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                                                                   EXHIBIT 10.30

                         MANAGEMENT CONTINUITY AGREEMENT

     THIS MANAGEMENT CONTINUITY AGREEMENT (the "Agreement") is entered into
effective as of the ______ day of _____, 2000, between ____________,
("Employee") and AVIRON, a Delaware corporation (the "Company"). This Agreement
is intended to provide Employee with certain benefits described herein upon the
occurrence of specific events. Certain capitalized terms used in this Agreement
are defined in Article 4.

                                    RECITALS

     A.   It is expected that another company may from time to time consider the
possibility of acquiring the Company or that a change of control may otherwise
occur, with or without the approval of the Company's Board of Directors. The
Board of Directors recognizes that such consideration can be a distraction to
Employee and can cause Employee to consider alternative employment
opportunities. The Board of Directors has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued dedication and objectivity of the Employee, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company.

     B.   The Company's Board of Directors believes it is in the best interests
of the Company and its stockholders to retain Employee and provide incentives to
Employee to continue in the service of the Company.

     C.   The Board of Directors further believes that it is imperative to
provide Employee with certain benefits upon a Change of Control and, under
certain circumstances, upon termination of Employee's employment in connection
with a Change of Control, which benefits are intended to provide Employee with
financial security and provide sufficient income and encouragement to Employee
to remain with the Company, notwithstanding the possibility of a Change of
Control.

     D.   To accomplish the foregoing objectives, the Board of Directors has
directed the Company, upon execution of this Agreement by Employee, to agree to
the terms provided in this Agreement.

     Now therefore, in consideration of the mutual promises, covenants and
agreements contained herein, and in consideration of the continuing employment
of Employee by the Company, the parties hereto agree as follows:

                                    ARTICLE 1

                                CHANGE OF CONTROL

     1.1  TERMINATION EVENTS. If Employee's employment terminates under
circumstances constituting a Covered Termination upon or within eighteen (18)
months

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following a Change of Control of the ownership of the Company, Employee shall be
entitled to receive the following benefits set forth in Sections 1.2, 1.3 and
1.4.

     1.2  SALARY CONTINUATION. Employee shall receive Base Salary that has
accrued but is unpaid as of the date of such Covered Termination, and, within
thirty (30) days following such Covered Termination, Employee also shall receive
a lump sum payment equal to one year of the base salary which the employee was
receiving immediately prior to the Change of Control and the Employee's targeted
bonus for the fiscal year in which the Change of Control occurs.

     1.3  HEALTH INSURANCE COVERAGE IN THE EVENT OF CHANGE OF CONTROL:

          Provided that Employee makes a timely election to continue coverage
under the Company's group health plan pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") in connection with Employee's
Covered Termination, the Company will pay Employee's COBRA premiums for a
maximum period of one (1) year following the date of such Covered Termination
(the "COBRA Continuation Period"). In addition, if Employee's spouse and/or
dependents were enrolled in the Company's group health plan on the date of the
Covered Termination, the Company will pay the COBRA premiums for Employee's
dependents during the COBRA Continuation Period, but only to the same extent
that such dependents' premiums under such plan were paid by the Company prior to
the date of such Covered Termination. No provision of this Agreement will affect
the continuation coverage rules under COBRA, except that the Company's payment
of any applicable premiums during the COBRA Continuation Period will be credited
as payment by Employee for purposes of the Employee's payment required under
COBRA. Therefore, the period during which Employee must elect to continue the
Company's group health coverage at his or her own expense under COBRA, the
length of time during which COBRA coverage will be made available to Employee,
and all other rights and obligations of the Employee under COBRA (except the
obligation to pay premiums that the Company pays during the COBRA Continuation
Period) will be applied in the same manner that such rules would apply in the
absence of this Agreement. At the conclusion of the COBRA Continuation Period,
Employee will be responsible for the entire payment of premiums required under
COBRA for the remaining duration of eligibility for COBRA, if any.

          Notwithstanding the foregoing, the Company's obligation to make COBRA
payments for Employee shall cease immediately if Employee becomes eligible for
other health insurance benefits at the expense of a new employer. Employee
agrees to notify a duly authorized officer of the Company, in writing,
immediately upon acceptance of any employment following the Covered Termination
which provides Employee with eligibility for health insurance benefits.

     1.4  ACCELERATION OF VESTING OF OUTSTANDING OPTIONS. In the event of a
Covered Termination where the Company has assumed or substituted the Employee's
options in connection with the Change of Control, the vesting of outstanding
stock options to purchase common stock of the Company granted to Employee prior
to the date of termination of employment shall accelerate as of the date of such
Covered Termination so that all outstanding options are one hundred percent
(100%) vested and immediately exercisable. Such acceleration of vesting of
outstanding options also shall apply to any unvested option shares that were
acquired by Employee on or before the date of the Covered Termination and that
were subject to

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a repurchase option by the Company as of such date. Where the Company does not
assume or substitute the Employee's options in connection with a Change of
Control, one hundred percent (100%) of options will vest immediately prior to a
Change of Control.

     1.5  PARACHUTE PAYMENTS. In the event that the acceleration of the vesting
provided for in Section 1.4 and benefits otherwise payable to Employee (i)
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended, (the "Code"), or any comparable
successor provision, and (ii) but for this section would be subject to the
excise tax imposed by Section 4999 of the Code, or any comparable successor
provision (the "Excise Tax"), then Employee's benefits hereunder shall be either

          (i)  provided to Employee in full, or

          (ii) provided to Employee as to such lesser extent which would result
               in no portion of such benefits being subject to the Excise Tax,

whichever of the foregoing amounts, when taking into account applicable federal,
state, local and foreign income and employment taxes, the Excise Tax, and any
other applicable taxes, results in the receipt by Employee, on an after-tax
basis, of the greatest amount of benefits, notwithstanding that all or some
portion of such benefits may be taxable under the Excise Tax. Unless the Company
and Employee otherwise agree in writing, any determination required under this
section shall be made in writing in good faith by the Accountants. In the event
of a reduction of benefits hereunder, benefits payable in cash shall be reduced
first. For purposes of making the calculations required by this section, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code, and other applicable legal authority.
The Company and Employee shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this section.

     If, notwithstanding any reduction described in this section, the IRS
determines that Employee is liable for the Excise Tax as a result of the receipt
of the payment of benefits as described above, then Employee shall be obligated
to pay back to the Company, within thirty (30) days after a final IRS
determination or in the event that Employee challenges the final IRS
determination, a final judicial determination, a portion of the payment equal to
the "Repayment Amount." The Repayment Amount with respect to the payment of
benefits shall be the smallest such amount, if any, as shall be required to be
paid to the Company so that Employee's net after-tax proceeds with respect to
any payment of benefits (after taking into account the payment of the Excise Tax
and all other applicable taxes imposed on such payment) shall be maximized. The
Repayment Amount with respect to the payment of benefits shall be zero if a
Repayment Amount of more than zero would not result in Employee's net after-tax
proceeds with respect to the payment of such benefits being maximized. If the
Excise Tax is not eliminated pursuant to this paragraph, Employee shall pay the
Excise Tax.

     Notwithstanding any other provision of this Section 1.5, if (i) there is a
reduction in the payment of benefits as described in this section, (ii) the IRS
later determines that

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Employee is liable for the Excise Tax, the payment of which would result in the
maximization of Employee's net after-tax proceeds (calculated as if Employee's
benefits had not previously been reduced), and (iii) Employee pays the Excise
Tax, then the Company shall pay to Employee those benefits which were reduced
pursuant to this section contemporaneously or as soon as administratively
possible after Employee pays the Excise Tax so that Employee's net after-tax
proceeds with respect to the payment of benefits is maximized.

                                   ARTICLE 3

                     LIMITATIONS AND CONDITIONS ON BENEFITS

     3.1  WITHHOLDING OF TAXES. The Company shall withhold appropriate federal,
state, local (and foreign, if applicable) income and employment taxes from any
payments hereunder.

     3.2  RELEASE PRIOR TO RECEIPT OF BENEFITS. Upon the occurrence of a Covered
Termination, and prior to the receipt of any benefits under this Agreement on
account of the occurrence of such Covered Termination, Employee shall execute a
release (the "Release") in the form incorporated herein and attached hereto as
Attachment I. Such Release shall specifically relate to all of Employee's rights
and claims in existence at the time of such execution and shall confirm
Employee's obligations under the Company's standard form of proprietary
information agreement. It is understood that Employee has twenty-one (21) days
to consider whether to execute such Release, and Employee may revoke such
Release within seven (7) business days after execution. In the event Employee
does not execute such Release within the twenty-one (2l)-day period, or if
Employee revokes such Release within the subsequent seven (7) business day
period, no benefits shall be payable under this Agreement and this Agreement
shall be null and void. Notwithstanding the foregoing, in addition to or in lieu
of the release contained in Attachment I, Employee may be required to execute
and deliver an effective release in such other form as the Company may, in its
sole discretion, determine to be necessary or appropriate in order to comply
with the requirements of the laws of any jurisdiction applicable to Employee in
order to make a general release of claims effective and enforceable.

                                   ARTICLE 4

                            OTHER RIGHTS AND BENEFITS

     4.1  NONEXCLUSIVITY. Except as otherwise expressly provided herein, nothing
in the Agreement shall prevent or limit Employee's continuing or future
participation in any benefit, bonus, incentive or other plans, programs,
policies or practices provided by the Company and for which Employee may
otherwise qualify, nor shall anything herein limit or otherwise affect such
rights as Employee may have under other agreements with the Company. Except as
otherwise expressly provided herein, amounts which are vested benefits or which
Employee is otherwise entitled to receive under any plan, policy, practice or
program of the Company at or subsequent to the date of a Covered Termination
shall be payable in accordance with such plan, policy, practice or program.

     4.2  NON-DUPLICATION OF BENEFITS. Notwithstanding any other provision of
the Agreement to the contrary, any benefits payable to Employee under this
Agreement shall be in

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lieu of any severance benefits payable by the Company to such individual under
any other arrangement covering the individual, unless expressly otherwise agreed
to by the Company in writing.

                                   ARTICLE 5

                                   DEFINITIONS

     For purposes of the Agreement, the following terms are defined as follows:

     5.1  "ACCOUNTANTS" means the independent public accountants of the Company.

     5.2  DEFINITION OF BASE SALARY: Base Salary means the Employee's base
salary (exclusive of bonuses and other forms of supplemental compensation) at
the rate in effect during the last regularly scheduled payroll period
immediately preceding the date of Employee's Covered Termination or prior to the
Change of Control, unless a different time period for establishing Base Salary
is expressly set forth in this Agreement.

     5.3  "CAUSE" Employee's dismissal or discharge for fraud, misappropriation,
embezzlement or intentional misconduct on the part of Employee which resulted in
material loss, damage or injury to the Company.

     5.4  "CHANGE OF CONTROL" means a (i) dissolution or liquidation of the
Company; (ii) a sale, lease or other disposition of all or substantially all of
the assets of the Company; (iii) a merger or consolidation in which the Company
is not the surviving corporation and in which beneficial ownership of securities
of the Company representing at least forty percent (40%) of the combined voting
power entitled to vote in the election of the members of the Board of Directors
has changed; (iv) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, and in which beneficial
ownership of securities of the Company representing at least forty percent (40%)
of the combined voting power entitled to vote in the election of the member of
the Board of Directors has changed; (v) an acquisition by any entity (other than
(A) a controlled affiliate of the Company, (B) any employee benefit plan, or
related trust, sponsored or maintained by the Company or subsidiary of the
Company or other entity controlled by the Company, or (C) any company owned
directly or indirectly by stockholders of the Company in substantially the same
proportions as their ownership of Common Stock interest of the Company,
immediately prior to the occurrence with respect to which the evaluation of the
Change in Control is being made) of the beneficial ownership, directly or
indirectly, of securities of the Company representing at least forty percent
(40%) of the combined voting power of the Company's then outstanding securities;
or (vi) in the event that the individuals who, as of the date of adoption of the
Plan, are members of the Company's Board of Directors (the "Incumbent Board"),
cease for any reason to constitute at least forty percent (40%) of the Board of
Directors. (If the election, or nomination for election by the Company's
stockholders, of any new Director is approved by a vote of at least forty
percent (40%) of the Incumbent Board, such new Director shall be considered to
be a member of the Incumbent Board in the future.)

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     5.5  "CODE" means the Internal Revenue Code of 1986, as amended.

     5.6  "COVERED TERMINATION" means involuntary termination by the Company of
Employee's employment with the Company for any reason other than death,
disability or for Cause or upon or within eighteen (18) months following a
Change of Control of the ownership of the Company, Employee voluntarily
terminates employment after any of the following are undertaken without
Employee's express written consent:

          (a)  the assignment to Employee of any duties or responsibilities
which result in a material diminution or adverse change of Employee's position,
status or circumstances of employment;

          (b)  a reduction by the Company in Employee's Base Salary;

          (c)  any failure by the Company to continue in effect any benefit plan
or arrangement, including incentive plans or plans to receive securities of the
Company, in which Employee is participating (hereinafter referred to as "Benefit
Plans"), or the taking of any action by the Company which would adversely affect
Employee's participation in or reduce Employee's benefits under any Benefit
Plans or deprive Employee of any fringe benefit then enjoyed by Employee;
provided, however, a Covered Termination shall not exist under this subsection
4.6(c) if the Company offers a range of benefit plans and programs which, taken
as a whole, are comparable to the Benefit Plans provided to Employee as of the
date of this Agreement, as determined in good faith by the Company;

          (d)  a relocation of Employee or the Company's principal business
offices to a location more than twenty-five (25) miles from ___________, at
which Employee has performed duties, except for required travel by Employee on
the Company's business to an extent substantially consistent with Employee's
business travel obligations as of the date of this Agreement;

          (e)  any material breach by the Company of any provision of this
Agreement which is not cured by the Company within twenty (20) days of delivery
of written notice from Employee of such breach; or

          (f)  any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.

                                   ARTICLE 6

                               GENERAL PROVISIONS

          6.1  EMPLOYMENT STATUS. This Agreement does not constitute a contract
of employment or impose on Employee any obligation to remain as an employee, or
impose on the Company any obligation (i) to retain Employee as an employee, (ii)
to change the status of Employee as an at-will employee, or (iii) to change the
Company's policies regarding termination of employment; or (iv) to be unable to
terminate Employee's employment with the Company at any time, with or without
notice, for any reason or no reason.

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          6.2  NOTICES. Any notices provided hereunder must be in writing and
such notices or any other written communication shall be deemed effective upon
the earlier of personal delivery (including delivery by facsimile) or the third
day after mailing by first class mail, to the Company at its primary office
location and to Employee at Employee's address as listed in the Company's
payroll records. Any payments made by the Company to Employee under the terms of
this Agreement shall be delivered to Employee either in person or at the address
as listed in the Company's payroll records.

          6.3  SEVERABILITY. If a legal authority of competent jurisdiction
determines that any term or provision of this Agreement is invalid or
unenforceable, in whole or in part, then the remaining terms and provisions
hereof shall be unimpaired. Such legal authority will have the authority to
modify or replace the invalid or unenforceable term or provision with a valid
and enforceable term or provision that most accurately embodies the parties'
intention with respect to the invalid or unenforceable term or provision.

          6.4  WAIVER. If either party should waive any breach of any provisions
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.

          6.5  COMPLETE AGREEMENT. This Agreement, including Attachment I, and
any other written agreements referred to in this Agreement, constitutes the
entire agreement between Employee and the Company and it is the complete, final,
and exclusive embodiment of their agreement with regard to this subject matter.
It is entered into without reliance on any promise or representation other than
those expressly contained herein.

          6.6  AMENDMENT OR TERMINATION OF AGREEMENT. This Agreement may be
changed or terminated only upon the mutual written consent of the Company and
Employee. The written consent of the Company to a change or termination of this
Agreement must be signed by an Employee officer of the Company after such change
or termination has been approved by the Company's Board of Directors.

          6.7  COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.

          6.8  HEADINGS. The headings of the Articles and Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning hereof.

          6.9  SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Employee and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that Employee may not assign any duties hereunder and may not assign any
rights hereunder without the written consent of the Company, which consent shall
not be withheld unreasonably.

          6.10 ATTORNEYS' FEES. If either party hereto brings any action to
enforce his or its rights hereunder, the prevailing party in any such action
shall be entitled to recover his or its reasonable attorneys' fees and costs
incurred in connection with such action.

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          6.11 CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of the
State of California, without regard to such state's conflict of laws rules.

          6.12 NON-PUBLICATION. The parties mutually agree not to disclose
publicly the terms of this Agreement except to the extent that disclosure is
mandated by applicable law or to respective personal advisors.

          6.13 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the
text of this Agreement and anysummary, description or other information
regarding this Agreement, the text of this Agreement shall control.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year written above.

AVIRON                                 [EMPLOYEE]

By:
   -------------------------------     ----------------------------------
Name:  C. Boyd Clarke
Title: Chief Executive Officer

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                                  ATTACHMENT I

                                     RELEASE

     Certain capitalized terms used in this Release are defined in the
Management Continuity Agreement (the "Agreement") which I have executed and of
which this Release is a part.

     I hereby confirm my obligations under the Company's proprietary information
and inventions agreement.

     Except as otherwise set forth in this Release, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their officers,
directors, agents, servants, employees, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification I may have as a result of any third party action against me
based on my employment with the Company), arising out of or in any way related
to agreements, events, acts or conduct at any time prior to the date I execute
this Release, including, but not limited to: all such claims and demands
directly or indirectly arising out of or in any way connected with my employment
with the Company or the termination of that employment, including but not
limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of disputed compensation; claims pursuant to
any federal, state or local law or cause of action including, but not limited
to, the federal Civil Rights Act of 1964, as amended; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal
Employee Retirement Income Security Act of 1974, as amended; the federal
Americans with Disabilities Act of 1990; tort law; contract law; statutory law;
common law; wrongful discharge; discrimination; fraud; defamation; emotional
distress; and breach of the implied covenant of good faith and fair dealing;
provided, however, that nothing in this paragraph shall be construed in any way
to release the Company from its obligation to indemnify me pursuant to the
Company's indemnification obligation pursuant to agreement or applicable law.

     In giving this release, which includes claims that may be unknown to me at
present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any unknown or unsuspected claims I
may have against the Company.

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     I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
under the Agreement for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (A) my waiver and release do not apply to any rights or claims that may
arise on or after the date I execute this Release; (B) I have the right to
consult with an attorney prior to executing this Release; (C) I have twenty-one
(21) days to consider this Release (although I may choose to voluntarily execute
this Release earlier); (D) I have seven (7) days following the execution of this
Release by the parties to revoke the Release; and (E) this Release shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Release is executed by me.

                                       [EMPLOYEE]

                                       -----------------------------------------
                                       Date:
                                            ------------------------------------

                                       10Portland Commercial Banking
                                                            1300 SW Fifth Avenue
                                                      P O Box 3131, MAC 6101-133
                                                         Portland, OR 97208-3131

WELLS
FARGO

                                     May 31, 2000

BARRETT BUSINESS SERVICES, INC.
4724 SW Macadam Avenue
Portland, OR  97201

Dear Mr. Mulholland:

         This letter is to confirm that WELLS FARGO BANK,  NATIONAL  ASSOCIATION
("Bank"),  subject to all terms and conditions  contained herein,  has agreed to
make available to BARRETT  BUSINESS  SERVICES,  INC.  ("Borrower") the following
described  credit  accommodations  (each,  a  "Credit"  and  collectively,   the
"Credits"):

         1.   A revolving  line of credit under which Bank will make advances to
Borrower from time to time up to and  including  May 31, 2001,  not to exceed at
any  time  the   maximum   principal   amount   of   Fifteen   Million   Dollars
($15,000,000.00)  ("Line of  Credit"),  the  proceeds of which shall be used for
working capital requirements.

         2.   A term  loan  in the  original  principal  amount  of Six  Hundred
Ninety-three Thousand Seven Hundred Fifty Dollars ($693,750.00) ("Term Loan A"),
on which the outstanding principal balance as of the date hereof is $467,028.06.
Subject to the terms and  conditions of this letter,  Bank hereby  confirms that
Term Loan A remains in full force and effect.

         3.   A term loan in the  original  principal  amount  of Eight  Million
Dollars  ($8,000,000.00)  ("Term  Loan B"), on which the  outstanding  principal
balance  as of the date  hereof  is  $5,555,555.58.  Subject  to the  terms  and
conditions of this letter, Bank hereby confirms that Term Loan B remains in full
force and effect.

I.       CREDIT TERMS:

         1.   LINE OF CREDIT:

         (a)  Line of Credit Note. Borrower's obligation to repay advances under
the Line of Credit shall be evidenced by a promissory note  substantially in the
form of Exhibit A attached  hereto ("Line of Credit  Note"),  all terms of which
are incorporated herein by this reference.

         (b)  Letter of Credit  Subfeature.  As a  subfeature  under the Line of
Credit,  Bank agrees from time to time during the term thereof to issue  standby
letters of credit for the  account of Borrower  (each,  a "Letter of Credit" and
collectively,  "Letters  of  Credit");  provided  however,  that  the  form  and
substance of each Letter of Credit shall be subject to approval by Bank,  in its
sole discretion;  and provided further, that the aggregate undrawn amount of all
outstanding  Letters of Credit shall not at any time exceed Five Million Dollars
($5,000,000.00).  Each Letter of Credit shall be issued for a term not to exceed
365 days, as designated by Borrower;

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 2

provided  however,  that no Letter of Credit shall have an expiration  date more
than  ninety  (90) days  beyond the  maturity  date of the Line of  Credit.  The
undrawn  amount of all  Letters of Credit  shall be  reserved  under the Line of
Credit and shall not be  available  for  borrowings  thereunder.  Each Letter of
Credit shall be subject to the additional  terms and conditions of the Letter of
Credit Agreement and related  documents,  if any, required by Bank in connection
with the  issuance  thereof.  Each  draft  paid by Bank under a Letter of Credit
shall be deemed  an  advance  under  the Line of  Credit  and shall be repaid by
Borrower in accordance  with the terms and conditions of this letter  applicable
to such advances;  provided  however,  that if advances under the Line of Credit
are not available,  for any reason,  at the time any draft is paid by Bank, then
Borrower shall  immediately pay to Bank the full amount of such draft,  together
with interest thereon from the date such amount is paid by Bank to the date such
amount is fully  repaid  by  Borrower,  at the rate of  interest  applicable  to
advances under the Line of Credit.  In such event Borrower  agrees that Bank, in
its sole discretion, may debit any demand deposit account maintained by Borrower
with Bank for the amount of any such draft.

         (c)  Borrowing and Repayment. Borrower may from time to time during the
term of the Line of Credit  borrow,  partially or wholly  repay its  outstanding
borrowings,  and  reborrow,  subject  to  all  of  the  limitations,  terms  and
conditions  contained  herein or in the Line of Credit Note;  provided  however,
that the total outstanding  borrowings under the Line of Credit shall not at any
time exceed the maximum  principal  amount  available  thereunder,  as set forth
above.

         2.   TERM LOAN A:

         (a)  Term  Note  A.  Borrower's  obligation  to  repay  Term  Loan A is
evidenced by a promissory note  substantially  in the form of Exhibit B attached
hereto  ("Term  Note A"),  all terms of which  are  incorporated  herein by this
reference. Any reference in Term Note A to any prior loan agreement between Bank
and Borrower shall be deemed a reference to this letter.

         (b)  Repayment.  Principal  and interest on Term Loan A shall be repaid
in accordance with the provisions of Term Note A.

         (c)  Prepayment. Borrower may prepay principal on Term Loan A solely in
accordance with the provisions of Term Note A.

         3.   TERM LOAN B:

         (a)  Term  Note  B.  Borrower's  obligation  to  repay  Term  Loan B is
evidenced by a promissory note  substantially  in the form of Exhibit C attached
hereto  ("Term  Note B"),  all terms of which  are  incorporated  herein by this
reference. Any reference in Term Note B to any prior loan agreement between Bank
and Borrower shall be deemed a reference to this letter.

         (b)  Repayment.  The principal amount of Term Loan B shall be repaid in
accordance with the provisions of Term Note B.

         (c)  Prepayment. Borrower may prepay principal on Term Loan B solely in
accordance with the provisions of Term Note B.

         4.       COLLATERAL:
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Barrett Business Services, Inc.
May 31, 2000
Page 3

         As security for all indebtedness of Borrower to Bank under Term Loan A,
Borrower  hereby  grants to Bank a lien of not less than first  priority on that
certain real property located at 4724 SW Macadam Avenue, Portland, OR.

         All of the foregoing  shall be evidenced by and subject to the terms of
such  security  agreements,  financing  statements,  deeds  of trust  and  other
documents  as  Bank  shall  reasonably  require,   all  in  form  and  substance
satisfactory to Bank.  Borrower shall reimburse Bank immediately upon demand for
all costs and expenses  incurred by Bank in connection with any of the foregoing
security,  including without limitation,  filing and recording fees and costs of
appraisals, audits and title insurance.

II.      INTEREST/FEES:

         1.   Interest.  The  outstanding  principal  balances  of the  Line  of
Credit, Term Loan A and Term Loan B shall bear interest at the rates of interest
set forth in the Line of Credit Note, Term Note A and Term Note B (collectively,
the "Notes").

         2.   Computation  and Payment.  Interest on the Line of Credit and Term
Loan B shall be computed on the basis of a 360-day  year,  actual days  elapsed.
Interest on Term Loan A shall be computed on the basis of a 366-day year, actual
days elapsed.  Interest shall be payable at the times and place set forth in the
Notes.

         3.   Unused  Commitment Fee.  Borrower shall pay to Bank a fee equal to
fifteen hundredths percent (0.15%) per annum (computed on the basis of a 360-day
year,  actual days  elapsed) on the average  daily unused  amount of the Line of
Credit,  which fee shall be calculated on a quarterly basis by Bank and shall be
due and  payable by  Borrower  in arrears on the last day of each  March,  June,
September and December.

         4.   Letter of Credit  Fees.  Borrower  shall pay to Bank fees upon the
issuance of each Letter of Credit,  upon the payment or  negotiation  by Bank of
each  draft  under any  Letter of Credit  and upon the  occurrence  of any other
activity with respect to any Letter of Credit (including without limitation, the
transfer,  amendment  or  cancellation  of any Letter of Credit)  determined  in
accordance  with  Bank's  standard  fees and  charges  then in  effect  for such
activity, but in any event not more than 90 basis points, without prior notice.

         5.   Collection of Payments.  Borrower  authorizes  Bank to collect all
principal, interest and fees due under each Credit by charging Borrower's demand
deposit  account  number  4159-583848  with Bank,  or any other  demand  deposit
account  maintained by Borrower with Bank, for the full amount  thereof.  Should
there be  insufficient  funds in any such demand deposit account to pay all such
sums when due, the full amount of such  deficiency  shall be immediately due and
payable by Borrower.

III.     REPRESENTATIONS AND WARRANTIES:

         Borrower  makes the following  representations  and warranties to Bank,
which  representations and warranties shall survive the execution of this letter
and shall  continue in full

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 4

force  and  effect  until  the full and  final  payment,  and  satisfaction  and
discharge, of all obligations of Borrower to Bank subject to this letter.

         1.   Legal  Status.  Borrower  is a  corporation,  duly  organized  and
existing and in good  standing  under the laws of the state of Maryland,  and is
qualified  or  licensed  to do  business  in all  jurisdictions  in  which  such
qualification  or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on Borrower.

         2.  Authorization and Validity.  This letter, the Notes, and each other
document,  contract or  instrument  deemed  necessary  by Bank to  evidence  any
extension of credit to Borrower pursuant to the terms and conditions  hereof, or
now or at any time hereafter required by or delivered to Bank in connection with
this letter (collectively,  the "Loan Documents") have been duly authorized, and
upon their execution and delivery in accordance with the provisions  hereof will
constitute  legal,  valid and binding  agreements and obligations of Borrower or
the party  which  executes  the  same,  enforceable  in  accordance  with  their
respective terms.

         3.   No Violation. The execution,  delivery and performance by Borrower
of each  of the  Loan  Documents  do not  violate  any  provision  of any law or
regulation,  or  contravene  any provision of the Articles of  Incorporation  or
By-Laws of Borrower,  or result in a breach of or constitute a default under any
contract, obligation, indenture or other instrument to which Borrower is a party
or by which Borrower may be bound.

         4.   Litigation.  There are no  pending,  or to the best of  Borrower's
knowledge threatened,  actions, claims, investigations,  suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which  could  have a  material  adverse  effect on the  financial  condition  or
operation of Borrower other than those  disclosed by Borrower to Bank in writing
prior to the date hereof.

         5.  Correctness  of Financial  Statement.  The financial  statement of
Borrower  dated  March 31,  2000,  a true copy of which  has been  delivered  by
Borrower  to Bank prior to the date  hereof,  (a) is  complete  and  correct and
presents  fairly  the  financial  condition  of  Borrower,   (b)  discloses  all
liabilities  of Borrower  that are required to be reflected or reserved  against
under  generally   accepted   accounting   principles,   whether  liquidated  or
unliquidated,  fixed or contingent, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied. Since the date of
such  financial  statement  there  has been no  material  adverse  change in the
condition or operation of Borrower, nor has Borrower mortgaged, pledged, granted
a security  interest in or otherwise  encumbered any of its assets or properties
except in favor of Bank or as otherwise permitted by Bank in writing.

         6.   Income Tax  Returns.  Borrower  has no  knowledge  of any  pending
material  assessments  or material  adjustments  of its income tax payable  with
respect to any year.

         7.   No Subordination.  There is no agreement,  indenture,  contract or
instrument to which  Borrower is a party or by which  Borrower may be bound that
requires the subordination in right of payment of any of Borrower's  obligations
subject to this letter to any other obligation of Borrower.

         8.   Permits,  Franchises.   Borrower  possesses,  and  will  hereafter
possess, all permits, consents, approvals,  franchises and licenses required and
all rights to trademarks,

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 5

trade names,  patents and fictitious  names,  if any,  necessary to enable it to
conduct the business in which it is now engaged in  compliance  with  applicable
law.

         9.   ERISA.  To  the  best  of  Borrower's  knowledge,  Borrower  is in
compliance  in all  material  respects  with all  applicable  provisions  of the
Employee  Retirement  Income Security Act of 1974, as amended or recodified from
time to time  ("ERISA");  Borrower has not violated any provision of any defined
employee pension benefit plan (as defined in ERISA) maintained or contributed to
by Borrower  (each, a "Plan");  no Reportable  Event,  as defined in ERISA,  has
occurred  and is  continuing  with  respect to any Plan  initiated  by Borrower;
Borrower has met its minimum  funding  requirements  under ERISA with respect to
each Plan; and each Plan will be able to fulfill its benefit obligations as they
come due in  accordance  with the Plan  documents and under  generally  accepted
accounting principles.

         10.  Other  Obligations.  Borrower is not in default on any  obligation
for borrowed money,  any purchase money  obligation or any other material lease,
commitment, contract, instrument or obligation.

         11.  Environmental Matters.  Except as disclosed by Borrower to Bank in
writing  prior to the date  hereof,  Borrower is in  compliance  in all material
respects with all applicable  federal or state  environmental,  hazardous waste,
health  and  safety  statutes,  and any rules or  regulations  adopted  pursuant
thereto,  which govern or affect any of Borrower's operations and/or properties,
including  without  limitation,   the  Comprehensive   Environmental   Response,
Compensation   and  Liability  Act  of  1980,   the  Superfund   Amendments  and
Reauthorization Act of 1986, the Federal Resource  Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended,  modified or supplemented  from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action  involving a material  expenditure is needed to respond to a
release  of any toxic or  hazardous  waste or  substance  into the  environment.
Borrower has no material contingent  liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

         12.  Real Property Collateral.  Except as disclosed by Borrower to Bank
in  writing  prior  to the  date  hereof,  with  respect  to any  real  property
collateral required hereby:

         (a)  All  taxes,  governmental  assessments,  insurance  premiums,  and
water, sewer and municipal  charges,  and rents (if any) which previously became
due and owing in respect thereof have been paid as of the date hereof.

         (b)  There are no  construction  or similar  liens or claims which have
been filed for work, labor or material (and no rights are outstanding that under
law could give rise to any such lien)  which  affect all or any  interest in any
such real property and which are or may be prior to or equal to the lien thereon
in favor of Bank.

         (c)  None of the  improvements  which  were  included  for  purpose  of
determining  the  appraised  value of any such real property lies outside of the
boundaries  and/or building  restriction  lines thereof,  and no improvements on
adjoining properties materially encroach upon any such real property.

         (d)  There  is no  pending,  or to the  best  of  Borrower's  knowledge
threatened,  proceeding  for the  total or  partial  condemnation  of all or any
portion of any such real property,

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 6

and all such real  property  is in good  repair and free and clear of any damage
that would  materially and adversely affect the value thereof as security and/or
the intended use thereof.

IV.      CONDITIONS:

         1.   Conditions of Initial Extension of Credit.  The obligation of Bank
to grant any of the Credits is subject to fulfillment to Bank's  satisfaction of
all of the following conditions:

         (a)  Documentation.   Bank  shall  have   received  each  of  the  Loan
Documents, duly executed and in form and substance satisfactory to Bank.

         (b)  Financial  Condition.  There shall have been no  material  adverse
change,  as  determined  by Bank,  in the  financial  condition  or  business of
Borrower,  nor any material decline,  as determined by Bank, in the market value
of any collateral required hereunder or a substantial or material portion of the
assets of Borrower.

         (c)  Insurance.  Borrower  shall have  delivered  to Bank  evidence  of
insurance  coverage on all Borrower's  property,  in form,  substance,  amounts,
covering risks and issued by companies  satisfactory to Bank, and where required
by Bank,  with loss payable  endorsements  in favor of Bank,  including  without
limitation,  policies of fire and extended coverage  insurance covering all real
property  collateral  required hereby,  with replacement cost and mortgagee loss
payable  endorsements,  and such policies of insurance  against specific hazards
affecting any such real property as may be required by  governmental  regulation
or Bank.

         (d)  Appraisals.  Bank shall have  obtained,  at  Borrower's  cost,  an
appraisal of all real property  collateral required hereby, and all improvements
thereon,  issued by an appraiser  acceptable to Bank and in form,  substance and
reflecting values satisfactory to Bank, in its discretion.

         (e)  Title Insurance.  Bank shall have received an ALTA Policy of Title
Insurance,  with such endorsements as Bank may require,  issued by a company and
in form  and  substance  satisfactory  to Bank,  in such  amount  as Bank  shall
require, insuring Bank's lien on the real property collateral required hereby to
be of first  priority,  subject only to such exceptions as Bank shall approve in
its discretion, with all costs thereof to be paid by Borrower.

         2.   Conditions of Each Extension of Credit.  The obligation of Bank to
make each extension of credit  requested by Borrower  hereunder shall be subject
to the fulfillment to Bank's satisfaction of each of the following conditions:

         (a)  Compliance.  The representations  and warranties  contained herein
and in each of the other Loan  Documents  shall be true on and as of the date of
the signing of this letter and on the date of each  extension  of credit by Bank
pursuant  hereto,  with the same  effect  as  though  such  representations  and
warranties  had been made on and as of each such date, and on each such date, no
default  hereunder,  and no  condition,  event or act which  with the  giving of
notice or the  passage of time or both would  constitute  such a default,  shall
have occurred and be continuing or shall exist.

         (b)  Documentation.  Bank shall have received all additional  documents
which may be required in connection with such extension of credit.

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 7

V.       COVENANTS:

         Borrower covenants that so long Bank remains committed to extend credit
to Borrower pursuant hereto,  or any liabilities  (whether direct or contingent,
liquidated or  unliquidated) of Borrower to Bank under any of the Loan Documents
remain  outstanding,  and until payment in full of all  obligations  of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

         1.   Punctual Payment. Punctually pay all principal,  interest, fees or
other liabilities due under any of the Loan Documents at the times and place and
in the manner specified therein.

         2.   Accounting  Records.   Maintain  adequate  books  and  records  in
accordance with generally accepted accounting  principles  consistently applied,
and permit any representative of Bank, at any reasonable time, to inspect, audit
and examine such books and  records,  to make copies of the same and inspect the
properties of Borrower.

         3.   Financial  Statements.  Provide to Bank all of the  following,  in
form and detail satisfactory to Bank:

         (a)  not  later  than 95 days  after  and as of the end of each  fiscal
year, an audited financial statement of Borrower, prepared by a certified public
accountant  acceptable  to Bank, to include  balance  sheet,  income  statement,
statement of cash flows,  and a copy of  Borrower's  Form 10-K report filed with
the Securities and Exchange Commission;

         (b)  not  later  than 50 days  after  and as of the end of each  fiscal
quarter,  a copy of Borrower's  Form 10-Q report filed with the  Securities  and
Exchange Commission;

         (c)  from time to time such other  information  as Bank may  reasonably
request,   including  without  limitation,   copies  of  rent  rolls  and  other
information with respect to any real property collateral required hereby.

         4.   Compliance.   Preserve  and  maintain   all   licenses,   permits,
governmental  approvals,  rights,  privileges and  franchises  necessary for the
conduct  of its  business;  and  comply  with the  provisions  of all  documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws,  rules,  regulations and orders
of a governmental agency applicable to Borrower and/or its business.

         5.   Insurance.  Maintain and keep in force  insurance of the types and
in amounts customarily carried in lines of business similar to that of Borrower,
including but not limited to fire, extended coverage,  public liability,  flood,
property damage and workers' compensation,  with all such insurance carried with
companies and in amounts  satisfactory to Bank, and deliver to Bank from time to
time at Bank's request schedules setting forth all insurance then in effect.

         6.   Facilities.  Keep all properties useful or necessary to Borrower's
business  in good  repair and  condition,  and from time to time make  necessary
repairs,  renewals and  replacements  thereto so that such  properties  shall be
fully and efficiently preserved and maintained.

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 8

         7.   Taxes and Other  Liabilities.  Pay and discharge  when due any and
all  indebtedness,  obligations,  assessments and taxes,  both real or personal,
including without  limitation federal and state income taxes and state and local
property  taxes and  assessments,  except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction,  for eventual payment thereof in the
event Borrower is obligated to make such payment.

         8.   Litigation.  Promptly  give  notice  in  writing  to  Bank  of any
litigation  pending or  threatened  against  Borrower  with a claim in excess of
$100,000.00.

         9.   Financial  Condition.  Maintain Borrower's  financial condition as
follows using generally accepted accounting principles  consistently applied and
used  consistently  with prior  practices  (except to the extent modified by the
definitions herein):

         (a)  Current  Ratio  not  less  than  1.15 to 1.0 as of the end of each
fiscal quarter,  with "Current Ratio" defined as total current assets divided by
total current liabilities.

         (b)  EBITDA not less than $10,000,000.00 as of each fiscal quarter end,
determined on a trailing  4-quarter  basis  including  the current  quarter then
ended,  with  "EBITDA"  defined  defined as net profit  before tax plus interest
expense  (net  of  capitalized  interest  expense),   depreciation  expense  and
amortization expense.

         (c)  Funded Debt to EBITDA  Ratio as of the end of each fiscal  quarter
not more than 2.25 to 1.0, with "Funded Debt" defined as all borrowed funds plus
the amount of all capitalized lease obligations of Borrower.

         10.  Other Indebtedness.  Not create,  incur, assume or permit to exist
any indebtedness or liabilities  resulting from  borrowings,  loans or advances,
whether secured or unsecured, matured or unmatured,  liquidated or unliquidated,
joint or several,  except (a) the  liabilities  of Borrower to Bank, and (b) any
other  liabilities  of Borrower  existing as of, and disclosed to Bank prior to,
the date  hereof and (c) the  unsecured  liabilities  of  Borrower to sellers of
companies acquired by Borrower, the total of which shall not exceed an aggregate
of $3,500,000.00, without prior Bank approval.

         11.  Merger,  Consolidation,  Transfer  of  Assets.  Not merge  into or
consolidate with any other entity; nor make any substantial change in the nature
of  Borrower's  business as conducted as of the date hereof;  nor acquire all or
substantially all of the assets of any other entity in any transaction involving
a purchase price of $20,000,000.00 or more without the prior written approval of
Bank,  which  approval  shall not be  unreasonably  withheld;  nor sell,  lease,
transfer or otherwise  dispose of all or a  substantial  or material  portion of
Borrower's assets except in the ordinary course of its business.

         12.  Guaranties.  Not  guarantee or become liable in any way as surety,
endorser  (other  than as  endorser  of  negotiable  instruments  for deposit or
collection  in the  ordinary  course of  business),  accommodation  endorser  or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity,  except any of the
foregoing in favor of Bank.

         13.  Loans, Advances, Investments. Not make any loans or advances to or
investments in any person or entity, except any of the foregoing existing as of,
and  disclosed  to

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 9

Bank prior to, the date hereof,  or any loans or advances or investments made in
the normal  course,  such as short term advances to employees or  investments of
excess cash.

         14.  Pledge of Assets. Not mortgage, pledge, grant or permit to exist a
security  interest in, or lien upon, all or any portion of Borrower's assets now
owned or  hereafter  acquired,  except any of the  foregoing in favor of Bank or
which are existing as of, and  disclosed  to Bank in writing  prior to, the date
hereof,  and except security interests for the purchase or lease of assets up to
an aggregate principal amount of $25,000.00.

VI.      DEFAULT, REMEDIES:

         1.   Default,  Remedies. Upon the violation of any term or condition of
any of the Loan  Documents,  or upon the  occurrence  of any  default or defined
event of  default  under  any of the Loan  Documents:  (a) all  indebtedness  of
Borrower  under each of the Loan  Documents,  any term  thereof to the  contrary
notwithstanding,  shall at Bank's option and without  notice become  immediately
due and payable without presentment,  demand, protest or notice of dishonor, all
of which are expressly waived by Borrower;  (b) the obligation,  if any, of Bank
to extend any further credit under any of the Loan Documents  shall  immediately
cease and  terminate;  and (c) Bank shall have all rights,  powers and  remedies
available  under  each of the Loan  Documents,  or  accorded  by law,  including
without  limitation  the right to resort to any or all  security  for any of the
Credits and to  exercise  any or all of the rights of a  beneficiary  or secured
party pursuant to applicable law. All rights, powers and remedies of Bank may be
exercised at any time by Bank and from time to time after the  occurrence of any
such  breach or  default,  are  cumulative  and not  exclusive,  and shall be in
addition to any other rights, powers or remedies provided by law or equity.

         2.   No  Waiver.  No  delay,  failure  or  discontinuance  of  Bank  in
exercising  any right,  power or remedy  under any of the Loan  Documents  shall
affect or operate  as a waiver of such  right,  power or  remedy;  nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise  affect any other or further  exercise  thereof or the exercise of any
other right,  power or remedy.  Any waiver,  permit,  consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

VII.     MISCELLANEOUS:

         1.   Notices.  All  notices,  requests  and demands  which any party is
required or may desire to give to any other party  under any  provision  of this
letter must be in writing delivered to each party at its address first set forth
above,  or to such other address as any party may designate by written notice to
all other parties. Each such notice, request and demand shall be deemed given or
made as follows:  (a) if sent by hand delivery,  upon  delivery;  (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S.  mail,  first class and postage  prepaid;  and (c) if sent by telecopy,
upon receipt.

         2.   Costs,  Expenses and Attorneys'  Fees.  Borrower shall pay to Bank
immediately  upon demand the full  amount of all  payments,  advances,  charges,
costs and expenses,  including  reasonable  attorneys'  fees (to include outside
counsel fees and all allocated  costs of Bank's in-house  counsel),  expended or
incurred by Bank in connection  with (a) the negotiation

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 10

and  preparation of this letter and the other Loan Documents,  Bank's  continued
administration hereof and thereof, and the preparation of amendments and waivers
hereto and thereto,  (b) the  enforcement of Bank's rights and/or the collection
of any amounts which become due to Bank under any of the Loan Documents, and (c)
the  prosecution  or defense of any action in any way related to any of the Loan
Documents,  including  without  limitation,  any action for declaratory  relief,
whether incurred at the trial or appellate  level, in an arbitration  proceeding
or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding  (including without limitation,  any adversary proceeding,
contested  matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.

         3.   Successors,  Assignment.  This  letter  shall be binding  upon and
inure  to  the   benefit  of  the  heirs,   executors,   administrators,   legal
representatives,  successors and assigns of the parties;  provided however, that
Borrower may not assign or transfer its interest  hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant  participations  in all or any part of, or any interest in,  Bank's rights
and benefits under each of the Loan Documents.  In connection therewith Bank may
disclose all  documents  and  information  which Bank now has or  hereafter  may
acquire  relating  to any of  the  Credits,  Borrower  or its  business,  or any
collateral required hereunder.

         4.   Entire  Agreement;  Amendment.  This  letter  and the  other  Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to the Credits and supersede all prior negotiations, communications, discussions
and  correspondence  concerning the subject  matter  hereof.  This letter may be
amended or modified only in writing signed by each party hereto.

         5.   No Third Party Beneficiaries. This letter is made and entered into
for the sole  protection and benefit of the parties hereto and their  respective
permitted successors and assigns, and no other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim in
connection  with,  this letter or any other of the Loan Documents to which it is
not a party.

         6.   Severability of Provisions.  If any provision of this letter shall
be prohibited  by or invalid  under  applicable  law,  such  provision  shall be
ineffective  only  to the  extent  of such  prohibition  or  invalidity  without
invalidating the remainder of such provision or any remaining provisions of this
letter.

         7.   Governing  Law.  This letter shall be governed by and construed in
accordance with the laws of the State of Oregon.

         8.   Arbitration.

         (a)  Arbitration.  Upon the demand of any party,  any Dispute  shall be
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this letter. A "Dispute" shall mean any action, dispute, claim
or  controversy  of any kind,  whether in contract or tort,  statutory or common
law,  legal  or  equitable,  now  existing  or  hereafter  arising  under  or in
connection with, or in any way pertaining to, any of the Loan Documents,  or any
past, present or future extensions of credit and other activities,  transactions
or  obligations  of any kind related  directly or  indirectly to any of the Loan
Documents,  including  without  limitation,  any of  the  foregoing  arising  in
connection  with the  exercise of any  self-help,  ancillary  or other  remedies
pursuant  to any of the Loan  Documents.  Any party may by  summary  proceedings
bring an

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 11

action  in court to  compel  arbitration  of a  Dispute.  Any party who fails or
refuses to submit to  arbitration  following a lawful  demand by any other party
shall bear all costs and  expenses  incurred by such other  party in  compelling
arbitration of any Dispute.

         (b)  Governing Rules.  Arbitration proceedings shall be administered by
the American Arbitration  Association ("AAA") or such other administrator as the
parties  shall  mutually  agree  upon in  accordance  with  the  AAA  Commercial
Arbitration  Rules. All Disputes  submitted to arbitration  shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding  any  conflicting  choice  of law  provision  in any of the Loan
Documents.  The arbitration  shall be conducted at a location in Oregon selected
by the AAA or other  administrator.  If there is any  inconsistency  between the
terms hereof and any such rules, the terms and procedures set forth herein shall
control. All statutes of limitation applicable to any Dispute shall apply to any
arbitration  proceeding.  All discovery activities shall be expressly limited to
matters  directly  relevant to the Dispute being  arbitrated.  Judgment upon any
award  rendered  in  an   arbitration   may  be  entered  in  any  court  having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections  afforded to it under
12 U.S.C. Section 91 or any similar applicable state law.

         (c)  No Waiver;  Provisional  Remedies,  Self-Help and Foreclosure.  No
provision  hereof  shall  limit  the right of any  party to  exercise  self-help
remedies  such as setoff,  foreclosure  against or sale of any real or  personal
property collateral or security, or to obtain provisional or ancillary remedies,
including  without  limitation  injunctive  relief,  sequestration,  attachment,
garnishment  or the  appointment  of a  receiver,  from  a  court  of  competent
jurisdiction  before,  after or during the pendency of any  arbitration or other
proceeding.  The  exercise of any such  remedy  shall not waive the right of any
party to compel arbitration hereunder.

         (d)  Arbitrator Qualifications and Powers; Awards.  Arbitrators must be
active members of the Oregon State Bar or retired judges of the state or federal
judiciary of Oregon,  with  expertise in the  substantive  law applicable to the
subject matter of the Dispute.  Arbitrators are empowered to resolve Disputes by
summary  rulings in  response to motions  filed  prior to the final  arbitration
hearing.  Arbitrators  (i) shall  resolve all  Disputes in  accordance  with the
substantive law of the State of Oregon, (ii) may grant any remedy or relief that
a court of the State of Oregon  could order or grant within the scope hereof and
such  ancillary  relief as is necessary to make  effective any award,  and (iii)
shall  have the  power to award  recovery  of all  costs  and  fees,  to  impose
sanctions  and to take such  other  actions as they deem  necessary  to the same
extent a judge  could  pursuant  to the Federal  Rules of Civil  Procedure,  the
Oregon Rules of Civil  Procedure or other  applicable  law. Any Dispute in which
the amount in  controversy  is  $5,000,000  or less shall be decided by a single
arbitrator who shall not render an award of greater than  $5,000,000  (including
damages, costs, fees and expenses).  By submission to a single arbitrator,  each
party expressly waives any right or claim to recover more than  $5,000,000.  Any
Dispute in which the amount in controversy  exceeds  $5,000,000 shall be decided
by majority vote of a panel of three  arbitrators;  provided  however,  that all
three arbitrators must actively participate in all hearings and deliberations.

         (e)  Miscellaneous.  To the maximum  extent  practicable,  the AAA, the
arbitrators  and the parties  shall take all action  required  to  conclude  any
arbitration  proceeding  within 180 days of the filing of the  Dispute  with the
AAA. No arbitrator or other party to an arbitration  proceeding may disclose the
existence,  content or results thereof, except for disclosures of information by
a party  required in the ordinary  course of its business,  by applicable law or
regulation,  or to the extent  necessary to exercise any judicial  review rights
set forth herein.  If more than one

<PAGE>

Barrett Business Services, Inc.
May 31, 2000
Page 12

agreement for  arbitration  by or between the parties  potentially  applies to a
Dispute,  the arbitration  provision most directly related to the Loan Documents
or the subject matter of the Dispute shall control.  This arbitration  provision
shall survive termination,  amendment or expiration of any of the Loan Documents
or any relationship between the parties.

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

         Your  acknowledgment of this letter shall constitute  acceptance of the
foregoing  terms and  conditions.  Bank's  commitment  to extend  any  credit to
Borrower  pursuant to the terms of this letter shall terminate on June 30, 2000,
unless this letter is acknowledged by Borrower and returned to Bank on or before
that date.

                                        Sincerely,

                                        WELLS FARGO BANK,
                                         NATIONAL ASSOCIATION

                                        By: /s/ Julie Wilson
                                            ----------------------
                                            Julie Wilson
                                            Vice President

Acknowledged and accepted as of 6-1-00:

BARRETT BUSINESS SERVICES, INC.

By: /s/ Michael D. Mulholland
    -------------------------
    Michael D. Mulholland
    Vice President-Finance

<PAGE>

                         REVOLVING LINE OF CREDIT NOTE

$15,000,000.00                                                  Portland, Oregon
                                                                    May 31, 2000

        FOR, VALUE RECEIVED,  the undersigned  BARRETT BUSINESS  SERVICES,  INC.
("Borrower")  promises  to  pay to the  order  of  WELLS  FARGO  BANK,  NATIONAL
ASSOCIATION  ("Bank") at its office at 1300 S. W. Fifth Avenue,  T-13, Portland,
Oregon,  or at such other place as the holder  hereof may  designate,  in lawful
money of the United States of America and in immediately  available  funds,  the
principal sum of Fifteen Million Dollars ($15,000,000.00), or so much thereof as
may be advanced  thereon,  to be computed on each  advance  from the date of its
disbursement as set forth herein.

DEFINITIONS:

        As used herein,  the  following  terms shall have the meanings set forth
after each,  and any other term  defined in this Note shall have the meaning set
forth at the place defined:

        (a) "Business Day" means any day except a Saturday,  Sunday or any other
day on which  commercial  banks in Oregon are  authorized  or required by law to
close.

        (b) "Federal Funds Rate" means, for any period,  a fluctuating  interest
rate per annum equal for each day during such period to the weighted  average of
the rates on overnight  Federal funds  transactions  with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next  preceding  Business Day) by the
Federal  Reserve Bank of New York,  or, if such rate is not so published for any
day which is a Business Day, the average of the quotations of such rates on such
day received by Bank from three Federal  funds  brokers of  recognized  standing
selected by it.

        (c) "Fixed Rate Term" means a period  commencing  on a Business  Day and
continuing for one (1), two (2), or three (3) months, as designated by Borrower,
during which all or a portion of the outstanding  principal balance of this Note
bears interest determined in relation to LIBOR;  provided however, that no Fixed
Rate Term may be selected for a principal amount less than Five Hundred Thousand
Dollars  ($500,000.00);  and  provided  further,  that no Fixed  Rate Term shall
extend beyond the scheduled  maturity date hereof.  If any Fixed Rate Term would
end on a day which is not a  Business  Day,  then such  Fixed Rate Term shall be
extended to the next succeeding Business Day.

                                      -1-
<PAGE>

        (d) "LIBOR" means the rate per annum (rounded upward,  if necessary,  to
the nearest whole 1/8 of 1%) and determined pursuant to the following formula:

        LIBOR =                     Base LIBOR
                         -------------------------------
                         100% - LIBOR Reserve Percentage

        (i) "Base  LIBOR"  means the rate per annum  for  United  States  dollar
deposits  quoted  by  Bank as the  Inter-Bank  Market  Offered  Rate,  with  the
understanding  that such rate is quoted by Bank for the  purpose of  calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed  Rate  Term for  delivery  of funds on said date for a period of time
approximately  equal to the  number  of days in such  Fixed  Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank  Market  Offered Rate upon such offers or other market  indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including, but
not  limited  to,  the rate  offered  for U.S.  dollar  deposits  on the  London
Inter-Bank Market.

       (ii) "LIBOR Reserve  Percentage" means the reserve percentage  prescribed
by the Board of Governors of the Federal  Reserve  System (or any successor) for
"Eurocurrency  Liabilities"  (as defined in Regulation D of the Federal  Reserve
Board,  as  amended),  adjusted  by Bank for  expected  changes in such  reserve
percentage during the applicable Fixed Rate Term.

        (e) "Prime  Rate" means at any time the rate of interest  most  recently
announced  within  Bank at its  principal  office  as its Prime  Rate,  with the
understanding  that the Prime Rate is one of Bank's base rates and serves as the
basis upon which  effective  rates of interest  are  calculated  for those loans
making reference  thereto,  and is evidenced by the recording  thereof after its
announcement in such internal publication or publications as Bank may designate.

INTEREST:

        (a) Interest.  The outstanding principal balance of this Note shall bear
interest  (computed on the basis of a 360-day year,  actual days elapsed) either
(i) at a fluctuating  rate per annum equal to the Prime Rate in effect from time
to time,  (ii) at a  fluctuating  rate per  annum  one and  one-quarter  percent
(1.25%)  above the Federal Funds Rate in effect from time to time, or (iii) at a
fixed rate per annum determined by Bank to be one percent (1.00%) above LIBOR in
effect on the first day of the  applicable  Fixed Rate Term.  When  interest  is
determined in relation to the Prime Rate or Federal  Funds Rate,  each change in
the rate of interest  hereunder  shall  become  effective on the date each Prime
Rate or Federal Funds Rate change is announced within Bank. With respect to each
LIBOR selection hereunder, Bank is

                                      -2-
<PAGE>

hereby authorized to note the date,  principal  amount,  interest rate and Fixed
Rate Term  applicable  thereto and any payments made thereon on Bank's books and
records (either manually or by electronic entry) and/or on any schedule attached
to this Note,  which  notations shall be prima facie evidence of the accuracy of
the information noted.

        (b) Selection of Interest Rate Options.  At any time any portion of this
Note bears  interest  determined  in relation to LIBOR,  it may be  continued by
Borrower at the end of the Fixed Rate Term  applicable  thereto so that all or a
portion thereof bears interest  determined in relation to the Prime Rate, to the
Federal  Funds  Rate,  or to LIBOR  for a new  Fixed  Rate  Term  designated  by
Borrower.  At any time any  portion of this Note bears  interest  determined  in
relation to the Prime Rate or to the Federal  Funds Rate,  Borrower  may convert
all or a portion  thereof so that it bears  interest  determined  in relation to
LIBOR for a Fixed Rate Term  designated  by  Borrower.  At such time as Borrower
requests an advance  hereunder  or wishes to select a LIBOR  option for all or a
portion of the  outstanding  principal  balance  hereof,  and at the end of each
Fixed Rate Term,  Borrower shall give Bank notice  specifying:  (i) the interest
rate option selected by Borrower; (ii) the principal amount subject thereto; and
(iii) for each LIBOR  selection,  the length of the applicable  Fixed Rate Term.
Any such notice may be given by telephone so long as, with respect to each LIBOR
selection,  (A) Bank receives written  confirmation from Borrower not later than
three (3)  Business  Days after  such  telephone  notice is given,  and (B) such
notice is given to Bank prior to 10:00 a.m.,  California  time, on the first day
of the Fixed Rate Term.  For each LIBOR option  requested  hereunder,  Bank will
quote the  applicable  fixed  rate to  Borrower  at  approximately  10:00  a.m.,
California  time,  on the first day of the Fixed Rate Term. If Borrower does not
immediately  accept  the rate  quoted  by Bank,  any  subsequent  acceptance  by
Borrower shall be subject to a  redetermination  by Bank of the applicable fixed
rate; provided however,  that if Borrower fails to accept any such rate by 11:00
a.m.,  California  time, on the Business Day such  quotation is given,  then the
quoted  rate shall  expire and Bank shall have no  obligation  to permit a LIBOR
option to be selected on such day.  If no  specific  designation  of interest is
made at the time any advance is  requested  hereunder or at the end of any Fixed
Rate Term,  Borrower  shall be deemed to have made a Federal Funds Rate interest
selection for such advance or the principal amount to which such Fixed Rate Term
applied.

        (c)    Additional LIBOR Provisions.

        (i) If Bank at any time shall determine that for any reason adequate and
reasonable means do not exist for ascertaining  LIBOR,  then Bank shall promptly
give notice  thereof to Borrower.  If such notice is given and until such notice
has been  withdrawn  by Bank,  then (A) no new LIBOR  option may be  selected by
Borrower, and (B) any portion of the outstanding principal

                                      -3-
<PAGE>

balance hereof which bears interest determined in relation to LIBOR,  subsequent
to the end of the Fixed  Rate  Term  applicable  thereto,  shall  bear  interest
determined in relation to the Prime Rate.

       (ii) If any law, treaty, rule,  regulation or determination of a court or
governmental  authority  or  any  change  therein  or in the  interpretation  or
application  thereof  (each,  a "Change in Law") shall make it unlawful for Bank
(A) to make LIBOR options available hereunder, or (B) to maintain interest rates
based  on  LIBOR,  then in the  former  event,  any  obligation  of Bank to make
available such unlawful LIBOR options shall immediately be cancelled, and in the
latter event,  any such unlawful  LIBOR-based  interest  rates then  outstanding
shall be  converted,  at Bank's  option,  so that interest on the portion of the
outstanding  principal  balance subject thereto is determined in relation to the
Prime Rate;  provided  however,  that if any such Change in Law shall permit any
LIBOR-based interest rates to remain in effect until the expiration of the Fixed
Rate Term applicable  thereto,  then such permitted  LIBOR-based  interest rates
shall continue in effect until the expiration of such Fixed Rate Term.  Upon the
occurrence  of  any  of  the  foregoing  events,  Borrower  shall  pay  to  Bank
immediately  upon demand such amounts as may be necessary to compensate Bank for
any fines, fees,  charges,  penalties or other costs incurred or payable by Bank
as a result  thereof  and  which are  attributable  to any  LIBOR  options  made
available to Borrower  hereunder,  and any  reasonable  allocation  made by Bank
among its operations shall be conclusive and binding upon Borrower.

     (iii) If any  Change  in Law or  compliance  by Bank  with any  request  or
directive  (whether  or not  having the force of law) from any  central  bank or
other governmental authority shall:

        (A)    subject Bank to any tax, duty or other charge with respect to any
               LIBOR  options,  or change the basis of  taxation  of payments to
               Bank of  principal,  interest,  fees or any other amount  payable
               hereunder  (except  for changes in the rate of tax on the overall
               net income of Bank); or

        (B)    impose,  modify or hold applicable any reserve,  special deposit,
               compulsory  loan or similar  requirement  against assets held by,
               deposits or other  liabilities in or for the account of, advances
               or loans by, or any other  acquisition  of funds by any office of
               Bank; or

        (C)    impose on Bank any other condition;

and the  result  of any of the  foregoing  is to  increase  the  cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to reduce any
amount  receivable  by Bank in  connection  therewith,  then in any  such  case,
Borrower  shall pay to Bank  immediately  upon  demand  such  amounts  as may be
necessary

                                       -4-
<PAGE>

to compensate Bank for any additional  costs incurred by Bank and/or  reductions
in amounts  received by Bank which are  attributable  to such LIBOR options.  In
determining  which costs incurred by Bank and/or  reductions in amounts received
by Bank are  attributable  to any  LIBOR  options  made  available  to  Borrower
hereunder,  any reasonable allocation made by Bank among its operations shall be
conclusive and binding upon Borrower.

        (d) Payment of Interest.  Interest accrued on this Note shall be payable
on the first day of each month, commencing July 1, 2000.

        (e) Default Interest.  From and after the maturity date of this Note, or
such earlier date as all principal  owing  hereunder  becomes due and payable by
acceleration or otherwise,  the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year,  actual days elapsed)  equal to four percent (4%) above
the rate of interest from time to time applicable to this Note.

BORROWING AND REPAYMENT:

        (a) Borrowing and  Repayment.  Borrower may from time to time during the
term of this Note borrow,  partially or wholly repay its outstanding borrowings,
and reborrow,  subject to all of the  limitations,  terms and conditions of this
Note and of any document  executed in  connection  with or governing  this Note;
provided however,  that the total  outstanding  borrowings under this Note shall
not at any time exceed the principal  amount stated above.  The unpaid principal
balance  of this  obligation  at any time  shall be the total  amounts  advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for any Borrower,  which balance may be endorsed  hereon from time to time
by the holder.  The outstanding  principal balance of this Note shall be due and
payable in full on May 31, 2001.

        (b) Advances.  Advances hereunder,  to the total amount of the principal
sum stated  above,  may be made by the holder at the oral or written  request of
(i) William W. Sherertz, Jr. or Michael D. Mulholland, any one acting alone, who
are  authorized to request  advances and direct the  disposition of any advances
until  written  notice of the  revocation  of such  authority is received by the
holder at the office  designated  above,  or (ii) any  person,  with  respect to
advances deposited to the credit of any account of any Borrower with the holder,
which advances,  when so deposited,  shall be conclusively presumed to have been
made to or for the benefit of each Borrower  regardless of the fact that persons
other than those  authorized  to request  advances  may have  authority  to draw
against such account.  The holder shall have no obligation to determine  whether
any person requesting an advance is or has been authorized by any Borrower.

                                      -5-
<PAGE>

        (c)  Application  of  Payments.  Each payment made on this Note shall be
credited  first,  to any  interest  then  due  and  second,  to the  outstanding
principal  balance hereof.  All payments  credited to principal shall be applied
first,  to the outstanding  principal  balance of this Note which bears interest
determined in relation to the Prime Rate and/or  Federal Funds Rate, if any, and
second,  to the outstanding  principal balance of this Note which bears interest
determined in relation to LIBOR,  with such payments applied to the oldest Fixed
Rate Term first.

PREPAYMENT:

        (a) Prime Rate/Federal Funds Rate.  Borrower may prepay principal on any
portion of this Note which bears  interest  determined  in relation to the Prime
Rate or Federal Funds Rate at any time, in any amount and without penalty.

        (b) LIBOR.  Borrower  may prepay  principal  on any portion of this Note
which  bears  interest  determined  in  relation to LIBOR at any time and in the
minimum amount of Five Hundred Thousand Dollars ($500,000.00); provided however,
that if the outstanding  principal  balance of such portion of this Note is less
than said amount,  the minimum prepayment amount shall be the entire outstanding
principal  balance  thereof.  In consideration of Bank providing this prepayment
option to  Borrower,  or if any such  portion of this Note shall  become due and
payable  at any time  prior to the last day of the Fixed  Rate  Term  applicable
thereto by  acceleration  or otherwise,  Borrower shall pay to Bank  immediately
upon demand a fee which is the sum of the  discounted  monthly  differences  for
each month from the month of  prepayment  through  the month in which such Fixed
Rate Term matures, calculated as follows for each such month:

         (i)   Determine  the amount of interest  which would have  accrued each
               month on the amount  prepaid at the interest  rate  applicable to
               such amount had it remained outstanding until the last day of the
               Fixed Rate Term applicable thereto.

        (ii)   Subtract  from the amount  determined  in (i) above the amount of
               interest  which  would  have  accrued  for the same  month on the
               amount  prepaid for the remaining term of such Fixed Rate Term at
               LIBOR in effect on the date of prepayment  for new loans made for
               such term and in a principal amount equal to the amount prepaid.

       (iii)   If the  result  obtained  in (ii) for any month is  greater  than
               zero, discount that difference by LIBOR used in (ii) above.

Each  Borrower  acknowledges  that  prepayment of such amount may result in Bank
incurring  additional  costs,  expenses  and/or  liabilities,  and  that  it  is
difficult to ascertain the full

                                      -6-
<PAGE>

extent of such costs,  expenses and/or  liabilities.  Each Borrower,  therefore,
agrees to pay the  above-described  prepayment  fee and agrees  that said amount
represents  a  reasonable  estimate of the  prepayment  costs,  expenses  and/or
liabilities  of Bank. If Borrower  fails to pay any prepayment fee when due, the
amount of such  prepayment  fee shall  thereafter  bear interest until paid at a
rate per annum two percent (2%) above the Prime Rate in effect from time to time
(computed on the basis of a 360-day year,  actual days elapsed).  Each change in
the rate of interest on any such past due prepayment fee shall become  effective
on the date each Prime Rate change is announced within Bank.

EVENTS OF DEFAULT:

         The  occurrence of any of the following  shall  constitute an "Event of
 Default" under this Note:

        (a) The failure to pay any  principal,  interest,  fees or other charges
when due  hereunder or under any contract,  instrument  or document  executed in
connection with this Note.

        (b) The filing of a petition by or against any  Borrower,  any guarantor
of this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint  venturer  referred  to  herein  as a "Third  Party  Obligor")  under  any
provisions of the Bankruptcy  Reform Act, Title 11 of the United States Code, as
amended  or  recodified  from time to time,  or under any  similar  or other law
relating to bankruptcy, insolvency,  reorganization or other relief for debtors;
the  appointment of a receiver,  trustee,  custodian or liquidator of or for any
part of the assets or property  of any  Borrower  or Third  Party  Obligor;  any
Borrower or Third Party Obligor becomes  insolvent,  makes a general  assignment
for the benefit of creditors or is generally not paying its debts as they become
due; or any  attachment  or like levy on any  property of any  Borrower or Third
Party Obligor.

        (c)  The   dissolution  or  liquidation  of  any  Borrower  which  is  a
corporation, partnership, joint venture or other types of entity.

        (d) Any default in the payment or performance of any obligation,  or any
defined event of default,  under any  provisions of any contract,  instrument or
document  pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase  obligation,  or any other liability
of any kind to any person or entity,  including the holder;  provided,  however,
that any cure period applicable to such default has expired, and with respect to
a default  under any  obligation  to any person or entity  other than Bank,  the
amount of the debt or other liability in default exceeds $5,000,000.00.

                                      -7-
<PAGE>

        (e) Any  financial  statement  provided  by any  Borrower or Third Party
Obligor to Bank proves to be  incorrect,  false or  misleading  in any  material
respect.

        (f) Any sale or transfer of all or a substantial or material part of the
assets of any Borrower or Third Party Obligor other than in the ordinary  course
of its business.

        (g) Any violation or breach of any provision of, or any defined event of
default  under,  any  addendum  to this  Note or any loan  agreement,  guaranty,
security  agreement,  deed of trust,  mortgage  or other  document  executed  in
connection  with or securing this Note,  which,  if such  violation or breach is
curable,  is not cured  within  the  earlier  to occur of (i) 30 days  after the
occurrence thereof or (ii) any applicable cure period expressly provided in such
document.

MISCELLANEOUS:

        (a) Remedies. Upon the occurrence of any Event of Default, the holder of
this Note,  at the  holder's  option,  may  declare  all sums of  principal  and
interest  outstanding  hereunder  to be  immediately  due  and  payable  without
presentment,  demand,  notice of nonperformance,  notice of protest,  protest or
notice of dishonor all of which are expressly  waived by each Borrower,  and the
obligation,  if any, of the holder to extend any further credit  hereunder shall
immediately  cease  and  terminate.  Each  Borrower  shall  pay  to  the  holder
immediately  upon demand the full  amount of all  payments,  advances,  charges,
costs and expenses,  including  reasonable  attorneys'  fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel), expended
or incurred by the holder in  connection  with the  enforcement  of the holder's
rights and/or the collection of any amounts which become due to the holder under
this Note,  and the  prosecution  or defense of any action in any way related to
this Note,  including  without  limitation,  any action for declaratory  relief,
whether incurred at the trial or appellate  level, in an arbitration  proceeding
or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding  (including without limitation,  any adversary proceeding,
contested  matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.

        (b) Obligations Joint and Several. Should more than one person or entity
sign this Note as a Borrower,  the  obligations  of each such Borrower  shall be
joint and several.

        (c)  Governing  Law.  This Note shall be  governed by and  construed  in
accordance with the laws of the State of Oregon.

UNDER OREGON LAW, MOST  AGREEMENTS,  PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING  LOANS AND OTHER CREDIT  EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD

                                      -8-
<PAGE>

PURPOSES  OR SECURED  SOLELY BY THE  BORROWER'S  RESIDENCE  MUST BE IN  WRITING,
EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE ENFORCEABLE.

        IN WITNESS  WHEREOF,  the  undersigned  has executed this Note as of the
date first written above.

BARRETT BUSINESS SERVICES, INC.

By:  /s/ Michael D. Mulholland
     Michael D. Mulholland
     Vice President-Finance

                                      -9-

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