PROMISSORY NOTE




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Borrower:  Timberline Software Corporation   Lender:Pacific One Bank
           9600 S.W. Nimbus Avenue                  P.O. Box 40108
           Beaverton, Oregon 97008                  Portland, Oregon  97240-0108
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Principal Amount: $9,750,000.00 Initial Rate:8.5% Date of Note:December 1, 1997


PROMISE TO PAY. Timberline Software Corporation  ("Borrower") promises to pay to
Pacific One Bank  ("Lender"),  or order, in lawful money of the United States of
America,  the principal  amount of Nine Million Seven Hundred Fifty Thousand and
00/100 Dollars  ($9,750,000.00) or so much as may be outstanding,  together with
interest on each of the unpaid  outstanding  principal balances from the date of
disbursement until paid in full.

PAYMENT.  Borrower will pay this loan in accordance  with the following  payment
schedule:

     A.   Interim Construction Loan
          -------------------------

          Borrower shall make seventeen (17)  consecutive  monthly interest only
          payments,  beginning  December  1, 1997 and on that day for each month
          thereafter,  with interest  calculated on the unpaid principal balance
          at the  Pacific  One Bank  Prime  Rate  described  below,  and a final
          payment of principal  and  interest  due on May 1, 1999 (the  "Interim
          Construction  Loan"). This final payment will be for all principal and
          accrued interest not yet paid,  together with any other unpaid amounts
          under this Note.  The  monthly  payment  amount  will change with each
          change in the interest  rate.  The interest rate will be adjusted with
          each change in the Pacific One Bank Prime Rate.

          Borrower  shall be entitled to one (1) six (6) month  extension of the
          final payment due date on this Interim Construction Loan, provided all
          of the following  conditions  are  satisfied:  (1) Before May 1, 1999,
          Borrower  shall  have  delivered  to  Lender a notice  in  writing  of
          Borrower's  intent to exercise said extension  option (the  "Notice");
          (2)  Borrower  shall have  delivered to Lender the sum of Ten Thousand
          and  00/100  Dollars  ($10,000.00)  for the  extension  option,  which
          payment must  accompany  the Notice;  (3) No default shall exist under
          this  Note,  or any  other  agreement  between  Lender  and  Borrower,
          including  but  not  limited  to  the   Construction   Loan  Agreement
          ("Agreement"), Deed of Trust, Commercial Security Agreement, Hazardous
          Waste Warranty and Indemnification  Agreement, and Assignment of Rents
          executed in connection with this Note; and (4) Borrower shall continue
          to timely make monthly interest only payments on the first day of each
          month  during  the  extension  period,  with a  final  payment  of all
          principal and interest due at the expiration of the extension period.

     B.   Conversion to Term Loan
          -----------------------

          Provided  all of the  following  conditions  are  satisfied:  (a)  all
          conditions  and  covenants  set  forth in the  Agreement  between  the
          parties  hereto are satisfied and the Project (as that term is defined
          in the  Agreement) is fully  completed and accepted by Lender no later
          than May 1,  1999  (as  such  date  may be  extended  pursuant  to any
          exercised  extension  option as provided for above);  (b) Borrower has
          paid a Term Loan fee in full equal to one-half  percent (0.50%) of the
          Note  balance at the time of  conversion;  and (c)  Borrower is not in
          default under this Note, the Agreement or any other agreement  between
          the Lender and  Borrower;  then Lender  shall  convert the balance due
          under the  Interim  Construction  Loan but no more  than Nine  Million

<PAGE>

          Seven Hundred Fifty Thousand and 00/100 Dollars ($9,750,000.00) into a
          term  loan  (the  "Term  Loan").  Borrower  shall pay the Term Loan by
          making one hundred  nineteen  (119) monthly  payments of principal and
          interest  commencing  the first day of the first full month  following
          the  conversion  of the Interim  Construction  Loan into the Term Loan
          (the  "Conversion  Date"),  with  interest  calculated  on the  unpaid
          principal  balance from the Conversion Date at an interest rate of one
          hundred sixty-six bases points (T-bill + 1.66%) over the Treasury Bill
          rate  described  below,  and a final payment of principal and interest
          due ten (10) years from the Conversion  Date.  This final payment will
          be for all principal and accrued interest not yet paid,  together with
          any other unpaid amounts under this Note.  The monthly  payment amount
          will change with each  adjustment in the interest  rate,  based on the
          Note  amount   outstanding,   remaining   amortization   period  of  a
          twenty-five  (25)  year  amortization   schedule  (which  amortization
          schedule  commences on the  Conversion  Date),  and interest rate. The
          interest  rate for this Term Loan will be adjusted  on the  Conversion
          Date and on the fifth anniversary of the Conversion Date.

Interest on this Note is computed on a 365/365 simple interest  basis;  that is,
by applying the ratio of the annual  interest  rate over the number of days in a
year, times the outstanding  principal balance,  times the actual number of days
the  principal  balance is  outstanding.  Borrower  will pay Lender at  Lender's
address  shown above or at such other place as Lender may  designate in writing.
Unless otherwise agreed or required by applicable law,  payments will be applied
first to accrued unpaid interest,  then to any unpaid  collection costs and late
charges, and any remaining amount to principal.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent  index which is Pacific One Bank
Prime Rate as to the  Interim  Construction  Loan,  and the index as to the Term
Loan, if  applicable,  is the weekly  average  yield on United  States  Treasury
securities ("Treasury Bills") adjusted to a constant maturity of five (5) years,
as made available by the Federal  Reserve Board (referred to collectively as the
"Index") most recent to the Index  adjustment date. The Index is not necessarily
the lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan,  Lender may  designate  a  substitute  index after
notice to  Borrower.  Lender  will tell  Borrower  the  current  Index rate upon
Borrower's  request.  Borrower  understands  that Lender may make loans based on
other  rates as well.  The  interest  rate or rates to be  applied to the unpaid
principal  balance of this Note will be the rate or rates set forth above in the
"Payment" section. Whenever increases occur in the interest rate, Lender, at its
option, may do one or both of the following: (a) increase Borrower's payments to
ensure Borrower's loan will pay off by its original final maturity date, and (b)
increase Borrower's payments to cover accruing interest.

PREPAYMENT PENALTY. During the Interim Construction Loan term only, Borrower may
pay without  penalty all or a portion of the amount owed earlier than it is due.
Borrower  shall pay a prepayment  premium equal to three  percent  (3.0%) of the
outstanding  note balance at the time of prepayment if prepayment  occurs during
the first year of the Term Loan and if the source of the  prepayment  funds is a
loan or loans from another lending  institution or institutions.  Borrower shall
pay a prepayment  premium equal to two percent  (2.0%) of the  outstanding  note
balance at the time of prepayment if prepayment occurs during the second year of
the Term Loan and if the source of the prepayment  funds is a loan or loans from
another  lending  institution or  institutions.  Borrower shall pay a prepayment
premium equal to one percent (1.0%) of the outstanding  note balance at the time
of prepayment if prepayment occurs after the second year of the Term Loan and if
the  source of the  prepayment  funds is a loan or loans  from  another  lending
institution  or  institutions.  For the  purposes  of this  provision,  "lending
institution"  shall mean any entity that loans money in the  ordinary  course of
business.  Early  payments  will not,  unless  agreed  to by Lender in  writing,
relieve Borrower of Borrower's obligation to continue to make payments under the
payment  schedule.  Rather,  they will reduce the principal  balance due and may
result in Borrower's making fewer payments.

LATE  CHARGE:  If a payment  is 15 days or more late,  Borrower  will be charged
5.000% of the regularly scheduled payment.

DEFAULT.  Borrower  will be in  default  if any of the  following  happens:  (a)
Borrower  fails to make  any  payment  within  ten (10)  days of when  due.  (b)
Borrower  breaks any promise  Borrower has made to Lender,  or Borrower fails to
perform promptly at the time and strictly in the manner provided in this Note or

<PAGE>

any agreement  related to this Note, or in any other  agreement or loan Borrower
has with  Lender.  If any such  default is curable and if Borrower  has not been
given notice of a breach of the same provision  within the preceding twelve (12)
months,  it may be  cured  (and no Event  of  Default  will  have  occurred)  if
Borrower,  after Lender sends written notice demanding cure of such failure, (i)
cures the failure  within  thirty (30) days;  or (ii), if the cure requires more
than  thirty  (30) days,  immediately  initiates  steps  sufficient  to cure the
failure and  thereafter  continues and completes  all  reasonable  and necessary
steps  sufficient  to  produce  compliance  within  ninety  (90)  days.  (c) Any
representation  or  statement  made or  furnished  to Lender by  Borrower  or on
Borrower's behalf is false or misleading in any material  respect.  (d) Borrower
dissolves  or  becomes  insolvent,  a  receiver  is  appointed  for any  part of
Borrower's property,  Borrower makes an assignment for the benefit of creditors,
or any proceeding is commenced  either by Borrower or against Borrower under any
bankruptcy or insolvency  laws. (e) Any creditor tries to take any of Borrower's
property on or in which Lender has a lien or security interest.  This includes a
garnishment  of any of  Borrower's  accounts  with Lender.  (f) Borrower (or any
member or partner of Borrower) dies or becomes  incompetent.  Lender may, at its
option,  permit the deceased's estate to assume  unconditionally the obligations
arising under this Note in a manner reasonably  satisfactory to Lender,  and, in
so doing,  cure the event of  default.  (g) Any  guarantor  of this Note  seeks,
claims,  or  otherwise  attempts to limit,  modify,  or revoke such  guarantor's
guaranty  with Lender or any of the events of default  occur with respect to any
guarantor of this Note or any guarantor dies or become incompetent.  Lender may,
at its option, permit the deceased guarantor's estate to assume  unconditionally
the obligations arising under this Note in a manner satisfactory to Lender, and,
in so doing,  cure the event of default.  (h) Lender in good faith deems  itself
insecure.

LENDER'S  RIGHTS.  Upon default,  Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest  immediately  due,  without
notice, and then Borrower will pay that amount. Upon default,  including failure
to pay upon final maturity,  Lender, at its option, may also, if permitted under
applicable law, do one or both of the following:  (a) increase the interest rate
on this Note to five percentage  (5.00%) points over the interest rate in effect
at the time of the default, and (b) add any unpaid accrued interest to principal
and such sum will bear  interest  therefrom  until paid at the rate  provided in
this Note (including any increased  rate). The interest rate will not exceed the
maximum rate permitted by applicable law. Lender may hire or pay someone else to
help collect this Note if Borrower  does not pay.  Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit,  including
attorneys' fees and legal expenses for  arbitration  and bankruptcy  proceedings
(including  efforts  to modify  or vacate  any  automatic  stay or  injunction),
appeals,  and  any  anticipated   post-judgment   collection  services.  If  not
prohibited  by  applicable  law,  Borrower  also  will pay any court  costs,  in
addition to all other sums  provided  by law.  This Note has been  delivered  to
Lender and  accepted  by Lender in the State of  Oregon.  IF THERE IS A LAWSUIT,
BORROWER  AGREES  UPON  LENDER'S  REQUEST TO SUBMIT TO THE  JURISDICTION  OF THE
COURTS OF MULTNOMAH  COUNTY,  THE STATE OF OREGON.  LENDER AND  BORROWER  HEREBY
WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY  ACTION,  PROCEEDING,  OR  COUNTERCLAIM
BROUGHT BY EITHER  LENDER OR  BORROWER  AGAINST  THE  OTHER.  THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON.

RIGHT OF SETOFF.  To the  extent any such  accounts  exist,  Borrower  grants to
Lender a  contractual  possessory  security  interest  in, and  hereby  assigns,
conveys, delivers,  pledges, and transfers to Lender all Borrower's right, title
and  interest in and to,  Borrower's  accounts  with Lender  (whether  checking,
savings, or some other account),  including without limitation all accounts held
jointly  with  someone  else and all  accounts  Borrower may open in the future,
excluding however all Keogh and trust accounts.  Borrower  authorizes Lender, to
the extent  permitted by  applicable  law, to charge or setoff all sums owing on
this Note against any and all such accounts.

COLLATERAL. This Note is secured by, in addition to any other collateral, a Deed
of Trust  and an  Assignment  of Rents to a  trustee  in favor of Lender on real
property  located  in  Washington  County,  State of  Oregon,  all the terms and
conditions of which are hereby incorporated and made a part of this Note.

ARBITRATION.  Except as  provided  below,  Lender  and  Borrower  agree that all
disputes,  claims and controversies between them, whether individual,  joint, or
class  in  nature,  arising  from  this  Note or  otherwise,  including  without
limitation contract and tort disputes,  shall be arbitrated pursuant to the then

<PAGE>

effective arbitration rules of the Arbitration Service of Portland, Inc., or the
then  effective  commercial   arbitration  rules  of  the  American  Arbitration
Association,  whichever  organization  is  selected  by the  party  which  first
initiates  arbitration by filing a claim in accordance  with the filing rules of
the organization  selected.  Notwithstanding the above, Lender's actions to take
or dispose of any collateral  securing this Note shall not be prohibited by this
arbitration  agreement nor constitute a waiver of this arbitration  provision as
to all other disputes. This includes,  without limitation,  obtaining injunctive
relief or a temporary  restraining  order;  foreclosing by notice and sale under
any deed of trust or mortgage; obtaining a writ of attachment or imposition of a
receiver;  or exercising  any rights  relating to personal  property,  including
taking or disposing of such property with or without  judicial  process pursuant
to  Article  9  of  the  Uniform  Commercial  Code.  Any  disputes,  claims,  or
controversies  concerning  the  lawfulness  or  reasonableness  of any  act,  or
exercise of any right,  concerning any collateral securing this Note,  including
any claim to rescind,  reform, or otherwise modify any agreement relating to the
collateral  securing this Note, shall also be arbitrated,  provided however that
no arbitrator shall have the right or the power to enjoin or restrain any act of
any party.  Judgment upon any award rendered by any arbitrator may be entered in
any court  having  jurisdiction.  Nothing in this Note shall  preclude any party
from  seeking  equitable  relief  from a court of  competent  jurisdiction.  The
statute of limitations,  estoppel,  waiver,  laches, and similar doctrines which
would  otherwise  be  applicable  in an  action  brought  by a  party  shall  be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of an action for these purposes.

LINE OF CREDIT.  This Note  evidences a straight  line of credit for the Interim
Construction  Loan only.  Once the total amount of principal has been  advanced,
Borrower is not entitled to further loan advances.  Borrower agrees to be liable
for all sums either:  (a) advanced in  accordance  with the  instructions  of an
authorized  person or (b) credited to any of  Borrower's  accounts  with Lender,
regardless of the fact that persons  other than those  authorized to borrow have
authority to draw against the accounts.  The unpaid  principal  balance owing on
this  Note at any time  may be  evidenced  by  endorsements  on this  Note or by
Lender's internal records, including daily computer print-outs.

GENERAL  PROVISIONS.  Time is of the essence  hereof.  Lender may delay or forgo
enforcing  any of its rights or remedies  under this Note  without  losing them.
Borrower and any other person who signs,  guarantees  or endorses  this Note, to
the extent allowed by law, waive  presentment,  demand for payment,  protest and
notice  of  dishonor.  Upon any  change in the terms of this  Note,  and  unless
otherwise  expressly stated in writing, no party who signs this Note, whether as
maker,  guarantor,  accommodation  maker or  endorser,  shall be  released  from
liability.  All such parties agree that Lender may renew, extend (repeatedly and
for any length of time) or modify this loan,  or release any party or  guarantor
or  collateral;  or impair,  fail to realize upon or perfect  Lender's  security
interest in the collateral; and take any other action deemed necessary by Lender
without the consent of or notice to anyone.  All  obligations  of Borrower under
this Note shall be joint and  several,  and all  references  to Borrower  herein
shall  mean each and  every  Borrower.  This  means  that each of the  Borrowers
signing below is responsible for all obligations in this Note.

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

PRIOR TO SIGNING THIS NOTE,  BORROWER READ AND  UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. EACH BORROWER AGREES
TO THE TERMS OF THE NOTE AND  ACKNOWLEDGES  RECEIPT OF A  COMPLETED  COPY OF THE
NOTE.

BORROWER:

Timberline Software Corporation

By: /s/ Thomas P. Cox
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Its:  Senior Vice President
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