INVENTORY
                           LOAN AND SECURITY AGREEMENT
                                                     Date -------------, 19----.

Agreement between--------------------------------------------(hereinafter called
the debtor), whose address is --------------------------------------------------
and -----------------------------------------------------(hereinafter called the
secured party), whose address is ----------------------------------------------;

Section 1. Debtor's Place of Business.  The chief place of business of debtor is
--------------------------------------- and, if other than at the above address,
the place where  debtor  keeps his records  concerning  accounts  receivable  is
------------------------  -----------------------------------.  Neither the said
place nor the collateral shall be removed from Oregon without written consent of
the secured party.

Section 2.  Loan Agreement.

     2.1  Amount  of Loan.  The  secured  party  from time to time will lend the
debtor at debtor's  request,  such sums as the secured  party in his  discretion
believes are adequately secured by this agreement.

     2.2  Borrowing  Percentage.  The  aggregate  amount of the loans  shall not
exceed  -------%  of the net value of the  qualified  inventory  as  hereinafter
defined, plus 100% of the collected balance in debtor's cash collateral account.
Should the  aggregate  amount of said loans at any time exceed said  percentage,
the entire loan, including the excess, is secured hereby.

     2.3 Debtor's  Notes.  All loans shall be  evidenced by debtor's  promissory
note or notes payable  either on demand or on such maturity as the secured party
may fix;  all notes  shall bear  interest  at such rates and  interest  shall be
payable at such  intervals  as the parties  hereto  shall agree upon at the time
each loan is made.

     2.4 Other  Charges.  In addition to the principal and interest of the notes
the debtor shall pay to the secured party upon his demand, all expenses incurred
by the secured  party to audit and  service  debtor's  account and to  preserve,
collect, protect his interest in or realize on the collateral, including counsel
fees and legal expenses,  taxes and insurance premiums.  All such expenses shall
be part of the  obligation  secured by the collateral and shall bear interest at
---- % per annum from the date advanced by the secured party until paid.

     2.5     Terms of Payment.

         (a) Deposit of Proceeds in Cash Collateral Account.  Debtor,  forthwith
    upon  receipt of all  checks,  drafts,  cash and other  remittances  (herein
    called  proceeds)  in part or full payment for any of the  collateral,  will
    deposit  the  proceeds  in  a  cash  collateral   account   maintained  with
    the-------------------------- Branch of ------------------------------------
    The-------------------------------------------------------------------------
    -----------------------Bank,  over which the secured  party alone shall have
    power of withdrawal. Pending such deposit the debtor shall not commingle any
    proceeds with any other funds or property of the debtor,  but shall hold the
    proceeds  separate  and apart  therefrom  and upon an express  trust for the
    secured party until  deposited in the cash  collateral  account.  Credit for
    proceeds  deposited in the cash collateral account shall be conditional upon
    final payment of the deposited  item.  Once each week the secured party will
    apply the whole or any part of the  collected  funds on  deposit in the cash
    collateral  account  against the  principal or interest of the notes and the
    other  charges  specified  in  Section  2.4,  the order  and  method of such
    application to be in the  discretion of the secured  party.  Any part of the
    cash  collateral  account which the secured party elects not to so apply may
    be paid over by the secured party to the debtor.

         (b) Alternative Method of Payment. The secured party, by written notice
    to the debtor  (subject to  revocation  at any time),  in lieu of  requiring
    deposit of proceeds in the cash  collateral  account,  may permit  debtor to
    make payments weekly or at other intervals, of an amount equal to ------% of
    the proceeds of the collateral received by debtor during the interval.

         (c) Goods Represented by Documents. If the collateral is represented or
    covered by documents of title, whether or not negotiable,  in the possession
    of the secured party, the secured party,  upon payment of the amount secured
    thereby, may release all or part of the documents or goods to the debtor.
<PAGE>

     2.6  Statement of Account and  Additional  Collateral.  Once each month the
secured  party may render a  statement  of account  to the  debtor  showing  the
current status of the loans, service charges and the cash collateral account. If
the statement or any interim statement  indicates the loans  outstanding  exceed
the borrowing percentage,  the debtor either shall furnish additional collateral
or pay the difference in cash.

Section 3.  Collateral.

To secure the payment and performance of all obligations of the debtor set forth
on this agreement,  the note or notes and any other obligations of the debtor to
the secured,  party, the debtor grants to the secured party a security  interest
in the following collateral:

     3.1  Inventory.*  All  inventory  now owned or  hereafter  acquired  by the
debtor.
     
     3.2  Accounts  Receivable.  All  accounts  of the  debtor now  existing  or
hereafter arising which are proceeds of the inventory.

     3.3  Contract  Rights.  All  contract  rights of the debtor now existing or
hereafter arising, relating to the inventory.

     3.4 Proceeds and Products. Proceeds and products of all the above.

Section 4.  Qualified Inventory.

    4.1 Definition.  Qualified inventory must be readily marketable and meet all
of the  following  specifications  on the date of the loan and while any note or
notes are outstanding:

    (a)  No  Encumbrances.  All the goods are owned by the debtor  free from any
         lien, security interest or other encumbrance of any person.

    (b)  Other Financing.  No financing  statement covering any of the inventory
         or its  proceeds  or the  debtor's  accounts  is on file in any  public
         office  and the  secured  party  has not  received  any  notice  of any
         proposed acquisition of an inventory security interest from any person.

    (c)  Documents.  If any of the goods is  represented or covered by documents
         of title,  instruments or chattel paper, the debtor is the owner of the
         documents,  instruments  and  paper  and  none of it has  been  sold or
         transferred nor has any security  interest in any of it been granted to
         any person.

     4.2 Net Value. The net value of the qualified inventory shall be determined
at  cost  or  market,  whichever  is  lower,  exclusive  of any  transportation,
processing or handling  charges.  The determination of "net value" shall be made
by the secured party.  The debtor shall notify the secured party  immediately of
any event  causing a loss to or  depreciation  in value of the inventory and the
amount of such loss or depreciation.

Section 5.  Authority to Sell or Process Collateral.

     So long as  debtor is not in  default  on the note or notes or in breach of
any of the terms of this  agreement,  the debtor shall have the right to sell or
process the inventory in the regular course of debtor's business.


<PAGE>

Section 6.  Other Agreements of Debtor.

     6.1 Certificates and Statements of Inventory Position.  At the time of each
loan and at such  intervals  and in such form as the secured  party may request,
but at least  monthly,  the debtor shall submit to the secured party a certified
statement of debtor's  inventory  position showing inventory on hand,  inventory
represented  or  covered by  warehouse  receipts  or bills of lading,  qualified
inventory on hand,  inventory in possession of bailees,  including the names and
addresses of such bailees, and a statement of debtor's current accounts.

     6.2  Endorsements.  If any proceeds to debtor  shall  include or any of the
accounts  shall be evidenced by, notes,  trade  acceptances  or  instruments  or
documents,  or if any  inventory  is  covered by  documents  of title or chattel
paper,  whether or not  negotiable,  debtor,  if requested by the secured party,
immediately  shall deliver them to the secured  party,  appropriately  endorsed.
Regardless of the form of the endorsement,  the debtor waives protest. If debtor
fails to endorse any instrument or document,  the secured party is authorized to
endorse it on debtor's behalf.

* ORS  79.1090(4)  "GOODS ARE . . . 'INVENTORY' IF THEY ARE HELD BY A PERSON WHO
HOLDS THEM FOR SALE OR LEASE OR TO BE FURNISHED UNDER CONTRACTS OF SERVICE OR IF
HE HAS SO  FURNISHED  THEM,  OR IF THEY ARE RAW  MATERIALS,  WORK IN  PROCESS OR
MATERIALS  USED OR CONSUMED IN A  BUSINESS.  INVENTORY  OF A PERSON IS NOT TO BE
CLASSIFIED AS HIS EQUIPMENT."

S-N FORM NO. 1206-UCC SERIES (SN)
SECURITY AGREEMENT--INVENTORY
Stevens-Ness Law Publishing Co.
Portland, Oregon  97204

-------
If  any  loan  above   mentioned   is  a   consumer   loan  as  defined  by  the
Truth-in-Lending  Act and Regulation Z,  disclosures  are required to be made by
the secured  party to the debtor prior to  consummation  of that loan;  for this
purpose use  Stevens-Ness  Form No. 1320, or equivalent.  If compliance with Act
not required,disregard this notice.


<PAGE>
                                                      S-N FORM NO. 1206 - PAGE 2

Section 6.  (continued)

     6.3 Maintenance of Records. The debtor at all times shall keep accurate and
complete records of the collateral and its status.

     6.4 Right of Secured  Party to Inspect.  The  secured  party and any of his
agents shall have the right to call at the debtor's  place or places of business
or any other  place where the  collateral  may be located,  at  intervals  to be
determined by the secured party,  to inspect the  collateral and inspect,  audit
and copy any books and records of the debtor relating to the collateral or other
transactions with the secured party.

     6.5 Reports. The debtor, if requested by the secured party, shall submit to
the secured party

         (a) Periodical  Certified  Statement.  Within forty-five days after the
    end of  each  calendar  quarter  of each  fiscal  year  of the  debtor,  his
    financial  statement  as of the  close  of  such  quarter,  certified  by an
    authorized person; within ninety days after the end of each fiscal year, his
    financial  statements as of the close of the year,  certified by independent
    accountants and from time to time,  such additional  information and reports
    regarding his financial status as the secured party may require.

         (b)  Reconciliation  Report. At least once in each thirty-day period, a
    report in form  satisfactory  to the secured  party  showing the sales from,
    additions to, changes in value of, payment for and  adjustments to inventory
    made since the  preceding  reconciliation  report,  together with such other
    information as the secured party may require.

     6.6 Financing Statements. At the request of the secured party, debtor shall
join  with the  secured  party in  executing  one or more  financing  statements
pursuant  to the Uniform  Commercial  Code in form  satisfactory  to the secured
party,  and will pay for filing the  statement  in the proper  public  office or
offices.

     6.7 Other Borrowing.  Without the written consent of the secured party, the
debtor will not engage in any other inventory or accounts  receivable  financing
or create any indebtedness for money borrowed except loans made hereunder.

     6.8 Further Documentation.  Debtor, at any time upon request of the secured
party, will do, make,  execute and deliver all such additional and further acts,
instruments  or papers as the  secured  party may  require to assure the secured
party of the latter's right hereunder and to the collateral and its proceeds. If
debtor is a  corporation,  it will  promptly  furnish  the  secured  party  with
certified  copies of  resolutions  of its  board of  directors  authorizing  the
execution and delivery of this contract.

     6.9 Insurance. Debtor will keep the inventory fully insured against loss or
damage by fire,  theft (and collision,  if applicable) and such other hazards as
secured party from time to time requires, with such deductible provisions,  upon
such terms,  including loss payable and other endorsements,  and in such company
or companies as the secured party may approve;  debtor  immediately will deliver
all  policies  to the secured  party,  to be retained by the latter in pledge to
secure debtor's obligations hereunder,  with irrevocable authority to submit any
proofs, to adjust any loss,  receive and receipt for any sum payable,  surrender
any policy, discharge and release any insurer, endorse in debtor's name any loss
or refund check or draft and, in general,  exercise in the name of the debtor or
otherwise,  any and all rights of the debtor in respect thereto or in respect to
the proceeds  thereof.  All proceeds of insurance shall be deposited in debtor's
cash collateral account.

<PAGE>

     6.10 Taxes.  Debtor shall pay,  when due, all taxes and  assessments  on or
relating to the collateral or its use or on the proceeds.

     6.11 Notification of Account Debtor or Bailee.  With respect to proceeds in
the form of accounts,  at any time prior to or after default by the debtor,  the
secured  party may notify the account  debtor on any of the  collateral  to make
payment  directly to the secured  party.  The  debtor,  if the secured  party so
requires,  shall  notify the  account  debtors of the secured  party's  security
interest  in their  accounts.  Until such time as the  secured  party by written
notice to the debtor elects to exercise said right of  notification,  the debtor
is  authorized  as agent of the  secured  party,  to  collect  and  enforce  the
accounts.  At any time in the  discretion of the secured  party,  the latter may
notify the bailee of any inventory of secured party's security interest therein.

     6.12 Truth-in-Lending Act. When making consumer sales of inventory,  debtor
agrees to comply with Regulation Z by making the required  disclosures and, upon
request,   will  furnish  secured  party  with  satisfactory  evidence  of  such
compliance.

Section 7.  Default.

     The debtor shall be in default under this  agreement  upon the occurence of
any of the following events:

     7.1  Nonpayment  of  Principal  and  Interest.  Failure to pay when due the
principal of or interest on any note.

     7.2 Breach of  Debtor's  Agreement.  Failure by debtor to keep,  observe or
perform any provision of this  agreement or any other  agreement  between debtor
and the secured party.

     7.3 Misrepresentation.  The discovery of any  misrepresentation,  breach of
warranty or material falsity of any  certificate,  schedule or statement made or
furnished by debtor to the secured party, whether or not in connection with this
agreement.

     7.4 Impairment. Change in the condition or affairs, financial or otherwise,
of the  debtor or of any  endorser,  guarantor  or surety for the  liability  of
debtor to the secured party which in the opinion of the secured party impairs or
decreases  secured party's  security.  7.5 Loss or destruction of or substantial
damage to any of the  collateral.  7.6  Insolvency.  Termination  of business or
commencement  of any  insolvency  proceedings  by or against debtor or if debtor
becomes insolvent, or if debtor dies, or, if debtor is a partnership,  the death
of any  partner.  7.7 The secured  party deems or has  reasonable  cause to deem
himself insecure.

Section 8.  Remedies of Secured Party on Default.

     Upon the  occurrence of any event of default,  the secured party may at his
option and without prior notice  declare all notes and other  obligations of the
debtor secured by this agreement  immediately due and payable and shall have and
may exercise each and all of the rights and remedies  granted to him by the said
notes, this agreement and the Uniform Commercial Code of Oregon. All remedies of
the secured party shall be cumulative.  The secured party may require the debtor
to assemble the collateral and make it available to the secured party at a place
to be designated by the latter which is reasonably convenient to both parties.


<PAGE>

Section 9.  General.

     9.1 Waivers. The debtor waives demand, presentment,  notice of dishonor and
protest of any  instrument  either of debtor or others  which may be included in
the collateral or in the obligations secured hereby.

     9.2     Consents.  The debtor consents and agrees

     (a) To any extension,  postponement  of time of payment,  indulgence and to
         any substitution, exchange or release of collateral;

     (b) To the  addition  or  release  of any  party  or  person  primarily  or
         secondarily  liable,  or acceptance of partial payments on any accounts
         or instruments and the settlement, compromising or adjustment thereof;

     (c) If there be more than one debtor or a guarantor or co-maker of any note
         secured  by this  agreement,  the  obligation  of each and all shall be
         primary and joint and several;

     (d) Each note which this agreement secures is a separate instrument and may
         be  negotiated,  extended  or  renewed  by the  secured  party  without
         releasing the debtor, the collateral or any guarantor or co-maker.

     (e) Should the secured  party  transfer  his  interest in said  collateral,
         debtor  will  not  assert  as  a  defense,  counter-claim,  set-off  or
         otherwise against secured party's assignee any claim, known or unknown,
         which  debtor now has or claims to have or hereafter  acquires  against
         the secured party and further,  in such event,  each right herein given
         to the  secured  party  shall  accrue to and may be  exercised  by said
         assignee.

     9.3 Duties with Respect to Collateral. The secured party shall have no duty

     (a) To collect the collateral or any proceeds;

     (b) To preserve rights of debtor or others against prior parties;

     (c) To  realize  on  the  collateral  in  any  particular  manner  or  seek
         reimbursement from any particular source;

     (d) To preserve, protect, insure or care for the inventory.

     9.4 Non-waiver By Secured Party.  Secured party shall not be deemed to have
waived any of his rights under this or any other agreement or instrument  signed
by the debtor unless the waiver is in writing  signed by the secured  party.  No
delay in exercising  secured party's rights shall be a waiver nor shall a waiver
on one occasion operate as a waiver of such right on a future occasion.

     9.5 Notices.  Each demand, notice or other communication shall be served or
given by mail  addressed  to the party at his  address  set  forth  herein or as
changed by written  notice to the other party,  or by personal  service upon the
party or proper officer.  Reasonable notice,  when notice is required,  shall be
deemed to be five days from date of mailing.

     9.6 Law Governing. All the terms herein and the rights, duties and remedies
of the parties shall be governed by the laws of Oregon.
<PAGE>

     9.7 In construing this agreement,  the singular includes the plural and the
masculine pronoun includes the femine and the neuter.

     9.8  This  contract  shall  bind  and  inure  to  the  benefit  of,  as the
circumstances  may  require,  not only the  immediate  parties  hereto but their
respective heirs, executors, administrators, successors in interest and assigns.

Section 10. Special Terms and Conditions.

EXECUTED in duplicate.

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

----------------------------------          -----------------------------------
         (Individual Debtor)                    (Individual Secured Party)

----------------------------------          -----------------------------------
 (Partnership or Corporate Debtor)      (Partnership or Corporate Secured Party)

By--------------------------------          By---------------------------------