<PAGE>

                                                      Loan No. 1910069-0004
                                                      ---------------------
[Heller Logo]


                                   PROMISSORY NOTE


$10,000,000.00                                                   May 30, 1997


    FOR VALUE RECEIVED, PRAEGITZER INDUSTRIES, INC., an Oregon corporation 
("MAKER"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware 
corporation (together with any holder of this Note, "PAYEE"), at its office 
located at 500 West Monroe Street, Chicago, Illinois 60661, or at such other 
place as Payee may from time to time designate, the principal sum of Ten 
Million and 00/100 Dollars ($10,000,000.00), together with interest thereon 
at a rate per annum equal to the One Month LIBOR Rate (hereafter defined), 
PLUS two and 75/100 percent (2.75%), payable in ninety (90) consecutive 
monthly installments of principal plus interest commencing July 1, 1997, and 
continuing on the same day of each consecutive calendar month thereafter 
until this Note is fully paid. The first eighty-nine (89) such monthly 
installments shall each be in the principal amount of one hundred eleven 
thousand one hundred eleven and 11/100 Dollars ($111,111.11), plus accrued 
interest, and the final monthly installment shall be in the principal amount 
of one hundred eleven thousand one hundred eleven and 21/100 Dollars 
($111,111.21), plus accrued interest.  All payments shall be applied first to 
interest and then to principal.  Interest shall be computed on the basis of a 
360-day year and charged for the actual number of days elapsed.

    For purposes of this Note, "ONE MONTH LIBOR RATE" means, for each 
calendar month, a rate of interest equal to:

         (a)  the rate of interest determined by Payee at which deposits in 
U.S. Dollars are offered for the one (1) month interest period based on 
information presented on the Reuters Screen LIBO Page as of 11:00 A.M. (London
time) on the day which is two (2) business days (defined as any day other 
than a Saturday or Sunday or holiday on which commercial banks in London, 
England and New York City, New York, are authorized to close) prior to the 
first day of each calendar month; provided that if at least two such offered 
rates appear on the Reuters Screen LIBO Page in respect of such interest 
period, the arithmetic mean of all such rates (as determined by Payee) will 
be the rate used; provided further that if there are fewer than two offered 
rates or Reuters ceases to provide LIBOR quotations, such rate shall be the 
average rate of interest determined by Payee at which deposits in U.S. 
Dollars are offered for the one (1) month interest period by Bankers Trust 
Company and The Chase Manhattan Bank and National Association (or their 
respective successors) to banks with combined capital and surplus in excess 
of $500,000,000 in the London interbank market as of 11:00 A.M. (London time) 
on the applicable interest rate determination date, divided by

         (b)  a number equal to 1.0 minus the aggregate (but without 
duplication) of the rates (expressed as a decimal fraction) of reserve 
requirements in effect on the day which is two (2) business days prior to the 
beginning of each calendar month (including, without limitation, basic, 
supplemental, marginal and emergency reserves under any regulations of the 
Board of Governors of the Federal Reserve System or other governmental 
authority having jurisdiction with respect thereto, as now and from time to 
time in effect) for Eurocurrency funding (currently referred to as 
"Eurocurrency liabilities" in Regulation D of such Board) which are required 
to be maintained by a member bank of the Federal Reserve System;

                                          1

<PAGE>

    
    (such rate to be adjusted to the nearest one sixteenth of one percent 
(1/16 of 1%) or, if there is no nearest one sixteenth of one percent (1/16 of 
1%), to the next higher one sixteenth of one percent (1/16 of 1%)).

    For the initial funding month (or any fraction thereof) under this Note, 
the applicable floating rate shall be the One Month LIBOR Rate in effect on 
the day of funding, with interest payable in arrears and calculated daily on 
the basis of a 360 day year for the actual number of days elapsed during such 
calendar month.

    Notwithstanding the foregoing, if at any time implementation of any 
provision hereof shall cause the interest contracted for or charged herein or 
collectable hereunder to exceed the applicable lawful maximum rate, then the 
interest shall be limited to such applicable lawful maximum.

    This Note is secured by the collateral described in the Trust Deed, 
Security Agreement, Assignment of Leases and Rents and Fixture Filing dated 
May 30, 1997, made by Maker as "Grantor" in favor of Oregon Title Insurance 
Company, an Oregon corporation, as "Trustee" and Payee as "Beneficiary" (the 
"TRUST DEED") and in the Security Agreement dated May 30, 1997, between Maker 
and Payee (the "SECURITY AGREEMENT;" and together with the Trust Deed and all 
documents and instruments related to this Note, the Trust Deed and/or the 
Security Agreement, the "LOAN DOCUMENTS") to which reference is made for a 
statement of the nature and extent of protection and security afforded, 
certain rights of Payee and certain rights and obligations of Maker, 
including Maker's rights, if any, to prepay the principal balance hereof.

    Time is of the essence hereof.  If payment of any installment or any 
other sum due under this Note or the Loan Documents is not paid when due, 
Maker agrees to pay a late charge equal to the lesser of (i) five cents (5 
cents) per dollar on, and in addition to, the amount of each such payment, or 
(ii) the maximum amount Payee is permitted to charge by law.  In the event of 
the occurrence of an Event of Default (as defined in the Security Agreement), 
then the entire unpaid principal balance hereof with accrued and unpaid 
interest thereon, together with all other sums payable under this Note or the 
Loan Documents, shall, at the option of Payee and without notice or demand, 
become immediately due and payable, such accelerated balance bearing interest 
until paid at the rate of six percent (6%) per annum above the One Month 
LIBOR Rate.

    Maker and all endorsers, guarantors or any others who may at any time 
become liable for the payment hereof hereby consent to any and all extensions 
of time, renewals, waivers and modifications of, and substitutions or release 
of security or of any party primarily or secondarily liable on, or with 
respect to, this Note or any of the Loan Documents or any of the terms and 
provisions thereof that may be made, granted or consented to by Payee, and 
agree that suit may be brought and maintained against any one or more of 
them, at the election of Payee, without joinder of the others as parties 
thereto, and that Payee shall not be required to first foreclose, proceed 
against, or exhaust any security herefor, in order to enforce payment of this 
Note by any one or more of them. Maker and all endorsers, guarantors or any 
others who may at any time become liable for the payment hereof hereby 
severally waive presentment, demand for payment, notice of nonpayment, 
protest, notice of protest, notice of dishonor, and all other notices in 
connection with this Note, filing of suit and diligence in collecting this 
Note or enforcing any of the security herefor, and, without limiting any 
provision of any of the Loan Documents, agree to pay, if permitted by law, 
all expenses incurred in collection, including reasonable attorneys' fees, 
and hereby waive all benefits of valuation, appraisement and exemption laws.

    If there be more than one Maker, all the obligations, promises, 
agreements and covenants of Maker under this Note are joint and several.

    THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE 
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO 
PRINCIPLES OF CONFLICTS OF LAW. AT PAYEE'S ELECTION AND WITHOUT LIMITING 
PAYEE'S RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION,

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<PAGE>


MAKER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURT 
(FEDERAL, STATE OR LOCAL) HAVING SITUS WITHIN THE STATE OF ILLINOIS, 
EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE BY 
CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO THE CHIEF FINANCIAL OFFICER OF 
MAKER AT THE LAST KNOWN ADDRESS OF MAKER, WHICH SERVICE SHALL BE DEEMED 
COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF.

    MAKER HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF 
ACTION BASED UPON OR ARISING OUT OF THIS NOTE.  THIS WAIVER IS INFORMED AND 
FREELY MADE.  MAKER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO 
ENTER INTO A BUSINESS RELATIONSHIP, THAT IT HAS ALREADY RELIED ON THE WAIVER 
IN ENTERING INTO THIS NOTE, AND THAT IT WILL CONTINUE TO RELY ON THE WAIVER 
IN ITS RELATED FUTURE DEALINGS.  MAKER FURTHER WARRANTS AND REPRESENTS THAT 
IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND 
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL 
COUNSEL.

Witness/Attest:                        PRAEGITZER INDUSTRIES, INC., 
                                       an Oregon corporation

/s/ Charles R. Markley                 By: /s/ Matthew J. Bergeron
----------------------                    ---------------------------

                                       Name: Matthew J. Bergeron
                                            -------------------------

                                       Title: Chief Operating Officer
                                             ------------------------



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<PAGE>

                                                      Loan No.: 1910069-0004
                                                                --------------

                                  SECURITY AGREEMENT


THIS SECURITY AGREEMENT ("AGREEMENT") is made this 30th day of May 1997, by 
and between PRAEGITZER INDUSTRIES, INC., an Oregon corporation ("DEBTOR"), 
whose business address is 1270 Monmouth Cutoff, Dallas, Oregon 97338, and 
HELLER FINANCIAL, INC., a Delaware corporation ("SECURED PARTY"), whose 
address is Commercial Equipment Finance Division, 500 West Monroe Street, 
Chicago, Illinois 60661.

                                     WITNESSETH:

1.  SECURE PAYMENT.  To secure payment of indebtedness in the principal sum 
of up to Ten Million and 00/ 100 Dollars ($10,000,000.00), as evidenced by a 
note or notes executed and delivered by Debtor to Secured Party (the "NOTES") 
and any obligations now or hereafter arising under the Loan Documents (as 
defined below) (all the foregoing hereinafter called the "INDEBTEDNESS"), 
Debtor hereby grants and conveys to Secured Party a first priority continuing 
lien and security interest in the property described on the Schedule(s) 
attached hereto (the "SCHEDULES"), all products and proceeds (including 
insurance proceeds) thereof, if any, and all substitutions, replacements, 
attachments, additions, and accessions thereto, all or any of the foregoing 
hereinafter called the "COLLATERAL." The Schedules may be supplemented from 
time to time to evidence the Collateral subject to this Agreement.

2.  WARRANTIES, REPRESENTATIONS AND COVENANTS.  Debtor warrants, represents, 
covenants and agrees as follows:

    (a)  PERFORM OBLIGATIONS.  Debtor shall pay as and when due all of the 
Indebtedness secured by this Agreement and perform all of the obligations 
contained in this Agreement according to its terms.   Debtor shall use the 
loan proceeds for business uses and not for personal, family, household, or 
agricultural uses.

    (b)  PERFECTION.  This Agreement creates a valid and first priority 
continuing lien and security interest in the Collateral, securing the payment 
and performance of the Indebtedness and, assuming UCC-1 financing statements 
describing the Collateral in substantially the same manner as described on 
the attached Schedule A is duly filed with


                                          1


<PAGE>

the Secretary of State of the State of Oregon and with the official real 
estate records of the County of Polk, Oregon, all actions necessary to 
perfect such security interest have been duly taken.

    (c)  COLLATERAL FREE AND CLEAR.  Except as may be set forth on the 
Schedules, Debtor shall keep the Collateral free and clear of all liens, 
claims, charges, encumbrances and other security interests of any kind (other 
than the security interest granted hereby and any lien securing payment of ad 
valorem property taxes, fees or assessments that are not delinquent).  Debtor 
shall defend the title to the Collateral against all persons and against all 
claims and demands whatsoever.  At the request of Secured Party, Debtor shall 
furnish further assurance of title, execute any written agreement and do any 
other acts necessary to effectuate the purposes and provisions of this 
Agreement, including in order to perfect, continue, or terminate the security 
interest of Secured Party in the Collateral, and pay all costs in connection 
therewith.

    (d)  POSSESSION AND OPERATING ORDER OF THE COLLATERAL.  Subject to 
Secured Party's rights and remedies upon the occurrence of an Event of 
Default (defined below), Debtor shall retain possession of the Collateral at 
all times and shall not sell, exchange, assign, loan, deliver, lease, 
mortgage, or otherwise dispose of the Collateral or any part thereof without 
the prior written consent of Secured Party, provided, however, that (i) in 
each succeeding yearly period following the date of this Agreement (each such 
yearly period shall begin on the date of this Agreement or an anniversary 
date thereof, as the case may be, and end on the day immediately preceding 
the next anniversary date of this Agreement), Debtor shall be permitted to 
sell or otherwise transfer for consideration to an unaffiliated entity items 
of Collateral with a fair market value, in the aggregate, of a maximum amount 
of Fifty Thousand and 00/100 Dollars ($50,000.00), and (ii) Debtor may 
encumber items of Collateral acquired by Debtor after the date hereof ("AFTER 
ACQUIRED COLLATERAL") if (1) such After Acquired Collateral is not a 
replacement or substitution of any item(s) of Collateral existing on the date 
hereof (where "replacement" and "substitution" means situations in which the 
After Acquired Collateral serves the same function or service as Collateral 
existing on the date hereof (regardless of whether it also serves other 
functions) and such Collateral existing on the date hereof is no longer in 
service by Debtor at its operations in Dallas, Oregon), or an attachment, 
addition or accession to any item(s) of Collateral existing on the date 
hereof that can not reasonably be removed without materially and adversely 
affecting the value or utility of the items of Collateral existing on the 
date hereof, and (2) such encumbrance is a purchase money security interest 
(as defined in the Uniform Commercial Code) with respect to such After 
Acquired Collateral, that is duly perfected on, before or within ninety (90) 
days after the date Debtor first receives possession of such After Acquired 
Collateral, and, upon request therefor from Debtor, Secured Party will 
subordinate its security interest arising hereunder in such After Acquired 
Collateral pursuant to a subordination agreement in form and substance 
satisfactory to Secured Party.  Debtor shall at all times keep the Collateral 
at the location[s] specified on the Schedules (except for removals thereof in 
the

                                          2



<PAGE>

usual course of business for temporary periods).  At Debtor's sole cost and 
expense, Debtor shall also keep the Collateral in good repair and condition 
and shall not misuse, abuse, waste or otherwise allow it to deteriorate, 
except for normal wear and tear.  Secured Party may verify any Collateral in 
any reasonable manner which Secured Party may consider appropriate, and 
Debtor shall furnish all reasonable assistance and information and perform 
any acts which Secured Party may reasonably request in connection therewith.

    (e)  INSURANCE.  Debtor shall insure the Collateral against loss by fire 
(including extended coverage), theft and other hazards (not including flood 
or earth movement), for its full insurable value including replacement costs, 
with a deductible not to exceed One Hundred Thousand and 00/100 Dollars 
($100,000.00) per occurrence and without co-insurance.  In addition, Debtor 
shall obtain liability insurance covering liability for bodily injury, 
including death and property damage, in an amount of at least Five Million 
and 00/100 Dollars ($5,000,000.00) per occurrence or such greater amount as 
may comply with general industry standards, or in such other amounts as 
Secured Party may otherwise require.  All policies of insurance required 
hereunder shall be in such form, amounts, and with such companies as Secured 
Party may approve; shall provide for at least thirty (30) days prior written 
notice to Secured Party prior to any modification or cancellation thereof; 
shall name Secured Party as loss payee or additional insured, as applicable, 
and shall be payable to Debtor and Secured Party as their interests may 
appear; shall waive any claim for premium against Secured Party; and, with 
respect to the policies insuring against loss by fire, theft and other 
hazards, shall provide that no act or neglect of Debtor shall invalidate the 
coverage afforded thereunder to Secured Party, and with respect to liability 
insurance policies, shall provide coverage unless Debtor intentionally fails 
to disclose all hazards existing as of the inception of the policy. 
Certificates of insurance or policies evidencing the insurance required 
hereunder along with satisfactory proof of the payment of the premiums 
therefor shall be delivered to Secured Party who is authorized but under no 
duty, to obtain such insurance upon failure of Debtor to do so. Debtor shall 
give immediate written notice to Secured Party and to insurers of loss or 
damage to the Collateral and shall promptly file proofs of loss with 
insurers.  Debtor hereby irrevocably appoints Secured Party as Debtor's 
attorney-in-fact, coupled with an interest, for the purpose of obtaining, 
adjusting and canceling any such insurance and endorsing settlement drafts.  
Debtor hereby assigns to Secured Party, as additional security for the 
Indebtedness, all sums which may become payable under such insurance.

    (f)  IF COLLATERAL ATTACHES TO REAL ESTATE.  If the Collateral or any 
part thereof has been attached to or is to be attached to real estate, an 
accurate description of the real estate and the name and address of the 
record owner is set forth on the Schedules.  Debtor shall, on demand of 
Secured Party, furnish Secured Party with a disclaimer or waiver of any 
interest in any such Collateral satisfactory to Secured Party and signed by 
all persons other than Debtor having an interest in the real estate.

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<PAGE>

    (g)  FINANCIAL STATEMENTS.  Debtor shall furnish to Secured Party, as 
soon as practicable, and in any event within sixty (60) days after the end of 
each fiscal quarter of Debtor and each guarantor of all or any part of the 
Indebtedness (each, a "GUARANTOR"), respectively, Debtor's and each 
Guarantor's unaudited financial statements including in each instance, 
balance sheets, income statements, and statements of cash flow, on a 
consolidated and consolidating basis, as appropriate, and separate profit and 
loss statements as of and for the quarterly period then ended and for the 
respective person's fiscal year to date, prepared in accordance with 
generally accepted accounting principles, consistently applied ("GAAP").  
Debtor shall also furnish to Secured Party, as soon as practicable, and in 
any event within ninety (90) days after the end of each fiscal year of Debtor 
and each Guarantor, respectively, Debtor's and each Guarantor's annual 
audited financial statements, including balance sheets, income statements and 
statements of cash flow for the fiscal year then ended, on a consolidated and 
consolidating basis, as appropriate, which have been prepared by its 
independent accountants in accordance with GAAP.  Such audited financial 
statements shall be accompanied by the independent accountant's opinion, 
which opinion shall be in form generally recognized as "unqualified."

    (h)  AUTHORIZATION.  Debtor is now, and will at all times remain, duly 
licensed, qualified to do business and in good standing in every jurisdiction 
where failure to be so licensed or qualified and in good standing would have 
a material adverse effect on its business, properties or assets.  Debtor has 
the power to authorize, execute and deliver this Agreement, the Notes and any 
other documents and instruments relating thereto (the Agreement, Notes and 
other documents and instruments, all as amended from time to time, are 
hereafter collectively referred to as the "LOAN DOCUMENTS"), to incur and 
perform obligations hereunder and thereunder, and to grant the security 
interests created hereby.  As of the time of delivery thereof to Secured 
Party, the Loan Documents will have been duly authorized, executed, and 
delivered by or on behalf of Debtor, and will constitute the legal, valid, 
and binding obligations of Debtor, enforceable against Debtor in accordance 
with their respective terms. Debtor shall preserve and maintain its existence 
and shall not wind up its affairs or otherwise dissolve.  Debtor shall not, 
without thirty (30) days prior written notice to Secured Party, (1) change 
its name or so change its structure such that any financing statement or 
other record notice becomes misleading or (2) change its principal place of 
business or chief executive or accounting offices from the address stated 
herein.

    (i)  LITIGATION.  There are no actions, suits, proceedings, or 
investigations ("LITIGATION") pending or, to the knowledge of Debtor, 
threatened against Debtor or otherwise affecting the Collateral other than as 
disclosed in Schedule 2(i) attached hereto.  Debtor shall promptly notify 
Secured Party in writing of Litigation against it if: (1) the outcome of such 
Litigation may materially or adversely affect the finances or operations of 
Debtor (for purposes of this provision, Five Hundred Thousand and 00/100 
Dollars


                                          4

<PAGE>

($500,000.00) shall be deemed material) or (2) such Litigation questions the 
validity of any Loan Document or any action taken or to be taken pursuant 
thereto.  Debtor shall furnish to Secured Party such information regarding 
any such Litigation as Secured Party shall reasonably request.

    (j)  NO CONFLICTS.  Debtor is not in violation of any material term or 
provision of its by-laws, or of any material agreement or instrument, or of 
any judgment, decree, order, or any statute, rule, or governmental regulation 
applicable to it.  The execution, delivery, and performance of the Loan 
Documents do not and will not violate, constitute a default under, or 
otherwise conflict with any such term or provision or result in the creation 
of any security interest, lien, charge, or encumbrance upon any of the 
properties or assets of Debtor, except for the security interest herein 
created.

    (k)  COMPLIANCE WITH LAWS.  Debtor shall use and maintain the Collateral 
in a lawful manner in accordance with all applicable laws, regulations, 
ordinances, and codes and shall otherwise comply in all material respects 
with all applicable laws, rules, and regulations and duly observe all valid 
requirements of all governmental authorities, and all statutes, rules and 
regulations relating to its business, including (i) the Internal Revenue Code 
of 1986, as amended from time to time, (ii) all federal, state, and local 
laws, rules, regulations, orders, and decrees relating to health, safety, 
hazardous substances, and environmental matters, including the Resource 
Recovery and Reclamation Act of 1976, the Comprehensive Environmental 
Response, Compensation, and Liability Act of 1980, the Toxic Substances 
Control Act, the Clean Water Act of 1977, and the Clean Air Act, all as 
amended from time to time (collectively, "ENVIRONMENTAL LAWS"), (iii) the 
Employees Retirement Income Security Act of 1974, as amended from time to 
time, and (iv) the Fair Labor Standards Act, as amended from time to time.

    (1)  TAXES.  Debtor has timely filed all tax returns (federal, state, 
local, and foreign) required to be filed by it and has paid or established 
reserves for all taxes, assessments, fees, and other governmental charges in 
respect of its properties, assets, income and franchises.  Debtor shall 
promptly pay and discharge all taxes, assessments, license fees (related to 
the Collateral) and other governmental charges prior to the date on which 
penalties are attached thereto, establish adequate reserves for the payments 
of such taxes, assessments, and other governmental charges and make all 
required withholding and other tax deposits, and, upon request, provide 
Secured Party with receipts or other proof that any or all of such taxes, 
assessments, license fees or governmental charges have been paid in a timely 
fashion; provided, however, that nothing contained herein shall require the 
payment of any tax, assessment, or other governmental charge so long as its 
validity is being diligently contested in good faith and by appropriate 
proceedings diligently conducted and Debtor has established cash reserves 
therefor in accordance with GAAP.  Should any stamp, excise, or other tax, 
including mortgage, conveyance, deed, intangible, or recording taxes become 
payable in connection with or respect of any of the Loan


                                          5

<PAGE>


Documents, Debtor shall pay the same (including interest and penalties, if 
any) and shall hold Secured Party harmless with respect thereto.

    (m)  ENVIRONMENTAL LAWS.  Except as disclosed by Debtor (or Debtor's 
representative or agent) in writing to Secured Party's counsel (including 
internal counsel) on or prior to the date hereof, Debtor has (1) not received 
any summons, complaint, order, or other notice that it is not in compliance 
with, or that any public authority is investigating its compliance with, any 
Environmental Laws and (2) no knowledge of any material violation of any 
Environmental Laws on or about its assets or property.  Debtor shall provide 
Secured Party, promptly following receipt, copies of any correspondence, 
notice, complaint, order, or other document that it receives asserting or 
alleging a circumstance or condition which requires or may require a cleanup, 
removal, remedial action or other response by or on the part of Debtor under 
any Environmental Laws, or which seeks damages or civil, criminal or punitive 
penalties from Debtor for an alleged violation of any Environmental Laws.

    (n)  REGULATIONS.  No proceeds of the loans or any other financial 
accommodation hereunder will be used, directly or indirectly, for the purpose 
of purchasing or carrying any margin security, as that term is defined in 
Regulations G, T, U, X of the Board of Governors of the Federal Reserve 
System.

    (o)  BOOKS AND RECORDS.  Debtor shall maintain, at all times, true and 
complete books and records in accordance with GAAP and consistent with those 
applied in the preparation of Debtor's financial statements.  At all 
reasonable times, upon reasonable notice, and during normal business hours, 
Debtor shall permit Secured Party or its agents to audit, examine and make 
extracts from or copies of any of its books, ledges, reports, correspondence, 
and other records relating to the Collateral.

    (p)  SETOFF.  Without limiting any other right of Secured Party, whenever 
Secured Party has the right to declare any Indebtedness to be immediately due 
and payable (whether or not it has so declared), Secured Party is hereby 
authorized at any time and from time to time to the fullest extent permitted 
by law, to set off and apply against any and all of the Indebtedness, any and 
all monies then or thereafter owed to Debtor by Secured Party in any 
capacity, whether or not the obligation to pay such monies owed by Secured 
Party is then due.  Secured Party shall be deemed to have exercised such 
right of setoff immediately at the time of such election even though any 
charge therefor is made or entered on Secured Party's records subsequent 
thereto.

    (q)  STANDARD OF CARE; NOTICE OF CLAIMS.  Debtor acknowledges and agrees 
that Secured Party shall not be liable for any acts or omissions nor for any 
error of judgment or mistake of fact or law other than as a sole and direct 
result of Secured Party's gross negligence willful misconduct.  Debtor shall 
give Secured Party written notice of any action or inaction by Secured Party 
or any agent or attorney of Secured Party that may


                                          6

<PAGE>

give rise to a claim against Secured Party or any agent or attorney of 
Secured Party or that may be a defense to payment or performance of and of 
the Indebtedness for any reason, including commission of a tort (subject, in 
any event, to the first sentence of this paragraph) or violation of any 
contractual duty or duty implied by law.  Debtor agrees that unless such 
notice is fully given as promptly as possible (and in any event within thirty 
(30) days) after the Chairman of the Board, Chief Executive Officer, 
President, Chief Operating Officer, Chief Financial Officer, Secretary, any 
Senior or Executive Vice President or internal counsel of Debtor, or any Vice 
President of Business and/or Technical Operations of Debtor's Dallas, Oregon 
operations, has knowledge, or with the exercise of reasonable diligence 
should have had knowledge, of any such action or inaction, Debtor shall not 
assert, and Debtor shall be deemed to have waived, any claim or defense 
arising therefrom.

    (r)  INDEMNITY.  Debtor shall indemnify, defend and hold Secured Party, 
its parent, affiliates, officers, directors, agents, employees, and attorneys 
harmless from and against any loss, expense (including reasonable attorneys' 
fees and costs), damage or liability arising directly or indirectly out of 
(i) any breach of any representation, warranty or covenant contained in any 
Loan Document, (ii) any claim or cause of action that would deny Secured 
Party the full benefit or protection of any provision in any Loan Document, 
or (iii) the ownership, possession, lease, operation, use, condition, sale, 
return, or other disposition of the Collateral, except to the extent the 
loss, expense, damage or liability arises solely and directly from Secured 
Party's gross negligence or willful misconduct.  If after receipt of any 
payment of all or any part of the Indebtedness, Secured Party is for any 
reason compelled to surrender such payment to any person or entity, because 
such payment is determined to be void or voidable as a preference, 
impermissible set-off, or a diversion of trust funds, or for any other 
reason, the Loan Documents shall continue in full force and effect and Debtor 
shall be liable to Secured Party for the amount of such payment surrendered.  
The provisions of the preceding sentence shall be and remain effective 
notwithstanding any contrary action which may have been taken by Secured 
Party in reliance upon such payment, and any such contrary action so taken 
shall be without prejudice to Secured Party's rights under this Agreement and 
shall be deemed to have been conditioned upon such payment having become 
final and irrevocable.  Additionally, Debtor shall be liable for all charges, 
costs, expenses and attorneys' fees incurred by Secured Party (including a 
reasonable allocation of the compensation, costs and expenses of internal 
counsel, based upon time spent): (i) in perfecting, defending or protecting 
its security interest in the Collateral, or any part thereof, (ii) in the 
negotiation, execution, delivery, administration, amendment or enforcement of 
the Loan Documents or the collection of any amounts due under any Note or 
other Loan Document; (iii) in any lawsuit or other legal proceeding in any 
way connected with any of the Loan Documents, including any contract or tort 
or other actions, any arbitration or other alternative dispute resolution 
proceeding, all appeals and judgment enforcement actions and any bankruptcy 
proceeding (including any relief from stay and/or adequate protection 
motions, cash collateral disputes, assumption/rejection motions and disputes 
or objections to any


                                          7

<PAGE>

proposed disclosure statement or reorganization plan).  Debtor acknowledges 
and agrees that the preceding sentence shall survive and not be merged with 
any judgment in connection with any exercise of any right or remedy by 
Secured Party provided under this Agreement.  The provisions of this 
paragraph shall survive the termination of this Agreement and the other Loan 
Documents.

    (s)  COMPLETE INFORMATION. No representation or warranty made by Debtor 
in any Loan Document and no other document or statement furnished to Secured 
Party by or on behalf of Debtor contains any material misstatement of a 
material fact or omits to state any material fact necessary in order to make 
the statements contained therein not misleading.  Except as expressly set 
forth in the Schedules, there is no fact known to Debtor that will or could 
have a materially adverse affect on the business, operation, condition 
(financial or otherwise), performance, properties or prospects of Debtor or 
Debtor's ability to timely pay all of the Indebtedness and perform all of its 
other obligations contained in or secured by this Agreement.  Each 
representation and warranty made by Debtor in this Agreement shall be deemed 
to have been made as of the date of this Agreement and as of the date of each 
advance of funds under a Note.

    (t)  COLLATERAL DOCUMENTATION.  Debtor shall deliver to Secured Party 
prior to any advance or loan, satisfactory documentation regarding the 
Collateral to be financed, including such invoices, canceled checks 
evidencing payments, or other documentation as may be reasonably requested by 
Secured Party. Additionally, Debtor shall satisfy Secured Party that Debtor's 
business and financial information is as has been represented and there has 
been no material change in Debtor's business, financial condition, or 
operations.

3.  PREPAYMENT.  Upon forty-five (45) days prior written notice to Secured 
Party, Debtor may prepay in whole, but not in part (except as set forth 
below), on any regularly scheduled payment date under the Note, the then 
entire unpaid principal balance of any Note, together with all accrued and 
unpaid interest thereon to the date of such prepayment, provided that along 
with and in addition to such prepayment, Debtor shall pay (i) any and all 
other sums then due under any of the Loan Documents, and (ii) a prepayment 
fee as liquidated damages and not as a penalty, in a sum equal to three 
percent (3%) of the principal balance being prepaid for any prepayment on or 
before the first anniversary of the date of the Note, two percent (2%) of the 
principal balance being prepaid for any prepayment after the first 
anniversary of the date of the Note and on or before the second anniversary 
of the date of the Note, and one percent (1%) of the principal balance being 
prepaid for any prepayment after the second anniversary of the date of the 
Note and before the seventh anniversary date of the Note. The prepayment fee 
described in clause (ii) above shall also be due upon the acceleration of the 
maturity date of any Note following the occurrence of any Event of Default.  
Notwithstanding anything to the contrary set forth above, provided no Event 
of Default has occurred and is continuing, in each yearly period following 
the date of this Agreement (each such yearly


                                          8

<PAGE>

period shall begin on the date of this Agreement or an anniversary date 
thereof, as the case may be, and end on the day immediately preceding the 
next anniversary date of this Agreement), Debtor shall be permitted to prepay 
(without paying any fee, liquidated damages or other penalties) principal 
outstanding under the Note in the amount of One Hundred Thousand and 00/100 
Dollars ($100,000.00), or less, together with all accrued and unpaid interest 
thereon to the date of such prepayment, provided, however, that each such 
prepayment shall be made on a regularly scheduled payment date under the Note.

4.  EVENTS OF DEFAULT.  If any one of the following events (each of which is 
herein called an "EVENT OF DEFAULT") shall occur: (a) Debtor fails to pay any 
part of the Indebtedness within ten (10) calendar days of its due date, or (b)
any warranty or representation of Debtor in any Loan Document is materially 
untrue, misleading or inaccurate, or (c) Debtor breaches or defaults in the 
performance of any of its obligations under Paragraphs (c) through (e) of 
Section 2, above, or (d) Debtor or any Guarantor breaches or defaults in the 
performance of any other agreement or covenant under any Loan Document and 
fails to cure such breach or default within thirty (30) days after written 
notice of the breach or default from Secured Party, or (e) Debtor or any 
Guarantor breaches or defaults in the payment or performance of any debt or 
other obligation owed by it to Secured Party or any affiliate of Secured 
Party and fails to cure such breach or default within the applicable cure 
period, if any, or (f) Debtor breaches or defaults in the payment or 
performance of any debt or other obligation, whether now or hereafter 
existing, with an outstanding principal balance in excess of One Million and 
00/100 Dollars ($1,000,000.00), and the same is subsequently accelerated, or 
(g) there shall be a change in the beneficial ownership and control, directly 
or indirectly, of the majority of the outstanding voting securities or other 
interests entitled (without regard to the occurrence of any contingency) to 
elect or appoint members of the board of directors or other managing body of 
Debtor or any Guarantor other than any such change as the result of the death 
of Robert L. Praegitzer or Sally E. Praegitzer, or as the result of a 
transfer for estate planning purpose of any shares of Debtor owned by Robert 
L. Praegitzer or Sally E. Praegitzer to a trust for the benefit of his or her 
heirs, as to which Robert L. Praegitzer or Sally E. Praegitzer, or both, are 
the sole trustee(s) (a "CHANGE OF CONTROL"), or there is any merger, 
consolidation, dissolution, liquidation, winding up or sale or other transfer 
of all or substantially all of the assets of Debtor or any Guarantor pursuant 
to which there is a change of control or cessation of Debtor or the Guarantor 
or the business of either, or (h) Debtor or any Guarantor shall file a 
voluntary petition in bankruptcy, shall apply for or permit the appointment 
by consent or acquiescence of a receiver, conservator, administrator, 
custodian or trustee for itself or all or a substantial part of its property, 
shall make an assignment for the benefit of creditors or shall be unable, 
fail or admit in writing its inability to pay its debts generally as such 
debts become due, or (i) there shall have been filed against Debtor or any 
Guarantor an involuntary petition in bankruptcy or Debtor or any Guarantor 
shall suffer or permit the involuntary appointment of a receiver, 
conservator, administrator, custodian or trustee for all or a substantial 
part of its property or the issuance of a warrant of attachment, diligence, 
execution or similar process against


                                          9

<PAGE>

all or any substantial part of its property; unless, in each case, such 
petition, appointment or process is fully bonded against, vacated or 
dismissed within forty-five (45) days from its effective date, but not later 
than ten (10) days prior to any proposed disposition of any assets pursuant 
to any such proceeding, or (j) if there is a material adverse change in the 
business or financial condition or prospects of Debtor, then, and in any such 
event, Secured Party shall have the right to exercise any one or more of the 
remedies hereinafter provided.

Each of the following events shall also constitute an Event of Default 
hereunder and upon the occurrence of any one or more of them, Secured Party 
shall have the right to exercise any one or more of the remedies hereinafter 
provided:

    (aa) If at the end of the first fiscal year of Debtor ending after the 
date of this Agreement, and each fiscal year ending thereafter (each a 
"Fiscal Year"), Debtor's operating income before interest expense, income 
taxes, depreciation, amortization and extraordinary gains and/or losses, all 
as determined in accordance with GAAP ("EBITDA"), for each such Fiscal Year, 
is less than one and one-half (1.5) times as much as the sum of all of 
Debtor's interest expense incurred during the Fiscal Year plus the current 
portion of long term debt and capitalized leases reported as of the end of 
the Fiscal Year, all as determined in accordance with GAAP; or

    (bb) If Debtor at any time has a net worth as determined in accordance 
with GAAP of less than thirty million and 00/100 Dollars ($30,000,000) 
increasing annually by an amount equal to 50% of the reported net after-tax 
earnings beginning with the Fiscal Year ending June 30, 1997 and each 
subsequent year thereafter; or

    (cc) If at the end of any Fiscal Year End of Debtor, the sum of Debtor's 
notes payable, capitalized lease obligations and all other borrowed funds 
(whether reflected as a current liability or a long-term liability) as 
determined by GAAP is greater than three (3.0) times Debtor's EBITDA for the 
Fiscal Year then ended.

5.  REMEDIES.  If an Event of Default shall occur, in addition to all rights 
and remedies of a secured party under the Uniform Commercial Code, Secured 
Party may, at its option, at any time (a) declare the entire unpaid 
Indebtedness to be immediately due and payable; (b) without demand or legal 
process, enter into the premises where the Collateral may be found and take 
possession of and remove the Collateral, all without charge to or liability 
on the part of Secured Party; or (c) require Debtor to discontinue its use of 
the Collateral, and, to the extent it is not permanently affixed to or 
otherwise a part of real property, assemble, crate, pack, ship, and deliver 
the Collateral to Secured Party in such manner and at such place as Secured 
Party may require, all at Debtor's sole cost and expense. DEBTOR HEREBY 
EXPRESSLY WAIVES ITS RIGHTS, IF ANY, TO (1) PRIOR NOTICE OF REPOSSESSION AND 
(2) A JUDICIAL OR ADMINISTRATIVE HEARING PRIOR TO SUCH REPOSSESSION.  Secured 
Party may, at its option, ship,


                                          10


<PAGE>

store and repair the Collateral so removed and sell any or all of it at a 
public or private sale or sales. Unless the Collateral is perishable or 
threatens to decline speedily in value or is of a type customarily sold on a 
recognized market, Secured Party will give Debtor reasonable notice of the 
time and place of any public sale thereof or of the time after which any 
private sale or any other intended disposition thereof is to be made, it 
being understood and agreed that Secured Party may be a buyer at any such 
sale and Debtor may not, either directly or indirectly, be a buyer at any 
such sale.  The requirements, if any, for reasonable notice will be met if 
such notice is delivered to Debtor in accordance with Section 10 of this 
Agreement at least ten (10) days before the time of sale or disposition.  In 
accordance with Section 2(r), Debtor shall also be liable for and shall upon 
demand pay to Secured Party all expenses incurred by Secured Party in 
connection with the undertaking or enforcement by Secured Party of any of its 
rights or remedies hereunder or at law, all of which costs and expenses shall 
be additional Indebtedness hereby secured.  After any such sale or 
disposition, Debtor shall be liable for any deficiency of the Indebtedness 
remaining unpaid, with interest thereon at the rate set forth in the related 
Notes.

6.  CUMULATIVE REMEDIES.  All remedies of Secured Party hereunder are 
cumulative, are in addition to any other remedies provided for by law or in 
equity and may, to the extent permitted by law, be exercised concurrently or 
separately, and the exercise of any one remedy shall not be deemed an 
election of such remedy or to preclude the exercise of any other remedy.  No 
failure on the part of Secured Party to exercise, and no delay in exercising 
any right or remedy, shall operate as a waiver thereof or in any way modify 
or be deemed to modify the terms of this Agreement or any other Loan Document 
or the Indebtedness, nor shall any single or partial exercise by Secured 
Party of any right or remedy preclude any other or further exercise of the 
same or any other right or remedy.

7.  ASSIGNMENT.  Secured Party may transfer or assign all or any part of the 
Indebtedness and the Loan Documents without releasing Debtor or the 
Collateral, and upon such transfer or assignment the assignee or holder shall 
be entitled to all the rights, powers, privileges and remedies of Secured 
Party to the extent assigned or transferred.  The obligations of Debtor shall 
not be subject, as against any such assignee or transferee, to any defense, 
set-off, or counter-claim available to Debtor against Secured Party and any 
such defense, set-off, or counter-claim may be asserted only against Secured 
Party.

8.  TIME IS OF THE ESSENCE.  Time and manner of performance by Debtor of its 
duties and obligations under the Loan Documents is of the essence.  If Debtor 
shall fail to comply with any provision of any of the Loan Documents, 
Secured Party shall have the right, but shall not be obligated, to take 
action to address such non-compliance, in whole or in part, and all moneys 
spent and expenses and obligations incurred or assumed by Secured Party shall 
be paid by Debtor upon demand and shall be added to the Indebtedness.  Any 
such action by Secured Party shall not constitute a waiver of Debtor's 
default.


                                          11

<PAGE>

9.  ENFORCEMENT.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN 
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS, 
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  AT SECURED PARTY'S 
ELECTION AND WITHOUT LIMITING SECURED PARTY'S RIGHT TO COMMENCE AN ACTION IN 
ANY OTHER JURISDICTION, DEBTOR HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION 
AND VENUE OF ANY COURT (FEDERAL, STATE OR LOCAL) HAVING SITUS WITHIN THE 
STATE OF ILLINOIS, EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS 
TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO THE CHIEF 
FINANCIAL OFFICER OF DEBTOR AT THE LAST KNOWN ADDRESS OF DEBTOR, WHICH 
SERVICE SHALL BE DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF 
MAILING THEREOF.

10. FURTHER ASSURANCE; NOTICE.  Debtor shall, at its expense, do, execute and 
deliver such further acts and documents as Secured Party may from time to 
time reasonably require to assure and confirm the rights created or intended 
to be created hereunder, to carry out the intention or facilitate the 
performance of the terms of the Loan Documents or to assure the validity, 
perfection, priority or enforceability of any security interest created 
hereunder.  Debtor agrees to execute any instrument or instruments necessary 
or expedient for filing, recording, perfecting, notifying, foreclosing, 
and/or liquidating of Secured Party's interest in the Collateral upon request 
of, and as determined by, Secured Party, and Debtor hereby specifically 
authorizes Secured Party to prepare and file Uniform Commercial Code 
financing statements and other documents and to execute same for and on 
behalf of Debtor as Debtor's attorney-in-fact, irrevocably and coupled with 
an interest, for such purposes. All notices required or otherwise given by 
either party shall be in writing and shall be delivered by hand, by 
registered or certified first class United States mail, return receipt 
requested, or by overnight courier to the other party at its address stated 
herein or at such other address as the other party may from time to time 
designate by written notice (and, if to Debtor, directed to the Chief 
Financial Officer of Debtor).  All notices shall be deemed given when 
received, when delivery is refused or when the returned for failure to be 
called for.

11. WAIVER OF JURY TRIAL.  DEBTOR AND SECURED PARTY HEREBY WAIVE THEIR 
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON 
OR ARISING IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS.  THIS WAIVER IS 
INFORMED AND FREELY MADE.  DEBTOR AND SECURED PARTY ACKNOWLEDGE THAT THIS 
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT 
EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THE LOAN DOCUMENTS, 
AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE 
DEALINGS.  DEBTOR AND SECURED PARTY FURTHER WARRANT AND REPRESENT THAT EACH 
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT EACH KNOWINGLY AND 
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL 
COUNSEL.

12. COMPLETE AGREEMENT. The Loan Documents are intended by Debtor and Secured 
Party to be the final, complete, and exclusive expression of the agreement 
between them.


                                          12

<PAGE>

The Loan Documents may not be altered, modified or terminated in any manner 
except by a writing duly signed by the parties thereto.  Debtor and Secured 
Party intend the Loan Documents to be valid and binding and no provisions 
hereof and thereof which may be deemed unenforceable shall in any way 
invalidate any other provisions of the Loan Documents, all of which shall 
remain in full force and effect.  The Loan Documents shall be binding upon 
the respective successors, legal representatives, and assigns of the parties. 
The singular shall include the plural, the plural shall include the 
singular, and the use of any gender shall be applicable to all genders.  The 
use in any of the Loan Documents of the word "including," or words of similar 
import, when following any general term, statement or matter shall not be 
construed to limit such term, statement or matter to any specific item or 
matters, whether or not language of nonlimitation, such as "without 
limitation" or "but not limited to," or words of similar import, are used 
with reference thereto, but rather shall be deemed to refer to all other 
items or matters that could reasonably fall within the broadest possible 
scope of such term, statement or matter.  If there be more than one Debtor, 
the warranties, representations and agreements contained herein and in the 
other Loan Documents shall be joint and several.  The Schedules on the 
following page[s] are incorporated herein by this reference and made a part 
hereof.  Sections and subsections headings are included for convenience of 
reference only and shall not be given any substantive effect.

                              [signatures on next page]






                                          13


<PAGE>


IN WITNESS WHEREOF, Secured Party and Debtor have each signed this Security 
Agreement as of the day and year first above written.

HELLER FINANCIAL, INC.,                PRAEGITZER INDUSTRIES, INC.,
a Delaware corporation                 an Oregon corporation

By: /s/ John Watson                         By: /s/ Matthew J. Bergeron
   -----------------------                 ----------------------------
Name: John Watson                      Name: /s/ Matthew J. Bergeron
     ---------------------                   --------------------------
Title: VP                                   Title: Chief Operating Officer
      --------------------                    -------------------------







                                          14


<PAGE>

Loan No. 1910069-0004
        --------------
AFTER RECORDING RETURN TO:

Heller Financial, Inc.
Commercial Equipment Finance Division
One Montgomery Street, Suite 2250
San Francisco, California 94104



                 BE ADVISED THAT THE PROMISSORY NOTE SECURED BY THIS
                 TRUST DEED PROVIDES FOR A VARIABLE RATE OF INTEREST.


                           TRUST DEED, SECURITY AGREEMENT,
                            ASSIGNMENT OF LEASES AND RENTS
                                  AND FIXTURE FILING


    THIS TRUST DEED, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND
FIXTURE FILING ("Trust Deed"), is made this 30 day of May, 1997 among PRAEGITZER
INDUSTRIES, INC. the address of which is 1270 Monmouth Cutoff, Dallas, Oregon
97338 ("Grantor"); OREGON TITLE INSURANCE COMPANY, an Oregon corporation, the
address of which is 1515 S.W. 5th Avenue, Suite 800, Portland, Oregon 97201, and
its successors in trust and assigns ("Trustee"), and HELLER FINANCIAL, INC., a
Delaware corporation, the address of which is Commercial Equipment Finance
Division, 500 West Monroe Street, Chicago, Illinois 60661 ("Beneficiary").

    1.   GRANTING CLAUSE.  Grantor, in consideration of the acceptance by
Trustee of the trust hereunder, and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and in order to
secure the payment of the indebtedness evidenced by the Note (as hereinafter
defined) with interest thereon, and any other sums payable thereunder and
hereunder, and to secure the performance of the obligations contained herein,
grants, bargains, sells, and conveys to Trustee and its successors in trust and
assigns, forever, in trust, with power of sale, all of Grantor's estate, right,
title, interest, claim and demand in and to the property in the county of Polk,
state of Oregon, described as follows, whether now existing or hereafter
acquired (all of the property described in all parts of this Section 1 and all
additional property, if any, described in Section 2 is herein called the
"Property"):

         1.1   LAND AND APPURTENANCES. The land described on Exhibit A hereto
and incorporated herein by this reference, and all tenements, hereditaments,
rights-of-way, easements, appendages and appurtenances thereto belonging or in
any way appertaining, including without limitation all of the right, title and
interest of Grantor in and to any avenues,


                                          1
<PAGE>

streets, ways, alleys, vaults, strips or gores of land adjoining that property,
and all claims or demands of Grantor either in law or in equity in possession or
expectancy of, in and to that property; and

         1.2   IMPROVEMENTS AND FIXTURES.  All buildings, structures and other
improvements now or hereafter erected on the property described in 1.1 above,
and all facilities, fixtures, machinery, apparatus, installations, goods
(excluding inventory), equipment, furniture and other tangible properties of
whatsoever nature (including without limitation all heating, ventilating, air
conditioning, plumbing and electrical equipment, all elevators and escalators,
all sprinkler systems, all engines and motors, all lighting, laundry, cleaning,
fire prevention and fire extinguishing equipment, all ducts and compressors, all
refrigerators, stoves and other appliances, attached cabinets, partitions, rugs,
carpets and draperies, all building materials and supplies, and all construction
forms and equipment), now or hereafter located in or used or procured for use in
connection with that property, it being the intention of the parties that all
property of the character hereinabove described which is now owned or hereafter
acquired by Grantor and which is affixed or attached to or used in connection
with the property described in 1.1 above shall be, remain or become a portion of
that property and shall be covered by and subject to the lien of this Trust
Deed, TOGETHER WITH all contracts, agreements, permits, plans, specifications,
drawings, surveys, engineering reports and other work products relating to the
construction of the existing or any future improvements on the Property, any and
all rights of Grantor in, to or under any architect's contracts or construction
contracts relating to the construction of the existing or any future
improvements on the Property, and any performance and/or payment bonds issued in
connection therewith; and

         1.3   MACHINERY AND EQUIPMENT.  All of Grantor's right, title and
interest in and to the following property and interests in property, whether now
owned or hereafter acquired or arising and wheresoever located: all of the goods
described on Schedule A attached hereto and incorporated herein by this
reference.

         1.4   ENFORCEMENT AND COLLECTION.  Any and all rights of Grantor
without limitation to make claim for, collect, receive and receipt for any and
all rents, income, revenues, issues, royalties, and profits, including mineral,
oil and gas right and profits, insurance proceeds, condemnation awards and other
moneys, payable or receivable from or on account of any of the Property,
including interest thereon, or to enforce all other provisions of any other
agreement (including those described in Section 1.2 above) affecting or relating
to any of the Property, to bring any suit in equity, action at law or other
proceeding for the collection of such moneys or for the specific or other
enforcement of any such agreement, award or judgment, in the name of Grantor or
otherwise, and to do any and all things which Grantor is or may be or become
entitled to do with respect thereto, provided, however, that no obligation of
Grantor under the provisions of any such agreements, awards or judgments shall
be impaired or diminished by virtue hereof, nor shall any such obligation be
imposed upon Trustee or Beneficiary; and

         1.5   [INTENTIONALLY OMITTED]


                                          2

<PAGE>

         1.6   LEASES.  All of Grantor's rights as landlord in and to all
existing and future Leases (defined below) and tenancies, whether written or
oral and whether for a definite term or month to month, now or hereafter
demising all or any portion of the property described in 1.1 and 1.2 above,
including all renewals and extensions thereof and all rents and deposits and
other amounts received or receivable thereunder, provided, however that in
accepting this Trust Deed neither Beneficiary nor Trustee assumes any liability
for the performance of any such Lease.

    2.   SECURITY AGREEMENT.  To the extent any of the property described in
Section 1 is personal property, Grantor, as debtor, grants to Beneficiary, as
secured party, a security interest therein together with a security interest in
all other personal property of whatsoever nature which is located on or used or
to be used in connection with any of the property described in Section 1, and
any products or proceeds of any thereof, pursuant to the Uniform Commercial Code
of the state of Oregon (the "UCC"), on the terms and conditions contained herein
except that where any provision hereof is in conflict with that certain Security
Agreement dated May 30, 1997, between Grantor and Beneficiary (the "Security
Agreement"), or the UCC, the Security Agreement or UCC, as the case may be,
shall control.  Beneficiary hereby assigns such security interest, together with
the security interest granted to Beneficiary under the Security Agreement to
Trustee, in trust, for the benefit of Beneficiary to be dealt with as a portion
of the "Property" except as otherwise specified herein.

    3.   OBLIGATIONS SECURED.  This Trust Deed is given for the purpose of
securing:

         3.1   PERFORMANCE AND PAYMENT. The performance of the obligations
contained herein and the payment of Ten Million and 00/100 DOLLARS
($10,000,000.00) with interest thereon, according to the terms of a promissory
note dated May 30, 1997, made by Grantor and payable to Beneficiary or order,
having a maturity date of December 1, 2004, and any and all extensions,
renewals, modifications or replacements thereof, whether the same be in greater
or lesser amounts (the "Note"), which Note contains provision for a variable
rate of interest; and

         3.2. FUTURE ADVANCES. The repayment of any and all sums advanced or 
expenditures made by Beneficiary subsequent to the execution of this Trust Deed
for the maintenance or preservation of the Property or advanced or expended by
Beneficiary pursuant to any provision of this Trust Deed subsequent to its
execution or pursuant to any provision of the Security Agreement subsequent to
its execution, in either case together with interest thereon at the Default Rate
(defined below).



                                          3

<PAGE>



    4.   WARRANTIES AND COVENANTS OF GRANTOR.  Grantor warrants, covenants, and
agrees:

         4.1   WARRANTIES.

         (a)  Grantor has full power and authority to grant the Property to
Trustee and warrants the Property to be free and clear of all liens, charges,
and other encumbrances except Permitted Liens (defined in Section 4.13 below)
and those, if any, noted on Exhibit B hereto and incorporated herein by this
reference.

         (b)  The Property is free from damage and no matter has come to
Grantor's attention (including, but not limited to, knowledge of any
construction defects or nonconforming work) that would materially impair the
value of the Property as security.

         4.2   PRESERVATION OF LIEN.  Grantor will preserve and protect the
priority of this Trust Deed as a first lien on the Property.

         4.3   REPAIR AND MAINTENANCE OF PROPERTY.  Grantor will keep the
Property in good condition and repair, which duty shall include but is not
limited to continual cleaning, painting, landscaping, repairing and refurbishing
of the Property; will complete and not remove or demolish, alter, or make
additions to any building or other improvement which is part of the Property
without the express written consent of Beneficiary; will underpin and support
when necessary any such building or other improvement and protect and preserve
the same; will complete or restore promptly and in good and workmanlike manner
any such building or other improvement which may be damaged or destroyed and pay
when due all claims for labor performed and materials furnished therefor; will
not commit, suffer or permit any act upon the Property in violation of law; and
will do all other acts which from the character or use of the Property may be
reasonably necessary for the continued operation of the Property in a safe and
legal manner, the specific enumerations herein not excluding the general.

         4.4   INSURANCE.

              4.4.1     HAZARD.  Grantor will provide, maintain and deliver to 
Beneficiary, as further security for the faithful performance of this Trust
Deed, insurance covering fire, casualty and such other hazards as may be
specified by Beneficiary (including insurance against flood, if the Property is
situated in a designated flood zone) in an amount equal to one hundred percent
(100%) of the replacement cost of the Property and naming Beneficiary as first
loss payee pursuant to a loss-payee form acceptable to Beneficiary, with such
deductibles as approved by Beneficiary but that are, in any event, not more than
$100,000 (except with respect to flood insurance, as to which the deductible
shall not exceed $2,000,000, and earth movement insurance, as to which the
deductible shall not exceed 1% of Grantor's current "property and time element"
values).  Grantor shall be responsible for any uninsured losses and any
deductibles.  All existing and future policies for such insurance, and the
proceeds thereof, are hereby assigned to Beneficiary, but no such assignment
shall be effective to


                                          4

<PAGE>

invalidate or impair any insurance policy.  Should the Property or any part
thereof be damaged by reason of any cause covered by insurance, Beneficiary may,
at its option, commence, appear in and prosecute, in its own name, any action or
proceeding, or make any reasonable compromise or settlement in connection with
such damage, and obtain all proceeds, or other relief therefor, and Grantor
agrees to pay Beneficiary's costs and reasonable attorneys' fees in connection
therewith.  No insurance proceeds at any time assigned to or held by Beneficiary
shall be deemed to be held in trust, and Beneficiary may commingle such proceeds
with its general assets and shall not be liable for the payment of any interest
thereon.  The amount collected under any insurance policies required to be
maintained by Grantor pursuant to this Section 4.4.1 may be applied by
Beneficiary upon any indebtedness secured hereby and in such order as
Beneficiary may determine, or at the option of Beneficiary, the entire amount so
collected or any part thereof may be released to Grantor.  Beneficiary shall in
no case be obligated to see to the proper application of any amount paid over to
Grantor. Such application or release shall not cure or waive any default or
notice of default hereunder or invalidate any act done pursuant to such notice.

              4.4.2     LIABILITY.  Grantor will maintain comprehensive general
liability insurance covering the legal liability of Grantor against claims for
bodily injury, death, or property damage occurring on, in, or about the Property
with coverage of Five Million Dollars ($5,000,000) per occurrence, and naming
Beneficiary an additional insured.

              4.4.3     RENTAL INTERRUPTION.  In the event the portion of the
Property leased, licensed or otherwise set aside for occupancy by any person
other than Grantor under the Leases is at any time twenty thousand (20,000)
square feet or more, Grantor shall maintain rental or business interruption
insurance in an amount equal to at least twelve (12) months' gross rental income
from the Property, and naming Beneficiary as first loss payee, provided that
Grantor may collect and retain any payments under said policies so long as it is
not in default hereunder.

                   4.4.4      [INTENTIONALLY OMITTED.]

              4.4.5     GENERAL PROVISIONS. All policies of insurance required
to be maintained by Grantor pursuant to this Section 4.4 shall be in form and
substance and with companies acceptable to Beneficiary.  All policies and
renewals thereof shall contain provision for thirty (30) days' written notice to
Beneficiary prior to any cancellation or modification thereof.  Notwithstanding
any of the foregoing, neither Trustee nor Beneficiary shall be responsible for
any such insurance or for the collection of any insurance moneys, or for any
insolvency of any insurer or insurance underwriter.  Any and all unexpired
insurance shall inure to the benefit of and pass to the purchaser of the
Property at any trustee's or sheriff's sale held hereunder.

                   4.4.6     WARNING REGARDING INSURANCE. Unless Grantor 
provides Beneficiary with evidence of the insurance coverage as required by 
this Trust Deed, Beneficiary may purchase insurance at Grantor's expense to 
protect Beneficiary's interest.  This insurance may, but need not, also 
protect Grantor's interest.  If the collateral becomes damaged, the coverage 
Beneficiary purchases may not pay any claim Grantor makes or any

                                          5

<PAGE>

claim made against Grantor.  Grantor may later cancel this coverage by 
providing evidence that Grantor has obtained property coverage elsewhere.

Grantor is responsible for the cost of any insurance purchased by 
Beneficiary. The cost of any insurance may be added to the sums secured by 
this Trust Deed. If the cost is added to Grantor's loan balance, interest at 
the Default Rate on the loan 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 Beneficiary 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.

         4.5   RIGHT OF INSPECTION.  Grantor shall permit Beneficiary or its
agents, at all reasonable times, to enter upon and inspect the Property.

         4.6   PRESERVATION OF LICENSES, ETC.  Grantor shall observe and 
comply with all requirements necessary to the continued existence and 
validity of all rights, licenses, permits, privileges, franchises and 
concessions relating to any existing or presently contemplated use of the 
Property, including but not limited to any zoning variances, special 
exceptions and nonconforming use permits.

         4.7   FURTHER ASSURANCES.  Grantor will, at its expense, from time 
to time execute and deliver any and all such instruments of further assurance 
and other instruments and do any and all such acts, or cause the same to be 
done, as Trustee or Beneficiary deems necessary or advisable to grant to 
Trustee the Property or to carry out more effectively the purposes of this 
Trust Deed.

         4.8   LEGAL ACTIONS.  Grantor will appear in and defend any action 
or proceeding before any court or administrative body purporting to affect 
the security hereof or the rights or powers of Beneficiary or Trustee; and 
will pay all costs and expenses, including cost of evidence of title and any 
attorneys' fees, incurred by Beneficiary and Trustee, in a reasonable sum, in 
any such action or proceeding in which Beneficiary or Trustee may appear, and 
in any suit brought by Beneficiary or Trustee to foreclose this Trust Deed.

         4.9   TAXES, ASSESSMENTS AND OTHER LIENS.  Grantor will pay before 
delinquency all taxes, assessments, encumbrances, charges, and liens with 
interest, on the Property or any part thereof, which at any time appear to be 
or are alleged to be prior and superior hereto, including but not limited to 
any tax on or measured by rents of the Property, the Note, this Trust Deed, 
or any obligation or part thereof secured hereby.

         4.10  TRUST EXPENSES. Grantor will pay all costs, fees and expenses of
this trust including all such costs, fees and expenses incident to any default
hereunder, including reasonable attorneys' fees.

                                          6

<PAGE>

         4.11  REPAYMENT OF EXPENDITURES.  Immediately upon notice thereof,
Grantor will pay immediately and without demand all sums expended hereunder by
Beneficiary or Trustee with interest from date of expenditure at the default
rate of interest specified in the Note (the "Default Rate") and the repayment
thereof shall be secured hereby.

         4.12  FINANCIAL & OPERATING INFORMATION.  Grantor shall comply with
Section 2(g) of the Security Agreement.

         4.13  SALE, TRANSFER, OR ENCUMBRANCE OF PROPERTY.  Except as 
permitted in the Security Agreement and Permitted Liens (defined below), 
Grantor will not, without the prior written consent of Beneficiary (which 
consent shall be subject to the conditions set forth below) sell, transfer or 
otherwise convey the Property or any interest therein, further encumber the 
Property or any interest therein or agree to do any of the foregoing without 
first repaying in full the Note and all other sums secured hereby.  As used 
herein, the term "Permitted Liens" means any lien arising after the date 
hereof that is (i) a mechanic's, materialmen's, carrier's, repairer's or 
other non-consensual statutory lien, arising in the ordinary course of 
Grantor's business and securing obligations either not delinquent or (A) 
being contested in good faith by appropriate proceedings promptly and 
diligently instituted and conducted, (B) with prompt written notice to 
Beneficiary of the commencement of and any material developments in such 
proceedings, and (C) as to which (1) the sum necessary to discharge the lien 
plus all costs and other charges that could accrue as a result of a 
foreclosure or sale under the lien is less than One Hundred Thousand and 
00/100 Dollars ($100,000.00), or (2) an undertaking sufficient under the 
internal laws of the state of Oregon to discharge the lien plus all costs and 
other charges that could accrue as a result of a foreclosure or sale under 
the lien, or (ii) a lien arising out of a judgment against Grantor for the 
payment of money not exceeding One Hundred Thousand and 00/100 Dollars 
($100,000.00), so long as (A) prompt written notice is furnished to 
Beneficiary of the entry of the judgment and any further material 
developments in the proceedings, and (1) such lien has been outstanding not 
more than ten (10) business days, or (2) execution thereof has been 
effectively stayed and bonded against (by an undertaking sufficient under the 
internal laws of the state of Oregon) pending and through appeal of the 
judgment, or (iii) a lien on any items of the Property to secure payment of 
ad valorem property taxes, fees or assessments which are not delinquent.

         4.14  [INTENTIONALLY OMITTED.]


         4.15  GRANTOR EXISTENCE.  Beneficiary is making this loan in reliance
on Grantor's continued existence, ownership and control in its present corporate
form.  Grantor will not cause, permit, acquiesce in or suffer any change of
control (as defined in Section 4(g) of the Security Agreement) nor any merger,
consolidation, dissolution, liquidation, winding up or sale or other transfer of
all or substantially all of its assets pursuant to which there is a change of
control or cessation of its business, and will do all things necessary to
preserve and maintain said corporate existence and to insure its continuous
right to carry on its business, including but not limited to, filing within the
prescribed time all corporate tax returns and reports, and paying when due all
such taxes.

                                          7

<PAGE>

         4.16  TAX AND INSURANCE RESERVES.  In addition to the payments 
required by the Note, Grantor agrees to pay Beneficiary, at Beneficiary's 
request following and during the continuance of the occurrence of an Event of 
Default (defined below), such sums as Beneficiary may from time to time 
estimate will be required to pay, at least 30 days before due, the next due 
taxes, assessments, insurance premiums, and similar charges affecting the 
Property, less all sums already paid therefor divided by the number of months 
to elapse before one month prior to the date when such taxes, assessments and 
premiums will become delinquent, such sums to be held by Beneficiary without 
interest or other income to the Grantor to pay such taxes, assessments and 
premiums.  Should this estimate as to taxes, assessments and premiums prove 
insufficient, the Grantor upon demand agrees to pay Beneficiary such 
additional sums as may be required to pay them before delinquent.

    If the total of the above-described payments in any one year shall exceed 
the amounts actually paid by Beneficiary for taxes, assessments and premiums, 
such excess may be credited by Beneficiary on subsequent payments under this 
section.  If an Event of Default occurs for which Beneficiary elects to 
realize upon this Trust Deed, then at the time of the Trustee's sale or final 
decree of foreclosure, Beneficiary shall apply any balance of funds it may 
hold pursuant to this Section 4.16 first to interest on and then to the 
principal of the Note. If Beneficiary acquires the Property in lieu of 
realizing on this Trust Deed, the balance of funds it holds shall become the 
property of Beneficiary.

    Any transfer in fee of all or a part of the Property shall automatically
transfer to the grantee all or a proportionate part of Grantor's rights and
interest in the fund accumulated hereunder.

         4.17  LEASES.

               (a)  Grantor will in all respects promptly and faithfully 
keep, perform and comply with all of the terms, provisions, covenants, 
conditions and agreements in each of the agreements pursuant to which any 
tenant or licensee of any part of the Property is occupying the Property (the 
"Leases") to be kept, performed and complied with by the lessor therein, and 
will require, demand and strictly enforce, by all available means, the prompt 
and faithful performance of and compliance with all of the terms, provisions, 
covenants, conditions and agreements in the Leases to be performed and 
complied with by the lessees therein.

               (b)  Grantor shall not receive or collect any rents from any 
present or future tenant of the Property or any part thereof in advance in 
excess of five percent (5.00 %) of gross annual rental income from the 
Property or collect a security deposit in excess of two (2) months' rent.

               (c)  [INTENTIONALLY OMITTED.]

               (d)  In the event any tenant or licensee under the Leases 
should be the subject of any proceeding under the Federal Bankruptcy Act or 
any other federal, state or local statute that provides for the possible 
termination or rejection of the Leases, Grantor covenants

                                          8

<PAGE>

and agrees that in the event any of the Leases is so rejected, no damages 
settlement shall be made without the prior written consent of Beneficiary; 
and further that any check in payment of damages for rejection of any such 
Lease shall be made payable both to Grantor and Beneficiary; and Grantor 
hereby assigns any such payment to Beneficiary and further covenants and 
agrees that upon request of Beneficiary it will duly endorse to the order of 
Beneficiary any such check, the proceeds of which will be applied to any 
portion of the indebtedness secured by this Trust Deed as Beneficiary may 
elect.

         4.18  HAZARDOUS WASTE.

               (a)  For purposes of this Trust Deed, "hazardous substance" 
means any hazardous or toxic substances, materials or wastes, including, but 
not limited to, those substances, materials, and wastes listed in the United 
States Department of Transportation Hazardous Materials Table (49 CFR 172.101)
or by the Environmental Protection Agency as hazardous substances (40 
CFR Part 302) and amendments thereto, or such substances, materials and 
wastes which are or become regulated under any applicable local, state or 
federal law including, without limitation, any material, waste or substance 
which is (i) petroleum, (ii) asbestos, (iii) polychlorinated biphenyls, (iv) 
defined as a "hazardous waste", "extremely hazardous waste", "restricted 
hazardous waste" or "hazardous substance" under Hazardous Substances, 
Radiation Sources, ORS Chapters 453.001, et seq., Solid Waste Control, ORS 
Chapters 459.005, et seq., Hazardous Waste and Hazardous Materials, ORS 
Chapters 466.005, et seq., Pollution Control, ORS Chapters 468.005, et. seq., 
Oregon Drinking Water Quality Act, ORS Chapters 448.123, et seq., and Ground 
Water Act of 1955, ORS Chapters 537.505, et seq., (v) designated as a 
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 
U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321) or listed pursuant to 
Section 307 of the Clean Water Act (33 U.S.C. Section 1317), (vi) defined as 
a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and 
Recovery Act, 42 U.S.C. Section 6903), or (vii) defined as a "hazardous 
substance" pursuant to Section 101 of the Comprehensive Environmental 
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601, et seq. 
(42 U.S.C. Section 9601), all as amended, replaced or succeeded, and any 
other substance or matter defined as a toxic or hazardous substance or 
material or pollutant or contaminant under any other federal, state or local 
laws, ordinances or regulations or under any reported decision of a state or 
federal court, or any substance or matter imposing liability for clean-up 
costs or expenses on any person or entity under any statutory or common law 
theory.

               (b)  Grantor hereby represents, warrants, covenants and agrees 
that all operations and activities upon, and all uses and occupancies of, the 
Property, or any portion thereof, by Grantor, any tenant, occupant or other 
user of the Property, or any part thereof, are presently and, so long as any 
indebtedness secured hereby is outstanding, shall be in all material respects 
in compliance with all federal, state and local laws, regulations, rules and 
orders governing or any way relating to the generating, handling, 
manufacturing, treatment, storage, use, transportation, spillage, leakage, 
dumping, discharge or disposal of any hazardous substance; that there is not 
now, nor, to the best knowledge of Grantor after due and diligent inquiry, 
has there ever been any underground tank on, under or at the Property which 
contain or contained any materials which, if known to be present in soils or 
groundwater,


                                          9

<PAGE>


would require cleanup, removal or some other remedial action under any of 
those federal, state or local laws, regulations, rules or orders.  To the 
best of Grantor's knowledge after due and diligent inquiry, there is not 
present in the soils or groundwater on, under or at the Property any 
hazardous material which require cleanup, removal or other remedial action 
under an federal, state or local law, regulation, rule or order.

               (c)  If the presence, release, threat of release, placement on 
or in the Property, or the generation, transportation, storage, treatment or 
disposal at the Property of any hazardous substance: (i) gives rise to 
liability (including but not limited to, a response action, remedial action 
or removal action) under RCRA, CERCLA, state toxic waste laws, or otherwise, 
or (ii) causes a significant public health effect, or (iii) pollutes or 
threatens to pollute the environment, Grantor shall, at its sole expense, 
promptly take any and all remedial and removal action necessary to clean up 
the Property and mitigate exposure to liability arising from the hazardous 
substance, whether or not required by law.  Any provision of this Trust Deed 
to the contrary notwithstanding, if Grantor fails to perform its obligations 
under this subsection 4.18(c), any funds advanced by Beneficiary to pay for 
any and all remedial and removal action to clean up the Property and mitigate 
exposure to liability from the hazardous substance shall NOT be secured by 
the lien of this Trust Deed but rather shall be covered by the separate 
Certificate and Indemnity Agreement Regarding Hazardous Substances executed 
concurrently herewith.

               (d)  Grantor shall promptly give Beneficiary: (i) written 
notice and a copy of any notice or correspondence it receives from any 
federal, state or other government authority regarding hazardous substances 
on the Property or hazardous substances which materially and adversely affect 
or will affect the Property, and (ii) written notice of any knowledge or 
information Grantor obtains regarding hazardous substances in a material 
amount on or released from the Property or hazardous substances which will 
otherwise materially and adversely affect the Property or material expenses 
or losses incurred or expected to be incurred by Grantor or any government 
agency to study, assess, contain or remove any hazardous substances on or 
near the Property.

               (e)  In the event Beneficiary requires, from time to time 
following the occurrence of an Event of Default, Grantor to implement an 
operations and maintenance plan because of the presence or potential presence 
of asbestos, or lead containing paint or other hazardous substances on the 
Property, Grantor shall implement and follow the requirements of any such 
operations and maintenance plan, maintain records of such compliance at the 
Property and make such records immediately available to Beneficiary upon 
request by Beneficiary.

                                          10

<PAGE>

    5.   DEFAULT.

         5.1   DEFINITION.  Any of the following shall constitute an "Event of
Default" as that term is hereinafter used:

               (a)  Any representation or warranty made by or for the benefit 
of Grantor herein or elsewhere in connection with the loan secured hereby, 
including but not limited to any representations in connection with the 
security therefor, shall prove to have been incorrect or misleading in any 
material respect;

               (b)  Grantor or any other person or entity liable therefor shall
fail to pay within ten (10) calendar days of its due date any part of the
indebtedness secured hereby;

               (c)  Grantor or any other signatory thereto shall default in the
performance of any of its obligations under Sections 4.3, 4.4, 4.9 or 4.13 of
this Trust Deed;

               (d)  Grantor or any other signatory thereto shall default in the
performance of any covenant or agreement contained in this Trust Deed and such
default is not cured within thirty (30) days after written notice thereof from
Beneficiary or Trustee; or

               (e) Any Event of Default (as defined in the security Agreement)
shall occur.

         5.2   BENEFICIARY'S AND TRUSTEE'S RIGHT TO PERFORM.  Upon the 
occurrence of any Event of Default, Beneficiary or Trustee, but without the 
obligation so to do and without notice to or demand upon Grantor and without 
releasing Grantor from any obligations hereunder, may: make any payments or 
do any acts required of Grantor hereunder in such manner and to such extent 
as either may deem necessary to protect the security hereof, Beneficiary or 
Trustee being authorized to enter upon the Property for such purposes; 
commence, appear in and defend any action or proceeding purporting to affect 
the security hereof or the rights or powers of Beneficiary or Trustee; pay, 
purchase, contest or compromise any encumbrance, charge or lien in accordance 
with the following paragraph; and in exercising any such powers, pay 
necessary expenses, employ counsel and pay a reasonable fee therefor.  All 
sums so expended shall be payable on demand by Grantor, be secured hereby 
(except as otherwise provided in Section 4.18) and bear interest at the 
Default Rate from the date advanced or expended until repaid.

    Beneficiary or Trustee in making any payment herein and hereby 
authorized, in the place and stead of the Grantor, in the case of a payment 
of taxes, assessments, water rates, sewer rentals and other governmental or 
municipal charges, fines, impositions or liens asserted against the Property, 
may make such payment in reliance on any bill, statement or estimate procured 
from the appropriate public office without inquiry into the accuracy of the 
bill, statement or estimate or into the validity of any tax, assessment, 
sale, forfeiture, tax lien or title or claim thereof; in the case of any 
apparent or threatened adverse claim of title, lien, statement of lien, 
encumbrance, deed of trust, claim or charge Beneficiary or Trustee, as the

                                          11
<PAGE>

case may be, shall be the sole judge of the legality or validity of same; and 
in the case of a payment for any other purpose herein and hereby authorized, 
but not enumerated in this paragraph, such payment may be made whenever, in 
the sole judgment and discretion of Trustee or Beneficiary, as the case may 
be, such advance or advances shall seem necessary or desirable to protect the 
full security intended to be created by this instrument, provided further, 
that in connection with any such advance, Beneficiary at its option may and 
is hereby authorized to obtain a continuation report of title prepared by a 
title insurance company, the cost and expenses of which shall be repayable by 
the Grantor without demand and shall be secured hereby.

         5.3   REMEDIES ON DEFAULT.  Upon the occurrence of any Event of
Default all sums secured hereby shall become immediately due and payable,
without notice or demand, at the option of Beneficiary and Beneficiary may:

               (a)  Have a receiver appointed as a matter of right, without
regard to the sufficiency of the Property or any other security for the
indebtedness secured hereby;

               (b)  Foreclose this Trust Deed as a mortgage or otherwise
realize upon the Property;

               (c)  Cause Trustee to exercise its power of sale; or

               (d)  Sue on the Note according to law.

         5.4   NO WAIVER.  By accepting payment of any sum secured hereby after
its due date, Beneficiary does not waive its right either to require prompt
payment when due of all other sums so secured or to declare an Event of Default
for failure to do so.

    6.   CONDEMNATION.  Any award of damages, whether paid as a result of 
judgment or prior settlement, in connection with any condemnation or other 
taking of any portion of the Property, for public or private use, or for 
injury to any portion of the Property is hereby assigned and shall be paid to 
Beneficiary which may apply such moneys received by it in the same manner and 
with the same effect as provided in Section 4.4.1 above for disposition of 
proceeds of hazard insurance.  Should the Property or any part or 
appurtenance thereof or right or interest therein be taken or threatened to 
be taken by reason of any public or private improvement, condemnation 
proceeding (including change of grade), or in any other manner, Beneficiary 
may, at its option, commence, appear in and prosecute, in its own name, any 
action or proceeding, or make any reasonable compromise or settlement in 
connection with such taking or damage, and obtain all compensation, awards or 
other relief therefor, and Grantor agrees to pay Beneficiary's costs and 
reasonable attorneys' fees incurred in connection therewith.  No condemnation 
award at any time assigned to or held by Beneficiary shall be deemed to be 
held in trust, and Beneficiary may commingle such award with its general 
assets and shall not be liable for the payment of any interest thereon.


                                          12

<PAGE>

    7.   TRUSTEE.

         7.1   GENERAL POWERS AND DUTIES OF TRUSTEE.  At any time or from 
time to time, without liability therefor and without notice and without 
affecting the liability of any person for the payment of the indebtedness 
secured hereby, upon written request of Beneficiary, payment of its own fees 
and presentation of this Trust Deed and the Note for endorsement (in case of 
full reconveyance, for cancellation or retention), Trustee may:

               (a)  Consent to the making of any map or plat of the Property;

               (b)  Join in granting any easement or creating any restriction
thereon;

               (c)  Join in any subordination or other agreement affecting this
Trust Deed or the lien or charge thereof; or

               (d)  Reconvey, without warranty, all or any part of the
Property.

         7.2   RECONVEYANCE.  Upon written request of Beneficiary stating 
that all sums secured hereby have been paid, and upon surrender of this Trust 
Deed and the Note to Trustee for cancellation and retention and upon payment 
of its fees, Trustee shall reconvey, without warranty, the Property then held 
hereunder.  The recitals in any reconveyance executed under this Trust Deed 
of any matters of fact shall be conclusive proof of the truthfulness thereof. 
The grantee in such reconveyance may be described as "the person or persons 
legally entitled thereto".

         7.3   POWERS AND DUTIES ON DEFAULT.  Upon written request therefor 
by Beneficiary specifying the nature of the default, or the nature of the 
several defaults, and the amount or amounts due and owing, Trustee shall 
execute a written notice of breach and of its election to cause the Property 
to be sold to satisfy the obligation secured hereby, and shall cause such 
notice to be recorded and otherwise given according to law.

    Notice of sale having been given as then required by law and not less 
than the time then required by law having elapsed after recordation of such 
notice of breach, Trustee, without demand on Grantor, shall sell the Property 
at the time and place of sale specified in the notice, as provided by 
statute, either as a whole or in separate parcels and in such order as it may 
determine, at public auction to the highest and best bidder for cash in 
lawful money of the United States, payable at time of sale.  Grantor agrees 
that such a sale (or a sheriff's sale pursuant to judicial foreclosure) of 
all the Property as real estate constitutes a commercially reasonable 
disposition thereof, but that with respect to all or any part of the Property 
which may be personal property Trustee shall have and exercise, at 
Beneficiary's sole election, all the rights and remedies of a secured party 
under the UCC.  Whenever notice is permitted or required hereunder or under 
the UCC, ten (10) days shall be deemed reasonable. Trustee may postpone sale 
of all or any portion of the Property, and from time to time thereafter may 
postpone such sale, as provided by statute.  Trustee shall deliver to the 
purchaser its deed and bill of sale conveying the Property so sold, but 
without any covenant or warranty, express or


                                          13

<PAGE>

implied.  The recital in such deed and bill of sale of any matters or facts 
shall be conclusive proof of the truthfulness thereof.  Any person other than 
Trustee, including Grantor or Beneficiary, may purchase at such sale.

    After deducting all costs, fees and expenses of Trustee and of this 
trust, including the cost of evidence of title search and reasonable counsel 
fees in connection with sale, Trustee shall apply the proceeds of sale to 
payment of: all sums expended under the terms hereof not then repaid, with 
accrued interest at the Default Rate; all other sums then secured hereby; and 
the remainder, if any, to Grantor.

         7.4   REASSIGNMENT OF SECURITY INTEREST.  At the request of 
Beneficiary, Trustee shall reassign to Beneficiary the security interest 
created hereby and assigned hereby and after such reassignment Beneficiary 
shall have the right, upon the occurrence or continuance of any Event of 
Default, to realize upon the personal property subject to this Trust Deed, 
independent of any action of Trustee, pursuant to the UCC.

         7.5   ACCEPTANCE OF TRUST.  Trustee accepts this trust when this 
Trust Deed, duly executed and acknowledged, is made a public record as 
provided by law.  Trustee is not obligated to notify any party hereto except 
Beneficiary of pending sale under any other deed of trust or of any action or 
proceeding in which Grantor, Beneficiary or Trustee shall be a party unless 
brought by Trustee.

         7.6   RELIANCE.  Trustee, upon presentation to it of an affidavit 
signed by Beneficiary setting forth facts showing a default by Grantor under 
this Trust Deed, is authorized to accept as true and conclusive all facts and 
statements therein, and to act thereon hereunder.

         7.7   REPLACEMENT OF TRUSTEE.  Beneficiary may, from time to time, 
as provided by statute, appoint another trustee in place and stead of Trustee 
herein named, and thereupon Trustee herein named shall be discharged and the 
trustee so appointed shall be substituted as Trustee hereunder, with the same 
effect as if originally named Trustee herein.

    8.   APPLICATION OF RENTS.  Grantor hereby gives to and confers upon 
Beneficiary the right, power and authority during the continuance of this 
Trust Deed to collect the rents, issues and profits of the Property, 
reserving unto Grantor the right, prior to any default in payment of any 
indebtedness secured hereby or hereunder, to collect and retain such rents, 
issues and profits as they become due and payable.  Upon any such default, 
Beneficiary may at any time and without notice, either in person, by agent, 
or by a receiver to be appointed by a court, without regard to the adequacy 
of any security for the indebtedness hereby secured, enter upon and take 
possession of the Property or any part thereof, or in its own name sue for or 
otherwise collect such rents, issues, and profits, including those past due 
and unpaid, and apply the same, less costs and expenses of operation and 
collection, including reasonable attorneys' fees, upon any indebtedness 
secured hereby, and in such order as Beneficiary may determine. The entering 
upon and taking possession of the Property, the collection of such


                                          14

<PAGE>

rents, issues and profits and the application thereof as aforesaid, shall not 
cure or waive any default or notice of default hereunder or invalidate any 
act done pursuant to such notice.

    9.   NOTICES.

         9.1   TRUSTEE.  Any notice or demand upon Trustee may be given or made
at:

                   Oregon Title Insurance Company
                   1515 SW Fifth Avenue, Suite 800
                   Portland, Oregon 97201


         9.2   GRANTOR AND BENEFICIARY.  Any notice to or demand upon Grantor 
(including any notice of default or notice of sale) or notice to or demand 
upon Beneficiary shall be deemed to have been sufficiently made for all 
purposes when deposited in the United States mails, postage prepaid, 
registered or certified, return receipt requested, addressed as follows:

    GRANTOR:       Praegitzer Industries, Inc. 
                   1270 Monmouth Cutoff 
                   Dallas, Oregon 97338
                   Attention:  Chief Financial Officer

    BENEFICIARY:   Heller Financial, Inc.
                   Commercial Equipment Finance Division 
                   One Montgomery Street, Suite 2250
                   San Francisco, California 94104
                   Attention:  Region Credit Manager

or to such other address as may be filed in writing by Grantor or Beneficiary 
with Trustee.

         9.3   WAIVER OF NOTICE.  The giving of notice may be waived in 
writing by the person or persons entitled to receive such notice, either 
before or after the time established for the giving of such notice.

    10.  MODIFICATIONS.  Upon written request of any party then liable for 
any sum secured hereby, Beneficiary reserves the right to extend the term, or 
otherwise modify the terms, hereof or of the Note as Beneficiary and such 
person may from time to time deem appropriate and any such change shall not 
operate to release, in any manner, the liability of the original Grantor or 
Grantor's successors in interest.

    11.  SUCCESSORS AND ASSIGNS.  All provisions herein contained shall be 
binding upon and inure to the benefit of the respective successors and 
assigns of the parties.


                                          15

<PAGE>

    12.  GOVERNING LAW; SEVERABILITY.  This Trust Deed shall be governed by 
the law of the state of Oregon.  In the event that any provision or clause of 
this Trust Deed or the Note conflicts with applicable law, the conflict shall 
not affect other provisions of this Trust Deed or the Note which can be given 
effect without the conflicting provision and to this end the provisions of 
this Trust Deed and the Note are declared to be severable.

    13.  GRANTOR'S RIGHT TO POSSESSION.  Grantor may be and remain in 
possession of the Property for so long as it is not in default hereunder or 
under the terms of the Note and Grantor may, while it is entitled to 
possession of the Property, use the same.

    14.  MAXIMUM INTEREST.  No provision of this Trust Deed or of the Note 
shall require the payment or permit the collection of interest in excess of 
the maximum permitted by law.  If any excess of interest in such respect is 
herein or in the Note provided for, neither Grantor nor its successors or 
assigns shall be obligated to pay that portion of such interest which is in 
excess of the maximum permitted by law, and the right to demand the payment 
of any such excess shall be and is hereby waived and this Section 14 shall 
control any provision of this Trust Deed or the Note which is inconsistent 
herewith.

    15.  ATTORNEYS' FEES.  In the event any action or proceeding is brought 
to enforce or interpret the provisions of this Trust Deed, the prevailing 
party shall be entitled to recover, as a part of the prevailing party's 
costs, a reasonable attorneys' fee at trial, in bankruptcy proceedings and on 
appeal, the amount of which shall be fixed by the court and made a part of 
any judgment rendered.

    16.  PREPAYMENT PROVISIONS.  If at any time after default and 
acceleration of the indebtedness secured hereby there shall be a tender of 
payment of the amount necessary to satisfy such indebtedness by or on behalf 
of the Grantor, its successors or assigns, the same shall be deemed to be a 
voluntary prepayment such that the sum required to satisfy such indebtedness 
in full shall include, to the extent permitted by law, the additional payment 
required under the prepayment privilege as stated in the Note.  Similarly, 
should the Property at any time be destroyed or be the subject of any 
successful condemnation proceeding, the portion of any insurance proceeds or 
condemnation award, as the case may be, due the Beneficiary shall include the 
additional payment required under the prepayment privilege as stated in the 
Note.

    17.  TIME OF ESSENCE.  Time is of the essence under this Trust Deed and 
in the performance of every term, covenant and obligation contained herein.

    18.  MISCELLANEOUS.

         18.1  Whenever the context so requires the singular number includes 
the plural herein, and the impersonal includes the personal.


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<PAGE>

         18.2  The headings to the various sections have been inserted for 
convenient reference only and shall not modify, define, limit or expand the 
express provisions of this Trust Deed.

    THIS TRUST DEED WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS 
    TRUST DEED 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 
    OR LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.390.

    DATED as of the day and year first above written.

    GRANTOR:                           PRAEGITZER INDUSTRIES, INC.

                                        By: /s/ Matthew J. Bergeron
                                          ---------------------------
                                        Its: Chief Operating Officer
                                            -------------------------
                      
                               [Acknowledgment follows]







                                          17

<PAGE>

STATE OF OREGON        )
                       ) ss.
County of [Illegible]

    This instrument was acknowledged before me on the 23 day of May, 1997, by
Matthew Bergeron as, Chief Operating Officer of Praegitzer Industries, Inc.

                                       /s/ Nancy E. Brown
                                       ------------------------------------
                                       Notary Public for Oregon
                                       My Commission Expires:
                                                             --------------

[Official Seal]





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