RECORDATION REQUESTED BY:

          Pacific One Bank
          P.O. Box 40108
          Portland, Oregon  97240-0108

WHEN RECORDED MAIL TO:

          Pacific One Bank
          P.O. Box 40108
          Portland, Oregon  97240-0108

SEND TAX NOTICES TO:

          Timberline Software Corporation
          9600 S.W. Nimbus Avenue
          Beaverton, Oregon 97008


                                SPACE ABOVE THIS LINE IS FOR RECORDER'S USE ONLY
--------------------------------------------------------------------------------

                                DEED OF TRUST
                         LINE OF CREDIT INSTRUMENT

LINE  OF  CREDIT  INSTRUMENT.  (a)  This  Deed  of  Trust  is a LINE  OF  CREDIT
INSTRUMENT. (b) The maximum principal amount to be advanced pursuant to the Note
is Nine Million Seven Hundred Fifty Thousand and 00/100 Dollars ($9,750,000.00).
(c) The term of the credit agreement commences on the date of this Deed of Trust
and ends no later than November 1, 2009. (d) The maximum  principal amount to be
advanced pursuant to the Note may be exceeded by advances  necessary to complete
construction of previously agreed upon improvements on the Real Property.

THIS  DEED OF  TRUST IS  DATED ,  December  1,1997,  among  Timberline  Software
Corporation,  whose address is 9600 S.W. Nimbus Avenue, Beaverton,  Oregon 97008
(referred to below as  "Grantor");  Pacific One Bank,  whose address is P.O. Box
40108, Portland,  Oregon 97240-0108 (referred to below sometimes as "Lender" and
sometimes as  "Beneficiary");  and Valerie T. Auerbach,  whose address is 121 SW
Morrison, Suite 600, Portland, Oregon 97204 (referred to below as "Trustee").

CONVEYANCE AND GRANT. For valuable consideration, Grantor conveys to Trustee for
the benefit of Lender as Beneficiary all of Grantor's right, title, and interest
in and to the following  described real property,  together with all existing or
subsequently  erected or  affixed  buildings,  improvements  and  fixtures;  all
easements,  rights of way, and appurtenances;  all water, water rights and ditch
rights (including stock in utilities with ditch or irrigation  rights);  and all
other rights,  royalties,  and profits relating to the real property,  including
without  limitation  all minerals,  oil, gas,  geothermal  and similar  matters,
located in Washington County, State of Oregon (the "Real Property"):

            Lots 6 and 7, CORPORATE CENTER AT CORNELL OAKS, recorded January 26,
            1995 in Plat Book 95, Pages 27 through 32,  recorded as Document No.
            95005969, situated in the County of Washington and State of Oregon.

            TOGETHER  WITH a  non-exclusive  right,  privilege  and easement for
            ingress and egress of pedestrian and vehicular  traffic as disclosed
            by Easement  Agreement  recorded August 5, 1997,  Recorder's Fee No.
            97071989.

Grantor  presently  assigns to Lender (also known as Beneficiary in this Deed of
Trust) all of  Grantor's  right,  title,  and interest in and to all present and
future  leases of the  Property  and all Rents from the  Property.  In addition,
Grantor grants Lender a Uniform  Commercial Code security  interest in the Rents
and the Personal Property defined below.

DEFINITIONS.  The following words shall have the following meanings when used in
this Deed of Trust. Terms not otherwise defined in this Deed of Trust shall have
the  meanings  attributed  to such terms in the  Uniform  Commercial  Code.  All
<PAGE>

references  to dollar  amounts  shall mean amounts in lawful money of the United
States of America.

      Beneficiary. The word "Beneficiary" means Pacific One Bank, its successors
      and assigns. Pacific One Bank also is referred to as "Lender" in this Deed
      of Trust.

      Borrower.  The word  "Borrower"  means  Timberline  Software  Corporation.
      Timberline Software Corporation is also referred to herein as Grantor.

      Deed of Trust.  The words  "Deed of Trust"  mean this Deed of Trust  among
      Grantor,   Lender,  and  Trustee,  and  includes  without  limitation  all
      assignment  and  security  interest  provisions  relating to the  Personal
      Property and Rents.

      Grantor.  The  word  "Grantor"  means  any and all  persons  and  entities
      executing  this Deed of Trust,  including  without  limitation  Timberline
      Software Corporation.

      Guarantor. The word "Guarantor" means and includes without limitation, any
      and all guarantors, sureties, and accommodation parties in connection with
      the Indebtedness.

      Improvements.   The  word   "Improvements"   means  and  includes  without
      limitation  all existing  and future  improvements,  fixtures,  buildings,
      structures,  mobile  homes  affixed  on  the  Real  Property,  facilities,
      additions and other construction on the Real Property.

      Indebtedness.  The word  "Indebtedness"  means all  principal and interest
      payable  under the Note and any amounts  expended or advanced by Lender to
      discharge obligations of Grantor or expenses incurred by Trustee or Lender
      to enforce obligations of Grantor under this Deed of Trust,  together with
      interest on such amounts as provided in the Note.

      Lender.  The word "Lender"  means  Pacific One Bank,  its  successors  and
      assigns.

      Note.  The word  "Note"  means the Note dated  December  1,  1997,  in the
      principal  amount of Nine Million Seven Hundred Fifty  Thousand and 00/100
      Dollars  ($9,750,000.00)  from  Borrower  to  Lender,  together  with  all
      renewals, extensions,  modifications,  refinancings, and substitutions for
      the  Note.  The rate of  interest  on the  Note is  subject  to  indexing,
      adjustment, renewal, or renegotiation.

      Personal  Property.  The words  "Personal  Property"  mean all  equipment,
      fixtures,  and other articles of personal  property now or hereafter owned
      by  Grantor,  which are now or  hereafter  attached or affixed to the Real
      Property;  together  with all  accessions,  parts,  and  additions to, all
      replacements  of, and all  substitutions  for, any of such  property;  and
      together with all proceeds  (including  without  limitation  all insurance
      proceeds and refunds of premiums)  from any sale or other  disposition  of
      the Property.

      Property. The word "Property" means collectively the Real Property and the
      Personal Property.

      Real Property. The words "Real Property" mean the property,  interests and
      rights described above in the "Conveyance and Grant" section.

      Related Documents.  The words "Related Documents" mean and include without
      limitation all  promissory  notes,  credit  agreements,  loan  agreements,
      guaranties, security agreements,  mortgages, deeds of trust, and all other
      instruments,  agreements and documents, whether now or hereafter existing,
      executed in connection with the Indebtedness.

      Rents.  The word  "Rents"  means all present and future  rents,  revenues,
      income,  issues,  royalties,  profits, and other benefits derived from the
      Property.
<PAGE>

      Trustee.  The word "Trustee"  means Valerie T. Auerbach and any substitute
      or successor trustees.

THIS DEED OF TRUST,  INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST
IN THE RENTS  AND  PERSONAL  PROPERTY,  IS GIVEN TO SECURE  (1)  PAYMENT  OF THE
INDEBTEDNESS AND (2) PERFORMANCE OF ANY AND ALL OBLIGATIONS OF GRANTOR UNDER THE
NOTE,  THE  RELATED  DOCUMENTS,  AND THIS  DEED OF  TRUST.  THIS  DEED OF TRUST,
INCLUDING  THE  ASSIGNMENT  OF RENTS AND THE SECURITY  INTEREST IN THE RENTS AND
PERSONAL  PROPERTY,  IS ALSO GIVEN TO SECURE ANY AND ALL  OBLIGATIONS OF GRANTOR
UNDER THAT CERTAIN  CONSTRUCTION  LOAN AGREEMENT  BETWEEN  GRANTOR AND LENDER OF
EVEN DATE HEREWITH.  ANY EVENT OF DEFAULT UNDER THE CONSTRUCTION LOAN AGREEMENT,
OR ANY OF THE RELATED DOCUMENTS  REFERRED TO THEREIN,  SHALL ALSO BE AN EVENT OF
DEFAULT UNDER THIS DEED OF TRUST.  THE NOTE AND THIS DEED OF TRUST ARE GIVEN AND
ACCEPTED ON THE FOLLOWING TERMS:

GRANTOR'S  REPRESENTATION  AND WARRANTY.  Grantor  warrants that Grantor has the
full  power and right to enter  into this Deed of Trust and to  hypothecate  the
Property.

GRANTOR'S  WAIVERS.  Grantor waives all rights or defenses  arising by reason of
any "one  action" or  "anti-deficiency"  law, or any other law which may prevent
Lender  from  bringing  any  action  against  Grantor,  including  a  claim  for
deficiency to the extent Lender is otherwise entitled to a claim for deficiency,
before or after Lender's  commencement or completion of any foreclosure  action,
either judicially or by exercise of a power of sale.

PAYMENT AND  PERFORMANCE.  Except as  otherwise  provided in this Deed of Trust,
Borrower shall pay to Lender all  Indebtedness  secured by this Deed of Trust as
it becomes  due,  and  Borrower  and Grantor  shall  strictly  perform all their
respective  obligations  under the Note,  this  Deed of Trust,  and the  Related
Documents.

POSSESSION  AND  MAINTENANCE  OF THE PROPERTY.  Grantor and Borrower  agree that
Grantor's  possession and use of the Property shall be governed by the following
provisions:

      Possession and Use.  Until the occurrence of an Event of Default,  Grantor
      may (a) remain in possession and control of the Property, (b) use, operate
      or manage the Property,  and (c) collect any Rents from the Property.  The
      following  provisions  relate  to  the  use of the  Property  or to  other
      limitations  on the Property.  THIS  INSTRUMENT  WILL NOT ALLOW USE OF THE
      PROPERTY  DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE
      LAWS AND  REGULATIONS.  BEFORE SIGNING OR ACCEPTING THIS  INSTRUMENT,  THE
      PERSON  ACQUIRING  FEE  TITLE  TO  THE  PROPERTY  SHOULD  CHECK  WITH  THE
      APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND
      TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS
      DEFINED IN ORS 30.930.

      Duty to  Maintain.  Grantor  shall  maintain  the  Property in  tenantable
      condition and promptly perform all repairs,  replacements, and maintenance
      necessary to preserve its value.

      Hazardous Substances.  The terms "hazardous waste," "hazardous substance,"
      "disposal,"  "release," and "threatened  release," as used in this Deed of
      Trust,  shall  have the same  meanings  as set forth in the  Comprehensive
      Environmental  Response,  Compensation,  and  Liability  Act of  1980,  as
      amended,  42  U.S.C.  Section  9601,  et seq.  ("CERCLA"),  the  Superfund
      Amendments and  Reauthorization  Act of 1986, Pub. L. No. 99-499 ("SARA"),
      the Hazardous  Materials  Transportation  Act, 49 U.S.C.  Section 1801, et
      seq., the Resource  Conservation and Recovery Act, 49 U.S.C. Section 6901,
      et seq., or other applicable state or Federal laws,  rules, or regulations
      adopted pursuant to any of the foregoing.  Grantor represents and warrants
      to Lender  that:  (a)  During  the period of  Grantor's  ownership  of the
      Property,  there  has  been  no  use,  generation,  manufacture,  storage,
      treatment,  disposal, release or threatened release of any hazardous waste
      or substance by any person on, under,  or about the Property;  (b) Grantor
      has no knowledge  of, or reason to believe that there has been,  except as
      previously  disclosed to and  acknowledged  by Lender in writing,  (i) any
      use, generation,  manufacture,  storage, treatment,  disposal, release, or
      threatened release of any hazardous waste or substance by any prior owners
      or occupants of the Property or (ii) any actual or  threatened  litigation
<PAGE>

      or claims of any kind by any  person  relating  to such  matters;  and (c)
      Except as previously  disclosed to and  acknowledged by Lender in writing,
      (i) neither Grantor nor any tenant, contractor,  agent or other authorized
      user of the  Property  shall use,  generate,  manufacture,  store,  treat,
      dispose of, or release any  hazardous  waste or substance  on,  under,  or
      about  the  Property  and (ii) any such  activity  shall be  conducted  in
      compliance with all applicable federal, state, and local laws, regulations
      and ordinances,  including without limitation those laws, regulations, and
      ordinances  described above.  Grantor  authorizes Lender and its agents to
      enter upon the Property to make such  inspections  and tests as Lender may
      deem appropriate to determine compliance of the Property with this section
      of the Deed of Trust. Any inspections or tests made by Lender shall be for
      Lender's   purposes  only  and  shall  not  be  construed  to  create  any
      responsibility  or  liability  on the part of Lender to  Grantor or to any
      other person.  The  representations  and warranties  contained  herein are
      based on  Grantor's  due  diligence  in  investigating  the  Property  for
      hazardous waste.  Grantor hereby (a) releases and waives any future claims
      against Lender for indemnity or  contribution in the event Grantor becomes
      liable for cleanup or other  costs under any such laws,  and (b) agrees to
      indemnify and hold  harmless  Lender  against any and all claims,  losses,
      liabilities, damages, penalties, and expenses which Lender may directly or
      indirectly  sustain or suffer  resulting  from a breach of this section of
      the Deed of Trust or as a consequence of any use, generation, manufacture,
      storage,  disposal,  release  or  threatened  release  occurring  prior to
      Grantor's  ownership or interest in the Property,  whether or not the same
      was or should have been known to Grantor.  The  provisions of this section
      of the Deed of Trust, including the obligation to indemnify, shall survive
      the payment of the  Indebtedness  and the satisfaction and reconveyance of
      the lien of this  Deed of Trust  and shall  not be  affected  by  Lender's
      acquisition  of any interest in the Property,  whether by  foreclosure  or
      otherwise.

      Nuisance,  Waste.  Grantor shall not cause, conduct or permit any nuisance
      nor  commit,  permit,  or suffer  any  stripping  of or waste on or to the
      Property or any portion of the Property.  Specifically without limitation,
      Grantor will not remove,  or grant to any other party the right to remove,
      any  timber,  minerals  (including  oil and  gas),  soil,  gravel  or rock
      products without the prior written consent of Lender.

      Removal  of  Improvements.  Grantor  shall  not  demolish  or  remove  any
      Improvements  from the Real Property  without the prior written consent of
      Lender.  As a  condition  to the removal of any  Improvements,  Lender may
      require  Grantor to make  arrangements  satisfactory  to Lender to replace
      such Improvements with Improvements of at least equal value.

      Lender's  Right to Enter.  Lender and its agents and  representatives  may
      enter upon the Real Property at all reasonable times to attend to Lender's
      interests and to inspect the Property for purposes of Grantor's compliance
      with the terms and conditions of this Deed of Trust.

      Compliance with Governmental  Requirements.  Grantor shall promptly comply
      with all laws, ordinances, and regulations, now or hereafter in effect, of
      all  governmental  authorities  applicable  to the use or occupancy of the
      Property.  Grantor may contest in good faith any such law,  ordinance,  or
      regulation  and  withhold  compliance  during  any  proceeding,  including
      appropriate  appeals,  so long as Grantor has  notified  Lender in writing
      prior to  doing so and so long as,  in  Lender's  sole  opinion,  Lender's
      interests in the Property are not jeopardized.  Lender may require Grantor
      to post adequate  security or a surety bond,  reasonably  satisfactory  to
      Lender, to protect Lender's interest.

      Duty to Protect.  Grantor agrees  neither to abandon nor leave  unattended
      the  Property.  Grantor shall do all other acts, in addition to those acts
      set forth above in this  section,  which from the character and use of the
      Property are reasonably necessary to protect and preserve the Property.

      ADA/FHAA  Compliance.  So long as this Deed of Trust remains  outstanding,
      Grantor will, at its own cost and expense,  in respect of the Property and
      in respect of Grantor's business activities at or within the Property: (a)
      comply with all  requirements of the federal  Americans with  Disabilities
      Act (the "ADA") and the federal Fair Housing  Amendments  Act of 1988 (the
      "FHAA")  and  the  rules  and  regulations   promulgated  thereunder  (the
      "Rules"),  to the extent  applicable to Grantor's  ownership,  management,
      operation, leasing, use, construction, reconstruction, repair, remodeling,
      rehabilitation,  or alteration  of the Property or any part  thereof;  (b)
      immediately  provide to Lender  written notice (and copies of) any and all
      notices of actual,  potential, or alleged violations of the ADA, the FHAA,
      or the Rules and any and all  governmental  investigations  or  regulatory
      actions  instituted  or  threatened  against  Grantor or the  Property  or
<PAGE>

      Grantor's business activities at or within the Property regarding the ADA,
      the FHAA,  or the Rules;  and (c)  furnish  to  Lender,  from time to time
      whenever reasonably requested by Lender, a Compliance Assessment,  in form
      and substance reasonably  satisfactory to Lender, prepared by an architect
      or engineer with skill,  experience,  and reputation acceptable to Lender,
      in the  field of  compliance  with  the ADA or the  FHAA,  as  applicable.
      Reappraisals.  Lender shall have the right to obtain at Grantor's cost and
      expense  reappraisals  of the  Property  from any  licensed  or  certified
      appraiser  designated  by  Lender,  from  time to time (a)  whenever  such
      reappraisal may be required by any law, rule, or regulation  applicable to
      the conduct of Lender's  business,  or may be requested or directed by any
      governmental  authority charged with the administration of such law, rule,
      or  regulation  or  Lender's  compliance  therewith,  whether  or not such
      request or  direction  has the force of law,  or (b)  whenever  Lender has
      reasonable  cause to believe  that the  then-current  loan-to-value  ratio
      applicable  to the  loan or  loans  secured  by the  Property  exceed  the
      original  loan-to-value ratio approved by Lender with respect to such loan
      or  loans,  or  (c)  whenever  reasonably  deemed  appropriate  by  Lender
      following  the  occurrence  or  during  the  continuation  of an  Event of
      Default.  Lender may use the results of such  reappraisal  to evaluate and
      restructure  such  loan or  loans  if  necessary  in  Lender's  reasonable
      discretion.

DUE ON SALE - CONSENT BY LENDER. Lender may, at its option,  declare immediately
due and  payable  all  sums  secured  by this  Deed of  Trust  upon  the sale or
transfer,  without the Lender's prior written consent, of all or any part of the
Real Property,  or any interest in the Real Property. A "sale or transfer" means
the conveyance of Real Property or any right, title or interest therein; whether
legal or equitable; whether voluntary or involuntary;  whether by outright sale,
deed,  installment sale contract,  land contract,  contract for deed,  leasehold
interest with a term greater than five (5) years,  lease-option  contract, or by
sale, assignment, or transfer of any beneficial interest in or to any land trust
holding title to the Real Property, or by any other method of conveyance of Real
Property interest. However, this option shall not be exercised by Lender if such
exercise is prohibited by federal law or by Oregon law. Notwithstanding anything
to the contrary set forth above, in the event Lender allows an assumption of the
Note upon a sale or  transfer,  Lender  shall be entitled to, in addition to any
other  fees and  requirements  imposed  by  Lender  in its sole  discretion,  an
assumption  fee equal to one percent (1%) of the Note balance at the time of the
assumption.

TAXES AND LIENS. The following provisions relating to the taxes and liens on the
Property are a part of this Deed of Trust.

      Payment.  Grantor  shall  pay  when  due  (and  in  all  events  prior  to
      delinquency) all taxes,  special taxes,  assessments,  charges  (including
      water and sewer),  fines and  impositions  levied against or on account of
      the  Property,  and shall pay when due all  claims for work done on or for
      services  rendered or material  furnished to the  Property.  Grantor shall
      maintain the Property  free of all liens having  priority over or equal to
      the  interest of Lender  under this Deed of Trust,  except for the lien of
      taxes  and  assessments  not due,  except  for the  existing  indebtedness
      referred to below, and except as otherwise provided in this Deed of Trust.

      Right To Contest. Grantor may withhold payment of any tax, assessment,  or
      claim in connection  with a good faith dispute over the obligation to pay,
      so long as Lender's interest in the Property is not jeopardized. If a lien
      arises or is filed as a result of nonpayment, Grantor shall within fifteen
      (15) days  after the lien  arises or, if a lien is filed,  within  fifteen
      (15) days after Grantor has notice of the filing,  secure the discharge of
      the lien,  or if  requested  by  Lender,  deposit  with  Lender  cash or a
      sufficient corporate surety bond or other security  satisfactory to Lender
      in an  amount  sufficient  to  discharge  the  lien  plus  any  costs  and
      attorneys'  fees or other  charges  that  could  accrue  as a result  of a
      foreclosure  or sale under the lien. In any contest,  Grantor shall defend
      itself  and  Lender  and  shall  satisfy  any  adverse   judgment   before
      enforcement  against  the  Property.  Grantor  shall  name  Lender  as  an
      additional  obligee  under  any  surety  bond  furnished  in  the  contest
      proceedings.

      Evidence  of  Payment.   Grantor  shall  upon  demand  furnish  to  Lender
      satisfactory  evidence  of payment of the taxes or  assessments  and shall
      authorize the  appropriate  governmental  official to deliver to Lender at
      any time a written  statement  of the taxes and  assessments  against  the
      Property.

      Notice of Construction.  Grantor shall notify Lender at least fifteen (15)
<PAGE>

      days before any work is  commenced,  any  services are  furnished,  or any
      materials  are  supplied  to  the  Property,   if  any  mechanic's   lien,
      materialmen's  lien,  or other  lien could be  asserted  on account of the
      work, services, or materials and the cost exceeds $25,000.00. Grantor will
      upon request of Lender furnish to Lender advance  assurances  satisfactory
      to Lender that Grantor can and will pay the cost of such improvements.

PROPERTY DAMAGE  INSURANCE.  The following  provisions  relating to insuring the
Property are a part of this Deed of Trust.

      Maintenance of Insurance.  Grantor shall procure and maintain  policies of
      fire  insurance  with  standard  extended   coverage   endorsements  on  a
      replacement  basis for the full insurable value covering all  Improvements
      on the Real Property in an amount  sufficient to avoid  application of any
      coinsurance  clause,  and with a  standard  mortgagee  clause  in favor of
      Lender,  together with such other insurance,  including but not limited to
      hazard, liability, business interruption,  and boiler insurance, as Lender
      may  reasonably  require.  Policies  shall be  written  in form,  amounts,
      coverages  and  basis  reasonably  acceptable  to Lender  and  issued by a
      company or companies reasonably acceptable to Lender. Grantor will deliver
      to Lender the policies or certificates  of insurance in form  satisfactory
      to Lender,  including stipulations that coverages will not be cancelled or
      diminished  without at least  thirty  (30) days' prior  written  notice to
      Lender.  Should the Real  Property at any time  become  located in an area
      designated by the Director of the Federal Emergency Management Agency as a
      special flood hazard area,  Grantor agrees to obtain and maintain  Federal
      Flood Insurance to the extent such insurance is required and is or becomes
      available,  for the term of the loan  and for the  full  unpaid  principal
      balance of the loan,  or the maximum  limit of coverage that is available,
      whichever is less.

      Application of Proceeds.  Grantor shall promptly notify Lender of any loss
      or damage to the Property if the estimated  cost of repair or  replacement
      exceeds  $25,000.00.  Lender may make proof of loss if Grantor fails to do
      so within fifteen (15) days of the casualty.  If this Deed of Trust is not
      in default for any reason  other than  damage to or loss of the  Property,
      and if the  estimated  value (as  determined  by Lender in its  reasonable
      discretion) of the Property after repair,  restoration,  or replacement is
      equal to or  greater  than the value of the  Property  on the date of this
      Deed of Trust, Lender shall receive the proceeds and apply the proceeds to
      the repair, restoration,  and replacement of the Property. If this Deed of
      Trust is in default for any reason other than damage to the  Property,  or
      if the  estimated  value  (as  determined  by  Lender  in  its  reasonable
      discretion) of the Property after repair,  restoration,  or replacement is
      less  than the  value of the  Property  on the date of this Deed of Trust,
      Lender may, at its election, receive and retain the proceeds and apply the
      same to the reduction of the  Indebtedness  and/or the payment of any lien
      affecting the Property. If the proceeds are applied to repair, restoration
      and replacement,  Grantor shall repair or replace the damaged or destroyed
      Improvements  in a manner  satisfactory  to  Lender.  Lender  shall,  upon
      satisfactory proof of such expenditure,  pay or reimburse Grantor from the
      proceeds for the  reasonable  cost of repair or  restoration if Grantor is
      not in default under this Deed of Trust.  Any proceeds which have not been
      disbursed  within 180 days after their  receipt  and which  Lender has not
      committed to the repair or restoration of the Property shall be used first
      to pay any amount  owing to Lender  under this Deed of Trust,  then to pay
      accrued  interest,  and the  remainder,  if any,  shall be  applied to the
      principal balance of the Indebtedness.  If Lender holds any proceeds after
      payment  in full  of the  Indebtedness,  such  proceeds  shall  be paid to
      Grantor as Grantor's interests may appear.

      Unexpired  Insurance at Sale. Any unexpired  insurance  shall inure to the
      benefit of, and pass to, the  purchaser  of the  Property  covered by this
      Deed of  Trust  at any  trustee's  sale  or  other  sale  held  under  the
      provisions  of this  Deed of  Trust,  or at any  foreclosure  sale of such
      Property.

                                     WARNING
                                     -------

            Unless  Grantor  provides  Lender  with  evidence  of the  insurance
            coverage  as  required  herein,  Lender may  purchase  insurance  at
            Grantor's expense to protect Lender's interest.  This insurance may,
            but need not,  also  protect  Grantor's  interest.  If the  Property
            becomes damaged, the coverage Lender purchases may not pay any claim
            Grantor makes or any claim made against  Grantor.  Grantor may later
            cancel this coverage by providing evidence that Grantor has obtained
            property coverage elsewhere.
<PAGE>

            Grantor is  responsible  for the cost of any insurance  purchased by
            Lender. The cost of this insurance may be added to the Note balance.
            If the cost is added to the Note  balance,  the interest rate on the
            Note will apply to this added amount. The effective date of coverage
            may be the date Grantor's  prior coverage lapsed or the date Grantor
            failed to provide proof of coverage.

            The coverage  Lender  purchases may be  considerably  more expensive
            than  insurance  Grantor  can  obtain on  Grantor's  own and may not
            satisfy  any need for  property  damage  coverage  or any  mandatory
            liability insurance requirements imposed by applicable law.

TAX AND INSURANCE RESERVES. Subject to any limitations set by applicable law and
provided  Grantor  defaults  in the  payment of taxes or  insurance  as required
herein,  Lender may require Grantor to maintain with Lender reserves for payment
of annual taxes,  assessments,  and insurance premiums,  which reserves shall be
created by advance  payment or monthly  payments of a sum estimated by Lender to
be  sufficient  to produce,  at least  fifteen (15) days before due,  amounts at
least equal to the taxes,  assessments,  and  insurance  premiums to be paid. If
fifteen  (15) days  before  payment is due the reserve  funds are  insufficient,
Grantor shall upon demand pay any deficiency to Lender.  The reserve funds shall
be held by Lender as a general deposit from Grantor, which Lender may satisfy by
payment of the taxes, assessments, and insurance premiums required to be paid by
Grantor as they become due. Lender shall have the right to draw upon the reserve
funds to pay such  items,  and Lender  shall not be required  to  determine  the
validity or accuracy of any item before paying it.  Nothing in the Deed of Trust
shall be  construed  as  requiring  Lender  to  advance  other  monies  for such
purposes,  and Lender  shall not incur any  liability  for anything it may do or
omit to do with  respect to the  reserve  account.  All  amounts in the  reserve
account are hereby  pledged to further  secure the  Indebtedness,  and Lender is
hereby  authorized to withdraw and apply such amounts on the  Indebtedness  upon
the  occurrence of an Event of Default.  Lender shall not be required to pay any
interest or earnings on the reserve funds unless required by law or agreed to by
Lender in writing.  Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the taxes and  assessments
required to be paid by Grantor.

EXPENDITURES  BY LENDER.  If Grantor  fails to comply with any provision of this
Deed of Trust or if any action or proceeding is commenced that would  materially
affect Lender's  interests in the Property,  Lender on Grantor's behalf may, but
shall not be required  to, take any action that Lender  deems  appropriate.  Any
amount that Lender  expends in so doing will bear  interest at the rate  charged
under the Note from the date incurred or paid by Lender to the date of repayment
by  Grantor.  All such  expenses,  at  Lender's  option,  will (a) be payable on
demand,  (b) be added to the balance of the Note and be apportioned among and be
payable with any  installment  payments to become due during either (i) the term
of any  applicable  insurance  policy or (ii) the remaining term of the Note, or
(c) be treated as a balloon  payment which will be due and payable at the Note's
maturity.  This Deed of Trust also will  secure  payment of these  amounts.  The
rights  provided for in this paragraph  shall be in addition to any other rights
or any remedies to which  Lender may be entitled on account of the default.  Any
such action by Lender  shall not be construed as curing the default so as to bar
Lender from any remedy that it otherwise would have had.

WARRANTY;  DEFENSE OF TITLE. The following  provisions  relating to ownership of
the Property are a part of this Deed of Trust.

      Title.  Grantor warrants that: (a) Grantor holds good and marketable title
      of record to the  Property in fee simple,  free and clear of all liens and
      encumbrances  other than those set forth in the Real Property  description
      or in any title  insurance  policy,  title report,  or final title opinion
      issued in favor of, and accepted by, Lender in  connection  with this Deed
      of Trust,  and (b) Grantor has the full right,  power,  and  authority  to
      execute and deliver this Deed of Trust to Lender.

      Defense of Title. Subject to the exception in the paragraph above, Grantor
      warrants  and will forever  defend the title to the  Property  against the
      lawful  claims of all persons.  In the event any action or  proceeding  is
      commenced  that  questions  Grantor's  title or the interest of Trustee or
      Lender  under  this Deed of Trust,  Grantor  shall  defend  the  action at
      Grantor's  expense.  Grantor may be the nominal party in such  proceeding,
      but Lender shall be entitled to  participate  in the  proceeding and to be
      represented  in the  proceeding  by counsel of Lender's  own  choice,  and
<PAGE>

      Grantor will deliver, or cause to be delivered, to Lender such instruments
      as Lender may request from time to time to permit such participation.

      Compliance With Laws. Grantor warrants that the Property and Grantor's use
      of the Property  complies with all existing  applicable laws,  ordinances,
      and regulations of governmental authorities.

CONDEMNATION. The following provisions relating to condemnation  proceedings are
      a part of this Deed of Trust.  Application of Net Proceeds.  If all or any
      part of the Property is condemned by eminent domain  proceedings or by any
      proceeding or purchase in lieu of condemnation, Lender may at its election
      require  that  all or any  portion  of the net  proceeds  of the  award be
      applied to the  Indebtedness or the repair or restoration of the Property.
      The net  proceeds of the award  shall mean the award after  payment of all
      reasonable  costs,  expenses,  and attorneys'  fees,  Trustee or Lender in
      connection with the condemnation.

      Proceedings.  If any proceeding in  condemnation  is filed,  Grantor shall
      promptly  notify Lender in writing,  and Grantor shall  promptly take such
      steps as may be  necessary  to defend  the  action  and  obtain the award.
      Grantor may be the nominal party in such  proceeding,  but Lender shall be
      entitled to  participate  in the  proceeding  and to be represented in the
      proceeding by counsel of its own choice, and Grantor will deliver or cause
      to be delivered to Lender such  instruments as may be requested by it from
      time to time to permit such participation.

IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following
provisions  relating to governmental  taxes, fees and charges are a part of this
Deed of Trust:

      Current  Taxes,  Fees and Charges.  Upon request by Lender,  Grantor shall
      execute such documents in addition to this Deed of Trust and take whatever
      other action is requested by Lender to perfect and continue  Lender's lien
      on the Real Property.  Grantor shall  reimburse  Lender for all taxes,  as
      described  below,  together  with  all  expenses  incurred  in  recording,
      perfecting or continuing this Deed of Trust,  including without limitation
      all taxes,  fees,  documentary  stamps, and other charges for recording or
      registering this Deed of Trust.

      Taxes. The following shall constitute taxes to which this section applies:
      (a) a specific tax upon this type of Deed of Trust or upon all or any part
      of the  Indebtedness  secured by this Deed of Trust; (b) a specific tax on
      Borrower  which Borrower is authorized or required to deduct from payments
      on the  Indebtedness  secured by this type of Deed of Trust;  (c) a tax on
      this type of Deed of Trust chargeable  against the Lender or the holder of
      the Note; and (d) a specific tax on all or any portion of the Indebtedness
      or on payments of principal and interest made by Borrower.

      Subsequent  Taxes.  If any tax to which  this  section  applies is enacted
      subsequent  to the date of this Deed of Trust,  this event  shall have the
      same  effect as an Event of Default  (as  defined  below),  and Lender may
      exercise any or all of its  available  remedies for an Event of Default as
      provided  below unless  Grantor  either (a) pays the tax before it becomes
      delinquent,  or (b)  contests  the tax as provided  above in the Taxes and
      Liens  section and  deposits  with Lender cash or a  sufficient  corporate
      surety bond or other security satisfactory to Lender.

SECURITY AGREEMENT;  FINANCING STATEMENTS.  The following provisions relating to
this Deed of Trust as a security agreement are a part of this Deed of Trust.

      Security Agreement.  This instrument shall constitute a security agreement
      to the extent any of the Property  constitutes  fixtures or other personal
      property, and Lender shall have all of the rights of a secured party under
      the Uniform Commercial Code as amended from time to time.

      Security Interest. Upon request by Lender, Grantor shall execute financing
      statements  and take  whatever  other  action  is  requested  by Lender to
      perfect and continue  Lender's security interest in the Rents and Personal
      Property. In addition to recording this Deed of Trust in the real property
      records,  Lender may, at any time and without further  authorization  from
      Grantor, file executed counterparts,  copies or reproductions of this Deed
      of Trust as a financing statement.  Grantor shall reimburse Lender for all
      expenses incurred in perfecting or continuing this security interest. Upon
      default, Grantor shall assemble the Personal Property in a manner and at a
<PAGE>

      place reasonably convenient to Grantor and Lender and make it available to
      Lender within three (3) days after receipt of written demand from Lender.

      Addresses.  The mailing  addresses of Grantor (debtor) and Lender (secured
      party), from which information concerning the security interest granted by
      this  Deed of Trust  may be  obtained  (each as  required  by the  Uniform
      Commercial Code), are as stated on the first page of this Deed of Trust.

FURTHER  ASSURANCES;  ATTORNEY-IN-FACT.  The  following  provisions  relating to
further assurances and attorney-in-fact are a part of this Deed of Trust.

      Further  Assurances.  At any time, and from time to time,  upon request of
      Lender,  Grantor will make, execute and deliver, or will cause to be made,
      executed  or  delivered,  to  Lender  or to  Lender's  designee,  and when
      requested by Lender, cause to be filed, recorded,  refiled, or rerecorded,
      as the case may be, at such times and in such offices and places as Lender
      may deem appropriate, any and all such mortgages, deeds of trust, security
      deeds, security agreements, financing statements, continuation statements,
      instruments of further  assurance,  certificates,  and other  documents as
      may, in the sole opinion of Lender,  be necessary or desirable in order to
      effectuate,  complete,  perfect, continue, or preserve (a) the obligations
      of  Grantor  and  Borrower  under  the Note,  this Deed of Trust,  and the
      Related  Documents,  and (b) the liens and security  interests  created by
      this  Deed of Trust  on the  Property,  whether  now  owned  or  hereafter
      acquired by Grantor. Unless prohibited by law or agreed to the contrary by
      Lender  in  writing,  Grantor  shall  reimburse  Lender  for all costs and
      expenses  incurred  in  connection  with the  matters  referred to in this
      paragraph.

      Attorney-in-Fact.  If Grantor fails to do any of the things referred to in
      the preceding  paragraph,  Lender may do so for and in the name of Grantor
      and at Grantor's  expense.  For such purposes,  Grantor hereby irrevocably
      appoints Lender as Grantor's  attorney-in-fact  for the purpose of making,
      executing,  delivering,  filing,  recording, and doing all other things as
      may be necessary or desirable, in Lender's sole opinion, to accomplish the
      matters referred to in the preceding paragraph.

FULL PERFORMANCE. If Borrower pays all the Indebtedness when due, terminates the
line of credit, and otherwise performs all the obligations  imposed upon Grantor
under this Deed of Trust,  Lender shall execute and deliver to Trustee a request
for full  reconveyance  and  shall  execute  and  deliver  to  Grantor  suitable
statements of termination of any financing statement on file evidencing Lender's
security  interest in the Rents and the  Personal  Property.  Grantor  shall pay
Lender a reasonable reconveyance fee for said reconveyance.

DEFAULT.  Each of the following,  at the option of Lender,  shall  constitute an
event of default ("Event of Default") under this Deed of Trust:

      Default on  Indebtedness.  Failure of Borrower to make any payment  within
      ten (10) days of when due on the Indebtedness.

      Default on Other Payments.  Failure of Grantor within the time required by
      this  Deed of Trust to make any  payment  for taxes or  insurance,  or any
      other payment necessary to prevent filing of or to effect discharge of any
      lien.

      Compliance  Default.  Failure of Grantor or  Borrower  to comply  with any
      other term,  obligation,  covenant or condition  contained in this Deed of
      Trust, the Note or in any of the Related  Documents.  If such a failure is
      curable and if Grantor or Borrower has not been given a notice of a breach
      of the same  provision of this Deed of Trust within the  preceding  twelve
      (12) months,  it may be cured (and no Event of Default will have occurred)
      if Grantor or Borrower,  after Lender sends written notice  demanding cure
      of such failure:  (a) cures the failure within thirty (30) days; or (b) 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 after notice is sent.

      Breaches.  Any warranty,  representation or statement made or furnished to
      Lender by or on behalf of  Grantor or  Borrower  under this Deed of Trust,
      the Note or the  Related  Documents  is, or at the time made or  furnished
      was, false in any material respect.
<PAGE>

      Insolvency.  The  insolvency  of Grantor  or  Borrower,  appointment  of a
      receiver for any part of Grantor or Borrower's  property,  any  assignment
      for the benefit of creditors, the commencement of any proceeding under any
      bankruptcy or insolvency  laws by or against  Grantor or Borrower,  or the
      dissolution or  termination of Grantor or Borrower's  existence as a going
      business  (if  Grantor or Borrower  is a  business).  Except to the extent
      prohibited  by federal law or Oregon law, the death of Grantor or Borrower
      (or a member or partner of Grantor  or Borrow)  also shall  constitute  an
      Event of Default  under this Deed of Trust.  Lender  may,  at its  option,
      permit the deceased's  estate to assume  unconditionally  the  obligations
      arising under the Note in a manner reasonably satisfactory to Lender, and,
      in so doing, cure the Event of Default.

      Foreclosure,  etc.  Commencement  of  foreclosure,   whether  by  judicial
      proceeding,  self-help,  repossession or any other method, by any creditor
      of Grantor against any of the Property. However, this subsection shall not
      apply in the event of a good faith  dispute by Grantor as to the  validity
      or  reasonableness  of the claim  which is the  basis of the  foreclosure,
      provided  that  Grantor  gives  Lender  written  notice of such  claim and
      furnishes reserves or a surety bond for the claim satisfactory to Lender.

      Breach of Other  Agreement.  Any breach by Grantor or  Borrower  under the
      terms of any other  agreement  between Grantor or Borrower and Lender that
      is not  remedied  within  any grace  period  provided  therein,  including
      without  limitation  any agreement  concerning any  indebtedness  or other
      obligation  of Grantor or  Borrower  to Lender,  whether  existing  now or
      later.

      Events  Affecting  Guarantor.  Any Guarantor seeks,  claims,  or otherwise
      attempts to limit, modify, or revoke such Guarantor's guaranty with Lender
      or any of the preceding events occurs with respect to any Guarantor of any
      of the Indebtedness or such Guarantor dies or becomes incompetent. Lender,
      at its option,  may, but shall not be required to, permit the  Guarantor's
      estate  to  assume  unconditionally  the  obligations  arising  under  the
      guaranty in a manner  satisfactory  to Lender,  and, in doing so, cure the
      Event of Default.

      Insecurity.  Lender in good faith deems itself insecure.

RIGHTS AND REMEDIES ON DEFAULT.  Upon the occurrence of any Event of Default and
at any time thereafter,  Trustee or Lender, at its option,  may exercise any one
or more of the following rights and remedies, in addition to any other rights or
remedies provided by law:

      Accelerate  Indebtedness.  Lender  shall  have the right at its  option to
      declare the entire Indebtedness immediately due and payable, including any
      prepayment penalty which Borrower would be required to pay.

      Foreclosure.  With  respect to all or any part of the Real  Property,  the
      Trustee  shall have the right to foreclose by notice and sale,  and Lender
      shall have the right to foreclose by judicial foreclosure,  in either case
      in accordance  with and to the full extent  provided by applicable law. If
      this Deed of Trust is foreclosed by judicial  foreclosure,  Lender will be
      entitled to a judgment  which will  provide that if the  foreclosure  sale
      proceeds are insufficient to satisfy the judgment, execution may issue for
      the amount of the unpaid balance of the judgment.

      UCC  Remedies.  With respect to all or any part of the Personal  Property,
      Lender shall have all the rights and remedies of a secured party under the
      Uniform Commercial Code.

      Collect Rents.  Lender shall have the right,  without notice to Grantor or
      Borrower,  to take  possession  of and manage the Property and collect the
      Rents,  including amounts past due and unpaid, and apply the net proceeds,
      over and above Lender's costs, against the Indebtedness. In furtherance of
      this right, Lender may require any tenant or other user of the Property to
      make  payments of rent or use fees  directly  to Lender.  If the Rents are
      collected  by  Lender,  then  Grantor  irrevocably  designates  Lender  as
      Grantor's  attorney-in-fact  to endorse  instruments  received  in payment
      thereof in the name of Grantor and to  negotiate  the same and collect the
      proceeds.  Payments  by tenants or other  users to Lender in  response  to
      Lender's  demand shall satisfy the  obligations for which the payments are
      made, whether or not any proper grounds for the demand existed. Lender may
<PAGE>

      exercise its rights under this subparagraph either in person, by agent, or
      through a receiver.

      Appoint Receiver. Lender shall have the right to have a receiver appointed
      to take  possession of all or any part of the Property,  with the power to
      protect and  preserve  the  Property,  to operate the  Property  preceding
      foreclosure  or sale, and to collect the Rents from the Property and apply
      the  proceeds,  over and above the cost of the  receivership,  against the
      Indebtedness.  The  receiver  may serve  without bond if permitted by law.
      Lender's right to the appointment of a receiver shall exist whether or not
      the  apparent  value  of  the  Property  exceeds  the  Indebtedness  by  a
      substantial  amount.  Employment  by Lender shall not  disqualify a person
      from serving as a receiver.

      Tenancy at  Sufferance.  If Grantor  remains in possession of the Property
      after the Property is sold as provided above or Lender  otherwise  becomes
      entitled to possession  of the Property  upon default of Grantor,  Grantor
      shall  become a tenant at  sufferance  of Lender or the  purchaser  of the
      Property and shall, at Lender's option, either (a) pay a reasonable rental
      for the use of the Property,  or (b) vacate the Property  immediately upon
      the demand of Lender.

      Other  Remedies.  Trustee or Lender  shall have any other  right or remedy
      provided in this Deed of Trust or the Note or by law.

      Notice of Sale.  Lender shall give Grantor  reasonable  notice of the time
      and place of any public sale of the Personal Property or of the time after
      which any  private  sale or other  intended  disposition  of the  Personal
      Property is to be made. Reasonable notice shall mean notice given at least
      ten (10)  days  before  the time of the sale or  disposition.  Any sale of
      Personal  Property  may be made in  conjunction  with any sale of the Real
      Property.

      Sale of the Property.  To the extent  permitted by applicable law, Grantor
      and  Borrower  hereby  waive  any and all  rights  to  have  the  Property
      marshalled.  In exercising its rights and remedies,  the Trustee or Lender
      shall  be  free to  sell  all or any  part  of the  Property  together  or
      separately,  in one sale or by separate sales. Lender shall be entitled to
      bid at any public sale on all or any portion of the Property.

      Waiver;  Election  of  Remedies.  A waiver  by any  party of a breach of a
      provision  of this  Deed of Trust  shall  not  constitute  a waiver  of or
      prejudice the party's rights  otherwise to demand strict  compliance  with
      that  provision or any other  provision.  Election by Lender to pursue any
      remedy provided in this Deed of Trust, the Note, in any Related  Document,
      or provided by law shall not exclude  pursuit of any other remedy,  and an
      election to make  expenditures  or to take action to perform an obligation
      of Grantor or Borrower  under this Deed of Trust after  failure of Grantor
      or  Borrower  to  perform  shall not  affect  Lender's  right to declare a
      default and to exercise any of its remedies.

      Attorneys'  Fees;  Expenses.  If Lender  institutes  any suit or action to
      enforce any of the terms of this Deed of Trust,  Lender  shall be entitled
      to recover such sum as the court may adjudge reasonable as attorneys' fees
      at trial and on any appeal.  Whether or not any court  action is involved,
      all reasonable  expenses  incurred by Lender which in Lender's opinion are
      necessary  at  any  time  for  the  protection  of  its  interest  or  the
      enforcement of its rights shall become a part of the Indebtedness  payable
      on  demand  and  shall  bear  interest  at the Note  rate from the date of
      expenditure  until repaid.  Expenses  covered by this  paragraph  include,
      without  limitation,  however subject to any limits under  applicable law,
      Lender's  attorneys'  fees  whether or not there is a  lawsuit,  including
      attorneys'  fees for  arbitration  and bankruptcy  proceedings  (including
      efforts to modify or vacate any automatic stay or injunction), appeals and
      any anticipated  post-judgment  collection services, the cost of searching
      records,   obtaining  title  reports  (including   foreclosure   reports),
      surveyors'  reports,  appraisal fees,  title  insurance,  and fees for the
      Trustee,  to the extent permitted by applicable law. Grantor also will pay
      any court costs, in addition to all other sums provided by law.

      Rights of  Trustee.  Trustee  shall  have all of the  rights and duties of
      Lender as set forth in this section.

POWERS AND  OBLIGATIONS  OF TRUSTEE.  The following  provisions  relating to the
powers and obligations of Trustee are part of this Deed of Trust.
<PAGE>

      Powers of  Trustee.  In  addition  to all powers of  Trustee  arising as a
      matter of law, Trustee shall have the power to take the following  actions
      with  respect  to the  Property  upon the  written  request  of Lender and
      Grantor:  (a)  join in  preparing  and  filing  a map or plat of the  Real
      Property,  including  the  dedication  of streets  or other  rights to the
      public;  (b) join in granting any easement or creating any  restriction on
      the Real Property;  and (c) join in any  subordination  or other agreement
      affecting  this Deed of Trust or the interest of Lender under this Deed of
      Trust.

      Obligations to Notify.  Trustee shall not be obligated to notify any other
      party of a pending  sale  under any other  trust  deed or lien,  or of any
      action or  proceeding  in which  Grantor,  Lender,  or Trustee  shall be a
      party, unless the action or proceeding is brought by Trustee.

      Trustee.  Trustee shall meet all qualifications required for Trustee under
      applicable  law. In addition to the rights and  remedies  set forth above,
      with respect to all or any part of the  Property,  the Trustee  shall have
      the right to foreclose by notice and sale, and Lender shall have the right
      to foreclose by judicial  foreclosure,  in either case in accordance  with
      and to the full extent  provided by  applicable  law.  Successor  Trustee.
      Lender,  at  Lender's  option,  may from time to time  appoint a successor
      Trustee to any Trustee appointed  hereunder by an instrument  executed and
      acknowledged  by Lender and  recorded in the office of the recorder of the
      county  in which the Real  Property  is  situated.  The  instrument  shall
      contain, in addition to all other matters required by state law, the names
      of the original Lender, Trustee, and Grantor, the book and page where this
      Deed of Trust is  recorded,  and the name  and  address  of the  successor
      trustee,  and the instrument  shall be executed and acknowledged by Lender
      or its successors in interest.  The successor trustee,  without conveyance
      of the  Property,  shall  succeed  to all the  title,  power,  and  duties
      conferred  upon the Trustee in this Deed of Trust and by  applicable  law.
      This procedure for  substitution  of trustee shall govern to the exclusion
      of all other provisions for substitution.

NOTICES TO GRANTOR AND OTHER PARTIES.  Any notice under this Deed of Trust shall
be in writing and shall be  effective  when  actually  delivered  or, if mailed,
shall be deemed  effective when deposited in the United States mail first class,
registered  mail,  postage  prepaid,  directed to the  addresses  shown near the
beginning  of this Deed of Trust.  Any party may change its  address for notices
under this Deed of Trust by giving formal  written  notice to the other parties,
specifying that the purpose of the notice is to change the party's address.  All
copies of notices of foreclosure  from the holder of any lien which has priority
over this Deed of Trust  shall be sent to  Lender's  address,  as shown near the
beginning of this Deed of Trust.  For notice  purposes,  Grantor  agrees to keep
Lender and Trustee informed at all times of Grantor's current address.

MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a part of
this Deed of Trust:

      Amendments.  This  Deed of Trust,  together  with any  Related  Documents,
      constitutes  the entire  understanding  and agreement of the parties as to
      the matters set forth in this Deed of Trust. No alteration of or amendment
      to this Deed of Trust  shall be  effective  unless  given in  writing  and
      signed  by the  party or  parties  sought  to be  charged  or bound by the
      alteration or amendment.

      Accounts and Records.  Grantor will  maintain a standard  modern system of
      accounting  administered in accordance with generally accepted  accounting
      principles. Lender shall have the right to examine the books of account of
      Grantor  to the  extent  that they  pertain  to this Deed of Trust and the
      Property, and to discuss the affairs, finances, and accounts of Grantor to
      such  extent,  all at such  reasonable  times and  intervals as Lender may
      desire.  Grantor  will  furnish to Lender,  (i) within one hundred  twenty
      (120) days after and as of the close of each  fiscal  year,  the  year-end
      financial statements of Grantor, including a balance sheet and a statement
      of earnings  (income and loss) from  Grantor's  business,  as requested by
      Lender,  in detail  satisfactory to Lender;  (ii) upon an Event of Default
      and within twenty (20) days following Lender's request therefor,  all such
      financial  information  as may be  necessary or  appropriate  for Lender's
      determination  of Grantor's net operating income and debt service with all
      such  financial  information  being  prepared and certified as accurate by
      Grantor;  (iii) from time to time,  upon  Lender's  request,  tenant  rent
      rolls,  leasing  summary  reports  and cash flow  projections  (or updates
      thereof),  setting forth the status of all existing and anticipated leases
      or subleases  affecting  the Property and  Grantor's  best estimate of the
      revenues to be obtained and the expenses to be incurred in connection with
      the operation of the Property for the following  one-year period; and (iv)
<PAGE>

      within  thirty (30) days after and as of the close of each quarter of each
      fiscal year, the quarter-end financial statements of Grantor,  including a
      balance sheet and statement of earnings  (income and loss) from  Grantor's
      business  and from  the  Property,  as  requested  by  Lender,  in  detail
      satisfactory  to Lender.  In addition to the above,  Grantor shall furnish
      Lender with, as soon as available,  but in no event later than one hundred
      twenty (120) days after the end of each fiscal  year,  copies of Grantor's
      tax returns.

      Applicable  Law.  THIS DEED OF TRUST  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 GRANTOR HEREBY WAIVE
      THE RIGHT TO ANY JURY TRIAL IN ANY  ACTION,  PROCEEDING,  OR  COUNTERCLAIM
      BROUGHT BY EITHER LENDER OR GRANTOR AGAINST THE OTHER.  THIS DEED OF TRUST
      SHALL BE  GOVERNED BY AND  CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE
      STATE OF OREGON.

      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 Deed of Trust or otherwise,
      including  without  limitation  contract  and  tort  disputes,   shall  be
      arbitrated  pursuant  to  the  then  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 Property 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;
      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 Property, including any claim to rescind, reform, or
      otherwise  modify any agreement  relating to the  Property,  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 Deed of Trust 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.

      Caption  Headings.  Caption  headings  in  this  Deed  of  Trust  are  for
      convenience  purposes  only and are not to be used to  interpret or define
      the provisions of this Deed of Trust.

      Lender's Right to Sell  Participations in the Loan. Lender may at any time
      sell, assign, transfer,  negotiate,  grant participations in, or otherwise
      dispose  of,  to  any  one  or  more  other  lenders  (hereinafter  called
      "Participants") all or any part of the indebtedness of Grantor at any time
      outstanding  under the Note,  this  Deed of Trust,  or any of the  Related
      Documents (collectively,  the "Loan Documents").  Grantor acknowledges and
      agrees  that any such  disposition  will  give  rise to an  obligation  of
      Grantor to each  Participant  and that,  in such event,  each  Participant
      shall,  for all purposes  hereof,  be entitled to the benefits of the Loan
      Documents and all other  documents,  instruments,  and agreements  therein
      described, as its interest may appear. Grantor shall, from time to time at
      the request of Lender,  execute and  deliver,  or cause to be executed and
      delivered,   to  Lender  or  to  such  party  or  parties  (including  any
      Participant) as Lender may designate, any and all such further instruments
      as may in the opinion of Lender be  necessary  or  desirable  to give full
      force and effect to such disposition, including, but not limited to, a new
      note or new notes to be issued in exchange for the Note and such  estoppel
      certificates  or other  instruments  as may be  requested  from Grantor to
      evidence the continuing  validity of the Loan Documents and the absence of
      any default by Lender thereunder.  Notwithstanding the foregoing,  Grantor
      acknowledges  that no  Participant  shall be  deemed a  direct  lender  or
      co-lender with Lender.

      Maintenance of Depository Relationship.  Grantor shall, at all times while
<PAGE>

      any portion of the Note remains unpaid, maintain a depository relationship
      with Lender,  or a subsidiary or affiliate of Lender,  until completion of
      the initial construction project and receipt of an occupancy certificate.

      Merger. There shall be no merger of the interest or estate created by this
      Deed of Trust with any other  interest  or estate in the  Property  at any
      time held by or for the  benefit of Lender in any  capacity,  without  the
      written consent of Lender.

      Multiple  Parties;  Corporate  Authority.  All  obligations of Grantor and
      Borrower  under  this Deed of Trust  shall be joint and  several,  and all
      references  to  Borrower  shall  mean  each and  every  Borrower,  and all
      references to Grantor shall mean each and every  Grantor.  This means that
      each of the Borrowers  signing below is responsible for all obligations in
      this Deed of Trust.  Where any one or more of the parties are corporations
      or partnerships or limited  liability  companies,  it is not necessary for
      Lender  to  inquire  into  the  powers  of any of  the  parties  or of the
      officers, directors,  partners, members, or agents acting or purporting to
      act on their behalf.

      Severability.  If a court of competent jurisdiction finds any provision of
      this Deed of Trust to be  invalid  or  unenforceable  as to any  person or
      circumstance,  such  finding  shall not render that  provision  invalid or
      unenforceable as to any other persons or circumstances.  If feasible,  any
      such offending  provision  shall be deemed to be modified to be within the
      limits of enforceability or validity;  however, if the offending provision
      cannot be so modified,  it shall be stricken and all other  provisions  of
      this  Deed  of  Trust  in  all  other  respects  shall  remain  valid  and
      enforceable.

      Successors and Assigns.  Subject to the limitations stated in this Deed of
      Trust on  transfer  of  Grantor's  interest,  this Deed of Trust  shall be
      binding upon and inure to the benefit of the parties, their successors and
      assigns.  If ownership of the  Property  becomes  vested in a person other
      than Grantor,  Lender,  without notice to Grantor, may deal with Grantor's
      successors  with reference to this Deed of Trust and the  Indebtedness  by
      way of  forbearance  or  extension  without  releasing  Grantor  from  the
      obligations of this Deed of Trust or liability under the Indebtedness.

      Time Is of the Essence.  Time is of the essence in the performance of this
      Deed of Trust.

      Waivers and Consents. Lender shall not be deemed to have waived any rights
      under  this Deed of Trust (or under the  Related  Documents)  unless  such
      waiver is in writing  and signed by Lender.  No delay or  omission  on the
      part of Lender in  exercising  any right shall operate as a waiver of such
      right or any other  right.  A waiver by any party of a  provision  of this
      Deed of Trust shall not  constitute a waiver of or  prejudice  the party's
      right  otherwise to demand strict  compliance  with that  provision or any
      other  provision.  No prior  waiver by  Lender,  nor any course of dealing
      between Lender and Grantor or Borrower,  shall  constitute a waiver of any
      of Lender's  rights or any of Grantor or Borrower's  obligations as to any
      future  transactions.  Whenever consent by Lender is required in this Deed
      of Trust, the granting of such consent by Lender in any instance shall not
      constitute  continuing consent to subsequent  instances where such consent
      is required.

COMMERCIAL DEED OF TRUST.  Grantor agrees with Lender that this Deed of Trust is
a  commercial  deed of trust and that  Grantor  will not  change  the use of the
Property without Lender's prior written consent.

EACH GRANTOR  ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS DEED OF TRUST,
AND EACH GRANTOR AGREES TO ITS TERMS.

GRANTOR:

Timberline Software Corporation

By: /s/ Thomas P. Cox
   ----------------------------
Its:  Senior Vice President
    ---------------------------
<PAGE>


                          CORPORATE ACKNOWLEDGMENT

STATE OF OREGON                 )
                                ) ss.
County of WASHINGTON            )


         On this first day of December,  1997, before me, a Notary Public in and
for said state,  personally  appeared  Thomas P. Cox,  Senior Vice  President of
Timberline Software  Corporation,  known to me to be the person who executed the
within DEED OF TRUST on behalf of said  corporation and  acknowledged to me that
he/she/they executed the same for the purposes therein stated.



                                          /s/Ronald M. Osmond
                                         -------------------------------
                                         Notary Public for Oregon
                                         My Commission Expires: July 5, 1999


                         REQUEST FOR FULL  RECONVEYANCE
          (To be used only when  obligations have been paid in full)

To:                                , Trustee
   --------------------------------
The  undersigned  is the legal owner and holder of all  Indebtedness  secured by
this Deed of Trust.  All sums secured by this Deed of Trust have been fully paid
and satisfied. You are hereby directed, upon payment to you of any sums owing to
you under the terms of this Deed of Trust or pursuant to any applicable statute,
to cancel the Note  secured  by this Deed of Trust  (which is  delivered  to you
together with this Deed of Trust),  and to reconvey,  without  warranty,  to the
parties  designated  by the terms of this Deed of Trust,  the estate now held by
you under this Deed of Trust. Please mail the reconveyance and Related Documents
to: .

Date:                                      Beneficiary:
     ----------------                                  -------------------
                                           By:
                                              ----------------------------
                                           Its:
                                               ---------------------------