AGREEMENT FOR RESOLUTION
OF LAWSUIT ON PROMISSORY NOTE AND
COVENANT NOT TO EXECUTE ON JUDGMENT
FOR SIX MONTHS

I. PARTIES.

The parties to this Agreement for Resolution of Lawsuit on Promissory Note

and Covenant not to Execute on Judgment for Six Months (hereafter "this

Agreement") are Rod Welch, individually and doing business as Rod Welch Company

(hereafter "Welch"), on the one hand, and Reliance Surety Company and United

Pacific Insurance Company (collectively "Reliance"), on the other hand. The

parties' addresses are:

Rod Welch
440 Davis Court, #1602
San Francisco, CA 94111

Reliance Surety Company and
United Pacific Insurance Company
2505 South 320th Street
Federal Way, WA 98003

II. RECITALS.

2.1 Reliance brought suit against Welch for losses, costs and expenses

incurred by Reliance pursuant to an Agreement Concerning Repayment of Expenses

and Promissory Note ("Repayment Agreement") executed between the parties. The

Lawsuit is captioned United Pacific Insurance and Reliance Surety Company v.

Rod Welch, individually and doing business as Rod Welch Company, Case No.

305199 ("Lawsuit"). The Repayment Agreement arose from an Agreement of

Indemnity wherein Reliance executed on Welch's behalf, at Welch's request,

contract surety bonds in favor of the State of California ("the Bonds") in

connection with Welch's construction contract with the State for the Pier 11

Fender Reconstruction Project.

2.2 Reliance incurred losses, costs and expenses in the amount of

$527,154.88 by virtue of having executed the Bonds. Welch owes Reliance that

amount pursuant to the Indemnity Agreement including interest, which continued

to accrue at the legal rate of 10% per annum from the date of February 6, 1997.

At Welch's request, Reliance and Welch agreed in the Repayment Agreement to

forebear from pursuing its indemnity rights against him until February 6,

1997. Pursuant to the Repayment Agreement, Welch also owes Reliance attorneys'

fees and costs incurred by Reliance in the amount of $5,752.00, which continue

to accrue at the legal rate of 10% per annum.

2.3 Welch has consented to entry of default and default judgment in the

Lawsuit. In consideration for Welch’s consent to entry of default and default

judgment, Reliance agrees not to execute on the judgment for a period of six

months from the date of entry of judgment.

III. TERMS AND CONDITIONS.

3.1 Welch agrees that he will consent to entry of default and default

judgment in the Lawsuit.

3.2 Reliance agrees that it will not execute on any judgment entered

against Welch in this action for six months from the date of entry of judgment.

3.3 The parties agree that the terms, conditions and covenants of this

Agreement shall remain in full force and effect until such time as all

obligations of Welch to Reliance have been fully repaid and satisfied.

3.4 The parties hereto, and each of them, represent that they have full

power and authority to make and perform all of the obligations and undertakings

of this Agreement.

IV. MISCELLANEOUS PROVISIONS.

4.1 This Agreement and each and every other agreement with respect to

the obligations of the parties hereto shall be interpreted, construed and

enforced in accordance with and governed by the provisions and laws of the

State of California.

4.2 The parties hereto stipulate that they have had full opportunity to

consult counsel of their choice and that the terms and provisions of this

Agreement are fair and reasonable as of the time of the signing of this

Agreement.

4.3 It is further understood that all the covenants, agreements,

conditions and terms contained in this Agreement shall be binding upon, apply

and inure to the benefit of the successors and assigns of the respective

parties hereto.

4.4 Neither this Agreement nor any course of conduct of the parties

pursuant thereto shall be construed to establish rights of any party not a

party to this Agreement. Time is of the essence of this Agreement.

4.5 This Agreement represents the whole and complete agreement among

the parties and shall not be changed, modified or abridged, except by

subsequent written agreement executed by the parties hereto.

4.6 Should litigation between the parties ensue with regard to any of

their respective obligations under this Agreement, the prevailing party shall

be awarded its actual costs and attorneys' fees.

4.7 This Agreement may be executed in one or more counterparts, each of

which shall be an original as against any party who signed it, and all of which

shall constitute one and the same document.


RELIANCE SURETY COMPANY AND
UNITED PACIFIC INSURANCE COMPANY

DATED: ______________, 1999       By:    _______________________________

Its:    ________________________________


ROD WELCH, individually and d/b/a the ROD
WELCH COMPANY

DATED: ______________, 1999       By:    _______________________________