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                                                                 EXHIBIT 10.13

                           BUSINESS SECURITY AGREEMENT

This Business Security  Agreement  ("AGREEMENT") is made and entered into by the
undersigned  borrower,  guarantor and/or other obligor/pledgor (the "DEBTOR") in
favor of U. S. BANK N.A., 555 SW OAK, PORTLAND,  OR 97204 (the "BANK") as of the
date set forth on the last page of this Agreement.

                          ARTICLE I. SECURITY INTEREST


         1.1  GRANT OF  SECURITY  INTEREST.  Debtor  hereby  grants  a  security
        interest in and collaterally  assigns the Collateral  (defined below) to
        Bank to secure all of Debtor's  Obligations (defined below) to Bank. The
        intent  of the  parties  hereto  is  that  the  Collateral  secures  all
        Obligations  of Debtor to Bank,  whether or not such  Obligations  exist
        under this Agreement or any other  agreements,  whether now or hereafter
        existing,  between  Debtor  and Bank or in  favor  of  Bank,  including,
        without limitation, any note, any loan or security agreement, any lease,
        any  mortgage,  deed of trust or other  pledge of an interest in real or
        personal  property,  any  guaranty,  any  letter of  credit or  banker's
        acceptance,  any agreement for any other services or credit  extended by
        Bank to Debtor even though not specifically  enumerated  herein, and any
        other  agreement  with  Bank  (together  and  individually,   the  "LOAN
        DOCUMENTS').
         1.2  "COLLATERAL  "means all of the  following  whether  now,  owned or
        existing or  hereafter  acquired  by Debtor (or by Debtor with  spouse),
        wherever  located   (including  all  documents,   general   intangibles,
        additions  and  accessions,  spare  and  repair  parts,  special  tools,
        replacements,  returned  or  repossessed  goods and  books  and  records
        relating to the following; and all proceeds,  supporting obligations and
        products of the following) [CHECK ALL THAT APPLY]:

        |X|  All  accounts,  instruments,   documents,  chattel  paper,  general
        intangibles,   contract  rights,   investment  property  (including  any
        securities  entitlements  and/or  securities  accounts  held by Debtor),
        securities and certificates of deposit,  deposit accounts, and letter of
        credit rights;

        |X| All inventory;

        |X| All equipment;

        [ ] All fixtures; and

        [ ] Specific Collateral (the following,  whether constituting equipment,
        inventory, fixtures, or (other collateral):

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

        In the event the first four boxes are checked,  Debtor  acknowledges and
        agrees that,  in applying the law of any  jurisdiction  that at any time
        enacts all or  substantially  all of the uniform  provisions  of Revised
        Article 9 of the  Uniform  Commercial  Code (1999  Official  Text),  the
        foregoing  collateral  description covers all assets of Debtor. Bank may
        at any  time and  from  time to time  file  financing  and  continuation
        statements and amendments  thereto reflecting the same. Unless otherwise
        defined,  the terms set forth in this Agreement  shall have the meanings
        set  forth  in the  Uniform  Commercial  Code  as  adopted  in the  Loan
        Documents and as amended from time to time. The defined terms  hereunder
        shall be interpreted in a manner most favorable to Bank.

         1.3 "OBLIGATIONS"  means all Debtor's debts (except for consumer credit
        if Debtor is a natural  person),  liabilities,  obligations,  covenants,
        warranties, and duties to Bank (plus its affiliates including any credit
        card debt,  but  specifically  excluding  any type of consumer  credit),
        whether now or hereafter  existing or incurred,  whether  liquidated  or
        unliquidated, whether absolute or contingent, whether arising out of the
        Loan  Documents or otherwise,  and all other debts and  obligations  due
        Bank  under any  lease,  agricultural,  real  estate or other  financing
        transaction  and regardless of whether such financing is related in time
        or type to the financing  provided at the time of grant of this security
        interest,  and  regardless  of  whether  such  Obligations  arise out of
        existing or future credit  granted by Bank to any Debtor,  to any Debtor
        and others, to others guaranteed,  endorsed or otherwise secured by' any
        Debtor or to any debtor-in-possession or other  successor-in-Interest of
        any Debtor,  and  including  principal,  interest,  fees,  expenses  and
        charges relating to any of the foregoing.

                      ARTICLE II. WARRANTIES AND COVENANTS

        In addition to all other  warranties  and  covenants of Debtor under the
        Loan Documents which are expressly  incorporated  herein as part of this
        Agreement and while any part of the credit granted Debtor under the Loan
        Documents is available or any  Obligations  of Debtor to Bank are unpaid
        or outstanding, Debtor continuously warrants and agrees as follows:

        2.1 DEBTOR'S  NAME,  LOCATION;  NOTICE OF LOCATION  CHANGES.  Except as
        indicated  in the  ARTICLE 9  CERTIFICATE  executed by Debtor and made a
        part hereof, Debtor's name and organizational structure has remained the
        same during the past five (5) years.  Debtor  will  continue to use only
        the name set forth with  Debtor's  signature  unless  Debtor  gives Bank
        prior  written  notice of any change.  Furthermore,  Debtor shall not do
        business  under  another name nor use any trade name without  giving ten
        (10) days  prior  written  notice to Bank.  Debtor  will not  change its
        status or organizational  structure without the prior written consent of
        Bank.  Debtor will not change its location or registration (if Debtor is
        a registered organization) to another state without prior written notice
        to Bank. The address  appearing in the ARTICLE 9 CERTIFICAte is Debtor's
        chief executive office (or residence if Debtor is a sole proprietor).
         2.2  STATUS OF  COLLATERAL.  All  Collateral  is  genuine  and  validly
        existing.  Except  for  items of  insignificant  value  or as  otherwise
        reflected  in  writing  by  Debtor  to Bank  under a  borrowing  base or
        otherwise, (i) Collateral constituting inventory, equipment and fixtures
        is in good condition,  not obsolete and is either currently  saleable or
        usable;  and (ii) Collateral  constituting  accounts,  contract  rights,
        notes,  chattel paper and other third-party  obligations to pay is fully
        enforceable  in  accordance  with its terms and not  subject  to return,
        dispute,  setoff,  credit allowance or adjustment,  except for discounts
        for prompt  payment.  Unless Debtor provides Bank with written notice to
        the  contrary,  Debtor has no notice or knowledge of anything that would
        impair the ability of any third-party  obligor to pay any debt to Debtor
        when due.
        1150A(C)us bancorp 2001                                  Page 1 of 4
        3/02


                                 Page 12 of 19
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         2.3 OWNERSHIP;  MAINTENANCE OF  COLLATERAL;  RESTRICTIONS  ON LIENS AND
        DISPOSITIONS.  Debtor is the sole  owner of the  Collateral  free of all
        liens,  claims,  other  encumbrances  and security  interests  except as
        permitted in writing by Bank.  Debtor shall: (i) maintain the Collateral
        in good condition and repair  (reasonable  wear and tear excepted),  and
        not permit its value to be impaired;  (ii) not permit waste,  removal or
        loss of identity of the Collateral;  (iii) keep the Collateral  freeform
        all liens, executions,  attachments,  claims,  encumbrances and security
        interests  (other  than Bank's  paramount  security  interest  and those
        permitted in writing by Bank);  (iv) defend the  Collateral  against all
        claims and legal  proceedings  by persons  other than Bank;  (v) pay and
        discharge when due all taxes,  levies and other charges or fees upon the
        Collateral except for payment of taxes contested by Debtor in good faith
        by  appropriate  proceedings so long as no levy or lien has been imposed
        upon the Collateral;  (vi) not lease, sell or transfer the Collateral to
        any party nor move it to any new location outside of the ordinary course
        of  business;  (vii) not permit the  Collateral,  without the consent of
        Bank,  to become a fixture or an accession  to other  goods;  (viii) not
        permit the  Collateral  to be used in violation of any  applicable  law,
        regulation  or  policy  of  insurance;  and,  (ix) as to the  Collateral
        consisting of instruments  and chattel paper,  preserve Bank's rights in
        it against  all other  parties.  Notwithstanding  the above,  Debtor may
        sell, lease or transfer inventory in the ordinary course of its business
        provided that no sale,  lease or transfer  shall include any  transferor
        sale in  satisfaction  (partial or  complete)  of a debt owed by Debtor;
        title will not pass to buyer until Debtor physically  delivers the goods
        to buyer or Debtor ships the goods F.O.B.  to buyer's  destination;  and
        sales  and/or  leases to  Debtor's  affiliates  shall be for fair market
        value, cash on delivery, with the proceeds remitted to Bank.

         2.4   MAINTENANCE  OF  SECURITY   INTEREST;   PURCHASE  MONEY  SECURITY
        INTERESTS.  Debtor  shall take any action  requested by Bank to preserve
        the  Collateral  and to  establish  the value of,  the  priority  of, to
        perfect,  to continue the perfection of or to enforce Bank's interest in
        the Collateral and Bank's rights under this Agreement; and shall pay all
        costs and expenses  related  thereto.  Debtor-shall  also cooperate with
        Bank in obtaining  control (for purposes of perfection under the Uniform
        Commercial   Code)  of  Collateral   consisting  of  deposit   accounts,
        investment property,  letter of credit rights,  electronic chattel paper
        and any  other  collateral  where  Bank may  obtain  perfection  through
        control.  Debtor  hereby  authorizes  Bank to take  any and all  actions
        described  above and in place of Debtor with  respect to the  Collateral
        and hereby ratifies any such actions Bank has taken prior to the date of
        this  Agreement  and  hereafter,  which  actions  may  include,  without
        limitation,  filing UCC financing statements and obtaining or attempting
        to obtain control agreements from holders of the Collateral.  Debtor and
        Bank intend to maintain the full effect of any purchase  money  security
        interest  granted  in favor of Bank  notwithstanding  the fact  that the
        Collateral   so   purchased  is  also  pledged  as  security  for  other
        Obligations under the Loan Documents.

         2.5 COLLATERAL INSPECTIONS; MODIFICATIONS AND CHANGES IN COLLATERAL. At
        reasonable  times,  Bank may examine the Collateral and Debtor's records
        pertaining to it, wherever  located,  and make copies of such records at
        Debtor's  expense;  and Debtor  shall  assist Bank in so doing.  Without
        Bank's prior written consent, Debtor shall not alter, modify,  discount,
        extend,  renew or cancel any Collateral,  except for ordinary  discounts
        for prompt payment on accounts,  physical modifications to the inventory
        occurring in the manufacturing process or alterations to equipment which
        do not materially affect its value. Debtor shall promptly notify Bank in
        writing of any material change in the condition of the Collateral and of
        any change in location of the Collateral.

         2.6  COLLATERAL  RECORDS,  REPORTS AND  STATEMENTS.  Debtor  shall keep
        accurate and complete records  respecting the Collateral in such form as
        Bank  may  approve.  At such  times as Bank may  require,  Debtor  shall
        furnish to Bank any records/information  Bank might require,  including,
        without limitation, a statement certified by Debtor and in such form and
        containing  such  information  as may be  prescribed by Bank showing the
        current status and value of the Collateral.

         2.7  CHATTEL  PAPER,  INSTRUMENTS,  ETC.  Chattel  paper,  instruments,
        drafts,  notes,  acceptances,  and  other  documents,  which  constitute
        Collateral,  shall  be on  forms  satisfactory  to  Bank.  Debtor  shall
        promptly mark chattel paper to indicate  conspicuously  Bank's  security
        interest  therein,  shall not deliver any  chattel  paper or  negotiable
        instruments  to any other entity and,  upon  request,  shall deliver all
        original  chattel paper,  instruments,  drafts,  notes,  acceptances and
        other documents which constitute Collateral to Bank.

         2.8 UNITED  STATES  GOVERNMENT  CONTRACTS.  If any accounts or contract
        rights  arose  out of  contracts  with the  United  States or any of its
        departments, agencies or instrumentalities, Debtor shall promptly notify
        Bank and execute any writings  required by Bank so that all money due or
        to become due under such  contracts  shall be assigned to Bank under the
        Federal Assignment of Claims Act.

         2.9  ENVIRONMENTAL  MATTERS.  Except as disclosed in a written schedule
        attached to this  Agreement  (if no schedule is  attached,  there are no
        exceptions),  there  exists no  uncorrected  violation  by Debtor of any
        federal,   state  or  local  laws  (including   statutes,   regulations,
        ordinances or other governmental restrictions and requirements) relating
        to the discharge of air  pollutants,  water  pollutants or process waste
        water or otherwise  relating to the environment or Hazardous  Substances
        as hereinafter defined, whether such laws currently exist or are enacted
        in the future (collectively  "ENVIRONMENTAL  LAWS'). The term "HAZARDOUS
        SUBSTANCES" shall mean any hazardous or toxic wastes, chemicals or other
        substances,  the  generation,   possession  or  existence  of  which  is
        prohibited or governed by any Environmental  Laws. Debtor is not subject
        to any judgment, decree, order or citation, or a party to (or threatened
        with) any litigation or  administrative  proceeding,  which asserts that
        Debtor (i) has  violated  any  Environmental  Laws;  (ii) is required to
        clean up,  remove or take  remedial or other  action with respect to any
        Hazardous  Substances   (collectively  "REMEDIAL  ACTION;  or  (iii)  is
        required to pay all or a portion of the cost of any Remedial Action,  as
        a  potentially  responsible  party.  There are not now,  nor to Debtor's
        knowledge  after  reasonable  investigation  have there  ever been,  any
        Hazardous  Substances  (or tanks or other  facilities for the storage of
        Hazardous  Substances)  stored,  deposited,  recycled or disposed of on,
        under or at any real  estate  owned or  occupied  by Debtor  during  the
        periods that Debtor owned or occupied such real estate, which if present
        on the real estate or in soils or ground water,  could require  Remedial
        Action. To Debtor's knowledge,  there are no proposed or pending changes
        in  Environmental  Laws  which  would  adversely  affect  Debtor  or its
        business,  and there are no conditions  existing  currently or likely to
        exist while the Loan  Documents are in effect which would subject Debtor
        to Remedial Action or other liability.  Debtor  currently  complies with
        and will  continue to timely  comply with all  applicable  Environmental
        Laws;  and will provide Bank,  immediately  upon receipt,  copies of any
        correspondence,  notice,  complaint,  order or other  document  from any
        source  asserting  or  alleging  any  circumstance  or  condition  which
        requires or may require a financial  contribution  by Debtor or Remedial
        Action or other response by or on the part of Debtor under Environmental
        Laws,  or which seeks damages or civil,  criminal or punitive  penalties
        from Debtor for an alleged violation of Environmental Laws.

         2.10 INSURANCE. Debtor will maintain insurance to such extent, covering
        such  risks  and with  such  insurers  as is  usual  and  customary  for
        businesses operating similar properties, and as is satisfactory to Bank,
        including insurance for fire and other risks insured against by extended
        or  comprehensive  coverage,  public  liability  insurance  and workers'
        compensation  insurance;  and will  designate  Bank as loss payee with a
        "Lender's Loss Payable"  endorsement  on any casualty  policies and take
        such other  action as Bank may  reasonably  request to ensure  that Bank
        will receive (subject to no other  interests) the insurance  proceeds of
        the  Collateral.  Debtor hereby  assigns all  insurance  proceeds to and
        irrevocably directs, while any Obligations remain unpaid, any insurer to
        pay to Bank the proceeds of all such 1150A

                                  PAGE 2 OF 4


                                 Page 13 of 19
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       insurance and any premium refund; and authorizes Bank to endorse Debtor's
       name to effect the same, to make, adjust or settle, in Debtor's name, any
       claim on any insurance  policy  relating to the  Collateral;  and, at the
       option of Bank, to apply such proceeds and refunds to the  Obligations or
       to restoration of the Collateral,  returning any excess to Debtor. In the
       event of any  failure of the Debtor to obtain or maintain  any  insurance
       required  hereunder,  the  Bank  shall  have the  authority,  but not the
       obligation,  to obtain any such insurance coverage,  and the Debtor shall
       immediately  reimburse  the  Bank  for the cost  thereof,  together  with
       interest on such amount at the highest rate of interest  then accruing on
       any of the Obligations.

                            ARTICLE III. COLLECTIONS

         3.1 DEPOSIT  WITH BANK.  At any time Bank may require that all proceeds
        of Collateral received by Debtor shall be held by Debtor upon an express
        trust for Bank, shall not be commingled with any other funds or property
        of  Debtor  and  shall  be  turned  over to Bank in  precisely  the form
        received (but endorsed by Debtor, if necessary for collection) not later
        than the business day following the day of their  receipt.  All proceeds
        of Collateral  received by Bank directly or from Debtor shall be applied
        against the  Obligations in such order and at such times,  as Bank shall
        determine.

                     ARTICLE IV. RIGHTS AND DUTIES OF BANK

         In addition to all other rights  (including  setoff) and duties of Bank
        under the Loan Documents,  which are expressly  incorporated herein as a
        part of this Agreement, the following provisions shall also apply:

         4.1  AUTHORITY  TO PERFORM FOR DEBTOR.  Debtor  presently  appoints any
        officer of Bank as Debtor's  attorney-in-fact  (coupled with an interest
        and irrevocable  while any  Obligations  remain unpaid) to do any of the
        following upon default by Debtor hereunder  (notwithstanding  any notice
        requirements  or  grace/cure  periods  under  this or  other  agreements
        between  Debtor  and  Bank):  (i) to file,  endorse or place the name of
        Debtor on any invoice or document of title relating to accounts,  drafts
        against customers, notices to customers, notes, acceptances, assignments
        of government  contracts,  instruments,  financing  statements,  checks,
        drafts,  money orders,  insurance  claims or payments or other documents
        evidencing  payment or a security  interest  relating to the Collateral;
        (ii) to receive, open and dispose of all mail addressed to Debtor and to
        notify the Post Office authorities to change the address for delivery of
        mail addressed to Debtor to an address  designated by Bank;  (iii) to do
        all such other acts and things  necessary to carry out  Debtor's  duties
        under this Agreement and the other Loan Documents;  and (iv) to perfect,
        protect and/or realize upon Bank's  interest in the  Collateral.  If the
        Collateral  includes  funds or property in depository  accounts,  Debtor
        authorizes each of its depository institutions to remit to Bank, without
        liability  to  Debtor,  all of  Debtor's  funds  on  deposit  with  such
        institution  upon  written  direction  by Bank  after  default by Debtor
        hereunder.  All acts by Bank are hereby ratified and approved,  and Bank
        shall not be liable for any acts of commission or omission,  nor for any
        errors of judgment or mistakes of fact or law.

         4.2  VERIFICATION  AND  NOTIFICATION;  BANK'S  RIGHTS.  Bank may verify
        Collateral in any manner, and Debtor shall assist Bank in so doing. Upon
        the occurrence of a default  hereunder,  Bank may at any time and Debtor
        shall,  upon request of Bank, notify the account debtors to make payment
        directly to Bank;  and Bank may enforce  collection  of,  sell,  settle,
        compromise,  extend or renew the  indebtedness of such account  debtors;
        all without  notice to or the consent of Debtor.  Until account  debtors
        are so notified, Debtor, as agent of Bank, shall make collections on the
        Collateral. Bank may at any time notify any bailee possessing Collateral
        to turn over the Collateral to Bank.

         4.3  COLLATERAL  PRESERVATION.  Bank shall use  reasonable  care in the
        custody and  preservation  of any Collateral in its physical  possession
        but in determining  such standard of reasonable  care,  Debtor expressly
        acknowledges that Bank has no duty to: (i) insure the Collateral against
        hazards;  (ii)  ensure  that the  Collateral  will not  cause  damage to
        property  or injury to third  parties;  (iii)  protect it from  seizure,
        theft or conversion by third parties,  third parties'  claims or acts of
        God;  (iv) give to Debtor any  notices  received by Bank  regarding  the
        Collateral;  (v) perfect or continue perfection of any security interest
        in  favor  of  Debtor;   (vi)   perform  any   services,   complete  any
        work-in-process  or  take  any  other  action  in  connection  with  the
        management or maintenance of the  Collateral;  or (vii) sue or otherwise
        effect  collection  upon any  accounts  even if Bank  shall  have made a
        demand for payment upon individual account debtors.  Notwithstanding any
        failure by Bank to use  reasonable  care in preserving  the  Collateral,
        Debtor agrees that Bank shall not be liable for consequential or special
        damages arising therefrom.

                        ARTICLE V. DEFAULTS AND REMEDIES

           Bank may enforce its rights and remedies  under this  Agreement  upon
        default.  A default shall occur if Debtor fails to comply with the terms
        of any Loan  Documents  (including  this  Agreement  or any  guaranty by
        Debtor),  a demand for payment is made under a demand loan, or any other
        obligor  fails to comply with the terms of any Loan  Documents for which
        Debtor has given Bank a guaranty or pledge.

           5.1 CUMULATIVE REMEDIES;  NOTICE; WAIVER. In addition to the remedies
        for default set forth in the Loan  Documents,  Bank upon  default  shall
        have all other rights and  remedies for default  provided by the Uniform
        Commercial Code, as well as any other applicable law and this Agreement,
        INCLUDING,  WITHOUT LIMITATION, THE RIGHT TO REPOSSESS,  RENDER UNUSABLE
        AND/OR DISPOSE OF THE COLLATERAL WITHOUTJUDICIAL PROCESS. The rights and
        remedies  specified  herein are  cumulative and are not exclusive of any
        rights or remedies,  which Bank would  otherwise  have.  With respect to
        such rights and remedies:

          (a)  ASSEMBLING  COLLATERAL;   STORAGE;  USE  OF  DEBTOR'S  NAME/OTHER
               PROPERTY.  Bank may require Debtor to assemble the Collateral and
               to make it available to Bank at any convenient  place  designated
               by Bank.  Debtor  recognizes  that Bank will not have an adequate
               remedy in Law if this  obligation  is breached  and  accordingly,
               Debtor's   obligation  to  assemble  the   Collateral   shall  be
               specifically  enforceable.  Bank  shall  have  the  right to take
               immediate  possession of said  Collateral and Debtor  irrevocably
               authorizes  Bank  to  enter  any of the  premises  wherever  said
               Collateral  shall be  located,  and to store,  repair,  maintain,
               assemble,  manufacture,  advertise and sell,  lease or dispose of
               (by public sale or  otherwise)  the same on said  premises  until
               sold, all without charge or rent to Bank.  Bank is hereby granted
               an  irrevocable   license  to  use,   without  charge,   Debtor's
               equipment,  inventory, labels, patents,  copyrights,  franchises,
               names,  trade secrets,  trade names,  trademarks and  advertising
               matter and any property of a similar nature;  and Debtor's rights
               under all licenses and franchise agreements shall inure to Bank's
               benefit.  Further,  Debtor releases Bank from obtaining a bond or
               surety with respect to any repossession and/or disposition of the
               Collateral.  (b)  NOTICE OF  DISPOSITION.  Written  notice,  when
               required by law, sent to any address of Debtor in this Agreement,
               at least five (5)


                                1150A Page 3 of 4


                                 Page 14 of 19
<PAGE>

               calendar days (counting the day of sending)  before the date of a
               proposed  disposition of the Collateral is reasonable  notice but
               less   notice  may  be   reasonable   under  the   circumstances.
               Notification  to  account  debtors  by Bank shall not be deemed a
               disposition  of the  Collateral.  Notice of any  record  shall be
               deemed  delivered  when the record has been (a)  deposited in the
               United States Mail,  postage pre-paid,  (b) received by overnight
               delivery  service,   (c)  received  by  telex,  (d)  received  by
               telecopy,   (e)  received  through  the  Internet,  or  (f)  when
               personally delivered.

          (c)  POSSESSION OF  COLLATERAL/COMMERCIAL  REASONABLENESS.  Bank shall
               not,  at  any  time,  be  obligated  to  either  take  or  retain
               possession  or  control  of  the  Collateral.   With  respect  to
               Collateral in the possession or control of Bank,  Debtor and Bank
               agree   that   as   a   standard   for   determining   commercial
               reasonableness,   Bank  need  not  liquidate,  collect,  sell  or
               otherwise  dispose of any of the Collateral if Bank believes,  in
               good  faith,  that  disposition  of the  Collateral  would not be
               commercially reasonable, would subject Bank to third-party claims
               or liability,  that other potential purchasers could be attracted
               or that a  better  price  could  be  obtained  if Bank  held  the
               Collateral for up to 2 years.  Bank may sell  Collateral  without
               giving  any   warranties  and  may   specifically   disclaim  any
               warranties of title or the like.  Furthermore,  Bank may sell the
               Collateral  on  credit  (and  reduce  the  Obligations  only when
               payment is received from the buyer),  at wholesale and/or with or
               without an agent or broker; and Bank need not complete,  process,
               repair,  clean-up or otherwise  prepare the  Collateral  prior to
               disposition.  If the purchaser  fails to pay for the  Collateral,
               Bank my resell the  Collateral  and Debtor shall be credited with
               the  cash  proceeds  of  the  sale.  Bank  may  comply  with  any
               applicable state or federal law requirements in connection with a
               disposition  of  the  Collateral  and  compliance   will  not  be
               considered to adversely affect the commercial  reasonableness  of
               any sale of the  Collateral.



          (d)  WAIVER BY DEBTOR.  Bank has no  obligation  and Debtor waives any
               obligation to attempt to satisfy the  Obligations  by 'collecting
               the  obligations  from any third  parties  and Bank may  release,
               modify or waive any  collateral  provided  by any third  party to
               secure  any of the  Obligations,  all  without  affecting  Bank's
               rights  against  Debtor.  Debtor further waives any obligation on
               the part of Bank to  marshal  any assets in favor of Debtor or in
               payment of the  Obligations.  Notwithstanding  any  provisions in
               this  Agreement or any other  agreement  between Debtor and Bank,
               Debtor does not waive any  statutory  rights except to the extent
               that the waiver thereof is permitted by law.

          (e)  WAIVER BY BANK.  Bank may permit  Debtor to attempt to remedy any
               default without waiving its rights and -remedies  hereunder,  and
               Bank may waive any default without  waiving any other  subsequent
               or prior  default  by Debtor.  Furthermore,  delay on the part of
               Bank in exercising any right, power or privilege  hereunder or at
               law shall not operate as a waiver  thereof,  nor shall any single
               or partial  exercise of such right,  power or privilege  preclude
               other exercise thereof or the exercise of any other right,  power
               or  privilege.  NO WAIVER OR  SUSPENSION  SHALL BE DEEMED TO HAVE
               OCCURRED UNLESS BANK HAS EXPRESSLY  AGREED IN WRITING  SPECIFYING
               SUCH WAIVER OR SUSPENSION.

ARTICLE VI. MISCELLANEOUS

         All other  provisions in the Loan Documents are expressly  incorporated
as a part of this Agreement.


         ALL DOCUMENTS  ATTACHED  HERETO,  INCLUDING ANY APPENDICES,  SCHEDULES,
        RIDERS,   AND  EXHIBITS  TO  THIS   AGREEMENT,   ARE  HEREBY   EXPRESSLY
        INCORPORATED BY REFERENCE.

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<CAPTION>




         IN WITNESS  WHEREOF,  the undersigned  has/have  executed this BUSINESS
        SECURITY AGREEMENT as NOVEMBER 7, 2002

<S>         <C>                                                         <C>

        (Individual Debtor)                                            NUTECH DIGITAL, INC.
                                                                       -----------------------------------------------
                                                                       Debtor Name (Organization)
          ---------------------------------------------(SEAL)          a CALIFORNIA CORPORATION
                                                                       -----------------------------------------------

         Debtor Name  N/A                                              BY
                      --------------------------------------               -------------------------------------------

         ----------------------------------------------(SEAL)          Name and Title LEE KASPER, PRESIDENT/SECRETARY
                                                                                       -------------------------------
         Debtor Name  N/A                                              BY
                      --------------------------------------               -------------------------------------------


                                                                       Name and Title
                                                                                      --------------------------------

                                   Page 4 of 4

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