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                           THIRD FORBEARANCE AGREEMENT


            The effective date of this Agreement is May 1, 1998. The Parties to
      this Agreement are U.S. Bank National Association ("Bank"), Geographics,
      Inc. ("Borrower"), and Geographics Marketing Canada and Martin
      Distributing, Inc. (jointly and severally "Guarantors").

      THIS AGREEMENT IS MADE WITH RESPECT TO THE FOLLOWING RECITALS. THE TRUTH,
      ACCURACY AND COMPLETENESS OF EACH OF THE RECITED FACTS IS EXPRESSLY
      ACKNOWLEDGED BY THE PARTIES, AND THIS ACKNOWLEDGEMENT IS INTENDED TO BE
      CONTRACTUALLY BINDING UPON THE PARTIES.

A.    Geographics is currently indebted to Bank under a promissory note dated
      August 30, 1996, and a related business loan agreement pursuant to which
      the Bank provided Geographics a Revolving Line of Credit in the maximum
      amount of $12,000,000 (the "Revolving Loan"). In addition to the Revolving
      Loan, Geographics is indebted to Bank for various real estate and
      equipment loans (the "Term Loans"). The amounts owed on the Revolving Loan
      and the Term Loans as of April 23, 1998 (not including attorney fees) are
      set forth on attached Exhibit A to this Agreement. The Bank has continued
      to make advances under the Revolving Loan pending execution of this Third
      Forbearance Agreement. Further, interest, fees and other charges continue
      to accrue on the Revolving Loan and the Term Loans. Geographics' entire
      indebtedness to the Bank shall be referred to herein as the
      "Indebtedness."

B.    The Indebtedness is secured by security interests in substantially all of
      Geographics' assets, including but not limited to accounts, inventory,
      equipment, and general intangibles, and specifically including the Core
      Business Assets defined below.

C.    Guarantors have guaranteed all of Geographics' Indebtedness to the Bank,
      which guarantees remain outstanding.

D.    The Revolving Loan and the Term Loans are in default, and the Bank has
      declared all of the Indebtedness, including principal and accrued but
      unpaid interest, to be immediately due and payable. Geographics and the
      Guarantors hereby acknowledge that the Loans are in default, that the
      Indebtedness is currently due and owing, and that there are no defenses or
      offsets that exist to the repayment of said Indebtedness.

E.    Bank and Geographics entered into prior Forbearance Agreements, under
      which the Bank agreed to forbear from the exercise of its rights and
      remedies as a result of the defaults described above. The most recent such
      agreement ("Second Forbearance Agreement") expired on April 15, 1998.


THIRD FORBEARANCE AGREEMENT -- Page 1
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F.    Borrower and Guarantors have requested that the Bank further forbear for a
      period of time from the exercise of its rights and remedies as a result of
      the events of default described above. Bank is willing to forbear for a
      limited time only if Geographics cooperates in the Bank's foreclosure sale
      of Geographics "Core Business" assets as described below.

G.    Geographics, through its signage products business segment, is engaged in
      the business of developing, manufacturing, marketing, supporting and
      distributing various rub-on and stick-on lettering, stencils, graphic arts
      products, non-electric and electric signs and other signage products (the
      "Core Business"). In addition to the Core Business, Geographics operates a
      "Specialty Paper Business," which is engaged in the development,
      manufacture, marketing and distribution of designer stationery, business
      cards, brochures, letterhead, memo pads and paper cubes. For over a year,
      Geographics has been attempting to sell the Core Business. After
      considering all offers, Geographics agreed in December 1997 to sell the
      assets associated with the Core Business to Identity Group, Inc.
      ("Identity"). The parties reached agreement on price and terms. However,
      Geographics has determined it will be unable to satisfy all of the
      conditions in the offer by the closing deadline.

H.    At the time the parties entered into the Second Forbearance Agreement, it
      was expected that Geographics would close the sale to Identity prior to
      expiration of the second forbearance period on April 15, 1998. Geographics
      has been in default for almost a year. The Bank is unwilling to continue
      financing Geographics' operations without a prompt paydown of the
      Indebtedness. To avoid losing the sale to Identity, the Bank has demanded
      Geographics' cooperation in allowing the Bank to foreclose on the Core
      Business assets through private sale to Identity pursuant to RCW
      62A.9-504.

I.    Geographics desires to continue the Specialty Paper Business whether or
      not the Core Business is sold. Geographics intends to block the
      foreclosure sale to Identity (by filing Chapter 11, if necessary) unless
      the Bank agrees to provide post-sale financing for a period of up to six
      months on the terms set forth below. Geographics believes this will give
      it a chance to refinance its obligations to the Bank, to convince the Bank
      to extend further financing accommodations, or to otherwise satisfy its
      obligations to the Bank.

                       NOW THEREFORE IT IS HEREBY AGREED:

            1.    Acknowledgment of Default. On and as of the date hereof: (i)
material events of default existed and continue to exist under the Revolving
Loan and the Terms Loans, including, without limitation, those events of default
identified in the Recitals to this Forbearance Agreement; (ii) timely, adequate
and proper notice of the occurrence of such Existing Defaults ("collectively,
"the Existing Defaults") has been received by the Borrower and Guarantors from
the Bank (and Borrower and Guarantor waive any requirement that any such notice
be in writing); (iii) all grace periods, if any, applicable to the cure of
defaults after receipt of such notices have expired; (iv) each of the Existing
Defaults was and is continuing without timely cure by Borrower; and (v) Bank had
not and has not waived, in any respect, any or all the Existing Defaults or its
respective rights and remedies with respect thereto.


THIRD FORBEARANCE AGREEMENT -- Page 2
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            2.    Acknowledgment of Bank's Right to Accelerate. On and as of the
date hereof, the Bank has accelerated and declared the Indebtedness evidenced by
the Revolving Loan and Term Loans to be immediately due and payable and has made
demand upon Borrower and Guarantor for the full payment of all such
Indebtedness. Such acceleration and demand for payment, is in all respects
adequate and proper. Borrower and Guarantor waive any and all further notice,
presentment, and notice of dishonor or demand with respect to such Indebtedness.

            3.    Acknowledgment of Indebtedness. On and as of the date hereof,
Borrower is indebted to the Bank in the amounts set forth in the Recitals to
this Forbearance Agreement, together with additional advances made from April
23, 1998 to date. All such amounts remain outstanding and unpaid. All such
amounts are due and payable in full, without offset, deduction or counterclaim
of any kind or character whatsoever, but are subject to increase or other
adjustment as a result of any and all interest, fees, and other charges,
including without limitation, attorneys fees and costs of collection, which are
payable to the Bank under the Revolving Loan and Term Loan documents.

            4.    Forbearance. On the terms and conditions as set forth in this
Forbearance Agreement, Bank shall forbear from taking any action to enforce its
rights under the Revolving Loan and Term Loans, arising from the Existing
Defaults, through November 1, 1998 ("Forbearance Period").


            5.    Conditions of Forbearance. The Forbearance Period shall
terminate upon the earliest occurring of any of the following:

                  (a)   The end of the Forbearance Period;

                  (b)   Any default by the Borrower or the Guarantors under this
            Forbearance Agreement;

                  (c)   Any default by the Borrower or the Guarantors under the
            Term Loans or the Revolving Loan (as modified hereby) after the date
            of this Agreement, or under the Core Business Collateral Surrender
            and Foreclosure Agreement (hereafter, "Collateral Surrender
            Agreement) executed by the parties contemporaneously herewith;

                  (d)   Failure of the Bank's private foreclosure sale of the
            Core Business Assets to Identity to close (and Bank to receive all
            net sale proceeds) on or before May 6, 1998.

            6.    Forbearance on Default Interest. Bank further will forebear on
collection of all default interest now accrued and/or owing under the Revolving
Loan on the following conditions:

                  (a)   If there is no default under this Forbearance Agreement,
            such default interest shall be waived and forgiven.


THIRD FORBEARANCE AGREEMENT -- Page 3
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                  (b)   If there is a default under this Forbearance Agreement,
            or under the Collateral Surrender Agreement, such default interest
            shall be immediately due and payable in full.

            7.    Extension of Revolving Loan. During the Forbearance Period,
the Revolving Loan shall continue under its current terms and conditions with
the following modifications:

                  (a)   All Indebtedness thereunder shall be due and payable
            without demand on the earlier of the end of the Forbearance Period
            or November 1, 1998.

                  (b)   During the months of May, June and July 1998, the
            maximum amount of the Revolving Loan shall not exceed $5,500,000.
            During the months of August, September and October 1998, the maximum
            amount of such Loan shall not exceed $6,000,000. At all times during
            the Forbearance Period, the maximum amount of the Revolving Loan
            advanced against eligible inventory shall not exceed $3,500,000.

                  (c)   The advance rate against eligible accounts receivable
            shall be reduced to 70%.

                  (d)   During the months of August and September 1998, the
            Bank, in its sole discretion, will consider increasing the maximum
            amount of the Revolving Loan up to $7,500,000 on the following
            conditions:

                        (i)   Such increase shall be considered only to enable
                  Borrower to fill identified purchase orders for seasonal
                  sales.

                        (ii)  Borrower must be in compliance with its
                  obligations under this Agreement.

                        (iii) Advances will be made under the Revolving Loan
                  only if it is in formula. However, the Bank will consider
                  increasing the advance rate against identified accounts
                  receivable for seasonal inventory sales which are not subject
                  to charge-back, volume discount, rebate or other reduction.

                  (e)   All other provisions and limitations in the "Operating
            Provisions Accounts Receivable and Inventory Secured Lines" attached
            as Exhibit B and incorporated herein by reference shall apply.

                  (f)   Notwithstanding any prior course of dealing between the
            parties, the Bank shall not make or permit any overadvances under
            the Revolving Loan beyond the maximum amounts available under the
            terms of this Third Forbearance Agreement.

            8.    It is expressly understood and agreed that upon the maturity
of the Indebtedness on November 1, 1998, or earlier acceleration of the
Indebtedness as provided for herein, all such Indebtedness shall be immediately
payable in full, AND BANK SHALL HAVE NO FURTHER OBLIGATIONS OR COMMITMENTS TO
BORROWER TO EXTEND,


THIRD FORBEARANCE AGREEMENT -- Page 4
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RENEW OR REFINANCE ANY OF SUCH INDEBTEDNESS, REGARDLESS OF ANY RENEWALS,
EXTENSIONS OR FLEXIBILITY WHICH BANK MAY IN GOOD FAITH AND FAIR DEALING HAVE
PREVIOUSLY ALLOWED IN CONNECTION WITH SUCH INDEBTEDNESS.

            9.    Acknowledgment that Agreements Continue in Full Force and
Effect. The Revolving Loan and Term Loans, and all notes, security agreements,
trust deeds and other agreements related thereto, shall, except as expressly
modified herein during the forbearance period, remain in full force and effect,
and shall not be released, impaired, diminished, or in any other way modified or
amended as a result of the execution and delivery of this forbearance agreement.

            10.   Grant of Cross Security. All of the security agreements, deeds
of trust, and other security instruments and collateral which secure the
Revolving Loan, Term Loans and guarantees shall continue to remain in full force
and effect and each shall secure repayment of all Indebtedness and obligations
owed by Borrower and Guarantors, respectively to the Bank, including those
obligations arising under this Forbearance Agreement.

            11.   Further Cooperation. Borrower and Guarantors agree to
cooperate fully and to take all further actions and to execute all further
instruments that Bank deems necessary or appropriate to carry out the purposes
of this Agreement.

            12.   Cross Default. Any failure by Borrower to observe and perform
any of the covenants or agreements contained herein or in any other agreement
between the Borrower and the Bank will constitute an event of default under this
Agreement and each other agreement between Borrower and the Bank. Upon the
happening of any event of default, the Bank shall have the right to demand
immediate payment of any and all Indebtedness owing to it by the Borrower and
the Guarantors and to exercise any or all of its rights under the law and
pursuant to the terms of this Agreement and all of the other agreements in
effect between the parties.

            13.   No Waiver. Any waiver by the Bank of a default in any of the
terms and conditions of this Agreement or in any other agreement referred to
herein shall not be deemed a waiver of any subsequent or other default or of any
of the Bank's rights as a result of breaches or defaults by the Borrower.

            14.   Except as modified or supplemented hereby and except as
inconsistent herewith, all unexpired prior agreements entered into between the
parties hereto remain in full force and effect pursuant to their original terms
and said agreements are hereby ratified and confirmed.

            15.   Each and every word and portion of this Agreement is
contractual and not merely a recital. This Agreement may not be amended or
supplemented, canceled or discharged and no provision hereof may be waived,
except by subsequent written agreement between the parties.


THIRD FORBEARANCE AGREEMENT -- Page 5
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            16.   Borrower acknowledges that, in general, borrowers who
experience difficulties honoring loan obligations, in an effort to inhibit or
impede lenders from exercising the rights and remedies available pursuant to
mortgages, notes, loan agreements or other instruments evidencing or affecting
loan transactions, frequently allege or argue that some loan officer or
administrator of a lender made an oral modification or made some statement which
could be interpreted as a consent, waiver, extension, modification or amendment
of one or more debt instruments or could be interpreted as an agreement to take
or forbear from taking some action and that the borrower relied to its detriment
upon such consent, waiver, oral modification or statement. For that reason, and
in order to protect the Bank from such allegations and arguments in connection
with the transactions contemplated by this Agreement, it is agreed and
acknowledged that all instruments referred to herein or executed or delivered in
connection herewith can be extended, modified or amended, and a consent or
waiver can be given and an agreement can be altered or entered into, only in
writing. None of the rights, powers, remedies or benefits of the Bank can be
released, waived, extended, modified or amended and no consent can be given or
any agreement altered or entered into except in writing signed by an agent of
the Bank. Borrower further acknowledges its understanding that no officer or
employee of the Bank has the power or authority to make an oral consent or an
oral release, extension, modification or amendment in respect to this Agreement
or of any of the documents referred to herein or executed or delivered in
connection herewith or to make any oral waiver or to alter or enter into any
oral agreement on behalf of the Bank.

            17.   This writing is intended by the parties as a final and
complete expression of this Agreement and of all matters relating to this
Agreement. No prior course of dealing or negotiations between the parties, and
no oral or extrinsic evidence of any nature shall be used to supplement or
modify any term of this Agreement.

            18.   In the event any suit or action is instituted to enforce or
interpret any of the terms of this Agreement, including any action or
participation in or in connection with a case or proceeding under any Chapter of
the Bankruptcy Code or any successor statute, the prevailing party shall be
entitled to such sum as the court may adjudge reasonable as attorney fees and
costs in such suit, action or proceeding, or upon any appeal from any judgment,
order or decree entered therein, and whether or not such fees and costs are
prescribed by statute. Whether or not any court action is involved, Borrower
agrees to pay all reasonable attorney fees and costs incurred by the Bank that
are necessary at any time in the Bank's opinion for the protection of its
interests or enforcement of its rights hereunder.

            19.   Each and every right, remedy and power hereby granted to the
Bank or allowed it by law or other agreement, shall be cumulative and shall not
be exclusive of any other rights, remedy and power and may be exercised
concurrently, consecutively or separately by the Bank. No failure nor neglect on
the part of the Bank to exercise and no delay in exercising any right, remedy or
power hereunder, under any other agreement, any other document, or by law, shall
in any way release or reduce Borrower's liability to the Bank hereunder, or in
any way reduce, condition or limit Borrowers obligations hereunder.


THIRD FORBEARANCE AGREEMENT -- Page 6
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            20.   The Bank and Borrower intend that their relationship shall be
solely that of creditor and debtor. Nothing contained herein or in any document
referred to herein or executed or delivered in connection herewith shall be
deemed or construed to create a partnership, tenancy-in-common, joint tenancy,
joint venture or co-ownership by or between the Bank and Borrower. The Bank
shall not be in any way responsible or liable for the debts, losses, obligations
or duties of Borrower with respect to its business or otherwise. All obligations
to pay real property or other taxes, assessments, insurance premiums, and all
other fees and charges arising from the ownership, operation, or occupancy of
the business and property of Borrower, and to perform all other agreements and
contracts relating thereto, shall be the sole responsibility of Borrower
consistent with the terms and provisions of this Agreement and the documents
referred to above, Borrower shall be free to determine and follow its own
policies and practices in the conduct of its respective business.

            21.   Borrowers, Guarantors and the Bank acknowledge and agree that
the parties may, in the sole discretion of the Bank, discuss various means for
repayment of the Indebtedness owing to the Bank, and that Borrower may enter
into discussions and negotiations with prospective third-party lenders to
Borrower, third-party creditors of Borrower, or potential investors in Borrower
or other third persons. If Borrower asks the Bank to enter into or participate
in any such discussions or negotiations, Borrower agrees that the Bank may, in
the course of such discussions, reveal information about the Borrower that would
normally be considered confidential between the Bank and the Borrower. Borrower
agrees that, if such discussions do take place, they shall in no way obligate or
commit the Bank to agree to any secured or unsecured financing, to subordinate
any lien or to release any collateral, to lend any additional funds to Borrower,
to extend any other form of credit to Borrower, to forbear from exercising any
rights, powers and remedies of the Bank, or to provide any letters of credit or
other credit support on behalf of Borrower. Borrower waives, releases and
discharges any right it may have to assert any claim or contention that the Bank
has made any oral or written offer, promise, or commitment to cooperate with any
third-party lender to Borrower or third-party creditor of Borrower, or any other
third person, to agree to any secured or unsecured financing or to otherwise
subordinate any lien or to release any collateral, to lend any additional funds
to Borrower or provide any other form of credit to Borrower, to forbear from
exercising any rights, powers and remedies of the Bank, to provide any letters
of credit or other credit support on behalf of Borrower, or to take (or refrain
from taking) any other action whatsoever with respect to Borrower, except as
provided in this Agreement.

            22.   The parties declare that they have been advised by counsel in
connection with the execution of this Agreement and acknowledge that they are
not relying on any representations or advice of the Bank or its lawyers, that
they are not acting under any misrepresentation or misapprehension as to this
Agreement's legal effect, and that this Agreement has not been executed under
duress.

            23.   It is understood that the rule of construction that a written
agreement is construed against the party preparing or drafting such agreement
shall specifically not be applicable to the interpretation of this Agreement.


THIRD FORBEARANCE AGREEMENT -- Page 7
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            24.   All the covenants, agreements, conditions and terms contained
in this Agreement shall be binding upon, apply, and inure to the benefit of the
successors and assigns of the respective parties hereto.

            25.   The laws of the State of Washington shall govern the rights,
liabilities, duties and responsibilities of the parties. At Bank's request, and
subject to the provisions on Mandatory Arbitration below, if there is a lawsuit,
Borrower and/or Guarantor shall submit themselves to the exclusive jurisdiction
of the courts of King County, State of Washington.

            26.   Mandatory Arbitration. Lender and Borrower agree that all
disputes, claims and controversies between them, whether individual, joint, or
class in nature, arising from this Agreement or otherwise, including without
limitation contract and tort disputes, shall be arbitrated pursuant to the Rules
of the American Arbitration Association, upon request of either party. No act to
take or dispose of any Collateral shall constitute a waiver of this arbitration
agreement or be prohibited by this arbitration agreement. This includes, without
limitation, obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage; obtaining a writ
of attachment or imposition of a receiver; or exercising any rights relating to
personal property, including taking or disposing of such property with or
without judicial process pursuant to Article 9 of the Uniform Commercial Code.
Any disputes, claims or controversies concerning the lawfulness or
reasonableness of any act, or exercise of any right, concerning any Collateral,
including any claim to rescind, reform, or otherwise modify any agreement
relating to the Collateral, shall also be arbitrated, provided however that no
arbitrator shall have the right or the power to enjoin or restrain any act of
any party. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing in this Agreement shall preclude any
party from seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar doctrines which
would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of an action for these purposes. The
Federal Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.

            27.   This Agreement may be executed in counterparts, each of which
when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Any
counterpart that may be delivered by facsimile transmission shall be deemed the
equivalent of an originally signed counterpart and shall be fully admissible in
any enforcement proceeding regarding this Agreement.

            28.   Release. As additional consideration to the Bank for entering
into this Agreement, Borrower and Guarantors hereby release and forever
discharge to the Bank, its officers, directors, employees, agents, successors
and assigns, from any and all liability, or claims of liability, whether known
or unknown, of whatsoever nature arising out of or based in whole or in part
upon any agreement, act, or omission of the Bank, or of any person or entity
acting, or purporting to act on behalf of the Bank, occurring prior to the
effective date of this Agreement.

            29.   Time is of the essence under this Forbearance Agreement


THIRD FORBEARANCE AGREEMENT -- Page 8
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            30.   Borrower's Representations and Warranties. Borrower represents
and warrants to Bank as of the date of this Agreement :

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

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

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

                  (d)   Survival of Representations, Releases and Warranties.
            Borrower understands and agrees that Bank is relying upon the above
            representations, releases and warranties in entering into this
            Forbearance Agreement. Borrower further agrees that the foregoing
            representations, releases and warranties shall be continuing in
            nature and shall remain in full force and effect until such time as
            Borrower's obligations to Bank shall be paid in full.

            31.   No Representations or Warranties by Lender. Except as
expressly set forth herein, the Bank makes no representations, warranties,
promises, or commitments to loan money, extend credit, or forbear from enforcing
repayment in connection with any of the documents or transactions contemplated
hereunder. The Borrower and the Guarantors acknowledge that they have received
the following notice:

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

            BORROWER AND GUARANTORS ACKNOWLEDGE RECEIPT OF A COPY OF THIS
AGREEMENT.


THIRD FORBEARANCE AGREEMENT -- Page 9
<PAGE>   10
            IN WITNESS WHEREOF, the parties have executed this FORBEARANCE
AGREEMENT as of the date first written above.



GEOGRAPHICS, INC.                      GEOGRAPHICS MARKETING CANADA

By:  ______________________________    By:   _________________________________
     Ronald S. Deans
     Chairman/CEO                      Its:  _________________________________



U.S. NATIONAL BANK,
NATIONAL ASSOCIATION                   MARTIN DISTRIBUTING, INC.

By:  ______________________________    By:   _________________________________
         Roger Lundeen

Its:  _____________________________    Its:  _________________________________


THIRD FORBEARANCE AGREEMENT -- Page 10