<PAGE>

                      LOAN AGREEMENT

<TABLE>
<CAPTION>
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  PRINCIPAL       LOAN DATE     MATURITY     LOAN NO   CALL      COLLATERAL     ACCOUNT   OFFICER   INITIALS
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<S>               <C>           <C>          <C>       <C>       <C>            <C>       <C>       <C>
$1,000,000.00    07-31-1998    08-01-1999      9501                 302         E121729    TLH12
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</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.
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<TABLE>
<S>                                     <C>
BORROWER: R-B RUBBER PRODUCTS, INC.     LENDER: KEYBANK NATIONAL ASSOCIATION
          904 EAST 10TH AVENUE                  WILLAMETTE VALLEY COMMERCIAL BANKING
          MCMINNVILLE, OR 97128                 CENTER, SALEM
                                                416 STATE STREET
                                                P.O. BOX 2246 OR-20-96-0158
                                                SALEM, OR 97308
</TABLE>
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THIS LOAN AGREEMENT BETWEEN R-B RUBBER PRODUCTS, INC. ("BORROWER") AND KEYBANK
NATIONAL ASSOCIATION ("LENDER") IS MADE AND EXECUTED ON THE FOLLOWING TERMS AND
CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL LOANS FROM LENDER OR HAS
APPLIED TO LENDER FOR A COMMERCIAL LOAN OR LOANS AND OTHER FINANCIAL
ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY EXHIBIT OR
SCHEDULE ATTACHED TO THIS AGREEMENT. ALL SUCH LOANS AND FINANCIAL
ACCOMMODATIONS, TOGETHER WITH ALL FUTURE LOANS AND FINANCIAL ACCOMMODATIONS FROM
LENDER TO BORROWER, ARE REFERRED TO IN THIS AGREEMENT INDIVIDUALLY AS THE "LOAN"
AND COLLECTIVELY AS THE "LOANS." BORROWER UNDERSTANDS AND AGREES THAT (a) IN
GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON BORROWER'S
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THIS AGREEMENT; (b)
THE GRANTING, RENEWING, OR EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE
SUBJECT TO LENDER'S SOLE JUDGMENT AND DISCRETION; AND (c) ALL SUCH LOANS SHALL
BE AND SHALL REMAIN SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS OF THIS
AGREEMENT.

TERM. This Agreement shall be effective as of JULY 31, 1998, and shall continue
thereafter until all indebtedness of Borrower to Lender has be performed in full
and the parties terminate this Agreement in writing.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

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

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

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

     ADVANCE. The word "Advance" means a disbursement of Loan funds under this
     Agreement.

     BORROWER. The word "Borrower" means R-B RUBBER PRODUCTS, INC.. The word
     "Borrower" also includes, as applicable, all subsidiaries and affiliates of
     Borrower as provided below in the paragraph titled "Subsidiaries and
     Affiliates."

     BORROWING BASE. The words "Borrowing Base" mean, as determined by Lender
     from time to time, the lesser of (a) $1,000,000.00; or (b) the sun of (i)
     80.000% of the aggregate amount of Eligible Accounts, plus (ii) 50.000% of
     the aggregate amount of Eligible Inventory (not to exceed in corresponding
     Loan amount based on Eligible Inventory $300,000).

     CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
     Compensation, and Liability Act of 1980, as amended.

     COLLATERAL. The word "Collateral" means and includes without limitation all
     property and assets granted as collateral security for a Loan, whether real
     or personal property, whether granted directly or indirectly, whether
     granted now or in the future, and whether granted in the form of a security
     interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
     chattel trust, factor's lien, equipment trust, conditional sale, trust
     receipt, lien, charge, lien or title retention contract, lease or
     consignment intended as a security device, or any other security or lien
     interest whatsoever, whether created by law, contract, or otherwise. The
     word "Collateral" includes without limitation all collateral described
     below in the section filled "COLLATERAL."

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

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

          (b) Accounts with respect to which the Account Debtor is a subsidiary
          of, or affiliated with or related to Borrower or its shareholders,
          officers, or directors.

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

          (d) Accounts with respect to which the Account Debtor is not a
          resident of the United States, except to the extent such Accounts are
          supported by insurance, bonds or other assurances satisfactory to
          Lender.

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

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

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

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

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

          (j) Accounts with respect to which the Account Debtor is the United
          States government or any department or agency of the United States.

          (k) Accounts which have not been paid in full within 60 DAYS from the
          invoice date.

<PAGE>

07-31-1998                    LOAN AGREEMENT                            PAGE 2
LOAN NO 9501                   (CONTINUED)
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          period specified above; Accounts which are subject to retainage.

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

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

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

          (c) Work in progress.

     ERISA. The word "ERISA" means the Employee Retirement Income Security Act
     of 1974, as amended.

     EVENT OF DEFAULT. The words "Event of Default" mean and include without
     limitation any of the Events of Default set forth below in the section 
     titled "EVENTS OF DEFAULT."

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

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

     GUARANTOR. The word "Guarantor" means and includes without limitation each
     and all of the guarantors, sureties, and accommodation parties in
     connection with any Indebtedness.

     INDEBTEDNESS. The word "Indebtedness" means and includes without limitation
     all Loans, together with all other obligations, debts and liabilities of
     Borrower to Lender, or any one or more of them, as well as all claims by
     Lender against Borrower, or any one or more of them; whether now or
     hereafter existing, voluntary or involuntary, due or not due, absolute or
     contingent, liquidated or unliquidated; whether Borrower may be liable
     individually or jointly with others; whether Borrower may be obligated as a
     guarantor, surety, or otherwise; whether recovery upon such indebtedness
     may be or hereafter may become barred by any statute of limitations; and
     whether such Indebtedness may be or hereafter may become otherwise
     unenforceable.

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

     LENDER. The word "Lender" means KEYBANK NATIONAL ASSOCIATION, its
     successors and assigns.

     LINE OF CREDIT. The words "Line of Credit" mean the credit facility
     described in the Section titled "LINE OF CREDIT" below.

     LOAN. The word "Loan" or "Loans" means and includes without limitation any
     and all commercial loans and financial accommodations from Lender to
     Borrower, whether now or hereafter existing, and however evidenced,
     including without limitation those loans and financial accommodations
     described herein or described on any exhibit or schedule attached to this
     Agreement from time to time.

     NOTE. The word "Note" means and includes without limitation Borrower's
     promissory note or notes, if any, evidencing Borrower's Loan obligations in
     favor of Lender, as well as any substitute, replacement or refinancing note
     or notes therefor.

     PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and security
     interests securing Indebtedness owed by Borrower to Lender; (b) liens for
     taxes, assessments, or similar charges either not yet due or being
     contested in good faith; (c) liens of materialmen, mechanics warehousemen,
     or carriers, or other like liens arising in the ordinary course of business
     and securing obligations which are not yet delinquent; (d) purchase money
     liens or purchase money security interests upon or in any properly acquired
     or held by Borrower in the ordinary course of business to secure
     indebtedness outstanding on the date of this Agreement or permitted to be
     incurred under the paragraph of this Agreement titled "Indebtedness and
     Liens"; (e) liens and security interests which, as of the date of this
     Agreement, have been disclosed to and approved by the Lender in writing;
     and (f) those liens and security interests which in the aggregate
     constitute an immaterial and insignificant monetary amount with respect to
     the net value of Borrower's assets.

     RELATED DOCUMENTS. The words "Related Documents" mean and include without
     limitation all promissory notes, credit agreements, loan agreements,
     environmental agreements, guaranties, security agreements, mortgages, deeds
     of trust, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

     SECURITY AGREEMENT. The words "Security Agreement" mean and include without
     limitation any agreements, promises, covenants, arrangements,
     understandings or other agreements, whether created by law, contract, or
     otherwise, evidencing, governing, representing, or creating a Security
     interest.

     SECURITY INTEREST. The words "Security Interest" mean and include without
     limitation any type of collateral security, whether in the form of a lien,
     charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
     challel trust, factor's lien, equipment trust, conditional sale, trust
     receipt, lien or title retention contract, lease or consignment intended as
     a security device, or any other security or lien interest whatsoever,
     whether created by law, contract, or otherwise.

     SARA. The word "SARA" means the Superfund Amendments and Reauthorization
     Act of 1986 as now or hereafter amended.

LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows.

     CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
     Advance to or for the account of Borrower under this Agreement is subject
     to the following conditions precedent, with all documents, Instruments,
     opinions, reports, and other items required under this Agreement to be in
     form and substance satisfactory to Lender:

          (a) Lender shall have received evidence that this Agreement and all
          Related Documents have been duly authorized, executed, and delivered
          by Borrower to Lender.

          (b) Lender shall have received such opinions of counsel, supplemental
          opinions, and documents as Lender may request.

          (c) The security interests in the Collateral shall have been duly
          authorized, created, and perfected with first lien priority and shall
          be in full force and effect.

          (d) All guaranties required by Lender for the Line of Credit shall
          have been executed by each Guarantor, delivered to Lender, and be in
          full force and effect.

          (e) Lender, at its option and for its sole benefit, shall have
          conducted an audit of Borrower's Accounts. Inventory books records and

<PAGE>

07-31-1998                    LOAN AGREEMENT                            PAGE 3
LOAN NO 9501                   (CONTINUED)
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          operations, and Lender shall be satisfied as to their condition.

          (f) Borrower shall have paid to Lender all fees, costs, and expenses
          specified in this Agreement and the Related Documents as are then due
          and payable.

          (g) There shall not exist at the time of any Advance a condition which
          would constitute an Event of Default under this Agreement, and
          Borrower shall have delivered to Lender the compliance certificate
          called for in the paragraph below titled "Compliance Certificate."

     MAKING LOAN ADVANCES. Advances under the Line of Credit may be requested
     orally by authorized persons. Lender may, but need not, require that all
     oral requests be confirmed in writing. Each Advance shall be conclusively
     deemed to have been made at the request of and for the benefit of Borrower
     (a) when credited to any deposit account of Borrower maintained with Lender
     or (b) when advanced in accordance with the instructions of an authorized
     person. Lender, at its option, may set a cutoff time, after which all
     requests for Advances will be treated as having been requested on the next
     succeeding Business Day.

     MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount of
     the outstanding Advances shall exceed the applicable Borrowing Base,
     Borrower, immediately upon written or oral notice from Lender, shall pay to
     Lender an amount equal to the difference between the outstanding principal
     balance of the Advances and the Borrowing Base. On the Expiration Date,
     Borrower shall pay to Lender in full the aggregate unpaid principal amount
     of all Advances then outstanding and all accrued unpaid interest, together
     with all other applicable fees, costs and charges, if any, not yet paid.

     LOAN ACCOUNT. Lender shall maintain on its books a record of account in
     which Lender shall make entries for each Advance and such other debits and
     credits as shall be appropriate in connection with the credit facility.
     Lender shall provide Borrower with periodic statements of Borrower's
     account, which statements shall be considered to be correct and
     conclusively binding on Borrower unless Borrower notifies Lender to the
     contrary within thirty (30) days after Borrower's receipt of any such
     statement which Borrower deems to be incorrect.

COLLATERAL. To secure payment of the Line of Credit and performance of all other
Loans, obligations and duties owed by Borrower to Lender, Borrower (and others,
if required) shall grant to Lender Security interests in such property and
assets as Lender may require (the "Collateral"), including without limitation
Borrower's present and future Accounts, general Intangibles, and Inventory.
Lender's Security Interests in the Collateral shall be continuing liens and
shall include the proceeds and products of the Collateral, including without
limitation the proceeds of any insurance. With respect to the Collateral,
Borrower agrees and represents and warrants to Lender:

     PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute such financing
     statements and to take whatever other actions are requested by Lender to
     perfect and continue Lender's Security Interests in the Collateral. Upon
     request of Lender, Borrower will deliver to Lender any and all of the
     documents evidencing or constituting the Collateral, and Borrower will note
     Lender's interest upon any and all chattel paper if not delivered to Lender
     for possession by Lender. Contemporaneous with the execution of this
     Agreement, Borrower will execute one or more UCC financing statements and
     any similar statements as may be required by applicable law, and will file
     such financing statements and all such similar statement. In the 
     appropriate location or locations. Borrower hereby appoints Lender as its 
     irrevocable attorney-in-fact for the purpose of executing any documents 
     necessary to perfect or to continue any Security interest. Lender may at 
     any time, and without further authorization from Borrower, file a carbon, 
     photograph, facsimile, or other reproduction of any financing statement for
     use as a financing statement. Borrower will reimburse Lender for all 
     expenses for the perfection, termination, and the continuation of the 
     perfection of Lender's security interest in the Collateral. Borrower 
     promptly will notify Lender of any change in Borrower's name including any 
     change to the assumed business names of Borrower. Borrower also promptly 
     will notify Lender of any change in Borrower's Social Security Number or 
     Employer Identification Number. Borrower further agrees to notify Lender in
     writing prior to any change in address or location of Borrower's principal 
     governance office or should Borrower merge or consolidate with any other 
     entity.

     COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
     keep correct and accurate records of the Collateral, all of which records
     shall be available to Lender or Lender's representative upon demand for
     inspection and copying at any reasonable time. With respect to the
     Accounts, Borrower agrees to keep and maintain such records as Lender may
     require, including without limitation information concerning Eligible
     Accounts and Account balances and agings. With respect to the Inventory,
     Borrower agrees to keep and maintain such records as Lender may require,
     including without limitation information concerning Eligible inventory and
     records itemizing and describing the kind, type, quality, and quantity of
     Inventory, Borrower's inventory costs and selling prices, and the daily
     withdrawals and additions to Inventory.

     COLLATERAL SCHEDULES. Concurrently with the execution and delivery of this
     Agreement, Borrower shall execute and deliver to Lender schedules of
     Accounts and Inventory and Eligible Accounts and Eligible Inventory, in
     form and substance satisfactory to the Lender. Thereafter and at such
     frequency as Lender shall require, Borrower shall execute and deliver to
     Lender such supplemental schedules of Eligible Accounts and Eligible
     Inventory and such other matters and information relating to the Accounts
     and Inventory as Lender may request.

     REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
     Accounts, Borrower represents and warrants to Lender: (a) Each Account
     represented by Borrower to be an Eligible Account for purposes of this
     Agreement conforms to the requirements of the definition of an Eligible
     Account; (b) All Account Information listed on schedules delivered to
     Lender will be true and correct, subject to immaterial variance; and (c)
     Lender, its assigns, or agents shall have the right at any time and at
     Borrower's expense to inspect, examine, and audit Borrower's records and to
     confirm with Account Debtors the accuracy of such Accounts.

     REPRESENTATIONS AND WARRANTIES CONCERNING INVENTORY. With respect to the
     Inventory, Borrower represents and warrants to Lender: (a) All Inventory
     represented by Borrower to be Eligible Inventory for purposes of this
     Agreement conforms to the requirements of the definition of Eligible
     Inventory; (b) All inventory values listed on schedules delivered to Lender
     will be true and correct, subject to immaterial variance; (c) The value the
     Inventory will be determined on a consistent accounting basis; (d) Except
     as agreed to the contrary by Lender in writing, all Eligible Inventory is
     now and at all times hereafter will be in Borrower's physical possession
     and shall not be held by others on consignment, sale on approval, or sale
     or return; (e) Except as reflected in the Inventory schedules delivered to
     Lender, all Eligible Inventory is now and at all times hereafter will of
     good and merchantable quality, free from defects; (f) Eligible Inventory is
     not now and will not at any time hereafter be stored with a bailee,
     warehouseman, or similar party without Lender's prior written consent, and,
     in such event, Borrower will concurrently at the time of bailment cause any
     such bailee, warehouseman, or similar party to issue and deliver to Lender,
     in form acceptable to Lender, warehouse receipts in Lender's name
     evidencing the storage of Inventory; and (g) Lender, its assigns, or agents
     shall have the right at any time and at Borrower's expense to inspect and
     examine the Inventory and to check and test the same as to quality,
     quantity, value, and condition.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

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

                               [Illegible]

<PAGE>

07-31-1998                    LOAN AGREEMENT                            PAGE 4
LOAN NO 9501                   (CONTINUED)
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     any other person, regulatory authority or governmental body; and do not
     conflict with, result in a violation of, or constitute a default under (a)
     any provision of its articles of incorporation or organization, or bylaws,
     or any agreement or other instrument binding upon Borrower or (b) any law,
     governmental regulation, court decree, or order applicable to Borrower.

     FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
     Lender truly and completely disclosed Borrower's financial condition as of
     the date of the statement, and there has been no material adverse change in
     Borrower's financial condition subsequent to the date of the most recent
     financial statement supplied to Lender. Borrower has no material contingent
     obligations except as disclosed in such financial statements.

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

     PROPERTIES. Except for Permitted Liens, Borrower owns and has good title to
     all of Borrower's properties free and clear of all Security interests, and
     has not executed any security documents or financing statements relating to
     such properties. All of Borrower's properties are titled in Borrower's
     legal name, and Borrower has not used, or filed a financing statement
     under, any other name for at least the last five (5) years.

     HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
     "disposal," "release," and "threatened release," as used in this Agreement,
     shall have the same meanings as set forth in the "CERCLA," "SARA," the
     Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
     the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
     seq., or other applicable state or Federal laws, rules, or regulations
     adopted pursuant to any of the foregoing or intended to protect human
     health or the environment ("Environmental Laws"). Except as disclosed to
     and acknowledged by Lender in writing, Borrower represents and warrants
     that: (a) During the period of Borrower's ownership of the properties,
     there has been no use, generation, manufacture, storage, treatment,
     disposal, release or threatened release of any hazardous waste or substance
     by any person on, under, about or from any of the properties. (b) Borrower
     has no knowledge of, or reason to believe that there has been (i) any use,
     generation, manufacture, storage, treatment, disposal, release, or
     threatened release of any hazardous waste or substance on, under, about or
     from the properties by any prior owners or occupants of any of the
     properties, or (ii) any actual or threatened litigation or claims of any
     kind by any person relating to such matters. (c) Neither Borrower nor any
     tenant, contractor, agent or other authorized user of any of the properties
     shall use, generate, manufacture, store, treat, dispose of, or release any
     hazardous waste or substance on, under, about or from any of the
     properties; and any such activity shall be conducted in compliance with all
     applicable federal, state, and local laws, regulations, and ordinances,
     including without limitation Environmental Laws. Borrower authorizes Lender
     and its agents to enter upon the properties to make such Inspections and
     tests as Lender may deem appropriate to determine compliance of the
     properties with this section of the Agreement. Any Inspections or tests
     made by Lender shall be at Borrower's expens and for Lender's purposes only
     and shall not be construed to create any responsibility or liability on the
     part of Lender to Borrower or to any other person. The representations and
     warranties contained herein are based on Borrower's due diligence in
     investigating the properties for hazardous waste and hazardous substances.
     Borrower hereby (a) releases and waives any future claims against Lender
     for indemnity or contribution in the event Borrower becomes liable for
     cleanup or other costs under any such laws, and (b) agrees to indemnify and
     hold harmless Lender against any and all claims, losses, liabilities,
     damages, penalities, and expenses which Lender may directly or indirectly
     sustain or suffer resulting from a breach of this section of the Agreement
     or as a consequence of any use, generation, manufacture, storage, disposal,
     release or threatened release of a hazardous waste or substance on the
     properties, or as a result of a violation of any Environmental Laws. The
     provisions of this section of the Agreement, including the obligation to
     indemnify, shall survive the payment of the Indebtedness and the
     termination or expiration of this Agreement and shall not be affected by
     Lender's acquisition of any interest in any of the properties, whether by
     foreclosure or otherwise.

     LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
     proceeding or similar action (including those for unpaid taxes) against
     Borrower is pending or threatened, and no other event has occurred which
     may materially adversely affect Borrower's financial condition or
     properties, other than litigation, claims, or other events, if any, that
     have been disclosed to and acknowledged by Lender in writing.

     TAXES. To the best of Borrower's knowledge, all tax returns and reports of
     Borrower that are or were required to be filed, have been filed, and all
     taxes, assessments and other governmental charges have been paid in full,
     except those presently being or to be contested by Borrower in good faith
     in the ordinary course of business and for which adequate reserves have
     been provided.

     LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
     Borrower has not entered into or granted any Security Agreements, or
     permitted the filling or attachment of any Security Interests on or
     affecting any of the Collateral directly or indirectly securing repayment
     of Borrower's Loan and Note, that would be prior or that may in any way be
     superior to Lender's Security Interests and rights in and to such
     Collateral.

     BINDING EFFECT. This Agreement, the Note, all Security Agreements directly
     or indirectly securing repayment of Borrower's Loan and Note and all of the
     Related Documents are binding upon Borrower as well as upon Borrower's
     successors, representatives and assigns, and are legally enforceable in
     accordance with their respective terms.

     COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
     business or commercial related purposes.

     EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may
     have any liability complies in all material respects with all applicable
     requirements of law and regulations, and (i) no Reportable Event nor
     Prohibited Transaction (as defined in ERISA) has occurred with respect to
     any such plan, (ii) Borrower has not withdrawn from any such plan or
     initiated steps to do so, (iii) no steps have been taken to terminate any
     such plan, and (iv) there are no unfunded liabilities other than those
     previously disclosed to Lender in writing.

     LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of business,
     or Borrower's Chief executive office, if Borrower has more than one place
     of business, is located at 904 EAST 10TH AVENUE, MCMINNVILLE, OR 97128.
     Unless Borrower has designated otherwise in writing this location is also
     the office or offices where Borrower keeps its records concerning the
     Collateral.

     YEAR 2000. Borrower warrants and represents that all software utilized in
     the conduct of Borrower's business will have appropriate capabilities and
     compatibility for operation to handle calendar dates failing on or after
     January 1, 2000, and all information pertaining to such calendar dates, in
     the same manner and with the same functionality as the software does
     respecting calendar dates failing on or before December 31, 1999. Further,
     Borrower warrants and represents that the data-related user interface
     functions, data-fields, and data-related program instructions and functions
     of the software include the indication of the century.

     INFORMATION. All information heretofore or contemporaneously herewith
     furnished by Borrower to Lender for the purposes of or in connection with
     this Agreement or any transaction contemplated hereby is, and all
     information hereafter furnished by or on behalf of Borrower to Lender will
     be, true and accurate in every material respect on the date as of which
     such information is dated or certified; and none of such information is or
     will be incomplete by omitting to state any material fact necessary to make
     such information not misleading.

     SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and agrees
     that Lender, without independent investigation, is relying upon the above
     representations and warranties in extending Loan Advances to Borrower.
     Borrower further agrees that the foregoing representations and warranties
     shall be continuing in nature and shall remain in full force and effect
     until such time as Borrower's Indebtedness shall be paid in full, or until
     this Agreement shall be terminated in the manner provided above, whichever
     is the last to occur.

<PAGE>

07-31-1998                    LOAN AGREEMENT                            PAGE 5
LOAN NO 9501                   (CONTINUED)
-------------------------------------------------------------------------------

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

     LITIGATION. Promptly inform Lender in writing of (a) all material adverse
     changes in Borrower's financial condition, and (b) all existing and all
     threatened litigation, claims, investigations, administrative proceedings
     or similar actions affecting Borrower or any Guarantor which could
     materially affect the financial condition of Borrower or the financial
     condition of any Guarantor.

     FINANCIAL RECORDS. Maintain its books and records in accordance with
     generally accepted accounting principles, applied on a consistent basis,
     and permit Lender to examine and audit Borrower's books and records at all
     reasonable times.

     FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in no
     event later than one hundred twenty (120) days after the end of each fiscal
     year, Borrower's balance sheet and income statement for the year ended,
     audited by a certified public accountant satisfactory to Lender, and, as
     soon as available, but in no event later than forty five (45) days after
     the end of each fiscal quarter, Borrower's balance sheet and profit and
     loss statement for the period ended, prepared and certified as correct to
     the best knowledge and belief by Borrower's chief financial officer or
     other officer or person acceptable to Lender. All financial reports
     required to be provided under this Agreement shall be prepared in
     accordance with generally accepted accounting principles, applied on a
     consistent basis, and certified by Borrower as being true and correct.

     ADDITIONAL INFORMATION. Furnish such additional information and statements,
     lists of assets and liabilities, agings of receivables and payables,
     inventory schedules, budgets, forecasts, tax returns, and other reports
     with respect to Borrower's financial condition and business operations as
     Lender may request from time to time.

     INSURANCE. Maintain fire and other risk insurance, public liability
     insurance, and such other insurance as Lender may require with respect to
     Borrower's properties and operations, in form, amounts, coverages and with
     insurance companies reasonably acceptable to Lender. Borrower, upon request
     of Lender, will deliver to Lender from time to time the policies or
     certificates of insurance in form satisfactory to Lender, including
     stipulations that coverages will not be cancelled or diminished without at
     least ten (10) days' prior written notice to Lender. Each insurance policy
     also shall include an endorsement providing that coverage in favor of
     Lender will not be impaired in any way by any act, omission or default of
     Borrower or any other person. In connection with all policies covering
     assets in which Lender holds or is offered a security interest for the
     Loans, Borrower will provide Lender with such loss payable or other
     endorsements as Lender may require.

     INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
     each existing insurance policy showing such information as Lender may
     reasonably request, including without limitation the following: (a) the
     name of the insurer; (b) the risks insured; (c) the amount of the policy;
     (d) the properties insured; (e) the then current property values on the
     basis of which insurance has been obtained, and the manner of determining
     those values; and (f) the expiration date of the policy. In addition, upon
     request of Lender (however not more often than annually). Borrower will
     have an independent appraiser satisfactory to Lender determine, as
     applicable, the actual cash value or replacement cost of any Collateral.
     The cost of such appraisal shall be paid by Borrower.

     OTHER AGREEMENTS. Comply with all terms and conditions of all other
     agreements, whether now or hereafter existing, between Borrower and any
     other party and notify Lender immediately in writing of any default in
     connection with any other such agreements.

     LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
     operations, unless specifically consented to the contrary by Lender
     writing.

     TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
     indebtedness and obligations, including without limitation all assessments,
     taxes, governmental charges, levies and liens, of every kind and nature,
     imposed upon Borrower or its properties, income, or profits, prior to the
     date on which penalties would attach, and all lawful claims that, if
     unpaid, might become a lien or charge upon any of Borrower's properties,
     income, or profits. Provided however, Borrower will not be required to pay
     and discharge any such assessment, tax, charge, levy, lien or claim so long
     as (a) the legality of the same shall be contested in good faith by
     appropriate proceedings, and (b) Borrower shall have established on its
     books adequate reserves with respect to such contested assessment, tax,
     charge, levy, lien, or claim in accordance with generally accepted
     accounting practices. Borrower, upon demand of Lender, will furnish to
     Lender evidence of payment of the assessments, taxes, charges, levies,
     liens and claims and will authorize the appropriate governmental official
     to deliver to Lender at any time a written statement of any assessments,
     taxes, charges, levies, liens and claims against Borrower's properties,
     income, or profits.

     PERFORMANCE. Perform and comply with all terms, conditions, and provisions
     set forth in this Agreement and in the Related Documents in a timely
     manner, and promptly notify Lender if Borrower learns of the occurrence of
     any event which constitutes an Event of Default under this Agreement or
     under any of the Related Documents.

     OPERATIONS. Maintain executive and management personnel with substantially
     the same qualifications and experience as the present executive and
     management personnel; provide written notice to Lender of any change in
     executive and management personnel; conduct its business affairs in a
     reasonable and prudent manner and in compliance with all applicable
     federal, state and municipal laws, ordinances, rules and regulations
     respecting its properties, charters, businesses and operations, including
     without limitation, compliance with the Americans With Disabilities Act and
     with all minimum funding standards and other requirements of ERISA and
     other laws applicable to Borrower's employee benefit plans.

     INSPECTION. Permit employees or agents of Lender at any reasonable time to
     inspect any and all Collateral for the Loan or Loans and Borrower's other
     properties and to examine or audit Borrower's books, accounts, and records
     and to make copies and memoranda of Borrower's books, accounts, and
     records. If Borrower now or at any time hereafter maintains any records
     (including without limitation computer generated records and computer
     software programs for the generation of such records) in the possession of
     a third party, Borrower, upon request of Lender, shall notify such party to
     permit Lender free access to such records at all reasonable times and to
     provide Lender with copies of any records it may request, all at Borrower's
     expense.

     COMPLIANCE CERTIFICATE. Unless waived in writing by Lender, provide Lender
     at least annually and at the time of each disbursement of Loan proceeds
     with a certificate executed by Borrower's chief financial officer, or other
     officer or person acceptable to Lender, certifying that the representations
     and warranties set forth in this Agreement are true and correct as of the
     date of the certificate and further certifying that, as of the date of the
     certificate, no Event of Default exists under this Agreement.

     ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
     with all environmental protection federal, state and local laws, statutes,
     regulations and ordinances; not cause or permit to exist, as a result of an
     intentional or unintentional action or omission on its part or on the part
     of any third party, on property owned and/or occupied by Borrower, any
     environmental activity where damage may result to the environment, unless
     such environmental activity is pursuant to and in compliance with the
     conditions of a permit issued by the appropriate federal state or local
     governmental authorities; shall furnish to Lender promptly and in any event
     within thirty (30) days after receipt thereof a copy of any notice,
     summons, lien, citation, directive, letter or other communication from any
     governmental agency or instrumentality concerning any intention or
     unintentional action or omission on Borrower's part in connection with any
     environmental activity whether or not there is damage to the environment
     and/or other natural resources.


<PAGE>

07-31-1998                    LOAN AGREEMENT                            PAGE 6
LOAN NO 9501                   (CONTINUED)
-------------------------------------------------------------------------------


     ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
     notes, mortgages, deeds of trust, security agreements, financing
     statements, instruments, documents and other agreements as Lender or its
     attorneys may reasonably request to evidence and secure the Loans and to
     perfect all Security Interests.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

     INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
     course of business and indebtedness to Lender contemplated by this
     Agreement, create, incur or assume indebtedness for borrowed money,
     including capital leases, (b) except as allowed as a Permitted Lien, sell,
     transfer, mortgage, assign, pledge, lease, grant a security interest in, or
     encumber any of Borrower's assets, or (c) sell with recourse any of
     Borrower's accounts, except to Lender.

     CONTINUITY OF OPERATIONS. (a) Engage in any business activities
     substantially different than those in which Borrower is presently engaged,
     (b) cease operations, liquidate, merge, transfer, acquire or consolidate
     with any other entity, change ownership, change its name, dissolve or
     transfer or sell Collateral out of the ordinary course of business, (c) pay
     any dividends on Borrower's stock (other than dividends payable in its
     stock), provided, however that notwithstanding the foregoing, but only so
     long as no Event of Default has occurred and is continuing or would result
     from the payment of dividends, if Borrower is a "Subchapter S Corporation"
     (as defined in the Internal Revenue Code of 1986, as amended), Borrower may
     pay cash dividends on its stock to its shareholders from time to time in
     amounts necessary to enable the shareholders to pay income taxes and make
     estimated income tax payments to satisfy their liabilities under federal
     and state law which arise solely from their status as Shareholders of a
     Subchapter S Corporation because of their ownership of shares of stock of
     Borrower, or (d) purchase or retire any of Borrower's outstanding shares or
     alter or amend Borrower's capital structure.

     LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money or
     assets, (b) purchase, create or acquire any interest in any other
     enterprise or entity, or (c) incur any obligation as surety or guarantor
     other than in the ordinary course of business.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; or (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender.

ADDITIONAL DEFINITIONS.

ADJUSTED TANGIBLE CAPITAL means Tangible Capital less investments in, advances
to, promissory notes and any receivables from, any affiliate or other related
entity of Borrower.

CAPITAL EXPENDITURES means current period net fixed assets less prior period net
fixed assets, plus current period depreciation.

CASH FLOW means net income after taxes, and exclusive of extraordinary gains and
income, plus depreciation and amortization.

CURRENT ASSETS shall be as defined by GAAP, minus prepaid expenses.

CURRENT LIABILITIES shall be as defined by GAAP

DEBT means all of Borrower's liabilities excluding Subordinated Debt

EBITDA means, calculated for the period of the previous four fiscal quarters,
the net earnings of Borrower plus the aggregate amounts deducted in determining
such net income in respect of interest expenses, taxes, depreciation and
amortization; but not, however, giving effect to extraordinary losses or gains
in calculating net income.

FIXED CHARGES means interest expense plus lease expense, current maturities of
long-term debt and current maturities of capital leases.

FUNDED DEBT means all interest bearing term loan Debt or capital lease payments
of Borrower having a maturity of greater than one year.

LIQUID ASSETS means Borrower's cash on hand plus Borrower's readily marketable
securities.

OPERATING CASH FLOW means net income after taxes, and exclusive of extraordinary
gains, gains on asset sales, and other income, plus depreciation and
amortization, plus interest expense, plus lease expense, less dividends, and
distributions.

SUBORDINATED DEBT means indebtedness and liabilities of Borrower which have been
subordinated by written agreement to indebtedness owned by Borrower to Lender in
form and substance acceptable to Lender.

TANGIBLE CAPITAL means Tangible Net Worth plus Subordinated Debt

TANGIBLE NET WORTH means Borrower's total assets excluding all intangible assets
(i.e., goodwill, trademarks, patents, copyrights, organizational expenses, and
similar intangible items, but including leaseholds and leasehold improvements)
less total Debt.

TOTAL FIXED CHARGES means interest expense, plus current maturities of long-term
debt and current maturities of capital leases, plus lease expenses, plus
preferred stock dividends, plus Capital Expenditures.

TOTAL LIQUID ASSETS means Borrower's cash on hand plus Borrower's readily
marketable securities, plus Borrower's net trade accounts receivable.

TOTAL SENIOR LIABILITIES means total liabilities less Subordinated Debt.

UNENCUMBERED LIQUIDITY means the sum of unpledged cash, stocks, bonds, and other
near cash investments held in a person's name and immediately available with
unimpaired value; but not including pledged assets, IRA, 401(k), annuity or
trust accounts.

WORKING CAPITAL means Borrower's current assets, excluding prepaid expenses,
less Borrower's current liabilities.

ADDITIONAL COVENANTS. Borrower covenants and agrees with Lender that, while this
Agreement is in effect, Borrower will:

TANGIBLE NET WORTH. Borrower shall maintain a Tangible Net Worth of not less
than $4,500,000.00; calculated at the end of each quarter.

CURRENT RATIO. Borrower shall maintain a ratio of current assets to current
liabilities in excess of 1.5 to 1.0; calculated at the end of each quarter.

OPERATING CASH FLOW TO TOTAL FIXED CHARGE RATIO. Borrower shall maintain a ratio
of Operating Cash Flow to Total Fixed Charges of not less than 1. 3 to 1.0;
calculated at the end of each fye for the preceding 12-month period.

BORROWING PLAN. An exhibit, titled "BORROWING PLAN," is attached to this
Agreement and by this reference is made a part of this Agreement just as if all
the provisions, terms and conditions of the Exhibit had been fully set forth in
this Agreement.

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

<PAGE>

07-31-1998                    LOAN AGREEMENT                            PAGE 7
LOAN NO 9501                   (CONTINUED)
-------------------------------------------------------------------------------

     DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
     on the Loans.

     OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
     perform when due any other term, obligation, covenant or condition
     contained in this Agreement or in any of the Related Documents, or failure
     of Borrower to comply with or to perform any other term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Borrower.

     DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
     under any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's property or Borrower's or any
     Grantor's ability to repay the Loans or perform their respective
     obligations under this Agreement or any of the Related Documents.

     FALSE STATEMENTS. Any warranty, representation or statement made or
     furnished to Lender by or on behalf of Borrower or any Grantor under this
     Agreement or the Related Documents is false or misleading in any material
     respect at the time made or furnished, or becomes false or misleading at
     any time thereafter.

     DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any Security
     Agreement to create a valid and perfected Security Interest) at any time
     and for any reason.

     INSOLVENCY. The dissolution or termination of Borrower's existence as a
     going business, the Insolvency of Borrower, the appointment of a receive
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower, any creditor
     of any Grantor against any collateral securing the Indebtedness, or by any
     governmental agency. This includes a garnishment, attachment, or levy on or
     of any of Borrower's deposit accounts with Lender. However, this Event of
     Default shall not apply if there is a good faith dispute by Borrower or
     Grantor, as the case may be, as to the validity or reasonableness of the
     claim which is the basis of the creditor or forfeiture proceeding, and if
     Borrower or Grantor gives Lender written notice of the creditor or
     forfeiture proceeding and furnishes reserves or a surety bond for the
     creditor or forfeiture proceeding satisfactory to Lender.

     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
     to any Guarantor of any of the Indebtedness or any Guarantor dies or
     becomes incompetent, or revokes or disputes the validity of, or liability
     under, any Guaranty of the Indebtedness. Lender, at its option, may, but
     shall not be required to, permit the Guarantor's estate to assume
     unconditionally the obligations arising under the guaranty in a manner
     satisfactory to Lender, and, in doing so, cure the Event of Default.

     CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%)
     or more of the common stock of Borrower.

     ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

     RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
     curable and if Borrower or Grantor, as the case may be, has not been given
     a notice of a similar default within the preceding twelve (12) months, it
     may be cured (and no Event of Default will have occurred) if Borrower or
     Grantor, as the case may be, after receiving written notice from Lender
     demanding cure of such default: (a) cures the default within fifteen (15)
     days; or (b) if the cure requires more than fifteen (15) days, immediately
     initiates steps which Lender deems in Lender's sole discretion to be
     sufficient to cure the default and thereafter continues and completes all
     reasonable and necessary steps sufficient to produce compliance as soon as
     reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies she be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     AMENDMENTS. This Agreement, together with any Related Documents,
     constitutes the entire and final understanding and agreement of the parties
     as to the matters set forth in this Agreement. No alteration of or
     amendment to this Agreement shall be effective unless given in writing and
     signed by the party or parties sought to be charged or bound by the
     alteration or amendment.

     APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
     LENDER IN THE STATE OF OREGON. IF THERE IS A LAWSUIT, BORROWER AGREES UPON
     LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF MULTNOMAH
     COUNTY, THE STATE OF OREGON. LENDER ARE BORROWER HEREBY WAIVE THE RIGHT TO
     ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER
     LENDER OR BORROWER AGAINST THE OTHER. THIS AGREEMENT SHALL BE GOVERNED BY
     AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON.

     CAPTION HEADINGS. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
     sale or transfer, whether now or later, of one or more participation
     interests in the Loans to one or more purchasers, whether related or
     unrelated to Lender. Lender may provide, without any limitation whatsoever
     to any one or more purchasers, or potential purchasers, any information or
     knowledge Lender may have about Borrower or about any other matter relating
     to the Loan, and Borrower hereby waives any rights to privacy it may have
     with respect to such matters. Borrower additionally waives are and all
     notices of sale of participation interests, as well as all notices of any
     repurchase of such participation interests. Borrower also agrees that the
     purchasers of any such participation interests will be considered as the
     absolute owners of such interests in the Loans and will have all the rights
     granted under the participation agreement or agreements governing the sale
     of such participation interests. Borrower further waives all rights of
     offset or counterclaim that it may have now or later against Lender or
     against any purchaser of such a participation interest and unconditionally
     agrees that either Lender or such purchaser may enforce Borrower's
     obligation under the Loans irrespective of the failure or insolvency of any
     holder of any interest in the Loans. Borrower further agrees that the
     purchaser of any such participation interests may enforce interests
     irrespective of any personal claims or defenses that Borrower may have
     against Lender.

     COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
     expenses, including without limitation attorneys' fees, incurred in
     connection with the preparation, execution, enforcement, modification and
     collection of this Agreement or in connection with the Loans made pursuant
     to this Agreement. Lender may pay someone else to help collect the Loans
     and to enforce this Agreement, and Borrower will pay that [Illegible]
     under applicable law Lender's attorneys' fees and Lender's legal expenses,
     whether or not there is


<PAGE>

07-31-1998                    LOAN AGREEMENT                            PAGE 8
LOAN NO 9501                   (CONTINUED)
-------------------------------------------------------------------------------

     any anticipated post-judgment collection services. Borrower also will pay
     any court costs, in addition to all other sums provided by law.

     NOTICES. All notices required to be given under this Agreement shall be
     given in writing, may be sent by telefacsimile (unless otherwise required
     by law), and shall be effective when actually delivered or when deposited
     with a nationally recognized overnight courier or deposited in the United
     States mail, first class, postage prepaid, addressed to the party to whom
     the notice is to be given at the address shown above. Any party may change
     its address for notices under this Agreement by giving formal written
     notice to the other parties, specifying that the purpose of the notice is
     to change the party's address. To the extent permitted by applicable law,
     if there is more than one Borrower, notice to any Borrower will constitute
     notice to all Borrowers. For notice purposes, Borrower will keep Lender
     Informed at all times of Borrower's current address(es).

     SEVERABILITY. If a court of competent jurisdiction finds any provision of
     this Agreement to be invalid or unenforceable as to any person or
     circumstances, such finding shall not render that provision invalid or
     unenforceable as to any other persons or circumstances. If feasible, any
     such offending provision shall be deemed to be modified to be within the
     limits of enforceability or validity; however, if the offending provision
     cannot be so modified, it shall be stricken and all other provisions of 
     this Agreement in all other respects shall remain valid and enforceable.

     SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
     provisions of this Agreement makes if appropriate, including without
     limitation any representation, warranty or covenant, the word "Borrower" as
     used herein shall include all subsidiaries and affiliates of Borrower.
     Notwithstanding the foregoing however, under no circumstances shall this
     Agreement be construed to require Lender to make any Loan or other
     financial accommodation to any subsidiary or affiliate of Borrower.

     SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
     behalf of Borrower shall bind its successors and assigns and shall inure to
     the benefit of Lender, its successors and assigns. Borrower shall not,
     however, have the right to assign its rights under this Agreement or any
     interest therein, without the prior written consent of Lender.

     SURVIVAL. All warranties, representations, and covenants made by Borrower
     in this Agreement or in any certificate or other Instrument delivered by
     Borrower to Lender under this Agreement shall be considered to have been
     relied upon by Lender and will survive the making of the Loan and delivery
     to Lender of the Related Documents, regardless of any investigation made by
     Lender or on Lender's behalf.

     WAIVER. Lender shall not be deemed to have waived any rights under this
     Agreement unless such waiver is given In writing and signed by Lender. No
     delay or omission on the part of Lender in exercising any right shall
     operate as a waiver of such right or any other right. A waiver by Lender of
     a provision of this Agreement shall not prejudice or constitute a waiver of
     Lender's right otherwise to demand strict compliance with that provision or
     any other provision of this Agreement. No prior waiver by Lender, nor any
     course of dealing between Lender and Borrower, or between Lender and any
     Grantor, shall constitute a waiver of any of Lender's rights or of any
     obligations of Borrower or of any Grantor as to any future transactions.
     Whenever the consent of Lender is required under this Agreement, the
     granting of such consent by Lender in any instance shall not constitute
     continuing consent in subsequent instances where such consent is required,
     and in all cases such consent may be granted or withheld in the sole
     discretion of Lender.

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

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND
BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF JULY 31, 1998.

BORROWER:

R-B RUBBER PRODUCTS, INC.

BY: /s/ Ronald L. Bogh
   --------------------------------
     RONALD L. BOGH, PRESIDENT

LENDER:

KEYBANK NATIONAL ASSOCIATION

BY: /s/ [Illegible]
    ------------------------------
    AUTHORIZED OFFICER

-------------------------------------------------------------------------------
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.25a(c) 1998 CFI ProServices, Inc.
All rights reserved. [OR-C40 E3.25 F3.25 P3.25 RBRUBRK 1.LN C30.OVL]

<PAGE>
                           COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
   PRINCIPAL      LOAN DATE      MATURITY    LOAN NO   CALL      COLLATERAL     ACCOUNT    OFFICER   INITIALS
-------------------------------------------------------------------------------------------------------------
<S>               <C>           <C>          <C>       <C>       <C>           <C>         <C>       <C>
$1,000,000.00     07-31-1998    08-01-1999      9501                   302       E121729    TLH12
-------------------------------------------------------------------------------------------------------------
</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.
-----------------------------------------------------------------------------
<TABLE>
<S>                                     <C>
BORROWER: R-B RUBBER PRODUCTS, INC.     LENDER: KEYBANK NATIONAL ASSOCIATION
          904 EAST 10TH AVENUE                  WILLAMETTE VALLEY COMMERCIAL BANKING
          MCMINNVILLE, OR 97128                 CENTER, SALEM
                                                416 STATE STREET
                                                P.O. BOX 2246 OR-20-96-0158
                                                SALEM, OR 97308
</TABLE>
-------------------------------------------------------------------------------

THIS COMMERCIAL SECURITY AGREEMENT IS ENTERED INTO BETWEEN R-B RUBBER PRODUCTS,
INC. (REFERRED TO BELOW AS "GRANTOR"); AND KEYBANK NATIONAL ASSOCIATION
(REFERRED TO BELOW AS "LENDER"). FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO
LENDER A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND
AGREES THAT LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT
TO THE COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

     AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
     as this Commercial Security Agreement may be amended or modified from time
     to time, together with all exhibits and schedules attached to this
     Commercial Security Agreement from time to time.

     COLLATERAL. The word "Collateral" means the following described property of
     Grantor, whether now owned or hereafter acquired, whether now existing or
     hereafter arising, and wherever located:

          ALL INVENTORY, CHATTEL PAPER, ACCOUNTS AND GENERAL INTANGIBLES

     In addition, the word "Collateral" includes all the following, whether now
     owned or hereafter acquired, whether now existing or hereafter arising, and
     wherever located:

          (a) All attachments, accessions, accessories, tools, parts, supplies,
          increases, and additions to and all replacements of and substitutions
          for any property described above.

          (b) All products and produce of any of the property described in this
          Collateral section.

          (c) All accounts, general intangibles, instruments, rents, monies,
          payments, and all other rights, arising out of a sale, lease, or other
          disposition of any of the property described in this Collateral
          section.

          (d) All proceeds (including insurance proceeds) from the sale,
          destruction, loss, or other disposition of any of the property
          described in this Collateral section.

          (e) All records and data relating to any of the property described in
          this Collateral section, whether in the form of a writing, photograph,
          microfilm, microfiche, or electronic media, together with all of
          Grantor's right, title, and interest in and to all computer software
          required to utilize, create, maintain, and process any such records or
          data on electronic media.

     EVENT OF DEFAULT. The words "Event of Default" mean and include without
     limitation any of the Events of Default set forth below in the section
     titled "Events of Default."

     GRANTOR. The word "Grantor" means R-B RUBBER PRODUCTS, INC., its successors
     and assigns.

     GUARANTOR. The word "Guarantor" means and includes without limitation each
     and all of the guarantors, sureties, and accommodation parties in
     connection with the Indebtedness.

     INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
     the Note, including all principal and interest, together with all other
     indebtedness and costs and expenses for which Grantor is responsible under
     this Agreement or under any of the Related Documents. In addition, the word
     "Indebtedness" includes all other obligations, debts and liabilities, plus
     interest thereon, of Grantor, or any one or more of them, to Lender, as
     well as all claims by Lender against Grantor, or any one or more of them,
     whether existing now or later; whether they are voluntary or involuntary,
     due or not due, direct or indirect, absolute or contingent, liquidated or
     unliquidated; whether Grantor may be liable individually or jointly with
     others; whether Grantor may be obligated as guarantor, surety,
     accommodation party or otherwise; whether recovery upon such indebtedness
     may be or hereafter may become barred by any statute of limitations; and
     whether such indebtedness may be or hereafter may become otherwise
     unenforceable.

     LENDER. The word "Lender" means KEYBANK NATIONAL ASSOCIATION, its
     successors and assigns.

     NOTE. The word "Note" means the note or credit agreement dated July 31,
     1998, in the principal amount of $1,000,000.00 from R-B RUBBER PRODUCTS,
     INC. to Lender, together with all renewals of, extensions of, modifications
     of, refinancings of, consolidations of and substitutions for the note or
     credit agreement.

     RELATED DOCUMENTS. The words "Related Documents" mean and include without
     limitation all promissory notes, credit agreements, loan agreements,
     environmental agreements, guaranties, security agreements, mortgages, deeds
     of trust, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:

     PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
     statements and to take whatever other actions are requested by Lender to
     perfect and continue Lender's security interest in the Collateral. Upon
     request of Lender, Grantor will deliver to Lender any and all of the
     documents evidencing or constituting the Collateral, and Grantor will note
     Lender's interest upon any and all chattel paper if not delivered to Lender
     for possession by Lender. Grantor hereby appoints Lender as its irrevocable
     attorney-in-fact for the purpose of executing any documents necessary to
     perfect or to continue the security interest granted in this Agreement.
     Lender may at any time, and without further authorization from Grantor,
     file a carbon, photographic or other reproduction of any financing
     statement or of this Agreement for use as a financing statement. Grantor
     will reimburse Lender for all expenses for the perfection and the
     continuation of the perfection of Lender's security interest in the
     Collateral. Grantor promptly will notify Lender before any change in
     Grantor's name including any change to the assumed business names of
     Grantor. THIS IS A CONTINUING SECURITY AGREEMENT AND WILL CONTINUE IN
     EFFECT EVEN THOUGH ALL OR ANY PART OF THE [Illigible]


<PAGE>

07-31-1998                COMMERCIAL SECURITY AGREEMENT                   PAGE 2
LOAN NO 9501                       (CONTINUED)
-------------------------------------------------------------------------------

     NO VIOLATION. The execution and delivery of this Agreement will not violate
     any law or agreement governing Grantor or to which Grantor is a party, and
     its certificate or articles of incorporation and bylaws do not prohibit any
     term or condition of this Agreement.

     ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
     accounts, chattel paper, or general intangibles, the Collateral is
     enforceable in accordance with its terms, is genuine, and complies with
     applicable laws concerning form, content and manner of preparation and
     execution, and all persons appearing to be obligated on the Collateral have
     authority and capacity to contract and are in fact obligated as they appear
     to be on the Collateral. At the time any account becomes subject to a
     security interest in favor of Lender, the account shall be a good and valid
     account representing an undisputed, bona fide indebtedness incurred by the
     account debtor, for merchandise held subject to delivery instructions or
     theretofore shipped or delivered pursuant to a contract of sale, or for
     services theretofore performed by Grantor with or for the account debtor;
     there shall be no setoffs or counterclaims against any such account; and no
     agreement under which any deductions or discounts may be claimed shall have
     been made with the account debtor except those disclosed to Lender in
     writing.

     LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will deliver
     to Lender in form satisfactory to Lender a schedule of real properties and
     Collateral locations relating to Grantor's operations, including without
     limitation the following: (a) all real property owned or being purchased by
     Grantor; (b) all real properly being rented or leased by Grantor; (c) all
     storage facilities owned, rented, leased, or being used by Grantor; and (d)
     all other properties where Collateral is or may be located. Except in the
     ordinary course of its business, Grantor shall not remove the Collateral
     from its existing locations without the prior written consent of Lender.

     REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent
     the Collateral consists of intangible property such as accounts, the
     records concerning the Collateral) at Grantor's address shown above, or at
     such other locations as are acceptable to Lender. Except in the ordinary
     course of its business, including the sales of inventory, Grantor shall not
     remove the Collateral from its existing locations without the prior written
     consent of Lender. To the extent that the Collateral consists of vehicles,
     or other filled property, Grantor shall not take or permit any action which
     would require application for certificates of title for the vehicles
     outside the State of Oregon, without the prior written consent of Lender.

     TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
     collected in the ordinary course of Grantor's business, Grantor shall not
     sell, offer to sell, or otherwise transfer or dispose of the Collateral.
     While Grantor is not in default under this Agreement, Grantor may sell
     inventory, but only in the ordinary course of its business and only to
     buyers who qualify as a buyer in the ordinary course of business. A sale in
     the ordinary course of Grantor's business does not include a transfer in
     partial or total satisfaction of a debt or any bulk sale. Grantor shall not
     pledge, mortgage, encumber or otherwise permit the Collateral to be subject
     to any lien, security interest, encumbrance, or charge, other than the
     security interest provided for in this Agreement, without the prior written
     consent of Lender. This includes security interests even if junior in right
     to the security interests granted under this Agreement. Unless waived by
     Lender, all proceeds from any disposition of the Collateral (for whatever
     reason) shall be held in trust for Lender and shall not be commingled with
     any other funds; provided however, this requirement shall not constitute
     consent by Lender to any sale or other disposition. Upon receipt, Grantor
     shall immediately deliver any such proceeds to Lender.

     TITLE. Grantor represents and warrants to Lender that it holds good and
     marketable title to the Collateral, free and clear of all liens and
     encumbrances except for the lien of this Agreement. No financing statement
     covering any of the Collateral is on file in any public office other than
     those which reflect the security interest created by this Agreement or to
     which Lender has specifically consented. Grantor shall defend Lender's
     rights in the Collateral against the claims and demands of all other
     persons.

     COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall require, and
     insofar as the Collateral consists of accounts and general intangibles,
     Grantor shall deliver to Lender schedules of such Collateral, including
     such information as Lender may require, including without limitation names
     and addresses of account debtors and agings of accounts and general
     intangibles. Insofar as the Collateral consists of inventory, Grantor shall
     deliver to Lender, as often as Lender shall require, such lists,
     descriptions, and designations of such Collateral as Lender may require to
     identify the nature, extent, and location of such Collateral. Such
     information shall be submitted for Grantor and each of its subsidiaries or
     related companies.

     MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all
     tangible Collateral in good condition and repair. Grantor will not commit
     or permit damage to or destruction of the Collateral or any part of the
     Collateral. Lender and its designated representatives and agents shall have
     the right at all reasonable times to examine, inspect, and audit the
     Collateral wherever located. Grantor shall immediately notify Lender of all
     cases involving the return, rejection, repossession, loss or damage of or
     to any Collateral; of any request for credit or adjustment or of any other
     dispute arising with respect to the Collateral; and generally of all
     happenings and events affecting the Collateral or the value or the amount
     of the Collateral.

     TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
     assessments and liens upon the Collateral, its use or operation, upon this
     Agreement, upon any promissory note or notes evidencing the indebtedness,
     or upon any of the other Related Documents. Grantor may withhold any such
     payment or may elect to contest any lien if Grantor is in good faith
     conducting an appropriate proceeding to contest the obligation to pay and
     so long as Lender's interest in the Collateral is not jeopardized in
     Lender's sole opinion. If the Collateral is subjected to a lien which is
     not discharged within fifteen (15) days, Grantor shall deposit with Lender
     cash, a sufficient corporate surely bond or other security satisfactory to
     Lender in an amount adequate to provide for the discharge of the lien plus
     any interest, costs, attorneys' fees or other charges that could accrue as
     a result of foreclosure or sale of the Collateral. In any contest Grantor
     shall defend itself and Lender and shall satisfy and final adverse judgment
     before enforcement against the Collateral. Grantor shall name Lender as an
     additional obligee under any surely bond furnished in the contest
     proceedings.

     COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
     with all laws, ordinances, rules and regulations of all governmental
     authorities, now or hereafter in effect, applicable to the ownership,
     production, disposition, or use of the Collateral. Grantor may contest in
     good faith any such law, ordinance or regulation and withhold compliance
     during any proceeding, including appropriate appeals, so long as Lender's
     interest in the Collateral, in Lender's opinion, is not jeopardized.

     HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
     never has been, and never will be so long as this Agreement remains a lien
     on the Collateral, used for the generation, manufacture, storage,
     transportation, treatment, disposal, release or threatened release of any
     hazardous waste or substance, as those terms are defined in the
     Comprehensive Environmental Response, Compensation, and Liability Act of
     1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
     Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"),
     the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
     seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
     et seq., or other applicable state or Federal laws, rules, or regulations
     adopted pursuant to any of the foregoing or intended to protect human
     health or the environment ("Environmental Laws"). The terms "hazardous
     waste" and "hazardous substance" shall also include, without limitation,
     petroleum and petroleum by-products or any fraction thereof and asbestos.
     The representations and warranties contained herein are based on Grantor's
     due diligence in investigating the Collateral for hazardous wastes and
     substances. Grantor hereby (a) releases and waives any future claims
     against Lender for Indemnity or contribution in the event Grantor becomes
     liable for cleanup or other costs under any Environmental Laws, and (b)
     agrees to indemnify and hold harmless Lender against any and all claims and
     losses resulting from a breach of this provision of this Agreement, or as a
     result of a violation of any Environmental Laws. This obligation to
     indemnify shall survive the payment of the indebtedness and the
     satisfaction of this Agreement.

     MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
     risks insurance, including without limitation fire, theft and liability

<PAGE>

07-31-1998                COMMERCIAL SECURITY AGREEMENT                   PAGE 3
LOAN NO 9501                       (CONTINUED).
-------------------------------------------------------------------------------

     coverage together with such other Insurance as Lender may require with
     respect to the Collateral, in form, amounts, coverages and basis reasonably
     acceptable to Lender and issued by a company or companies reasonably
     acceptable to Lender. Grantor, upon request of Lender, will deliver to
     Lender from time to time the policies or certificates of insurance in form
     satisfactory to Lender, including stipulations that coverages will not be
     cancelled or diminished without at least ten (10) days' prior written
     notice to Lender and not including any disclaimer of the insurer's
     liability for failure to give such a notice. Each insurance policy also
     shall include an endorsement providing that coverage in favor of Lender
     will not be Impaired in any way by any act, omission or default of Grantor
     or any other person. In connection with all policies covering assets in
     which Lender holds or is offered a security Interest, Grantor will provide
     Lender with such loss payable or other endorsements as Lender may require.
     If Grantor at any time fails to obtain or maintain any insurance as
     required under this Agreement, Lender may (but shall not be obligated to)
     obtain such insurance as Lender deems appropriate, including if it so
     chooses "single interest insurance," which will cover only Lender's
     interest in the Collateral.

     APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
     any loss or damage to the Collateral. Lender may make proof of loss if
     Grantor fails to do so within fifteen (15) days of the casualty. All
     proceeds of any insurance on the Collateral, including accrued proceeds
     thereon, shall be held by Lender as part of the Collateral. If Lender
     consents to repair or replacement of the damaged or destroyed Collateral,
     Lender shall, upon satisfactory proof of expenditure, pay or reimburse
     Grantor from the proceeds for the reasonable cost of repair or restoration.
     If Lender does not consent to repair or replacement of the Collateral,
     Lender shall retain a sufficient amount of the proceeds to pay all of the
     Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
     not been disbursed within six (6) months after their receipt and which
     Grantor has not committed to the repair or restoration of the Collateral
     shall be used to prepay the Indebtedness.

     INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
     reserves for payment of insurance premiums, which reserves shall be created
     by monthly payments from Grantor of a sum estimated by Lender to be
     sufficient to produce, at least fifteen (15) days before the premium due
     date, amounts at least equal to the insurance premiums to be paid. If
     fifteen (15) days before payment is due, the reserve funds are
     insufficient, Grantor shall upon demand pay any deficiency to Lender. The
     reserve funds shall be held by Lender as a general deposit and shall
     constitute a non-Interest-bearing account which Lender may satisfy by
     payment of the insurance premiums required to be paid by Grantor as they
     become due. Lender does not hold the reserve funds in trust for Grantor,
     and Lender is not the agent of Grantor for payment of the insurance
     premiums required to be paid by Grantor. The responsibility for the payment
     of premiums shall remain Grantor's sole responsibility.

     INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
     reports on each existing policy of insurance showing such information as
     Lender may reasonably request including the following: (a) the name of the
     insurer; (b) the risks insured; (c) the amount of the policy; (d) the
     property insured; (e) the then current value on the basis of which
     insurance has been obtained and the manner of determining that value; and
     (f) the expiration date of the policy. In addition, Grantor shall upon
     request by Lender (however not more often than annually) have an
     independent appraiser satisfactory to Lender determine, as applicable, the
     cash value or replacement cost of the Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts and above in the paragraph
titled "Transactions Involving Collateral", Grantor may have possession of the
tangible personal property and beneficial use of all the Collateral and may use
it in any lawful manner not inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Lender is
required by law to perfect Lender's security interest in such Collateral. Until
otherwise notified by Lender, Grantor may collect any of the Collateral
consisting of accounts. At any time and even though no Event of Default exists,
Lender may exercise its rights to collect the accounts and to notify account
debtors to make payments directly to Lender for application to the indebtedness.
If Lender at any time has possession of any Collateral, whether before or after
an Event of Default, Lender shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole discretion,
shall deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take any steps necessary to preserve any
rights in the Collateral against prior parties, not to protect, preserve or
maintain any security interest given to secure the indebtedness.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.

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

     DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due on
     the Indebtedness.

     OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
     term, obligation, covenant or condition contained in this Agreement or in
     any of the Related Documents or in any other agreement between Lender and
     Grantor.

     DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
     under any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's property or Borrower's or any
     Grantor's ability to repay the Loans or perform their respective
     obligations under this Agreement or any of the Related Documents.

     FALSE STATEMENTS. Any warranty, representation or statement made or
     furnished to Lender by or on behalf of Grantor under this Agreement, the
     Note or the Related Documents is false or misleading in any material
     respect, either now or at the time made or furnished.

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

     INSOLVENCY. The dissolution or termination of Grantor's existence as a
     going business, the insolvency of Grantor, the appointment of a receiver
     for any part of Grantor's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Grantor.

     CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Grantor or by any
     governmental agency against the Collateral or any other collateral securing
     the Indebtedness. This includes a garnishment of any of Grantor's deposit
     accounts with Lender. However, this Event of Default shall not apply if
     there is a good faith dispute by Grantor as to the validity or
     reasonableness of the claim which is the basis of the creditor or
     forfeiture proceeding and if Grantor gives Lender written notice of the
     creditor or forfeiture proceeding and deposits with Lender monies or a
     surety bond [Illegible]

<PAGE>

07-31-1998                COMMERCIAL SECURITY AGREEMENT                   PAGE 4
LOAN NO 9501                       (CONTINUED)
-------------------------------------------------------------------------------


     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
     to any Guarantor of any of the Indebtedness or such Guarantor dies or
     becomes incompetent. Lender, at its option, may, but shall not be required
     to, permit the Guarantor's estate to assume unconditionally the obligations
     arising under the guaranty in a manner satisfactory to Lender, and, in
     doing so, cure the Event of Default.

     ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
     condition, or Lender believes the prospect of payment or performance of the
     indebtedness is impaired.

     RIGHT TO CURE. If any default, other than a Default on indebtedness, is
     curable and if Grantor has not been given a prior notice of a breach of the
     same provision of this Agreement, it may be cured (and no Event of Default
     will have occurred) If Grantor, after Lender sends written notice demanding
     cure of such default, (a) cures the default within fifteen (15) days; or
     (b), if the cure requires more than fifteen (15) days, immediately
     Initiates steps which Lender deems in Lender's sole discretion to be
     sufficient to cure the default and thereafter continues and completes all
     reasonable and necessary steps sufficient to produce compliance as soon as
     reasonably practical.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Oregon Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

     ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
     including any prepayment penalty which Grantor would be required to pay,
     immediately due and payable, without notice.

     ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all or
     any portion of the Collateral and any and all certificates of title and
     other documents relating to the Collateral. Lender may require Grantor to
     assemble the Collateral and make it available to Lender at a place to be
     designated by Lender. Lender also shall have full power to enter upon the
     property of Grantor to take possession of and remove the Collateral. If the
     Collateral contains other goods not covered by this Agreement at the time
     of repossession, Grantor agrees Lender may take such other goods, provided
     that Lender makes reasonable efforts to return them to Grantor after
     repossession.

     SELL THE COLLATERAL. Lender shall have full power to sell, lease, transfer,
     or otherwise deal with the Collateral or proceeds thereof in its own name
     or that of Grantor. Lender may sell the Collateral at public auction or
     private sale. Unless the Collateral threatens to decline speedily in value
     or is of a type customarily sold on a recognized market, Lender will give
     Grantor reasonable notice of the time after which any private sale or any
     other intended disposition of the Collateral is to be made unless Grantor
     has signed, after an Event of Default occurs, a statement renouncing or
     modifying Grantor's right to notification of sale. The requirements of
     reasonable notice shall be met if such notice is given at least ten (10)
     days before the time of the sale or disposition. All expenses relating to
     the disposition of the Collateral, including without limitation the
     expenses of retaking, holding, insuring, preparing for sale and selling the
     Collateral, shall become a part of the Indebtedness secured by this
     Agreement and shall be payable on demand, with interest at the Note rate
     from date of expenditure until repaid.

     APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall
     have the following rights and remedies regarding the appointment of a
     receiver: (a) Lender may have a receiver appointed as a matter of right,
     (b) the receiver may be an employee of Lender and may serve without bond,
     and (c) all fees of the receiver and his or her attorney shall become part
     of the Indebtedness secured by this Agreement and shall be payable on
     demand, with interest at the Note rate from date of expenditure until
     repaid.

     COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
     receiver, may collect the payments, rents, income, and revenues from the
     Collateral. Lender may at any time in its discretion transfer any
     Collateral into its own name or that of its nominee and receive the
     payments, rents, income, and revenues therefrom and hold the same as
     security for the indebtedness or apply it to payment of the Indebtedness in
     such order of preference as Lender may determine. Insofar as the Collateral
     consists of accounts, general intangibles, insurance policies, instruments,
     chattel paper, choses in action, or similar property, Lender may demand,
     collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
     realize on the Collateral as Lender may determine, whether or not
     Indebtedness or Collateral is then due. For these purposes, Lender may, on
     behalf of and in the name of Grantor, receive, open and dispose of mail
     addressed to Grantor; change any address to which mail and payments are to
     be sent; and endorse notes, checks, drafts, money orders, documents of
     title, instruments and items pertaining to payment, shipment, or storage of
     any Collateral. To facilitate collection, Lender may notify account debtors
     and obligors on any Collateral to make payments directly to Lender.

     OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
     Lender may obtain a judgment against Grantor for any deficiency remaining
     on the Indebtedness due to Lender after application of all amounts received
     from the exercise of the rights provided in this Agreement. Grantor shall
     be liable for a deficiency even if the transaction described in this
     subsection is a sale of accounts or chattel paper.

     OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies of
     a secured creditor under the provisions of the Uniform Commercial Code, as
     may be amended from time to time. In addition, Lender shall have and may
     exercise any or all other rights and remedies it may have available at law,
     in equity, or otherwise.

     CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether evidenced
     by this Agreement or the Related Documents or by any other writing, shall
     be cumulative and may be exercised singularly or concurrently. Election by
     Lender to pursue any remedy shall not exclude pursuit of any other remedy,
     and an election to make expenditures or to take action to perform an
     obligation of Grantor under this Agreement, after Grantor's failure to
     perform, shall not affect Lender's right to declare a default and to
     exercise its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     AMENDMENTS. This Agreement, together with any Related Documents,
     constitutes the entire and final understanding and agreement of the parties
     as to the matters set forth in this Agreement. No alteration of or
     amendment to this Agreement shall be effective unless given in writing and
     signed by the party or parties sought to be charged or bound by the
     alteration or amendment.

     APPLICABLE LAW. This Agreement has been delivered to Lender and accepted by
     Lender in the State of Oregon. If there is a lawsuit, Grantor agrees upon
     Lender's request to submit to the jurisdiction of the courts of Multnomah
     County, the State of Oregon. Lender and Grantor hereby waive the right to
     any jury trial in any action, proceeding, or counterclaim brought by either
     Lender or Grantor against the other. This Agreement shall be governed by
     and construed in accordance with the laws of the State of Oregon.

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

     CAPTION HEADINGS. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     NOTICES. All notices required to be given under this Agreement shall be
     given in writing, may be sent by telefacsimile (unless otherwise required
     by law), and shall be effective when actually delivered or when deposited
     with a nationally recognized overnight courier or deposited in the

<PAGE>

07-31-1998                COMMERCIAL SECURITY AGREEMENT                   PAGE 5
LOAN NO 9501                       (CONTINUED)
-------------------------------------------------------------------------------


     United States mail, first class, postage prepaid, addressed to the party to
     whom the notice is to be given at the address shown above. Any party may
     change its address for notices under this Agreement by giving formal
     written notice to the other parties, specifying that the purpose of the
     notice is to change the party's address. To the extent permitted by
     applicable law, if there is more than one Grantor, notice to any Grantor
     will constitute notice to all Grantors. For notice purposes, Grantor will
     keep Lender Informed at all times of Grantor's current address(es).

     POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
     attorney-in-fact, irrevocably, with full power of substitution to do the
     following: (a) to demand, collect, receive, receipt for, sue and recover
     all sums of money or other property which may now or hereafter become due,
     owing or payable from the Collateral; (b) to execute, sign and endorse any
     and all claims, instruments, receipts, checks, drafts or warrants issued in
     payment for the Collateral; (c) to settle or compromise any and all claims
     arising under the Collateral, and, in the place and stead of Grantor, to
     execute and deliver its release and settlement for the claim; and (d) to
     file any claim or claims or to take any action or institute or take part in
     any proceedings, either in its own name or in the name of Grantor, or
     otherwise, which in the discretion of Lender may seem to be necessary or
     advisable. This power is given as security for the Indebtedness, and the
     authority hereby conferred is and shall be irrevocable and shall remain in
     full force and effect until renounced by Lender.

     PREFERENCE PAYMENTS. Any monies Lender pays because of an asserted
     preference claim in Borrower's bankruptcy will become a part of the
     Indebtedness and, at Lender's option, shall be payable by Borrower as
     provided above in the "EXPENDITURES BY LENDER" paragraph.

     SEVERABILITY. If a court of competent jurisdiction finds any provision of
     this Agreement to be invalid or unenforceable as to any person or
     circumstance, such finding shall not render that provision invalid or
     unenforceable as to any other persons or circumstances. If feasible, any
     such offending provision shall be deemed to be modified to be within the
     limits of enforceability or validity; however, if the offending provision
     cannot be so modified, it shall be stricken and all other provisions of
     this Agreement in all other respects shall remain valid and enforceable.

     SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer
     of the Collateral, this Agreement shall be binding upon and inure to the
     benefit of the parties, their successors and assigns.

     WAIVER. Lender shall not be deemed to have waived any rights under this
     Agreement unless such waiver is given in writing and signed by Lender. No
     delay or omission on the part of Lender in exercising any right shall
     operate as a waiver of such right or any other right. A waiver by Lender of
     a provision of this Agreement shall not prejudice or constitute a waiver of
     Lender's right otherwise to demand strict compliance with that provision or
     any other provision of this Agreement. No prior waiver by Lender, nor any
     course of dealing between Lender and Grantor, shall constitute a waiver of
     any of Lender's rights or of any of Grantor's obligations as to any future
     transactions. Whenever the consent of Lender is required under this
     Agreement, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

     WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated for the
     Indebtedness, Borrower irrevocably waives, disclaims and relinquishs all
     claims against such other person which Borrower has or would otherwise have
     by virtue of payment of the Indebtedness or any part thereof, specifically
     including but not limited to all rights of Indemnity, contribution or
     exoneration.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JULY 31,
1998.

GRANTOR:
R-B RUBBER PRODUCTS, INC.

By: /s/ Ronald L. Bogh
    -----------------------------
     RONALD L. BOGH, PRESIDENT

--------------------------------------------------------------------------------
LASER PRO. Reg. U.S. Pat. & T.M. Off., Ver. 3.25a(c) 1998 CFI ProServices, Inc.
All rights reserved, [OR-E40 E3.25 F3.25 P3.25 RBRUBRK1.LN C30.OVL]

<PAGE>

                                  PROMISSORY NOTE

<TABLE>
<CAPTION>
   PRINCIPAL      LOAN DATE      MATURITY      LOAN NO   CALL      COLLATERAL     ACCOUNT   OFFICER   INITIALS 
--------------------------------------------------------------------------------------------------------------
<S>               <C>           <C>            <C>       <C>       <C>            <C>       <C>        <C>
$1,000,000,00     07-31-1998    08-01-1999       9501                  302        E121729    TLH12
--------------------------------------------------------------------------------------------------------------
</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.
------------------------------------------------------------------------------
<TABLE>
<S>                                     <C>
BORROWER: R-B RUBBER PRODUCTS, INC.     LENDER: KEYBANK NATIONAL ASSOCIATION
          904 EAST 10TH AVENUE                  WILLAMETTE VALLEY COMMERCIAL BANKING
          MCMINNVILLE, OR 97128                 CENTER, SALEM
                                                416 STATE STREET
                                                P.O. BOX 2246  OR-20-96-0158
                                                SALEM, OR 97308
</TABLE>
-------------------------------------------------------------------------------

PRINCIPAL AMOUNT: $1,000,000.00      INITIAL RATE: 8.500%       DATE OF NOTE:
                                                                JULY 31, 1991

PROMISE TO PAY. R-B RUBBER PRODUCTS, INC. ("Borrower") promises to pay to
KEYBANK NATIONAL ASSOCIATION ("Lender"), or order, in lawful money of the United
States of America, the principal amount of One Million & 00/100 Dollars
($1,000,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. BORROWER WILL PAY THIS LOAN ON DEMAND, OR IF NO DEMAND IS MADE, IN ONE
PAYMENT OF ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON AUGUST
1, 1999. IN ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ACCRUED
UNPAID INTEREST BEGINNING AUGUST 31, 1998, 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, times the outstanding
principal balance, times 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, the re to principal, and any remaining amount to any unpaid collection
costs and late charges.

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 Prime Rate announced by
Lender (the "Index"). The interest rate will change automatically and
correspondingly on the date of each announced change of the Index by Lender. The
Index is not necessarily the lowest rate charged by Lender on its loans and is
set by Lender in its sole discretion. If the Index becomes unavailable during
the term of this loan, the Lender may designate a substitute index after
notifying Borrower. 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 that the Index changes. THE INDEX CURRENTLY IS 8.500% PER ANNUM. THE
INTEREST RATE TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE
AT A RATE EQUAL TO THE INDEX, RESULTING IN AN INITIAL RATE OF 8.500% PER ANNUM.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, 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, relieving Borrower of
Borrower's obligation to continue to make payments of accrued unpaid interest.
Rather, they will reduce the principal balance due.

LATE CHARGE. If a payment is 16 DAYS OR MORE LATE, Borrower will be charged
5.000% OF THE REGULARLY SCHEDULED PAYMENT.

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) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in an material respect either now or at
the time made or furnished. (e) 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. (f) 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. (g) Any guarantor dies or any of the other events described in this
default section occurs with respect to any guarantor of this Note. (h) A
material adverse change occurs in Borrower's financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is impaired.

If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the default
and thereafter continues and completes a reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.

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, permitted under
applicable law, increase the variable interest rate on this Note to 5.000
percentage points over the Index. 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 OREGON. IF THERE IS A LAWSUIT,
BORROWER AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF MULTNOMAH COUNTY THE STATE OF OREGON. LENDER AND BORROWER HEREBY WAIVE
THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT
BY EITHER LENDER OR BORROWER AGAINST THE OTHER. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing. All
communications, instructions, or directions by telephone otherwise to Lender are
to be directed to Lender's office shown above. The following party or parties
are authorized to request advances under the line of credit until Lender
receives from Borrower at Lender's address shown above written notice of
revocation of their authority: RONALD L. BOGH, PRESIDENT; PAUL GILSON, SVP AND
CHIEF OPERATING OFFICER; AND BRIAN ALLEN, CHIEF FINANCIAL OFFICER. 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 Borrower's
accounts with Lender, regardless of the fact that persons other than those
authorized to borrow have authority to draw against the accounts. The unpaid
principal [Illegible]


<PAGE>

07-31-1998                        PROMISSORY NOTE                   PAGE 2
LOAN NO 9501                       (CONTINUED)
-------------------------------------------------------------------------------

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 attempts to limit, modify or revoke such guarantor's guarantee of
this Note or any other loan with Lender; or (d) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender.

ADDITIONAL PROVISION. Any advance that Lender in its sole discretion may permit
after the final payment date provided in this Note will be due on demand and
otherwise subject to the terms of this Note.

PRIOR NOTE. This Note is a renewal of that Promissory Note from Borrower to
Lender dated 09/01/95.

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. 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 or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; 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. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.

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

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:
R-B RUBBER PRODUCTS, INC.

By: /s/Ronald L. Bogh
    --------------------------
     RONALD L. BOGH, PRESIDENT

-------------------------------------------------------------------------------
Variable Rate. Line of Credit.     LASER PRO. Reg. U.S. Pal. & T.M. Off., Ver.
                                        3.25a (c) 1998   CFI ProServices, Inc. 
                                        All rights reserved. (OR-D20 E3.25 F3.25
                                        P3.25 RBRUBRK 1.LN C30.OVL)

<PAGE>

                           AGREEMENT TO PROVIDE INSURANCE
<TABLE>
<CAPTION>
  PRINCIPAL       LOAN DATE      MATURITY      LOAN NO   CALL      COLLATERAL      ACCOUNT   OFFICER   INITIALS
--------------------------------------------------------------------------------------------------------------
<S>               <C>           <C>            <C>       <C>       <C>            <C>        <C>        <C>
$1,000,000.00     07-31-1998    08-01-1999       9501                  302         E121729    TLH12
--------------------------------------------------------------------------------------------------------------
</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.
--------------------------------------------------------------------------------
<TABLE>
<S>                                     <C>
BORROWER: R-B RUBBER PRODUCTS, INC.     LENDER: KEYBANK NATIONAL ASSOCIATION
          904 EAST 10TH AVENUE                  WILLAMETTE VALLEY COMMERCIAL BANKING
          MCMINNVILLE, OR 97128                 CENTER, SALEM
                                                416 STATE STREET
                                                P.O. BOX 2246  OR-20-96-0158
                                                SALEM, OR 97308
</TABLE>
--------------------------------------------------------------------------------

INSURANCE REQUIREMENTS. R-B RUBBER PRODUCTS, INC. ("Grantor") understands that
insurance coverage is required in connection with the extending of a loan or the
providing of other financial accommodations to Grantor by Lender. These
requirements are set forth in the security documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):

COLLATERAL: ALL INVENTORY.
          TYPE. All risks, including fire, theft and liability.
          AMOUNT. Full insurable value.
          BASIS. Actual cash value.
          ENDORSEMENTS. Lender's loss payable clause with stipulation that
          coverage will not be cancelled or diminished without a minimum of ten
          (10) days' prior written notice to Lender.
          DEDUCTIBLES. $500.00.

INSURANCE COMPANY. Grantor may obtain Insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender.

INSURANCE MAILING ADDRESS. All documents and other materials relating to
insurance for this loan should be mailed, delivered or directed to the following
address:

          KEYBANK NATIONAL ASSOCIATION
          COMMERCIAL LOAN SERVICES
          P.O. BOX 5278
          BOISE, ID 83705-5278
          (800) 539-2191

PROVISION OF INSURANCE. Grantor agrees to deliver to Lender, thirty (30) days
from the date of this Agreement, evidence of the required insurance as provided
above, with an effective date of July 31, 1998, or earlier.

                                      WARNING
   -----------------------------------------------------------------------------
     Unless Grantor provides Lender with evidence of the insurance coverage as
     required by Grantor's security documents, Lender may purchase insurance at
     Grantor's expense to protect Lender's interest. This insurance may, but
     need not, also protect Grantor's interest. If the collateral becomes
     damaged, the coverage Lender purchases may not pay any claim Grantor makes
     or any claim made against Grantor. Grantor may later cancel this coverage
     by providing evidence that Grantor has obtained property coverage
     elsewhere. Grantor will be responsible for the cost of any insurance
     purchased by Lender. The cost of this insurance may be added to Grantor's
     Indebtedness. If the cost is added to Grantor's Indebtedness, the interest
     rate on the underlying Indebtedness will apply to this added amount. The
     effective date of coverage may be the date Grantor's prior coverage lapsed
     or the date Grantor failed to provide proof of coverage. The coverage
     Lender purchases may be considerably more expensive than insurance Grantor
     can obtain on Grantor's own and may not satisfy any need for property
     damage coverage or any mandatory liability insurance requirements imposed
     by applicable law.
   -----------------------------------------------------------------------------

AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all Information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JULY 31, 1998.

GRANTOR:

R-B RUBBER PRODUCTS, INC.

By: /s/ Ronald L. Bogh
    -----------------------------
      RONALD L. BOGH, PRESIDENT

 -------------------------------------------------------------------------------
                                FOR LENDER USE ONLY
                               INSURANCE VERIFICATION

DATE: 8/7/98                                           PHONE: 503 472 2165
     ---------------                                         -----------------
AGENT'S NAME:  HAGAN HAMILTON INS (DALE MOORE)
             -----------------------------------------------------
INSURANCE COMPANY:  TRAVELERS INS
                  ----------------------------
POLICY NUMBER:  Y J630 348K 2576
               -------------------------------
EFFECTIVE DATES: 10-10-97 to 10-10-98
                ------------------------------
COMMENTS: Current Property Limits Blanket Bldgs & Equip 7,789,300 Business
          ---------------------------------------------------------------------
          Interruption 3,000,000
          --------------------------
--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver.3.25a(c) 1998 CFI ProServices, Inc.
All rights reserved. [OR-110 E3.25 F3.25 P3.25 RBRUBRK1.LN C30.OVL]