WEB PRESS CORP, 10QSB, 1999-05-13

WEB PRESS CORP
10QSB, 1999-05-13
PRINTING TRADES MACHINERY & EQUIPMENT

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<PAGE>

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the three months ending March 31, 1999

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
OF THE EXCHANGE ACT

For the transition period from ______________ to ______________

Commission file number 0-7267

WEB PRESS CORPORATION _____________________________
(Exact name of registrant as specified in its charter)

Washington 91-0851298 _____
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

22023 68th Avenue S., Kent, Washington 98032
(Address of principal executive offices)

Registrant's telephone number, including area code (253) 395-3343

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 preceding 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 ninety
(90) days. Yes X No _

All reports during the preceding 12 months have been filed.

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date
(applicable only to corporate issuers): Common Stock, $.025 par
value per share; 3,105,413 shares outstanding as of May 12, 1999.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Page 1 of 15 pages in this document

<PAGE>

INTRODUCTORY REMARKS

The condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the
information presented not misleading.

The information furnished reflects all adjustments which are, in
the opinion of management, necessary to a fair statement of the
results for the interim period.

It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes
therein included in the Company's latest annual report on Form
10-KSB.

<PAGE>
PART I

FINANCIAL INFORMATION

WEB PRESS CORPORATION

CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>

ASSETS March 31, 1999
______________
<S> <C>
Current Assets:
Cash $ 143
Accounts receivable, less
allowance for doubtful
accounts of $11 1,054
Inventories 4,926
Refundable income taxes 98
Deposits 33
Prepaid expenses 25
______

Total Current Assets 6,279

Machinery and Leasehold Improvements,
at cost:
Machinery and equipment 3,401
Leasehold improvements 197
______
3,598
Less accumulated depreciation
and amortization.............. (2,747)
______
Machinery and Leasehold
Improvements (Net) 851
______

Total Assets $7,130
======
</TABLE>

The above figures are unaudited. The accompanying notes are an
integral part of the Consolidated Financial Statements.

<PAGE>

WEB PRESS CORPORATION

CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY March 31, 1999
______________
<S> <C>
Current Liabilities:
Note payable to bank...................... $ 990
Accounts payable.......................... 559
Customer deposits......................... 660
Accrued expenses.......................... 516
Deferred income taxes .................... 7
Current portion of long-term debt......... 326
______
Total Current Liabilities................... 3,058

Long-Term Debt, less current portion........ 680

Deferred Tax Liabilities.................... 474

Commitments

Stockholders' Equity:
Common stock, par value $.025 per share:
Authorized, 4,000,000 shares
Issued, 3,436,513 shares................. 86
Paid-in capital.......................... 320
Retained earnings........................ 2,609
______
3,015

Treasury stock, 331,100 shares at cost... (97)
______

Total Stockholders' Equity.................. 2,918
______

Total Liabilities and
Stockholders' Equity....................... $7,130
======

</TABLE>

The above figures are unaudited. The accompanying notes are an
integral part of the Consolidated Financial Statements.

<PAGE>

WEB PRESS CORPORATION

Consolidated Statements of Operations

For the three months ending March 31,
(Dollars in Thousands Except Earnings Per Share)

Sales......................... $1,405 $1,015

Cost of sales................. 1,114 768
______ ______
291 247
Selling, general and
administrative expenses..... 347 334
______ ______ (56) (87)
Interest expense.............. 50 46

Loss before tax benefit....... (106) (133)

Tax benefit on loss .......... (36) (45)
______ ______

Net loss...................... $ (70) $ (88)
====== ======

Basic loss per share.......... $(.02) $(.03)
===== =====
</TABLE>

The above figures are unaudited. The accompanying notes are an
integral part of the Consolidated Financial Statements.

<PAGE>

WEB PRESS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ending March 31,
(Dollars in Thousands)
<TABLE>
<CAPTION>
1999 1998
____ ____
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)................... $ (70) $ (88)
Adjustments to reconcile net
earnings (loss) to net cash provided
(used) by operating activities:
Depreciation and amortization....... 47 52
Inventory valuation reserve......... 26 16
Provision for losses on accounts
receivable........................ 2 2
Deferred taxes...................... (36) (45)
Retirement of plant assets.......... 5

Increase (Decrease) in cash from
changes in operating accounts:

Accounts receivable.............. 918 2,507
Inventory......................... (977) (1,109)
Deposits.......................... (7) 56
Income taxes refundable........... (14)
Prepaid expenses.................. 20 19
Accounts payable.................. (317) (260)
Customer deposits................. 391 2
Accrued expenses.................. (245) (749)
_____ _____

Total adjustments................. (192) 496
_____ _____

Net cash provided(used) by
Operating activities.............. (262) 408

Cash flows from investing activities:
Capital expenditures.................. (27) (451)
Proceeds from retirement of plant
Assets.............................. 55
_____ _____

Net cash used by investing activities... (27) (396)

<PAGE>
(Continued from previous page)

Cash Flows from financing activities:
Proceeds from issuance of
long-term debt...................... 421
Payments on long-term debt............ (77) (68)
Net borrowings (payments) under
line of credit...................... 503 (335)
______ ______
Net cash provided by financing
activities.......................... 426 18
______ ______

Net increase in cash.................... 137 30

Cash at beginning of period............. 6 6
______ _____

Cash at end of period................... $ 143 $ 36
====== =====

Supplemental disclosures of cash
flow information:

Cash was paid during the year for:

Interest.............................. $44 $42
Taxes................................. 15

</TABLE>

The above figures are unaudited. The accompanying notes are an
integral part of the Consolidated Financial Statements.

<PAGE>

WEB PRESS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDING MARCH 31, 1999

Note 1 - Summary of Significant Accounting Policies:

Principles of consolidation
___________________________

The accompanying consolidated financial statements include the
accounts of Web Press Corporation and Web Leader International,
Inc., its wholly owned Domestic International Sales Corporation
(DISC). All significant inter-company accounts and transactions
have been eliminated in consolidation.

Inventories
___________

Raw materials, work-in-progress and finished goods inventories
are stated at the lower of average cost or market. Used presses
and other related press equipment are stated at the lower of
cost (specific identification basis) or market. Inventory costs
include material, labor, and manufacturing overhead.

Inventories were classified as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands)
March 31, 1999
______________
<S> <C>
Raw materials and parts
(including subassemblies)..... $2,266
Work-in-progress.............. 1,273
Finished goods................ 961
Used equipment................ 426
______

$4,926
======
</TABLE>

Machinery and leasehold improvements
____________________________________

Machinery and equipment are depreciated on the straight-line
method, for financial statement purposes, based upon useful
lives of three to ten years. Leasehold improvements are
amortized over their useful lives or the term of the lease,
whichever is shorter. For income tax purposes, accelerated
methods are used for all eligible assets.

Maintenance and repairs are charged directly to costs or
expenses as incurred. Equipment of only nominal value and
renewals and betterments that do not appreciably extend the life
of the asset are charged directly to costs or expenses.

<PAGE>

Fully depreciated or fully amortized assets which are no longer
in use or are not identifiable are written off by charges to the
allowance for accumulated depreciation and amortization. When
assets are retired or disposed of, the costs and accumulated
depreciation of such assets are removed from the accounts and
the difference between the net depreciated cost and the amount
received is recorded in the statements of operatinos.

Revenue recognition
___________________

Revenue from sales of manufactured products under firm contracts
is recognized generally at the time equipment is available for
shipment. All freight and installation costs are accrued at the
time revenue is recognized. Estimated costs related to product
warranties are provided at the time of sale. Proceeds received
on contracts prior to recognition as a sale are recorded as
deposits.

Income taxes
____________

Income taxes are provided on income for financial reporting
purposes without regard to the period in which such taxes are
payable. Deferred taxes are provided for all significant items
which are reported for tax purposes in different periods than
the consolidated statements of earnings. Investment tax credits
are recorded as a reduction of federal income taxes in the year
available.

Earnings per share
__________________

Earnings per share-basic and diluted were calculated based on
the weighted average number of shares outstanding. The weighted
average-basic and diluted number of shares outstanding were
3,105,413 in 1999 and 1998.

Note 2 - Financing:

On March 31, 1999, the Company had a line of credit with a
commercial bank for borrowing up to $1.2 million. The interest
rate charged was 2 percent above the bank's prime rate.
Borrowings against this line were $905 thousand on March 31,
1999. Accounts receivable, firm orders in production,
inventories, and values in excess of the long-term financing on
equipment are pledged as collateral.

<PAGE>

On March 31, 1999, the Company had a second line of credit with
the bank for borrowing up to an additional $1 million to
manufacture equipment for export. The loan is a revolving line
of credit based on a series of transactions backed by letter of
credit orders acceptable to the bank. Borrowings against this
line were $84 thousand on March 31, 1999. The line is secured by
an "export working capital guarantee" from the Export-Import
Bank of the United States. The interest rate charged is 1.5
percent above the bank's prime rate.

On April 7, 1999, the Company secured new financing from another
bank. The new loan is a revolving line of credit and provides
for borrowing up to $3 million for the general business purposes
of the Company. Interest is to be paid monthly and the interest
rate charged is the bank's prime rate. The rate was 7.75
percent on April 7, 1999. The loan is to be repaid in one
payment on June 1, 2002. Accounts receivable, firm orders in
production, inventories, and values in excess of the long-term
financing on equipment are pledged as collateral.

The Company used the new loan to retire the two lines of credit
and to payoff two term notes held by the prior bank. The total
amount borrowed to make these payments was $2.018 million.

The new bank has also agreed to provide the Company with a
second loan for borrowing up to an additional $2 million to
manufacture equipment for export. The loan is to be secured by
an "export working capital guarantee" from the Export-Import
Bank of the United States. The Company and the bank are
presently in the process of securing that guarantee.

<PAGE>

Long-term debt consists of the following:
<TABLE>
<CAPTION>
(Dollars in Thousands)
March 31, 1999
______________

<S> <C>
Term note, 2% above prime rate, due
in monthly installments of $24,857
including interest. Final payment
due February, 2001........................ $ 517

Note payable for equipment, 9.3%, due
in monthly installments of $2,198
including interest. Final payment due
in March, 2004............................ 105

Note payable for equipment, 9%, due in
monthly installments of $6,794 including
interest. Final payment of $155,675 due
in March, 2003............................ 376

Note payable for equipment, 8.23%, due in
monthly installments of $277 including
interest. Final payment due in December,
2001...................................... 8
______
1,006

Less current portion...................... 326
______

$ 680
======
</TABLE>

Equipment with an original cost of $571 thousand is pledged
as collateral under the notes payable for equipment and the
equipment purchase contracts.

Note 3 - Common Stock:

The Company's Stock Option Plan permits issuance of stock
options to key employees at prices not less than 100% of market
price at the date of grant. An aggregate of 600,000 shares of
common stock is reserved in connection with this Plan. As of
March 31, 1999, no options had been granted under this Plan.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OPERATING RESULTS
_________________

Sales for the first quarter of 1999 increased $390 thousand to
$1.405 million. In 1998, first quarter sales were $1.015
million. New equipment sales increased $427 thousand to $1.045
million in the first quarter of 1999, and accounted for most of
the increase in sales. The Company did not sell any used
equipment in the first quarter of 1999. In the first quarter of
1998, the Company had used equipment sales of $94 thousand. The
sale of parts and service in 1999 increased $57 thousand from the
same period in 1998, to $360 thousand. The backlog of orders
believed to be firm was $3.172 million on May 11, 1999, compared
with $3.155 million on May 13, 1998.

Cost of sales, expressed as a percentage of sales, increased to
79.3 percent in the first quarter of 1999, compared with 75.6
percent in the first quarter of 1998. The primary reasons for
the increase were a lower profit margin for new equipment sold in
the first quarter of 1999; cost overruns on certain new equipment
sales; and a $43 thousand increase in research and development
cost in 1999 compared with 1998. Gross profits were $291
thousand and $247 thousand in the first quarter of 1999 and 1998,
respectively.

Selling, general and administrative expenses increased by $13
thousand in the first quarter of 1999 compared with the same
period in 1998. Selling expense increased $21 thousand to $207
thousand in the first quarter of 1999, compared to first quarter
of 1998. Most of the increase was for incentive compensation.
Administrative expenses in 1999 declined by $7 thousand from the
corresponding period in 1998, to $140 thousand.

Interest expense was $50 thousand in the first quarter of 1999,
compared with $46 thousand in the first quarter of 1998. The
average interest rate on the Company's short-term borrowings from
the bank was 9.5 percent in 1999 and 10.4 percent in 1998. The
average amount of short-term borrowings outstanding increased to
$363 thousand in 1999 from $322 thousand in 1998.

The Company had a net loss of $70 thousand in the first quarter
of 1999, compared with a net loss of $88 thousand in the first
quarter of 1998. The lower gross margin on new equipment sales,
cost overruns, and higher research and development cost all
contributed to the net loss in 1999.

<PAGE>

LIQUIDITY
_________

Net working capital was $3.221 million and the current ratio was
2.1:1on March 31, 1999. Net cash used by operating activities
was $262 thousand in the first quarter of 1999. Changes in
working capital components from December 31, 1998 include an
increase in inventories of $977 thousand, a decrease in accounts
receivable of $918 thousand, an increase in customer deposits of
$391 thousand, and lower accrued expenses and accounts payable of
$245 thousand and $317 thousand, respectively.

The Company is manufacturing equipment in larger lots to meet
demand for the Quad-Stack and to achieve other manufacturing
efficiencies. This has caused inventories to increase. On March
31, 1999, raw materials and parts had increased $498 thousand;
work-in-progress had increased $156 thousand; finished goods had
increased $240 thousand; and used equipment had increased $58
thousand, from December 31, 1998.

Funds provided by operations are the Company's primary source of
liquidity. In addition, the Company uses short-term debt from
two separate revolving lines of credit with a commercial bank to
finance fluctuating working capital requirements. On March 31,
1999, the Company had additional borrowing capacity of $295
thousand from its operating line of credit and $916 thousand from
its "export" line of credit.

On April 7, 1999, the Company secured new financing from another
bank. The new loan is a revolving line of credit and provides
for borrowing up to $3 million for the general business purposes
of the Company. Interest is to be paid monthly and the interest
rate charged is the bank's prime rate. The loan is to be repaid
in one payment on June 1, 2002. The Company used the loan to
retire two existing lines of credit and to payoff two long-term
notes held by a different bank. The total amount borrowed to
make these payments was $2.018 million.

The new bank has also agreed to provide the Company with a second
loan for borrowing up to an additional $2 million to manufacture
equipment for export. The loan is to be secured by an "export
working capital guarantee" from the Export - Import Bank of the
United States. The Company and the bank are presently in the
process of securing that guarantee.

CAPITAL RESOURCES
_________________

Total assets were $7.130 million on March 31, 1999.
Stockholder's equity was $2.918 million, a decrease of $70
thousand from December 31, 1998, and long-term debt was decreased
by $85 thousand to $680 thousand during the same period. Long-

<PAGE>

term debt and deferred income taxes (net of deferred tax assets),
as a percentage of total capitalization was 28 percent on March
31, 1999. The Company believes that its borrowing capacity is
sufficient to provide for orderly growth.

YEAR 2000
_________

The Company's computer software systems consist primarily of
programs written for the Company. The Company has tested the
system using year 2000 data. The systems functioned properly in
almost every respect. The Company has hired two outside
consultants to make improvements and certain changes as a result
of these tests. The Company expects these changes to be
completed by September 30, 1999.

The equipment used to manufacture the Company's presses are all
year 2000 compliant. The Company has contacted "critical"
vendors and service providers about their ability to deliver
products or services without interruption at the year 2000.
Based on the assurances of these vendors or service providers,
the Company has concluded that it is highly unlikely to have its
supply of raw material or basic services interrupted by a year
2000 computer problem.

The equipment manufactured by the Company is not date sensitive
or run by computer. The Company, therefore, does not have to
upgrade or change any of the equipment it manufactures to be year
2000 compliant.

<PAGE>

Item 6. Exhibits and Reports on Form 8-K
_________________________________________

(a) Exhibits

(10) Material Contracts

The following exhibits are filed herewith:

(10k) being the Business Loan Agreement between Web Press
Corporation and KeyBank National Association dated
April 7, 1999.

(b) Reports on Form 8-K -- There are no reports on Form 8-K
filed for the three months ending March 31, 1999.

SIGNATURE
_________

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

WEB PRESS CORPORATION
_____________________
(Registrant)

May 12, 1999 /s/Gary B. Palmer
____________ ________________________
Date Gary B. Palmer, President

May 12, 1999 /s/Craig L. Mathison
____________ _____________________________
Date Craig L. Mathison
Vice President of Finance
(Principal Accounting Officer)

<ARTICLE> 5
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 143
<SECURITIES> 0
<RECEIVABLES> 1065
<ALLOWANCES> 11
<INVENTORY> 4926
<CURRENT-ASSETS> 6279
<PP&E> 3598
<DEPRECIATION> 2747
<TOTAL-ASSETS> 7130
<CURRENT-LIABILITIES> 3058
<BONDS> 0
0
0
<COMMON> 86
<OTHER-SE> 2832
<TOTAL-LIABILITY-AND-EQUITY> 7130
<SALES> 1405
<TOTAL-REVENUES> 1405
<CGS> 1114
<TOTAL-COSTS> 1114
<OTHER-EXPENSES> 347
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> (106)
<INCOME-TAX> (36)
<INCOME-CONTINUING> (70)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)

</TABLE>

<PAGE>

Exhibit (10k) being the Business Loan Agreement between Web Press
Corporation and KeyBank National Association dated
April 7, 1999.

BUSINESS LOAN AGREEMENT
______________________________________________________________________________
Principal Loan Date Maturity Loan No. Call Collateral
$3,000,000.00 04-07-1999 06-01-2002 2000009502 402 322

Account Officer Initials
E93826 TWE02 TWE
_____________________________________________________________
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
______________________________________________________________________________

Borrower: WEB PRESS CORPORATION AND Lender: KEYBANK NATIONAL
22023 68TH AVENUE SOUTH ASSOCIATION
KENT, WA 98032 SEATTLE COMMUNITY
BANKING CENTER
700 FIFTH AVENUE
48TH FLOOR
SEATTLE, WA 98104

THIS LOAN AGREEMENT between WEB PRESS CORPORATION ("Borrower") and KeyBank
National Association ("Lender") is made and executed on the following terms
and conditions. Borrower has received prior commercial loans from Lender or
has applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations
from Lender to Borrower, are referred to in this Agreement individually as the
"Loan" and collectively as the "Loans." Borrower understands and agrees that:
(a) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements, as set forth in this
Agreement; (b) the granting, renewing, or extending of any Loan by Lender at
all times shall be subject to Lender's sole judgment and discretion; and (c)
all such Loans shall be and shall remain subject to the following terms and
conditions of this Agreement.

TERM. This Agreement shall be effective as of April 7, 1999, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.

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

Agreement. The word "Agreement" means this Loan Agreement, as this Loan
Agreement may be amended or modified from time to time, together with all
exhibits and schedules attached to this Loan Agreement from time to time.

Borrower. The word "Borrower" means WEB PRESS CORPORATION. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."

<PAGE>

CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.

Collateral. The word "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real
or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security
mortgage, deed of trust, assignment, pledge chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust receipt,
lien, charge, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien interest
whatsoever, whether created by law, contract, or otherwise.

ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.

Event of Default. The words "Event of Default" means and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."

Grantor. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all Borrowers
granting such a Security Interest.

Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.

Indebtedness. The word "Indebtedness" means and includes without limitation
all Loans, together with all other obligations, debts and liabilities of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or
hereafter existing, voluntary or involuntary, due or not due, absolute or
contingent, liquidated or unliquidated; whether Borrower may be liable
individually or jointly with others; whether Borrower may be obligated as a
guarantor, surety, 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.

Lender. The word "Lender" means KeyBank National Association, its
successors and assigns.

Loan. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to this
Agreement from time to time.

Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, it any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor.

Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (c) liens of materialmen, mechanics, warehousemen,

<PAGE>

or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (d) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (e) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (f) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to
the net value of Borrower's assets.

Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and

04-07-99 BUSINESS LOAN AGREEMENT Page 2
Loan No 2000009502 (Continued)

documents, whether now or hereafter existing, executed in connection with
the Indebtedness.

Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.

Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.

SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the
Initial Loan Advance and each subsequent Loan Advance under this
agreement shall be subject to the fulfillment to Lender's
satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.

Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d)
evidence of insurance as required below; and (e) any other documents
required under this Agreement or by Lender or its counsel, including
without limitation any guaranties described below.

Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
the Related Documents, and such other authorizations and other documents

<PAGE>

and instruments as Lender or its counsel, in their sole discretion, may
require.

Payment of Fees and Expenses. Borrower shall have paid to Lender all
fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any Related Document.

Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to Lender under this Agreement are true and
correct.

No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this
Agreement.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any
Loan, and at all times any Indebtedness exists:

Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Washington
and is validly existing and in good standing in all states in which
Borrower is doing business. Borrower has the full power and authority to
own its properties and to transact the businesses in which it is presently
engaged or presently proposes to engage. Borrower also is duly qualified
as a foreign corporation and is in good standing in all states in which the
failure to so qualify would have a material adverse effect on its business
or financial condition.

Authorization. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of any
other person, regulatory authority or government body; and do not conflict
with, result in a violation of, or constitute a default under (a) any
provision of its articles of incorporation or organization, or bylaws, or
any agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.

Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.

Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.

Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such

<PAGE>

properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.

Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. Except as disclosed to and
acknowledged by Lender in writing, Borrower represents and warrants that:
(a) During the period of Borrower's ownership of the properties, there has
been no use, generation, manufacture, storage, treatment, disposal, release
or threatened release of any hazardous waste or substance by any person on,
under, about or from any of the properties. (b) Borrower has no knowledge
of, or reason to believe that there has been (i) any use, generation,
manufacture, storage, treatment, disposal, release, or threatened release
of any hazardous waste or substance on, under, about or from the properties
by any prior owners or occupants of any of the properties, or (ii) any
actual or threatened litigation or claims of any kind by any person
relating to such matters. (c) Neither Borrower nor any tenant, contractor,
agent or other authorized user of any of the properties shall use,
generate, manufacture, store, treat, dispose of, or release any hazardous
waste or substance on, under, about or from any of the properties; and any
such activity shall be conducted in compliance with all applicable federal,
state, and local laws, regulations, and ordinances, including without
limitation those laws, regulations and ordinances described above. Borrower
authorizes Lender and its agents to enter upon the properties to make such
inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and for
Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are based
on Borrower's due diligence in investigating the properties for hazardous
waste and hazardous substances. Borrower hereby (a) releases and waives any
future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, and
(b) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of
this section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring
prior to Borrower's ownership or interest in the properties, whether or not
the same was or should have been known to Borrower. The provisions of this
section of the Agreement, including the obligation to indemnity, shall
survive the payment of the Indebtedness and the termination or expiration
of this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.

04-07-99 BUSINESS LOAN AGREEMENT Page 3
Loan No 2000009502 (Continued)

Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or

<PAGE>

properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.

Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
assessments and other governmental charges have been paid in full, except
those presently being or to be contested by Borrower in good faith in the
ordinary course of business and for which adequate reserves have been
provided.

Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
collateral.

Binding Effect. This Agreement, the Note, all Security Agreements directly
or indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.

Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.

Employee Benefit Plans. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable Event
nor Prohibited Transaction (as defined in ERISA) has occurred with respect
to any such plan, (ii) Borrower has not withdrawn from any such plan or
initiated steps to do so, (iii) no steps have been taken to terminate any
such plan, and (iv) there are no unfunded liabilities other than those
previously disclosed to Lender in writing.

Location of Borrowers Offices and Records. Borrower's place of business, or
Borrower's Chief executive office, if Borrower has more than one place of
business, is located at 22023 - 68TH AVENUE SOUTH, KENT, WA 98032. Unless
Borrower has designated otherwise in writing this location is also the
office or offices where Borrower keeps its records concerning the
Collateral.

Year 2000. Borrower warrants and represents that all software utilized in
the conduct of Borrower's business will have appropriate capabilities and
compatibility for operation to handle calendar dates falling on or after
January 1, 2000, and all information pertaining to such calendar dates, in
the same manner and with the same functionality as the software does
respecting calendar dates falling on or before December 31, 1999. Further,
Borrower warrants and represents that the data-related user interface
functions, data-fields, and data-related program instructions and functions
of the software include the indication of the century.

Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which
such information is dated or certified; and none of such information is or

<PAGE>

will be incomplete by omitting to state any material fact necessary to make
such information not misleading.

Survival of Representations and Warranties. Borrower understands and agrees
that Lender, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect
until such time as Borrower's Indebtedness shall be paid in full, or until
this Agreement shall be terminated in the manner provided above, whichever
is the last to occur.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.

Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.

Financial Statements.- Furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal
year, Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender, and, as
soon as available, but in no event later than forty five (45) days after
the end of each fiscal quarter, Borrowers balance sheet and profit and loss
statement for the period ended, prepared and certified as correct to the
best knowledge and belief by Borrower's chief financial officer or other
officer or person acceptable to Lender. All financial reports required to
be provided under this Agreement shall be prepared in accordance with
generally accepted accounting principles, applied on a consistent basis,
and certified by Borrower as being true and correct.

Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports
with respect to Borrower's financial condition and business operations as
Lender may request from time to time.

Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverage's
and with insurance companies reasonably acceptable to Lender. Borrower,
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 coverage's will not be canceled or
diminished without at least ten (10) days' prior written notice to
Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is

<PAGE>

offered a security interest for the Loans, Borrower will provide Lender
with such loss payable or other endorsements as Lender may require.

Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.

Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantors
named below, on Lenders forms, and in the amounts and under the conditions
spelled out in those guaranties.

Guarantors Amounts
WEB LEADER INTERNATIONAL, INC. Unlimited

Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.

04-07-99 BUSINESS LOAN AGREEMENT Page 4
Loan No 2000009502 (Continued)

Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.

Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits. Provided however, Borrower will not be required to pay
and discharge any such assessment, tax, charge, levy, lien or claim so long
as (a) the legality of the same shall be contested in good faith by
appropriate proceedings, and (b) Borrower shall have established on its
books adequate reserves with respect to such contested assessment, tax,
charge, levy, lien, or claim in accordance with generally accepted
accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies,
liens and claims and will authorize the appropriate governmental official
to deliver to Lender at any time a written statement of any assessments,
taxes, charges, levies, liens and clams against Borrower's properties,
income, or profits.

Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely

<PAGE>

manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.

Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations, including
without limitation, compliance with the Americans with Disabilities Act and
with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.

Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books,accounts, and records.
If Borrower now or at any time hereafter maintains any records (including
without limitation computer generated records and computer software
programs for the generation of such records) in the possession of a third
party, Borrower, upon request or Lender, shall notify such party to permit
Lender free access to such records at all reasonable times and to provide
Lender with copies of any records it may request, all at Borrower's
expense.

Compliance Certificate. Unless waived in writing by Lender, provide Lender
at least annually and at the time of each disbursement of Loan proceeds
with a certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the representations
and warranties set forth in this Agreement are true and correct as of the
date of the certificate and further certifying that, as of the date of the
certificate, no Event of Default exists under this Agreement.

Environmental Compliance and Reports. Borrower shall comply in all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part
of any third party, on property owned occupied by Borrower, any
environmental activity where damage may result to the environment, unless
such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local
governmental authorities; shall furnish to Lender promptly and in any event
within thirty (30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrowers part in connection with any
environmental activity whether or not there is damage to the environment
and/or other natural resources.

Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or Its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:

<PAGE>

Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security interest in, or
encumber any of Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender.

Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (C) pay
any dividends on Borrower's stock (other than dividends payable in its
stock), provided, however that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and is continuing or would result
from the payment of dividends, if Borrower is a "Subchapter S Corporation"
(as defined in the Internal Revenue Code of 1986, as amended), Borrower may
pay cash dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes and make
estimated income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of shares of stock of
Borrower, or (d) purchase or retire any of Borrower's outstanding shares or
alter or amend Borrower's capital structure.

Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds
if: (a) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that Borrower
or any Guarantor has with Lender; (b) Borrower or any Guarantor becomes
insolvent, files a petition in bankruptcy or similar proceedings, or is
adjudged a bankrupt; (c) there occurs a material adverse change in Borrower's
financial condition, in the financial condition of any Guarantor, or in the
value of any Collateral securing any Loan; or (d) any Guarantor seeks, claims
or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of
the Loan or any other loan with Lender; or (e) Lender in good faith deems
itself insecurs, even though no event of Default shall have occurred.

ADDITIONAL COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

Maximum Capital Expenditures. The Borrower's capital expenditures shall not
exceed $600,000.00 in any fiscal year.

Interest Coverage Ratio. The ratio of Borrower's earnings before interest and
taxes divided by interest expenses shall not be less than 2.5 to 1.0;
calculated at the end of each quarter.

Senior Liabilities to Adjusted Tangible Capital Ratio. Borrower shall maintain
a ratio of Total Senior Liabilities to Adjusted Tangible Capital of not more
than 2.5 to 1.0; calculated at the end of each quarter. The Words "Total
Senior Liabilities" means total liabilities less Subordinated Debt. The words

<PAGE>

"Adjusted Tangible Capital" mean Tangible Capital less investments in,
advances to, promissory notes and any receivables from, any affiliate or other

04-07-99 BUSINESS LOAN AGREEMENT Page 5
Loan No 2000009502 (Continued)

related entity of Borrower. The words "Tangible Capital" mean Tangible Net
Worth plus Subordinated Debt. The words "Tangible Net Worth" mean Borrower's
total assets excluding all intangible assets (i.e., goodwill, trademarks,
patents, copyright, organizational expenses, and similar intangible items, but
including leaseholds and leasehold improvements) less Total Debt. The words
"Total Debt" mean all of Borrower's liabilities including Subordinated Debt.
The words "Subordinated Debt" mean indebtedness and liabilities of Borrower
which have been subordinated by written agreement to indebtedness owned by
Borrower to Lender in form and substance acceptable to Lender.

RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all
accounts Borrower may open in the future, excluding however all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:

Default on Indebtedness. Failure of Borrower to make any payment when due
on the Loans.

Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.

Default In Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.

False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at
any time thereafter.

Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time
and for any reason.

<PAGE>

Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.

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 Borrower, any creditor
of any Grantor against any collateral securing the Indebtedness, or by any
governmental agency. This includes a garnishment, attachment, or levy on or
of any of Borrower's deposit accounts with Lender. However, this Event of
Default shall not apply if there is a good faith dispute by Borrower or
Grantor, as the case may be, as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding, and if
Borrower or Grantor gives Lender written notice of the creditor or
forfeiture proceeding and furnishes reserves or a surety bond for the
creditor or forfeiture proceeding satisfactory to Lender.

Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness. 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.

Change In Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.

Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.

Insecurity. Lender, in good faith, deems itself insecure.

Right to Cure. If any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) if Borrower or
Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (15)
days; or (b) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lenders sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option,
all Indebtedness immediately will become due and payable, all without notice
of any kind to Borrower, except that in the case of an Event of Default of the
type described in the "Insolvency" subsection above, such acceleration shall
be automatic and not optional. In addition, Lender shall have all the rights
and remedies provided in the Related Documents or available at law, in equity,
or otherwise. Except as may be prohibited by applicable law, all of Lender's

<PAGE>

rights and remedies 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 Borrower or of any Grantor shall not affect
Lender's right to declare a default and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

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

Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Washington. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of King
County, the State of Washington. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.

Caption headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.

Multiple Parties; Corporate Authority. All obligations of Borrower under
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each of the persons
signing below is responsible for all obligations in this Agreement.

04-07-99 BUSINESS LOAN AGREEMENT Page 6
Loan No 2000009502 (Continued)

Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation whatsoever,
to any one or more purchasers, or potential purchasers, any information or
knowledge Lender may have about Borrower or about any other matter relating
to the Loan, and Borrower hereby waives any rights to privacy it may have
with respect to such matters. Borrower additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests. Borrower also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loans and will have all the rights
granted under the participation agreement or agreements governing the sale
of such participation interests. Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or
against any purchaser of such a participation interest and unconditionally
agrees that either Lender or such purchaser may enforce Borrower's
obligation under the Loans irrespective of the failure or insolvency of any
holder of any interest in the Loans. Borrower further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.

<PAGE>

Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made pursuant
to this Agreement. Lender may pay someone else to help collect the Loans
and to enforce this Agreement, and Borrower will pay that amount. This
includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses, whether or not there is a lawsuit,
including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any
court costs, in addition to all other sums provided by law.

Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required
by law), and shall be effective when actually delivered or when deposited
with a nationally recognized overnight courier or deposited in the United
States mail, first class, postage prepaid, addressed to the party to whom
the notice is to be given at the address shown above. Any party may change
its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party's address. To the extent permitted by applicable law,
if there is more than one Borrower, notice to any Borrower will constitute
notice to all Borrowers. For notice purposes, Borrower will keep Lender
informed at all times of Borrowers current address(es).

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.

Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower.

Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.

Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.

<PAGE>

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 Borrower, or between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor 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 in subsequent instances where such consent is required,
and in all cases such consent may be granted or withheld in the sole
discretion of Lender.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
APRIL 7,1999.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.

BORROWER:
WEB PRESS CORPORATION

By: /s/ GARY B. PALMER
Gary B. Palmer, President

By: /s/ CRAIG L. MATHISON
Craig L. Mathison, Vice President of Finance

LENDER:
KeyBank National Association

By: /s/ THOMAS W. ESSIG
Authorized Officer:Thomas W. Essig, Vice President

<PAGE>

PROMISSORY NOTE

______________________________________________________________________________
Principal Loan Date Maturity Loan No. Call Collateral
$3,000,000.00 04-07-1999 06-01-2002 2000009502 402 322

Borrower: WEB PRESS CORPORATION AND Lender: KEYBANK NATIONAL
22023 68TH AVENUE SOUTH ASSOCIATION
KENT, WA 98032 SEATTLE COMMUNITY
BANKING CENTER
700 FIFTH AVENUE
48TH FLOOR
SEATTLE, WA 98104

______________________________________________________________________________

Principal Amount: $3,000,000.00 Initial Rate: 7.75%
Date of Note: April 7, 1999

PROMISE TO PAY. WEB PRESS CORPORATION. ("Borrower") promises to pay to KeyBank
National Association("Lender"), or order, in lawful money of the United States
of America, the principal amount of Three Million & 00/100 Dollars
($3,000,000.00) or so much as may be outstanding, together with interest on
the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in
one payment of all outstanding principal plus all accrued unpaid interest on
June 1, 2002. In addition, Borrower will pay regular monthly payments of
accrued unpaid interest beginning May 17, 1999, and all subsequent interest
payments are due on the same day of each month after that. The annual interest
rate for this Note is computed on a 365/360 basis; that is, by applying the
ratio of the annual interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding. Borrower will pay Lender at Lender's address
shown above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to any unpaid collection costs and any late charges, then to any unpaid
interest, and any remaining amount to principal.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the Prime Rate
announced by Lender (the "Index"). The interest Rate will change
automatically and correspondingly on the date of each announced change of the
Index by Lender. The Index is not necessarily the lowest rate charged by
Lender on its loans and is set by Lender in its sole discretion. If the index
becomes unavailable during the term of this loan, the lender may designate a
substitute index after notifying Borrower. Lender will tell Borrower the

<PAGE>

current index rate upon Borrower's request. Borrower understands that Lender
may make loans based on other rates as well. The interest rate change will not
occur more often than each day that the index changes. The index currently is
7.750% per annum. The interest rate to be applied to the unpaid principal
balance of this Note will be at a rate equal to the Index, resulting in an
initial rate of 7.750% per annum. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by applicable
law.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject
to refund upon early payment (whether voluntary or as a result of default),
except as otherwise required by law. Except for the foregoing, Borrower may
pay without penalty all or a portion of the amount owed earlier than it is
due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments of accrued
unpaid interest. Rather, they will reduce the principal balance due.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $50.00, whichever is greater.

DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
any of Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d)
Any representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment
for the benefit of creditors, or any proceeding is commenced either by
Borrower or against Borrower under any bankruptcy or insolvency laws. (f) Any
creditor tries to take any of Borrower's property on or in which Lender has a
lien or security interest. This includes a garnishment of any of Borrowers
accounts with Lender. (g) Any guarantor dies or any of the other events
described in this default section occurs with respect to any guarantor of this
Note. (h) A material adverse change occurs in Borrower's financial condition,
or Lender believes the prospect of payment or performance of the Indebtedness
is impaired. (i) Lender in good faith deems itself insecure.

If any default, other than a default in payment, is curable and if Borrower
has not been given a notice of a breach of the same provision of this Note
within the preceding twelve (12) months, it may be cured (and no event of
default will have occurred) if Borrower, after receiving written notice from
Lender demanding cure of such default: (a) cures the default within fifteen
(15) days; or (b) if the cure requires more than fifteen (15) days,
immediately initiates steps which Lender deems in Lender's sole discretion to
be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including

<PAGE>

failure to pay upon final maturity, Lender, at its option, may also, if
permitted under applicable law, increase the variable interest rate on this
Note to 3.000 percentage points over the Index. The interest rate will not
exceed the maximum rate permitted by applicable law. Lender may hire or pay
someone else to help collect this Note if Borrower does not pay. Borrower also
will pay Lender that amount. This includes, subject to any limits under
applicable law, Lender's attorneys' fees and Lender's legal expenses whether
or not there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. If not prohibited by applicable law, Borrower also will pay any
court costs, in addition to all other sums provided by law. This Note has been
delivered to Lender and accepted by Lender in the State of Washington. If
there is a lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of King County or Pierce County, the State of
Washington. This Note shall be governed by and construed in accordance with
the laws of the State of Washington.

RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers to

04-07-99 PROMISSORY NOTE Page 2
Loan No 2000009502 (Continued)

Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all
accounts Borrower may open in the future, excluding however all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on this Note
against any and all such accounts.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested only in writing by Borrower or by an authorized
person. All communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Lender's office shown above. The
following party or parties are authorized to request advances under the line
of credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: GARY B. PALMER, President;
CRAIG L.MATHISON, Vice President of Finance. 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 Lender.
The unpaid principal balance owing on this Note at any time may be evidenced
by endorsements on this Note or by Lenders internal records, including daily
computer printouts. Lender will have no obligation to advance funds under this
Note if: (a) Borrower or any guarantor is in default under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender,
including any agreement made in connection with the signing of this Note; (b)
Borrower or any guarantor ceases doing business or is insolvent; (c) any
guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
guarantor's guarantee of this Note or any other loan with Lender; or (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (e) Lender in good faith deems itself
insecure under this Note or any other agreement between Lender and Borrower.

<PAGE>

ADDITIONAL PROVISION. Any advance that Lender in its sole discretion may
permit after the final payment date provided in this Note will be due on
demand and otherwise subject to the terms of this Note.

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lenders right to
declare payment of this Note on its demand. Lender may delay or forgo
enforcing any of its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses this Note, to
the extent allowed by law, waive presentment demand for payment protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether
as maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary by
Lender without the consent of or notice to anyone. All such parties also agree
that Lender may modify this loan without the consent of or notice to anyone
other than the party with whom the modification is made.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.

BORROWER:

WEB PRESS CORPORATION

BY: /s/ GARY B. PALMER
____________________________
President: WEB PRESS CORP.

BY: /s/ CRAIG L. MATHISON
_________________________________________
Craig L. Mathison, Vice President of Finance

<PAGE>

COMMERCIAL SECURITY AGREEMENT
______________________________________________________________________________
Principal Loan Date Maturity Loan No. Call Collateral
$3,000,000.00 04-07-1999 06-01-2002 2000009502 402 322

Borrower: WEB PRESS CORPORATION AND Lender: KEYBANK NATIONAL
22023 68TH AVENUE SOUTH ASSOCIATION
KENT, WA 98032 SEATTLE COMMUNITY
BANKING CENTER
700 FIFTH AVENUE
48TH FLOOR
SEATTLE, WA 98104

______________________________________________________________________________

THIS COMMERCIAL SECURITY AGREEMENT is entered into between WEB PRESS
CORPORATION. (referred to below as "Grantor"); and KeyBank National
Association(referred to below as "Lender"). For valuable consideration,
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.

Agreement. The word "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.

Collateral. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:

All inventory, chaffel paper, accounts, equipment and general
intangibles, together with the following specifically described
property: machinery

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 above.

(b) All products and produce of any of the property described in this
Collateral section.

<PAGE>

(c) All accounts, 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.

(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.

Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "Events of Default."

Grantor. The word "Grantor" means WEB PRESS CORPORATION, its successors and
assigns.

Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with the Indebtedness.

Indebtedness. The word "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, or any one or more of them, to Lender, as
well as all claims by Lender against Grantor, 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 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 otherwise
unenforceable.

Lender. The word "Lender" means KeyBank National Association, its
successors and assigns.

Note. The word "Note" means the note or credit agreement dated APRIL
7,1999, in the principal amount of $3,000,000.00 from WEB PRESS CORPORATION
to Lender, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of and substitutions for the note or credit
agreement.

RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory
security interest in and hereby assigns, conveys, delivers, pledges, and

<PAGE>

transfers 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 and Keogh accounts, and
all trust accounts for which the grant of a security interest would be
prohibited by law. Grantor authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all Indebtedness against any and all such
accounts.

04-07-99 COMMERCIAL SECURITY AGREEMENT Page 2
Loan No 2000009502 (Continued)

OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:

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 Lenders 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 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.

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 certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.

Enforceability of Collateral. To the extent the Collateral consists of
accounts, 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. At the time any account becomes subject to a
security interest in favor of Lender, the account shall be a good and valid
account representing an undisputed, bona fide indebtedness incurred by the
account debtor, for merchandise held subject to delivery instructions or
theretofore shipped or delivered pursuant to a contract of sale, or for
services theretofore performed by Grantor with or for the account debtor;
there shall be no setoffs or counterclaims against any such account; and no
agreement under which any deductions or discounts may be claimed shall have
been made with the account debtor except those disclosed to Lender in
writing.

Location of the Collateral. Grantor, upon request of Lender, will deliver
to Lender in form satisfactory to Lender a schedule of real properties and

<PAGE>

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.

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 Washington, without the prior written consent of
Lender.

Transactions Involving Collateral. Except for inventory sold or accounts
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. Unless waived by
Lender, all proceeds from any disposition of the 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.

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. 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
rights in the Collateral against the claims and demands of all other
persons.

Collateral Schedules and Locations. As often as Lender shall require and
insofar as the Collateral consists of accounts 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 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.

<PAGE>

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; of any request for credit or adjustment or of any other
dispute arising with respect to the Collateral; and generally of all
happenings and events affecting the Collateral or the value or the amount
of the Collateral.

Taxes, Assessments and Liens. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness,
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 sole opinion. If the Collateral is subjected to a lien which is
not discharged within fifteen (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 or 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.

Compliance with Governmental Requirements. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
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 opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that 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 waste or substance,as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability

04-07-99 COMMERCIAL SECURITY AGREEMENT Page 3
Loan No 2000009502 (Continued)

Act of 1980, as amended, 42 U.S.C Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing. The terms "hazardous
waste" and "hazardous substance" shall also include, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.
The representations and warranties contained herein are based on Grantor's
due diligence in investigating the Collateral for hazardous wastes and

<PAGE>

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 such 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. This
obligation to indemnify shall survive the payment of the Indebtedness and
the satisfaction of this Agreement.

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 require with
respect to the Collateral, in form, amounts, coverage's and basis
reasonably acceptable to Lender and issued by a company or companies
reasonably acceptable to Lender. Grantor, upon request or Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverage's will not be canceled or diminished without at least ten (10)
days' prior written notice to Lender and not including any disclaimer of
the insurer's liability for failure to give such a notice. Each insurance
policy also shall include an endorsement providing that coverage in favor
of Lender will not be impaired in any way by any act, omission or default
of Grantor or any other person. 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.

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 fifteen (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. If Lender
consents to repair or replacement of the damaged or destroyed Collateral
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.

Insurance Reserves. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the payment
of premiums shall remain Grantor's sole responsibility.

<PAGE>

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, Grantor shall upon
request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and
except as otherwise provided below with respect to accounts, 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. Until otherwise notified by Lender,
Grantor may collect any of the Collateral consisting of accounts. At any time
and even though no Event of Default exists, Lender may exercise its rights to
collect the accounts and to notify account debtors to make payments directly
to Lender for application to the Indebtedness. 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 sole 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 Indebtedness.

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 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 the 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

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

Default on Indebtedness. Failure of Grantor to make any payment when due on
the Indebtedness.

Other Defaults. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in

<PAGE>

any of the Related Documents or in any other agreement between Lender and
Grantor.

Default in Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower's property or
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.

False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the
Note or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.

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 security interest or lien) at any
time and for any reason.

Insolvency. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver

04-07-99 COMMERCIAL SECURITY AGREEMENT Page 4
Loan No 2000009502 (Continued)

for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.

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.

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.

Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.

Insecurity. Lender, in good faith, deems itself insecure.

<PAGE>

Right to Cure. If any default, other than a Default on Indebtedness, is
curable and if Grantor has not been given a prior notice of a breach of the
same provision of this Agreement, it may be cured (and no Event of Default
will have occurred) if Grantor, after Lender sends written notice demanding
cure of such default, (a) cures the default within (15) days; or (b), if
the cure requires more than (15) days, immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.

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 Washington Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the following
rights and remedies:

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.

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 to Grantor after
repossession.

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. The
requirements of reasonable notice shall be met if such notice is given at
least ten (10) 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 Note
rate from date of expenditure until repaid.

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 mailer of right,
(b) the receiver may be an employee of Lender and may serve without bond
and (c) all 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 Note rate from date of expenditure until
repaid.

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

<PAGE>

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, general intangibles, insurance policies, instruments,
chattel paper, choices 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, 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.

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a Judgment against Grantor 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.

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
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.

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.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Washington. If there is a lawsuit, Grantor agrees
upon Lenders request to submit to the jurisdiction of the courts of King or
Pierce County, the State of Washington. Lender and Grantor hereby waive the
right to any jury that in any action, proceeding, or counterclaim brought
by either Lender or Grantor against the other. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington.

Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lenders

<PAGE>

04-07-99 COMMERCIAL SECURITY AGREEMENT Page 5
Loan No 2000009502 (Continued)

legal expenses, incurred in connection with the enforcement of this
Agreement. Lender may pay someone else to help enforce this Agreement, and
Grantor 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 also shall pay all court costs and such
additional fees as may be directed by the court.

Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.

Multiple Parties; Corporate Authority. All obligations of Grantor under
this Agreement shall be joint and several, and all references to Grantor
shall mean each and every Grantor. This means that each of the persons
signing below is responsible for all obligations in this Agreement.

Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required
by law), and shall be effective when actually delivered or when deposited
with a nationally recognized overnight courier or deposited in the United
States mail, first class, postage prepaid, addressed to the party to whom
the notice is to be given at the address shown above. Any party may change
its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party's address. To the extent permitted by applicable law,
if there is more than one Grantor, notice to any Grantor will constitute
notice to all Grantors. For notice purposes, Grantor will keep Lender
informed at all times of Grantor's current address(es).

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.

Preference Payments. Any monies Lender pays because of an asserted
preference claim in Borrower's bankruptcy will become a part of the
Indebtedness and, at Lender's option, shall be payable by Borrower as
provided above in the "EXPENDITURES BY LENDER" paragraph.

<PAGE>

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.

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.

Waiver of Co-obligor's Rights. If more than one person is obligated for the
Indebtedness, Borrower irrevocably waives, disclaims and relinquishes all
claims against such other person which Borrower has or would otherwise have
by virtue of payment of the Indebtedness or any part thereof, specifically
including but not limited to all rights of indemnity, contribution or
exoneration.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
APRIL 3, 1998.

GRANTOR:

WEB PRESS CORPORATION

By: /s/ Gary B. Palmer
___________________________________________
Gary B. Palmer, President

By: /s/ Craig L. Mathison
____________________________________________
Craig L. Mathison, Vice President of Finance

<PAGE>

CORPORATE RESOLUTION TO GUARANTEE

______________________________________________________________________________
Principal Loan Date Maturity Loan No. Call Collateral
$3,000,000.00 04-07-1999 06-01-2002 2000009502 402 322

Account Officer Initials
E93826 TWE02 TWE
______________________________________________________________________________
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
______________________________________________________________________________

Borrower: WEB PRESS CORPORATION AND Lender: KEYBANK NATIONAL
22023 68TH AVENUE SOUTH ASSOCIATION
KENT, WA 98032 SEATTLE COMMUNITY
BANKING CENTER
Guarantor: WEB LEADER INTERNATIONAL, INC. 700 FIFTH AVENUE
22023 68TH AVENUE SOUTH 48TH FLOOR
KENT, WA 98032 SEATTLE, WA 98104

______________________________________________________________________________

I, the undersigned Secretary or Assistant Secretary of WEB LEADER
INTERNATIONAL, INC. (the "Corporation"), HEREBY CERTIFY that the Corporation
is organized and existing under and by virtue of the laws of the State of
Washington with its principal office at 22023 68TH AVENUE SOUTH, KENT, WA
98032.

I, FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on April 7, 1999, at which ia quorum was present and voting,
or by other duly authorized corporate action in lieu of a meeting, the
following resolutions were adopted:

WHEREAS the granting of the loan or other financial accommodations described
below from KEYBANK NATIONAL ASSOCIATION to WEB PRESS CORPORATION will be
beneficial to this Corporation, and accordingly this Corporation is willing to
provide its guaranty to Lender as provided below;

AND WHEREAS one of the conditions required by Lender for the granting of the
loan or other financial accommodations is that Lender be furnished with the
written corporate guaranty of this Corporation as corporate guarantor.

BE IS RESOLVED,that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:

NAME POSITION ACTUAL SIGNATURE
GARY B. PALMER Chairman

X /S/GARY B.PALMER

acting for and on behalf of the Corporation and as its act and deed be, and he
or she hereby is, authorized and empowered:

Guaranty. To guarantee or act as surely for loans or other financial
accommodations to WEB PRESS CORPORATION from KEYBANK NATIONAL
ASSOCIATION ("Lender") on such guarantee or surely terms as may be
agreed upon between the officers or employees of this Corporation and

<PAGE>

Lender and in such sum or sums of money as in his or her judgement
should be guaranteed or assured, without limit (the "Guaranty").

Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the Guaranty,
any property now or hereafter belonging to the Corporation or in which
the Corporation now or hereafter may have an interest, including without
limitation all real property and all personal property (tangible or
intangible) of the Corporation. Such property may be mortgaged,
pledged, transferred, endorsed, hypothecated, or encumbered at the time
such loans are obtained or such indebtedness is incurred, or at any
other time or times, and may be either in addition to or in lieu of any
property theretofore mortgaged, pledged, transferred, endorsed,
hypothecated, or encumbered. The provisions of these Resolutions
authorizing or relating to the pledge, mortgage, transfer, endorsement,
hypothecation, granting of a security interest in, or in any way
encumbering, the assets of the Corporation shall include, without
limitation, doing so in order to lend collateral security for the
indebtedness, now or hereafter existing, and of any nature whatsoever,
of WEB PRESS CORPORATION to Lender. The Corporation has considered the
value to itself of lending collateral in support of such indebtedness,
and the Corporation represents to Lender that the Corporation is
benefited by doing so.

Execute Security Documents. To execute and deliver to Lender the forms
of mortgage, deed of trust, pledge agreement, hypothecation agreement,
and other security agreements and financing statements which may be
submitted by Lender, and which shall evidence the terms and conditions
under and pursuant to which such liens and encumbrances, or any of them,
are given; and also to execute and deliver to Lender any other written
instruments, any chattel paper, or any other collateral, of any kind or
nature, which he or she may in his or her discretion deem reasonably
necessary or proper in connection with or pertaining to the giving of
the liens and encumbrances.

Further Acts. To do and perform such other acts and things and to
execute and deliver such other documents and agreements, including
agreements waiving the right to a trial by jury, as he or she may in his
or her discretion deem reasonably necessary or proper in order to carry
into effect the provisions of these Resolutions.

BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other address as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation, (d) change in the authorized signer(s), (e)
conversion of the Corporation to a new or different type of business entity,
or (f) change in any other aspect of the Corporation that directly relates to
any agreements between the Corporation and Lender. No change in name of the
Corporation will take effect until after Lender has been notified.

04-07-99 CORPORATE RESOLUTION TO BORROW Page 2
Loan No 2000009502 (Continued)

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and

<PAGE>

effect and Lender may rely on these Resolutions until written notice of his or
her revocation shall have been delivered to and received by Lender. Any such
notice shall not affect any of the Corporation's agreements or commitments in
effect at the time notice if given.

I FURTHER CERTIFY that the officer, employee, or agent named above is duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupies the position set opposite the name; that the foregoing
Resolutions now stand of record on the books of the Corporation; and that the
Resolutions are in full force and effect and have not been modified or revoked
in any manner whatsoever.

I FURTHER CERTIFY that the officers, employees, and agents named above are
duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever. The Corporation has no corporate seal,
and therefore, no seal is affixed to this certificate.

IN TESTIMONY WHEREOF, I have hereunto set my hand on April 7, 1999 and attest
that the signatures set opposite the names listed above are their genuine
signatures.

CERTIFIED TO AND ATTESTED BY:

X /S/CRAIG L. MATHISON________

X_____________________________

NOTE: In case the Secretary or other certifying officer is designated
by the foregoing resolutions as one of the signing officers, it is
advisable to have this certificate signed by a second Officer or
Director of the Corporation.

<PAGE>

Exhibit (10k) being the Business Loan Agreement between Web Press
Corporation and KeyBank National Association dated
April 7, 1999.

Borrower: WEB PRESS CORPORATION AND Lender: KEYBANK NATIONAL
22023 68TH AVENUE SOUTH ASSOCIATION
KENT, WA 98032 SEATTLE COMMUNITY
BANKING CENTER
700 FIFTH AVENUE
48TH FLOOR
SEATTLE, WA 98104

<PAGE>

CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.

ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.

Event of Default. The words "Event of Default" means and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."

Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.

Lender. The word "Lender" means KeyBank National Association, its
successors and assigns.

<PAGE>

04-07-99 BUSINESS LOAN AGREEMENT Page 2
Loan No 2000009502 (Continued)

documents, whether now or hereafter existing, executed in connection with
the Indebtedness.

SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.

<PAGE>

and instruments as Lender or its counsel, in their sole discretion, may
require.

Payment of Fees and Expenses. Borrower shall have paid to Lender all
fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any Related Document.

No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this
Agreement.

<PAGE>

properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.

04-07-99 BUSINESS LOAN AGREEMENT Page 3
Loan No 2000009502 (Continued)

<PAGE>

properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.

Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.

<PAGE>

will be incomplete by omitting to state any material fact necessary to make
such information not misleading.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

<PAGE>

offered a security interest for the Loans, Borrower will provide Lender
with such loss payable or other endorsements as Lender may require.

Guarantors Amounts
WEB LEADER INTERNATIONAL, INC. Unlimited

04-07-99 BUSINESS LOAN AGREEMENT Page 4
Loan No 2000009502 (Continued)

Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.

Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely

<PAGE>

manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:

<PAGE>

ADDITIONAL COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

Maximum Capital Expenditures. The Borrower's capital expenditures shall not
exceed $600,000.00 in any fiscal year.

Interest Coverage Ratio. The ratio of Borrower's earnings before interest and
taxes divided by interest expenses shall not be less than 2.5 to 1.0;
calculated at the end of each quarter.

<PAGE>

"Adjusted Tangible Capital" mean Tangible Capital less investments in,
advances to, promissory notes and any receivables from, any affiliate or other

04-07-99 BUSINESS LOAN AGREEMENT Page 5
Loan No 2000009502 (Continued)

EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:

Default on Indebtedness. Failure of Borrower to make any payment when due
on the Loans.

<PAGE>

Change In Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.

Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.

Insecurity. Lender, in good faith, deems itself insecure.

<PAGE>

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

Caption headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.

04-07-99 BUSINESS LOAN AGREEMENT Page 6
Loan No 2000009502 (Continued)

<PAGE>

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
APRIL 7,1999.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.

BORROWER:
WEB PRESS CORPORATION

By: /s/ GARY B. PALMER
Gary B. Palmer, President

By: /s/ CRAIG L. MATHISON
Craig L. Mathison, Vice President of Finance

LENDER:
KeyBank National Association

By: /s/ THOMAS W. ESSIG
Authorized Officer:Thomas W. Essig, Vice President

<PAGE>

PROMISSORY NOTE

______________________________________________________________________________
Principal Loan Date Maturity Loan No. Call Collateral
$3,000,000.00 04-07-1999 06-01-2002 2000009502 402 322

Borrower: WEB PRESS CORPORATION AND Lender: KEYBANK NATIONAL
22023 68TH AVENUE SOUTH ASSOCIATION
KENT, WA 98032 SEATTLE COMMUNITY
BANKING CENTER
700 FIFTH AVENUE
48TH FLOOR
SEATTLE, WA 98104

______________________________________________________________________________

Principal Amount: $3,000,000.00 Initial Rate: 7.75%
Date of Note: April 7, 1999

<PAGE>

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $50.00, whichever is greater.

<PAGE>

RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers to

04-07-99 PROMISSORY NOTE Page 2
Loan No 2000009502 (Continued)

<PAGE>

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.

BORROWER:

WEB PRESS CORPORATION

BY: /s/ GARY B. PALMER
____________________________
President: WEB PRESS CORP.

BY: /s/ CRAIG L. MATHISON
_________________________________________
Craig L. Mathison, Vice President of Finance

<PAGE>

Borrower: WEB PRESS CORPORATION AND Lender: KEYBANK NATIONAL
22023 68TH AVENUE SOUTH ASSOCIATION
KENT, WA 98032 SEATTLE COMMUNITY
BANKING CENTER
700 FIFTH AVENUE
48TH FLOOR
SEATTLE, WA 98104

______________________________________________________________________________

Collateral. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:

All inventory, chaffel paper, accounts, equipment and general
intangibles, together with the following specifically described
property: machinery

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 above.

(b) All products and produce of any of the property described in this
Collateral section.

<PAGE>

(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property described
in this Collateral section.

Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "Events of Default."

Grantor. The word "Grantor" means WEB PRESS CORPORATION, its successors and
assigns.

Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with the Indebtedness.

Lender. The word "Lender" means KeyBank National Association, its
successors and assigns.

RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory
security interest in and hereby assigns, conveys, delivers, pledges, and

<PAGE>

04-07-99 COMMERCIAL SECURITY AGREEMENT Page 2
Loan No 2000009502 (Continued)

OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:

Location of the Collateral. Grantor, upon request of Lender, will deliver
to Lender in form satisfactory to Lender a schedule of real properties and

<PAGE>

04-07-99 COMMERCIAL SECURITY AGREEMENT Page 3
Loan No 2000009502 (Continued)

<PAGE>

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

Default on Indebtedness. Failure of Grantor to make any payment when due on
the Indebtedness.

Other Defaults. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in

<PAGE>

any of the Related Documents or in any other agreement between Lender and
Grantor.

Insolvency. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver

04-07-99 COMMERCIAL SECURITY AGREEMENT Page 4
Loan No 2000009502 (Continued)

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.

Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.

Insecurity. Lender, in good faith, deems itself insecure.

<PAGE>

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.

<PAGE>

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lenders

<PAGE>

04-07-99 COMMERCIAL SECURITY AGREEMENT Page 5
Loan No 2000009502 (Continued)

Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.

Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required
by law), and shall be effective when actually delivered or when deposited
with a nationally recognized overnight courier or deposited in the United
States mail, first class, postage prepaid, addressed to the party to whom
the notice is to be given at the address shown above. Any party may change
its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party's address. To the extent permitted by applicable law,
if there is more than one Grantor, notice to any Grantor will constitute
notice to all Grantors. For notice purposes, Grantor will keep Lender
informed at all times of Grantor's current address(es).

<PAGE>

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
APRIL 3, 1998.

GRANTOR:

WEB PRESS CORPORATION

By: /s/ Gary B. Palmer
___________________________________________
Gary B. Palmer, President

By: /s/ Craig L. Mathison
____________________________________________
Craig L. Mathison, Vice President of Finance

<PAGE>

CORPORATE RESOLUTION TO GUARANTEE

______________________________________________________________________________
Principal Loan Date Maturity Loan No. Call Collateral
$3,000,000.00 04-07-1999 06-01-2002 2000009502 402 322

______________________________________________________________________________

BE IS RESOLVED,that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:

NAME POSITION ACTUAL SIGNATURE
GARY B. PALMER Chairman

X /S/GARY B.PALMER

acting for and on behalf of the Corporation and as its act and deed be, and he
or she hereby is, authorized and empowered:

<PAGE>

Lender and in such sum or sums of money as in his or her judgement
should be guaranteed or assured, without limit (the "Guaranty").

04-07-99 CORPORATE RESOLUTION TO BORROW Page 2
Loan No 2000009502 (Continued)

<PAGE>

IN TESTIMONY WHEREOF, I have hereunto set my hand on April 7, 1999 and attest
that the signatures set opposite the names listed above are their genuine
signatures.

CERTIFIED TO AND ATTESTED BY:

X /S/CRAIG L. MATHISON________

X_____________________________

NOTE: In case the Secretary or other certifying officer is designated by
the foregoing resolutions as one of the signing officers, it is
advisable to have this certificate signed by a second Officer or
Director of the Corporation.