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                                     [LOGO]

                            BUSINESS LOAN AGREEMENT

This Seafirst Business Loan Agreement ("Agreement") is made between 
Seattle-First National Bank ("Bank") and The Coeur d'Alenes Company and Union 
Iron Works, Inc. of Spokane, WA ("Borrower") with respect to the following:

                                     PART A

I. Line of Credit # 1. Subject to the terms of this Agreement, Bank will make 
   loans to Borrower under a [x] revolving [ ] nonrevolving line of credit as 
   follows:

(a) TOTAL AMOUNT AVAILABLE: $ 1,850,000
    [x] Subject to the provisions of any accounts receivable and/or inventory
        borrowing plan required herein; it is expressly understood that
        collateral ineligible for borrowing purposes is determined solely by
        Bank.
    [ ] Subject to (describe):________________________________________________

(b) AVAILABILITY PERIOD: March 26, 1996 through March 1, 1997. However, if
    loans are made and/or new promissory notes executed after the last date,
    such advances will be subject to the terms of this Agreement until repaid
    in full unless a written statement signed by the Bank and Borrower provides
    otherwise, ora replacement loan agreement is executed. The making of such
    additional advances alone however, does not constitute a commitment by the
    bank to make any further advances or extend the availability period.

(c) INTEREST RATE:
    [x] Banks publicly announced prime rate plus 0.325 percent of the principal
        per annum, adjusted on the date of any Bank prime rate change.
    [ ] _______________________________________________________________________

(d) INTEREST RATE BASIS. All interest will be calculated at the per annum
    interest rate based on 360-day year and applied to the actual number of days
    elapsed.

(e) REPAYMENT: At the times and in amounts as set forth in note(s) required
    under Part B Article 1 of this Agreement.

(f) LOAN FEE: $ 1,000.00 payable on March 26, 1996.

(g) FEE ON UNUTILIZED PORTION OF LINE: On N/A, and every N/A thereafter,
    Borrower shall pay a fee based upon the average daily unused portion of the
    line of credit. This fee will be calculated as follows:

(h) OTHER FEE(S) (IDENTIFY):___________________________________________________
    ___________________________________________________________________________

(i) COLLATERAL. This revolving line of credit shall be secured by a security
    interest, which is hereby granted, in favor of Bank on the following
    collateral: First lien position on accounts receivable and inventory. Also,
    collateral securing other loans with Bank may secure this loan.

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                                        [logo]
                                BUSINESS LOAN AGREEMENT

1.  Promissory Note(s). All loans shall be evidenced by promissory notes in a 
    form and substance satisfactory to Bank.

2.  Conditions to Availability of Loan/Line of Credit. Before Bank is 
    obligated to disburse/make any advance, or at any time thereafter which Bank
    deems necessary and appropriate, Bank must receive all of the following, 
    each of which must be in form and substance satisfactory to Bank loan 
    documents"):

     2.1  Original, executed promissory note(s);

     2.2  Original executed security agreement(s) and/or deed(s) of trust 
          covering the collateral described in Part A;

     2.3  All collateral described in Part A in which Bank wishes to have a
          possessory security interest;

     2.4  Financing statement(s) executed by Borrower;

     2.5  Such evidence that Bank may deem appropriate that the security 
          interests and liens in favor of Bank are valid, enforceable, and 
          prior to the rights and interests of others except those consented to 
          in writing by Bank;

    +2.6  The following guaranty(ies) in favor of the Bank:

    +2.7  Subordination agreement(s) in favor of Bank executed by:

     2.8  Evidence that the execution, delivery, and performance by Borrower of 
          this Agreement and the execution, delivery, and performance by 
          Borrower and any corporate guarantor or corporate subordinating 
          creditor of any instrument or agreement required under this Agreement,
          as appropriate, have been duly authorized;

     2.9  Any other document which is deemed by the Bank to be required from 
          time to time to evidence loans or to effect the provisions of this 
          Agreement;

     2.10 If requested by Bank, a written legal opinion expressed to Bank, of 
          counsel for Borrower as to the matters set forth in sections 3.1 and 
          3.2, and to the best of such counsel's knowledge after reasonable 
          investigation, the matters set forth in sections 3.3, 3.5, 3.6, 3.7, 
          3.8 and such other matters as the Bank may reasonably request;

     2.11 Pay or reimburse Bank for any out-of-pocket expenses expended in 
          making or administering the loans made hereunder including without 
          limitation attorney's fees (including allocated costs of in-house 
          counsel);

    +2.12 Other (describe):

3.  Representations and Warranties. Borrower represents and warrants to Bank, 
    except as Borrower has disclosed to Bank in writing, as of the date of this 
    Agreement and hereafter so long as credit granted under this Agreement is 
    available and until full and final payment of all sums outstanding under 
    this Agreement and promissory notes that:

     3.1  Borrower is duly organized and existing under the laws of the state 
          of its organization as a: 

                                         General                  Limited
                  X  Corporation        Partnership             Partnership
                 ---                ---                     ---

                                Sole 
                           Proprietorship           dba
                       ---                      ---

          Borrower is properly licensed and in good standing in each  state 
          in which Borrower is doing business and Borrower has qualified 
          under, and complied with, where required, the fictitious or trade 
          name statutes of each state in which Borrower is doing business, 
          and Borrower has obtained all necessary government approvals for 
          its business activities; the execution, delivery, and performance
          of this Agreement and such notes and other instruments required 
          herein are within Borrower's powers, have been duly authorized, 
          and, as to Borrower and any guarantor, are not in conflict with the 
          terms of any charter, bylaw, or other organization papers of Borrower,
          and this Agreement, such notes and the loan documents are valid and 
          enforceable according to their terms;

     3.2  The execution, delivery, and performance of this Agreement, the loan
          documents and any other instruments are not in conflict with any law 
          or any indenture, agreement or undertaking to which Borrower is a 
          party or by which Borrower is bound or affected;

     3.3  Borrower has title to each of the properties and assets as reflected 
          in its financial statements (except such assets which have been sold 
          or otherwise disposed of in the ordinary course of business), and no 
          assets or revenues of the Borrower are subject to any lien except as 
          required or permitted by this Agreement, disclosed in its financial 
          statements or otherwise previously disclosed to Bank in writing;

     3.4  All financial information, statements as to ownership of Borrower and 
          all other statements submitted by Borrower to Bank, whether previously
          or in the future, are and will be true and correct in all material 
          respects upon submission and are and will be complete upon submission 
          insofar as may be necessary to give Bank a true and accurate knowledge
          of the subject matter thereof;

     3.5  Borrower has filed all tax returns and reports as required by law to 
          be filed and has paid all taxes and assessments applicable to Borrower
          or to its properties which are presently due and payable, except those
          being contested in good faith;

     3.6  There are no proceedings, litigation or claims (including unpaid 
          taxes) against Borrower pending or, to the knowledge of the Borrower, 
          threatened, before any court or government agency, and no other event 
          has occurred which may have a material adverse effect on Borrower's 
          financial condition;

     3.7  There is no event which is, or with notice or lapse of time, or both, 
          would be, an Event of Default (as defined in Section 7) under this 
          Agreement;

     3.8  Borrower has exercised due diligence in inspecting Borrower's 
          properties for hazardous wastes and hazardous substances. Except as 
          otherwise previously disclosed and acknowledged to Bank in writing:  
          (a) during the period of Borrower's ownership of Borrower's 
          properties, there has been no use, generation, manufacture, storage, 
          treatment, disposal, release or threatened release of any hazardous 
          waste or hazardous substance by any person in, on, under or about any 
          of Borrower's properties; (b) Borrower has no actual or constructive 
          knowledge that there has been any use, generation, manufacture, 
          storage, treatment, disposal, release or threatened release of any 
          hazardous waste or hazardous substance by any person in, on, under or 
          about any of Borrower's properties by any prior owner or occupant of 
          any of Borrower's properties; and (c) Borrower has no actual or 
          constructive notice of any actual or threatened litigation or claims 
          of any kind by any person relating to such matters. The terms 
          'hazardous waste(s), hazardous substance(s),"disposal," "release," 
          and threatened release as used in this Agreement shall have the same 
          meanings as set forth in the Comprehensive Environmental Response,
          Compensation, and Liability Act of 1980, as amended, 42 U.S.C. 
          Section 9601, et seq., the Superfund Amendments and Re authorization 
          Act of 1986, as amended, Pub. L. No. 99-499, the Hazardous Materials 
          Transportation Act, as amended, 49 U.S. C. Section 1801, et seq., 
          the Resource Conservation and Recovery Act, as amended, 49 U.S.C. 
          Section 6901, et seq., or other applicable state or federal laws, 
          rules or regulations adopted pursuant to any of the foregoing.

    +3.9  Each chief place of business of Borrower, and the office or offices 
          where Borrower keeps its records concerning any of the collateral, 
          is located at:

4.  Affirmative Covenants. So long as credit granted under this Agreement is
    available and until full and final payment of all sums outstanding under 
    this Agreement and promissory note(s) Borrower will:

    +4.1  Use the proceeds of the loans covered by this Agreement only in 
          connection with Borrower's business activities and exclusively for 
          the following purposes:

    +4.2  Maintain current assets in an amount at least equal to 1.30 times 
          current liabilities, and not less than $ 1.000.000 in excess thereof. 
          Current assets and current liabilities shall be determined in 
          accordance with generally accepted accounting principles and 
          practices, consistently applied;

    +4.3  Maintain a tangible net worth of at least S. 2,000,000 and not permit
          Borrower's total indebtedness which is not subordinated in a manner 
          satisfactory to Bank to exceed 2.4 times Borrower's tangible net 
          worth. Tangible net worthy means the excess of total assets over total
          liabilities, excluding, however, from the determination of total 
          assets (a) all assets which should be classified as intangible assets 
          such as goodwill, patents, trademarks, copyrights, franchises, and 
          deferred charges (including unamortized debt discount and research and
          development costs), (b) treasury stock, (c) cash held in a sinking or 
          other similar fund established for the purpose of redemption or other 
          retirement of capital stock, (d) to the extent not already deducted 
          from total assets, reserves for depreciation, depletion, obsolescence 
          or amortization of properties and other reserves or appropriations of

<PAGE>


     hazardous wastes and hazardous substances contained in section 3.8, or
     (ii) section 5.8. The provisions of this section 6 shall survive the full
     and final payment of all sums outstanding under this Agreement and 
     promissory notes and shall not be affected by Bank's acquisition of any
     interest in any of the Borrower's properties, whether by foreclosure or 
     otherwise.

7.   EVENTS OF DEFAULT. The occurrence of any of the following events (events of
     Default") shall terminate any and all obligations on the part of Bank to
     make or continue the loan and/or line of credit and, at the option of Bank,
     shall make all sums of interest and principal outstanding under the loan
     and/or line of credit immediately due and payable, without notice of 
     default, presentment or demand for payment, protest or notice of non
     payment or dishonor, or other notices or demands of any kind or character,
     all of which are waived by Borrower, and Bank may proceed with collection
     of such obligations and enforcement and realization upon all security which
     it may hold and to the enforcement of all fights hereunder or at law:

     7.1  The Borrower shall fail to pay when due any amount payable by it
          hereunder on any loans or notes executed in connection herewith;

     7.2  Borrower shall fail to comply with the provisions of any other
          covenant, obligation or term of this Agreement for a period of
          fifteen (15) days after the earlier of written notice thereof shall
          have been given to the Borrower by Bank or Borrower or any
          Guarantor has knowledge of an Event of Default or an event that can
          become an Event of Default;

     7.3  Borrower shall fail to pay when due any other obligation for 
          borrowed money, or to perform any term or covenant on its part to be 
          performed under any agreement relating to such obligation or any such
          other debt shall be declared to be due and payable and such failure
          shall continue after the applicable grace period;

     7.4  Any representation or warranty made by Borrower in this Agreement or
          in any other statement to Bank shall prove to have been false or
          misleading in any material respect when made;

     7.5  Borrower makes an assignment for the benefit of creditors, files a
          petition in bankruptcy, is adjudicated insolvent or bankrupt, 
          petitions to any court for receiver or trustee for Borrower or any
          substantial part of its property, commences any proceeding relating
          to the arrangement, readjustment, reorganization or liquidation under
          any bankruptcy or similar laws, or if there is commenced against 
          Borrower any such proceedings which remain undismissed for a period
          of thirty (30) days or, if Borrower by any act indicates its consent
          or acquiescence in any such proceeding or the appointment of any such
          trustee or receiver;

    +7.6  Any judgment attaches against Borrower or any of its properties for an
          amount in excess of $25,000 which remains unpaid, unstayed on appeal,
          unbonded, or undismissed for a period of thirty (30) days;

     7.7  Loss of any required government approvals, and/or any governmental
          regulatory authority takes or institutes action which, in the opinion
          of Bank, will adversely affect Borrower's condition, operations or
          ability to repay the loan and/or line of credit;

     7.8  Failure of Bank to have a legal, valid and binding first lien on, or
          a valid and enforceable prior perfected security interest in, any
          property covered by any deed of trust or security agreement required
          under this Agreement;

     7.9  Borrower dies, becomes incompetent, or ceases to exist as a going
          concern;

     7.10 Occurrence of an extraordinary situation which gives Bank reasonable
          grounds to believe that Borrower may not, or will be unable to, 
          perform its obligations under this or any other agreement between Bank
          and Borrower; or

     7.11 Any of the preceding events occur with respect to any guarantor of
          credit under this Agreement, or such guarantor dies or becomes
          incompetent, unless the obligations arising under the guaranty and
          related agreements have been unconditionally assumed by the 
          guarantor's estate in a manner satisfactory to Bank.

8.   SUCCESSORS; WAIVERS. Notwithstanding the Events of Default above, this
     Agreement shall be binding upon and inure to the benefit of Borrower
     and Bank, their respective successors and assigns, except that 
     Borrower may not assign its rights hereunder. No consent or waiver 
     under this Agreement shall be effective unless in writing and signed by
     the Bank and shall not waive or affect any other default, whether prior
     or subsequent thereto, and whether of the same or different type. No
     delay or omission on the part of the Bank in exercising any right shall
     operate as a waiver of such right or any other right.

9.   Arbitration.

     9.1  At the request of either Bank or Borrower any controversy or claim
          between the Bank and Borrower, arising from or relating to this 
          Agreement or any Loan Document executed in connection with this 
          Agreement or arising from any alleged tort shalt be settled by
          arbitration in King County Washington. The United States Arbitration
          Act will apply to the arbitration proceedings which will be 
          administered by the American Arbitration Association under its
          commercial rules of arbitration except that unless the amount of
          the claim(s) being arbitrated exceeds $5,000,000 there shall be only
          one arbitrator. Any controversy over whether an issue is arbitrable
          shall be determined by the arbitrator(s). Judgment upon the 
          arbitration award may be entered in any court having jurisdiction.
          The institution and maintenance of any action for judicial relief
          or pursuit of a provisional or ancillary remedy shall not constitute
          a waiver of the fight of either party, including plaintiff, to submit
          the controversy or claim to arbitration if such action for judicial
          relief is contested.

          For purposes of the application of the statute of limitations the 
          filing of an arbitration as provided herein is the equivalent of 
          filing a lawsuit and the arbitrator(s) will have the authority to 
          decide whether any claim or controversy is barred by the statute of 
          limitations, and if so, to dismiss the arbitration on that basis. 
          The parties consent to the joinder in the arbitration proceedings of 
          any guarantor, hypothecator or other party having an interest related
          to the claim or controversy being arbitrated.

     9.2  Notwithstanding the provisions of Section 9.1, no controversy or 
          claim shall be submitted to arbitration without the consent of all
          parties if at the time of the proposed submission, such controversy
          or claim arises from or relates to an obligation secured by real
          property;

     9.3  No provision of this Section 9 shall limit the right of the Borrower
          or the Bank to exercise self-help remedies such as setup foreclosure
          or sale of any collateral, or obtaining any ancillary provisional or
          interim remedies from a court of competent jurisdiction before, after
          or during the pendency of any arbitration proceeding. The exercise of
          any such remedy does not waive the right of either party to request
          arbitration. At Bank's option foreclosure under any deed of trust may
          be accomplished by exercise of the power of sale under the deed of
          trust or judicial foreclosure as a mortgage.

10.  COLLECTION ACTIVITIES, LAWSUITS AND GOVERNING LAW. Borrower agrees to pay
     Bank all costs and expenses (including reasonable attorney's fees and the
     allocated cost for in-house legal services incurred by Bank), to enforce 
     this Agreement, any notes or any Loan Documents pursuant to this Agreement,
     whether or not suit is instituted. If suit is instituted by Bank to enforce
     this Agreement or any of these documents, Borrower consents to the personal
     jurisdiction of the Courts of the State of Washington and Federal Courts 
     located in the State of Washington. Borrower further consents to the venue
     of this suit, being laid in King County, Washington. This Agreement and any
     notes and security agreements entered into pursuant to this Agreement shall
     be construed in accordance with the laws of the State of Washington.

+11. ADDITIONAL PROVISIONS. This Agreement supersedes all oral negotiations or
     agreements between Bank and Borrower with respect to the subject matter 
     hereof and constitutes the entire understanding and Agreement of the 
     matters set forth in this Agreement.

     11.1 If any provision of this Agreement is held to be invalid or 
          unenforceable,then (a) such provision shall be deemed modified if 
          possible, or if not possible, such provision shall be deemed 
          stricken, and (b) all other provisions shall remain in full force 
          and effect.

     11.2 If the imposition of or any change in any law, rule, or regulation
          guideline or the interpretation or application of any thereof by any
          court of administrative or governmental authority (including any
          request or policy whether or not having the force of law) shall
          impose or modify any taxes (except U.S. federal, state or local 
          income or franchise taxes imposed on Bank), reserve requirements,
          capital adequacy requirements or other obligations which would: (a)
          increase the cost to Bank for extending or maintaining any loans 
          and/or line of credit to which this Agreement relates, (b) reduce
          the amounts payable to Bank under this Agreement, such notes and
          other instruments, or (c) reduce the rate of return on Bank's 
          capital as a consequence of Bank's obligations with respect to any
          loan and/or line of credit to which this Agreement relates, then
          Borrower agrees to pay Bank such additional amounts as will 
          compensate Bank therefor, within five (5) days after Bank's written
          demand for such payment, which demand shall be accompanied by an
          explanation of such imposition or charge and a calculation in 
          reasonable detail of the additional amounts payable by Borrower,
          which explanation and calculations shall be conclusive, absent
          manifest error.

     11.3 Bank may sell participations in or assign this loan in whole 
          or in part without notice to Borrower and Bank may provide 
          information regarding the Borrower and this Agreement to any 
          prospective participant or assignee. If a participation is sold or 
          the loan is assigned the purchaser will have the 


<PAGE>


          right of set off against the Borrower and may enforce its interest
          in the Loan irrespective of any claims or defenses the Borrower may
          have against the Bank.

12.  NOTICES. Any notices shall be given in writing to the opposite 
     party's signature below or as that party may otherwise specify in 
     writing.

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


This Business Loan Agreement (Parts A and B) executed by the parties on March
26, 1996. Borrower acknowledges having read all of the provisions of this 
Agreement and Borrower agrees to its terms.



SEATTLE-FIRST NATIONAL BANK S & E Commercial Team #1
                            ________________________
                                     (Branch/Office)

By: /s/ James R. Dean  Title: Vice President
____________________________  ______________


Address: P.O.Box 1446  City,State,Zip: Spokane, WA 99210
         ____________                  _________________


Phone: (509) 353-1480 Fax: (509) 353-1492
       _____________       ______________


The Coeur d'Alenes Company and Union Iron Works. Inc. of Spokane. WA
____________________________________________________________________
                       (Borrower Name)


By: /s/ Marilyn Schroeder          Title: Treasurer
    ______________________________        _________


Address: P. O. Box 2610 City,State, Zip: Spokane. WA 99220
         ______________                  _________________


Phone: (509) 924-6363 Fax: (509) 924-6924
       ______________      ______________


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[LOGO]


                                                   Loan No. 604938 and 453817-9
                                PROMISSORY NOTE

$1,688,000.00                                                December 20, 1995
                                                            Seattle, Washington

FOR VALUE RECEIVED, the undersigned ("Maker") promise(s) to pay to the order 
of SEATTLE-FIRST NATIONAL BANK, a national banking association ("Lender"), at 
its principal office in Seattle, Washington, or at such other place or places 
or to such other party as the "molder" (defined below) of this Note may from 
time to time designate in writing, the principal sum of ONE MILLION SIX 
HUNDRED EIGHTY-EIGHT THOUSAND AND NO/00 DOLLARS ($ 1,688,000.00), or so much 
thereof as may be advanced, in lawful money of the United States of America, 
together with interest thereon, on the following agreements, terms and 
conditions. The term "Holder" as used in this Note means Lender or any future 
holder of this Note, and their successors and assigns. 

    1.  TERM. This Note shall have an initial term (the "CONSTRUCTION TERM") 
expiring ten (10) months from the first day of the first calendar month 
following the initial advance by the Holder under this Note. The last day of 
the Construction Term is referred to in this Note as the "MATURITY DATE". If 
Maker is not then in default under this Note or any other documents or 
instruments executed by Maker in connection with the loan (the "LOAN") 
evidenced by this Note (collectively with this Note, the "LOAN DOCUMENTS"), 
on or before the last day of the Construction Term, the Loan shall convert to 
a permanent loan (the "PERMANENT LOAN") if Maker has complied with the 
following conditions, and with all other conditions as may be specified in 
any other Loan Document: 

    (a) Maker shall have provided the Holder with current financial 
statements of Maker, any general partner in Maker and any guarantor of the 
Loan, each certified as correct by the appropriate party, showing no material 
adverse change in any such person's or entity's financial condition from the 
date of this Note, and otherwise acceptable to the Holder in its sole 
discretion; 

    (b) Maker is not then in default under this Note or any other Loan Document,

    (c)  The improvements to be constructed with the proceeds of the Loan 
shall have been completed in accordance with the plans and specifications for 
the improvements approved by Lender and a certificate of occupancy shall have 
been issued by the applicable governmental authority allowing the use and 
occupancy of the improvements for their intended purposes; and 

    (d) Maker shall have complied with such other conditions to the 
conversion as the Holder may reasonably require and specify in writing prior 
to the date of the conversion. 

    If the Loan is converted to the Permanent Loan as provided above, the 
Maturity Date shall be extended to that date which is one hundred twenty 
(120) months from the first day of the first calendar month following the 
date of the conversion unless otherwise agreed in writing by the Holder. 

    2.  INTEREST. Interest shall commence to run on each advance under this 
Note from the date of the advance and will be computed on the outstanding 
balance of this Note as it exists from time to time at the interest rates 
provided for in subparagraphs 2(a) and 2(b) below, as applicable. After 
maturity, or after default, interest shall accrue on the outstanding 
principal balance of this Note at an interest rate equal to four percentage 
points (4%) per annum above the interest rate otherwise applicable to this 
Note. 

    (a) CONSTRUCTION TERM INTEREST. During the Construction Term, the 
principal balance of this Note shall bear interest at a per annum interest 
rate equal to the sum of the publicly

<PAGE>

announced prime rate (the "PRIME RATE") of Lender, as the same may change 
from time to time, plus three hundred twenty-five one- thousandths of one 
percentage point (0.325%) per annum. Interest rate adjustments caused by 
changes to the Prime Rate shall be effective the same day as the adjustments 
to the Prime Rate are effective. Interest on this Note during the 
Construction Term shall be computed on the basis of a 360-day year and the 
actual number of days elapsed in the period for which interest is payable. 

    (b) PERMANENT LOAN INTEREST. If the Loan converts to the Permanent Loan, 
interest shall accrue on the principal balance of this Note either at a 
variable interest rate as provided in subparagraph 2(b)(i) below (the 
"VARIABLE RATE"), or at a fixed interest rate as provided in subparagraph 
2(b)(ii) below (the "FIXED RATE"). After conversion to the Permanent Loan, 
interest on this Note shall be calculated using a 30-day month and a 360-day 
year. 

        (i) VARIABLE RATE. Unless Maker elects to have interest calculated at 
the Fixed Rate pursuant to subparagraph 2(b)(ii) below, interest shall accrue 
on the principal balance of this Note at the Variable Rate. The initial 
Variable Rate shall be equal to the "LIBOR INDEX" (defined below) as of the 
date the Loan converts to the Permanent Loan, plus two and three-fourths 
percentage points (2.750%) per annum, rounded to the next highest one-eighth 
of one percent (0.125%). The Variable Rate, if applicable, will change five 
(5) months after the first payment date stated in subparagraph 3(b) below, 
and every sixth (6th) month thereafter (each such date being referred to in 
this Note as an "INTEREST CHANGE DATE"). 

            (1) LIBOR Index - Current Index - Changes in the Variable Rate 
will be based on changes in the 180-day LIBOR as defined below (the "LIBOR 
Index"). If the LIBOR Index is no longer available, the Holder will choose a 
new index based upon comparable information and give Maker notice of the 
choice. The most recently available LIBOR Index fifteen (15) Business Days 
before each Interest Change Date is the "Current Index" . 
 
            (2) Calculation of Variable Rate - Before each Interest Change 
Date, if applicable, the Holder will calculate the new Variable Rate which 
shall be equal to the Current Index, plus two and three-fourths percentage 
points (2.750%) per annum, rounded to the next highest one-eighth of one 
percent (0.125%). This new interest rate will be the Variable Rate until the 
next Interest Change Date. 
 
            (3) LIBOR means the London Interbank Offer Rate, adjusted at the 
Holder's option for statutory reserves, deposit insurance, regulatory 
capital, taxes and assessments, if any, and is the average of the rates of 
interest, on a per annum basis, at which deposits in United States dollars 
having a term of 180 days are offered by major banks in immediately available 
funds to prime banks in the London Interbank market at 11:00 A.M. (London 
time) on the date the Loan converts to a Permanent Loan, for the day which is 
fifteen (15) Business Days prior to the applicable Interest Change Date, as 
applicable. This rate is reported on Telerate, a national and international 
medium which provides interest rate quotations daily, as quoted by the 
British Bankers Association as Interest Settlement Rates on page 3750 (or 
such other page as may replace it). Such interest rate quotation, as provided 
by Telerate, shall be deemed conclusive and final with respect to LIBOR 
determinations for so long as Telerate continues to make such interest rate 
reports. If Telerate or the British Bankers Association report is no longer 
available for 180-day maturities, a comparable publication or report 
containing such information selected by the Holder will be used. If there is 
no such publication or comparable publication containing such information, 
the 180-day LIBOR shall be the average rate (rounded if necessary to the 
nearest one-thousandth of a percent) at which dollar deposits having a 
maturity of 180 days are offered by at least two major banks in an interbank 
market where Eurodollars are being traded to prime banks in immediately 
available funds on the LIBOR determination date described above or as soon 
thereafter as such offer quotes can be obtained.

            (4) Business Day means a day on which commercial banks are 
generally open for business in Seattle, Washington and London, England. 

            (5) The amount of adjustment for reserves, deposit insurance, 
regulatory capital, taxes and assessments may change on any Interest Change 
Date depending on such charges then being assessed against the Holder. Such 
charges may change due to various factors, 

                                       2

<PAGE>

including but not limited to, changes in the requirements for reserves and 
capital adequacy promulgated by the Federal Reserve System of the United 
States and/or other state and federal regulatory agencies, statutory changes 
affecting the Holder, and/or imposition of taxes, FDIC fees and/or 
assessments. Each determination of an adjustment amount shall be made by the 
holder in its sole and absolute discretion and shall be conclusive and 
binding upon Maker and shall be determined without benefit of or credit for 
prorations, exceptions or offsets that may be available to the Holder frown 
time to time. 

       (ii) FIXED RATE. Prior to the date the Loan converts to the Permanent 
Loan, Maker may elect by written notice to the Holder to have interest on the 
entire principal amount of this Note calculated for the entire term of the 
Permanent Loan at a Fixed Rate, as provided below. Further, so long as Maker 
is not in default under the terms of this Note or any Loan Document, at any 
time after the Loan converts to the Permanent Loan, Maker at its option, and 
upon the payment of a fee to the Holder equal to 0.250% of the then 
outstanding principal balance of this Note (or $500.00, whichever is 
greater), may elect by written notice to the Holder to have interest 
calculated on the entire principal balance of this Note at a Fixed Rate 
calculated as provided below for the remainder of the term of the Permanent 
Loan. Maker's ability to fix the interest rate on this Note pursuant to this 
subparagraph 2(b)(ii) is subject to the availability to the Holder of 
matchfunding opportunities for a time period equivalent to the term of this 
Note following the date of Maker's election to fix the interest rate. 

            (1) Calculation of Fixed Rate - If Maker elects to have a Fixed 
Rate apply to this Note, interest shall accrue on the principal balance of 
this Note at a per annum rate equal to Lender's reserve adjusted "FIXED RATE 
INDEX" as quoted by Lender on the date the interest rate is converted to the 
Fixed Rate, for a period equivalent to the term of the Permanent Loan (or 
remainder thereof, as applicable), plus two and thirty-three one-hundredths 
percentage points (2.330%) per annum, rounded upward to the next highest 
one-eighth of one percent (0.125%). The Fixed Rate Index may be adjusted at 
the Holder's option to reflect statutory reserves, deposit insurance, 
regulatory capital, taxes and assessments, if any, as set forth in 
subparagraph 2(b)(i)(5) above. 

            (2) Date of Conversion - The interest rate will be converted to 
the Fixed Rate on the date the Holder receives Maker's written notice 
electing the Fixed Rate option, provided such notice is received before noon, 
Seattle time, on a Business Day, and the fee payable in connection with the 
election has been received by Holder. If notice is received by Holder after 
noon, Seattle time, on a Business Day, the interest rate applicable to this 
Note will convert to a Fixed Rate on the next Business Day. For purposes of 
this subparagraph 2(b)(ii)(2) only, the term "BUSINESS DAY" means a day on 
which commercial banks are generally open for business in Seattle, 
Washington. 

    3. PAYMENTS.

       (a) CONSTRUCTION TERM PAYMENTS. During the Construction Term, Maker 
shall make monthly payments of interest on this Note as it accrues. Payments 
shall be due on the first day of each calendar month during the Construction 
Term, commencing on the first day of the first calendar month following the 
initial advance by the Holder under this Note. 

       (b) PERMANENT LOAN PAYMENTS. If the Loan converts to the Permanent 
Loan, Maker shall make monthly payments of principal and interest to the 
Holder, in amounts sufficient to fully amortize the principal balance of this 
Note over a twenty (20) year amortization period in substantially equal 
payments, based on the interest rate applicable to this Note, calculated as 
provided below. Such monthly payments of principal and interest shall be due 
on the first day of each calendar month during the term of the Permanent 
Loan, commencing on the first day of the second calendar month following the 
month in which the Loan converts to the Permanent Loan. The monthly payments 
required on this Note following conversion to the Permanent Loan shall be 
calculated as follows: 

           (i) VARIABLE RATE PAYMENTS. If interest is accruing on this Note 
at a Variable Rate, the amount of the initial monthly payments shall be in an 
amount sufficient to fully amortize the principal balance of this Note at the 
initial Variable Rate, in substantially equal monthly 

                                       3

<PAGE>

payments over the amortization period specified above. Promptly after the 
Loan converts to the Permanent Loan, the Holder will provide Maker with a 
closing statement (or other written notice) which will confirm the initial 
Variable Rate and the amount of the initial principal and interest payments 
due under this Note. The monthly payment will change after each Interest 
Change Date to an amount sufficient to repay the then unpaid principal 
balance of this Note in full at the then current interest rate, in 
substantially equal monthly payments over the balance of the amortization 
period specified above. Until the payment is again changed, Maker shall pay 
the new monthly payment each month beginning on the first day of the first 
calendar month after the applicable Interest Change Date. The Holder will 
mail or deliver to Maker a notice of any changes in the interest rate 
applicable to this Note, and any resulting changes in the monthly payments 
required under this Note, prior to the date the first payment is due after 
the applicable Interest Change Date. 

          (ii) FIXED RATE PAYMENTS. If interest is accruing on this Note at a 
Fixed Rate, the amount of the monthly payments shall be in an amount 
sufficient to fully amortize the principal balance of this Note at the 
applicable Fixed Rate, in substantially equal monthly payments over the 
amortization period specified above, or the remainder thereof, as applicable. 
The applicable Fixed Rate and the amount of the monthly principal and 
interest payments due under this Note shall be confirmed in writing by the 
Holder (either pursuant to a closing statement or other written notice) after 
the interest rate is Fixed and prior to the date the first payment is due at 
the Fixed Rate. 

       (c) GENERAL. At the option of the Holder, all payments under this 
Note, including payment at maturity, shall be made in same day funds. On the 
Maturity Date (as the same may be extended as provided in this Note), the 
unpaid principal balance of this Note, all unpaid accrued interest and all 
other sums then due and owing pursuant to this Note or any other Loan 
Document shall be due and payable in full. Each payment shall be applied 
first, at Holder's option, to any unpaid late charges or other sums payable 
by Maker under this Note or any other Loan Document, then to interest to the 
due date of the payment, and then to the principal balance of this Note. 

    4. AUTOMATIC WITHDRAWAL. The payments on this Note and any other sums 
secured by the Deed of Trust Will be deducted on the first (lst) day of each 
month from Seafirst Deposit Account No. 68351402, or such other Seafirst 
Deposit Account as may be authorized in the future. 

    5. LATE CHARGES; RETURNED ITEM FEE. If any payment due hereunder is not 
received by the Holder within fifteen (15) days of the due date, at the 
option of the Holder without waiving such default or any of its remedies, a 
late charge shall be added to the delinquent payment in the amount of four 
percent (4%) of the full payment not timely paid. Any such late charge shall 
be due and payable on demand, and the Holder, at its option, may (a) refuse 
any late payment or any subsequent payment unless accompanied by the 
applicable late charge, (b) add the late charge to the principal balance of 
this Note, (c) pay any late charge with advances of the undisbursed proceeds 
of the Loan, if any, or (d) treat the failure to pay the late charge as 
demanded as a default under this Note. If a late charge is added to the 
principal balance of this Note, it shall bear interest at the same rate as 
the principal balance of this Note. Any payment to Holder by check, draft or 
other item shall be received by Holder subject to collection and will 
constitute payment when collected not when received. For each "nsf" or 
returned check, draft or other item, in addition to any applicable late 
charge, Maker shall pay to the Holder on demand a returned item fee in 
accordance with the Holder's schedule of such fees then in effect. 

    6. PREPAYMENT. During the Construction Term, and thereafter, so long as 
interest is calculated on this Note at a Variable Rate, this Note may be 
prepaid in whole or in part, at any time, without payment of a prepayment 
fee. During any period when a Fixed Rate is applicable to this Note, this 
Note may be prepaid only as set forth in EXHIBIT A attached. Partial 
prepayments, if permitted, shall not postpone nor reduce the amount of the 
monthly payments required under this Note. 

    7. DEFAULT. After a default under any of the Loan Documents, or if Maker 
fails to make any payment under this Note when due, the Holder, at its 
option, without notice to Maker (except as provided below), may declare the 
entire principal balance of this Note and all unpaid accrued interest thereon 
and other charges payable by Maker pursuant to this Note or any other Loan 

                                       4

<PAGE>

Document immediately due and payable in full, and the Holder may exercise any 
and all other rights or remedies available to it under any Loan Document, at 
law or in equity. Any additional interest due because of a default shall 
accrue from the date of default and shall be paid as a condition to the 
curing of the default. Notwithstanding the foregoing, the Holder will not 
accelerate the Maturity Date (a) because of a monetary default by Maker under 
this Note or any other Loan Document unless the default is not cured within 
ten (10) days of the date on which the Holder mails or delivers written 
notice of the default to Maker, or (b) because of a nonmonetary default by 
Maker under this Note or any other Loan Document unless the default is not 
cured within thirty (30) days of the date on which the Holder mails or 
delivers written notice of the default to Maker. For purposes of this Note, 
the term "monetary default" means a failure by Maker to make any payment 
required pursuant to this Note or any other Loan Document, and the term 
"nonmonetary default" shall mean a failure by Maker to perform any obligation 
contained in this Note or any other Loan Document, other than the obligation 
to make the payments provided for in this Note or any other Loan Document. If 
the nonmonetary default is capable of being cured and cannot reasonably be 
made within the thirty (30) day cure period, the cure period shall be 
extended up to ninety (90) days so long as Maker has commenced action to cure 
within the thirty (30) day cure period, and in the Holder's opinion, Maker is 
proceeding to cure the default with due diligence. None of the foregoing 
shall be construed to obligate the Holder to forbear in any other manner from 
exercising its remedies and the Holder may pursue any other rights or 
remedies which the Holder may have because of the default. 

    8. CUMULATlVE REMEDIES. The rights and remedies of any Holder under this 
Note or any other Loan Document, or at law or in equity, shall be cumulative 
and concurrent, may be pursued singly, successively or together against 
Maker, any guarantor of this Note, or any security for this Note. A failure 
by any Holder to exercise its option to accelerate this Note upon the 
occurrence of a default or to exercise any other rights to which it may be 
entitled shall not constitute a waiver of the right to exercise such option 
or any such rights in the event of any subsequent default, whether of the 
same or a different nature. 

    9. WAIVERS. Maker and all endorsers, guarantors and all other persons or 
entities who may become liable for all or any part of the obligations 
evidenced by this Note, jointly and severally: waive diligence, presentment, 
protest and demand, and also notice of protest, demand, non-payment, dishonor 
or maturity and also recourse to suretyship defenses generally; and consent 
to any and all renewals, extensions and modifications of the terms of this 
Note or any other Loan Document, including the time for payment, and agree 
any such renewal, extension or modification or the release or substitution of 
any security for the indebtedness evidenced by this Note or any other 
indulgences, shall not affect the liability of said parties for the 
indebtedness evidenced by this Note. Any such renewals, extensions, 
modifications, releases or indulgences may be made without notice to such 
parties. 

    10. COSTS AND EXPENSES. Whether or not suit is brought Maker shall pay on 
demand all costs and expenses, including attorneys' fees and costs and 
allocated costs of in-house legal counsel, incurred by or on behalf of the 
Holder in connection with this Note, including without limitation costs 
incurred in the collection of this Note, in protecting the security for this 
Note or in foreclosing or enforcing this Note or any other Loan Document, or 
resulting from the Holder being made a party to any litigation because of the 
existence of this Note or any other Loan Document. Without limiting the 
generality of the foregoing, if Maker becomes the subject of any bankruptcy 
or insolvency proceeding, Maker shall pay all fees and expenses incurred by 
the Holder in connection with such bankruptcy or insolvency proceeding. 

    11. MAXIMUM INTEREST. Maker represents and warrants the proceeds of this 
Note shall be used solely for commercial, investment and business purposes, 
and not for personal, family or household purposes. Notwithstanding any other 
provision of this Note or any other Loan Document, interest, loan fees and 
charges payable by reason of the indebtedness evidenced by this Note shall 
not exceed the maximum, if any, permitted by applicable law. If by virtue of 
applicable law, sums in excess of such maximum would otherwise be payable, 
then such excess sums shall be construed as having been immediately applied 
by the Holder to the principal balance of this Note when received. If at the 
time any such sum is received by the Holder, the principal balance of this 
Note has been paid in full, such sums shall be promptly refunded by the 
Holder to Maker, less any sums due to the Holder. 

                                       5

<PAGE>

    12. SECURITY. This Note is secured by a deed of trust of even date (the 
"Deed of Trust") encumbering certain real property located in Spokane County, 
Washington (the "Property"). Unless otherwise specified in this Note, all 
notices given pursuant to this Note must be in writing and will be 
effectively given if given in accordance with the terms of the Deed of Trust. 

    13. GENERAL. This Note shall be binding upon Maker and Maker's 
beneficiaries, heirs, devisees, personal representatives, successors and 
assigns. If Maker consists of more than one person or entity, all of such 
persons and entities shall be jointly and severally liable for Maker's 
obligations under this Note. This Note is governed by and shall be construed 
in accordance with the laws of the State of Washington. Each person or entity 
executing this Note consents to the non-exclusive personal jurisdiction and 
venue of the courts of the State of Washington and the United States federal 
courts located therein, in any action relating to or arising out of the 
enforcement or interpretation of this Note or any other Loan Document. Each 
such person or entity further agrees not to assert in any such action that 
the proceeding has been brought in an inconvenient forum. 

    14. ARBITRATION. Any dispute relating to this Note or the Loan (whether 
in contract or tort) shall be settled by arbitration if requested by Maker, 
the Holder or any other party to the dispute (such as a guarantor); provided, 
both Maker and the Holder must consent to a request for arbitration relating 
to an obligation secured by real property. The arbitration proceedings shall 
be held in Seattle, Washington in accordance with the commercial arbitration 
rules of the American Arbitration Association, and the United States 
Arbitration Act (i.e., Title 9, U.S.C.). There shall be one arbitrator who 
shall decide whether an issue is arbitrable or whether any claim is barred by 
a statute of limitations. Judgment on the arbitration award may be entered in 
any court having jurisdiction. Commencement of a lawsuit shall not constitute 
a waiver of the right of any party to request arbitration if the lawsuit is 
contested. Each party shall have the right before, during and after the 
commencement of any arbitration proceeding to exercise any of the following 
remedies, in any order or concurrently: (i) self-help remedies such as setoff 
or repossession; (ii) judicial or nonjudicial foreclosure against real or 
personal property collateral; and (iii) provisional remedies including 
injunction, appointment of receiver, attachment, claim and delivery and 
replevin. The exercise of any such remedy shall not waive a party's right to 
request arbitration. Nothing in this paragraph shall limit in any way any 
right the Holder may have to foreclose the Deed of Trust judicially as a 
mortgage, or nonjudicially pursuant to the power of sale. 

    15. DISPUTED OBLIGATIONS. All communications concerning disputed debts 
and obligations of Maker under this Note or any other Loan Document, 
including without limitation disputes as to the amount of any payment, fee or 
charge, and including an instrument tendered as full satisfaction of a 
disputed debt, must be in writing and must be sent to the following address, 
or to such other address as the Holder may hereafter specify: 

        Seattle-First National Bank 
        Attention: Loan Servicing Manager 
        Real Estate Group (CSC-14) 
        701 Fifth Avenue, Floor 14 
        Seattle, Washington 98104 

Any such communication should include the name of Maker, the applicable loan 
number, a description of the dispute and the relief or remedy requested, and 
an address and telephone number where the person sending the notice can be 
contacted. 

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

MAKER: 

THE COEUR D'ALENES COMPANY, an Idaho corporation 

By: Marilyn Schroeder 
    ------------------
Its: Treasurer 
    ------------------
<PAGE>

                                   EXHIBIT A 
                                   ---------
                                   PREPAYMENT 

    
     If the interest rate converts to the Fixed Rate the principal balance of 
this Note may be prepaid in whole or in part, at any time provided (i) a 
prepayment fee is paid as set forth below, (ii) each partial repayment is in 
an amount of $10,000.00 or more, and (iii) partial prepayments may be no more 
frequent than once per month. THE PREPAYMENT FEE SHALL BE DUE AND PAYABLE 
WHETHER THE PREPAYMENT IS BY VOLUNTARY PREPAYMENT, OPERATION OF LAW, 
ACCELERATION OR OTHERWISE. The amount of the prepayment fee depends on the 
following: 
 
     l . The amount by which certain "REFERENCE RATES", as defined below, 
have changed between the time this Note is prepaid and the date the interest 
rate converts to the Fixed rate. 
 
     2.  A prepayment fee factor (see "PREPAYMENT FEE FACTOR SCHEDULE" 
below). 
 
     3. The amount of principal prepaid. 
 
                           DEFINITION OF REFERENCE RATES 
 
     The "REFERENCE RATE" used to represent interest rate levels shall be the 
bond equivalent yield of the average US Treasury Securities having maturities 
equivalent to the remaining period to maturity of the Loan, rounded upward to 
the nearest month. The "INITIAL REFERENCE RATE" shall be the Reference Rate 
assigned to the Loan by the Holder at the time the interest rate converts to 
the Fixed Rate. The "FINAL REFERENCE RATE" shall be the Reference Rate 
assigned to the Loan by the Holder at the time of the prepayment. 
 
     The applicable Reference Rates shall be determined from the Federal 
Reserve Statistical Release (Publication H.15) as displayed on Page 119 of 
the Dow Jones Telerate Service (or such other page or service as may replace 
that page or service for the purpose of displaying rates comparable to said 
US Treasury Securities). If the publishing of the foregoing Statistical 
Release is ever discontinued, the applicable Reference Rate shall be based on 
the publication by the Board of Governors of the United States Federal 
Reserve System in replacement thereof, or if none, the publication which in 
the Holder's discretion most nearly corresponds. 
 
                           CALCULATION OF PREPAYMENT FEE 
 
     1. If the Initial Reference Rate is less than or equal to the Final 
Reference Rate, there is no prepayment fee. 

     2. If the Initial Reference Rate is greater than the Final Reference 
Rate, the prepayment fee shall be equal to the difference between the Initial 
Reference Rate and the Final Reference Rate (expressed as a decimal), 
multiplied by the appropriate factor from the Prepayment Fee Factor Schedule, 
multiplied by the principal amount of the Loan being prepaid. 

                         EXAMPLE OF PREPAYMENT FEE CALCULATION 

     An amortizing loan with remaining principal of $250,000 is fully prepaid 
with twenty-four (24) months remaining until maturity. An Initial Reference 
Rate of 9.000% was assigned to the loan at the time the loan was closed. The 
Final Reference Rate (as determined by the current 24-month US Treasury Rate 
on Page 119 of Telerate) is 7.500%. Rates therefore have dropped 1.500% since 
the loan was closed and a prepayment fee applies. A prepayment fee factor of 
1.3 is determined from Table 1 below and the prepayment fee is computed as 
follows: 

    Prepayment Fee = (0.09 - 0.075) x (1.3) x ($250,000) = $4,875.00 

                                       1

<PAGE>

                                FEE FACTOR SCHEDULES 

                           TABLE 1 - FULLY AMORTIZING LOANS 

Proportion of Remaining 
Principal Amount 
Being Prepaid 
 
                         Months Remaining to Maturity(1) 

          0     3    6    9    12   24   36   48   60   84   120  240  360 
---------------------------------------------------------------------------

90- 100%  0    .21  .36  .52   .67 1.3  1.9  2.5  3.1  4.3   5.9 10.3 13.1 
60- 89%   0    .24  .44  .63   .83 1.6  2.4  3.1  3.9  5.4   7.5 13.2 17.0 
30- 59%   0    .28  .53  .78  1.02 2.0  3.0  4.0  5.0  7.0   9.9 18.5 24.4 
 0- 29%   0    .31  .63  .92  1.22 2.4  3.7  5.0  6.3  9.0  13.4 28.3 41.8 


                           TABLE 2 - PARTIALLY AMORTIZING LOANS 
Proportion of Remaining 
Principal Amount 
Being Prepaid 

                          Months Remaining to Maturity(1) 

          0     3    6    9    12   24   36   48   60   84   120  240  360 
---------------------------------------------------------------------------

90- 100%  0    .26  .49  .71   .94 1.8  2.7  3.4  4.2   5.6  7.4 11.6 14.0 
60- 89%   0    .30  .59  .86  1.15 2.2  3.3  4.3  5.3   7.1  9.4 15.0 18.1 
30- 59%   0    .31  .63  .95  1.27 2.6  3.9  5.3  6.6   9.1 12.6 21.2 26.2 
 0- 29%   0    .31  .63  .95  1.27 2.6  4.0  5.4  7.0  10.2 15.7 33.4 46.0 

     (1)  If the remaining fixed rate period is between any two time periods 
shown in the above schedules, interpolate between the corresponding factors 
to the closest month. 


      The Holder of this Note is not required to actually reinvest the 
prepaid principal in any U.S. Government Treasury Securities, or otherwise 
prove its actual losses, as a condition to receiving a prepayment fee as 
calculated above. Maker agrees this prepayment fee is the bargained-for 
consideration to the Holder for permitting prepayment and the above is not a 
liquidated damages provision. This prepayment fee provision is to be 
interpreted in a manner that would make it enforceable to the fullest extent 
permitted by law, with any portion of the fee that is unenforceable being 
stricken or otherwise changed to cause the fee, as revised, to be enforced. 

                                       2


<PAGE>

                                 1 SEAFIRST BANK
                                 PROMISSORY NOTE

<TABLE>  
<CAPTION>

Principal       Loan Date  Maturity  Loan No.   Call  Collateral  Account  Officer  Initials
<S>             <C>        <C>       <C>        <C>   <C>         <C>      <C>      <C>
$1,850,000.00              03-01-97  18/59      AFS                         5607  
</TABLE>
References in the shaded area are for Lender's use only and do not limit the 
applicability of this document to any particular loan or item.


Borrower: THE COEUR D'ALENES COMPANY AND UNION  
          IRON WORKS, INC. OF SPOKANE, WASHINGTON  
          PO BOX 2610  
          SPOKANE, WA 99220  

Lender:   BANK OF AMERICA NW NA DOING BUSINESS AS  
          SEAFIRST BANK  
          EASTERN DIVISION TEAM #1  
          C/O CLSC-E (DOC'S)  
          PO BOX 1446 (SFC-5)  
          SPOKANE WA 99210-1630  


<TABLE>
<S>                                <C>                      <C>
Principal Amount: $1,850,000.00    0.325% Over the Index    Date of Note: March 26, 1996
</TABLE>

PROMISE TO PAY. THE COEUR D'ALENES COMPANY AND UNION IRON WORKS, INC. OF  
SPOKANE, WASHINGTON ("Borrower") promises to pay to BANK OF AMERICA NW N.A.  
DOING BUSINESS AS SEAFIRST BANK ("Lender"), or order, In lawful money of the  
United Sates of America, the principal amount of One Million Eight Hundred 
Fifty Thousand & 00/100 Dollars ($1,850,000.00) or so much as may be 
outstanding,  together with Interest on the unpaid outstanding principal 
balance untill paid in full.  

PAYMENT. Borrower will pay this loan In one payment of all outstanding 
principal plus all accrued unpaid Interest on March 1, 1997. In addition, 
Borrower will  pay regular monthly payments of accrued unpaid Interest 
beginning April 1, 1996, and all subsequent Interest payments are due on the 
same day of each month after that Interest on this Note is computed on a 
365/360 simple interest basis; that is, by applying the ratio of the annual 
interest rate over a year of 360 days,  multiplied by the outstanding 
principal balance, multiplied by the actual number of days the principal 
balance is outstanding. Borrower will pay Lender at  Lender's address shown 
above or at such other place as Lender may designate in  writing. Unless 
otherwise agreed or required by applicable law, payments will be applied 
first to accrued unpaid interest, then to principal, and any remaining  
amount to any unpaid collection costs and late charges.  
 
AUTOMATIC PAYMENTS. Borrower hereby authorizes Lender to automatically deduct 
from Borrower's checking/savings account number 68351402, or such other 
Seafirst account as may be authorized in the future, the loan payment 
according to the  amount and terms of this Note. If the funds in the account 
are insufficient to  cover any payment, Lender shall not be obligated to 
advance funds to cover the payment. At any time and for any reasons Borrower 
or Lender may voluntarily terminate Automatic Payments. Our business days 
are Monday through Friday.  Payments that come due on a Saturday, Sunday or 
legal bank holiday, will be deducted on the following business day.  
 
VARIABLE INTEREST RATE. The Interest rate on This Note Is subject to change 
from time to time based on changes In an Index which Is the Lender's publicly 
announced prime rate (the "Index"). The interest rate change will not occur 
more often than each day the prime rate changes. Lender will tell Borrower the 
current Index rate upon Borrowers request. Borrower understands that Lender 
may make  loans based on other rates as well. The interest rate change will 
not occur more often than each day. The Interest rate to be applied to the 
unpaid principal balance of this Note will be at a rate of 0.325 percentage 
points over the Index. NOTICE: Under no circumstances will the interest rate 
on this Note be more than the maximum rate allowed by applicable law.  
 
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount 
owed earlier than it is due. Early payments will not, unless agreed to by 
Lender in  writing, relieve Borrower of Borrower's obligation to continue to 
make payments under the payment schedule. Rather, they will reduce the 
principal balance due and may result in Borrower's making fewer payments.  
 
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged  
5.000% of the regularly scheduled payment or $20.00 whichever is greater.  

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

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal 
balance on this Note and all accrued unpaid interest immediately due, 
without  notice, and then Borrower will pay that amount. Upon default, 
including failure to pay upon final maturity, Lender, at its option, may 
also, if permitted under applicable law, do one or both of the following: (a) 
increase the variable  interest rate on this Note to 2.325 percentage points 
over the Index, and (b) add any unpaid accrued interest to principal and 
such sum will bear interest therefrom untill paid at the rate provided in this 
Note (including any increased  rate). The interest rate will not exceed the 
maximum rate permitted by applicable law. Lender may hire or pay someone 
else to help collect this Note if Borrower does not pay. Borrower also will 
pay Lender that amount. This includes, subject to any limits under applicable 
law Lender's attorneys' fees and Lender's legal expenses whether or not there 
is a lawsuit, including attorneys' fees and legal expenses for bankruptcy 
proceedings (including efforts to modify or vacate any automatic stay or 
injunction), appeals, and any anticipated postjudgment  collection services. 
If not prohibited by applicable law, Borrower also will pay any court costs, 
in addition to all other sums provided by law. This Note has been delivered 
to Lender and accepted by Lender In the State of Washington. If there is a 
lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction 
of the courts situated In King County, the State of Washington This Note 
shall be governed by and construed in accordance with the laws of the State 
of Washington.  
 
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances 
under this Note, as well as directions for payment from Borrowers accounts, 
may be requested orally or in writing by Borrower or by an authorized 
person. Lender may, but need not, require that all oral requests be 
confirmed in writing. The following party or parties are authorized to 
request advances under the line of credit untill Lender receives from Borrower 
at Lender's address shown above  written notice of revocation of their 
authority: JIMMIE T G COULSON and MARILYN SCHROEDER. Borrower agrees to be 
liable for all sums either: (a) advanced in accordance with the instructions 
of an authorized person or (b) credited to any of Borrowers accounts with 
Lender. The unpaid principal balance owing on this Note at any time may be 
evidenced by endorsements on this Note or by Lender's  internal records, 
including daily computer print-outs. Lender will have no  obligation to 
advance funds under this Note if: (a) Borrower or any guarantor is in default 
under the terms of this Note or any agreement that Borrower or any  guarantor 
has with Lender, including any agreement made in connection with the  signing 
of this Note; (b) Borrower or any guarantor ceases doing business or is 
insolvent; (c) any guarantor seeks, claims or otherwise


<PAGE>

                                 PROMISSORY NOTE                     Page 2
                                   (Continued)

attempts to limit modify or revoke such guarantor's guarantee of this Note or 
any other loan with Lender; (d) Borrower has applied funds provided pursuant 
to this Note for purposes other than those authorized by Lender; or (e) 
Lender in good  faith deems itself insecure under this Note or any other 
agreement between  Lender and Borrower. 

STATUTE OF FRAUDS PROVISION. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN 
MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT 
ENFORCEABLE UNDER WASHINGTON LAW.  
 
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or  
remedies under this Note without losing them.  Borrower and any other person 
who signs, guarantees or endorses this Note, to the extent allowed by law, 
waive  presentment, demand for payment, protest and notice of dishonor. Upon 
any change in the terms of this Note, and unless otherwise expressly stated 
in writing, no party who signs this Note, whether as maker, guarantor, 
accommodation maker or  endorser, shall be released from liability. All such 
parties agree that Lender  may renew, extend (repeatedly and for any length 
of time) or modify this loan,  with the consent of Borrower, or release any 
party or guarantor; or impair, fail to realize upon or perfect Lender's 
security interest in the collateral; and  take any other action deemed 
necessary by Lender without the consent of or  notice to anyone.  
 
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO  THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY 
OF THE NOTE. 

BORROWER:  

THE COEUR D'ALENES COMPANY AND UNION IRON WORKS, INC. OF SPOKANE, WASHINGTON  

By: /S/ Marilyn Schroeder                      By: /S/ Marilyn Schroeder  
 ..........................                     ...........................
THE COEUR D'ALENES COMPANY                     UNION IRON WORKS, INC. OF 
                                               SPOKANE, WASHINGTON 

<PAGE>

                                     [LOGO]

                                PROMISSORY NOTE

<TABLE>
-----------------------------------------------------------------------------------------
  PRINCIPAL  LOAN DATE  MATURITY  LOAN NO  CALL  COLLATERAL  ACCOUNT   OFFICER  INITIALS
 <S>         <C>       <C>        <C>      <C>   <C>        <C>        <C>      <C>
 $250,000.00           09-30-2003          AFS              1701484046  85607
-----------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the 
applicability of this document to any particular loan or item.
-----------------------------------------------------------------------------------------
</TABLE>

Borrower: THE COEUR D'ALENES COMPANY    Lender:   BANK OF AMERICA NW NA  D/B/A
          AND UNION IRON WORKS, INC OF            SEAFIRST BANK
          SPOKANE, WASHINGTON                     EASTERN DIVISION TEAM #1
          PO BOX 2610                             C/O CLSC-E (DOC'S)
          SPOKANE WASHINGTON 99220                P.O. BOX 1446 (SFC-5)
                                                  SPOKANE, WASHINGTON 99210-1630

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

Principal Amount: $250,000.00      0.500% Over the Index      Date of Note:
                                                              September 17, 1996

PROMISE TO PAY. THE COEUR D'ALENES COMPANY AND UNION IRON WORKS, INC OF SPOKANE,
WASHINGTON ("Borrower") promises to pay to BANK OF AMERICA NW NA D/B/A SEAFIRST
BANK ("Lender"), or order, in lawful money of the United States of America, the
principal amount of Two Hundred Fifty Thousand & 00/100 Dollars (S250,000.00),
together with interest on the unpaid principal balance until paid in full.

PAYMENT. Subject to any payment changes resulting from changes in the Index,  
Borrower will pay this loan In 84 payments of S4,018.38 each payment. Borrower's
first payment is due October 30, 1996, and all subsequent payments are due on  
the same day of each month after that. Borrower's final payment will be due on
September 30, 2003, and will be for all principal and all accrued Interest not
yet paid. Payments Include principal and Interest. Interest on this Note is
computed on a 365/360 simple interest basis, that is, by applying the ratio of
the annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid  
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.

AUTOMATIC PAYMENTS. Borrower hereby authorizes Lender to automatically deduct
from Borrower's checking/savings account number 68351402, or such other Seafirst
account as may be authorized in the future, the loan payment according to the
amount and terms of this Note. If the funds in the account are insufficient to
cover any payment, Lender shall not be obligated to advance funds to cover the
payment. At any time and for any reasons, Borrower or Lender may voluntarily
terminate Automatic Payments. Our business days are Monday through Friday.
Payments that come due on a Saturday, Sunday or legal bank holiday, will be 
deducted on the following business day.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes. In an Index which is the Lender's publicly  
announced prime rate (the "Index"). The interest rate change will not occur more
often than each day the prime rate changes Lender will tell Borrower the current
Index rate upon Borrower's request. Borrower understands that Lender may make  
loans based on other rates as well. The interest rate change will not occur more
often than each day. The Interest rate to be applied to the unpaid principal  
balance of this Note will be at a rate of 0.500 percentage points over the  
Index. NOTICE: Under no circumstances will the interest rate on this Note be  
more than the maximum rate allowed by applicable law.  

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in 
writing, relieve Borrower of Borrower's obligation to continue to make payments
under the payment schedule. Rather, they will reduce the principal balance due 
and may result in Borrower's making fewer payments.  

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged  
5.000% of the regularly scheduled payment or $20.00, whichever is greater.  

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

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal  
balance on this Note and all accrued unpaid interest immediately due, without  
notice, and then Borrower will pay that amount. Upon default, including failure 
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the variable  
interest rate on this Note to 2.500 percentage points over the Index, and (b) 
add any unpaid accrued interest to principal and such sum will bear interest 
therefrom until paid at the rate provided in this Note (including any increased
rate). The interest rate will not exceed the maximum rate permitted by  
applicable law. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and  
Lender's legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated post-
judgment collection services. If not prohibited by applicable law, Borrower also
will pay any court costs, in addition to all other sums provided by law. This 
Note has been delivered to Lender and accepted by Lender in the State of 
Washington. If there is a lawsuit, Borrower agrees upon Lender's request to 
submit to the jurisdiction of the courts situated in King County, the State of 
Washington  This Note shall be governed by and construed in accordance with the
laws of the State of Washington.

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

<PAGE>

[LOGO]


                   DEED OF TRUST, SECURITY AGREEMENT
                   AND FIXTURE FILING WITH ASSIGNMENT
                          OF LEASES AND RENTS

    THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING WITH ASSIGNMENT 
OF LEASES AND RENTS ("Deed of Trust") is made December 20, 1995 by THE COEUR 
D'ALENES COMPANY, an Idaho corporation, as "Grantor", whose address is East 
3900 Broadway Avenue, Spokane, WA 99202; to RAINIER CREDIT COMPANY, as 
"Trustee", whose address is P.O. Box 33828, FAB-I9, Seattle, WA 98124-3828; 
for the benefit of SEATTLE-FIRST NATIONAL BANK, a national banking 
association, as "Beneficiary", whose address is 701 Fifth Avenue, 15th Floor, 
Seattle, WA 98104, Attention: Real Estate Loan Administration.

                                 ARTICLE I

    1. GRANTING CLAUSE. Grantor irrevocably grants, bargains, sells and 
conveys to Trustee and its successors and assigns in trust, with power of 
sale and with right of entry and possession as provided herein, all Grantor's 
estate, right, title, interest, claim and demand, now owned or hereafter 
acquired, in and to the following (the "Property"):

         (a) The real property in Spokane County, Washington, described in 
SCHEDULE A attached and any and all improvements now or hereafter located 
thereon (the "Real Property").

         (b) All land lying in streets and roads adjoining the Real Property, 
and all access rights and easements pertaining to the Real Property.

         (c) All the lands, tenements, privileges, reversions, remainders, 
irrigation and water rights and stock, oil and gas rights, royalties, 
minerals and mineral rights, all development rights and credits, air rights, 
hereditaments and appurtenances belonging or in any way pertaining to the 
Real l'roperty.

         (d) All buildings, structures, improvements, fixtures, equipment and 
machinery and property now or hereafter attached to or used in connection 
with the use, occupancy or operation of the Real Property including, but not 
limited to, heating and incinerating apparatus and equipment, boilers, 
engines, motors, generating equipment, telephone and other communication 
systems, piping and plumbing fixtures, ranges, cooking apparatus and 
mechanical kitchen equipment, refrigerators, cooling, ventilating, sprinkling 
and vacuum cleaning systems, fire extinguishing apparatus, gas and electric 
fixtures, irrigation equipment, carpeting, underpadding, elevators, 
escalators, partitions, mantles, built-in mirrors, window shades, blinds, 
screens, storm sash, awnings, furnishings of public spaces, halls and 
lobbies, and shrubbery and plants, but excluding them from all personal 
property, inventory and equipment used in the operation of Grantor's 
fabrication and distribution business on the Property including, without 
limitation, all metal processing (i.e., press brake, shears), fabrication 
(i.e., welders), and distribution (i.e., saws, storage racks) equipment. All 
property mentioned in this subsection (d) shall be deemed part of the realty 
and not severable wholly or in part without material injury to the Real 
Property.

         (e) All rents, issues and profits of the Real Property, all existing 
and future leases of the Real Property (including extensions, renewals and 
subleases), all agreements for use and occupancy of the Real Property (all 
such leases and agreements whether written or oral, are hereafter referred to 
as the "Leases"), and all guaranties of lessees' performance under the 
Leases, together with


                                -1-

<PAGE>

the immediate and continuing right to collect and receive all of the rents, 
income, receipts, revenues, issues, profits and other income of any nature 
now or hereafter due (including any income of any nature coming due during 
any redemption period) under the Leases or from or arising out of the Real 
Property including minimum rents, additional rents, percentage rents, parking 
or common area maintenance contributions, tax and insurance contributions, 
deficiency rents, liquidated damages following default in any Lease, all 
proceeds payable under any policy of insurance covering loss of rents 
resulting from untenantability caused by destruction or damage to the Real 
Property, all proceeds payable as a result of exercise of an option to 
purchase the Real Property, all proceeds derived from the termination or 
rejection of any Lease in a bankruptcy or other insolvency proceeding, all 
security deposits or other deposits for the performance of any lessee's 
obligations under the Leases, and all proceeds from any rights and claims of 
any kind which Grantor may have against any lessee under the Leases or any 
occupants of the Real Property (all of the above are hereafter collectively 
referred to as the "Rents").  This subsection (e) is subject to the right, 
power and authority given to the Beneficiary in the Loan Documents (as 
defined herein) to collect and apply the Rents.

         (f) All of Grantor's rights to further encumber said Real Property 
for debt and all Grantor's rights to enter into any lease agreement which 
would create a tenancy that is or may become subordinate in any respect to 
any mortgage or deed of trust other than this Deed of Trust, but excluding 
the existing deed of trust (and which is subordinate to this Deed of Trust) 
securing payment of convertible debentures issued by Grantor.

    2. COLLATERAL. The following described estate, property and rights of 
Grantor are also included as security for the performance of each covenant 
and agreement of Grantor contained herein and the payment of all sums of 
money secured hereby:

         (a) All furniture, furnishings, appliances, machinery, vehicles, 
equipment and all other property of any kind now or hereafter located on the 
Property, used or intended to be used on the Property wherever actually 
located, or purchased with the proceeds of the Note (as defined herein), but 
excluding them from all personal property, inventory and equipment used in 
the operation of Grantor's automotive business on the Property including, 
without limitation, all metal processing (i.e., press brake, shears), 
fabrication (i.e., welders), and distribution (i.e., saws, storage racks) 
equipment and all rights of Grantor as lessee of any property described in 
this Section 2 and subsection l (d) above.

         (b) All compensation, awards, damages, rights of action and proceeds 
(including insurance proceeds and any interest on any of the foregoing) 
arising out of or relating to a taking or damaging of the Property by reason 
of any public or private improvement, condemnation proceeding (including 
change of grade), fire, earthquake or other casualty, injury or decrease in 
the value of the Property.

         (c) All returned premiums or other payments on any insurance 
policies pertaining to the Property and any refunds or rebates of taxes or 
assessments on the Property.

         (d) All rights to the payment of money, accounts receivable, 
deferred payments, refunds, cost savings, payments and deposits, whether now 
or later to be received from third parties (including all utility deposits), 
architectural and engineering plans, specifications and drawings, contract 
rights, governmental permits and licenses, and agreements and purchase orders 
which pertain to or are incidental to the design or construction of any 
improvements on the Property, Grantor's rights under any payment, 
performance, or other bond in connection with construction of improvements on 
the Property, and all construction materials, supplies, and equipment 
delivered to the Property or intended to be used in connection with the 
construction of improvements on the Property wherever actually located.

         (e) All contracts and agreements pertaining to or affecting the 
Property including, but not limited to, management, operating and franchise 
agreements, licenses, trade names and trademarks.


                                   -2-

<PAGE>

         (f) All of Grantor's interest in and to the proceeds of the loan 
(the "Loan") evidenced by the Note (defined below), whether disbursed or not, 
any account into which Loan proceeds are deposited, and Grantor's own funds 
now or later held on deposit as equity funds or for payment of bills relating 
to the Property.

         (g) All loan commitments or other agreements, now or hereafter in 
existence, which will provide Grantor with proceeds to satisfy the Secured 
Obligations (defined below) and the right to receive the proceeds due under 
such commitments or agreements including refundable deposits and fees.

         (h) All books and records pertaining to any and all of the Property 
and the other collateral described above, including computer readable memory 
and any computer hardware or software necessary to access and process such 
memory.

         (i) All additions, accessions, replacements, substitutions, proceeds 
and products of the Property described in this Section 2 and of any of the 
Property which is personal property.

The Property and all of the property and rights described in Sections I and 2 
above are referred to collectively in this Deed of Trust as the "Collateral".

    3. SECURITY AGREEMENT. If any of the Collateral is determined to be 
personal property, Grantor as Debtor hereby grants to Beneficiary as Secured 
Party a security interest in all such personal property to secure payment and 
performance of the Secured Obligations. This Deed of Trust constitutes a 
security agreement between Grantor and Beneficiary pursuant to the Uniform 
Commercial Code as adopted in the State of Washington, as now or hereafter 
amended, with respect to the Collateral, and any and all property affecting 
or related to the use and enjoyment of the Property, now or hereafter 
described in any Uniform Commercial Code Financing Statement naming Grantor 
as Debtor and Beneficiary as Secured Party. The remedies of Beneficiary for 
any violation of the covenants, terms and conditions of this Deed of Trust or 
any other Loan Document (defined below) shall include all remedies available 
to secured parties under the Uniform Commercial Code. Grantor agrees the 
filing of a financing statement in the records normally having to do with 
personal property shall not be construed as in anywise derogating from or 
impairing the intention of Grantor and Beneficiary that everything used in 
connection with the production of income from the Property that is the 
subject of this Deed of Trust and/or adapted for use therein and/or which is 
described or reflected in this Deed of Trust is, and at all times and for all 
purposes and in all proceedings both legal or equitable shall be, regarded as 
part of the real estate irrespective of whether (i) any such item is 
physically attached to the improvements, (ii) serial numbers are used for the 
better identification of certain equipment items capable of being thus 
identified in any list filed with the Beneficiary, or (iii) any such item is 
referred to or reflected in any such financing statement so filed at any time.

    4. FINANCING STATEMENT. This Deed of Trust shall also constitute a 
financing statement filed for record in the real estate records as a fixture 
filing pursuant to the Uniform Commercial Code. This Deed of Trust may be 
given to secure an obligation incurred for the construction of improvements 
on the Property, including the acquisition of the Property, or to secure an 
obligation incurred to refinance an obligation incurred for the construction 
of improvements on the Property, including the acquisition of the Property.

    5. OBLIGATIONS SECURED. The following obligations ("Secured Obligations") 
are secured by this Deed of Trust:

         (a) Payment of the sum of ONE MILLION SIX HUNDRED EIGHTY-EIGHT 
THOUSAND AND NO/100 DOLLARS ($1,688,000.00) with interest thereon according 
to the terms of a promissory note of even date herewith, payable to 
Beneficiary or order and made by Grantor, including all renewals, amendments, 
modifications, extensions and substitutions therefor (the "Note"). THE NOTE 
MAY CONTAIN PROVISIONS ALLOWING FOR CHANGES IN THE INTEREST RATE.

         (b) Payment of any further sums now or hereafter advanced or loaned 
by Beneficiary to Grantor, or any of its successors or assigns, and payment 
of every other present and


                               -3-

<PAGE>

future obligation owing by Grantor to Beneficiary of any kind, and all 
renewals, modifications, and extensions thereof, including any interest, 
fees, costs, service charges, indemnifications and expenses connected with 
such obligations, if (i) the promissory note or other written document 
evidencing the future advance or loan or other obligation specifically states 
that it is secured by this Deed of Trust, or (ii) the advance, including 
costs and expenses incurred by Beneficiary, is made pursuant to the Note, 
this Deed of Trust or any other documents executed by Grantor evidencing, 
securing, or relating to the Loan, and/or the Collateral, whether executed 
prior to, contemporaneously with, or subsequent to this Deed of Trust (this 
Deed of Trust, the Note and all such other documents, including any 
construction or other loan agreement, and all renewals, amendments, 
modifications or extensions thereof, are hereafter collectively referred to 
as the "Loan Documents"), together with interest thereon at the rate set 
forth in the Note, unless otherwise specified in the Loan Documents or agreed 
in writing.

         (c) Performance of each agreement, term and condition set forth or 
incorporated by reference in the Loan Documents, as such may be amended.

         (d) Performance and payment of the obligations of Grantor (or any 
other obliger under the Note) under each and every existing or future "swap 
transaction" (i.e., any transactions governed by an ISDA master agreement) to 
which Grantor (or the obligor under the Note) and Beneficiary are parties, if 
this Deed of Trust is referenced in such transaction as a credit support 
document.

    Notwithstanding any of the foregoing, the Secured Obligations shall not 
include the obligations of Grantor under any Certificate and Indemnity 
Agreement Regarding Building Laws and Hazardous Substances now or hereafter 
executed by Grantor (or any other person or entity) in connection with the 
loan evidenced by the Note.

                                     ARTICLE II

    1. ASSIGNMENT OF RENTS AND LEASES. Grantor hereby absolutely and 
irrevocably assigns to Beneficiary all Grantor's interest in the Rents and 
Leases. The foregoing assignment is subject to the terms and conditions of 
any separate assignment of the Leases and/or Rents, whenever executed, in 
favor of Beneficiary and covering the Property. Grantor warrants it has made 
no prior assignment of the Rents or the Leases and will make no subsequent 
assignment (other than to Beneficiary) without the prior written consent of 
Beneficiary. At Beneficiary's request, Grantor shall execute and deliver to 
Beneficiary a separate assignment of rents containing such terms and 
conditions as Beneficiary may reasonably require.

         (a) Unless otherwise provided in any separate assignment of the 
Leases and/or the Rents, and so long as Grantor is not in default under the 
Loan Documents, Grantor may collect the Rents as the Rents become due. 
Grantor shall use the Rents to pay normal operating expenses for the Property 
and sums due and payments required under the Loan Documents. No Rents shall 
be collected for a period subsequent to the current one month rental period 
and first or last month's rent. Grantor's right to collect the Rents shall 
not constitute Beneficiary's consent to the use of cash collateral in any 
bankruptcy proceeding.

         (b) If Grantor is in default under this Deed of Trust or any other 
Loan Document, without notice to Grantor, Beneficiary or its agents, or a 
court appointed receiver, may collect the Rents. In doing so, Beneficiary may 
(i) evict lessees for nonpayment of rent, (ii) terminate in any lawful manner 
any tenancy or occupancy, (iii) lease the Property in the name of the then 
owner on such terms as it may deem best, (iv) institute proceedings against 
any lessee for past due rent, and (v) do all other acts and things as 
Beneficiary deems necessary or desirable. The Rents received shall be applied 
to payment of the costs and expenses of collecting the Rents, including a 
reasonable fee to Beneficiary, a receiver or an agent, operating expenses for 
the Property and any sums due or payments required under the Loan Documents, 
in such order as Beneficiary may determine. Any excess shall be paid to 
Grantor, however, Beneficiary may withhold from any excess a reasonable 
amount to pay sums anticipated to become due which exceed the anticipated 
future Rents. Beneficiary's failure to collect or discontinuing collection at 
any time shall not in any manner affect the subsequent enforcement by 
Beneficiary of its rights to collect the Rents. The collection of the


                                   -4-

<PAGE>

Rents by or for Beneficiary shall not cure or waive any default under the 
Loan Documents. Any Rents paid to Beneficiary or a receiver shall be credited 
against the amount due from the lessees under the Leases. In the event any 
lessee under a Lease becomes the subject of any proceeding under the 
Bankruptcy Code or any other federal, state or local statute which provides 
for the possible termination or rejection of any Lease assigned hereby, 
Grantor covenants and agrees that in the event any of the Leases are so 
rejected, no damages settlement shall be made without the prior written 
consent of Beneficiary; any check in payment of damages for rejection or 
termination of any such Lease will be made payable both to the Grantor and 
Beneficiary; and Grantor hereby assigns any such payment to Beneficiary and 
further covenants and agrees that upon request of Beneficiary, it will duly 
endorse to the order of Beneficiary any such check, the proceeds of which 
will be applied to any portion of the indebtedness secured hereunder in such 
manner as Beneficiary may elect.

         (c) Regardless of whether or not Beneficiary, in person or by agent, 
takes actual possession of the Property or any part thereof, Beneficiary is 
not and shall not be deemed to be: (i) "a mortgagee in possession" for any 
purpose; (ii) responsible for performing any of the obligations of the lessor 
under any Lease; (iii) responsible for any waste committed by lessees or any 
other parties, any dangerous or defective condition of the Property, or any 
negligence in the management, upkeep, repair or control of the Property; or 
(iv) liable in any manner for the Property or the use, occupancy, enjoyment 
or operation of all or any part of it. In exercising its rights under this 
Section I Beneficiary shall be liable only for the proper application of and 
accounting for the Rents collected by Beneficiary or its agents.

    2. LEASES. Grantor shall fully comply with all of the terms, conditions 
and provisions of the Leases so that the same shall not become in default and 
do all things necessary to preserve the Leases in force. Unless otherwise 
agreed in writing by Beneficiary, without Beneficiary's prior written 
consent, Grantor will not enter into any Lease (i) on a form of Lease not 
previously approved by Beneficiary, (ii) for a term of three (3) years or 
more, or (iii) containing an option or right to purchase all or any part of 
the Collateral in favor of any lessee. With respect to any Lease of the whole 
or any part of the Property involving an initial term of three (3) years or 
more, Grantor shall not, without the prior written consent of Beneficiary, 
(a) permit the assignment or subletting of all or part ofthe lessee's rights 
under the Lease unless the right to assign or sublet is expressly reserved by 
the lessee under the Lease, (b) modify or amend the Lease for a lesser rental 
or term, or (c) accept surrender of the Lease or terminate the Lease except 
in accordance with the terms of the Lease providing for termination in the 
event of a default. Any proceeds or damages result from a lessee's default 
under any Lease, at Beneficiary's option, shall be paid to Beneficiary and 
applied against sums owed under the Loan Documents even though such sums may 
not be due and payable. Except for real estate taxes and assessments, without 
Beneficiary's prior written consent, Grantor shall not permit any lien to be 
created against the Property which may be or may become prior to any Lease. 
If the Property is partially condemned or suffers a casualty, Grantor shall 
promptly repair and restore the Property in order to comply with the Leases.

                                  ARTICLE III

    1. NON-AGRICULTURAL USE. Grantor represents and warrants to Beneficiary 
that neither the Property nor any other Collateral is used principally or 
primarily for agricultural or farming purposes.

    2. PERFORMANCE OF OBLIGATIONS. Grantor shall promptly and timely pay all 
sums due pursuant to the Loan Documents, strictly comply with all the terms 
and conditions of the Loan Documents, and perform each Secured Obligation in 
accordance with its terms.

    3. WARRANTY OF TITLE. Grantor warrants that it has good and marketable 
title to an indefeasible fee simple estate in the Property (unless Grantor's 
present interest in the Property is described in SCHEDULE A as a leasehold 
interest, in which case Grantor warrants that it lawfully possesses and holds 
a valid leasehold interest in the Property as described in SCHEDULE A), and 
good marketable title to the personal property Collateral, subject to no 
liens, encumbrances, easements, assessments, security interests, claims or 
defects of any kind prior or subordinate to the lien of this Deed of Trust, 
except those listed in Beneficiary's title insurance policy or approved by 
Beneficiary in writing (the "Exceptions") and real estate taxes and 
assessments for the current year. Grantor

                                     -5-
<PAGE>

warrants the Exceptions and the real estate taxes and assessments are not 
delinquent or in default, and Grantor has the right to convey the Property to 
Trustee for the benefit of Beneficiary, and the right to grant a security 
interest in the personal property Collateral. Grantor will warrant and defend 
title to the Collateral and will defend the validity and priority of the lien 
of this Deed of Trust and the security interests granted herein against any 
claims or demands.

    4. PROHIBITED LIENS.

         (a) Subject to Grantor's rights under subsection (b) below, Grantor 
shall not permit any governmental or statutory liens (including taxes, 
mechanic's or materialmen's liens) to be filed against the Collateral except 
for real estate taxes and assessments not yet due and liens permitted by the 
Loan Documents or approved by Beneficiary in writing.

         (b) Grantor will have the right to contest in good faith by 
appropriate legal or administrative proceeding the validity of any prohibited 
lien, encumbrance or charge so long as (i) no default exists under the Loan 
Documents, (ii) Grantor first deposits with Beneficiary a bond or other 
security satisfactory to Beneficiary in the amount reasonably required by 
Beneficiary, but not more than the amounts specified in RCW 60.04.161, as now 
or hereafter amended, (iii) Grantor immediately commences its contest of such 
lien, encumbrance or charge, applies to court for a show cause as provided 
for in RCW 60.04.221(9), as now or hereafter amended, and continuously 
pursues the contest in good faith and with due diligence; (iv) foreclosure of 
the lien, encumbrance or charge is stayed; and (v) Grantor pays any judgment 
rendered for the lien claimant or other third party within ten (10) days 
after the entry of the judgment. If the contested item is a mechanic's or 
materialmen's lien, Grantor will furnish Beneficiary with an endorsement to 
its title insurance policy which insures the priority of this Deed of Trust 
over the lien being contested. Grantor will discharge or elect to contest and 
post an appropriate bond or other security within twenty (20) days of written 
demand by Beneficiary.

    5. PAYMENT OF TAXES AND OTHER ENCUMBRANCES. Grantor shall pay the real 
estate taxes and any assessments or ground rents at least seven (7) days 
prior to delinquency unless otherwise provided for in the reserve account 
described in Section 15 below. All other encumbrances, charges and liens 
affecting the Collateral, including mortgages and deeds of trust, whether 
prior to or subordinate to the lien of this Deed of Trust, shall be paid when 
due and shall not be in default. On request Grantor shall furnish evidence of 
payment of these items.

    6. MAINTENANCE--NO WASTE. Grantor shall protect and preserve the 
Collateral and maintain it in good condition and repair. Grantor shall do all 
acts and take all precautions which, from the character and use of the 
Collateral, are reasonable, proper or necessary to so maintain, protect and 
preserve the Collateral. Grantor shall not commit or permit any waste of the 
Collateral.

    7. ALTERATIONS, REMOVAL AND DEMOLITION. Unless otherwise agreed in 
writing by Beneficiary, Grantor shall not structurally alter, remove or 
demolish any building or improvement on the Property without Beneficiary's 
prior written consent. Grantor shall not remove any fixture or other item of 
property which is part of the Collateral without Beneficiary's prior written 
consent unless the fixture or item of property is replaced by an article of 
equal suitability, owned by Grantor free and clear of any lien or security 
interest.

    8. COMPLETION, REPAIR AND RESTORATION. Grantor shall promptly complete or 
repair and restore in good workmanlike manner any building or improvement on 
the Property which may be constructed or damaged or destroyed and shall pay 
all costs incurred therefor. Prior to commencement of any construction 
Grantor shall submit the plans and specifications for Beneficiary's approval 
and furnish evidence of sufficient funds to complete the work.

    9. COMPLIANCE WITH LAWS. Grantor shall comply with all laws, ordinances, 
regulations, covenants, conditions, and restrictions affecting the 
Collateral, including, without limitation, all applicable requirements of the 
Fair Housing Act of 1968 (as amended) and the Americans With Disabilities Act 
of 1990 (as the same may be amended from time to time), and shall not commit 
or permit any act upon or concerning the Collateral in violation of any such 
laws, ordinances, regulations, covenants, conditions, and restrictions. 
Grantor shall defend, indemnify and


                                    -6-

<PAGE>

hold Beneficiary harmless from and against all liability threatened against 
or suffered by Beneficiary by reason of a breach by Grantor of the foregoing 
representations, warranties, covenants and agreements. The foregoing 
indemnity shall include the cost of all alterations to the Collateral 
(including architectural, engineering, legal and accounting costs), all 
fines, fees and penalties, and all legal and other expenses (including 
attorneys' fees) incurred in connection with the Property being in violation 
of any such laws, ordinances, regulations, covenants, conditions and 
restrictions. If Beneficiary or its designee shall become the owner of or 
acquire an interest in or rights to the Collateral by foreclosure or deed in 
lieu of foreclosure of this Deed of Trust or by other means, the foregoing 
indemnification obligation shall survive such foreclosure or deed in lieu of 
foreclosure or other acquisition of the Collateral. Notwithstanding the 
preceding sentence, Grantor shall have no obligation to defend, indemnify or 
hold Beneficiary harmless from any liability arising from or out of the 
activities of Beneficiary or its agents with respect to the Collateral on or 
after the transfer of the Collateral to Beneficiary pursuant to foreclosure 
proceedings or in lieu thereof.

    10. IMPAIRMENT OF COLLATERAL. Grantor shall not, without Beneficiary's 
prior written consent, change the general nature of the occupancy of the 
Property, initiate, acquire or permit any change in any public or private 
restrictions (including without limitation a zoning reclassification) 
limiting the uses which may be made of the Collateral, or take or permit any 
action which would impair the Collateral or Beneficiary's lien or security 
interest in the Collateral.

    11. INSPECTION OF COLLATERAL. Beneficiary and/or its representative may 
inspect the Collateral at reasonable times after reasonable notice.

    12. GRANTOR'S DEFENSE O}7 COLLATERAL. Grantor shall appear in and defend 
any action or proceeding which may affect the Collateral or the rights or 
powers of Beneficiary or Trustee under this Deed of Trust.

    13. BENEFICIARY'S RIGHT TO PROTECT COLLATERAL. Beneficiary may commence, 
appear in, and defend any action or proceeding which may affect the 
Collateral or the rights or powers of Beneficiary or Trustee under this Deed 
of Trust. Beneficiary may pay, purchase, contest or compromise any 
encumbrance, charge or lien not listed as an Exception which in its judgment 
appears to be prior or superior to the lien of this Deed of Trust. If Grantor 
fails to make any payment or do any act required under the Loan Documents, 
Beneficiary, without any obligation to do so and without releasing Grantor 
from any obligations under the Loan Documents, may make the payment or cause 
the act to be performed in such manner and to such extent as Beneficiary may 
deem necessary to protect the Collateral. Beneficiary is authorized to enter 
upon the Property for such purposes. In exercising any ofthese powers 
Beneficiary may incur such expenses, in its absolute discretion, it deems 
necessary.

    14. HAZARDOUS SUBSTANCES.

         (a) Grantor represents and warrants to Beneficiary, to the best of 
Grantor's knowledge and except as disclosed in Environmental Site Assessment, 
Level 1, by Budinger & Associates dated October 2, 1995, a copy of which has 
been provided to Beneficiary, no hazardous or toxic waste or substances are 
being stored on the Property or any adjacent property nor have any such waste 
or substances been stored or used in, on, under, over or about the Property 
or any adjacent property prior to or during Grantor's ownership, possession 
or control of the Property, other than the use or storage of hazardous or 
toxic waste or substances generally used in the ordinary course of operating, 
maintaining or developing properties such as the Property, all of which 
Grantor covenants have and will be used, stored and disposed of in accordance 
with commercially reasonable practices and all applicable federal, state and 
local laws, regulations and ordinances. Grantor shall provide written notice 
to Beneficiary immediately upon Grantor becoming aware that the Property or 
any adjacent property is being or has been contaminated with hazardous or 
toxic waste or substances. Grantor will not cause nor permit any activities 
on the Property which directly or indirectly could result in the Property or 
any other property becoming contaminated with hazardous or toxic waste or 
substances. For purposes of this Deed of Trust, the term "hazardous or toxic 
waste or substances" means any chemical, substance or material classified or 
designated as hazardous, toxic or radioactive, or similar term, and now or 
hereafter regulated under any applicable federal, state or


                                      -7-

<PAGE>

local statute, regulation, ordinance or requirement, now or hereafter in 
effect, pertaining to environmental protection, contamination or cleanup.

         (b) Grantor shall comply, at Grantor's expense, with all statutes, 
regulations and ordinances which apply to Grantor or the Collateral, and with 
all orders, decrees or judgments of governmental authorities or courts having 
jurisdiction which Grantor is bound by, relating to the use, collection 
storage, treatment, control, removal or cleanup of hazardous or toxic 
substances in, on, under, oven or about the Property or in, on, under, over 
or about any adjacent property that becomes contaminated with hazardous or 
toxic substances as a result of construction, operations or other activities 
on, or the contamination of, the Property. Beneficiary may, but is not 
obligated to, enter upon the Property to inspect it for compliance and to 
take such actions and incur such costs and expenses to effect such compliance 
as it deems advisable to protect its interest as Beneficiary; and whether or 
not Grantor has actual knowledge of the existence of hazardous or toxic 
substances in, on, under, over or about the Property or any adjacent property 
as of the date hereof, Grantor slaall reimburse Beneficiary on demand for the 
full amount of all costs and expenses incurred by Beneficiary prior to 
Beneficiary acquiring title to the Property through foreclosure or deed in 
lieu of foreclosure, in connection with such compliance activities.

         (c) Grantor's obligations under this Section 14 are unconditional 
and shall not be limited by a non-recourse or other limitations of liability 
provided for in this Deed of Trust or any other Loan Document.

    15. RESERVE ACCOUNT.

         (a) Subject to subsection (d) below, if Beneficiary so requires, 
Grantor shall pay to Beneficiary monthly, together with and in addition to 
any payments due under the Note, a sum, as estimated by Beneficiary, equal to 
the ground rents, if any, the real estate taxes and assessments next due on 
the Property and the premiums next due on insurance policies required under 
the Loan Documents, less all sums already paid therefor, divided by the 
number of months to elapse before two (2) months prior to the date when the 
ground rents, real estate taxes, assessments and insurance premiums will 
become delinquent. The monthly reserve accounts payments and any other 
payments due under the Note shall be paid in a single payment and applied by 
Beneficiary, at its option, in the following order: (l) ground rents, real 
estate taxes, assessments and insurance premiums, (2) expenditures made 
pursuant to the Loan Documents and interest thereon, (3) interest on the 
Note, and (4) principal due on the Note. Grantor shall promptly deliver to 
Beneficiary all bills and notices pertaining to the ground rents, taxes, 
assessments and insurance premiums.

         (b) The reserve account is solely for the protection of Beneficiary. 
Beneficiary shall have no responsibility except to credit properly the sums 
actually received by it. No interest will be paid on the funds in the reserve 
account and Beneficiary shall have no obligation to deposit the funds in an 
interest-bearing account. Upon assignment of this Deed of Trust by 
Beneficiary, any funds in the reserve account shall be turned over to the 
assignee and any responsibility of Beneficiary with respect thereto shall 
terminate. Each transfer of the Property shall automatically transfer to the 
grantee all rights of Grantor to any funds in the reserve account.

         (c) If the total of the payments to the reserve exceeds the amount 
of payments actually made by Beneficiary, plus such amounts as have been 
reasonably accumulated in the reserve account toward payments to become due, 
such excess may, at Beneficiary's election, be (1) credited by Beneficiary 
against sums then due and payable under the Loan Documents, or (2) refunded 
to Grantor as its name appears on the records of Beneficiary. If, however, 
the reserve account does not have sufficient funds to make the payments when 
they become due, Grantor shall pay to Beneficiary the amount necessary to 
make up the deficiency within fifteen (15) days after written notice to 
Grantor. If this Deed of Trust is foreclosed or if Beneficiary otherwise 
acquires the Collateral, the Beneficiary shall, at the time of commencement 
of the proceedings or at the time the Collateral is otherwise acquired, apply 
the remaining funds in the reserve account, less such sums as will become due 
during the pendency of the proceedings, against the sums due under the Loan 
Documents and/or to make payments required under the Loan Documents.


                                    -8-

<PAGE>

         (d) Unless required by the terms of Beneficiary's loan commitment or 
any other Loan Document, Grantor shall not be required to pay monthly reserve 
account payments so long as there has been no more than four (4) late 
payments due under the Note throughout the term of the Loan and there is no 
other default under the Loan and so long as Grantor remains in ownership of 
the Collateral, provided receipted bills evidencing the payment of all taxes 
and/or assessments and insurance premiums are exhibited to Beneficiary within 
fifteen (15) days after Beneficiary's reguest therefor. Upon any change in 
any of these conditions, Beneficiary may, at its option then or thereafter 
exercised, require the payment of reserves pursuant to this Section 15.

    16. REPAYMENT OF BENEFICIARY'S EXPENDITURES. Grantor shall pay within ten 
( 10) days after written notice from Beneficiary all sums expended by 
Beneficiary and all costs and expenses incurred by Beneficiary in taking any 
actions pursuant to the Loan Documents including, attorneys' fees, 
accountants' fees, appraisal and inspection fees, and the costs for title 
reports. If any laws or regulations are passed subsequent to the date of this 
Deed of Trust which require Beneficiary to incur out-of-pocket expenses in 
order to maintain, modify, extend or foreclose this Deed of Trust, revise the 
terms of the Loan or consent to an Accelerating Transfer (as defined below), 
Grantor shall reimburse Beneficiary for such expenses within fifteen (15) 
days after written notice from Beneficiary. Expenditures by Beneficiary shall 
bear interest from the date of such advance or expenditure at the default 
interest rate in the Note, shall constitute advances made under this Deed of 
Trust and shall be secured by and have the same priority as the lien of this 
Deed of Trust. If Grantor fails to pay any such expenditures, costs and 
expenses and interest thereon, Beneficiary may, at its option, without 
foreclosing the lien of this Deed of Trust, commence an independent action 
against Grantor for the recovery of the expenditures and/or advance any 
undisbursed Loan proceeds to pay the expenditures.

    17. ACCELERATING TRANSFERS.

         (a) "Accelerating Transfer" means any sale, contract to sell, 
conveyance, encumbrance, transfer of full possessory rights, or other 
transfer of all or any material part of the Collateral or any interest in it, 
whether voluntary, involuntary, by operation of law or otherwise and whether 
or not for record or for consideration. If Grantor is the majority owner of a 
business, either through ownership of shares of a corporation or interest in 
a partnership, limited liability company or other entity, which occupies 
seventy-five percent (75%) or more of the improvements on the Property, 
"Accelerating Transfer" also means any sale, contract to sell, or other 
transfer of the busincss or substantial assets of the business or the failure 
of the business to continue to occupy the Property .

         (b) Grantor acknowledges Beneficiary is taking actions in reliance 
on the expertise, skill, experience and reliability of Grantor, and the 
obligations secured hereby include material elements similar in nature to a 
personal service contract or ownership interest. In consideration of 
Beneficiary's reliance, Grantor agrees that Grantor shall not make any 
Accelerating Transfer without Beneficiary's prior written consent, which 
Beneficiary may withhold in its sole discretion. If Beneficiary consents, it 
may charge the Grantor a fee as consideration for such consent and condition 
its consent on such changes to the terms and conditions of the Note and other 
Loan Documents as Beneficiary may require, including without limitation 
increasing the interest rate on the Note. Grantor shall pay Beneficiary's 
actual costs incurred in making its decision to consent to an Accelerating 
Transfer, including but not limited to the cost of credit reports, an updated 
appraisal of the Property, an updated environmental assessment and 
documentation. If any Accelerating Transfer occurs without Beneficiary's 
prior written consent, Beneficiary in its sole discretion may declare an 
immediate default and all sums secured by this Deed of Trust to be 
immediately due and payable, and Beneficiary may invoke any rights and 
remedies provided herein. This provision shall apply to each and every 
Accelerating Transfer regardless of whether or not Beneficiary has consented 
or waived its rights, whether by action or nonaction, in connection with any 
previous Accelerating Transfer(s).

         (c) If all or any part of this Section 17 relevant to a particular 
Accelerating Transfer is unenforceable according to the law in effect at the 
time of the Accelerating Transfer, then Grantor shall reimburse Beneficiary 
for its actual costs incurred in processing the Accelerating Transfer on its 
records, including but not limited to the cost of modifications of Loan 
Documents, an appraisal, and obtaining relevant credit and financial 
information.

                                     -9-
<PAGE>
     18.  RELEASE OF PARTIES OR COLLATERAL. Without affecting the obligations 
of any party under the Loan Documents and without affecting the lien of this 
Deed of Trust and Beneficiary's security interest in the Collateral, 
Beneficiary and/or Trustee may, without notice (a) release all or any 
Grantor and/or any other party now or hereafter liable for any of the 
Secured Obligations (including guarantors), (b) release all or any part of 
the Collateral, (c) subordinate the lien of this Deed of Trust or 
Beneficiary's security interest in the Collateral, (d) take and/or release 
any other security for or guarantees of the Secured Obligations, (e) grant 
an extension of time for performance of the Secured Obligations, (f) modify, 
waive, forbear, delay or fail to enforce any of the Secured Obligations, (g) 
sell or otherwise realize on any other security or guaranty prior to, 
contemporaneously with or subsequent to a sale of all or any part of the 
Collateral, (h) make advances pursuant to the Loan Documents including 
advances in excess of the Note amount, (i) consent to the making of any map 
or plat of the Property, and (j) join in the grant of any easement on the 
Property. Any subordinate lienholder shall be subject to all such releases, 
extensions or modifications without notice to or consent from the 
subordinate lienholder. Grantor shall pay any Trustee's, attorneys', title 
insurance, recording, inspection or other fees or expenses incurred in 
connection with release of Collateral, the making of a map, plat or the 
grant of an easement. 

                                  ARTICLE IV

     1.   INSURANCE.

          (a) Grantor shall maintain such insurance on the Collateral as may 
be required from time to time by Beneficiary, with premiums prepaid, 
providing replacement cost coverage and insuring against loss by fire and 
such other risks covered by extended coverage insurance, and such other 
perils and risks as Beneficiary may require from time to time, including 
earthquake, loss of rents and business interruption. Grantor also shall 
maintain comprehensive general public liability insurance and if the 
Property is located in a designated flood hazard area, flood insurance. All 
insurance shall be with companies satisfactory to Beneficiary and in such 
amounts and with such coverages as Beneficiary may require from time to time, 
with lender's loss payable clauses in favor of and in form satisfactory to 
Beneficiary. At least thirty (30) days prior to the expiration of the term 
of any insurance policy, Grantor shall furnish Beneficiary with written 
evidence of renewal or issuance of a satisfactory replacement policy. If 
requested Grantor shall deliver copies of all polices to Beneficiary. Each 
policy of insurance shall provide Beneficiary with no less than forty-five 
(45) days prior written notice of any cancellation, expiration, non-renewal 
or modification. 

          (b) In the event of foreclosure of this Deed of Trust all interest of
Grantor in any insurance policies pertaining to the Collateral and in any 
claims against the policies and in any proceeds due under the policies shall 
pass to Beneficiary.

          (c) If under the ternis of any Lease the lessee is required to 
maintain insurance of the type required by the Loan Documents and if the 
insurance is maintained for the benefit of both the lessor and Beneficiary, 
Beneficiary will accept such policies provided all of the requirements of 
Beneficiary and the Loan Documents are met. In the event the lessee fails to 
maintain such insurance, Grantor shall promptly obtain such policies as are 
required by the Loan Documents.

          (d) If Grantor fails to maintain any insurance required of it by 
Beneficiary, or fails to pay any premiums with respect to such insurance, 
Beneficiary may obtain such replacement insurance as it deems necessary or 
desirable, or pay the necessary premium on behalf of Grantor, and any sums 
expended by Beneficiary in so doing shall be added to the principal balance 
of the Note and bear interest at the default interest rate set forth in the 
Note. 

     2.   DAMAGES AND CONDEMNATION AND INSURANCE PROCEEDS.

          (a) Grantor hereby absolutely and irrevocably assigns to Beneficiary,
and authorizes the payor to pay to Beneficiary, the following claims, causes of
action, awards, payments and rights to payment: (i) all awards of damages and
all other compensation payable directly or indirectly because of a
condemnation, proposed condemnation or taking for public or private use which
affects all or part of the Collateral or any interest in it; (ii) all other
awards, claims and causes of action, arising out of any warranty affecting all
or any part of the Collateral, or for damage or

                                      -10-
<PAGE>

injury to or decrease in value of all or part of the Collateral or any 
interest in it; (iii) all proceeds of any insurance policies payable because 
of loss sustained to all or part of the Collateral; and (iv) all interest 
which may accrue on any of the foregoing. 

          (b) Grantor shall immediately notify Beneficiary in writing if: (i) 
any damage occurs or any injury or loss is sustained in the amount of $25,000
or more to all or part of the Collateral, or any action or proceeding 
relating to any such damage, injury or loss is commenced; or (ii) any offer 
is made, or any action or proceeding is commenced, which relates to any 
actual or proposed condemnation or taking of all or part of the Collateral. 
If Beneficiary chooses to do so, it may in its own name appear in or 
prosecute any action or proceeding to enforce any cause of action based on 
warranty, or for damage, injury or loss to all or part of the Collateral, 
and it may make any compromise or settlement ofthe action or proceeding. 
Beneficiary, if it so chooses, may participate in any action or proceeding 
relating to condemnation or taking of all or part of the Collateral, and may 
join Grantor in adjusting any loss covered by insurance.

          (c) All proceeds of these assigned claims, other property and rights 
which Grantor may receive or be entitled to shall be paid to Beneficiary. In 
each instance, Beneficiary shall apply those proceeds first toward 
reimbursement of all of Beneficiary's costs and expenses of recovering the 
proceeds, including attorneys' fees.

          (d) If, in any instance, each and all of the following conditions are
satisfied in Beneficiary's reasonable judgment, Beneficiary shall permit
Grantor to use the balance of the proceeds ("Net Claims Proceeds") to pay
costs of repairing or reconstructing the Collateral in the manner described
below: (i) the plans and specifications, cost breakdown, construction
contract, construction schedule, contractor and payment and performance bond
for the work of repair or reconstruction must all be acceptable to
Beneficiary; (ii) Beneficiary must receive evidence satisfactory to it that
after repair or reconstruction, the Collateral will be at least as valuable as
it was immediately before the damage or condemnation occurred; (iii) the Net
Claims Proceeds must be sufficient in Beneficiary's determination to pay for 
the total cost of repair or reconstruction, including all associated 
development costs and interest projected to be payable on the Note until the 
repair or reconstruction is complete; or Grantor must provide its own funds 
in an amount equal to the difference between the Net Claims Proceeds and a 
reasonable estimate, made by Grantor and found acceptable by Beneficiary, of 
the total cost of repair or reconstruction; (iv) Beneficiary must receive 
evidence satisfactory to it that all Leases which it may find acceptable 
will continue after the repair or reconstruction is complete; (v) 
Beneficiary has received evidence satisfactory to it, that reconstruction 
and/or repair can be completed at least three (3) months prior to the date 
the Note secured by this Deed of Trust is due and payable; and (vi) no 
default under any of the Loan Documents shall have occurred and be continuing. 
If the foregoing conditions are met to Beneficiary's satisfaction, 
Beneficiary shall hold the Net Claims Proceeds and any funds which Grantor 
is required to provide and shall disburse them to Grantor to pay costs of 
repair or reconstruction upon presentation of evidence reasonably 
satisfactory to Beneficiary that repair or reconstruction has been completed 
satisfactorily and lien-free. However, if Beneficiary finds that one or more 
of the conditions are not satisfied, it may apply the Net Claims Proceeds to 
pay or prepay some or all of the Note.

                                  ARTICLE V

     1.   DEFAULT-REMEDIES.

          (a) Grantor will be in default under this Deed of Trust upon the 
occurrence of any one or more of the following events: (i) Any payment is 
not made when due under the Note, this Deed of Trust or any other Loan 
Document; (ii) There is a default under, a breach of, or failure to perform 
any other covenant, agreement or obligation to be performed under this Deed 
of Trust or any other Loan Document or under any guaranty of all or any part 
of the Secured Obligations; (iii) Any representation or warranty contained 
in this Deed of Trust or any other Loan Document, or any financial 
information furnished to Beneficiary in connection with the Loan, proves to 
be false or misleading in any material respect; (iv) Grantor defaults under 
any lease or other contract or agreement relating to the collateral, and 
such default is not cured within the applicable cure period, if any; (v) 
Grantor, or the maker of the Note if different from Grantor, is in default 
with respect to any other loan from Beneficiary to Grantor and/or such other 
borrower; (vi) Grantor, any maker of

                                     -11-
<PAGE>

the Note if different from Grantor, or any guarantor of the Loan fails to 
pay his, her or its debts generally as  they become due, or files a petition 
or action for relief under any bankruptcy, or Organization or insolvency 
laws or makes an assignment for the benefit of creditors, or (vii) an 
involuntary petition is filed against Grantor, any maker of the Note if 
different from Grantor, or any guarantor of the Loan under any bankruptcy, 
reorganization or other insolvency laws, or a custodian, receiver or trustee 
is appointed to take, possession, custody or control of the Collateral or 
any other properties or assets of Grantor, of any maker of the Note if 
different from Grantor, or of any guarantor of the Loan and such petition or 
appointment is not set aside, withdrawn or dismissed within thirty (30) days 
from the date of filing or appointment.

          (b) In the event of a default Beneficiary may declare the Secured 
Obligations, without limitation, the Loan and all other indebtedness 
evidenced by the Note or any other Loan Document, immediately due and 
payable after notice as set forth in Section 2 below, and/or exercise its 
rights and remedies under the Loan Documents and applicable law including, 
without limitation, foreclosure of this Deed of Trust judicially as a 
mortgage or nonjudicially pursuant to the power of sale. Beneficiary's 
exercise of any of its rights and remedies shall not constitute a waiver or 
cure of a default. Beneficiary's failure to enforce any of its remedies in 
the event of a default shall not constitute a waiver of the default or any 
subsequent default of its rights and remedies with respect to such default. 
In the event of foreclosure, the cost of the title premium for the trustee's 
sale guaranty (or equivalent title policy or report) shall be paid for by 
Grantor and shall be added to and be a part of the Secured Obligations. If 
this Deed of Trust or any of the other Loan Documents are referred to an 
attorney for enforcement or for preservation of Beneficiary's rights or 
remedies, and whether or not suit is filed or any proceedings are commenced, 
all of Beneficiary's costs and expenses incurred in connection therewith 
including, without limitation, Trustee's and attorneys' fees (including 
attorneys' fees for any appeal, bankruptcy proceeding or any other 
proceeding), accountants' fees, appraisal and internal appraisal review fees, 
inspection fees (including inspections for hazardous substances, asbestos 
containing materials, and compliance with building and land use codes and 
regulations), engineering fees, and expert witness fees and costs of title 
reports shall be added to and be a part of the Secured Obligations and shall 
be payable on demand. 

     2.   NOTICE AND OPPORTUNITY TO CURE. Notwithstanding any other provision 
of this Deed of Trust, Beneficiary shall not accelerate the maturity of one 
or more of the Secured Obligations (a) because of a monetary default 
(defined below) unless the default is not cured within ten (10) days of the 
date on which Beneficiary mails or delivers written notice of the default to 
Grantor, or (b) because of a nonmonetary default (defined below) unless the 
nonmonetary default is not cured within thirty (30) days of the date on 
which Beneficiary mails or delivers written notice of the default to Grantor. 
For purposes of this Deed of Trust, the term "monetary default" means a 
failure by Grantor to make any payment required of it pursuant to the Note 
or any other Loan Document, and the term "nonmonetary default" means a 
failure by Grantor or any other person or entity to perform any obligation 
contained in the Note or any other Loan Document, other than the obligation 
to make payments provided for in the Note or any other Loan Document. If a 
nonmonetary default is capable of being cured and the cure cannot reasonably 
be completed within the thirty (30) day cure period, the cure period shall 
be extended up to ninety (90) days so long as Grantor has commenced action 
to cure within the thirty (30) day cure period, and in Beneficiary's opinion,
Grantor is proceeding to cure the default with due diligence. None of the 
foregoing shall be construed to obligate Beneficiary to forebear in any 
other manner from exercising its remedies and Beneficiary may pursue any 
other rights or remedies which Beneficiary may have because of a default.

     3.   CUMULATIVE REMEDIES. To the fullest extent allowed by law, all of
Beneficiary's and Trustee's rights and remedies specified in the Loan
Documents (including this Deed of Trust) are cumulative, not mutually
exclusive and not in substitution for any rights or remedies available at law
or in equity. Without waiving its rights in the Collateral, Beneficiary may
proceed against Grantor, any other party obligated to pay or perform the
Secured Obligations or against any other security or guaranty for the Secured
Obligations, in such order or manner as Beneficiary may elect. Except where
prohibited by applicable law, the commencement of proceedings to enforce a
particular remedy shall not preclude the commencement of other proceedings of
other proceedings to enforce a different remedy.

                                      -12-

<PAGE>

     4.   ENTRY. After a default, Beneficiary, in person, by agent or by court
appointed receiver, may enter, take possession of, manage and operate all or
any part of the Collateral, and may also do any and all other things in
connection with those actions that Beneficiary may consider necessary and
appropriate to protect the security of this Deed of Trust, including taking
and possessing copies of all of Grantor's or the then owner's books and
records; entering into, enforcing, modifying, or canceling Leases on such
terms and conditions as Beneficiary may consider proper, obtaining and
evicting tenants; fixing or modifying Rents; collecting and receiving any
payment of money owing to Grantor, completing any unfinished construction;
and/or contracting for and making repairs and alterations. Grantor hereby
irrevocably constitutes and appoints Beneficiary as its attorney-in-fact to
perform such acts and execute such documents as Beneficiary in its sole
discretion may consider to be appropriate in connection with taking these
measures. Although the foregoing power of attorney is effective immediately,
Beneficiary shall not exercise the power until the occurrence of a default.

     5.   APPOINTMENT OF RECEIVER. In the event of a default, Grantor 
consents to, and Beneficiary, to the fullest extent permitted by applicable 
law, shall be entitled, without notice bond or regard to the adequacy of the 
Collateral, to the appointment of a receiver for the Collateral The receiver 
shall have, in addition to all the rights and powers customarily given to 
and exercised by a receiver, all the rights and powers granted to 
Beneficiary by the Loan Documents. The receiver shall be entitled to receive 
a reasonable fee for management of the Property. If Grantor is an occupant 
of the Property, Beneficiary has the right to require Grantor to pay rent at 
fair market rates and the right to remove Grantor from Property if Grantor 
fails to pay rent. 

     6.   SALE OF PROPERTY AFTER DEFAULT. Following a default and the 
foreclosure of this Deed of Trust, either judicially or nonjudicially, the 
Collateral may be sold separately or as a whole, at the option of Beneficiary.
In the event of a trustee's sale of the Collateral pursuant to the power of 
sale granted herein, Beneficiary hereby assigns its security interest in the 
personal property Collateral to the trustee. Beneficiary may also realize on 
the personal property Collateral in accordance with the remedies available 
to secured parties under the Uniform Commercial Code or at law. In the event 
of a trustee's sale, Grantor, and the holder of any subordinate liens or 
security interest with actual or constructive notice hereof, waive any 
equitable, statutory or other right they may have to require marshaling of 
assets in connection with the exercises of any of the remedies permitted by 
applicable law or provided herein, or to direct the order in which any of 
the Collateral will be sold in the event of any sale under this Deed of 
Trust or foreclosure in the inverse order of alienation.

     7.   FORECLOSURE OF LESSEE'S RIGHTS-SUBORDINATION. Beneficiary shall 
have the right, at its option, to foreclose this Deed of Trust subject to 
the rights of any lessees of the Property. Beneficiary's failure to 
foreclose against any lessee shall not be asserted as a claim against 
Beneficiary or as a defense against any claim by Beneficiary in any action 
or proceeding. Beneficiary at any time may subordinate this Deed of Trust to 
any or all of the Leases except that Beneficiary shall retain its priority 
claim to any condemnation or insurance proceeds.

     8.   REPAIRS DURING REDEMPTION. In the event of a judicial foreclosure the
purchaser during any redemption period may make such repairs and alterations
to the Property as may be reasonably. necessary for the proper operation,
care, preservation, protection and insuring of the Property. Any sums so paid,
together with interest from the date of the expenditure at the rate provided
in the judgment, shall be added to the amount required to be paid for
redemption of the Property.

                                   ARTICLE VI

     1 .  ADDITIONAL SECURITY DOCUMENTS. Grantor shall within fifteen (15) days
after request by Beneficiary execute and deliver any financing statement,
renewal, affidavit, certificate, continuation statement, or other document
Beneficiary may request in order to perfect, preserve, continue, extend, or
maintain security interests or liens granted herein to Beneficiary and the
priority of such security interests or liens. Grantor shall pay all costs and
expenses incurred by Beneficiary in connection with the preparation,
execution, recording, filing, and refiling of any such document.

                                      -13-

<PAGE>

     2.   RECONVEYANCE AFTER PAYMENT. Upon written request of Beneficiary 
stating that all obligations secured by this Deed of Trust have been paid, 
Trustee shall reconvey, without warranty, the Collateral then subject to the 
lien of this Deed of Trust. Grantor shall pay any costs, trustee's fees and 
recording fees incurred in so reconveying the Property.

     3.   NONWAIVER OF TERMS AND CONDITIONS. Time is of the essence with 
respect to performance ofthe obligations under the Loan Documents. 
Beneficiary's failure to require prompt enforcement of any such obligation 
shall not constitute a waiver of the obligation or any subsequent required 
performance of the obligation. No term or condition of this Deed of Trust or 
any other Loan Documents may be waived, modified or amended except by a 
written agreement signed by Grantor and Beneficiary. Any waiver of any term 
or condition of the Loan Documents shall apply only to the time and occasion 
specified in the waiver and shall not constitute a waiver of the term or 
condition at any subsequent time or occasion.

     4.   WAIVERS BY GRANTOR. Without affecting any of Grantor's obligations 
under the Loan Documents, Grantor waives the following: (a) any right to 
require Beneficiary to proceed against any specific party liable for sums 
due under the Loan Documents or to proceed against or exhaust any specific 
security for sums due under the Loan Documents; (b) notice of new or 
additional indebtedness of any Grantor or any other party liable for sums 
due under the Loan Documents to Beneficiary; (c) any defense arising out of 
Beneficiary entering into additional financing or other arrangements with 
any Grantor or any other party liable for sums due under the Loan Documents 
and any action taken by Beneficiary in connection with any such financing or 
other arrangements or any pending financing or other arrangements; (d) any 
defense arising out of the absence, impairment, or loss of any or all rights 
of recourse, reimbursement, contribution or subrogation or any other rights or
remedies of Beneficiary against any Grantor or any other party liable for sums
due under the Loan Documents or any Collateral; and (e) any obligation of
Beneficiary to see to the proper use and application of any proceeds advanced
pursuant to the Loan Documents.

     5.   RIGHT OF SUBROGATION Beneficiary is subrogated to the rights, 
whether legal or equitable, of all beneficiaries, mortgagees, lienholders 
and owners directly or indirectly paid off or satisfied in whole or in part 
by any proceeds advanced by Beneficiary under the Loan Documents, regardless 
of whether such parties assigned or released of record their rights or liens 
upon payment.

     6.   JOINT AND SEVERAL LIABILITY. If there is more than one Grantor of 
this Deed of Trust, their obligations shall be joint and several.

     7.   STATEMENT OF AMOUNT OWING. Grantor within fifteen (15) days after 
request by Beneficiary will furnish Beneficiary a written statement of the 
amount due under the Loan Documents, any offsets or defenses against the 
amount claimed by Grantor, and such other factual matters as Beneficiary may 
reasonably request.

     8.   BOOKS AND RECORDS; FINANCIAL STATEMENTS.

          (a) Grantor will keep and maintain at Grantor's principal place of 
business which is East 3900 Broadway Avenue, Spokane, WA 99202, or such 
other place as Beneficiary may approve in writing, books of accounts and 
records adequate to reflect correctly the results of the operation of the 
Property and copies of all written contracts, leases and other instruments 
which affect the Property. Such books, records, contracts, leases and other 
instruments shall be subject to examination, inspection and copying at any 
reasonable time by Beneficiary. Except as otherwise agreed in writing by 
Beneficiary, Grantor shall provide to Beneficiary within ninety (90) days 
after the end of each of Grantor's fiscal years (or within twenty (20) days 
of Beneficiary's written request therefor if Grantor is in default), for 
each Grantor, for each general partner of Grantor if Grantor is a partnership,
and for each guarantor of all or any of the Secured Obligations, a complete 
and current financial statement, together with a statement of income and 
expenses of the Property and a statement of changes in financial position 
with respect to the Property for the prior year, each in reasonable detail 
and certified by Grantor, the general partner or the guarantor, as the case 
may be. All financial statements shall be prepared in accordance with 
generally accepted accounting principles consistently applied, or such other 
accounting practices as Lender may approve. At the same time, Grantor shall 
also furnish a current rent roll for the Property, certified by Grantor, 
which shall include such

                                      -14-

<PAGE>

information as Beneficiary may require, including the name of each tenant, 
the lease expiration date, the monthly rent, the  date to which rent has 
been paid, and any deposits or prepaid rent Grantor  is holding. In addition 
to the foregoing, unless otherwise agreed in writing  by Beneficiary, within 
one hundred twenty (120) days after the end of each  tax year of Grantor and 
each guarantor of all or any of the Secured  Obligations, Grantor will 
provide Beneficiary with a copy of the United  States federal income tax 
return filed by Grantor and each guarantor for his, her or its tax year most 
recently ended. 

          (b) All financial statements shall be prepared in accordance with 
generally accepted accounting principles, consistently applied, or shall 
otherwise be prepared in a manner acceptable to Beneficiary. Grantor's 
compliance with these provisions shall not limit or affect Grantor's 
obligations to comply with financial, tax and operation covenants and 
reporting requirements under any other agreement between Grantor and 
Beneficiary whether or not such other agreement is related to the Secured 
Obligations. If any of the reporting requirements in this Section 8 are 
inconsistent with the reporting requirements in any such other agreement, 
the reporting requirements in such other agreement shall control.

     9.   APPRAISALS. In the event of a default Beneficiary may obtain a 
current regulatory conforming appraisal of the Collateral. In addition, 
appraisals may be commissioned by Beneficiary when required by laws and 
regulations which govern Beneficiary's lending practices. The cost of all 
such appraisals (and related internal review fees and costs) will be paid by 
Grantor within fifteen ( 15) days after request by Beneficiary.

     10.  INVASION OF PREPAYMENT FEE. If Grantor is in default, whether 
Beneficiary has accelerated the maturity of the indebtedness or not, any 
tender of payment sufficient to satisfy all sums due under the Loan 
Documents made at any time prior to foreclosure sale shall constitute an 
evasion of lllc prepaylnent terms of the Note, if any, and shall be deemed a 
voluntary prepayment. Any such payment, to the extent permitted by law, 
shall include the additional payment required under the prepayment fee 
provision in the Note, if any, or if at that time prepayment is not permitted,
then such payment, to the extent permitted by law, will include an 
additional payment of five percent (5%) of the then principal balance.

     11.  PAYMENT OF NEW TAXES. If any federal, state or local law is passed
subsequent to the date of this Deed of Trust which requires Beneficiary to pay
any tax because of this Deed of Trust or the sums due under the Loan Documents
(excluding income taxes), then Grantor shall pay to Beneficiary on demand any
such taxes if it is lawful for Grantor to pay them, or, in the alternative
Grantor may repay all sums due under the Loan Documents plus any prepayment
fee within thirty (30) days of such demand. If it is not lawful for Grantor to
pay such taxes, then at its option Beneficiary may declare a default under the
Loan Documents.

     12.  IN-HOUSE COUNSEL FEES. Whenever Grantor is obligated to pay or 
reimburse Beneficiary or Trustee for any attorneys' fees, those fees shall 
include the allocated costs for services of in-house counsel.

     13.  NOTICES. Any notice given by Grantor, Trustee or Beneficiary shall 
be in writing and shall be effective (1) on personal delivery to the party 
receiving the notice or (2) on the third day after deposit in the United 
States mail, postage prepaid with return receipt requested, addressed to the 
party at the address set forth above (or such other address as a party may 
specify by written notice given pursuant to this paragraph), or with respect 
to the Grantor, to the address at which Beneficiary customarily or last 
communicated with Grantor.

     14.  CONTROLLING DOCUMENT. In the event of a conflict or inconsistency 
between the terms and conditions of this Deed of Trust and the terms and 
conditions of any other of the Loan Documents (except for any separate 
assignment of the Rents and/or the Leases and any loan agreement which shall 
prevail over this Deed of Trust), the terms and conditions of this Deed of 
Trust shall prevail. 

                                      -15-

<PAGE>

     15.  INVALIDITY OF TERMS AND CONDITIONS. If any term or condition of 
this Deed of Trust is found to be invalid, the invalidity shall not affect 
any other term or condition of the Deed of Trust and the Deed of Trust shall 
be construed as if not containing the invalid term or condition .

     16.  LEGISLATION AFFECTING BENEFICIARY'S RIGHTS. If enactment or 
expiration of applicable laws has the effect of rendering any provision of 
the Note or this Deed of Trust unenforceable according to its terms, 
Beneficiary, at its option, may require immediate payment in full of all 
sums secured by this Deed of Trust and may invoke any remedies permitted 
herein. 

     l7.  RULES OF CONSTRUCTION. This Deed of Trust shall be construed so that,
whenever applicable, the use of the singular shall include the plural, the use
of the plural shall include the singular, and the use of any gender shall be
applicable to all genders and shall include corporations, partnerships,
limited partnerships, limited liability companies and other forms of entities.
This Deed of Trust inures to the benefit of, and binds all parties named
herein and their successors and assigns. The headings to the various sections
have been inserted for convenience of reference only and shall not be used to
construe this Deed of Trust.

     18.  APPLICABLE LAW. The Loan Documents shall be governed by and 
construed in accordance with the laws of the State of Washington.

GRANTOR:


THE COEUR D'ALENES COMPANY,
an Idaho corporation


By Marilyn Schroeder
   -----------------

Its: Treasurer
     ---------


STATE OF WASHINGTON   )
                      )SS
COUNTY OF Spokane     )

     On this day personally appeared before me Marilyn Schroeder to me known 
(or proven on the basis of satisfactory evidence) to be the Treasurer of THE 
COEUR D'ALENES COMPANY, an Idaho corporation, the corporation that executed the
within and foregoing instrument, and acknowledged said instrument to be the
free and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned, and on oath stated that __he was authorized to execute said
instrument.

GIVEN UNDER my hand and of official seal this 5th day of February, 1996.


                                                         /S/ Paulette A. Bleken
                                                         ----------------------
[SEAL]                                   (Print Notary Name) Paulette A. Bleken
                               Notary Public in and for the State of Washington
                                                     residing at Greenacres WA 
                                                 My appointment expires 8-27-99


                                      -16-


<PAGE>

                           REQUEST FOR FULL RECONVEYANCE
                To be used only when all obligations have been paid
                          under the Note and this Deed of Trust
TO: TRUSTEE

   The undersigned is the legal owner and holder of the Note and all other
indebtedness secured by the within Deed of Trust. Said Note, together with 
all other indebtedness secured by said Deed of Trust, has been fully paid and 
satisfied; and you are hereby requested and directed, on payment to you of 
any sums owing to you under the terms of said Deed of Trust, to cancel said 
Note above mentioned and all other evidence of indebtedness secured by said 
Deed of Trust delivered to you herewith, together with said Deed of Trust, 
and to reconvey, without warranty, to the parties designated by the terms of 
said Deed of Trust, all the estate now held by you thereunder.

   Dated____________________________________________________________
   
   Mail reconveyance to:____________________________________________


                                       -17-

<PAGE>

                                    SCHEDULE A

THIS SCHEDULE IS PART OF THE DEED OF TRUST DATED DECEMBER 20, 1995, BETWEEN 
THE COEUR D'ALENES COMPANY, AN IDAHO CORPORATION, AS GRANTOR, RAINIER CREDIT 
COMPANY, AS TRUSTEE, AND SEATTLE-FIRST NATIONAL BANK, A NATIONAL BANKING 
ASSOCIATION, AS BENEFICIARY

PROPERTY ADDRESS: EAST 3900 BROADWAY AVENUE, SPOKANE, WA 99202

LEGAL DESCRIPTION:

BLOCKS 100 AND 107, EAST SIDE SYNDICATE ADDITION, ACCORDING TO PLAT RECORDED 
IN VOLUME "C" OF PLATS, PAGE 73, IN THE CITY OF SPOKANE, SPOKANE COUNTY, 
WASHINGTON.

TOGETHER WITH VACATED SPRINGFIELD AVENUE ADJACENT TO SAID PREMISES.
                                       
                                       -18-

+<PAGE>

[LOGO]
                                                    Loan No. 604938 and 453817-9


                         CONSTRUCTION LOAN AGREEMENT

     This Agreement is made as of December 20, 1995, between SEATTLE-FIRST 
NATIONAL BANK a national banking association ("LENDER"), and THE COEUR D'ALENES 
COMPANY, an Idaho corporation ("BORROWER").
   
                                  RECITALS:
   
     A. Borrower has requested that Lender make a loan to Borrower (the "LOAN") 
to be secured by certain real property (the "PROPERTY") commonly known as 
East 3900 Broadway Avenue, Spokane, WA 99202 located in Spokane County, 
Washington. The proceeds of the Loan will be used to pay a portion of the cost 
of making certain improvements more particularly described as follows: a 
90,448 square foot industrial warehouse building (the "IMPROVEMENTS"). The 
Property and the Improvements are collectively referred to in this Agreement as 
the "Project".
   
     B. Lender is willing to make the Loan to Borrower on the terms and 
conditions set forth in this Agreement.   
   
                                  AGREEMENT:
   
     In consideration of the mutual covenants contained in this Agreement, 
Borrower and Lender agree as follows:   
   
     1.   LOAN. The principal amount of the Loan will be ONE MILLION SIX 
HUNDRED EIGHTY-EIGHT THOUSAND AND NO/100 DOLLARS ($1,688,000.00). The Loan 
will be evidenced by a Promissory Note (the "NOTE") which is being executed 
by Borrower with this Agreement.  The payment and interest terms of the Loan 
are set forth in the Note. The terms of the Note are incorporated into this 
Agreement by this reference. The Loan will mature, and be due and payable in 
full ten (10) months from the first day of the first calendar month following 
the initial advance of Loan proceeds. The last day of the term of the Loan is 
referred to in this Agreement as the "MATURITY DATE". The Loan shall be due 
and payable in full on the Maturity Date, as the same may be extended 
pursuant to the Note.
   
     2.   LOAN DOCUMENTS. In addition to the Note and this Agreement, the Loan 
will be evidenced, guaranteed and secured by the following documents, and any 
other documents which Lender may require (collectively with this Agreement, the 
Note, and all extensions, modifications and renewals of any such documents, the 
"LOAN DOCUMENTS"), all of which must be acceptable to Lender in form and 
content:   
   
          2.1  DEED OF TRUST. A Deed of Trust, Security Agreement and Fixture 
Filing with Assignment of Leases and Rents (the "DEED OF TRUST") which creates 
or constitutes, as applicable (a) a first priority lien on fee simple title to 
the Property; (b) a first priority security interest in all fixtures and 
tangible and intangible personal property used in the development, operation, 
maintenance or management of the Project; (c) a fixture filing under the 
Washington Uniform Commercial Code; and (d) a present assignment of all leases, 
rents, revenues and other cash received or receivable with respect to the 
Project.   
   
          2.2  FINANCING STATEMENTS. Such Uniform Commercial Code financing 
statements ("FINANCING STATEMENTS") as Lender may require to perfect any 
security interests granted to Lender under the Deed of Trust, this Agreement or 
any other Loan Document.   


                                       1
<PAGE>
   
          2.3  GUARANTEES. A guaranty or guarantees of the payment and 
performance of Borrower's obligations under the Loan Documents (each a 
"Guarantor" and if more than one person or entity, collectively 
"GUARANTORS").   
   
          2.4  ASSIGNMENT OF CONSTRUCTION CONTRACT. Architect's Contract and 
Plans and Specifications required by Lender, an assignment of the general 
contract for the construction of the improvements, between Borrower and its 
contractor ("GENERAL CONTRACTOR"), an assignment of the architectural contract 
for the Improvements with the Project architect ("ARCHITECT"), and an assignment
of the plans and specifications for the Improvements, and such consents to such 
assignments as Lender may require.   
   
     3.   LOAN FEE. In consideration of Lender's execution of this Agreement, 
which evidences Lender's commitment to make the Loan on the terms and conditions
of this Agreement and the other Loan Documents, Borrower shall pay Lender a 
loan fee in the amount of one percent (l .000%) of the amount of Loan (the 
"LOAN FEE"). One-half (l/2) of the Loan Fee shall be fully earned by Lender upon
the execution of this Agreement by both parties, and is due and payable without
condition on the date of the first disbursement of Loan proceeds, or sixty (60) 
days from the date of this Agreement, whichever is earlier. The remainder of the
Loan Fee shall be fully earned by Lender upon the conversion of the Loan to a 
permanent loan in accordance with the terms of the Note, and shall be due and 
payable in full on the date of such conversion.   
   
     4.   PRE-CLOSING REQUIREMENTS. Prior to and as a condition precedent to the
closing and funding of the Loan, each of the conditions set forth below must be 
met to Lender's satisfaction, and Borrower must meet to Lender's satisfaction 
all other conditions to the closing and initial funding of the Loan as may be
specified in writing by Lender to Borrower pursuant to a loan commitment, term
sheet, exhibit letter or other written instrument. For purposes of this   
Agreement, the term "closing" means the date the Deed of Trust is recorded and  
the conditions to the initial advance of Loan proceeds are satisfied. All   
documents and instruments referred to below or in any other such written   
instrument must be acceptable to Lender in form and content.   
   
          4.1  LOAN DOCUMENTS. All Loan Documents shall have been executed and 
delivered to Lender by Borrower, Guarantor(s) and such other persons or entities
as Lender may require, the Deed of Trust shall have been duly recorded in the 
real property records of the county in which the Property is located, the 
Financing Statements shall have been filed in all places necessary to perfect 
the liens and security interests created by the Deed of Trust and other Loan 
Documents, and any other Loan Documents to be recorded or filed shall have been 
duly recorded and filed in the appropriate recording and filing offices.   
   
          4.2  LOAN FEE. Borrower shall have paid the Loan Fee.   
   
          4.3  CERTIFICATE AND INDEMNITY. Borrower shall have executed and 
delivered to Lender a Certificate and Indemnity Agreement Regarding Building 
Laws and Hazardous Substances (the "CERTIFICATE AND INDEMNITY").   
   
          4.4  TITLE INSURANCE. Lender shall have received an ALTA extended 
coverage lender's policy of title insurance (the "TITLE POLICY") from a title 
insurance company acceptable to Lender, in an amount not less than the maximum 
principal amount of the Loan, insuring the Deed of Trust as a first lien on 
Borrower's interests in the Property, subject only to liens, encumbrances and 
other exceptions to title approved in writing by Lender and set forth in the 
Title Policy. The Title Policy shall contain such title insurance endorsements 
and reinsurance or coinsurance agreements as Lender may reasonably require.   
   
          4.5  UCC SEARCHES. Lender shall have received current uniform 
commercial code searches made in the office of the Department of Licensing of 
the State of Washington, and such other places as Lender may require, covering 
Borrower and such other persons and entities as Lender may require, and showing 
no filings related to or which could relate to the Project, or any other 
collateral for the Loan, other than filings made pursuant to the Loan Documents 
or otherwise approved by Lender.   


                                       2
<PAGE>
   
          4.6  FINANCIAL CONDITION. Lender shall be satisfied that the financial
condition and credit of Borrower and each Guarantor and all information relating
to the Project and its condition are as represented to Lender without any 
material adverse change.   
   
          4.7  CONSTRUCTION MATTERS. Lender shall have approved the General 
Contractor and received and approved the Construction Contract between Borrower 
and General Contractor for the improvements (the "CONSTRUCTION CONTRACT"), and 
if required by Lender, Lender shall have received a performance and payment bond
in an amount and otherwise acceptable to Lender, and a list of all 
subcontractors and materialmen who are expected to provide labor or material in 
connection with the Project.   
   
          4.8  PERMITS. Lender shall have received and approved copies of all 
building and other governmental permits and approvals necessary for Borrower to 
construct the Improvements and complete the Project.   
   
          4.9  LITIGATION. There shall be no litigation pending against Borrower
or any Guarantor, or any partner in Borrower, which in Lender's opinion could or
does affect Borrower's ability to complete the Project or Borrower's or any   
guarantor's ability to otherwise perform all of the terms and provisions of this
Agreement, the other Loan Documents and the Certificate and Indemnity.   
   
          4.10 OTHER CONDITIONS. All other provisions of this Agreement or any 
other Loan Document to be complied with prior to the closing and initial funding
of the Loan shall have been complied with, and all of the representations and   
warranties of Borrower and the other Loan Documents in this Agreement shall be  
true and correct in all material aspects.   
   
     If Lender disburses funds without requiring the satisfaction of each of the
foregoing conditions, Borrower's obligation to meet the unsatisfied conditions  
shall not be deemed waived (unless specifically waived in writing by Lender) and
Lender may require compliance with each of such conditions before further Loan  
proceeds are disbursed.   
   
     5.   CONSTRUCTION COVENANTS.   
   
          5.1  PLANS AND SPECIFICATIONS; PROJECT BUDGET. Borrower shall complete
the Improvements and the Project in accordance with plans and specifications   
submitted to and approved in writing by Lender (the "PLANS AND SPECIFICATIONS"),
and a budget (the "PROJECT BUDGET") approved in writing by Lender containing a  
detailed breakdown of the total costs of constructing the Improvements and   
completing the Project. Unless otherwise agreed in writing by Lender, the Plans 
and Specifications and the Project Budget shall be submitted to and approved by 
Lender prior to the closing and initial funding of the Loan. The Loan proceeds  
shall be allocated to various Project costs as shown in the Project Budget. The 
line items in the approved Project Budget may be adjusted and reallocated from  
time to time by Borrower, subject to the prior written approval of Lender. 
Lender also may initiate and determine reallocations of line items in the   
Project Budget from time to time when Lender determines such reallocations to be
reasonable or appropriate.   
   
          5.2  COMPLETION OF PROJECT. Borrower shall cause the Project to be 
completed in a good and workmanlike manner in accordance with the Plans and 
Specifications, and in compliance with the terms and conditions of the building 
permits and all other permits and approvals issued for the Project by any 
governmental authority, and the provisions of any applicable covenants, 
conditions or restrictions, free and clear of all claims, liens and encumbrances
other than the Deed of Trust and such other encumbrances as Lender may approve 
in writing. Borrower also shall comply with all applicable federal, state and 
local laws, including without limitation federal, state and local environmental,
shorelines management and hazardous waste laws.   
   
          5.3  COMMENCEMENT AND COMPLETION. Construction of the Improvements has
commenced (or will commence within thirty (30) days after the date of this 
Agreement), and the Improvements and the Project shall be completed within 
seven (7) months from the date of this Agreement, or sooner as required by any 
lease or other agreement or governmental permit or approval by which Borrower or
the Project is bound. The Project shall be deemed completed upon the 
satisfaction of the conditions to final disbursement of Loan proceeds set forth 
in Section 7 below.  


                                       3
<PAGE>
   
          5.4  CHANGES IN PLANS AND SPECIFICATIONS: CHANGE ORDERS. Borrower 
shall provide Lender with notice of all changes in the Plans and Specifications,
changes to the terms of the Construction Contract, orders for extra work, or 
other changes to the Project. Unless otherwise agreed by Lender, all changes to 
the Plans and Specifications or the Project (other than minor changes which do 
not affect the cost of the Project or the scheduled completion date) shall be 
made by a written change order signed by Borrower and General Contractor. 
Lender's prior written approval shall be required for (a) any single change 
order or modification which will result in an extension of the completion date 
of the Project if more than seven (7) days or which will result in an increase 
or decrease of more than $7,000.00 (or such other amount as Lender may now or 
hereafter approve in writing) of the direct construction costs specified in the 
approved Project Budget ("CONSTRUCTION COSTS"), (b) any change order or 
modification which together with the aggregate of all previous change orders or 
modifications (whether or not previously approved by Lender) will result in a 
net cumulative increase of the completion date of the Project if more than 
thirty (30) days or which will result in a net cumulative increase or decrease 
of more than $30,000.00 (or such other amount as Lender may now or hereafter 
approve in writing) of the Construction Costs. Borrower will not permit the 
performance of any work pursuant to any change order unless and until Borrower 
has received the approval of Lender, if such approval is required pursuant to 
this paragraph. Borrower shall provide Lender with copies of all change orders 
and modifications, irrespective of amount, whether or not Lender's prior 
approval is required pursuant to this paragraph. If a change order is made 
without Lender's consent and such consent is required pursuant to this 
paragraph, Lender shall have no obligation to disburse any Funds to pay for 
costs associated with the change order.   
   
          5.5  ABANDONMENT OF CONSTRUCTION. If construction of the Improvements 
is at any time abandoned or discontinued for fifteen (15) consecutive days or 
more, or if Lender in good faith determines the work is not being performed in 
accordance with the approved Plans and Specifications and Construction Contract,
Lender at its option, may enter onto the Property (or designate a third party to
enter onto the Property) to complete the construction or correct any work 
improperly done or replace any defective material. If Lender exercises the 
foregoing option, Lender may employ such workmen and furnish such materials as 
it believes are necessary or appropriate to complete the Improvements or correct
any errors or defects in construction or workmanship, or Lender may declare a 
default under this Agreement. All costs incurred by Lender pursuant to this 
paragraph, including a reasonable sum for supervision, attorneys' fees and all 
related costs and expenses, shall be deemed additional advances to Borrower and 
secured by the Deed of Trust and the other Loan Documents and by any other 
collateral for the Loan, and added to the unpaid principal balance of the Loan 
(even if the costs so incurred, together with prior advances of Loan proceeds, 
cause the outstanding principal balance to exceed the maximum amount of the Loan
set forth above). On demand, Borrower shall pay all costs and expenses expended 
by Lender pursuant to this paragraph. The fifteen (15) day period set forth 
above shall be extended one (l) day for each day that the abandonment or 
discontinuation of construction is caused by fire, earthquake or other acts of 
God, strikes, lockout, acts of public enemy, riot, insurrection or governmental
regulation of the sale or transportation of materials, supplies or labor, or any
other cause beyond the reasonable control of Borrower; provided, in no event 
shall such fifteen (15) day period be extended to a period of more than 
sixty (60) days, unless otherwise agreed in writing by Lender.   
   
     6.   EQUITY. Prior to the initial advance of Loan proceeds, Lender shall 
have received evidence satisfactory to it that Borrower has "EQUITY" in the 
Project in an amount equal to the difference between (a) the total cost of 
the Project, as shown in the Project Budget approved by Lender, and (b) the 
amount of the Loan. Equity may be in the form of either prepaid costs in the 
approved Project Budget, paid by Borrower with its own funds and verified by 
Lender, or cash deposited with Lender.  All cash deposited by Lender will be 
advanced by Lender pursuant to the terms of this Agreement prior to the 
disbursement of Loan funds. 
 
   
     7.   DISBURSEMENTS. This Section 7 shall govern the disbursement of Loan 
proceeds and all funds deposited with Lender pursuant to this Agreement, 
including any equity or other funds deposited with Lender pursuant to this 
Agreement (collectively the "FUNDS"). Borrower authorizes Lender to pay directly
from the Funds, the Loan Fee and Lender's expenses for which Borrower is liable 
under this Agreement or any other Loan Document.   


                                       4
<PAGE>

    7.1 GENERAL CONDITIONS TO DISBURSEMENTS. Each disbursement of Funds at 
the request of Borrower is subject to the following general conditions:   

         (a) Neither the Improvements nor any other part of the Project shall 
have been materially damaged by fire or other casualty, and there shall be no 
eminent domain or condemnation proceeding pending or threatened against the 
Project. This condition shall be deemed satisfied if Lender has received 
insurance or condemnation proceeds or a cash deposit from Borrower sufficient 
in Lender's judgment to pay the cost of all repairs necessary as a result of 
the casualty or condemnation and any related costs or expenses.   

        (b) Lender shall have received, at Borrower's expense, an endorsement 
to the Title Policy, in form and content acceptable to Lender, insuring the 
continued first lien priority of the Deed of Trust.   

         (c) Lender shall have received, at Borrower's expense, upon 
completion of the foundations of the Improvements, a foundation endorsement 
to the Title Policy, in form and content acceptable to Lender, showing no 
encroachments of the foundations onto other property.   

         (d) Lender must be satisfied that the Loan is "in balance" pursuant 
to Section 7.6 below or Borrower must have deposited the additional Funds 
with Lender required pursuant to such section of this Agreement.   

         (e) Lender is not prohibited from disbursing Funds under any 
applicable lien laws or stop notice statutes or otherwise.   

         (f) Borrower is not in default under this Agreement or any other 
Loan Document or under the Certificate and Indemnity, and no event or 
circumstance then exists which with notice, the passage of time or both would 
constitute a default under  this Agreement, any other Loan Document or the 
Certificate and Indemnity.   

         (g) No legal or administrative proceeding challenging the validity 
of or seeking to enjoin, set aside, review or otherwise challenge any 
governmental permit or approval applicable to the Project shall be pending 
or threatened.   

Unless all the foregoing conditions are met to Lender's satisfaction, Lender  
shall have no obligation to make any disbursement of Funds requested by   
Borrower; however, Lender may elect to make an advance of Funds 
notwithstanding  that any one or more of the foregoing conditions is not 
satisfied, and by doing  so Lender shall not be deemed to have waived its 
right to require the   satisfaction of any such conditions with respect to 
any other advance of Funds.  Unless otherwise agreed in writing by Lender, 
throughout the term of the Loan,  Borrower shall maintain a checking account 
(the "Loan Account") with Lender into which Loan proceeds and other Funds 
will be deposited and from which any Loan   payments that Borrower is 
required to make will be automatically withdrawn.   

    7.2 DISBURSEMENTS FOR CONSTRUCTION COSTS. Borrower may request 
disbursements of  Funds to pay direct construction costs provided for in the 
Project Budget once a month.  All requests for payment of Construction Costs 
shall be pursuant to a   draw request ("DRAW REQUEST"). Each Draw Request 
shall be on an AIA form of   Application and Certificate for Payment (or 
other form approved by Lender), signed by General Contractor, and Borrower or 
Architect, as required by Lender. Lender shall make disbursements pursuant to 
each Draw Request within seven (7)  business days after Lender's receipt and 
approval of the Draw Request and any supplementary documentation or 
information required by Lender, and subject to the terms and conditions of 
Section 7 of this Agreement. Unless otherwise agreed in writing by Lender, 
each Draw Request shall be accompanied by the following,  all of which must 
be acceptable to Lender: 

         (a) A Certificate of Job Progress signed by Borrower and General 
Contractor stating the percentage of the Project completed through the date 
payment is requested.

         (b) If requested by Lender, invoices (or other reasonable evidence)   
substantiating the Construction Costs covered by the Draw Request.


                                      5

<PAGE>
         (c) Executed acknowledgments of payment and releases of liens 
(through the date covered by the immediately preceding monthly advance) from 
General Contractor and all laborers, subcontractors and materialmen 
performing labor or services or supplying materials in connection with the 
Project.   

    Lender will withhold from each advance of Construction Costs an amount 
(the "RETENTION") equal to ten percent (10%) (or such other amount as may be 
set forth in the Construction Contract and approved in writing by Lender) of 
the amount of the Construction Costs for which disbursement is requested. 
Unless otherwise agreed in writing by Lender, the amount of the Retention 
shall be held by Lender until the conditions for final advance set forth 
below are satisfied.  If a disbursement is requested to pay for materials 
stored off-site, prior to making the disbursement Lender must receive (i) a 
copy of a bill of sale or other acceptable evidence establishing that such 
materials were purchased free and clear of liens and encumbrances and not 
pursuant to a conditional sales contract, (ii) evidence the materials are 
stored at a suitable location acceptable to Lender, and are insured against 
damage or destruction for the full insurable value under a policy of 
insurance which names Lender as an additional loss payee, and (iii) evidence 
the materials are segregated from materials and  equipment not intended to be 
incorporated into the Project.

    7.3 DISBURSEMENTS FOR OTHER COSTS.

         (a) INTEREST. If there is an interest reserve in the Project Budget, 
prior to   completion of the Improvements (and after completion of the 
Improvements to the  extent the net operating income from the Project is 
insufficient to pay interest due on the Note), Lender will make monthly 
disbursements of Funds from the   interest reserve set forth in the Project 
Budget to pay interest on the Note. If in Lender's opinion, the undisbursed 
balance of the Loan allocated to interest  in the Project Budget (plus any 
anticipated net operating income of the Project) is not sufficient to pay 
interest on the Note as it comes due, on demand, Borrower shall pay the 
interest from its own monies (not Loan proceeds or other  Funds) or shall 
deposit additional funds with Lender to be added to the interest reserve, at 
Lender's option.  The foregoing is not intended to alter or limit Borrower's 
obligation to make the monthly payments on the Note as the same come due if 
the interest reserve is not adequate or if Lender otherwise is not required 
to make such disbursements.

        (b) NON-CONSTRUCTION COSTS. Borrower may from time to time request 
the disbursement of Funds to pay costs other than Construction Costs if such 
other costs are included in the Project Budget, and the disbursement request 
is otherwise approved by Lender.  With each request, Borrower will provide 
Lender with such evidence as Lender may require verifying the amount and 
purpose of the costs for which disbursement is requested. Prior to disbursing 
Funds to any person or entity for Project management or development fees, 
real estate fees or commissions or otherwise, Lender shall have received, 
reviewed and approved executed copies of the applicable agreement providing 
for the payment of such fees or commissions, and Lender shall be reasonably 
satisfied that the person or entity to be paid has duly performed the 
services for which payment is requested. 

    7.4 INSPECTIONS BY LENDER. At Lender's option, Lender may retain, at 
Borrower's  expense, an architect, structural engineer or other construction 
consultant (the "CONSULTANT") to inspect the Project, review Draw Requests, 
the Construction   Contract, the Plans and Specifications, the Project Budget 
and such other documents or information as Lender may require, visit the 
Project and perform such other duties as Lender deems necessary or desirable 
in connection with Lender's administration of the Loan. The Consultant may 
make periodic inspections of the Improvements during construction to review 
and comment on construction progress and percentage of completion, conformity 
of the work with the Plans and Specifications, activity and coordination 
among trades and quality of workmanship, and the accuracy of the statement of 
percentage of completion reflected in any Certificate of Job Progress 
submitted to Lender. Any inspections by Lender or the Consultant shall be 
solely for the purpose of protecting the interests of Lender, and such 
inspections shall not be construed as a representation to Borrower or any 
other person or entity that there has been or will be strict compliance on 
the part of any contractors or subcontractors with the Plans and 
Specifications or construction of the Improvements is or will be free from 
faulty materials or workmanship. If the Consultant does not approve a 
Certificate of Job Progress, or any other materials or information submitted 
to Lender with a Draw Request, Lender will have no obligation to make the 
requested advance in an amount greater than the  amount approved by the 
Consultant.
                                      6

<PAGE>
    7.5 AMOUNT OF DISBURSEMENTS. Lender shall have no obligation to make an 
advance if (a) the percentage of Construction Costs in the Project Budget 
which has already been disbursed is greater than the percentage of completion 
of the Project, as certified to Lender in any Certificate of Job Progress and 
verified by Lender or the Consultant, (b) the percentage of any Construction 
Cost line item in the Project Budget which is already paid out is greater 
than the percentage of completion of that line item, or (c) in Lender's 
reasonable opinion the value of the Property as then improved is not adequate 
security for the Loan.

    7.6 LOAN BALANCING. Lender shall have no obligation to make a requested 
advance if in Lender's reasonable opinion the Loan is not "IN BALANCE"; i.e., 
the undisbursed balance of the Loan, plus any undisbursed Funds previously 
deposited by Borrower with Lender, if any, are not sufficient to pay all 
costs necessary to complete the Project (including without limitation the 
payment of interest on the Loan) in accordance with the approved Plans and 
Specifications and the approved Project Budget, free and clear of all liens, 
encumbrances and conditional sales contracts, whether the deficiency is 
attributable to changes in the work or in the Plans and Specifications or to 
any other cause. If at any time Lender determines the Loan is not in balance, 
within five (5) days after demand, Borrower will deposit with Lender the 
amount necessary to "balance" the Loan, and all Funds so deposited with 
Lender shall be held and disbursed by  Lender in accordance with this 
Agreement prior to the disbursement of any additional Loan proceeds. If 
Lender makes such demand, Lender shall have no obligation to make further 
disbursements of Funds until such additional funds are deposited with Lender 
by Borrower. Each Draw Request or other request for   disbursement submitted 
to Lender will constitute Borrower's representation and warranty to Lender 
that the Loan is "in balance".   

    7.7 USE AND APPLICATION OF FUNDS. Funds disbursed by Lender at Borrower's 
request shall be used only to pay costs associated with the Project, and only 
in accordance with Borrower's Draw Requests or other requests for 
disbursement.   Lender shall not be obligated to advance more than one 
hundred percent (100%) of the actual costs of the Project as shown in the 
Project Budget. Advances of   Funds shall be made to Borrower, or at Lender's 
option, directly to the   contractors, materialmen, laborers and 
subcontractors involved in the Project.  Lender shall have no obligation to 
assure that Funds advanced to Borrower or others are applied against the cost 
of the Project.  Borrower accepts full responsibility for the proper 
application of all Funds advanced by Lender at Borrower's request. Lender may 
rely solely on Draw Requests or other disbursement requests submitted by 
Borrower or its agents and upon other affidavits, statements or reports 
submitted by Borrower or its agents in making advances of Funds. Borrower 
shall defend, indemnify and hold Lender harmless from any losses, demands, 
claims, attorneys' fees and expenses which may arise out of the 
misapplication or misuse of Loan proceeds (or other Funds) by Borrower or by 
any other person paid at Borrower's direction.   

    7.8 FINAL DISBURSEMENT. The final disbursement of Funds, including the 
Retention, shall be made only if the conditions set forth below are met to 
Lender's satisfaction. Furthermore, the amount of the final disbursement 
shall be subject to Lender's approval. 

         (a) The Improvements and the Project are completed in accordance 
with the Plans and Specifications as confirmed by Architect, and Lender or 
the Consultant, and if requested by Lender, Lender shall have received 
as-built Plans and Specifications for the Project. 

         (b) Lender shall have received, at Borrower's expense, an 
endorsement to the Title Policy insuring the lien-free completion of the 
Project, without exceptions other than those previously approved by Lender. 

         (c) If requested by Lender, Lender shall have received an as-built 
survey of the Project and an endorsement to the Title Policy eliminating 
title exceptions regarding possible encroachments and/or violations of 
easement rights.

         (d) If requested by Lender, Lender shall have received copies of all 
licenses, permits and certificates necessary for the lawful use and occupancy 
of the Project, including but not limited to a copy of the final certificate 
of occupancy for the Project, which shall be unconditional unless otherwise 
agreed  by Lender, or other evidence acceptable to Lender that the Project is 
completed and accepted by all necessary governmental authorities. 

                                      7


<PAGE>

         (e) If requested by Lender, Lender shall have received a final 
accounting of Project costs from Borrower and/or General Contractor.   

         (f) Lender shall have received fully executed lien releases from 
General  Contractor and all persons or entities performing labor or services 
or supplying materials in connection with the Project, or Borrower shall have 
provided Lender with an appropriate surety bond from a surety acceptable to 
Lender or affirmative title insurance coverage with respect to potential 
laborers', mechanics' or materialmens' liens.

     7.9 EXPENSES, FEES AND INTEREST. Notwithstanding any other provision of 
this   Agreement, Lender may elect to use Funds to pay when due any Loan Fee 
payable to Lender pursuant to this Agreement, interest on the Loan, expenses 
of Lender   which are Borrower's responsibility under this Agreement, and 
such other sums as may be payable from time to time by Borrower to Lender 
with respect to the Loan. Such payments at the option of Lender may be made 
by debiting or charging the   Funds in the amount of such payments without 
first disbursing such amounts to   Borrower. In addition, Borrower hereby 
authorizes Lender, at its option, to make such other payments as Lender deems 
necessary or desirable to maintain the   validity and priority of the Deed of 
Trust, including the following, unless   Borrower makes the payment within 
ten (10) days after written notice from   Lender:   

         (a)  pay delinquent assessments and taxes on the Project:   

         (b) pay title insurance premiums, recording fees, and hazard, 
liability and   flood insurance premiums;   

         (c) pay contractor's liens or claims of liens against the Project, 
subject to   any right Borrower may have to contest such liens pursuant to 
the terms of the  Deed of Trust; and   

         (d) pay judgments affecting the Project, subject to any right 
Borrower may have  to contest such judgments pursuant to the terms of the 
Deed of Trust.   

     8. REPORTING REQUIREMENTS; ADDITIONAL BORROWER COVENANTS. Throughout the 
term of the Loan, Borrower, at Borrower's expense, will provide Lender with 
the   following:   

         8.1 FINANCIAL STATEMENTS: TAX RETURNS. Except as otherwise agreed in 
writing by  Lender, within ninety (90) days after the end of each fiscal year 
of Borrower,  Borrower shall provide Lender with financial statements from 
Borrower showing   Borrower's financial condition as of the end of the most 
recent fiscal year, and within ninety (90) days after the end of each 
Guarantor's fiscal year, financial statements from each Guarantor showing 
his, her or its financial condition as of the end of the most recent fiscal 
year. All such financial statements shall be  prepared in accordance with 
generally accepted accounting principles   consistently applied (or such 
other accounting practices as Lender may approve)  and certified as correct 
by the applicable person or the chief financial officer of the applicable 
entity. Further, unless otherwise agreed in writing by Lender, within one 
hundred twenty ( 120) days after the end of each tax year of Borrower and 
each Guarantor, Borrower will provide Lender with a copy of the United   
States federal income tax return filed by Borrower and each Guarantor for 
his,  her or its tax year most recently ended.   

         8.2 LEASES ETC. Borrower will provide Lender with copies of any 
sale, lease,   rental or other occupancy agreements entered into with respect 
to all or any   part of the Project, other than sales conducted in accordance 
with any partial  release provisions in this Agreement or any other Loan 
Document or any sale   which will result in the full repayment of the Loan. 
Unless otherwise agreed in  writing by Lender, without Lender's prior 
consent, Borrower will not enter into  any lease (i) on a form of lease not 
previously approved by Lender, (ii) for a  term of three (3) years or more, 
or (iii) containing an option or right to   purchase all or any part of the 
Project.  With respect to any lease of the whole or any part of the Project 
involving an initial term of three (3) years or more, Borrower shall not, 
without the prior written consent of Lender (a) permit the  assignment or 
subletting of all or any part of the lessee's rights under the   lease unless 
the right to assign or sublet is expressly reserved by the lessee  under the 
lease, (b) amend or modify the lease for a lesser rental 

                                      8

<PAGE>

or term, or (c) accept surrender of the lease or terminate the lease except 
in accordance with the terms of the lease.   

         8.3 TAXES AND ASSESSMENTS. Whenever requested by Lender, evidence 
that taxes and assessments, worker's compensation insurance, and all other 
bills that could   result in a lien against the Project are being promptly 
paid when due.   

         8.4 ADDITIONAL DOCUMENTS. Whenever requested by Lender, Borrower 
shall promptly  execute and deliver to Lender such instruments and documents 
as Lender may   reasonably require to further evidence the Loan or perfect or 
continue the  perfection of Lender's liens against and security interests in 
the collateral  for the Loan.   

         8.5 OPERATING STATEMENTS. Within fifteen (15) days following the end 
of each   calendar month, commencing with the first calendar month following 
completion  and the initial occupancy of the Project, Borrower shall provide 
Lender with  detailed operating statements of the Project, in a form 
acceptable to Lender,  showing the income and expenses for such month and the 
net operating income for the Project.   

         8.6 RENT ROLL. Within fifteen (15) days after the end of each 
calendar month,   commencing with the first calendar month following 
completion and the initial   occupancy of the Project, Borrower shall provide 
Lender with a rent roll which  shall include such information as Lender may 
require, including each tenant's  name, the lease expiration date, the 
monthly rent, and the amount of any  deposits or prepaid rent Borrower is 
holding.   

         8.7 MARKETING AND OPERATING PROJECTIONS. Within fifteen (15) days 
after written  request from Lender, Borrower shall provide Lender with 
proforma marketing and  operating projections (and updates thereto) for the 
Project.   

     Compliance with Sections 8.5, 8.6 and 8.7 shall not be required so long 
as   Grantor is the occupant and operator of the business conducted on the 
Project.  

     9. PROJECT CASH FLOW. Each month with the income and expense statement 
required  in Section 8.5 above, Borrower shall deposit with Lender an amount 
equal to the net operating income from the Project, up to the amount of the 
monthly debt  service required under the Note. For purposes of this 
Agreement, "net operating income" means all revenues generated by the 
Project, less the actual ordinary  and necessary expenses of the Project 
(other than debt service on the Note), and less reserves (in amounts 
reasonably acceptable to Lender) for periodic expenses (such as real property 
taxes) and for working capital. Compliance with this  Section 9 shall not be 
required so long as Grantor is the occupant and operator of the business 
conducted on the Project.   

     10. EVENTS OF DEFAULT; REMEDIES.   

         10.1 DEFAULT. Time is of the essence of this Agreement and all other 
Loan   Documents and the Certificate and Indemnity. Borrower will be in 
default under  this Agreement if (i) Borrower fails to make any payment when 
due under the  Note, this Agreement, any other Loan Document or the 
Certificate and Indemnity; (ii) Borrower fails to perform any other covenant, 
agreement or obligation to be performed by Borrower under this Agreement, any 
other Loan Document or the  Certificate and Indemnity; (iii) any 
representation or warranty contained in  this Agreement, any other Loan 
Document or the Certificate and Indemnity or any financial information 
furnished by Borrower or its agents to Lender in  connection with the Loan 
proves to be false or misleading in any material  respect; (iv) there is a 
material adverse change in the financial condition   of Borrower or any 
Guarantor which Lender in good faith believes will adversely  affect 
Borrower's ability to complete the Project or otherwise pay and perform  all 
obligations under this Agreement, any other Loan Document or the Certificate 
and Indemnity; (v) Borrower defaults under the Construction Contract or any  
lease or other contract or agreement relating to the construction or 
operation  of the Project, and such default is not cured within the 
applicable cure period, if any; (vi) Borrower is in default with respect to 
any other loan from Lender  to Borrower; (vii) Borrower or any Guarantor 
fails to pay his, her or its debts generally as they become due or files a 
petition or action for relief under any bankruptcy, reorganization or 
insolvency laws or makes an assignment for the  benefit of creditors; (viii) 
an involuntary petition is filed against Borrower  or any Guarantor under 
                                      9
<PAGE>

any bankruptcy, reorganization or other insolvency laws, or a custodian, 
receiver, or trustee is appointed to take possession, custody or control of 
the Project or the other properties of Borrower, or the assets of any 
Guarantor, and such petition or appointment is not set aside, withdrawn or  
dismissed within thirty (30) days from the date of filing or appointment; or  
(ix) a stop work order is issued on any phase of the Project by a government, 
 judicial or legal authority with jurisdiction over the Project and the order 
is not dismissed within ten (10) days after the date the order is issued.   

         10.2 REMEDIES. Upon the occurrence of a default, Lender may declare 
the Loan to  be immediately due and payable in full; make no further 
disbursement of Funds,  and pursue any one or more of the remedies set forth 
in this Agreement or in any other Loan Document concurrently or successively 
in addition to all other  remedies available to Lender at law or in equity. 
No remedy confirmed upon or  reserved to Lender in this Agreement, any other 
Loan Document or the Certificate and Indemnity, or at law or in equity, shall 
be exclusive of any other remedy  available to Lender, and to the extent 
permitted by applicable law, all such  remedies shall be cumulative and in 
addition to every other remedy available to Lender.

         10.3 NOTICE AND OPPORTUNITY TO CURE. Notwithstanding any other 
provision of this Agreement or any other Loan Document, Lender will not 
accelerate the maturity of the Loan (a) because of a monetary default under 
this Agreement or any other  Loan Document unless the default is not cured 
within ten (10) days of the date  on which Lender mails or delivers written 
notice of the default to Borrower, or (b) because of a non-monetary default 
under this Agreement or any other Loan  Document unless the default is not 
cured within thirty (30) days of the date on which Lender mails or delivers 
written notice of the default to Borrower. For  purposes of this Agreement, 
the term "monetary default" means a failure by  Borrower to make any payment 
required of it pursuant to the Note or any other  Loan Document, and the term 
"non-monetary default" shall mean a failure by  Borrower or any other person 
or entity; to perform any obligation contained in  this Agreement or any 
other Loan Document or the Certificate and Indemnity,  other than the 
obligation to make payments provided for in the Note or   any other Loan 
Document. If a non-monetary default is capable of being cured and the cure 
cannot reasonably be completed within the thirty (30) day cure period, the 
cure period shall be extended up to ninety (90) days so long as Borrower has 
commenced action to cure within the thirty (30) day cure period, and in 
Lender's opinion, Borrower is proceeding to cure the default with due 
diligence. None of the foregoing shall be construed to obligate Lender to 
forbear in any other  manner from exercising its remedies and Lender may 
pursue any other rights or  remedies which Lender may have because of a 
default.   

         10.4 COMPLETION OF CONSTRUCTION. Upon the occurrence of a default, 
Lender shall  have the right, in person or through a third party designated 
by Lender, to take possession of the Project and perform any and all work and 
labor necessary to  complete the Project. All sums expended by Lender in so 
doing shall be deemed to have been advanced under the Note and secured by the 
Deed of Trust and the other Loan Documents.  Any Funds disbursed by Lender in 
excess of the maximum  principal amount of the Loan will be considered an 
additional loan to Borrower, bearing interest at the interest rates provided 
for in the Note, and secured by the Deed of Trust and all other Loan 
Documents. Lender, by electing to so  complete the Project will not be deemed 
to have assumed any liability to  Borrower or any other person or entity for 
completing the Project or for the  manner or quality of construction of the 
Project, and Borrower hereby expressly waives any such liability on behalf of 
Lender. Borrower hereby constitutes and  appoints Lender as its true and 
lawful attorney in fact with full power of  substitution to complete the 
Project in the name of Borrower and to (a) use   any Funds for the purpose of 
completing the Project; (b) make such additions,   changes and corrections in 
the Plans and Specifications or the Project Budget as Lender deems desirable; 
(c) employ contractors, subcontractors, architects and  other persons as 
shall be required for such purposes; (d) pay, settle or  compromise all 
existing bills and claims which may be liens against the Project or as may be 
necessary or desirable for the completion of the Project or for  clearance of 
title; and (e) do any and all things which Borrower might do on its own 
behalf in order to complete the Project free and clear of all liens and  
encumbrances. The power of attorney granted pursuant to this paragraph shall 
be deemed a power coupled with an interest and irrevocable.   

     11 . SECURITY INTEREST - BORROWER FUNDS; OFFSETS. Borrower hereby grants 
Lender  a security interest in all of Borrower's right, title and interest, 
if any, in  the undisbursed Loan proceeds and in all other monies of Borrower 
of every kind and nature which are or will be on deposit with Lender, whether 
in the Loan  Account or otherwise. Following a default, Lender may 
                                      10
<PAGE>

apply any Funds in  Lender's possession or under Lender's control at any time 
in satisfaction of  Borrower's obligations to Lender under the Loan Documents 
or the Certificate and Indemnity, without notice to Borrower. Furthermore, 
following a default, Lender may apply to any obligation of Borrower under 
this Agreement, or other Loan  Document or the Certificate and Indemnity, or 
under any other agreement or on  any other account, any funds of Borrower 
which are in Lender's possession or  control at any time, including the 
proceeds of the Loan or any other loan  Borrower may now have or hereafter 
have in process with Lender.   

     12. UNAUTHORIZED LIENS AND ENCUMBRANCES.   

         12.1 NO LIENS OR ENCUMBRANCES. No equipment, materials, fixtures or 
any other   part of the Improvements shall be purchased or installed under 
conditional sales agreements or other arrangements where a right is reserved 
or may accrue to  anyone to remove or repossess such items. Borrower will 
keep the Project free  and clear of all liens and claims of any kind, whether 
or not superior to the  Deed of Trust, except for permitted exceptions set 
forth in the Title Policy or otherwise approved in writing by Lender.   

         12.2 LIEN CLAIMS. If any lien or claim of lien is filed against the 
Project, or  if a notice of intent to file such a lien is received by Lender, 
or if a  judgment or other encumbrance is placed against the Project, at 
Lender's option, such event shall constitute a default under this Agreement 
unless Borrower  obtains a release and satisfaction of such lien, claim of 
lien, judgment or  encumbrance, or provides Lender with a bond (or other 
security) acceptable to  Lender in the amount of one hundred fifty percent 
(150%), or such other amount  as Lender may require in writing, of the lien, 
claim of lien, judgment or  encumbrance within twenty (20) days of written 
notice by Lender to Borrower of  the existence of such claim, lien or 
encumbrance; however, in lieu of posting  such bond (or other security) 
Borrower may provide Lender with affirmative title insurance coverage from 
the issuer of the Title Policy, in form and content  acceptable to Lender, 
with regards to the lien, claim, judgment or encumbrance. In addition, 
Lender, at its option, may withhold from the Funds such amount as  may be 
required by applicable law, or sufficient, in Lender's opinion, to   pay the 
full amount of the lien, claim, judgment or other encumbrance, plus any  
related interest, attorneys' fees and costs, whichever is greater. Lender's  
rights under this paragraph shall not be affected by any claim by Borrower 
that the claim, lien, judgment or encumbrance is invalid, it being understood 
that  the decision of Lender to pay or withhold shall be made by Lender in 
its  reasonable discretion, subject only to Borrower's right to provide a 
bond or  other security satisfactory to Lender as provided above.   

     13. NO THIRD PARTY RIGHTS; ASSIGNMENT. This Agreement is made entirely 
for the  benefit of Borrower, Lender and Lender's successor's in interest, 
and no third  person shall have any rights under this Agreement whatsoever. 
Neither this  Agreement or the proceeds of the Loan shall be assignable by 
Borrower without  Lender's prior written consent, which consent may be 
withheld by Lender in its  sole discretion.  Any attempted assignment by 
Borrower without Lender's consent shall be void. Borrower acknowledges it 
shall have no right, title or interest  in and to any of the Loan proceeds 
until such time as such Funds have been  disbursed by Lender in accordance 
with this Agreement. Lender and its successors and assigns may assign the 
whole or any part of the Loan or this Agreement or  have other financial 
institutions participate in the Loan. Each assignee or  participating 
institution shall be entitled to all of the rights and benefits of Lender 
under this Agreement, all other Loan Documents and the Certificate and  
Indemnity.   

     14. MISCELLANEOUS.   

         14.1 SIGNS AND ADVERTISING. Until the Project is completed and the 
Loan is paid  in full, Lender may place a sign on the Project indicating 
Lender is providing  the construction financing for the Project. In addition, 
Lender may publicize  the financing and may indicate on such signs and 
publicity releases the name of  Borrower and a general description of the 
Project.   

         14.2 COSTS AND EXPENSES. Whether or not suit is brought, Borrower 
shall pay on  demand all costs and expenses, including attorneys' fees and 
costs and allocated costs of in-house legal counsel, incurred by or on behalf 
of Lender in  connection with the Loan, including without limitation costs 
incurred in  collection of the Loan, in protecting the security for the Loan, 
in foreclosing, enforcing or interpreting this Agreement, the Note, any other 
Loan Document or  the Certificate and Indemnity, or resulting from Lender 
being made a party to  any litigation because of 
                                      11
<PAGE>

the existence of the Deed of Trust, any other Loan  Document or the 
Certificate and Indemnity Without limiting the generality of the foregoing, 
if Borrower becomes the subject of any bankruptcy or insolvency  proceeding, 
Borrower shall pay all fees and expenses incurred by Lender in   connection 
with such bankruptcy or insolvency proceeding. Lender also shall have the 
right to commence an action or appear in any proceeding or action affecting 
the Project, the rights and duties of the parties hereunder, or the payment 
of  funds pursuant to this Agreement. Lender shall have the right to incur 
expenses, employ counsel and pay legal fees (including the allocated costs of 
in-house  counsel) and to charge the Loan account or any other funds on 
deposit with  Lender by Borrower.  In addition to the foregoing, Borrower 
shall pay all fees, expenses and charges of Lender with respect to the Loan, 
including any costs or expenses incurred by Lender in connection with the 
satisfaction of any pressing or funding conditions, such as credit report 
services, appraisal and internal  appraisal review fees, title insurance 
charges and other "out-of-pocket"  expenses of Lender, regardless of whether 
the Loan is closed, including charges of outside legal counsel and/or 
allocated costs of in-house legal counsel.   

         14.3 NOTICES. Any notice given pursuant to this Agreement shall be 
in writing   and shall be personally delivered or mailed. If mailed, a notice 
shall be sent  certified mail, return receipt requested, postage prepaid and 
shall be deemed to be received on the date of delivery or the third (3rd) 
business day following  the date of mailing, whichever shall first occur. Any 
notice to Borrower shall  be mailed or delivered to the address of the 
"Grantor" specified in the Deed of Trust or such other address as Borrower 
may from time to time specify in  writing, and any notice to Lender shall be 
mailed or delivered to the address of the "Beneficiary" specified in the Deed 
of Trust or such other address as Lender may from time to time specify in 
writing.   

         14.4 APPLICABLE LAW. This Agreement shall be governed by and 
construed in   accordance with the laws of the State of Washington. This 
Agreement is the  result of substantial negotiations between Borrower and 
Lender and shall be  construed in accordance with the fair intent and meaning 
of the language  contained in this Agreement in its entirety and not for or 
against either party, regardless of which party (or its legal counsel) was 
responsible for its  preparation. Borrower and Lender each represent to the 
other that each has  consulted with its own legal counsel in connection with 
this Agreement.   

         14.5 NONWAIVER. The failure of Lender to insist upon strict 
performance of a   covenant for obligation of Borrower under this Agreement 
shall not be deemed a  waiver of Lender's right to demand strict compliance 
therewith in the future,  nor will a periodic advance of Funds by Lender 
waive any condition to advance  not fulfilled at the time of the advance.   

         14.6 MODIFICATION. No modification, amendment or waiver of any term 
or condition of this Agreement or any other Loan Document or the Certificate 
and Indemnity  shall be effective unless set forth in writing and signed by 
Lender and  Borrower.

         14.7 COUNTERPARTS. This Agreement, any other Loan Document or the 
Certificate   and Indemnity may be executed in any number of counterparts, 
each of which shall be deemed an original, but all of which together shall 
constitute one and the  same instrument.

DATED as of the day and year first written above.   

NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEYs EXTEND CREDIT OR 
TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER 
WASHINGTON LAW.   

LENDER:                                BORROWER:

SEATTLE-FIRST NATIONAL BANK,           THE COEUR D'ALENES COMPANY,
a national banking association         an Idaho corporation

By:                                    By: /s/Marilyn Schroeder
   ----------------------------           ----------------------------

Its:                                   Its: Treasurer
    ---------------------------             --------------------------

                                      12
<PAGE>

                      CONSTRUCTION LOAN AGREEMENT BETWEEN
                  SEATTLE-FIRST NATIONAL BANK, AS LENDER, AND
                          THE COEUR D'ALENES COMPANY,
                       AN IDAHO CORPORATION, AS BORROWER

                                    INDEX
                                                                          PAGE


RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   -1-
                                                                        
AGREEMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   -1-
         1.  LOAN  . . . . . . . . . . . . . . . . . . . . . . . . . . .   -1-
         2.  LOAN DOCUMENTS  . . . . . . . . . . . . . . . . . . . . . .   -1-
                2.1   DEED OF TRUST  . . . . . . . . . . . . . . . . . .   -1-
                2.2   FINANCING STATEMENTS . . . . . . . . . . . . . . .   -1-
                2.3   GUARANTEES . . . . . . . . . . . . . . . . . . . .   -2-
                2.4   ASSIGNMENT OF CONSTRUCTION CONTRACT ARCHITECT'S    
                      CONTRACT AND PLANS AND SPECIFICATIONS  . . . . . .   -2-
        3.  LOAN FEE   . . . . . . . . . . . . . . . . . . . . . . . . .   -2-
        4.  PRE-CLOSING REQUIREMENTS   . . . . . . . . . . . . . . . . .   -2-
                4.1   LOAN DOCUMENTS . . . . . . . . . . . . . . . . . .   -2-
                4.2   LOAN FEE . . . . . . . . . . . . . . . . . . . . .   -2-
                4.3   CERTIFICATE AND INDEMNITY  . . . . . . . . . . . .   -2-
                4.4   TITLE INSURANCE  . . . . . . . . . . . . . . . . .   -2-
                4.5   UCC SEARCHES . . . . . . . . . . . . . . . . . . .   -2-
                4.6   FINANCIAL CONDITION  . . . . . . . . . . . . . . .   -3-
                4.7   CONSTRUCTION MATTERS . . . . . . . . . . . . . . .   -3-
                4.8   PERMITS  . . . . . . . . . . . . . . . . . . . . .   -3-
                4.9   LITIGATION . . . . . . . . . . . . . . . . . . . .   -3-
                4.10  OTHER CONDITIONS . . . . . . . . . . . . . . . . .   -3-
        5.  CONSTRUCTION COVENANTS . . . . . . . . . . . . . . . . . . .   -3- 
                5.1   PLANS AND SPECIFICATIONS; PROJECT BUDGET . . . . .   -3-
                5.2   COMPLETION OF PROJECT  . . . . . . . . . . . . . .   -3- 
                5.3   COMMENCEMENT AND COMPLETION  . . . . . . . . . . .   -3- 
                5.4   CHANGES IN PLANS AND SPECIFICATIONS, CHANGE 
                      ORDERS . . . . . . . . . . . . . . . . . . . . . .   -4- 
                5.5   ABANDONMENT OF CONSTRUCTION  . . . . . . . . . . .   -4-
        6.  EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . .   -4- 
        7.  DISBURSEMENTS  . . . . . . . . . . . . . . . . . . . . . . .   -4- 
                7.1   GENERAL CONDITIONS TO DISBURSEMENTS  . . . . . . .   -5-
                7.2   DISBURSEMENTS FOR CONSTRUCTION COSTS . . . . . . .   -5-
                7.3   DISBURSEMENTS FOR OTHER COSTS  . . . . . . . . . .   -6-
                7.4   INSPECTIONS BY LENDER  . . . . . . . . . . . . . .   -6- 
                7.5   AMOUNT OF DISBURSEMENTS  . . . . . . . . . . . . .   -7- 
                7.6   LOAN BALANCING . . . . . . . . . . . . . . . . . .   -7- 
                7.7   USE AND APPLICATION OF FUNDS . . . . . . . . . . .   -7- 
                7.8   FINAL DISBURSEMENT . . . . . . . . . . . . . . . .   -7- 
                7.9   EXPENSES, FEES AND INTEREST  . . . . . . . . . . .   -8- 
        8.  REPORTING REQUIREMENTS; ADDITIONAL
            BORROWER COVENANTS . . . . . . . . . . . . . . . . . . . . .   -8-
                8.1   FINANCIAL STATEMENTS; TAX RETURNS  . . . . . . . .   -8- 
                8.2   LEASES, ETC. . . . . . . . . . . . . . . . . . . .   -8- 
                8.3   TAXES AND ASSESSMENTS  . . . . . . . . . . . . . .   -9- 
                8.4   ADDITIONAL DOCUMENTS . . . . . . . . . . . . . . .   -9- 
                8.5   OPERATING STATEMENTS . . . . . . . . . . . . . . .   -9- 
                8.6   RENT ROLL  . . . . . . . . . . . . . . . . . . . .   -9- 
                8.7   MARKETING AND OPERATING PROJECTIONS  . . . . . . .   -9- 
        9.  PROJECT CASH FLOW  . . . . . . . . . . . . . . . . . . . . .   -9- 
       10.  EVENTS OF DEFAULT; REMEDIES  . . . . . . . . . . . . . . . .   -9- 
               10.1   DEFAULT  . . . . . . . . . . . . . . . . . . . . .   -9- 
               10.2   REMEDIES . . . . . . . . . . . . . . . . . . . . .  -10- 

                                       i

<PAGE>

               10.3   NOTICE AND OPPORTUNITY TO CURE . . . . . . . . . .  -10- 
               10.4   COMPLETION OF CONSTRUCTION . . . . . . . . . . . .  -10-
       11.  SECURITY INTEREST - BORROWER FUNDS; OFFSETS  . . . . . . . .  -10- 
       12.  UNAUTHORIZED LIENS AND ENCUMBRANCES  . . . . . . . . . . . .  -11- 
               12.1   NO LIENS OR ENCUMBRANCES . . . . . . . . . . . . .  -11-
               12.2   LIEN CLAIMS  . . . . . . . . . . . . . . . . . . .  -11-
       13.  NO THIRD PARTY RIGHTS; ASSIGNMENT  . . . . . . . . . . . . .  -11-
       14.  MISCELLANEOUS  . . . . . . . . . . . . . . . . . . . . . . .  -11-
               14.1   SIGNS AND ADVERTISING  . . . . . . . . . . . . . .  -11-
               14.2   COSTS AND EXPENSES . . . . . . . . . . . . . . . .  -11-
               14.3   NOTICES  . . . . . . . . . . . . . . . . . . . . .  -12-
               14.4   APPLICABLE LAW . . . . . . . . . . . . . . . . . .  -12-
               14.5   NON-WAIVER . . . . . . . . . . . . . . . . . . . .  -12-
               14.6   MODIFICATION . . . . . . . . . . . . . . . . . . .  -12-
               14.7   COUNTERPARTS . . . . . . . . . . . . . . . . . . .  -12-


                                      ii
<PAGE>

[LOGO]

                                            Loan No. 604938 and 453817-9


                  CERTIFICATE AND INDEMNITY AGREEMENT 
            REGARDING BUILDING LAWS AND HAZARDOUS SUBSTANCES

     This Agreement is made as of December 20, 1995 by THE COEUR D'ALENES 
COMPANY, an Idaho corporation ("Indemnitor"), for the benefit of 
SEATTLE-FIRST NATIONAL BANK, a national banking association ("Lender"), to 
induce Lender to make a loan (the "Loan") to Indemnitor in the amount of 
$1,688,000.00.

     In consideration of Lender agreeing to make the Loan, Indemnitor 
certifies, represents, warrants, covenants and agrees as follows for the 
benefit of Lender:

     I . DUE lNVESTIGATION. Indemnitor has duly investigated (a) the present 
and past uses of the "Property" (defined below) and has made due inquiry of 
the appropriate governmental agencies and offices having jurisdiction over 
the Property as to whether the Property or any "Other Property" (defined 
below) is or has been the site of storage or contamination by any "Hazardous 
Substances", (defined below) and Indemnitor has examined or been advised of 
all "Environmental Laws" (defined below) applicable to the Property; and (b) 
the condition of all buildings and other improvements on the Property and 
been advised of all "Building Laws" (defined below) applicable to the 
Property. Upon Lender's request, Indemnitor will provide Lender with a 
written summary of its investigations and copies of all inquiries and 
responses.

     2. HAZARDOUS SUBSTANCES. Indemnitor has no knowledge of (a) the presence 
of any Hazardous Substances on the Property or (b) any spills, releases, 
discharges or disposal of Hazardous Substances that have occurred or are 
presently occurring on or onto the Property or any Other Property, other than 
the presence, use, storage and disposal of Hazardous Substances generally 
used in the ordinary course of operating, maintaining or developing 
properties such as the Property, all of which Indemnitor covenants have and 
will be used, stored and disposed of in accordance with commercially 
reasonable practices and all applicable Environmental Laws.

     3. COMPLIANCE WITH LAWS. Indemnitor has no knowledge of (a) any failure 
by any person or entity to comply with all currently applicable Environmental 
Laws with respect to the generation, recycling, reuse, sale, storage 
handling, transport and disposal of Hazardous Substances on or from the 
Property; or (b) any failure of the Property to comply with all currently 
applicable Building Laws. Indemnitor shall cause the Property to be 
continuously in compliance with all Building Laws and Environmental Laws. 
Indemnitor warrants the Property is the only real property or interest in 
real property required to operate the Property (and all improvements thereon) 
in compliance with all Building Laws, except as otherwise disclosed to Lender 
in writing. All certificates of occupancy and other governmental permits and 
approvals necessary for the occupancy of the property have been obtained. All 
buildings and other improvements currently located on the Property are 
located outside a 100-year flood plain, or are covered by adequate flood 
insurance.

     4. FUTURE BUILDINGS AND IMPROVEMENTS. All buildings, structures and 
other improvements to be built or constructed on the Property shall be 
constructed in accordance with and shall fully comply with all applicable 
Building Laws and shall be located outside of any 100 year flood plain or 
will be continuously covered by adequate flood insurance. With respect to all 
buildings or improvements to the Property, if any, to be constructed and paid 
for with Loan proceeds, Indemnitor represents and warrants no changes to the 
plans and specifications for such buildings or improvements, submitted to and 
approved by Lender, have been required by governmental authorities, and all 
permits necessary to construct such buildings and improvements have been 
issued on the basis of the plans and specifications submitted to and approved 
by Lender.
                                    -1-

<PAGE>


     5. NO RELEASE OR WAIVER. Indemnitor has not and will not release or 
waive the liability of any previous owner, lessee or operator of the 
Property, or any other person or entity potentially responsible under 
applicable Environmental Laws for the presence or removal of Hazardous 
Substances on or from the Property, and Indemnitor has made no promises of 
indemnification regarding Hazardous Substances to any person or entity other 
than Lender.

     6. NOTICE TO LENDER. Indemnitor will immediately notify Lender if 
Indemnitor receives notice or otherwise becomes aware of (a) any Hazardous 
Substances or other environmental problem or liability with respect to the 
Property or Other Property, (b) any lien, action or notice resulting from the 
violation of any Environmental Laws or any Building Laws, or (c) the Property 
being in violation of any applicable Building Law or Environmental Law. At 
its own cost, Indemnitor will take all actions which are necessary or 
desirable to clean up any Hazardous Substances affecting the Property, 
including removal, containment or other remedial action required by 
applicable law, or cause the Property to be in compliance with any applicable 
Environmental Law or Building Law. Any notice sent to Lender pursuant to this 
paragraph will describe with particularity any actual, potential or alleged 
violation of Building Laws or Environmental Laws, and shall contain 
Indemnitor's plan or recommendations for correcting the violations.

     7. INDEMNIFICATION. Indemnitor shall indemnify, defend and hold Lender 
harmless from and against any and all claims, demands, damages, losses, 
liens, liabilities, penalties, fines, lawsuits and other proceedings and 
costs and expenses (including attorneys' fees and disbursements, and 
architectural, engineering and accounting costs and all repair and clean-up 
costs) which accrue to or are made against or incurred by Lender, or are in 
any way connected with (a) the inaccuracy of any of the certifications, 
representations or warranties of Indemnitor contained in this Agreement, (b) 
any activities on the Property during Indemnitor's ownership, possession or 
control of the Property which directly or indirectly result in the Property 
or any Other Property being contaminated with Hazardous Substances, or the 
Property being in violation of any applicable Building Laws or Environmental 
Laws, or (c) the discovery and/or cleanup of Hazardous Substances deposited 
or existing on the Property or any Other Property, and (d) any breach by 
Indemnitor of any of its covenants or agreements set forth in this Agreement. 
If Lender becomes the owner of or acquires an interest in or rights to the 
Property by foreclosure or by a conveyance in lieu of foreclosure of the deed 
of trust (the "Deed of Trust") or any other instruments securing the Loan, or 
by any other means, the foregoing indemnification obligation of Indemnitor 
shall survive such foreclosure or conveyance in lieu of foreclosure or other 
acquisition of the Property. Notwithstanding the preceding sentence, 
Indemnitor shall have no obligation to defend, indemnify or hold Lender 
harmless from any claim, demand, damage, loss, lien, liability, etc. arising 
from or out of the activities of Lender or its agents on the Property on or 
after transfer of the Property to Lender pursuant to foreclosure proceedings 
or in lieu thereof.

     8. UNCONDITIONAL AND UNSECURED OBLIGATIONS. Indemnitor's obligations 
under this Agreement are unconditional and shall not be limited by any 
limitations on liability provided for in any document or instrument 
evidencing or securing the Loan (collectively the "Loan Documents"). The 
certifications, representations, warranties, covenants and agreements of 
Indemnitor set forth in this Agreement (including without limitation the 
indemnity provided for in Paragraph 7 above), (a) are separate and distinct 
obligations from Indemnitor's obligations with respect to the Loan and under 
the Loan Documents, (b) are not secured by the Deed of Trust or any other 
Loan Document, (c) shall not be discharged or satisfied by foreclosure of the 
lien of the Deed of Trust or any lien or security interest created by any 
other Loan Document, and (d) shall continue in effect after any transfer of 
the Property, including without limitation transfers pursuant to foreclosure 
proceedings (whether judicial or nonjudicial), or by any conveyance in lieu 
of foreclosure.

     9. DEFINITIONS. For purposes of this Agreement:

        (a) "Building Laws" means all federal, state and local laws, 
statutes, regulations, ordinances and requirements, now or hereafter in 
effect, applicable to the ownership, development or operation of the 
Property, including all building, zoning, planning, subdivision, fire, 
traffic, safety, health, labor, air quality, wetlands, shoreline and flood 
plain laws, statutes, regulations, ordinances and requirements, and 
specifically includes all applicable requirements of the Fair Housing Act of 

                                    -2-

<PAGE>


1968, and the Americans With Disabilities Act of 1990, and all government and 
private covenants, conditions and restrictions applicable to the Property, 
all as now or hereafter amended.

        (b) "Environmental Laws" means all federal, state and local statutes, 
regulations, ordinances, and requirements, now or hereafter in effect, 
pertaining to environmental protection, contamination or cleanup, including 
without limitation (i) the Federal Water Pollution Control Act (33 U.S.C. 
Section 1251 et. seq.), (ii) the Federal Resource Conservation and Recovery Act
of 1976 (42 U.S.C. Section 6901 et. seq.), (iii) the Federal Comprehensive 
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 
Section 9601 et. seq.), (iv) the Washington Model Toxics Control Act (RCW 
Chapter 70.105(d)), and (v) the Washington Underground Petroleum Storage 
Tanks Act (RCW Chapter 70.148), all as now or hereafter amended.

        (c) "Hazardous Substances" means any chemical, substance or material 
classified or designated as hazardous, toxic or radioactive, or other similar 
term, and now or hereafter regulated under any Environmental Law, including 
without limitation, asbestos, petroleum and hydrocarbon products.

        (d) "Lender" means Seattle-First National Bank and its universal 
successors and assigns, and any person or entity designated or appointed by 
Lender to acquire the Property through foreclosure or by transfer in lieu of 
foreclosure, and any and all other financial institutions participating in 
the Loan.

        (e) "Other Property" means any property which becomes contaminated 
with Hazardous Substances as a result of the construction, development, 
operation or other activities on, or the contamination of, the Property.

        (f) "Property" means the real property situated in Spokane County, 
Washington, commonly known as East 3900 Broadway Avenue, Spokane, WA 99202, 
legally described in SCHEDULE A attached and all buildings, structures and 
other improvements now or hereafter located thereon.

     10. GENERAL. If Indemnitor is composed of more than one person or 
entity, the term "Indemnitor" shall refer to each and every such person or 
entity and all of such persons and entities shall be jointly and severally 
liable under this Agreement. Any individual signing this Agreement does so on 
his or her own behalf and on behalf of his or her marital community, unless 
otherwise stated in this Agreement. This Agreement shall be binding upon and 
inure to the benefit of Lender, Indemnitor and their respective heirs, 
representatives, successors and assigns. This Agreement shall be governed by 
and construed under the laws of the State of Washington. In any lawsuit, 
action or appeal therefrom, including proceedings in bankruptcy court, to 
enforce or interpret this Agreement, the prevailing party shall be entitled 
to recover its costs and expenses incurred therein, including attorneys' fees 
and disbursements.

     DATED as of the day and year first written above.

INDEMNITOR:

THE COEUR D'ALENES COMPANY,
an Idaho corporation

By:  /s/ Marilyn Schroeder

Its: Treasurer

                                    -3-

<PAGE>

                             SCHEDULE A

SCHEDULE ATTACHED TO AND FORMING PART OF THAT CERTIFICATE AND INDEMNITY 
AGREEMENT REGARDING BUILDING LAWS AND HAZARDOUS SUBSTANCES DATED DECEMBER 20, 
1995, GIVEN BY THE COEUR D'ALENES COMPANY, AN IDAHO CORPORATION, AS 
INDEMNITOR.

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

LEGAL DESCRIPTION:

 BLOCKS 100 AND 107, EAST SIDE SYNDICATE 
ADDITION, ACCORDING TO PLAT RECORDED IN VOLUME "C" OF PLATS, PAGE 73, IN THE 
CITY OF SPOKANE, SPOKANE COUNTY, WASHINGTON,

TOGETHER WITH VACATED SPRINGFIELD AVENUE ADJACENT TO SAID PREMISES.

<PAGE>

[LETTERHEAD]

------------------------------------------------------------------------------
Loan No. 604938 and 453817-9

                          AGREEMENT OF SUBORDINATION

THIS AGREEMENT OF SUBORDINATION ("Agreement") is made this 20th day of 
December, 1995 by and among:

"BANK"      -  SEATTLE-FIRST NATIONAL BANK, a national banking association

"BORROWER"  -  THE COEUR D'ALENES COMPANY, an Idaho corporation, and UNION IRON
               WORKS, INC. OF SPOKANE WASHINGTON, a Washington corporation.

with respect to the following facts:

     A. Borrower is indebted to Bank ("LOAN NO. 1") as evidenced by 
Promissory Note dated March 27, 1995, in the original face amount of 
$200,000.00. Payment of Loan No. I secured by, among other things, a security 
interest in fixtures and personal property of Borrower (collectively the 
"LOAN NO. 1 COLLATERAL") as evidenced by:

          (i)  Security Agreement dated March 31, 1995;

          (ii) UCC Financing Statement filed March 31, 1995, under Auditor's 
File No. 9503310366, and

          (iii) UCC Financing Statement filed March 31, 1995, under Auditor's 
File No. 9503110367.

     B. Bank is making a new loan to The Coeur d'Alenes Company, an Idaho 
corporation, in the principal amount of $1,688,000.00 ("LOAN NO. 2"). Payment 
of Loan No. 2 will also be secured and perfected by, among other things, a 
recorded Deed of Trust, Security Agreement, Fixture Filing and Assignment of 
Leases and Rents, and UCC Financing Statements on some or all of the Loan No. 
1 Collateral (the "LOAN NO. 2 COLLATERAL"). Bank requires as a condition of 
Loan No. 2 that the Bank's lien and encumbrance on the Loan No. 2 Collateral 
be a first and superior lien to the Bank's lien and encumbrance on the same 
collateral securing payment of Loan No. 1.

     NOW, THEREFORE, in consideration of the mutual benefits to be derived 
herefrom, it is

     1. RECITALS. Each of the above recitals is true and correct and, 
together with the documents and agreements evidencing and securing Loan No. 1 
and Loan No. 2, are incorporated herein as though fully set forth.

     2. SUBORDINATION. The lien and encumbrance of Bank on the Loan No. 1 
Collateral shall be subject, subordinate and inferior to the lien and 
encumbrance of Bank on the Loan No. 2 Collateral, but only insofar as the 
collateral for Loan No. I and Loan No. 2 is the same. Bank shall have the 
right, but not the obligation, to apply the collateral to payment of Loan No. 
2 prior to

                                     -1-

<PAGE>

payment of Loan No. 1, the Bank reserving to itself the right to apply the 
collateral to Loan No. 1 and Loan No. 2 in such manner and in such order- as 
Bank in its sole discretion may determine.

     3. CROSS DEFAULT. Any default under Loan No. I will, at Bank's option be 
a default on Loan No. 2, and any default on Loan No. 2 will, at Bank's 
option, be a default on Loan No. 1.

     4. NO OTHER ENCUMBRANCE. Borrower and each of them represents and 
warrants to Bank that except for (i) the encumbrance and security interest of 
Bank, (ii) the lien of real estate taxes and assessments not yet due, (iii) 
tenants in the possession under leases approved by Bank or subordinate to 
Bank's encumbrance and security interest, and (iv) other exceptions to title 
approved in writing by Bank, there exists no lien, charge or encumbrance 
against any of the Loan No. l Collateral or Loan No. 2 Collateral.

     5. GOVERNING LAW. This Agreement shall be construed and enforced under 
the laws of the State of Washington. In any action or proceeding to construe 
or enforce this Agreement, the prevailing party shall recover its costs and 
reasonable attorneys' fees including those incurred in any trial or 
arbitration proceeding, in any bankruptcy or receivership proceeding, and in 
any appeal therefrom.

NOTICE: ORAL AGREEMENTS, PROMISES OR COMMITMENTS TO: (1) LOAN MONEY, (2) EXTEND
CREDIT, (3) MODIFY OR AMEND ANY TERMS OF THE LOAN DOCUMENTS, (4) RELEASE ANY
GUARANTOR, (5) FORBEAR FROM ENFORCING REPAYMENT OF THE LOAN OR THE EXERCISE OF
ANY REMEDY UNDER THE LOAN DOCUMENTS, OR (6) MAKE ANY OTHER FINANCIAL
ACCOMMODATION PERTAINING TO THE LOAN ARE ALL UNENFORCEABLE UNDER WASHINGTON LAW.

     Made to be effective as of the date first so

BANK:

SEATTLE-FIRST NATIONAL BANK,
a national banking association

By:
   ---------------------------

Its:
    --------------------------


BORROWER:

THE COEUR D'ALENES COMPANY,
an Idaho corporation

By: /S/ Marilyn Schroeder
    --------------------------
Its: Treasurer
     -------------------------

UNION IRON WORKS, INC. OF SPOKANE, WASHINGTON
a Washington corporation

By: /S/ Marilyn Schroeder
   ---------------------------
Its: Treasurer
     -------------------------


                                     -2-

<PAGE>

STATE OF WASHINGTON     )
                        )SUBSECTION
COUNTY OF _________     )

     On this day personally appeared before me _________________ to me known 
(or proven on the basis of satisfactory evidence) to be the _________ of 
SEATTLE FIRST NATIONAL BANK, a national banking association, the corporation 
that executed the within and foregoing instrument, and acknowledged said 
instrument to be the free and voluntary act and deed of said corporation, for 
the uses and purposes therein mentioned, and on oath stated that _he was 
authorized to execute said instrument.

     GIVEN UNDER my hand and official seal this ___ day of ____________, ____.


                          ________________________________________________
                          (Print Notary Name)_____________________________
                          Notary Public in and for the State of Washington
                          residing at ____________________________________
                          My appointment expires _________________________





STATE OF WASHINGTON     )
                        )SUBSECTION
COUNTY OF SPOKANE       )

     On this day personally appeared before me Marilyn Schroeder to me known 
(or proven on the basis of satisfactory evidence) to be the Treasurer of THE 
COEUR D'ALENES COMPANY, an Idaho corporation, the corporation that executed 
the within and foregoing instrument, and acknowledged said instrument to be 
the free and voluntary act and deed of said corporation, for the uses and 
purposes therein mentioned, and on oath stated that _he was authorized to 
execute said instrument.

     GIVEN UNDER my hand and official seal this 5th day of February, 1996.


                          /S/ Paulette A. Bleken
                          ------------------------------------------------
                          PAULETTE A. BLEKEN
                          Notary Public in and for the State of Washington
                          residing at Greenacres WA
                          My appointment expires 8-27-99



STATE OF WASHINGTON     )
                        )SUBSECTION
COUNTY OF SPOKANE       )

     On this day personally appeared before me Marilyn Schroeder to me known 
(or proven on the basis of satisfactory evidence) to be the Treasurer of 
UNION IRON WORKS, INC. OF SPOKANE, WASHINGTON, a Washington corporation, the 
corporation that executed the within and foregoing instrument, and 
acknowledged said instrument to be the free and voluntary act and deed of 
said corporation, for the uses and purposes therein mentioned, and on oath 
stated that _he was authorized to execute said instrument.

     GIVEN UNDER my hand and official seal this 5th day of February, 1996.


                          /S/ Paulette A. Bleken
                          ------------------------------------------------
                          PAULETTE A. BLEKEN
                          Notary Public in and for the State of Washington
                          residing at Greenacres WA
                          My appointment expires 8-27-99


                                    -3-

<PAGE>

(Letterhead)
                                             Loan No. 604938 and 453817-9

                     LOAN MODIFICATION AND ADDITIONAL ADVANCE AGREEMENT 

THIS LOAN MODIFICATION AND ADDITIONAL ADVANCE AGREEMENT ("Agreement") is made to
be effective as of November 12, 1996, by and between: 

     "LENDER"   - BANK OF AMERICA NW, N.A., doing business as SEAFIRST BANK,
                successor by name change to Seattle-First National Bank 

     "BORROWER" - THE COEUR D'ALENES COMPANY, an Idaho corporation 

with respect to the following facts:
 
     A.     On or about December 20, 1995, Lender loaned to Borrower the 
principal sum of $1,688,000.00 (the "LOAN"), which Loan is evidenced by a 
Promissory Note ("NOTE") and secured by a Deed of Trust ("DEED OF TRUST") made
by Borrower as Grantor, recorded February 8, 1996, in Spokane County, 
Washington, under recording numbers 9602080190, 9602080191, 9602080192 and 
9602080193, and constituting a first lien encumbrance on the real and personal
property and fixtures (the "PROPERTY") described in the Deed of Trust or in any
UCC financing statement filed with respect thereto. The loan documents described
in this paragraph and other documents evidencing and securing the Loan are 
collectively described as the "LOAN DOCUMENTS."
 
     B.     Borrower and Lender desire to modify and increase the Loan as 
provided in and subject to the terms and conditions of this Agreement. 

     NOW, THEREFORE, in consideration of the mutual benefits to be derived 
herefrom, it is agreed:
 
     1.  RECITALS.  The above recitals are true and correct and together with 
the Loan Documents, are by this reference incorporated into this Agreement as 
though fully set forth. 

     2.  MODIFICATION OF LOAN DOCUMENTS. Lender and Borrower agree  that  the 
Loan and Loan Documents shall be modified as follows: 

         a.  RESTATED NOTE. Borrower shall execute and deliver to Lender,  in 
the form required by Lender, an Amended and Restated Promissory Note ("RESTATED 
NOTE") which will replace and supersede the Note. The Restated Note will include
an additional principal advance of $262,000.00 ("ADDITIONAL ADVANCE"). 
References in the Loan Documents to the Note shall mean the Restated Note. The 
Restated Note will be secured by the Deed of Trust. Funding of the undisbursed 
balance of the Restated Note will be subject to the terms and conditions of the
Construction Loan Agreement dated December 20, 1995 between Borrower and Lender.

         b. CONSTRUCTION LOAN AGREEMENT. The Loan Fee to convert to a permanent
loan in accordance with the terms of the Note is increased from $8,440.00 to 
$9,750.00. 

         c. AMENDMENT TO OTHER DOCUMENTS. Borrower agrees to sign and deliver
or cause to be signed and delivered to Lender such other documents as Lender 
may require to complete the modifications to the loan described herein. 

     3.  REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this 
Agreement, Borrower represents and warrants: 

                                     1
<PAGE>

         a.  Borrower has full legal power and authority to enter into this 
Agreement, that all necessary consents and approvals for the execution and 
performance of this Agreement have been obtained, and when signed and 
delivered to Lender this Agreement will be the legal binding and enforceable 
obligation of Borrower. 

         b.  Borrower owns and is vested in title to all of the Property 
described in the Deed of Trust or otherwise securing payment of the Loan and, 
except for the lien of real estate taxes and assessments not yet due, tenants 
in possession under leases approved by Lender or which are subordinate to the 
Deed of Trust, and other exceptions to title approved in writing by Lender, 
there exists no lien, charge or encumbrance against the Property created or 
arising subsequent to the recording date of the Deed of Trust. 

         c.  The, unpaid principal balance of the Loan as of the effective 
date of this Agreement is $1,678,728.00 and Borrower has no defense, claim or 
setoff, legal or equitable, to the full payment and performance of Borrower's 
obligations to Lender under the Loan Documents as herein modified. 

         d.  Borrower acknowledges that Borrower has read this Agreement and 
all other documents required by Lender in connection with this Agreement, is 
familiar with their respective terms and conditions, and has had the 
opportunity for advice of counsel of Borrower's own selection in regard to 
the terms, meaning and effect of this Agreement and all such other documents. 
Borrower further acknowledges that Borrower has made this Agreement freely 
and voluntarily, without duress, and in reliance on no promise or 
representation of Lender or by which Lender is bound not expressly set forth 
herein. 

     4.  CONDITIONS.  Lender's agreement to modify the Loan as provided herein 
is subject to satisfaction of each of the following conditions by not later 
than November 26, 1996, time being of the essence. Each condition is for the 
exclusive benefit of Lender and may be waived by Lender but any waiver must be 
in writing and signed by Lender in order to be effective. 

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

         b.   Datedown,  additional advance and/or mortgage modification 
endorsements, in form satisfactory to Lender, shall have been added to 
Lender's loan policy of title insurance ("LOAN POLICY") for the Deed of Trust, 
bringing the effective date of the Loan Policy current to the effective date 
of this Agreement and insuring that the modifications provided for herein 
shall not impair the continued validity, priority and enforceability of the 
Deed of Trust. 

          c. This Agreement and all other documents and agreements required by 
Lender have been fully signed, acknowledged and delivered to Lender and, if 
required by Lender, filed of record. 

          d.   Satisfaction of all other conditions and requirements to 
modification of the Loan, if any, as may be contained in a letter, exhibit 
list or other written communication by Lender to Borrower. 

     5.  RELEASE. As additional consideration for the modification of the Loan 
as herein set forth, Borrower does hereby release and forever discharge 
Lender, every participant in the Loan, and each and every of their respective 
employees, agents, directors, officers, subsidiaries, parent corporations and 
affiliates (collectively the "RELEASED PARTIES"), of and from all damage, 
loss, claims, demands, liabilities, obligations, actions and causes of action 
whatsoever which Borrower may have or claim to have against the Released 
Parties or any of them as of the effective date of this Agreement, whether 
presently known or unknown, on account of or in any way concerning, arising 
out of or founded upon the Loan including, but not limited to, all such loss 
or damage of any kind heretofore sustained, or that may arise as a consequence 
of the dealings between the parties up to and including the effective date of 
this Agreement. This release and the covenants herein on the part of Borrower 
are contractual and not a mere recital, and the parties agree that no 
liability is admitted except Borrower's indebtedness to Lender under the Loan 
Documents and that all agreements and

                                  2

<PAGE>

understandings between Borrower and Lender concerning the Loan are expressed 
and embodied in the Loan Documents, as modified hereby. 

     6.  GENERAL. 

         a.    ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between Borrower and Lender with respect to the foregoing modification of the 
Loan and shall not be amended except in writing signed by Lender and Borrower. 

         b.    RATIFICATION. As modified herein the Loan Documents are ratified 
and affirmed and shall be and remain in full force and effect. Borrower shall 
promptly pay and perform as and when due all of Borrower's obligations under 
the Loan Documents and this Agreement. This Agreement is not intended to and 
shall not be construed to impair the validity, priority or enforceability of 
the Deed of Trust or the other Loan Documents. 

         c.    CROSS-DEFAULT. Any default by Borrower under this Agreement shall
constitute a default under the Loan Documents, and each of them, and any 
default by Borrower under any Loan Document shall constitute a default under 
this Agreement. 

         d.    LENDER'S EXPENSES. Borrower shall pay all costs and expenses of 
Lender incurred in connection herewith including, without limitation, credit 
report fees, appraisal and internal appraisal review fees, title insurance 
charges, escrow and recording fees, document preparation charges, and charges 
of outside legal counsel and allocated cost of in-house legal counsel. 

         e.    GOVERNING LAW. This Agreement shall be construed and enforced 
under the laws of the State of Washington. In any action or proceeding to 
construe or enforce this Agreement or any of the Loan Documents, the 
prevailing party shall recover its costs an reasonable attorneys' fees 
including those incurred in any trial or arbitration proceeding, in any 
bankruptcy or receivership proceeding, and in any appeal therefrom. 

NOTICE: ORAL AGREEMENTS, PROMISES OR COMMITMENTS TO: (1) LOAN MONEY, (2) 
EXTEND CREDIT, (3) MODIFY OR AMEND ANY TERMS OF THE LOAN DOCUMENTS, (4) 
RELEASE ANY GUARANTOR, (5) FORBEAR FROM ENFORCING REPAYMENT OF THE LOAN OR THE 
EXERCISE OF ANY REMEDY UNDER THE LOAN DOCUMENTS, OR (6) MAKE ANY OTHER 
FINANCIAL ACCOMMODATION PERTAINING TO THE LOAN ARE ALL UNENFORCEABLE UNDER 
WASHINGTON LAW. 

     Made to be effective as of the date first set forth above. 


LENDER: 

SEAFIRST BANK 


By: ----------------------

Its: ---------------------


BORROWER:

THE COEUR D'ALENES COMPANY,
an Idaho corporation


By: /s/ Marilyn Schroeder
    ----------------------
Its: Treasurer
     ---------------------
                                  3
<PAGE>

CONSENT OF SUBORDINATORS: 

A.   THE HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE 
OCTOBER 31, 1998 hereby consent to the loan modification and additional advance
made by this Agreement, and do hereby ratify and affirm as continuing and in 
full force and effect that certain Subordination Agreement, dated February 5, 
1996, recorded February 8, 1996 under Spokane County Recording No. 9602080195. 

THE HOLDERS OF THE COEUR D'ALENES 
COMPANY'S CONVERTIBLE DEBENTURES 
DUE OCTOBER 31, 1998 

BY:  /s/CINV, L.A. COULSON 
     ---------------------
ITS: GENERAL PARTNER 
     ---------------------
BY:  /s/ROBERT P. SHANEWISE 
     ---------------------
ITS: BENEFICIARY 
     ---------------------
BY:  /s/HARRY L. YOST 
     ---------------------
ITS:
     ---------------------
BY:  /s/RUTH YOST 
     ---------------------
ITS:
     ---------------------
BY:  /s/BEN HARNEY 
     ---------------------
ITS:
     ---------------------
BY:  /s/DOROTHY A. HARNEY 
     ---------------------
ITS:
     ---------------------
B.   UNION IRON WORKS, INC., OF SPOKANE WASHINGTON hereby consents to the loan
modification and additional advance made by this Agreement, and does hereby 
ratify and affirm as continuing and in full force and effect that certain 
Agreement of Subordination, dated December 20, 1995, recorded February 8, 1996 
under Spokane County Recording No. 9602080194. 

By:  /s/ MARILYN SCHROEDER 
     ---------------------
Its: Treasurer 
     ---------------------
                                  4
<PAGE>

STATE OF WASHINGTON   )       
                      )Section
COUNTY OF ___________ )       

    On this day personally appeared before me _______________________, to me 
known (or proven on the basis of satisfactory evidence) to be the 
_______________  of BANK OF AMERICA NW, N.A., the corporation that executed 
the within and foregoing instrument, and acknowledged said instrument to be 
the free and voluntary act and deed of said corporation, for the uses and 
purposes therein mentioned, and on oath stated that he was authorized to 
execute said instrument. 

    GIVEN UNDER my hand and official seal this ___ day of _____________,1996. 

                                     _________________________________________
                                     (Print Notary Name)______________________
                                     Notary Public in and for the State of
                                     Washington residing at __________________
                                     My appointment expires___________________

STATE OF WASHINGTON )        
                    )Section 
COUNTY OF Spokane   )        

    On this day personally appeared before me Marilyn Schroeder to me known 
(or proven on the basis of satisfactory evidence) to be the Treasurer of THE 
COEUR D'ALENES COMPANY, an Idaho corporation, the corporation that executed 
the within and foregoing instrument, and acknowledged said instrument to be 
the free and voluntary act and deed of said corporation, for the uses and 
purposes therein mentioned, and on oath stated that she was authorized to 
execute said instrument. 

    GIVEN UNDER my hand and official seal this 27 day of November 1996.

                                     Richard G. Batchelder 
                                     (Print Notary Name) Richard G. Batchelder
                                     Notary Public in and for the State of 
                                     Washington residing at Spokane 
                                     My appointment expires 9-6-2000 

STATE OF WASHINGTON )         
                    )Section  
COUNTY OF Spokane   )         

    I certify that I know or have satisfactory evidence that L.A . Coulson, 
is the person who appeared before me, and said person acknowledged that he 
signed this instrument on oath stated that he was authorized to execute the 
instrument and acknowledge it as the General Partner of THE HOLDERS OF THE 
COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 31, 1998, to be 
the free and voluntary act of such party for the uses and purposes mentioned 
in the instrument. 

    Dated: 27 November 1996 

                                     Richard G. Batchelder 
                                     (Print Notary Name) Richard G. Batchelder
                                     Notary Public in and for the State of 
                                     Washington residing at Spokane 
                                     My appointment expires 9-6-2000 

                                       5

<PAGE>

STATE OF WASHINGTON )         
                    )Section  
COUNTY OF Spokane   )         

    I certify that I know or have satisfactory evidence that Robert P. 
Shanewise, is the person who appeared before me, and said person acknowledged 
that he signed this instrument on oath stated that he was authorized to 
execute the instrument and acknowledge it as the General Partner of THE 
HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 
31, 1998, to be the free and voluntary act of such party for the uses and 
purposes mentioned in the instrument. 

     Dated: 27 November 1996 

                                     Richard G. Batchelder 
                                     (Print Notary Name) Richard G. Batchelder
                                     Notary Public in and for the State of 
                                     Washington residing at Spokane 
                                     My appointment expires 9-6-2000 

STATE OF WASHINGTON )          
                    )Section   
COUNTY OF Spokane   )          

    I certify that I know or have satisfactory evidence that Harry L. Yost, 
is the person who appeared before me, and said person acknowledged that _he 
signed this instrument on oath stated that he was authorized to execute the 
instrument and acknowledge it as the General Partner of THE HOLDERS OF THE 
COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 31, 1998, to be 
the free and voluntary act of such party for the uses and purposes mentioned 
in the instrument. 

    Dated: 27 November 1996 


                                     Richard G. Batchelder 
                                     (Print Notary Name) Richard G. Batchelder
                                     Notary Public in and for the State of 
                                     Washington residing at Spokane 
                                     My appointment expires 9-6-2000 


STATE OF WASHINGTON )          
                    )Section   
COUNTY OF Spokane   )          

    I certify that I know or have satisfactory evidence that Ruth Yost, is 
the person who appeared before me, and said person acknowledged that she 
signed this instrument on oath stated that she was authorized to execute the 
instrument and acknowledge it as the General Partner of THE HOLDERS OF THE 
COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 31, 1998, to be 
the free and voluntary act of such party for the uses and purposes mentioned 
in the instrument.

    Dated: 27 November 1996 


                                     Richard G. Batchelder 
                                     (Print Notary Name) Richard G. Batchelder
                                     Notary Public in and for the State of 
                                     Washington residing at Spokane 
                                     My appointment expires 9-6-2000 


                                         6

<PAGE>

STATE OF WASHINGTON )          
                    )Section   
COUNTY OF Spokane   )          

    I certify that I know or have satisfactory evidence that Ben Harney, is 
the person who appeared before me, and said person acknowledged that he 
signed this instrument on oath stated that he was authorized to execute the 
instrument and acknowledge it as the General Partner of THE HOLDERS OF THE 
COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 31, 1998, to be 
the free and voluntary act of such party for the uses and purposes mentioned 
in the instrument. 

    Dated: 27 November 1996 
    

                                     Richard G. Batchelder 
                                     (Print Notary Name) Richard G. Batchelder
                                     Notary Public in and for the State of 
                                     Washington residing at Spokane 
                                     My appointment expires 9-6-2000 


STATE OF WASHINGTON )          
                    )Section   
COUNTY OF Spokane   )          

    I certify that I know or have satisfactory evidence that Dorothy A. 
Harney, is the person who appeared before me, and said person acknowledged 
that she signed this instrument on oath stated that she was authorized to 
execute the instrument and acknowledge it as the General Partner of THE 
HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 
31, 1998, to be the free and voluntary act of such party for the uses and 
purposes mentioned in the instrument. 

    Dated: 27 November 1996 


                                     Richard G. Batchelder 
                                     (Print Notary Name) Richard G. Batchelder
                                     Notary Public in and for the State of 
                                     Washington residing at Spokane 
                                     My appointment expires 9-6-2000 


STATE OF WASHINGTON )          
                    )Section   
COUNTY OF Spokane   )          

    I certify that I know or have satisfactory evidence that Marilyn 
Schroeder, is the person who appeared before me, and said person acknowledged 
that she signed this instrument on oath stated that she was authorized to 
execute the instrument and acknowledge it as the General Partner of THE 
HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 
31, 1998, to be the free and voluntary act of such party for the uses and 
purposes mentioned in the instrument. 

    Dated: 27 November 1996 
    


                                     Richard G. Batchelder 
                                     (Print Notary Name) Richard G. Batchelder
                                     Notary Public in and for the State of 
                                     Washington residing at Spokane 
                                     My appointment expires 9-6-2000 

                                        7
<PAGE>

[LOGO]


                                                  Loan No. 604938 and 453817-9

                          FIRST AMENDED AND RESTATED
                               PROMISSORY NOTE 

$1,950,000.00                                                November 12, 1996
                                                             Seattle, Washington

THIS FIRST AMENDED AND RESTATED PROMISSORY NOTE ("NOTE") IS THE 'RESTATED 
NOTE' REFERRED TO IN THE LOAN MODIFICATION AND ADDITIONAL ADVANCE AGREEMENT 
OF EVEN DATE HEREWITH BETWEEN MAKER AND LENDER. THIS NOTE SUPERSEDES AND 
REPLACES IN ITS ENTIRETY BUT DOES NOT CONSTITUTE A NOVATION OF THAT CERTAIN 
NOTE DATED DECEMBER 20, 1995, BY MAKER AND PAYABLE TO LENDER IN THE FACE 
AMOUNT OF $1,688,000.00. THIS NOTE CONTAINS MODIFICATIONS AND CHANGES IN THE 
TERMS OF THE LOAN BY LENDER TO MAKER.
 
     FOR VALUE RECEIVED, the undersigned ("MAKER") promise(s) to pay to the 
order of BANK OF AMERICA NW, N.A., doing business as SEA FIRST BANK 
("LENDER"), at its principal office in Seattle, Washington, or at such other 
place or places or to such other party as the "HOLDER" (defined below) may 
from time to time designate in writing, the principal sum of ONE MILLION NINE 
HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($1,950,000.00), or so much thereof 
as may be advanced, in lawful money of the United States of America, together 
with interest thereon, on the following agreements, terms and conditions. The 
term "HOLDER" as used in this Note means Lender or any future holder of this 
Note, and their successors and assigns. 

     1.   TERM. This Note shall have an initial term (the "CONSTRUCTION 
TERM") expiring on January 1, 1997. The last day of the Construction Term is 
referred to in this Note as the "MATURITY DATE". If Maker is not then in 
default under this Note or any other documents or instruments executed by 
Maker in connection with the loan (the "LOAN") evidenced by this Note 
(collectively with this Note, the "LOAN DOCUMENTS"), on or before the last 
day of the Construction Term, the Loan shall convert to a permanent loan (the 
"PERMANENT LOAN") if Maker has complied with the following conditions, and 
with all other conditions as may be specified in any other Loan Document:

          (a)  Maker shall have provided the Holder with current financial 
statements of Maker, any general partner in Maker and any guarantor of the 
Loan, each certified as correct by the appropriate party, showing no material 
adverse change in any such person's or entity's financial condition from the 
date of this Note, and otherwise acceptable to the Holder in its sole 
discretion;

          (b)  Maker is not then in default under this Note or any other loan 
Document;

          (c)  The improvements to be constructed with the proceeds of the 
Loan shall have been completed in accordance with the plans and 
specifications for the improvements approved by Lender and a certificate of 
occupancy shall have been issued by the applicable governmental authority 
allowing the use and occupancy of the improvements for their intended 
purposes; and

          (d)  Maker shall have complied with such other conditions to the 
conversion as the Holder may reasonably require and specify in writing prior 
to the date of the conversion.

     If the Loan is converted to the Permanent Loan as provided above, the 
Maturity Date shall be extended to that date which is one hundred twenty 
(120) months from the first day of the first calendar month following the 
date of the conversion unless otherwise agreed in writing by the Holder.  

                                       1
<PAGE>

     2.   INTEREST. Interest shall commence to run on each advance under this 
Note from the date of the advance and will be computed on the outstanding 
balance of this Note as it exists from time to time at the interest rates 
provided for in subparagraphs 2(a) and 2(b) below, as applicable. After 
maturity, or after default, interest shall accrue on the outstanding 
principal balance of this Note at an interest rate equal to four percentage 
points (4%) per annum above the interest rate otherwise applicable to this 
Note.

          (a)  CONSTRUCTION TERM INTEREST. During the Construction Term, the 
principal balance of this Note shall bear interest at a per annum interest 
rate equal to the sum of the publicly announced prime rate (the "PRIME RATE") 
of Lender, as the same may change from time to time, plus three hundred 
twenty-five one thousandths of one percentage point (0.325%) per annum. 
Interest rate adjustments caused by changes to the Prime Rate shall be 
effective the same day as the adjustments to the Prime Rate are effective. 
Interest on this Note during the Construction Term shall be computed on the 
basis of a 360-day year and the actual number of days elapsed in the period 
for which interest is payable.

          (b)  PERMANENT LOAN INTEREST. If the Loan converts to the Permanent 
Loan, interest shall accrue on the principal balance of this Note either at a 
variable interest rate as provided in subparagraph 2(b)(i) below (the 
"VARIABLE RATE"), or at a fixed interest rate as provided in subparagraph 
2(b)(ii) below (the "FIXED RATE"). After conversion to the Permanent Loan, 
interest on this Note shall be calculated A 30-day month and a 360-day year. 

               (i)  VARIABLE RATE. Unless Maker elects to have interest 
calculated at the Fixed Rate pursuant to subparagraph 2(b)(ii) below, 
interest shall accrue on the principal balance of this Note at the Variable 
Rate. The initial Variable Rate shall be equal to the "LIBOR INDEX" (defined 
below) as of the date the Loan converts to the Permanent Loan, plus two and 
three-fourths percentage points (2.750%) per annum, rounded to the next 
highest one-eighth of one percent (0.125%). The Variable Rate, if applicable, 
will change five (5) months after the first payment date stated in 
subparagraph 3(b) below, and every sixth (6th) month thereafter (each such 
date being referred to in this Note as an "INTEREST CHANGE DATE"). 

                    (1)  LIBOR INDEX - CURRENT INDEX - Changes in the 
Variable Rate will be based on changes in the 180-day LIBOR as defined below 
(the "LIBOR INDEX"). If the LIBOR Index is no longer available, the Holder 
will choose a new index based upon comparable information and give Maker 
notice of the choice. The most recently available LIBOR Index fifteen (15) 
Business Days before each Interest Change Date is the "CURRENT INDEX" . 

                    (2)  CALCULATION OF VARIABLE RATE - Before each Interest 
Change Date, if applicable, the Holder will calculate the new Variable Rate 
which shall be equal to the Current Index, plus two and three-fourths 
percentage points (2.750%) per annum, rounded to the next highest one-eighth 
of one percent (0.125%). This new interest rate will be the Variable Rate 
until the next Interest Change Date. 

                    (3)  LIBOR MEANS THE LONDON INTERBANK OFFER RATE, 
adjusted at the Holder's option for statutory reserves, deposit insurance, 
regulatory capital, taxes and assessments, if any, and is the average of the 
rates of interest, on a per annum basis, at which deposits in United States 
dollars having a term of 180 days are offered by major banks in immediately 
available funds to prime banks in the London Interbank market at 11:00 A.M. 
(London time) on the date the Loan converts to a Permanent Loan, or the day 
which is fifteen (15) Business Days prior to the applicable Interest Change 
Date, as applicable. This rate is reported on Telerate, a national and 
international medium which provides interest rate quotations daily, as quoted 
by the British Bankers Association as Interest Settlement Rates on page 3750 
(or such other page as may replace it). Such interest rate quotation, as 
provided by Telerate, shall be deemed conclusive and final with respect to 
LIBOR determinations for so long as Telerate continues to make such interest 
rate reports. If Telerate or the British Bankers Association report is no 
longer available for 180-day maturities, a comparable publication or report 
containing such information selected by the Holder will be used. If there is 
no such publication or comparable publication containing such information, 
the 180-day LIBOR shall be the average rate (rounded if necessary to the 
nearest one thousandth of a percent) at which dollar deposits having a 
maturity of 180 days are offered by at least two major banks in an
        
                                       2
<PAGE>

interbank market where Eurodollars are being traded to prime banks in 
immediately available funds on the LIBOR determination date described above 
or as soon thereafter as such offer quotes can be obtained. 

                    (4)  BUSINESS DAY means a day on which commercial banks 
are generally open for business in Seattle, Washington and London, England.  

                    (5)  The amount of adjustment for reserves, deposit 
insurance, regulatory capital, taxes and assessments may change on any 
Interest Change Date depending on such charges then being assessed against 
the Holder. Such charges may change due to various factors, including but not 
limited to, changes in the requirements for reserves and capital adequacy 
promulgated by the Federal Reserve System of the United States and/or other 
state and federal regulatory agencies, statutory changes affecting the 
Holder, and/or imposition of taxes, FDIC fees and/or assessments.  Each 
determination of an adjustment amount shall be made by the Holder in its sole 
and absolute discretion and shall be conclusive and binding upon Maker and 
shall be determined without benefit of or credit for prorations, exceptions 
or offsets that may be available to the Holder from time to time. 

               (ii) FIXED RATE. Prior to the date the Loan converts to the 
Permanent Loan, Maker may elect by written notice to the Holder to have 
interest on the entire principal amount of this Note calculated for the 
entire term of the Permanent Loan at a Fixed Rate, as provided below. 
Further, so long as Maker is not in default under the terms of this Note or 
any Loan Document, at any time after the Loan converts to the. Permanent 
Loan, Maker at its option, and upon the payment of a fee to the Holder equal 
to 0.250% of the then outstanding principal balance of this Note (or $500.00, 
whichever is greater), may elect by written notice to the Holder to have 
interest calculated on the entire principal balance of this Note at a Fixed 
Rate calculated as provided below for the remainder of the term of the 
Permanent Loan. Maker's ability to fix the interest rate on this Note 
pursuant to this subparagraph 2(b)(ii) is subject to the availability to the 
Holder of matchfunding opportunities for a time period equivalent to the term 
of this Note following the date of Maker's election to fix the interest rate. 

                    (1)  CALCULATION OF FIXED RATE - If Maker elects to have a 
Fixed Rate apply to this Note, interest shall accrue on the principal balance 
of this Note at a per annum rate equal to Lender's reserve adjusted "Fixed 
Rate Index" as quoted by Lender on the date the interest rate is converted to 
the Fixed Rate, for a period equivalent to the term of the Permanent Loan (or 
remainder thereof, as applicable), plus two and thirty-three one-hundredths 
percentage points (2.330%) per annum, rounded upward to the next highest 
one-eighth of one percent (0.125%). The Fixed Rate Index may be adjusted at 
the Holder's option to reflect statutory reserves, deposit insurance, 
regulatory capital, taxes and assessments, if any, as set forth in 
subparagraph 2(b)(i)(5) above. 

                    (2)  DATE OF CONVERSION - The interest rate will be 
converted to the Fixed Rate on the date the Holder receives Maker's written 
notice electing the Fixed Rate option, provided such notice is received before 
noon, Seattle time, on a Business Day, and the fee payable in connection with 
the election has been received by Holder. If notice is received by Holder after 
noon, Seattle time, on a Business Day, the interest rate applicable to this 
Note will convert to a Fixed Rate on the next Business Day. For purposes of 
this subparagraph 2(b)(ii)(2) only, the term "BUSINESS DAY" means a day on 
which commercial banks are generally open for business in Seattle, 
Washington. 

     3.   PAYMENTS. 

          (a)  CONSTRUCTION TERM PAYMENTS. During the Construction Term, Maker 
shall make monthly payments of interest on this Note as it accrues.  Payments 
shall be due on the first day of each calendar month during the Construction 
Term, commencing on the first day of the first calendar month following the 
initial advance by the Holder under this Note. 

          (b)  PERMANENT LOAN PAYMENTS. If the Loan converts to the Permanent 
Loan, Maker shall make monthly payments of principal and interest to the 
Holder, in amounts sufficient to 

                                       3
<PAGE>

fully amortize the principal balance of this Note over a twenty (20) year 
amortization period in substantially equal payments, based on the interest 
rate applicable to this Note, calculated as provided below.  Such monthly 
payments of principal and interest shall be due on the first day of each 
calendar month during the term of the Permanent Loan, commencing on the first 
day of the second calendar month following the month in which the Loan 
converts to the Permanent Loan. The monthly payments required on this Note 
following conversion to the Permanent Loan shall be calculated as follows: 

               (i)  VARIABLE RATE PAYMENTS. If interest is accruing on this 
Note at a Variable Rate, the amount of the initial monthly payments shall be 
in an amount sufficient to fully amortize the principal balance of this Note 
at the initial Variable Rate, in substantially equal monthly payments over 
the amortization period specified above. PROMPTLY AFTER THE LOAN CONVERTS TO 
THE PERMANENT LOAN, THE HOLDER WILL PROVIDE MAKER WITH A CLOSING STATEMENT 
(OR OTHER WRITTEN NOTICE) WHICH WILL CONFIRM THE INITIAL VARIABLE RATE AND 
THE AMOUNT OF THE INITIAL PRINCIPAL AND INTEREST PAYMENTS DUE UNDER THIS 
NOTE. The monthly payment will change after each Interest Change Date to an 
amount sufficient to repay the then unpaid principal balance of this Note in 
full at the then current interest rate, in substantially equal monthly 
payments over the balance of the amortization period specified above. Until 
the payment is again changed, Maker shall pay the new monthly payment each 
month beginning on the first day of the first calendar month after the 
applicable Interest Change Date. The Holder will mail or deliver to Maker a 
notice of any changes in the interest rate applicable to this Note, and any 
resulting changes in the monthly payments required under this Note, prior to 
the date the first payment is due after the applicable Interest Change Date. 

               (ii) FIXED RATE PAYMENTS. If interest is accruing on this 
Note at a Fixed Rate, the amount of the monthly payments shall be in an 
amount sufficient to fully amortize the principal balance of this Note at the 
applicable Fixed Rate, in substantially equal monthly payments over the 
amortization period specified above, or the remainder thereof, as applicable. 
THE APPLICABLE FIXED RATE AND THE AMOUNT OF THE MONTHLY PRINCIPAL AND 
INTEREST PAYMENTS DUE UNDER THIS NOTE SHALL BE CONFIRMED IN WRITING BY THE 
HOLDER (EITHER PURSUANT TO A CLOSING STATEMENT OR OTHER WRITTEN NOTICE) AFTER 
THE INTEREST RATE IS FIXED AND PRIOR TO THE DATE THE FIRST PAYMENT IS DUE AT 
THE FIXED RATE. 

          (c)  GENERAL. At the option of the Holder, all payments under this 
Note, including payment at maturity, shall be made in same day funds. On the 
Maturity Date (as the same may be extended as provided in this Note), the 
unpaid principal balance of this Note, all unpaid accrued interest and all 
other sums then due and owing pursuant to this Note or any other Loan 
Document shall be due and payable in full. Each payment shall be applied 
first, at Holder's option, to any unpaid late charges or other sums payable 
by Maker under this Note or any other Loan Document, then to interest to the 
due date of the payment, and then to the principal balance of this Note. 

     4.   AUTOMATIC WITHDRAWAL. The payments on this Note and any other sums 
secured by the Deed of Trust will be deducted on the first (lst) day of each 
month from Seafirst Deposit Account No. 6831402, or such other Seafirst 
Deposit Account as may be authorized in the future. 

     5.   LATE CHARGES; RETURNED ITEM FEE. If any payment due hereunder is not 
received by the Holder within fifteen (15) days of the due date, at the 
option of the Holder without waiving such default or any of its remedies, a 
late charge shall be added to the delinquent payment in the amount of four 
percent (4%) of the full payment not timely paid. Any such late charge shall 
be due and payable on demand, and the Holder, at its option, may (a) refuse 
any late payment or any subsequent payment unless accompanied by the 
applicable late charge, (b) add the late charge to the principal balance of 
this Note, (c) pay any late charge with advances of the undisbursed proceeds 
of the Loan, if any, or (d) treat the failure to pay the late charge as 
demanded as a default under this Note. If a late charge is added to the 
principal balance of this Note, it shall bear interest at the same rate as 
the principal balance of this Note. Any payment to Holder by check, draft or 
other item shall be received by Holder subject to collection and will 
constitute payment when collected not when received. For each "nsf' or 
returned check, draft or other item, in addition to any applicable late 
charge, Maker shall pay to the Holder on demand a returned item fee in 
accordance with the Holder's schedule of such fees then in effect.  

                                       4
<PAGE>

     6.   PREPAYMENT. During the Construction Term, and thereafter, so long as 
interest is calculated on this Note at a Variable Rate, this Note may be 
prepaid in whole or in part, at any time, without payment of a prepayment 
fee. During any period when a Fixed Rate is applicable to this Note, this 
Note may be prepaid only as set forth in EXHIBIT A attached. Partial 
prepayments, if permitted, shall not postpone nor reduce the amount of the 
monthly payments required under this Note.  

     7.   DEFAULT. After a default under any of the Loan Documents, or if Maker 
fails to make any payment under this Note when due, the Holder, at its 
option, without notice to Maker (except as provided below), may declare the 
entire principal balance of this Note and all unpaid accrued interest thereon 
and other charges payable by Maker pursuant to this Note or any other Loan 
Document immediately due and payable in full, and the Holder may exercise any 
and all other rights or remedies available to it under any Loan Document, at 
law or in equity. Any additional interest due because of a default shall 
accrue from the date of default and shall be paid as a condition to the 
curing of the default. Notwithstanding the foregoing, the Holder will not 
accelerate the Maturity Date (a) because of a monetary default by Maker under 
this Note or any other Loan Document unless the default is not cured within 
ten (10) days of the date on which the Holder mails or delivers written 
notice of the default to Maker, or (b) because of a nonmonetary default by 
Maker under this Note or any other Loan Document unless the default is not 
cured within thirty (30) days of the date on which the Holder mails or 
delivers written notice of the default to Maker. For purposes of this Note, 
the term "MONETARY DEFAULT" means a failure by Maker to make any payment 
required pursuant to this Note or any other Loan Document, and the term 
"NONMONETARY DEFAULT" shall mean a failure by Maker to perform any obligation 
contained in this Note or any other Loan Document, other than the obligation 
to make the payments provided for in this Note or any other Loan Document. If 
the nonmonetary default is capable of being cured and cannot reasonably be 
made within the thirty (30) day cure period, the cure period shall be 
extended up to ninety (90) days so long as Maker has commenced action to cure 
within the thirty (30) day cure period, and in the Holder's opinion, Maker is 
proceeding to cure the default with due diligence. None of the foregoing 
shall be construed to obligate the Holder to forbear in any other manner from 
exercising its remedies and the Holder may pursue any other rights or 
remedies which the Holder may have because of the default. 

     8.   CUMULATIVE REMEDIES. The rights and remedies of any Holder under this 
Note or any other Loan Document, or at law or in equity, shall be cumulative 
and concurrent, may be pursued singly, successively or together against 
Maker, any guarantor of this Note, or any security for this Note. A failure 
by any Holder to exercise its option to accelerate this Note upon the 
occurrence of a default or to exercise any other rights to which it may be 
entitled shall not constitute a waiver of the right to exercise such option 
or any such rights in the event of any subsequent default, whether of the 
same or a different nature. 

     9.   WAIVERS. Maker and all endorsers, guarantors and all other persons or 
entities who may become liable for all or any part of the obligations 
evidenced by this Note, jointly and severally: waive diligence, presentment, 
protest and demand, and also notice of protest, demand, non- payment, 
dishonor or maturity and also recourse to suretyship defenses generally; and 
consent to any and all renewals, extensions and modifications of the terms of 
this Note or any other Loan Document, including the time for payment, and 
agree any such renewal, extension or modification or the release or 
substitution of any security for the indebtedness evidenced by this Note or 
any other indulgences, shall not affect the liability of said parties for the 
indebtedness evidenced by this Note. Any such renewals, extensions, 
modifications, releases or indulgences may be made without notice to such 
parties. 

     10.  COSTS AND EXPENSES. Whether or not suit is brought Maker shall pay 
on demand all costs and expenses, including attorneys' fees and costs and 
allocated costs of in-house legal counsel, incurred by or on behalf of the 
Holder in connection with this Note, including without limitation costs 
incurred in the collection of this Note, in protecting the security for this 
Note or in foreclosing or enforcing this Note or any other Loan Document, or 
resulting from the Holder being made a party to any litigation because of the 
existence of this Note or any other Loan Document. Without limiting the 
generality of the foregoing, if Maker becomes the subject of any bankruptcy or

                                       5
<PAGE>

insolvency proceeding, Maker shall pay all fees and expenses incurred by the 
Holder in connection with such bankruptcy or insolvency proceeding. 

     11.  MAXlMUM INTEREST. Maker represents and warrants the proceeds of this 
Note shall be used solely for commercial, investment and business purposes, 
and not for personal, family or household purposes.  Notwithstanding any 
other provision of this Note or any other Loan Document, interest, loan fees 
and charges payable by reason of the indebtedness evidenced by this Note 
shall not exceed the maximum, if any, permitted by applicable law. If by 
virtue of applicable law, sums in excess of such maximum would otherwise be 
payable, then such excess sums shall be construed as having been immediately 
applied by the Holder to the principal balance of this Note when received. If 
at the time any such sum is received by the Holder, the principal balance of 
this Note has been paid in full, such sums shall be promptly refunded by the 
Holder to Maker, less any sums due to the Holder. 

     12.  SECURlTY. This Note is secured by a deed of trust dated December 10, 
1995 (the "DEED OF TRUST") encumbering certain real property located in 
Spokane County, Washington (the "PROPERTY"). Unless otherwise specified in 
this Note, all notices given pursuant to this Note must be in writing and 
will be effectively given if given in accordance with the terms of the Deed 
of Trust.  

     13.  GENERAL. This Note shall be binding upon Maker and Maker's 
beneficiaries, heirs, devisees, personal representatives, successors and 
assigns. If Maker consists of more than one person or entity, all of such 
persons and entities shall be jointly and severally liable for Maker's 
obligations under this Note. This Note is governed by and shall be construed 
in accordance with the laws of the State of Washington. Each person or entity 
executing this Note consents to the non-exclusive personal jurisdiction and 
venue of the courts of the State of Washington and the United States federal 
courts located therein, in any action relating to or arising out of the 
enforcement or interpretation of this Note or any other Loan Document. Each 
such person or entity further agrees not to assert in any such action that 
the proceeding has been brought in an inconvenient forum.  

     14.  ARBITRATION. Any dispute relating to this Note or the Loan (whether 
in contract or tort) shall be settled by arbitration if requested by Maker, 
the Holder or any other party to the dispute (such as a guarantor); PROVIDED, 
both Maker and the Holder must consent to a request for arbitration relating 
to an obligation secured by real property. The arbitration proceedings shall 
be held in Seattle, Washington in accordance with the commercial arbitration 
rules of the American Arbitration Association, and the United States 
Arbitration Act (i.e., Title 9, U.S.C.). There shall be one arbitrator who 
shall decide whether an issue is arbitrable or whether any claim is barred by 
a statute of limitations. Judgment on the arbitration award may be entered in 
any court having jurisdiction. Commencement of a lawsuit shall not constitute 
a waiver of the right of any party to request arbitration if the lawsuit is 
contested. Each party shall have the right before, during and after the 
commencement of any arbitration proceeding to exercise any of the following 
remedies, in any order or concurrently: (i) self-help remedies such as setoff 
or repossession; (ii) judicial or nonjudicial foreclosure against real or 
personal property collateral; and (iii) provisional remedies including 
injunction, appointment of receiver, attachment, claim and delivery and 
replevin. The exercise of any such remedy shall not waive a party's right to 
request arbitration. Nothing in this paragraph shall limit in any way any 
right the Holder may have to foreclose the Deed of Trust judicially as a 
mortgage, or nonjudicially pursuant to the power of sale. 

     15.  DISPUTED OBLIGATIONS. ALL COMMUNICATIONS CONCERNING DISPUTED DEBTS 
AND OBLIGATIONS OF MAKER UNDER THIS NOTE OR ANY OTHER LOAN DOCUMENT, 
INCLUDING WITHOUT LIMITATION DISPUTES AS TO THE AMOUNT OF ANY PAYMENT, FEE OR 
CHARGE, AND INCLUDING AN INSTRUMENT TENDERED AS FULL SATISFACTION OF A 
DISPUTED DEBT, MUST BE IN WRITING AND MUST BE SENT TO THE FOLLOWING ADDRESS, 
OR TO SUCH OTHER ADDRESS AS THE HOLDER MAY HEREAFTER SPECIFY: 

           SEAFIRST BANK 
           ATTENTION: LOAN SERVICING MANAGER 
           REAL ESTATE GROUP (CSC-14) 
           701 FIFTH AVENUE, FLOOR 14 
           SEATTLE, WASHINGTON 98104 

                                       6

<PAGE>

ANY SUCH COMMUNICATION SHOULD INCLUDE THE NAME OF MAKER, THE APPLICABLE LOAN 
NUMBER, A DESCRIPTION OF THE DISPUTE AND THE RELIEF OR REMEDY REQUESTED, AND AN 
ADDRESS AND TELEPHONE NUMBER WHERE THE PERSON SENDING THE NOTICE CAN BE 
CONTACTED. 

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

MAKER: 

THE COEUR D'ALENES COMPANY,
an Idaho corporation 

By:  /s/ Marilyn Schroeder
     -----------------------
Its:          Treas.
     -----------------------



                                       7
<PAGE>

[Letterhead]

                                                   Loan No   604938 and 453817-9


                              SUBORDINATION AGREEMENT

NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN THE SUBORDINATING PARTY'S 
SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY 
THAN THE LIEN OF SOME LATER OR OTHER SECURITY INSTRUMENT.

     1.   THE HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES 
DUE OCTOBER 31, 1998 ("Subordinator"), is the owner and holder of the 
following documents executed by The Coeur d'Alenes Company, an Idaho 
corporation (hereafter collectively referred to as the "Second Deed Of 
Trust"): 

          (a) DEED OF TRUST dated October 29, 1993, recorded November 5, 
1993, under Auditor's File No. 9311050174, records of Spokane County, 
Washington. Auditor's File No. 

     2.   SEATTLE-FIRST NATIONAL BANK, a national banking association 
("Lender") is the owner and holder of the following documents executed by The 
Coeur d'Alenes Company, an Idaho corporation (hereinafter collectively 
referred to as the "First Deed of Trust"): 

          (a) DEED OF TRUST dated December 20, 1995, recorded , under records 
of Spokane County. 

     3.   THE COEUR D'ALENES COMPANY, an Idaho corporation, ("Owner") is the 
owner of all the real property described in the First Deed of Trust. 

     4.   In consideration of benefits to Subordinator from Owner, receipt 
and sufficiency of which is hereby acknowledged, and to induce Lender to 
advance funds under its First Deed of Trust and all agreements in connection 
therewith, Subordinator hereby unconditionally subordinates the lien, 
security interest and rights granted by the Second Deed of Trust to the lien, 
security interest and rights granted by the First Deed of Trust and to all 
advances or charges made or accruing under the First Deed of Trust, including 
any extension or renewal thereof, to the same effect as though the First Deed 
of Trust had been placed on record before the Second Deed of Trust. 

     5.   It is understood and agreed that a default under the First Deed of 
Trust shall constitute a default under the Second Deed of Trust, and 
Subordinator, upon such default, may, at its option, without demand or 
notice, declare the whole sum secured by the Second Deed of Trust with 
interest thereon to be immediately due and payable, or Subordinator may, at 
its option, cure the default and add any amounts paid in curing the default 
to the amount due under the Second Deed of Trust without waiving any of its 
rights under the Second Deed of Trust or the Note which it secures. 

     6.   Subordinator acknowledges that, prior to the execution of this 
Agreement, Subordinator has had the opportunity to examine the terms of the 
First Deed of Trust, Note and agreements relating thereto which Subordinator 
consents to and approves. Subordinator acknowledges that Lender has no 
obligation to Subordinator to advance any funds under the First Deed of Trust 
or see to the application of any funds advanced. Any application or use of 
such funds for purposes other than those provided for in the First Deed of 
Trust, Note or other agreements shall not defeat this subordination in whole 
or in part. 

                                      -1-

<PAGE>

     7.   It is understood by the parties hereto that Lender would not make 
the loan secured by the First Deed of Trust Without this Agreement 

     8.   This Agreement shall be the whole and only agreement between the 
parties hereto with regard to the subordination of the Second Deed of Trust 
to the First Deed of Trust, and shall supercede and cancel any prior 
agreements regarding subordination including, but not limited to, those 
provisions, if any, contained in the Second Deed of Trust which provides for 
the subordination of the lien or charge thereof to a deed of trust or deeds 
of trust to be thereafter executed. 

     9.   This Subordination Agreement is entered into by Subordinator only 
and solely for the benefit of the present and future owners and holders of 
the indebtedness secured by the First Deed of Trust and not for the benefit 
of, nor in favor of, any other person or party.  The Second Deed of Trust is 
in full force and effect and asserted by Subordinator except as expressly 
hereby subordinated. 

     10.  This Subordination Agreement shall not impair the validity or 
priority of the Second Deed of Trust as to real property not described in the 
First Deed of Trust. 

     ll.  It is contemplated that this Subordination Agreement will be filed 
for record after the First Deed of Trust is filed, and Subordinates 
specifically authorizes Lender or its agent to insert in this Agreement where 
indicated the actual filing dates and number of the First Deed of Trust and 
such insertions shall be binding upon Subordinator. 

     12.  The heirs, administrators, assigns and successors in interest of 
Subordinator shall be bound by this Agreement. The words "Deed of Trust" 
shall refer to "mortgage" where appropriate. 

Executed this 5th day of February, 1996. 
              ---        --------     -

NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS ThE 
OWNER TO OBTAIN A LOAN SECURED BY A LIEN WHICH WILL HAVE PRIORITY OVER THE 
SUBORDINATING PARTY'S LIEN AND ALL OR A PORTION OF THE LOAN MAY BE EXPENDED 
FOR PURPOSES OTHER THAN IMPROVEMENT OF THE REAl PROPERTY.  IT IS RECOMMENDED 
THAT, PRIOR TO THE EXECUTION OF THIS SUBORDINATION AGREEMENT, THE PARTIES 
CONSULT WITH THEIR ATTORNEYS. 

OWNER:                                 SUBORDINATOR: 
THE COEUR D'ALENES COMPANY,            THE HOLDERS OF THE COEUR D'ALENES 
an Idaho corporation                   COMPANY'S CONVERTIBLE DEBENTURES 
                                       DUE OCTOBER 31, 1998, 

By:                                    By: /S/L.A. Coulson,              (1)
   ----------------------------           -------------------------------

Its:                                   Its: General Partner 
    ---------------------------             -----------------------------
  
                                        By:                              (2)
                                           ------------------------------
                                           Sigma FBO Robert P. Shanewise 
                                       
                                        Its:
                                           ------------------------------

                                         By:                             (3)
                                           ------------------------------
                                           Ben Harney
 
                                         By:                             (4) 
                                           ------------------------------
                                            Dorothy Harney

                                         By: /S/ Harry L. Yost           (5) 
                                           ------------------------------
                                             Harry L. Yost
 
                                         By: Ruth Yost                   (6) 
                                           ------------------------------
                                             Ruth Yost 


                                      -2-

<PAGE>


STATE OF WASHINGTON        )
                           )
COUNTY OF SPOKANE          )

I hereby certify that I know of have satisfactory evidence that Lawrence A. 
Coulson is the person who appeared before me, that said person acknowledged 
that he signed this instrument, on oath stated he was authorized to execute 
the instrument and acknowledge it as the general partner of C.I.N.V., a 
Washington partnership, to be the free and voluntary act of such party for 
the uses and purposes mentioned in the instrument. 

     GIVEN UNDER my hand and official seal this 6th Day of February, 1996. 

                       /S/ Paulette A. Bleken 
                       --------------------------------------
                       (Print Notary Name) Paulette A Bleken
                                           ------------------

                       Notary Public in and for the State of Washington 
                       residing at Greenacres 
                                   ---------------------
                       My appointment expires 8-27-99 
                                              --------

<PAGE>

STATE OF WASHINGTON        )
                           )Section
COUNTY OF                  )

I hereby certify that I know of have satisfactory evidence that              (4)
______________, is the person who appeared before me, that said person 
acknowledged that he/she signed this instrument, on oath stated he/she was 
authorized to execute the instrument and acknowledge it as the 
_______________ of THE HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE 
DEBENTURES DUE OCTOBER 31, 1998, to be the free and voluntary act of such 
party for the uses and purposes mentioned in the instrument. 

     GIVEN UNDER my hand and official seal this ___ day of _________________. 



                       --------------------------------------
                       (Print Notary Name) 
                                           ------------------

                       Notary Public in and for the State of Washington 
                       residing at
                                   ---------------------
                       My appointment expires 
                                              --------



STATE OF WASHINGTON        )
                           )Section
COUNTY OF SPOKANE          )


I hereby certify that I know of have satisfactory evidence that Harry Yost,  (5)
is the person who appeared before me, that said person acknowledged that 
he/she signed this instrument, on oath stated he/she was authorized to 
execute the instrument and acknowledge it as the _________________ of THE 
HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 
31, 1998, to be the free and voluntary act of such party for the uses and 
purposes mentioned in the instrument. 

     GIVEN UNDER my hand and official seal this 6th Day of February, 1996. 


                       /S/ Paulette A. Bleken 
                       --------------------------------------
                       (Print Notary Name) Paulette A Bleken
                                           ------------------

                       Notary Public in and for the State of Washington 
                       residing at Greenacres 
                                   ---------------------
                       My appointment expires 8-27-99 
                                              --------


STATE OF WASHINGTON        )
                           )Section
COUNTY OF SPOKANE          )

I hereby certify that I know of have satisfactory evidence that Ruth Yost,   (6)
is the person who appeared before me, that said person acknowledged that 
he/she signed this instrument, on oath stated he/she was authorized to execute 
the instrument and acknowledge it as the _______________ of THE HOLDERS OF THE 
COEUR D'ALENES COMPANY'S CONVERTIBLE DEBENTURES DUE OCTOBER 31, 1998, to be 
the free and voluntary act of such party for the uses and purposes mentioned 
in the instrument. 

     GIVEN UNDER my hand and official seal this 6th Day of February, 1996. 


                       /S/ Paulette A. Bleken 
                       --------------------------------------
                       (Print Notary Name) Paulette A Bleken
                                           ------------------

                       Notary Public in and for the State of Washington 
                       residing at Greenacres 
                                   ---------------------
                       My appointment expires 8-27-99 
                                              --------



                                      -4-

<PAGE>

STATE OF WASHINGTON        )
                           )Section
COUNTY OF                  )

I hereby certify that I know of have satisfactory evidence that              (2)
______________, is the person who appeared before me, that said person 
acknowledged that he/she signed this instrument, on oath stated he/she was 
authorized to execute the instrument and acknowledge it as the 
_______________ of THE HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE 
DEBENTURES DUE OCTOBER 31, 1998, to be the free and voluntary act of such 
party for the uses and purposes mentioned in the instrument. 

     GIVEN UNDER my hand and official seal this ___ day of _________________. 



                       --------------------------------------
                       (Print Notary Name) 
                                           ------------------

                       Notary Public in and for the State of Washington 
                       residing at
                                   ---------------------
                       My appointment expires 
                                              --------


STATE OF WASHINGTON        )
                           )Section
COUNTY OF                  )

I hereby certify that I know of have satisfactory evidence that              (3)
______________, is the person who appeared before me, that said person 
acknowledged that he/she signed this instrument, on oath stated he/she was 
authorized to execute the instrument and acknowledge it as the 
_______________ of THE HOLDERS OF THE COEUR D'ALENES COMPANY'S CONVERTIBLE 
DEBENTURES DUE OCTOBER 31, 1998, to be the free and voluntary act of such 
party for the uses and purposes mentioned in the instrument. 

     GIVEN UNDER my hand and official seal this ___ day of _________________. 



                       --------------------------------------
                       (Print Notary Name) 
                                           ------------------

                       Notary Public in and for the State of Washington 
                       residing at
                                   ---------------------
                       My appointment expires 
                                              --------


                                      -5-