MODIFICATION AND/OR EXTENSION AGREEMENT


Date:          July 24, 1997

Borrower:      PERCON INCORPORATED

Lender:        KEYBANK NATIONAL ASSOCIATION

Note:          Dated September 1, 1995, original principal amount of 
               $1,000,000.00.

Loan #:  96129-9501

     FOR VALUE RECEIVED, Borrower and Lender hereby agree to modify the
above-referenced Loan and Promissory Note and/or Loan Agreement as follows:

1.   MODIFICATION AND/OR EXTENSION PROVISIONS.

     a.   The maturity date of the loan is hereby extended to August 1, 1999.

     b.   Interest rate and payment provisions are not being modified, and
          Borrower shall continue to make regular installment payments as
          provided in the Note. Provisions for adjustment of the interest rate
          and/or payment amounts (if any) shall continue to apply.

2.   CONDITIONS. The modifications and/or extension described above are subject
     to and conditioned upon Borrower's full satisfaction of all of the
     following conditions on or before July 25, 1997, time being of the essence.

     a.   There shall be no uncured event of default under the Loan, nor any
          event or condition which with notice or the passage of time would be
          an event of default thereunder.

     b.   Borrower shall deliver to Lender a fully executed original of this
          Loan Modification and/or Extension Agreement.

     c.   All expenses incurred by Lender in connection with this Agreement
          (including without limitation, attorney fees, recording charges,
          charges for title policy update(s), escrow charges, costs of obtaining
          updated or additional appraisal(s) or collateral valuations, if
          required by Lender) shall be paid by borrower.

     d.   Borrower shall pay Lender in cash an extension fee of $2,500.00, due
          and payable at time of executing this Modification/Extension, and
          $2,500.00 due and payable on or before August 1, 1998.

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3.   GENERAL PROVISIONS. Except as modified above, all other provisions of the
     Note and any other documents securing or relating to the Loan (the "Loan
     Documents") remain in full force and effect. All security given for the
     Loan and all guarantees of the Loan (as applicable) shall continue in full
     force. Borrower warrants and represents to Lender that it has full right,
     power and authority to enter into this agreement and to perform all of its
     obligations hereunder, and that all information and materials submitted to
     Lender in connection with this modification are accurate and complete.
     Borrower warrants that no default exists under the Loan Documents. Borrower
     reaffirms its obligation to pay the Loan in full and reaffirms the validity
     and enforceability of the Loan Documents, without set-off, counterclaim or
     defense. Borrower acknowledges that:

          UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS
          MADE BY A BANK AFTER OCTOBER 3, 1989, CONCERNING LOANS AND
          OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY
          OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
          RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE
          SIGNED BY THAT BANK TO BE ENFORCEABLE.

                                        KEYBANK NATIONAL ASSOCIATION


                                        D.J. CRAMER, VP
                                        ---------------------------------------
                                        Authorized Officer


                                        BORROWER:  PERCON INCORPORATED


                                        By:  G. SCOTT PURCELL
                                           ------------------------------------
                                             Chief Financial Officer

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