidiary
to terminate the Optionee's employment at any time for any reason, with or
without cause.

6. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of any successor of the Company, but, except as provided above,
the Option shall not be assigned or otherwise disposed of by the Optionee.

7. ADMINISTRATION OF AGREEMENT BY COMMITTEE. At such time as a committee
of the Board is appointed to administer this Agreement, all decisions relating
to this Agreement shall be made by such committee and all references in this
Agreement to the Board shall mean and refer to such committee.

8. NOTICES. Parties to this Agreement shall give all notices to the
other parties concerning this Agreement by personal delivery, by telecopier or
by registered or certified mail, return receipt requested, addressed as follows:

If to the Company: Obie Media Corporation
4211 West 11th Street
Eugene, Oregon 97402
Attention: Chief Financial Officer

If to Optionee: at Optionee's address stated in the caption
of this Agreement, or such other address as
Optionee, by notice to the Company, may
designate in writing from time to time.

<PAGE>

Any party may, by written notice to the other parties, designate a new address
to which notices shall thereafter be delivered. Notice hereunder shall be deemed
effective upon the earlier of actual receipt or three days after being sent by
registered or certified mail.

IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date stated above.

OBIE MEDIA CORPORATION

By /s/ Brian B. Obie
-------------------------------------
Brian B. Obie
President and Chief Executive Officer

OPTIONEE

/s/ Wayne P. Schur
-------------------------------------
Wayne P. Schur

EXHIBIT 21.1

OBIE MEDIA CORPORATION
LIST OF SUBSIDIARIES

State or Other Names Under
Name Jurisdiction of Incorporation Which Does Business
- ---- ----------------------------- -------------------

1. Obie Media Limited British Columbia, Canada N/A

2. Philbin & Coine, Inc. New York P & C Media

3. O. B. Walls, Inc. Oregon Blue Wallscapes

Exhibit 23.1

Consent of Independent Public Accountants

As independent public accountants, we hereby consent to the incorporation of our
reports included or incorporated by reference in this Form 10-KSB, into the
Company's previously filed Registration Statement No. 333-48447 on Form S-8.

Portland, Oregon ARTHUR ANDERSEN LLP
February 26, 1999 /s/ Arthur Andersen LLP

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from the financial statements
of Obie Media Corporation which are included in its
annual report, Form 10-KSB, for the year ended
November 30, 1998, and is qualified in its entirety
by references to such financial statements.
</LEGEND>
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Nov-30-1998
<PERIOD-END> Nov-30-1998
<CASH> 326,140
<SECURITIES> 0
<RECEIVABLES> 7,011,156
<ALLOWANCES> 291,938
<INVENTORY> 0
<CURRENT-ASSETS> 8,960,251
<PP&E> 14,716,040
<DEPRECIATION> 4,222,866
<TOTAL-ASSETS> 27,647,331
<CURRENT-LIABILITIES> 7,927,268
<BONDS> 14,865,671
0
0
<COMMON> 6,851,053
<OTHER-SE> (1,304,311)
<TOTAL-LIABILITY-AND-EQUITY> 27,647,331
<SALES> 0
<TOTAL-REVENUES> 22,717,745
<CGS> 0
<TOTAL-COSTS> 14,792,952
<OTHER-EXPENSES> 935,545
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 776,001
<INCOME-PRETAX> 2,478,844
<INCOME-TAX> 977,665
<INCOME-CONTINUING> 1,501,179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,501,179
<EPS-PRIMARY> 0.35 <F1>
<EPS-DILUTED> 0.35 <F1>
<FN>
<F1>
Amounts reflect an 11-for-10 stock split which
occurred in December 1998
</FN>

</TABLE>

EXHIBIT 99.1

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
UNDER PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995; CERTAIN CAUTIONARY STATEMENTS

Obie Media Corporation ("Obie Media") and its representatives may from
time-to-time make forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act). Obie Media wants to invoke to the
fullest extent possible the protection of the Private Securities Litigation
Reform Act and the judicially created "bespeaks caution" doctrine with respect
to such statements. Accordingly, Obie Media is filing this Exhibit 99.1, which
lists certain factors that may cause actual results to differ from those in such
forward-looking statements.

This list is not necessarily exhaustive. Obie Media operates in a
rapidly changing environment, and new risk factors emerge periodically. There
can be no assurance that this Exhibit lists all material risks to Obie Media at
any specific point in time.

Readers are cautioned not to rely on any such forward-looking
statements in making investment decisions. Obie Media does not intend to update
its forward-looking statements.

Growth Strategy Risks

Obie Media's growth strategy is to increase our penetration within our
existing markets and to enter new markets. A principal component of our growth
strategy is to obtain exclusive agreements with additional transit districts
while renewing our existing transit agreements. Agreements with transit
districts are awarded through a competitive proposal process. We may not be
successful either in obtaining new agreements or renewing our existing
agreements. Other components of Obie Media's growth strategy include increasing
our inventory of outdoor displays, expanding our national presence and
selectively acquiring other out-of-home advertising companies or assets. Our
future growth will depend upon a number of factors, both within and outside our
control. These factors include:

o Our ability to successfully bid for new transit district agreements and
renew existing transit district agreements on terms favorable to us.

o Our ability to obtain required guarantees under transit district
agreements.

o Acceptance of Obie Media and our products by customers in new markets.

o Our receipt of any required governmental authorizations for any
proposed expansion.

<PAGE>
o Our identification and acquisition on favorable terms of suitable
acquisition candidates.

o Our ability to hire, train and retain qualified personnel.

o Our ability to obtain required financing on acceptable terms, if at
all.

Obie Media's credit agreements contain restrictions on our ability to incur
additional indebtedness, create additional liens and make acquisitions. We may
not be successful in expanding our operations and any expansion may not be
profitable. Further, our results to date may not be indicative of our prospects
or our ability to penetrate new markets, many of which may have different
competitive conditions and demographic characteristics than our current markets.

Risks Involved in Transit District Agreements

A significant portion of Obie Media's revenues are derived from our
transit district agreements. Under these agreements, we typically guarantee to
pay the transit district the greater of a minimum stated amount or a percentage
(usually over 50%) of the advertising revenues generated by our use of the
district's vehicles. When awarding contracts, transit districts rely heavily on
the amount of revenue the applicant guarantees it will pay to the district in
upcoming years. If our revenues from advertising displays are lower than
anticipated, we still must pay to the districts the guaranteed amounts each
year. We may not be able to profitably operate under any transit agreement.
Also, in order to expand into new geographic markets and renew our existing
transit agreements, we may face competitive pressure to increase the amounts of
our guarantees or the percentage of revenues we pay to transit districts. Any
such increase could result in financial losses or lower profits under our
transit district agreements. In addition, some of our agreements with transit
districts provide that the transit district may terminate the agreement before
the end of the specified term at the convenience of the transit district, or if
the transit district determines that such termination is in its best interest or
the public interest.

Revenue Concentration

A significant portion of Obie Media's revenues are derived from
agreements with a few large transit districts. Most of these agreements are
scheduled to expire within the next few years. Our inability to renew any of our
more significant transit agreements on favorable terms, if at all, or the early
termination of any such agreements, could adversely affect us.

<PAGE>
Risks Associated with Potential Acquisitions

A component of Obie Media's growth strategy is to selectively acquire
out-of-home advertising companies or assets. We may not be able to identify
suitable acquisition candidates or complete acquisitions on terms acceptable to
us. Further, other companies will compete with us for available acquisition
opportunities. Any acquisitions by Obie Media would involve risks commonly
encountered in acquisitions of companies, including:

o The difficulty of assimilating the operations and personnel of the
acquired company into our existing structure.

o Potential disruption of our ongoing business.

o Diversion of the time and resources of our management.

o An increase in our administrative costs.

o Our potential loss of key employees of the acquired company.

Our failure to effectively integrate any acquired businesses could
adversely affect us. In addition, future acquisitions by Obie Media may require
additional debt or equity financing. Debt financing, if available, may increase
our leverage and cash required to service debt. Equity financing may cause
dilution to our shareholders. We may not be able to obtain required financing
when needed on terms favorable to us, if at all.

Risks Associated With Growth

Obie Media has grown both internally and as a result of acquisitions.
This growth, and further anticipated growth, could place a strain on our
management, systems and other resources. To manage our growth, we will need to
continue to invest in and expand our operational, financial and information
systems and to attract, retain, motivate and effectively manage our employees.
We may not be able to do so.

Effect on Our Revenues of Economic Conditions and Advertising Trends

Obie Media relies on sales of advertising space for our revenues.
Changes in general economic conditions and trends in the advertising industry
affect sales of advertising space. A general decline in economic conditions, a
decline in economic conditions in particular markets where we conduct business
or a reallocation of advertising expenditures by advertisers using our displays
or services could result in a reduction in our advertising revenues.

<PAGE>
Competition

Obie Media's markets are highly competitive. In the transit advertising
market, we compete with other out-of-home advertising companies that submit
proposals for exclusive agreements with transit districts by means of a formal
proposal process. In the outdoor advertising display market, we compete with
other out-of-home advertising companies for customers. Obie Media also competes
for customers with other advertising media, including broadcast and cable
television, radio, print media, direct mail marketing, and displays in shopping
centers and malls, airports, stadiums, movie theaters and supermarkets and on
taxis, trains and subways. In recent years, there has been consolidation among
our competitors, including consolidation between out-of-home advertising
companies and broadcast or other media. Several of our competitors, including
diversified media companies, are substantially larger, better capitalized, more
widely known and have access to substantially greater resources than we do.
These traits may provide competitive advantages, particularly in large
advertising markets. In larger markets, we encounter direct competition for
transit district agreements from major transit advertising companies. Obie Media
may not be able to compete successfully either with other out-of-home companies
or with other advertising media.

Regulation of Outdoor Advertising Industry

The government extensively regulates the outdoor advertising industry
at the federal, state and local levels. These regulations limit the location,
relocation, height and size of outdoor advertising displays. In addition, some
jurisdictions prohibit the construction of new outdoor advertising displays or
the replacement, relocation, enlargement or upgrading of existing displays.
Governmental regulations, tobacco industry agreements and our transit district
agreements may also restrict the content of the advertisements displayed by Obie
Media. For example, some states have banned all outdoor advertising of tobacco
products. In November 1998, 46 states signed a settlement agreement with the
four largest American tobacco companies. Among other things, the agreement bans
transit and outdoor advertising of the companies' tobacco products in the 46
states. The United States Congress has also considered legislation that would
severely restrict or ban tobacco advertising. Existing or future laws or
regulations could adversely affect Obie Media, and may limit our ability to
increase our inventory of outdoor advertising displays or display particular
types of advertisements.

Restrictions Imposed by Our Primary Lender

Obie Media's primary lender has a lien on substantially all of our
assets to collateralize our indebtedness. Our credit agreements restrict our
ability to incur additional debt, create additional liens, sell assets and make
acquisitions. The credit agreements also contain financial covenants. These
restrictions may limit our ability to implement our growth strategy, pay
dividends or engage in other activities that would benefit us or our
shareholders.

<PAGE>
Seasonality and Fluctuations in Periodic Operating Results

Obie Media's revenues and operating results historically have
fluctuated by season. Typically, our results of operations are strongest in the
fourth quarter and weakest in the first quarter of our fiscal year ending
November 30. Our transit advertising operations are more seasonal than our
outdoor advertising operations as our outdoor advertising display space, unlike
our transit advertising display space, is and has been sold nearly exclusively
by means of 12-month contracts. We believe this seasonality will increase as our
transit advertising operations continue to expand more rapidly than our outdoor
advertising operations. This seasonality, together with fluctuations in general
and regional economic conditions and the timing and expenses related to
acquisitions, the obtaining of new transit agreements and other actions we have
taken to implement our growth strategy, has contributed to fluctuations in our
periodic operating results. These fluctuations likely will continue.
Accordingly, Obie Media's results of operations in any period may not be
indicative of the results to be expected for any future period. Because a
significant portion of our expenses are fixed and are based in part on our
estimate of future revenues, we may be unable to adjust our expenditures in a
timely manner to compensate for any unanticipated reduction in revenues. This
could result in period-to-period declines in operating results and net income.