JENKON INTERNATIONAL INC
EXHIBIT 10.4
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>6
<FILENAME>ex-10_4.txt
<DESCRIPTION>EXHIBIT 10.4
<TEXT>

<PAGE>

                                                                    EXHIBIT 10.4

                                PLEDGE AGREEMENT


     THIS PLEDGE AGREEMENT (this "Agreement") is entered into as of June 2, 2000
by and between TRAUTMAN WASSERMAN & COMPANY, INCORPORATED ("Pledgor"), a
shareholder of JIA, Inc., a Washington corporation ("Borrower"), and JENKON
INTERNATIONAL, INC., a Washington corporation (the "Lender").

     WHEREAS, reference is hereby made to that certain Stock Purchase Agreement
(the "Stock Purchase Agreement"), dated as of April 6, 2000 and entered into by
and among the Lender, JIA, Inc., a Washington corporation ("Borrower"), Jenkon
International, Inc., a Delaware corporation ("Parent") and Summit V, Inc., a
Washington corporation (the "Company");

     WHEREAS, Lender owns 5,000 shares of common stock of the Company (the
"Shares"), and intends to sell the Shares to Borrower and Borrower intends to
purchase such Shares from Lender;

     WHEREAS, pursuant to the Stock Purchase Agreement, the aggregate purchase
price for the Shares is $1,175,000, $326,738 of which shall be delivered to
Lender by the Borrower in the form of that certain Promissory Note of even date
herewith (the "Loan") (the "Note");

     WHEREAS, Pledgor is the legal and beneficial owner of 200,000 shares of the
issued and outstanding shares of common stock of Parent evidenced by the
certificates set forth on Exhibit "A" attached hereto and made a part hereof
(the "Pledged Shares");

     WHEREAS, Pledgor is also a legal and beneficial owner of shares of legally
issued and outstanding shares of common stock of Borrower;

     WHEREAS, in order to induce Lender to enter into the Stock Purchase
Agreement and to accept the Note, and to make advances and otherwise extend
credit to Borrower thereunder, Pledgor has agreed to secure the payment and
performance of the Secured Obligations (as hereinafter defined); and

     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and in order to induce the Lender to make the Loan, the parties
hereto agree as follows:

     SECTION 1. GRANTS OF SECURITY. Pledgor hereby assigns, pledges and grants
to the Lender a first priority security interest in all of such Pledgor's right,
title and interest in and to the following (the "Collateral") to secure the
Secured Obligations (as defined in Section 2):


                                      -1-

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     (i) the Pledged Shares and the certificates representing the Pledged Shares
and any interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares; and

     (ii) all proceeds of the foregoing items described in the preceding clause
(i).

     SECTION 2. SECURED OBLIGATIONS. This Agreement secures, and the Collateral
is collateral security for, the prompt payment or performance in full when due,
whether upon demand, at stated maturity, by acceleration or otherwise, of: (a)
all obligations of Borrower in respect of the Note, whether for principal,
interest (including, without limitation, interest that, but for the filing of a
petition in bankruptcy with respect to Borrower, would accrue on such
obligations), fees, expenses or otherwise; and (b) all obligations of Borrower
or Pledgor, now or hereafter existing under this Agreement, the Stock Purchase
Agreement and the Note and any and all damages and claims (including any third
party claims) suffered by Lender which may result from any breach by Pledgor or
Borrower of, or any misrepresentation contained in this Agreement, the Stock
Purchase Agreement or the Note (all such combined obligations of both Pledgor
and Borrower are collectively referred to herein as the "Secured Obligations").

     SECTION 3. DELIVERY OF PLEDGED SHARES. All certificates or instruments
representing or evidencing the Pledged Shares shall be delivered to and held by
or on behalf of the Lender pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the
Lender. The Lender shall have the right, at any time in its discretion and
without notice to Pledgor, following the occurrence of an Event of Default (as
defined herein), to transfer to or to register in the name of the Lender or any
of its nominees any or all of the Pledged Shares.

     SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants
to the Lender that the following statements are true, correct and complete:

     (a) Pledgor is the legal and beneficial owner of the Collateral, free and
clear of any lien or security interest except for the security interest created
by this Agreement. Pledgor shall defend the Collateral against all claims and
demands of all persons at any time claiming any interest therein adverse to the
Lender;

     (b) Pledgor is the legal and beneficial stockholder of Borrower and, as
such, will benefit from the completion of sale of the Shares to Borrower;

     (c) Pledgor has full power, authority, and legal right to pledge the
Collateral pursuant to this Agreement;


                                      -2-
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     (d) The pledge and delivery of the Collateral to the Lender pursuant to
this Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment and performance of the Secured Obligations;

     (e) Except as already has been made or obtained, no consent of any other
party (including, without limitation, creditors of Pledgor) and no consent,
authorization, approval, or other action by, and no notice to or filing with any
governmental authority or regulatory body is required either (i) for the pledge
by Pledgor of the Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by Pledgor or (ii) for the perfection
of or exercise by the Lender of the rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement;

     (f) The pledge of the Pledged Shares does not violate Regulations T, U or X
of the Board of Governors of the Federal Reserve System; and

     (g) Except as permitted under this Agreement, the Pledgor at all times will
be the sole beneficial owner of the Pledged Shares.


     SECTION 5. FURTHER ASSURANCES. Pledgor agrees that at any time and from
time to time, at the expense of Pledgor, it will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Lender may request, in order to perfect and
protect any security interest granted hereby or to enable the Lender to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.

     SECTION 6. VOTING RIGHTS, DIVIDENDS, ETC.

     (a) So long as no Event of Default shall have occurred and be continuing:

          (i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement; PROVIDED, HOWEVER,
that Pledgor shall give the Lender at least five days' written notice of the
manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right;

          (ii) Pledgor shall be entitled to receive and retain any and all
dividends and other distributions paid in respect of the Collateral; PROVIDED,
HOWEVER, that any and all

               (A) dividends and other distributions paid or payable other than
in cash in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Collateral,


                                      -3-
<PAGE>

               (B) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus, and

               (C) cash paid, payable or otherwise distributed in redemption of,
or in exchange for, any Collateral,

shall be, and shall be forthwith delivered to the Lender to hold as,
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of the Lender, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to the Lender as Collateral in the same
form as so received (with any necessary endorsement); and

          (iii) the Lender shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies and other instruments as Pledgor may
reasonably request for the purpose of enabling Pledgor to exercise the voting
and other rights which it is entitled to exercise pursuant to subsection 6(a)(i)
and to receive the dividends and other distributions which it is authorized to
receive and retain pursuant to subsection 6(a)(ii).

     (b) Upon the occurrence and during the continuance of an Event of Default:

          (i) Upon written notice from the Lender to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to subsection 6(a)(i) shall cease,
and all such rights shall thereupon become vested in the Lender which shall
thereupon have the sole right to exercise such voting and other consensual
rights.

          (ii) All rights of Pledgor to receive the dividends and other
distributions which it would otherwise be authorized to receive and retain
pursuant to subsection 6(a)(ii) shall cease and all such rights shall thereupon
become vested in the Lender which shall thereupon have the sole right to receive
such dividends and other distributions and the right to hold such dividends and
other distributions as Collateral during the continuance of such Event of
Default. All dividends and other distributions which are received by Pledgor
contrary to the provisions of this subsection 6(b)(ii) shall be received in
trust for the benefit of the Lender, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to the Lender as Collateral in the same
form as so received (with any necessary endorsement).

          (iii) Pledgor shall execute and deliver (or cause to be executed and
delivered) to the Lender all such proxies and other instruments as the Lender
may reasonably request for the purpose of enabling the Lender to exercise the
voting and other rights which it is entitled to exercise pursuant to subsection
6(b)(i) and to receive the dividends and other distributions which it is
authorized to receive and retain pursuant to subsection 6(b)(ii).

     SECTION 7. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES. Pledgor agrees
that it will not (i) sell or otherwise dispose of, or grant any option with
respect to, any


                                      -4-
<PAGE>

Collateral, or (ii) create or permit to exist any lien or security interest upon
or with respect to any Collateral, except for the security interest under this
Agreement.

     SECTION 8. LENDER APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
appoints the Lender as Pledgor's attorney-in-fact, with full authority in the
place and stead of Pledgor and in the name of Pledgor or otherwise, from time to
time upon the occurrence and continuation of an Event of Default, in the
Lender's discretion to take any action and to execute any instrument which the
Lender may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:

          (i) to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same;

          (ii) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for money due and to become due under or in
respect of any of the Collateral;

          (iii) to file any claims or take any action or institute any
proceedings which the Lender may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the Lender with
respect to any of the Collateral; and

          (iv) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though the Lender were the absolute owner thereof for all purposes, and to
do, at the Lender's option and Pledgor's expense, at any time, and from time to
time, all acts that the Lender deems necessary to protect, preserve or realize
upon the Collateral and the Lender's security interest therein, in order to
effect the intent of this Agreement, all as full and effectively as Pledgor
might do.

This appointment as attorney-in-fact is coupled with an interest and is
irrevocable. In performing its functions and duties under this Agreement, the
Lender has not assumed and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for Pledgor.

     SECTION 9. LENDER MAY PERFORM. If Pledgor fails to perform any agreement
contained herein, the Lender may itself perform, or cause performance of, such
agreement, and the expenses of the Lender incurred in connection therewith shall
be payable by Pledgor under Section 14(b).

     SECTION 10. THE LENDER'S DUTIES AND LIABILITIES.

     (a) The powers conferred on the Lender hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. The Lender shall be deemed to have exercised reasonable care in the
custody and preservation


                                      -5-
<PAGE>

of the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Lender accords its own property, it being
understood that the Lender shall have no responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Collateral, whether or not the Lender has or is
deemed to have knowledge of such matters, or (ii) taking any necessary steps to
assert rights against any parties with respect to any Collateral.

     (b) The Lender shall not be liable to Pledgor (i) for any loss or damage
sustained by Pledgor or (ii) for any loss, damage, depreciation or other
diminution in the value of any of the Collateral that may occur as a result of,
in connection with or that is in any way related to (x) any exercise by the
Lender of any right or remedy under this Agreement or (y) any other act or
failure to act of the Lender, except to the extent that the same shall be
determined by a judgment of a court of competent jurisdiction, that is final and
not subject to review on appeal, to be the result of acts or omissions on the
part of the Lender constituting gross negligence or willful misconduct.

     SECTION 11. EVENTS OF DEFAULT; REMEDIES UPON DEFAULT; DECISIONS RELATING TO
EXERCISE OF REMEDIES.

     11.1 Any one or more of the following events shall constitute an Event of
Default by Pledgor under this Agreement:

          (a) FAILURE TO PAY OBLIGATIONS. If Pledgor fails to pay when due and
payable or when declared due and payable, all or any portion of the Secured
Obligations owing to Lender (whether for principal, interest, taxes,
reimbursement of expenses, or otherwise);

          (b) FAILURE TO PERFORM. If Pledgor fails to perform, keep or observe
any other term, provision, condition, covenant, agreement, warranty or
representation contained in this Agreement, or any other present or future
agreement between Pledgor and Lender, and such failure continues for five (5)
days following written notice from the Lender to Pledgor;

          (c) VOLUNTARY INSOLVENCY PROCEEDING. If Pledgor commences any
Insolvency Proceeding (as defined below); and

          (d) INVOLUNTARY INSOLVENCY PROCEEDING. If any Insolvency Proceeding is
commenced against Pledgor and which is not dismissed within sixty (60) days of
the date of filing.


     11.2 As used herein the term "Insolvency Proceeding" means and includes any
proceeding commenced by or against any person or entity under any provision of
the federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency law,


                                      -6-
<PAGE>

including, but not limited to, assignments for the benefit of creditors, formal
or informal moratoriums, compositions or extensions generally with its
creditors.

     11.3 If an Event of Default shall have occurred and be continuing:

          (a) the Lender may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the Uniform
Commercial Code (the "UCC") in effect in the State of Washington at that time;

          (b) the Lender may transfer all or any part of the Collateral into the
Lender's name or the name of its nominee or nominees;

          (c) the Lender may give all consents, waivers and ratifications in
respect of the Collateral and otherwise act with respect thereto as though it
were a party thereto or outright owner thereof;

          (d) the Lender may settle, adjust, compromise and arrange all
accounts, controversies, questions, claims and demands whatsoever in relation to
all or any part of the Collateral;

          (e) the Lender may, in respect of the Collateral, execute all such
contracts, agreements, deeds, documents and instruments; bring, defend and
abandon all such actions, suits and proceedings; and take all actions in
relation to all or any part of the Collateral as the Lender in its absolute
discretion may determine;

          (f)       (i) The Lender may without notice (except as specified
below), sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange, broker's board or at any of the Lender's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as the Lender may
deem commercially reasonable, irrespective of the impact of any such sales on
the market price of the Collateral. To the extent permitted by law, the Lender
may be the purchaser of any or all of the Collateral at any such public or
private sale. Pledgor agrees that, to the extent notice of sale shall be
required by law, at least five (5) days' notice to Pledgor of the time and place
of any public sale or the time after which a private sale is to be made shall
constitute reasonable notification. The Lender shall not be obligated to make
any sale of the Collateral regardless of notice of sale having been given. The
Lender may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned;

                    (ii) Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and applicable state securities laws, the Lender
may be compelled, with respect to any sale of all or any part of the Collateral
conducted without prior registration or


                                      -7-
<PAGE>

qualification of such Collateral under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to the distribution or resale thereof, and such purchasers may have
to be limited in number to possibly one purchaser and any purchaser must be a
sophisticated investor able to fend for himself. Pledgor acknowledges that any
such private sales may be at prices and on terms less favorable to the Lender
than those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such
circumstances, Pledgor agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Lender shall have no
obligation to request the Parent to engage in public sales and no obligation to
delay the sale of any Collateral for the period of time necessary to permit the
Parent to register it for a form of public sale requiring registration under the
Securities Act or under applicable state securities laws. The Pledged Shares
constitute or upon foreclosure may constitute "restricted securities" as defined
in Rule 144 promulgated by the Securities and Exchange Commission under the
Securities Act and may be subject to transfer restrictions under the Securities
Act;

          (g) The Lender may appoint managers, sub-agents, officers and servants
for any of the purposes mentioned in the foregoing provisions of this Section 11
and to dismiss the same, all as the Lender in its absolute discretion may
determine; and


          (h) The Lender may generally take all such other action as the Lender
in its absolute discretion may determine to be incidental or conducive to any of
the matters or powers mentioned in the foregoing provisions of this Section 11
and which the Lender may or can do lawfully.

     SECTION 12. REMEDIES CUMULATIVE. Each and every right, power and remedy
hereby specifically given to the Lender shall be in addition to every other
right, power and remedy specifically given under this Agreement, the Stock
Purchase Agreement or the Note or now or hereafter existing at law or in equity,
or by statute, and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time or
simultaneously and as often and in such order as may be deemed expedient by the
Lender. All such rights, powers and remedies shall be cumulative, and the
exercise or the beginning of exercise of one shall not be deemed a waiver of the
right to exercise of any other or others. No delay or omission of the Lender in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Secured Obligations shall impair any such right, power or remedy or
shall be construed to be a waiver of any default or Event of Default or an
acquiescence therein.

     SECTION 13. APPLICATION OF PROCEEDS. After and during the continuance of an
Event of Default, any cash held by the Lender as Collateral and all cash
proceeds received by the Lender (all such cash being "Proceeds") in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral pursuant to the exercise by the Lender of its remedies as a secured
creditor as provided in Section 11 of this Agreement shall promptly be applied
by the Lender from time to time as follows:


                                      -8-
<PAGE>

          FIRST: To the payment of the costs and expenses of such sale,
     collection or other realization, and all expenses, liabilities and advances
     made or incurred by the Lender in connection therewith, in accordance with
     Section 14(b);

          SECOND: After payment in full of the amounts specified in the
     preceding subparagraph, to the payment of the Secured Obligations to the
     Lender; and

          THIRD: After payment in full of the amounts specified in the preceding
     subparagraphs, and any other amount required by any provision of law, to
     Pledgor, or its heirs, representatives, successors or assigns, or to
     whomever may be lawfully entitled to receive the same or as a court of
     competent jurisdiction may direct, of any surplus then remaining from such
     Proceeds.

All applications of Proceeds to the Secured Obligations shall be applied to the
payment of interest before application to the payment of principal.

     SECTION 14. INDEMNITY AND EXPENSES.

     (a) Pledgor agrees to indemnify the Lender from and against any and all
claims, losses and liabilities growing out of or resulting from Pledgor's breach
of any term hereof or any misrepresentation made hereunder or in connection with
this Agreement (including, without limitation, enforcement of this Agreement),
except claims, losses or liabilities resulting from the Lender's gross
negligence or willful misconduct. This provision shall remain in effect
following payment of the Secured Obligations.

     (b) Pledgor will upon demand pay to the Lender the amount of
any and all of the Lender's reasonable out-of-pocket expenses, including fees
and disbursements of its counsel, that the Lender may incur in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of the
Lender hereunder or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof.

     SECTION 15. AMENDMENTS, ETC. No amendment, modification, termination or
waiver of any provision of this Agreement or consent to any departure by Pledgor
herefrom shall in any event be effective without the written concurrence of the
Lender. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

     SECTION 16. ADDRESSES FOR NOTICES. Any communications between the parties
hereto or notices or requests provided herein to be given may be given by
mailing the same, postage prepaid, or by facsimile transmission to each party at
its address set forth on the signature pages hereof or to such other addresses
as each party may in writing hereafter


                                      -9-

<PAGE>

indicate. Any notice, request or demand to or upon the Lender or Pledgor shall
not be effective until received (provided, in the case of facsimile
transmission, that receipt is confirmed).

     SECTION 17. EFFECT OF DISPOSITION OF COLLATERAL. Any sale of, or the grant
of options to purchase, or any other realization upon, any Collateral by Lender
hereunder shall operate to divest all right, title, interest, claim and demand,
either at law or in equity, of Pledgor therein and thereto, and shall be a
perpetual bar both at law and in equity against Pledgor and against any and all
persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through and under Pledgor.

     SECTION 18. CONTINUING SECURITY INTEREST; TRANSFER OF SECURED OBLIGATIONS;
TERMINATION. This Agreement shall create a continuing security interest in the
Collateral and shall:


     (i) be binding upon Pledgor, its heirs, representatives, successors and
assigns;

     (ii) inure, together with the rights and remedies of the Lender, to the
benefit of the Lender and its successors, transferees and assigns; and

     (iii) without limiting the generality of the foregoing clause (ii), the
Lender may assign or otherwise transfer all or a portion of its interests and
rights under the Note to any other person or entity, and such other person or
entity shall thereupon become vested with all the benefits in respect thereof
granted to the Lender herein or otherwise.

     SECTION 19. HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.

     SECTION 20. SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

     SECTION 21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.

     SECTION 22. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF PLEDGOR AND THE LENDER AND ALL OTHER ASPECTS HEREOF SHALL BE
DEEMED TO BE MADE UNDER, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON, EXCEPT AS
REQUIRED BY


                                      -10-
<PAGE>

MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF WASHINGTON. Unless otherwise defined herein, or in the Note,
terms defined in Divisions 8 and 9 of the UCC are used herein as therein
defined.

     SECTION 23. INTERPRETATION. Wherever in this Agreement the context may
require, the masculine gender shall be deemed to include the feminine and/or
neuter, and the singular to include the plural.

     SECTION 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF TRIAL
BY JURY. Pledgor hereby irrevocably submits to the jurisdiction of any
Washington State or Federal court sitting in the Central District of Washington
in any action or proceeding arising out of or relating to this Agreement, and
Pledgor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Washington State or Federal
court. Pledgor hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. Pledgor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Section 24 shall affect the right of the Lender to bring any
action or proceeding against Pledgor or its property in the courts of any other
jurisdiction. IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS, EACH PARTY
HERETO WAIVES TRIAL BY JURY.

     SECTION 25. SECURITY INTEREST ABSOLUTE. All rights of the Lender and
security interests hereunder, and all obligations of Pledgor hereunder, shall be
absolute and unconditional irrespective of:

     (i) any lack of validity or enforceability of the Note or any other
agreement or instrument relating thereto;

     (ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Secured Obligations, or any other amendment or waiver
of or any consent to any departure from the Note or any other related document;

     (iii) any exchange, release or non-perfection of any other collateral, or
any release or amendment or waiver of or consent to any departure from any
guaranty for all or any of the Secured Obligations; or

     (iv) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Pledgor.

     SECTION 26. PLEDGOR REMAINS LIABLE. Anything herein to the
contrary notwithstanding, (i) Pledgor shall remain liable under the contracts
and agreements included in


                                      -11-
<PAGE>

or relating to the Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by the Lender of any of the rights
hereunder shall not release Pledgor from any of its duties or obligations under
the contracts and agreements included in or relating to the Collateral and (iii)
the Lender shall not have any obligation or liability under the contracts and
agreements included in or relating to the Collateral by reason of this
Agreement, nor shall the Lender be obligated to perform any of the obligations
or duties of Pledgor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.

     SECTION 27. SURETY WAIVERS.

     (a) Except to the extent otherwise expressly restricted or prohibited
pursuant either the Stock Purchase Agreement or the Note, at any time and in any
manner, upon such terms and at such times as it considers best and with or
without notice to Pledgor, Lender may alter, compromise, accelerate, extend, or
change the time or manner for payment of the indebtedness, increase or reduce
the rate of interest thereon, release or add any one or more obligors,
guarantors, endorsers or borrower, accept additional or substituted security
therefor, or release or subordinate any security therefor, without in any way
affecting the security interest of this Agreement or any covenant of Pledgor.

     (b) Pledgor waives any right to require Lender to proceed against the
Borrower or any other person, firm or corporation at any time or to pursue any
other remedy in its power, and Pledgor agrees that Lender shall not be obligated
to resort to any other security, with any priority, in any particular order, or
at all, even if such action, or lack thereof, destroys, alters or otherwise
impairs subrogation rights of Pledgor or the rights of Pledgor to proceed
against Borrower for reimbursement, or both.

     (c) Pledgor waives and agrees not to assert or take advantage of: (i) any
defense that may arise by reason of the incapacity, lack of authority,
insolvency, suspension or dissolution of Borrower or any other person, or the
failure of Lender to file or enforce a claim against the estate (either in
administration, bankruptcy or other proceedings) of Borrower or any other
person; or (ii) any defense or right based upon election of remedies by Lender,
including, without limitation, an election to proceed by nonjudicial rather than
judicial foreclosure, even if such election destroys, alters or otherwise
impairs subrogation rights of Pledgor or the right of Pledgor to proceed against
Borrower or any other person for reimbursement, or both.

     (d) Pledgor, by execution hereof, represents to Lender that the
relationship between Pledgor and Borrower is such that Pledgor has access to all
relevant facts and information concerning the debt and Borrower and that Lender
can rely upon Pledgor having such access. Pledgor waives and agrees not to
assert any duty on the part of Lender to disclose to Pledgor any facts that
Lender may now or hereafter know about the Borrower, regardless of whether
Lender has reason to believe that any such facts materially increase the risk
beyond that which Pledgor intends to assume or has reason to believe that such
facts are unknown to Pledgor or has a reasonable opportunity to communicate such
facts to Pledgor. Pledgor is fully


                                      -12-
<PAGE>

responsible for being and keeping informed of the financial condition and
operations of Borrower and all circumstances bearing on the risk of nonpayment
of any indebtedness hereby secured.

     (e) Pledgor waives demand, protest and notices of any kind, including,
without limiting the generality of the foregoing, notice of the existence,
creation or incurring of new or additional indebtedness or of any action or
non-action on the part of the Borrower, Lender, any endorser, any creditor of
Borrower or Pledgor under this or any other instrument, or any other person
whosoever, in connection with any obligation or evidence of indebtedness held by
Lender as collateral or in connection with any indebtedness secured hereby.

     (f) Until all Secured Obligations of Borrower to Lender under the Stock
Purchase Agreement and the Note have been paid in full, Pledgor waives the right
of subrogation and waives any right to enforce any remedy which Lender now has
or may hereafter have against Borrower and any benefit of, and any right to
participate in, any security now or hereafter held by Lender.

     (g) With or without notice to Pledgor, Lender, in its sole discretion, at
any time and from time to time, in such manner and upon such terms as it
considers reasonable, may apply any and all payments or recoveries from any
security, in such manner, order and priority as Lender elects, to any
indebtedness of Borrower to Lender, whether or not such indebtedness is secured
hereby or is otherwise secured or is due at the time of such application.

     (h) No exercise or nonexercise of Lender of any right hereby given it and
no dealing by Lender with Borrower or any other person shall in any way affect
any of the Secured Obligations of Pledgor hereunder or give Pledgor any recourse
against Lender.

     (i) Notwithstanding that Pledgor and Borrower may have entered into a
separate agreement relating to their rights and duties with each other, no
right, remedy or provision thereof shall be binding upon or affect or delay
Lender's rights or remedies under this Agreement or by operation of law.

     (j) Pledgor understands that the exercise by Lender of certain rights and
remedies contained in the Stock Purchase Agreement and the Note may affect or
eliminate Lender's right to seek a money judgment against Borrower and,
therefore, Pledgor's right of subrogation to seek a money judgment against
Borrower, and that Pledgor, upon completion of a foreclosure of this Agreement
by Lender may therefore succeed to a partially or totally non-reimbursable
liability on the part of Borrower. Nevertheless, Pledgor hereby authorizes and
empowers Lender, at its sole option, without notice or and without affecting the
validity or enforceability of this Agreement, as herein modified, to exercise,
in its sole discretion, any and all rights and remedies, or any combination
thereof, which may be available to it, including the right to foreclose this
Agreement by nonjudicial sale, subject to any restrictions contained in the
Stock Purchase Agreements or the Note.


                                      -13-
<PAGE>

     Pledgor acknowledges that Pledgor may have certain rights under applicable
law which, if not waived by Pledgor, might provide Pledgor with defenses against
Pledgor's liability under this Agreement. So long as any Obligation remains
outstanding under the Stock Purchase Agreement or the Note, Pledgor further
waives all rights and defenses that are or may become available to Pledgor.

     SECTION 28. FACSIMILE EXECUTION. Execution of this Agreement shall be
deemed binding upon the party executing this Agreement notwithstanding that
delivery of the executed document may be by facsimile transmission. Any party
shall be entitled to rely on a faxed execution copy of this Agreement with the
same force and effect as if an originally inked execution copy were delivered.
Inked original documents shall be delivered to the other parties by Federal
Express mail within one business day of the facsimile transmission.


                                      -14-

<PAGE>


     IN WITNESS WHEREOF, Pledgor and the Lender have caused this Agreement to be
duly executed and delivered as of the date first above written.

PLEDGOR:                                  LENDER:

TRAUTMAN WASSERMAN                        JENKON INTERNATIONAL, INC.,
& COMPANY, INCORPORATED                   a Washington corporation

By:  __________________________           By:  ___________________________
Name:  ________________________           Name:  _________________________
Title:  _______________________           Title:  ________________________


Notice Address for Pledgor:               Notice Address:


_______________________________           7600 NE 41st Street
_______________________________           Suite 300
_______________________________           Vancouver, WA 98662
_______________________________           Fax No.:  (360) 256-9623
_______________________________           Attention:  David Edwards


with a copy to:                           with a copy to:


Perkins Coie LLP                          Jeffer, Mangels, Butler & Marmaro LLP
1211 SW Fifth Ave.                        2121 Avenue of the Stars
Suite 1500                                Tenth Floor
Portland, OR 97204                        Los Angeles, California  90067
Fax No.:  (503) 727-2000                  Fax No.:  (310) 203-0567
Attention:  Patrick J. Simpson, Esq.      Attention:  Robert Steinberg, Esq.


                                      -15-

<PAGE>


                                   EXHIBIT "A"

                               TO PLEDGE AGREEMENT



      CERTIFICATE NOS.                                     # OF SHARE



</TEXT>
</DOCUMENT>
