Exhibit
10.9





CHANGE
IN TERMS AGREEMENT
 Principal
                $1,500,000.00
              Loan
      Date
                01-19-2001
              Maturity
                02-28-2010
              Loan
      No
                100012004
              Call
      / Coll
              Account
                100012003
              Officer
              InitialsReferences
      in the boxes above are for Lender's use only and do not limit the
      applicability of this document to any particular loan or
item.
                Any
      item above containing "" "" has been omitted due to text length
      limitations.
 
 Borrower:
              Paneltech
      International, LLC
                2999
      John Stevens Way
                Hoquiam,
      WA 98550
              Lender:
              ShoreBank
      Pacific
                Main
      Branch
                203
      Howerton Way SE; PO Box 400 Ilwaco, WA 98624
                (360)
      642-1166
 
 Principal Amount: $1,500,000.00
                Date
      of Agreement: November 30, 2009
 DESCRIPTION
OF EXISTING INDEBTEDNESS.Revolving Line of Credit in the original amount
of $500,000.00 as evidenced by that certain Promissory Note and Related
Documents dated January 19, 2001; as amended and increased by Change in Terms
and currently maturing November 30, 2009 and in the amount of
$1,700,000.
 
 DESCRIPTION
OF CHANGE IN TERMS.
 1)Maturity
date of Loan and Related Documents is extended to February 28,
2010;
 
 2)Loan
amount is decreased to $1,500,000.00;
 
 3)The
'Base Interest Rate' of the note will be determined by: adding the "Base Margin"
to the rate "Index" and adding or subtracting each Rate Adjustment Factor
("RAF"), as further described below:
 
 The
Index is Lender's Prime Rate. This is the rate Lender charges, or would charge,
on 90-day unsecured loans to the most creditworthy corporate customers. This
rate may or may not be the lowest rate available from Lender at any given time.
Lender will tell Borrower the current index rate upon Borrower's request. The
Index will not change more often than each time prime changes. Borrower
understands that Lender may make loans based on other rates as well. The index
currently is 3.750% per annum.
 
 The
'Base Margin' is 3.75% and is not subject to change during the
period.
 
 There
are three RAF's which are to be determined by the bank in its sole authority
based on the Borrower's monthly financial reporting prepared on a GAAP basis and
submitted within 30 days of month end. If the Borrower fails to report the
financial information for that period, the highest RAF will apply and default
interest may also apply. The RAFs will be determined based on the October 31,
2009 financial statements and the note rate will change effective November 1,
2009.
 
 Upon
default, Lender at its option may further increase the rate on the note to 5.0%
above the Base Interest Rate in effect at that time.
 
 Each
month the Rate Adjustment Factors will reset effective as of the 1st day of the
month following the subject reporting period, and will be based on the following
schedule:
 
 Debt
Service Coverage ("DSC"): Defined as Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) divided by Current Maturities of
Long-Term Debt (CMLTD) proportional to the corresponding EBITDA period, plus
period interest expenses
 Quarterly
DSC less than 1.2X, but greater than or equal to 1.0X = 1.0%
subtraction
 Quarterly
DSC greater than or equal to 1.2X but less than 1.5X = 2.0%
subtraction
 Quarterly
DSC greater than or equal to 1.5X = 2.25% subtraction
 
 Debt
to Worth: Defined as Total Liabilities divided by Total
Equity
 Monthly
Debt to Worth below 3.0X = 0.25% subtraction
 Monthly
Debt to Worth greater than or equal to 3.0X and less than 4.0X = no change
Monthly Debt to Worth greater than or equal to 4.0X and less than 5.0X = 1.0%
addition Monthly Debt to Worth greater than or equal to 5.0X and less than 6.0X
= 2.0% addition
 
 Current
Ratio ("CR"): defined as Current Assets divided by Current Liabilities Monthly
CR greater than or equal to 1.0X and less than 1.1X = 2.0% addition Monthly CR
greater than or equal to 1.1X and less than 1.2X = 1.0% addition Monthly CR
greater than or equal to 1.2X and less than 1.4X = no rate adjustment Monthly CR
greater than or equal to 1.4X = 0.25% subtraction
 
 For
example: The bank has determined the following based on the 10/31/09 financials:
DSC was negative, Debt to Worth was 3.98, and CR was 1.1; thus the Rate
Adjustment Factors result in an addition of 1%. This would be added to the Base
Margin, resulting in a note rate of SBP Prime +4.75%, effective as of 11/1/09.
In no case will the combination of the Rate Adjustment Factors reduce the
interest rate by more than 2.75%.
 
 4)The
existing Guaranty Agreements dated January 19, 2001, for Leroy D. Nott and Scott
D. Olmstead, are hereby replaced by the same documents, for Leroy D. Nott and
Scott D. Olmstead, dated the date of this agreement;
 
 5)The
existing Business Loan Agreement. dated January 19, 2001, is hereby replaced
with the Asset Based Loan Agreement dated the date of this
agreement;
 
 6)Borrower
agrees to execute and return the Default and Forbearance Agreement dated
December 17, 2009 and acknowledges that all terms and conditions within that
agreement remain in full force and effect;
 
 7)The
following will be due upon execution of this Agreement:
 
 a)A
renewal fee of $3,750.00;
 b)Interest
through December 31, 2009 in the amount of $5,525.68;
 c)Collateral
Exam in the amount of $1,391,35
 d)Five
(5) Credit Reports in the amount of $225.00 .
 
 CONTINUING
VALIDITY.Except as expressly changed
by this Agreement, the terms of the original obligation or obligations,
including all agreements evidenced or securing the obligation(s), remain
unchanged and in full force and effect. Consent by Lender to this Agreement does
not waive Lender's right to strict performance of the obligation(s) as changed,
nor obligate Lender to make any future change in terms. Nothing in this
Agreement will constitute a satisfaction of the obligation(s), it is the
intention of Lender to retain as liable parties all makers and endorsers of the
original obligation(s), including accommodation parties, unless a party is
expressly released by Lender in writing. Any maker or endorser, including
accommodation makers,
 
 
 
 CHANGE
      IN TERMS AGREEMENTLoan
      No: 100012004
                (Continued)
                Page
      2
 
 will
not be released by virtue of this Agreement. If any person who signed the
original obligation does not sign this Agreement below, then all persons signing
below acknowledge that this Agreement is given conditionally, based on the
representation to Lender that the non—signing party consents to the changes and
provisions of this Agreement or otherwise will not be released by it. This
waiver applies not only to any initial extension, modification or release, but
also to all such subsequent actions.
 
 FEE PAYMENT.BORROWER AGREES TO PAY FEE BY ONE OF THE FOLLOWING
METHODS:
 
 1)
              By
      check to be returned with the executed Change in Terms
  or2)
              By authorizing charge to
      designated ShoreBank Pacificchecking
      account #,or3)
              By
      authorizing charge to ShoreBank Pacific line of credit #
 
 PRIOR
TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE
AGREEMENT.
 
 CHANGE
IN TERMS SIGNERS:
 
 PANELTECH
INTERNATIONAL, LLC
 
 
 
 By:Leroy
      D. Nott, President of Paneltech International, LLCX
              
              
              XLeroy
      D. Nott, Individually Ronald H. lff, Individually
              
              
              Ronald H. Iff, IndividuallyXScott
      D. Olmstead, Individually


















BUSINESS LOAN AGREEMENT
(ASSET BASED)




Principal
              $1,500,000.00
            Loan
      Date
              11-30-2009
            Loan
      Date
              01-19-2009
            Loan
      No
              100012004
            Call
      / Coll
            
            Officer
            InitialsReferences
      in the boxes above are for Lender's use only and do not limit the
      applicability of this document to any particular loan or
item.
              Any
      item above containing "" "" has been omitted due to text length
      limitations.




Borrower:
            Paneltech International,
      LLC
            Lender:
            ShoreBank
    Pacific2999 John Stevens
      Way
            
            Main BranchHoquiam,
      WA 98550
            
            203 Howerton Way SE; PO Box
      400IIWBCO.WA
  98624(360)
      642-1166


THIS BUSINESS LOAN AGREEMENT (ASSET
BASED) dated November 30, 2009, Is made and executed between Paneltech
International, LLC("Borrower") and ShoreBank Pacific
("Lender") on the following terms and conditions. Borrower has received prior
commercial loans fromLender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those
which may be described on anyexhibit or schedule attached to this
Agreement. Borrower understands and agrees that:(A)in granting, renewing, or extending
any Loan, Lenderis
relying upon Borrower's representations, warranties, and agreements as set forth
in this Agreement; (B) the granting, renewing, or extendingof 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 remain subject to the terms and conditions of this
Agreement.
  TERM.This
Agreement shall be effective as of November 30, 2009, and shall continue in full
force and effect until such time as all of Borrower's Loans in favor of Lender
have been paid in full, including principal, interest, costs, expenses,
attorneys' lees, and other fees and charges, or until such time as the parties
may agree in writing to terminatc this Agreement.
  ADVANCE AUTHORITY.The following person or persons are
authorized to request advances and authorize payments under the line of credit
until Lender receives from Borrower, at Lender's address shown above, written
notice of revocation of such authority:Scott D. Olmstead, Chief FinancialOfficer of Paneltech
international, LLC; Leroy D. Nott, President; and Ronald H. Iff, Production
Manager.
  LINE OF CREDIT.Lendcr agrees to make Advances to Borrower from time to time from the
date of this Agreement to the Expiration Date, provided the aggregate amount of
such Advances outstanding at any time does not exceed the Borrowing Base. Within
the foregoing limits, Borrower may borrow, partially or wholly prepay, and
reborrow under this Agreement as follows:
  Conditions Precedent
to Each Advance.Lender's obligation to make any Advance to or for the
account of Borrower under this Agreement is subject to the following conditions
precedent, with ail documents, instruments, opinions, reports, and other items
required under this Agreement to be in form and substance satisfactory to
Lender:
  (1)  Lender
shall have received evidence that this Agreement and ail Related Documents have
been duly authorized, executed, and delivered by Borrower to
Lender.
  (2)  Lender
shall have received such opinions of counsel, supplemental opinions, and
documents as Lender may request.
  (3)  The
security interests in the Collateral shall have been duly authorized, created,
and perfected with first lien priority and shall be in full forcc and
effect.
  (4)  Ail
guaranties required by Lender for the credit facility(ies) shall have been
executed by each Guarantor, delivered to Lender, and be in full force and
effect.
  (5)  Lcnder,
at its option and for its sole benefit, shall have conducted an audit of
Borrower's Accounts, Inventory, books, records, and operations, and Lender shall
be satisfied as to their condition.
  (6)  Borrower
shall have paid to Lender ail fees, costs, and expenses specified in this
Agreement and the Related Documents as are Then duc and payable.
  (7)  There
shall not exist at the time of any Advance a condition which would constitute an
Event of Default under this Agreement, and Borrower shall have delivered to
Lender the compliance certificate called for in the paragraph below titled
"Compliance Certificate."
  Making Loan
Advances.Advances under this credit facility, as well as directions for
payment from Borrower's accounts, may be requested orally or in writing by
authorized persons. Lender may, but need not, require that all oral requests be
confirmed in writing. Each Advance shall be conclusively deemed to have been
made at the request of and for the benefit of Borrower (I) when credited to any
deposit account of Borrower maintained with Lender or (2) when advanced in
accordance with the instructions of an authorized person. Lender, at its option,
may set a cutoff time, after which all requests for Advances will be treated as
having been requested on the next succeeding Business Day.
  Mandatory Loan
Repayments.If at any time the aggregate principal amount of the
outstanding Advances shall exceed the applicable Borrowing Base, Borrower,
immediately upon written or oral notice from Lender, shall pay to Lender an
amount equal to the difference between the outstanding principal balance of the
Advances and the Borrowing Base, On the Expiration Date, Borrower shall pay to
Lender in full the aggregate unpaid principal amount of all Advances then
outstanding and all accrued unpaid interest, together with all other applicable
fees, costs and charges, if any, not yet paid.
  Loan Account.Lender shall maintain on its books a record of account in which Lender
shall make entries for each Advance and such other debits and credits as shall
be appropriate in connection with the credit facility. Lender shall provide
Borrower with periodic statements of Borrower's account, which statements shall
be considered to be correct and conclusively binding on Borrower unless Borrower
notifies Lender to the contrary within thirty (30) days after Borrower's receipt
of any such statement which Borrower deems to be incorrect.
  COLLATERAL.To secure payment of the Primary Credit Facility and performance of all
other Loans, obligations and duties owed by Borrower to Lender, Borrower (and
others, if required) shall grant to Lender Security Interests in such property
and assets as Lender may require. Lender's Security Interests in the Collateral
shall be continuing liens and shall include the proceeds and products of the
Collateral, including without limitation the proceeds of any insurance. With
respect to the Collateral, Borrower agrees and represents and warrants to
Lender:
  Perfection of
Security Interests.Borrower agrees to execute all documents perfecting
Lender's Security Interest and to take whatever actions are requested by Lender
to perfect and continue Lender's Security Interests in the Collateral. Upon
request of Lender, Borrower will deliver to Lender any and all of the documents
evidencing or constituting the Collateral, and Borrower will note Lender's
interest upon any and all chattel paper and instruments if not delivered to
Lender for possession by Lender. Contemporaneous with the execution of this
Agreement, Borrower will execute one or more UCC financing statements and any
similar statements as may be required by applicable law, and Lender will file
such financing statements and all such similar statements in the appropriate
location or locations. Borrower hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to perfect
or to continue any Security Interest. Lender may at any time, and without
further authorization from Borrower, file a carbon, photograph, facsimile, or
other reproduction of any financing statement for use as a
  
  BUSINESS
      LOAN AGREEMENT (ASSET BASED)Loan
    No:100012004
              (Continued)
              Page
  2


financing
statement. Borrower will reimburse Lender for all expenses for the perfection,
termination, and the continuation of She perfection of Lender's security
interest in the Collateral. Borrower promptly will notify Lender before any
change in Borrower's name including any change So the assumed business names of
Borrower. Borrower also promptly will notify Lender before any change in
Borrower's Social Security Number or Employer Identification Number. Borrower
further agrees to notify Lender in writing prior to any change in address or
location of Borrower's principal governance office or should Borrower merge or
consolidate with any other entity.
  Collateral Records.Borrower does now, and at all times hereafter shall, keep correct and
accurate records of the Collateral, all of which records shall be available to
Lender or Lender's representative upon demand for inspection and copying at any
reasonable time. With respect to the Accounts, Borrower agrees to keep and
maintain such records as Lender may require, including without limitation
information concerning Eligible Accounts and Account balances and agings.
Records related to Accounts (Receivables) are or will be located at. With
respect to the inventory, Borrower agrees to keep and maintain such records as
Lender may require, including without limitation information concerning Eligible
Inventory and records itemizing and describing the kind, type, quality, and
quantity of Inventory, Borrower's Inventory costs and selling prices, and the
daily withdrawals and additions to Inventory. Records related to Inventory are
or will be located at. The above is an accurate and complete list of all
locations at which Borrower keeps or maintains business records concerning
Borrower's collateral.
 
 Collateral
Schedules.Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender schedules of Accounts
and Inventory and schedules of Eligible Accounts and Eligible Inventory in form
and substance satisfactory to the Lender. Thereafter supplemental schedules
shall be delivered according to the following schedule: With respect to Eligible
Accounts, schedules shall be delivered Monthly within 15 days of month end. With
respect to Eligible Inventory, schedules shall be delivered monthly, within 15
days of month end.
 
 Representations and
Warranties Concerning Accounts.With respect to the Accounts, Borrower
represents and warrants to Lender: (1) Each Account represented by Borrower to
be an Eligible Account for purposes of this Agreement conforms to the
requirements of the definition of an Eligible Account; (2) All Account
information listed on schedules delivered to Lender will be true and correct,
subject to immaterial variance; and (3) Lender, its assigns, or agents shall
have the right at any time and at Borrower's expense So inspect, examine, and
audit Borrower's records and to confirm with Account Debtors the accuracy of
such Accounts.
  Representations and
Warranties Concerning Inventory.With respect to the inventory, Borrower
represents and warrants to Lender: (1) All Inventory represented by Borrower to
be Eligible Inventory for purposes of this Agreement conforms to the
requirements of the definition of Eligible Inventory; (2) All Inventory values
listed on schedules delivered to Lender will be true and correct, subject to
immaterial variance; (3) The value of the Inventory will be determined on a
consistent accounting basis; (4) Except as agreed to the contrary by Lender in
writing, all Eligible Inventory is now and at ali times hereafter will be in
Borrower's physical possession and shall not be held by others on consignment,
sale on approval, or sale or return; (5) Except as reflected in the Inventory
schedules delivered to Lender, all Eligible inventory is now and at all times
hereafter will be of good and merchantable quality, free from defects; (6)
Eligible Inventory is not now and will not at any time hereafter be stored with
a bailee, warehouseman, or similar party without Lender's prior written consent,
and, in such event, Borrower will concurrently at the time of bailment cause any
such bailee, warehouseman, or similar party to issue and deliver to Lender, in
form acceptable to Lender, warehouse receipts in Lender name evidencing the
storage of Inventory; and (7) Lender, its assigns, or agents shall have the
right at any time and at Borrower's expense to inspect and examine the Inventory
and to check and test the same as to quality, quantity, value, and
condition.
  CONDITIONS PRECEDENT
TOEACH ADVANCE. Lender's obligation to make the initial Advance and each
subsequent 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 the following documents for the Loan:
(1) the Note; (2) Security Agreements granting So Lender security interests in
the Collateral; (3) financing statements and all othcr documents perfecting
Lender's Security Interests; (4) evidence of insurance as required below; (5)
assignments of life insurance; (6) guaranties; (7) together with all such
Related Documents as Lender may require for She Loan; all in form and substance
satisfactory to Lender and Lender's counsel.
  Borrower's
Authorization. Borrowershall 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. In
addition, Borrower shall have provided such other resolutions, authorizations,
documents and instruments as Lender or its counsel, may require.
  Fees and Expenses
Under This Agreement.Borrower shall have paid to Lender all fees, costs,
and expenses specified in this Agreement and the Related Documents as are then
due and payable.
  Representations and
Warranties.The representations and warranties set forth in this
Agreement, in the Related Documents, and in any doeument 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 or under any Related
Document.
  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 limited liability company which is, and at all times shall
be, duly organized, validly existing, and in good standing under and by virtue
of the laws of the State of Washington. Borrower is duly authorized to transact
business in all other states in which Borrower is doing business, having
obtained all necessary filings, governmental licenses and approvals for each
state in which Borrower is doing business. Specifically, Borrower is, and at all
times shall be, duly qualified as a foreign limited liability eompany in all
slates in which the failure to so qualify would have a material adverse effect
on its business or financial condition. Borrower has the full power and
authority So own its properties and to transact the business in which it is
presently engaged or presently proposes to engage. Borrower maintains an office
at 2999 John Stevens Way, Hoquiam, WA 98550. Unless Borrower has designated
otherwise in wriiing, the principal office is the office at which Borrower keeps
its books and records including its records concerning the Collateral. Borrower
will notify Lender prior to any change in the location of Borrower's state of
organization or any change in Borrower's name. Borrower shall do all things
necessary to preserve and to keep in full force and effect its existence, rights
and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable So Borrower and Borrower's business activities.
  Assumed Business
Names. Borrowerhas filed or recorded all documents or filings required
by law relating to all assumed business names used by Borrower. Excluding the
name of Borrower, the following is a complete list of ali assumed business names
under which Borrower does business: None.
 
 Authorization.Borrower's execution, delivery, and performance of this Agreement and all
the Related Documents have been duly authorized by all necessary action by
Borrower and do not conflict with, result in a violation of, or constitute a
default under (1)any provision of (a) Borrower's
articles of organization or membership agreements, or (b) any agreement or other
instrument binding upon Borrower or (2) any law, governmental regulation, court
decree, or order applicable to Borrower or to Borrower's
properties.
  Financial
Information.Each of
Borrower's financial statements supplied to Lender truly and completely
disclosed Borrower's financial condition asof the date of the statement, and there
has been no material adverse change in Borrower's financial condition subsequent
So the date of the mosrecent financial statement supplied So
Lender. Borrower has no material contingent obligations except as disclosed in
such financialstatements.









Loan
    No:100012004
            BUSINESS LOAN AGREEMENT (ASSET
      BASED)
              (Continued)
            Page
  3




Legal Effect.This Agreement
constitutes, and any instrument or agreement Borrower is required to give under
this Agreement 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 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.Except
as disclosed to and acknowledged by Lender in writing, Borrower represents and
warrants that: (1) During the period of Borrower's ownership of the Collateral,
there has been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Substance by any person on,
under, about or from any of the Collateral. (2) Borrower has.no knowledge ot,
or reason to believe that there has been (a) any breach or violation of any
Environmental Laws; (b) any use, generation, manufacture, storage, treatment,
disposal, release or threatened release of any Hazardous Substance on, under,
about or from the Collateral by any prior owners or occupants of any of the
Collateral; or (c) any actual or threatened litigation or claims of any kind by
any person relating to such matters. (3) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the Collateral shall use,
generate, manufacture, store, treat, dispose of or release any Hazardous
Substance on, under, about or from any of the Collateral; and any such activity
shall be conducted in compliance with all applicable federal, state, and local
laws, regulations, and ordinances, including without limitation all
Environmental Laws. Borrower authorizes Lender and its agents to enter upon the
Collateral to make such inspections and tests as Lender may deem appropriate to
determine compliance of the Collateral 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 Collateral for hazardous waste and Hazardous
Substances. Borrower hereby {1} 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 (2) agrees to indemnify, defend,
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 of a hazardous waste or substance on the Collateral. The
provisions of this section of the Agreement, including the obligation to
indemnify and defend, shall survive the payment of the Indebtedness and the
termination, expiration or satisfaction of this Agreement and shall not be
affected by Lender's acquisition of any interest in any of the Collateral,
whether by foreclosure or otherwise.




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 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 of Borrower's tax returns and reports that are or were
required to be filed, have been filed, and all taxes, 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 (if any), and all Related Documents
are binding upon the signers thereof, as well as upon their successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.




AFFIRMATIVE COVENANTS.Borrower covenants and agrees with Lender that, so long as this Agreement
remains in effect, Borrower will:




Notices of Claims and Litigation.Promptly inform Lender in writing of (1) all material adverse changes in
Borrower's financial condition, and (2) 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 GAAP, 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 the following:




Annual Statements.As soon as
available, but in no event later than ninety (90) days after the end of each
fiscal year, Borrower's balance sheet and income statement for the year ended,
reviewed by a certified public accountant satisfactory to Lender.




Interim Statements.As soon as
available, but in no event later than thirty (30) days after the end of each
month, Borrower's balance sheet and profit and loss statement for the period
ended, prepared by Borrower.




Additional Requirements.Borrower's tax return is due as soon as available, but in no case later
than either 60 days after the applicable filing date or October
15;.




All
financial reports required to be provided under this Agreement shall be prepared
in accordance with GAAP, applied on a consistent basis, and certified by
Borrower as being true and correct.




Additional Information.Furnish such additional information and statements, as Lender may request
from time to time.





Financial Covenants and Ratios.Comply with the following covenants and ratios:




Working Capital Requirements.Other Working Capital requirements are as follows:


1)  Maintain
Working Capital, defined as Current Assets less Current Liabilities, in a
positive balance at all times as measured at the end of each month;




2)  Maintain
a Current Ratio, defined as Current Assets divided by Current Liabilities,
greater than 1.0 to 1.0 at all times as measured at the end of each
month;.




Minimum Income and Cash flow
Requirements.Other Cash Flow requirements are as follows:


Maintain
year-to-date cash flow coverage, defined as Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) divided by Current Maturities of
Long-Term Debt (CMLTD) proportional to the corresponding EBITDA period, plus
period interest expenses, in excess of 1.0 to 1.0 as measured on February 28,
2010.




Tangible Net Worth Requirements.Other Net Worth requirements are as follows:


1)
Maintain a minimum Net Worth defined as Total Equity in excess of $750,000.00 at
all times as measured at the end of each month;









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2)
Maintain a ratio of Debt to Net Worth, defined as all liabilities divided by
Total Equity not to exceed 6.0 to 1.0 at all times as measured at the end of
each month.




Except as
provided above, all computations made to determine compliance with the
requirements contained in this paragraph shall be made in accordance with
generally accepted accounting principles, applied on a consistent basis, and
certified by Borrower as being true and correct.




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, coverages and with insurance companies 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 coverages will not be cancelled or diminished without at least
thirty (30) 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 ail policies covering assets in which Lender holds or
is offered a security interest for the Loans, Borrower will provide Lender with
such lender's 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: (1) the name of the insurer; (2) the risks insured;
(3) the amount of the policy; (4)the properties insured;
(5) the then current property values on the basis of which insurance has been
obtained, and the manner of determining those values; and (6) 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 Lender's forms, and
in the amounts and under the conditions set forth in those
guaranties.




Names of Guarantors
            
            AmountsLeroy
      D. Nott
              Scott
      D. Oimstead
              Ronald
      H. Iff
              
              Sorb
      Management Corporation
              L.D.
      Nott Company
            
            Unlimited
              Unlimited
              12.010%
      of all Indebtedness or $129,000.00, whichever is less
              Unlimited
              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.




Loan Proceeds.Use ail 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 (1) the legality of the same shall be contested in good faith
by appropriate proceedings, and (2) Borrower shall have established on
Borrower's books adequate reserves with respect to such contested assessment,
tax, charge, levy, lien, or claim in accordance with GAAP.




Performance.Perform and
comply, in a timely manner, with all terms, conditions, and provisions set forth
in this Agreement, in the Related Documents, and in all other instruments and
agreements between Borrower and Lender. Borrower shall notify Lender immediately
in wriiing of any default in connection with any agreement.




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.




Environmental Studies.Promptly conduct and complete, at Borrower's expense, all such
investigations, studies, samplings and testings as may be requested by Lender or
any governmental authority relative to any substance, or any waste or by-product
of any substance defined as toxic or a hazardous substance under applicable
federal, state, or local law, rule, regulation, order or directive, at or
affecting any property or any facility owned, leased or used by
Borrower.




Compliance with Governmental
Requirements.Comply with all laws, ordinances, and regulations, now or
hereafter in effect, of all governmental authorities applicable to the conduct
of Borrower's properties, businesses and operations, and to the use or occupancy
of the Collateral, including without limitation, the Americans With Disabilities
Act. Borrower may contest in good faith any such law, ordinance, or regulation
and withhold compliance during any proceeding, including appropriate appeals, so
long as Borrower has notified Lender in writing prior to doing so and so long
as, in Lender's sole opinion. Lender's interests in the Collateral are not
jeopardized. Lender may require Borrower to post adequate security or a surety
bond, reasonably satisfactory to Lender, to protect Lender's
interest.




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 of 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 Certificates.Unless waived in writing by Lender, provide Lender within thirty (30)
days after the end of each month, 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 any and ail Environmental
Laws; not cause or permit to exist, as a result of an intentional or
unintentional action or omission on Borrower's part or on the part of any third
party, on property owned and/or 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 Borrower's part in connection
with any environmental activity whether or not there is damage to the
environment and/or other natural resources.









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Additional Assurances.Make,
execute and deliver to Lender such promissory notes, mortgages, deeds of trust,
security agreements, assignments, 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.




LENDER'S EXPENDITURES.If any
action or proceeding is commenced that would materially affect Lender's interest
in the Collateral or if Borrower fails to comply with any provision of this
Agreement or any Related Documents, including but not limited to Borrower's
failure to discharge or pay when due any amounts Borrower is required to
discharge or pay under this Agreement or any Related Documents, Lender on
Borrower's behalf may (but shall not be obligated to) take any action that
Lender deems appropriate, including but not limited to discharging or paying all
taxes, liens, security interests, encumbrances and other claims, at any time
levied or placed on any Collateral and paying all costs for insuring,
maintaining and preserving any 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 Borrower. All such expenses will 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 (1) the term of any applicable insurance policy; or
(2) 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.




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:




Indebtedness and Liens.(1)
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, (2) sell, transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of
Borrower's assets (except as allowed as Permitted Liens), or (3) sell with
recourse any of Borrower's accounts, except to Lender.




Continuity of Operations.(1)
Engage in any business activities substantially different than those in which
Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer,
acquire or consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, or (3) make
any distribution with respect to any capital account, whether by reduction of
capital or otherwise.




Loans, Acquisitions and Guaranties.(1) Loan, invest in or advance money or assets to any other person,
enterprise or entity, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or guarantor other
than in the ordinary course of business.




Agreements.Enter into any
agreement containing any provisions which would be violated or breached by the
performance of Borrower's obligations under this Agreement or in connection
herewith,




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 dies, becomes incompetent or 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 insecure, even though no Event
of Default shall have occurred.




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




Payment Default.Borrower
fails to make any payment when due under the Loan.




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




Default in Favor of Third Parties.Borrower or any Grantor 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 or any Grantor'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 Borrower or
on Borrower's behalf under this Agreement or the Related Documents is false or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.




Death or Insolvency.The
dissolution of Borrower (regardless of whether election to continue is made),
any member withdraws from Borrower, or any other termination of Borrower's
existence as a going business or the death of any member, the insolvency of
Borrower, the appointment ot 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.




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




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 or by any governmental agency against any collateral
securing the Loan. This includes a garnishment of any of Borrower's accounts,
including deposit accounts, with Lender. However, this Event of Default shall
not apply if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in its
sole discretion, as being an adequate reserve or bond for the
dispute.




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.




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




Insecurity.Lender in good
faith believes itself insecure.




Right to Cure.If any default,
other ihan a default on Indebtedness, is curable and it 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 if Borrower or Grantor, as the
case may be, after Lender sends written notice to Borrower or Grantor, as the
case may be, demanding cure of such default: (1) cure the default within fifteen
(15) days; or (2) if the cure requires more than fifteen (15) days, immediately
initiate steps which Lender deems in Lender's sole discretion So be sufficient
to cure the default and thereafter continue and complete all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.









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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 further 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, ail of Lender's 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.




CONDITIONS PRECEDENT TO ADDITIONAL
ADVANCES.All commitments and obligations of Lender to advance the
remaining $140,000 in loan proceeds for this transaction will terminate unless
Borrower meets the following conditions within 12 months from the date of this
Agreement: (1) Borrower's provides Bank with evidence that financial performance
matches or exceeds projections through September, 2001 {Projections to match
were provided to Bank in December, 2000); (2) Borrower is in compliance with all
financial covenants; and (3) Borrower is in compliance with all other conditions
and covenants of this Agreement and is not otherwise in default.




REPLACEMENT BUSINESS LOAN AGREEMENT.This Asset Based Loan Agreement replaces the existing Business Loan
Agreement between Guarantor and Lender dated January 19, 2001.




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.




Attorneys' Fees; Expenses.Borrower agrees to pay upon demand all of Lender's costs and expenses,
including Lender's attorneys' fees and Lender's legal expenses, incurred in
connection with the enforcement of this Agreement. Lender may hire or pay
someone else to help enforce this Agreement, and Borrower shall pay the costs
and expenses of such enforcement, Costs and expenses include Lender's attorneys'
fees and legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also shall pay all court costs and
such additional fees as may be directed by the court.




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.




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 Loan 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 Borrower 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 Loan and will have all the rights
granted under the participation agreement or agreements governing the sale of
such participation interests. Borrower further waives ali 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 Loan
irrespective of the failure or insolvency of any holder of any interest in the
Loan. 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.




Governing
Law. This Agreement will be governed by federal law applicable to Lender and, to
the extent not preempted by federal law, the laws of the State of Washington
without regard to its conflicts of law provisions. This Agreement has been
accepted by Lender in the State of Washington.




Choice of Venue.If there is a
lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of
the courts of Pacific County, State of Washington.




No Waiver by Lender.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
Borrower, or between Lender and any Grantor, shall constitute a waiver of any of
Lender's rights or of any of Borrower's or any 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.




Notices.Subject to applicable
law, and except for notice required or allowed by law to be given in another
manner, any notice required to be given under this Agreement shall be given in
writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail, as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the beginning of this Agreement.
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. For notice purposes, Borrower agrees to
keep Lender informed at ail times of Borrower's current address. Subject to
applicable law, and except for notice required or allowed by law to be given in
another manner, if there is more than one Borrower, any notice given by Lender
to any Borrower is deemed to be notice given to all Borrowers.




Severability.If a court of
competent jurisdiction finds any provision of this Agreement to be illegal,
invalid, or unenforceable as to any circumstance, that finding shall not make
the offending provision illegal, invalid, or unenforceable as to any other
circumstance. If feasible, the offending provision shall be considered modified
so that it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this Agreement.
Unless otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Agreement shall not affect the
legality, validity or enforceability of any other provision of this
Agreement.




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 in this Agreement shall include all of
Borrower's subsidiaries and affiliates. 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 of Borrower's subsidiaries
or affiliates.




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









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Survival of Representations and
Warranties.Borrower understands and agrees that in extending Loan
Advances, Lender is relying on ail representations, warranties, and covenants
made by Borrower in this Agreement or in any certificate or other instrument
delivered by Borrower to Lender under this Agreement or the Related Documents.
Borrower further agrees that regardless of any investigation made by Lender, all
such representations, warranties and covenants will survive the extension of
Loan Advances and delivery to Lender of the Related Documents, shall be
continuing in nature, shall be deemed made and redated by Borrower at the time
each Loan Advance is made, 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.




Time is of the Essence.Time
is of the essence in the performance of this Agreement.




Waive
Jury. Ail parties to this Agreement hereby waive the right to any jury trial in
any action, proceeding, or counterclaim brought by any party against any other
party.




DEFINITIONS.The following
capitalized words and terms shall have the following meanings when used in this
Agreement. Unless specifically stated to the contrary, all references to dollar
amounts shall mean amounts in lawful money of the United States of America.
Words and terms used in the singular shall include the plural, and the plural
shall include the singular, as the context may require. Words and terms not
otherwise defined in this Agreement shall have the meanings attributed to such
terms in the Uniform Commercial Code. Accounting words and terms not otherwise
defined in this Agreement shall have the meanings assigned to them in accordance
with generally accepted accounting principles as in effect on the date of this
Agreement:




Account.The word "Account"
means a trade account, account receivable, other receivable, or other right to
payment for goods sold or services rendered owing to Borrower (or to a third
party grantor acceptable to Lender).




Account Debtor.The words
"Account Debtor" mean the person or entity obligated upon an
Account.




Advance.The word "Advance"
means a disbursement of Loan funds made, or to be made, to Borrower or on
Borrower's behalf under the terms and conditions of this Agreement.




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




Borrower.The word "Borrower"
means Paneltech International, LLC and includes all co-signers and co-makers
signing the Note and all their successors and assigns.




Borrowing Base.The words
"Borrowing Base" mean Based on borrowing base certificates submitted monthly by
Borrower, Lender will permit the advance of funds, or demand funds to be repaid,
so that the aggregate outstanding amount owing on the line at any time is no
greater than the lesser of (a) 75% of eligible accounts receivable (composed of
total accounts receivable less ineligible accounts receivable), plus 50% of
eligible inventory up to $750,000 (provided at no time the advance on inventory
exceeds the advance on accounts receivable or (b) $1,500,000.




Business Day.The words
"Business Day" mean a day on which commercial banks are open in the State of
Washington.




Collateral.The word
"Collateral" means ail 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 interest, mortgage, collateral mortgage, deed of trust, assignment,
pledge, crop pledge, chattel mortgage, collateral chaitel 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. The word Collateral also includes
without limitation all collateral described in the Collateral section of this
Agreement.




Eligible Accounts.The words
"Eligible Accounts" mean at any time, all of Borrower's Accounts which contain
selling terms and conditions acceptable to Lender. The net amount of any
Eligible Account against which Borrower may borrow shall exclude ail returns,
discounts, credits, and offsets of any nature. Unless otherwise agreed to by
Lender in writing, Eligible Accounts do not include:




(1)  Accounts
with respect to which the Account Debtor is a member, employee or agent of
Borrower.




(2)  Accounts
with respect to which the Account Debtor is affiliated with
Borrower.




(3)  Accounts
with respect to which goods are placed on consignment, guaranteed sale, or other
terms by reason of which the payment by the Account Debtor may be
conditional.




(4)  Accounts
with respect to which Borrower is or may become liable to the Account Debtor for
goods sold or services rendered by the Account Debtor to Borrower.




(5)  Accounts
which are subject to dispute, counterclaim, or setoff.




(6)  Accounts
with respect to which the goods have not been shipped or delivered, or the
services have not been rendered, to the Account Debtor.




(7)  Accounts
with respect to which Lender, in its sole discretion, deems the creditworthiness
or financial condition of the Account Debtor to be unsatisfactory.




(8)  Accounts
of any Account Debtor who has filed or has had filed against it a petition in
bankruptcy or an application for relief under any provision of any state or
federal bankruptcy, insolvency, or debtor—in—relief acts; or who has had
appointed a trustee, custodian, or receiver for the assets of such Account
Debtor; or who has made an assignment for the benefit of creditors or has become
insolvent or fails generally to pay its debts (including its payrolls) as such
debts become due.




(9)  Accounts
which have not been paid in full within 90 daysfrom the invoice date.
The entire balance of any Account of any single Account Debtor will be
ineligible whenever the portion of the Account which has not been paid within
90 daysfrom the invoice
date is in excess of 25.000%of the total amount outstanding on the Account.





(10)  That
portion of the Accounts of any single Account Debtor which exceeds 20.000%of all of Borrower's
Accounts.





(11)  Foreign
accounts no! covered by Exlm insurance.





Eligible Inventory.The words
"Eligible Inventory" mean, at any time, all of Borrower's Inventory as defined
below, except:





(1)  Inventory
which is not owned by Borrower free and clear of all security interests, liens,
encumbrances, and claims of third parties.





(2)  Inventory
which Lender, in its sole discretion, deems to be obsolete, unsalable, damaged,
defective, or unfit for further processing.





(3) Work
in Process, Consigned, In-Transit Inventory are ineligible as well as supplies
and samples .









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            BUSINESS LOAN AGREEMENT (ASSET
      BASED)
              (Continued)
            Page
  8




Environmental Laws.The words
"Environmental Laws" mean any and ail state, federal and local statutes,
regulations and ordinances relating to the protection of human health or the
environment, including without limitation the Comprehensive Environmental
Response, Compensation, and Liability 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 thereto.




Event of Default.The words
"Event of Default" mean any of the events of default set forth in this Agreement
in the default section of this Agreement.




Expiration Date.The words
"Expiration Date" mean the date of termination of Lender's commitment to lend
under this Agreement.





GAAP.The word "GAAP" means
generally accepted accounting principles.




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




Guarantor.The word
"Guarantor" means any guarantor, surety, or accommodation party of any or all of
the Loan.




Guaranty.The word "Guaranty"
means the guaranty from Guarantor to Lender, including without limitation a
guaranty of all or part of the Note.




Hazardous Substances.The
words "Hazardous Substances" mean materials that, because of their quantity,
concentration or physical, chemical or infectious characteristics, may cause or
pose a present or potential hazard to human health or the environment when
improperly used, treated, stored, disposed of, generated, manufactured,
transported or otherwise handled. The words "Hazardous Substances" are used in
their very broadest sense and include without limitation any and all hazardous
or toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also includes, without
limitation, petroleum and petroleum by-products or any fraction thereof and
asbestos.




Indebtedness.The word
"Indebtedness" means the indebtedness evidenced by the Note or Related
Documents, including all principal and interest together with all other
indebtedness and costs and expenses for which Borrower is responsible under this
Agreement or under any of the Related Documents.




Inventory.The word
"Inventory" means all of Borrower's raw materials, work in process, finished
goods, merchandise, parts and supplies, of every kind and description, and goods
held for sale or lease or furnished under contracts of service in which Borrower
now has or hereafter acquires any right, whether held by Borrower or others, and
ail documents of title, warehouse receipts, bills of lading, and all other
documents of every type covering all or any part of the foregoing. Inventory
includes inventory temporarily out of Borrower's custody or possession and all
returns on Accounts.




Lender.The word "Lender"
means ShoreBank Pacific, its successors and assigns.




Loan.The word "Loan" means
any and all 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
the Note executed by Paneltech International, LLC in the principal amount of
$1,500,000.00 dated January 19, 2001, together with all renewals of, extensions
of, modifications of, refinancings of, consolidations of, and substitutions for
the note or credit agreement.




Permitted Liens.The words
"Permitted Liens" mean (1) liens and security interests securing Indebtedness
owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges
either not yet due or being contested in good faith; (3) liens of materialmen,
mechanics, warehousemen, or carriers, or other like liens arising in the
ordinary course of business and securing obligations which are not yet
delinquent; (4) 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"; (5) liens and security interests which, as of the date
of this Agreement, have been disclosed to and approved by the Lender in writing;
and {6} 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.




Primary Credit Facility.The
words "Primary Credit Facility" mean the credit facility described in the Line
of Credit section of this Agreement.




Related Documents.The words
"Related Documents" mean all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, security deeds, collateral mortgages, and alt other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the Loan.




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, without limitation, any and alt types of collateral
security, present and future, whether in the form of a lien, charge,
encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop
pledge, chattel mortgage, collateral 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.









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    No:100012004
            BUSINESS LOAN AGREEMENT (ASSET
      BASED)
              (Continued)
            Page
  9





BORROWER
ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT
(ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT
(ASSET BASED) IS DATED NOVEMBER 30, 2009.




BORROWER:




PANELTECH INTERNATIONAL,
      LLCBy:Leroy
      D. Nott, President of Paneltech International, LLC


LENDER:


SHOREBANK
    PACIFICBy:Authorized
    Signer