Document:

Exhibit

LEASE

THIS LEASE is entered into this 9th day of January 2017 (the “Effective Date”), between ESI Leasing, LLC, an Oregon limited liability company (“Landlord”) and Electro Scientific Industries, Inc., an Oregon corporation (“Tenant”).

RECITALS

A.    Tenant wishes to lease from Landlord the following property (the “Property”) located in the State of Oregon and described as follows:  

The real property commonly known as 13900, 13910 & 14000 NW Science Park Drive, Portland, Oregon 97229 consisting of the land described on attached Exhibit A and all buildings (“Buildings”) and other improvements located thereon.

B.    Landlord hereby leases the Property to Tenant, and Tenant hereby leases the Property from Landlord, on the terms and conditions set forth in this Lease.

TERMS AND CONDITIONS

		
	1.
	TERM; POSSESSION.

1.1Term.  The lease term shall commence on January 9, 2017 and continue through January 9, 2032, unless sooner terminated.

1.2Delivery of Possession. Tenant’s right to possession and obligations under this Lease shall commence on the commencement date of the lease term.  

1.3Acceptance of Property.  Tenant was the immediate past owner of the Property and is thoroughly familiar with the Property.  Tenant accepts the Property in its present condition, AS IS, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Property.  Landlord shall not be required to perform any work to ready the Property for Tenant’s occupancy.  Tenant acknowledges that neither Landlord nor Landlord’s agent, if any, has made any representation or warranty as to the suitability of the Property for the conduct of Tenant’s business.

1.4Renewal Option.  Tenant shall have the option to renew this Lease for two (2) additional terms, as provided below, so long as this Lease is not in default at the time the option is exercised and at the time the renewal term is to commence.  The renewal terms will be for five (5) years each, commencing on the day following expiration of the prior term.  The other terms and conditions of this Lease will remain the same during the renewal term, except that the base rent shall be as provided in Section 2.2.  Exercise of the renewal option shall be by notice given at least 30 days prior to expiration of the preceding term.

2.RENTAL.

2.1Base Rent During Initial Term.  Tenant shall pay to Landlord as base rent for the Property the following sums:
Months             Monthly Base Rent
1-120                $135,000.00
121-180            $148,500.00
2.2Base Rental During Renewal Terms.  If Tenant exercises its option to renew this Lease for the first of the two renewal terms in accordance with Section 1.4, Tenant shall pay to Landlord as base rent for the Property during the first of such two renewal terms the sum of $156,000.00 per month.  If Tenant exercises its option to renew this Lease for the second of the two renewal terms in accordance with Section 1.4, Tenant shall pay to Landlord as base rent for the Property during the second of such two renewal terms the sum of $164,000.00 per month. 

2.3Time and Place of Payment.  Rent will be paid in advance on the fifteenth day of each month at the address for Landlord set forth in this Lease, or such other address as Landlord may designate in writing to Tenant.  Rent is uniformly apportionable day to day.  Rent for the partial month (if any) in which the Lease commenced shall be prorated and paid at commencement of the lease term.

2.4Interest and Late Charges.  All rent and other payments not paid within ten (10) days after the due date shall bear interest from the due date until fully paid at the same rate as specified in Section 11.4 below.  In addition, if Tenant fails to make any rent payment within 10 days after it is due, Landlord may elect to impose a late charge of 5 cents per dollar of the overdue payment to reimburse Landlord for the costs of collecting the overdue payment. Tenant shall pay the late charge upon demand by Landlord.  Landlord may levy and collect a late charge in addition to all other remedies available for Tenant’s default, and collection of a late charge shall not waive the breach caused by the late payment.

2.5Partial or Delinquent Payments.  Payment by Tenant or receipt by Landlord of any amount less than the full monthly rental or other charges due from Tenant, or any endorsement or statement on any check or letter accompanying any check or rent payment, shall not in any event be deemed an accord and satisfaction.  Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rental or pursue any other remedy provided in this Lease.  Any payments required under this Lease which are not paid on or before the date for payment in this Lease (subject to any permitted grace period or notice requirement specified in this Lease) shall be considered delinquent and in default.

2.6Net Lease Provision.  All payments required to be paid by Tenant under this Lease, other than base rent, will constitute additional rent.  This is intended to be a net lease, meaning, except as otherwise expressly provided in this Lease, that Tenant shall pay all expenses of every type relating to the Property after commencement of the lease term, and all rentals shall be received by Landlord without set‐off, offset, abatement, or deduction of any kind.

		
	3.
	USE OF PROPERTY.

3.1Permitted Use.  Tenant shall use the Property only for conducting the following business and for no other purpose without Landlord’s written consent:  general office use, research and development, sales and marketing, manufacturing and repairs, warehousing, and employee cafeteria.

3.2Compliance with Laws.  In connection with its use, Tenant shall comply at its expense with all applicable laws, regulations and requirements of any public authority, including those regarding maintenance, operation, and use of the Property and equipment and appliances on the Property (including signs), including, without limitation, the Americans with Disabilities Act and any other act, law or regulation pertaining to persons with disabilities, except that Tenant may withhold compliance in connection with a good faith dispute so long as Landlord’s property interest is not jeopardized.  In the event such dispute by Tenant proves unsuccessful, Tenant shall promptly comply with such contested law, regulation or requirement.

3.3Hazardous Substances.  

a.Compliance.  Tenant shall comply fully with all laws pertaining to the protection of human health and the environment, including but not limited to employee and community right-to-know laws and all laws regarding the use, generation, storage, transportation, treatment, disposal or other handling of hazardous substances by Tenant, its employees, agents, and contractors.  Tenant shall promptly advise Landlord in writing of any hazardous substances regulated by such laws that are used, generated, manufactured, stored, transported or otherwise handled on the Property.  Tenant shall exercise extreme care in handling any hazardous substances and shall not cause, or permit its employees, agents, or contractors to cause, hazardous substances to be spilled, leaked, disposed of or otherwise released on the Property.  The term “hazardous substances” is used in its very broadest sense, and refers to materials which because of their quantity, concentration, or physical, chemical, or infectious characteristics may cause or pose a present or potential hazard to human health or the environment when improperly handled, treated, stored, transported, disposed of, or otherwise managed.  The term shall include, but is not limited to, all hazardous substances, hazardous materials and hazardous wastes listed by the U.S. Environmental Protection Agency and the state in which the Property is located under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the Resource Conservation and Recover Act (RCRA), the Toxic Substances Control Act (TSCA), and the Federal Water Pollution Control Act (FWPCA), and comparable state statutes.
b.Indemnity.  Tenant shall indemnify and hold harmless Landlord and its members, managers, officers, directors, employees, agents, contractors, successors and assigns for, from and against any and all claims, demands, liabilities, damages, fines, losses, costs (including the cost of compliance with any governmental order) and expenses (including attorneys’ fees at trial, on appeal and in connection with any petition for review) arising out of or in any way relating to Tenant’s breach of any covenant or warranty in this Section 3.3.  In the event any action is brought against Landlord by reason of any such claim, Tenant shall resist or defend such action or proceeding by counsel satisfactory to Landlord upon Landlord’s demand.  The obligation to indemnify, defend and hold harmless shall include, without limitation, (a) reasonable costs incurred in connection with investigation of site conditions, (b) reasonable costs of any clean-up, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision with respect to hazardous substances or infectious wastes, (c) reasonable sums paid in settlement of claims, attorneys’ fees, consultant and laboratory fees and expert fees, and (d) the value of any loss of the use of the Property.  Tenant’s obligations under this Section 3.3(b) shall survive the expiration or termination of the Lease for any reason.

3.4No Offensive Activities.  Tenant shall not conduct or permit any activities on the Property that create a nuisance or damage the reputation of the Property, or are reasonably offensive to Landlord, or other owners or users of adjoining property.

3.5Insurance Coverage.  Tenant shall refrain from any use of the Property that would invalidate or impair the coverages afforded by any insurance maintained with respect to the Property and shall not allow the condition of the Property or Buildings to decline to a degree that would result in any insurance required under this Lease to be maintained by Tenant to no longer be available.

3.6Building Overloads.  Tenant will refrain from doing anything on or about the Property that will cause an overload.  If Landlord believes there is an overload, Landlord may select a qualified electrician whose opinion will control regarding any overload of electric circuits, or a qualified engineer or architect whose opinion will control regarding floor overloads or other stresses.  Tenant will promptly comply with any actions recommended by the electrician, engineer or architect.

3.7Removal of Snow, Ice, and Debris.  Tenant shall keep any sidewalks abutting the Property and entrances to Buildings free and clear of snow, ice, debris, and obstructions of every kind.  Tenant shall keep the roof and drains leading from the roof free and clear of snow, ice, debris, or other obstruction which might overload or endanger the roof or adjoining premises, sidewalks, or streets.  In performing such work, Tenant shall take all reasonable precautions to avoid damage to the roof.

3.8Signs.  Except for existing signs located on the Property at the time this Lease commences, Tenant shall obtain Landlord’s prior approval of the location, design, size, color, materials, and other details of any signs to be located on the Property, which approval shall not be unreasonably withheld.  Signs must be designed and constructed in compliance with city and county sign codes.

4.MAINTENANCE AND ALTERATIONS.

4.1Tenant’s Obligations.  Tenant, at its expense, shall keep the Property (including the land, parking areas, access roads, driveways, sidewalks, landscaping, Buildings, improvements, roofs, electrical systems, HVAC systems, fire sprinkler systems and other mechanical systems, fixtures, and all personal property, trade fixtures and equipment) in good repair, operating condition, working order and appearance, and shall make all exterior and interior repairs, renewals, and replacements necessary to that end.  

4.2Landlord’s Obligations.  Landlord shall be under no obligation to make any repairs, alterations, or improvements or perform any maintenance on the Property at any time, except as expressly required in this Lease.  

4.3Alterations.  Tenant shall not make any alterations or additions to the Property without Landlord’s prior written consent, which consent may require the alterations to be removed and the Property restored on termination of this Lease.  Landlord will not unreasonably withhold its consent, subject to the following conditions:
a.Any alteration or addition shall be done in a good and workmanlike manner and in compliance with applicable laws and building codes and the Americans with Disabilities Act, and in accordance with the orders, rules and regulations of the National Board of Fire Underwriters or any other body exercising similar functions.
b.The cost of any such alteration or addition shall be paid in cash, or its equivalent, so that the Property and all portions thereof shall at all times be free of liens for labor and materials supplied or claimed to have been supplied to the Property.  At least 15 days before commencing any work or delivery of any materials relating to any alterations, improvements, or additions to the Property, Tenant shall notify Landlord of the expected date of commencement of such work or the delivery of any such materials.  Landlord shall have the right at any time and from time to time to post and maintain on the Property such notices as Landlord reasonably deems necessary to protect the Property from construction liens, materialmen’s liens, and any other liens.
c.Tenant shall cause all of its contractors performing work on the Property to maintain, at such contractor’s sole cost and expense, Workers Compensation Insurance covering all persons employed in connection with the work, with respect to whom death or bodily injury claims could be asserted against Landlord or its successors in interest when any work is in process in connection with any such alteration or 

addition.  Such insurance shall be in a company or companies of recognized responsibility, licensed to do business in the state where the Property is located, and true copies of all policies or certificates therefor, issued by the respective insurers, bearing notations evidencing the payment of premiums or accompanied by other evidence satisfactory to Landlord of such payment, shall be delivered to Landlord.
d.Except as otherwise provided in the consent, all alterations, additions, improvements, and fixtures installed by Tenant (other than trade fixtures and equipment) shall become a part of the Property at the expiration of the term of the Lease and belong to Landlord.
e.The value of the Property upon completion of such alterations shall equal or exceed the value of the Property prior to such work.
f.Tenant will not permit any “visual art,” as defined in the Visual Artists Protection Act, to be constructed or installed at the Property without Landlord’s prior written consent, which consent may be conditioned upon the artist executing a waiver of rights in form satisfactory to Landlord.

5.TAXES; UTILITIES.  

5.1Personal Property Taxes.  Tenant shall pay when due all personal property taxes assessed against its personal property, equipment or trade fixtures on the Property.

5.2Taxes and Assessments.  Tenant shall pay to the applicable taxing authority before delinquent all real property taxes, assessments and public charges on the Property.  Taxes and assessments for any partial year during the lease term shall be prorated between Landlord and Tenant on the basis of the portion of the tax year that Tenant occupies the Property.  If special assessments are payable in installments, Tenant shall be obligated to pay to Landlord only those installments coming due during the term of this Lease.

5.3Taxes in Lieu of Ad Valorem Tax.  If a tax is assessed upon Landlord’s interest under this Lease which is in lieu of the ad valorem real property tax, then to the extent permitted by law, Tenant shall pay such tax.  Tenant, however, shall have no obligation to pay any income, profits, or franchise tax levied upon the net income derived by Landlord from this Lease.

5.4Payment of Utilities Charges.  Tenant shall pay when due all charges for services and utilities incurred in connection with the use, occupancy, operation, and maintenance of the Property, including (but not limited to) charges for fuel, water, gas, electricity, sewage disposal, power, refrigeration, air conditioning, telephone, parking lot lighting, landscape maintenance and janitorial services.  

6.LIABILITY TO THIRD PERSONS.  

6.1Liens.  Tenant shall pay as due all claims for work done on or for services rendered or material furnished to the Property, and shall keep the Property free from any liens other than liens created by Landlord, except that Tenant may withhold payment of any claim in connection with a good faith dispute over the obligation to pay, so long as Landlord’s property interest is not jeopardized.  If Tenant fails to pay such claim or to discharge any lien, Landlord may do so and collect such amount as additional rent.  Amounts paid by Landlord hereunder shall bear interest and be repaid by Tenant as provided in Section 11.4 below.  Such payment by Landlord shall not constitute a waiver of any right or remedy Landlord may have because of Tenant’s default.  

6.2Contest by Tenant.  If Tenant withholds payment of a claim and a lien is filed as a result of nonpayment, Tenant shall (within 10 days after knowledge of the filing) secure the discharge of the lien or deposit with Landlord cash or sufficient corporate surety bond or other security satisfactory to Landlord in 

an amount sufficient to discharge the lien plus any costs, attorneys’ fees, and other charges that could accrue as a result of a foreclosure or sale under the lien.  

6.3Indemnification of Landlord.  Except to the extent of Landlord’s gross negligence of willful misconduct, Tenant shall indemnify, defend, and hold harmless Landlord from, for, and against any claim, loss, or liability arising out of or related to (1) Tenant’s use of the Property, (2) any action or inaction of Tenant or its employees, contractors and design professionals (and their subcontractors and suppliers at all tiers), agents, lenders, licensees or invitees, (3) any condition of the Property which is the responsibility of Tenant under this Lease, (4) the conduct of Tenant’s business or any activity, work or things done, permitted or suffered by Tenant in or about the Property or elsewhere, (5) any breach or default in the performance of any obligation of Tenant under this Lease, or (6) any products or goods sold by or provided by Tenant from the Property (including product liability and other claims).  In the event any action is brought against Landlord by reason of any such claim, Tenant shall resist or defend such action or proceeding by counsel satisfactory to Landlord upon Landlord’s demand.

6.4Landlord’s Liability.  Landlord shall have no liability to Tenant for acts of other tenants who may be occupying adjacent property, or for any defect in the Property which is the responsibility of the Tenant under this Lease, or for any interruption or failure in the supply of utilities or services to the Property. 

6.5Security.  Tenant acknowledges that the rental payable to Landlord under this Lease does not include the cost of guard service or other security measures, and that Landlord shall have no obligation whatsoever to provide such services or security measures.  Tenant assumes all responsibility for the protection of Tenant, its officers, employees, agents and invitees, from the acts of third parties.

7.INSURANCE AND DAMAGE.  

7.1Liability Insurance.  Tenant shall continuously maintain at its expense commercial general liability insurance, written on an occurrence basis, in a company rated not less than A -, Class VII, in “Best’s Insurance Guide,” covering claims and liability for personal injury, death, or property damage with limits of not less than $25,000,000 per occurrence and $25,000,000 in the aggregate, or such higher limits as Landlord may reasonably specify from time to time.  Such insurance shall name Landlord and the holder of any mortgage or trust deed on the Property (“Lender”) as additional insureds. If Tenant’s use of the Property includes any activity or matter that would be excluded from coverage under a commercial general liability policy, Tenant shall obtain such endorsements to the commercial general liability policy or otherwise obtain insurance to insure all liability arising from such activity or matter in such amounts as Landlord may reasonably require.

7.2Property Damage Insurance. Tenant shall be responsible for insuring the Buildings and other improvements, and all personal property, equipment, and trade fixtures located on the Property.  The Buildings and improvements shall be covered by property damage insurance covering all risks included under Causes of Loss - “Special Form” coverage, and such other risks (including earthquake and flood) as Landlord or any Lender may reasonably designate, on no less than a full replacement cost basis with agreed amount, replacement cost, ordinance or law coverage and inflation guard endorsements and with Rents Coverage for not less than 12 months rental under this Lease.  Landlord shall not unreasonably withhold its consent to reasonable and customary deductibles in such policies subject to the approval of any Lender.  Landlord shall be named as additional insured and loss payee on such policy (with loss payee endorsement acceptable to Landlord) and loss shall be payable to Landlord or otherwise as required by any mortgage or trust deed in favor of Lender.

7.3Policies.  All policies shall be in a form and with companies reasonably acceptable to Landlord and any Lender, rated not less than A -, Class VII, in “Best’s Insurance Guide,” with Landlord shown as an additional insured.  Tenant’s insurance shall provide primary coverage to Landlord when any policy issued to Landlord provides duplicate or similar coverage, and in such circumstance Landlord’s policy will be excess over Tenant’s policy. Tenant may carry such insurance under blanket policies; provided, however, such insurance by Tenant shall have a Landlord’s protective liability endorsement attached thereto. Certificates evidencing such insurance and a copy of such insurance policy(ies) shall be furnished to Landlord prior to commencement of the lease term.  At least 30 days before expiration of any policy required by this Lease, Tenant shall furnish to Landlord proof of issuance of a policy or policies continuing the required coverages.  Tenant shall furnish to Landlord receipts for the payment of premiums on such policies or other evidence of such payment reasonably satisfactory to Landlord. Upon request of Landlord, Tenant shall promptly furnish to Landlord a copy of such policy or policies.  Tenant will cause each insurance policy Tenant is required under this Lease to maintain to include a requirement that the insurer give at least 30 days’ written notice to Landlord before any cancellation of such policy.

7.4Restoration of Damage.  In case of damage or destruction to the Property there shall be no rent abatement.  Tenant shall proceed to restore the Property promptly to a condition equivalent in function and value to that existing prior to the damage.  To the extent insurance proceeds are made available by any Lender for restoration, Landlord shall hold such funds in an interest bearing account and shall disburse such proceeds and interest to Tenant as restoration progresses, up to the total cost of restoration, in a manner similar to that in which proceeds of a construction loan are customarily disbursed.  After restoration is complete, any remaining insurance proceeds shall be paid to Landlord.

7.5Repair of Tenant’s Property.  Repair, replacement, or restoration of any fixtures, equipment and personal property owned by Tenant, and tenant improvements shall be the responsibility of Tenant.

7.6Waiver of Subrogation.  Neither party shall be liable to the other for any loss or damage which (a) would be insured against under the terms of any property insurance required to be carried under this Lease, or (b) is insured against under the terms of any property insurance actually carried, regardless of whether it is required under this Lease. Such waiver shall apply regardless of whether the claim is due to the negligence of a party or that parties’ agents, officers, employees or contractors.

8.CONDEMNATION.  

If the entire Property is condemned, or if a portion is taken which causes the remainder to be unsuited to the use permitted under this Lease, then this Lease shall terminate as of the date upon which possession of the Property is taken by the condemning authority.  Otherwise, Landlord shall proceed to make necessary repairs and alterations to the Property to permit Tenant to continue its operations thereon.  Rent shall be abated during the period of restoration and shall be reduced for the remainder of the lease term to the extent and in the same proportion as the reduction in the reasonable rental value of the Property for Tenant’s use caused by the condemnation.  All condemnation proceeds shall belong to Landlord, except for any award specifically made to Tenant for moving expenses, or the taking of Tenant’s trade fixtures and personal property.  Sale of all or a part of the Property to a purchaser with the power of eminent domain in the face of a threat or the probability of the exercise of the power shall be treated as a taking by condemnation.  Landlord need not incur expenses for restoration in excess of the amount of condemnation proceeds received by Landlord after payment of all reasonable costs, expenses and attorneys’ fees incurred by Landlord in connection therewith.  

9.TRANSFERS BY TENANT.

9.1Prohibition of Transfer.  Tenant shall not assign, mortgage, pledge, hypothecate or encumber the Property or Tenant’s leasehold estate, or sublet all or any portion of the Property, license the use of all or any portion of the Property, or otherwise transfer any interest in the Property (whether voluntary, involuntary, by operation of law or otherwise), without the prior written consent of Landlord, which Landlord may grant or withhold in its sole discretion.  Any attempted transfer without consent shall be null and void and, at the option of Landlord, will cause termination of this Lease. 

9.2Obligations After Transfer.  The giving of such consent in one instance shall not preclude the need for Tenant to obtain Landlord’s consent to further transfers.  If Tenant is permitted to make any transfer, Tenant shall not be relieved of its obligations, but shall remain primarily liable to Landlord for performance of all such obligations.  The transferee shall execute an assumption of Tenant’s obligations under this Lease in form reasonably satisfactory to Landlord. The acceptance of rent by Landlord from any person other than Tenant shall not be deemed to be a waiver of any of the provisions of this Section 9 or to be a consent to any assignment, subletting or other transfer.

10.DEFAULT.  
The following shall be events of default:  

10.1Payment Default.  Tenant fails to make any rent or other payment under this Lease within ten (10) days after written notice to Tenant that it is past due; provided, however, Landlord shall not be required to give more than two (2) such notices in any 12 month period, after which this Lease shall be in default if rent or any other payment is not paid within ten (10) days after it is due without notice, until such 12 month period has passed.

10.2Unauthorized Transfer.  Tenant makes any transfer without Landlord’s prior written consent as required under Section 9.1.

10.3Default in Other Covenants.  Tenant fails to comply with any other term or condition or fulfill any other obligation of this Lease within thirty (30) days after written notice by Landlord specifying the nature of the default with reasonable particularity, provided, however, if the default is of such a nature that it cannot be remedied fully within the 30‐day period, it shall not be an event of default if Tenant begins correction of the default within the 30‐day period and thereafter proceeds with reasonable diligence and in good faith to effect the remedy as soon as practicable. 

10.4Insolvency Defaults.  Dissolution or termination of existence of Tenant; the commencement by Tenant of a voluntary case under the federal bankruptcy laws or under any other federal or state law relating to insolvency or debtor’s relief; the entry of a decree or order for relief against Tenant in an involuntary case under the federal bankruptcy laws or under any other applicable federal or state law relating to insolvency or debtor’s relief; the appointment of or the consent by Tenant to the appointment of a receiver, trustee, or custodian of Tenant or of any of Tenant’s property; an assignment for the benefit of creditors by Tenant; the making or suffering by Tenant of a fraudulent transfer under applicable federal or state law; concealment by Tenant of any of its property in fraud of creditors; the making or suffering by Tenant of a preference within the meaning of the federal bankruptcy law; or the imposition of a lien through legal proceedings or distraint upon any of the Property of Tenant which is not discharged or bonded.

10.5Default by Landlord.  Landlord shall not be in default under this Lease unless Landlord fails to perform its obligations within a reasonable time, but in no event later than thirty (30) days after written 

notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Property whose name and address shall have been furnished to Tenant in writing, specifying the nature of Landlord’s failure to perform; provided, however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are reasonably required for performance, then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and, thereafter, diligently prosecutes the same to completion.

11.REMEDIES ON DEFAULT.  
Upon default, Landlord may exercise any one or more of the following remedies, or any other remedy available under applicable law:  

11.1Termination.  Landlord may terminate Tenant’s right to possession of the Property and Tenant’s rights under this Lease by giving written notice to Tenant of Landlord’s election to terminate Tenant’s right to possession of the Property, and this Lease will terminate as of the date of such notice.  In the event of such termination, Landlord may recover damages from Tenant as provided in Section 11.3 below.

11.2Retake Possession.  Landlord may re‐enter and retake possession of the Property, without notice, either by summary proceedings, force, any other applicable action or proceeding, or otherwise.  Landlord may use the Property for Landlord’s own purposes or relet it upon any reasonable terms without prejudice to any other remedies that Landlord may have by reason of Tenant’s default.  None of these actions will be deemed an acceptance of surrender by Tenant. 

11.3Damages for Default.  Whether or not Landlord retakes possession or relets the Property, Landlord may recover all damages caused by the default (including but not limited to unpaid rent, attorneys’ fees relating to the default, and costs of reletting).  Landlord may sue periodically to recover damages as they accrue during the remainder of the lease term without barring a later action for further damages.  Landlord may at any time bring an action for accrued damages, together with interest thereon at the rate of 12 percent per annum, plus damages for the remaining lease term.  Such damages for the remaining lease term shall be equal to the difference between the total unpaid rent that would have been earned after termination of the Lease, with interest at 12 percent per annum from when due; less the amount of the rental loss that Tenant proves could have been reasonably avoided, if any; with such difference discounted to present value at a discount rate equal to the sum of the Federal Reserve rate in effect at the time of the award promulgated by the Federal Reserve office for the district in which the Property is located, plus one percent.

11.4Cure of Tenant’s Default.  Without prejudice to any other remedy for default, Landlord may perform any obligation or make any payment required to cure a default by Tenant.  The cost of performance, including attorneys’ fees and all disbursements, shall immediately be repaid by Tenant upon demand, together with interest from the date of expenditure until fully paid at the rate of 12 percent per annum, but not in any event at a rate greater than the maximum rate of interest permitted by law.  

12.SURRENDER AT EXPIRATION.  

12.1Condition of Property.  Upon expiration of the lease term or earlier termination of this Lease, Tenant shall deliver all keys to Landlord and surrender the Property in good condition, broom clean.  All repair, replacement and restoration for which Tenant is responsible shall be completed to the latest practical date prior to such surrender.  

12.2Fixtures.  Upon expiration of the lease term or earlier termination of this Lease, Tenant shall remove all of its furnishings, furniture, and trade fixtures that remain the property of Tenant and restore all 

damage caused by such removal.  If Tenant fails to do so, this shall be an abandonment of such property and Landlord may retain such property and all rights of Tenant with respect to it shall cease or, by notice in writing given to Tenant within twenty (20) days after removal was required, Landlord may elect to hold Tenant to its obligation of removal.  If Landlord elects to require Tenant to remove, Landlord may effect a removal and place the property in public storage for Tenant’s account.  Tenant shall be liable to Landlord for the cost of removal, restoration, transportation to storage, and storage, with interest on all such expenses as provided in Section 11.4.

12.3Holdover.  If Tenant does not vacate the Property at the time required, Landlord shall have the option to treat Tenant as a tenant from month to month, subject to all of the provisions of this Lease (except that the term will be month to month and the rent will be 150 percent of the amount of rent then being paid by Tenant), or to evict, eject or otherwise lawfully remove Tenant from the Property and recover damages caused by wrongful holdover.  Failure of Tenant to remove furniture, furnishings, or trade fixtures which Tenant is required to remove under this Lease shall constitute a failure to vacate to which this Section shall apply if such property not removed substantially interferes with occupancy of the Property by another tenant or with occupancy by Landlord for any purpose including preparation for a new tenant.  If a month-to-month tenancy results from a holdover by Tenant, the tenancy shall be terminable at the end of any monthly rental period on written notice from Landlord given not less than ten (10) days prior to the termination date which shall be specified in the notice.  Tenant waives any notice which would otherwise be provided by law with respect to month-to-month tenancy.

13.WARRANTY OF QUIET ENJOYMENT.  
So long as Tenant complies with all terms of this Lease, Tenant shall be entitled to peaceable and undisturbed possession of the Property free from any interference by Landlord or those claiming through Landlord.  

14.GENERAL PROVISIONS.  

14.1Time of Essence.  Time is of the essence of the performance of each of Tenant’s obligations under this Lease.  

14.2Modifications.  No modification of this Lease will be valid unless it is in writing and is signed by all of the parties.    

14.3No Appurtenances.  This Lease does not create any rights to light and air by means of openings in the walls of the Buildings, any rights or interests in parking facilities, or any other rights, easements, or licenses, by implication or otherwise, except as expressly set forth in this Lease or its exhibits.

14.4Nonwaiver.  Waiver of performance of any provision of this Lease shall not be a waiver of nor prejudice the party’s right otherwise to require performance of the same provision or any other provision.  

14.5Succession.  Subject to the limitations on transfer of Tenant’s interest, this Lease shall bind and inure to the benefit of the parties, their respective heirs, successors, and assigns. 

14.6Landlord’s Access.  Landlord and its authorized representatives may enter the Property with reasonable notice (but in no event shall more than 24 hour’s notice be required) to determine Tenant’s compliance with this Lease, to make necessary repairs, or to show the Property to any prospective tenants, purchasers or lenders. Landlord may enter the Property without notice by any means necessary in the case of an emergency. Landlord may at any time place on or about the Property any ordinary “for sale” signs and 

Landlord may at any time during the last one hundred eighty (180) days during the term of this Lease place on or about the Property any ordinary “for lease” signs.  

14.7Attornment.  In the event any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or trust deed made by Landlord covering the Property, upon request Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as Landlord under this Lease.  

14.8Subordination to Mortgages.  This Lease, at Landlord’s option, shall be subordinate to the lien of any trust deed or mortgage subsequently placed upon the Property, and to any and all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements, and extensions thereof; provided, however, that as to the lien of any such trust deed or mortgage Tenant’s right to quiet possession of the Property shall not be disturbed if Tenant is not in default and so long as Tenant pays the rent and observes and performs all of the provisions of this Lease.  If requested by Landlord, Tenant shall promptly execute and deliver any document reasonably to effectuate such subordination.

14.9Estoppel Certificates.  Within 10 business days after written request by the other party, either party shall execute and deliver a certificate prepared by the other party stating whether or not this Lease has been modified and is in full force and effect and specifying any modifications or alleged breaches by the other party.  This certificate shall also state the amount of monthly rent, the dates to which rent has been paid in advance, and the amount of any prepaid rent.  Failure to deliver the certificate within the specified time shall be conclusive upon the party from whom the certificate was requested that the Lease is in full force and effect and has not been modified, except as may be represented by the party requesting the certificate.

14.10Conveyance by Landlord.  In the event Landlord sells its interest in the Property during the term of this Lease, Landlord shall be discharged from any obligations and responsibilities under this Lease from and after the effective date of the sale, except for those already accrued.

14.11Breach by Landlord.  In the event any damages are awarded to Tenant against Landlord for breach of this Lease, Tenant’s sole recourse shall be against Landlord’s interest in the Property, and Landlord shall have no personal liability therefor.

14.12Recording.  This Lease shall not be recorded without the consent in writing of Landlord.

14.13Financial Statements.  Upon written request of Landlord, Tenant shall furnish to Landlord Tenant’s most current financial statement prepared in the ordinary course of Tenant’s business.  Landlord may make such financial statement available to any prospective lender or purchaser of the Property.  Landlord shall otherwise keep such financial statement confidential and shall require any such prospective lender or purchaser to do the same.

14.14Notices. 
a.All notices given pursuant to this Lease shall be in writing and shall either be (i) mailed by first class mail, postage prepaid, certified or registered with return receipt requested or (ii) delivered in person or by nationally recognized overnight courier.
b.Any notice (i) sent by mail in the manner specified in Section 14.14(a) shall be deemed served or given two (2) business days after deposit in the United States Postal Service, (ii) delivered by nationally recognized overnight courier shall be deemed served or given one Business Day after delivery to the courier, charges prepaid.  Notice given to a party in any manner not specified above shall be effective 

only if and when received by the addressee as demonstrated by objective evidence in the possession of the sender.
c.The address of each party to this Lease for purposes of notice shall be as follows:
LANDLORD:                ESI Leasing, LLC
13900 NW Science Park Drive
Portland, OR 97229            

		
	TENANT:
	Electro Scientific Industries, Inc.

13900 NW Science Park Drive
Portland, OR 97229
    
Each party may change its address for notice by giving not less than thirty (30) days’ prior notice of such change to the other party in the manner set forth above.

14.15Attorneys’ Fees; Disputes.  In the event suit or action is instituted to interpret or enforce the terms of this Lease or to rescind this Lease, the prevailing party shall be entitled to recover from the other party such sum as the court may adjudge reasonable as attorneys’ fees at trial, on appeal and on any petition for review, and in any proceeding in bankruptcy, in addition to all other sums provided by law.  Disputes between the parties which are to be litigated shall be tried before a judge without a jury.

14.16Applicable Law.  This Lease shall be construed, applied and enforced in accordance with the laws of the State of Oregon.

14.17Prior Agreements.  This Lease is the entire, final, and complete agreement of the parties with respect to the matters set forth in this Lease, and supersedes and replaces all prior written and oral agreements between the parties or their representatives with respect to such matters.

14.18Validity of Provisions.  If any provision in this Lease shall be invalid, illegal, or unenforceable in any respect, the validity of the remaining provisions contained in this Lease shall not be affected and shall be enforced to the fullest extent permitted by law.  

14.19Landlord’s Consent.  Whenever Landlord’s consent or approval is required under this Lease, except as otherwise expressly provided in this Lease, such consent or approval shall not be unreasonably withheld or delayed.

14.20Effective Date of Lease.  The submission of this Lease for examination does not constitute a reservation of or option for the Property, and this Lease shall become effective as a lease only upon execution and delivery by Landlord and Tenant.

14.21Authorship.  This Lease is a jointly negotiated work product and authorship shall not be ascribed to any particular party.

14.22Joint and Several Liability; Authority.  In the event Tenant now or hereafter consists of more than one person, firm or corporation, then all such persons, firms or corporations shall be jointly and severally liable as Tenant under this Lease. Each of the persons executing this Lease on behalf of Tenant warrants to Landlord that Tenant has all right and authority to enter into this Lease, and that each and every person signing on behalf of Tenant is authorized to do so.

IN WITNESS WHEREOF, the parties have executed this Lease as of the date first above written.  
		
	LANDLORD:
	ESI Leasing, LLC 

an Oregon limited liability company 

By:  ____________________________________
Name:  Paul R Oldham
Title:  Manager

		
	TENANT:
	ELECTRO SCIENTIFIC INDUSTRIES, INC., 

an Oregon corporation 

By:  ______________________________________
Name: Robert DeBakker
Title:  VP of Operations

EXHIBIT A

Legal Description

PARCEL I:

Lot 5, SUNSET SCIENCE PARK, in the County of Washington and State of Oregon.

EXCEPTING THEREFROM a portion of Lot 5, SUNSET SCIENCE PARK, a plat of record in the Southwest quarter of Section 33, Township 1 North, Range 1 West of the Willamette Meridian, Washington County, Oregon, said point being more particularly described as follows:
Beginning at the Southwest corner of said Lot 5, being also the Southeast corner of Lot 4, said SUNSET SCIENCE PARK, and running thence, along the line common to said Lot 4 and Lot 5, North 10o17' East 380.94 feet to a point on the Southerly right-of-way line of Science Park Drive, a point on the arc of a 248.85 foot radius curve, the radius point of which bears North 10o17' East; thence, along said Southerly right-of-way line, on the arc of said radius curve (the long chord of which bears South 84o12'59" East 39.04 feet) 39.09 feet; thence, along said Southerly right-of-way line, South 88o43' East 14.08 feet; thence South 18o04'22" West 389.80 feet to the point of beginning.
 
FURTHER EXCEPTING THEREFROM that portion conveyed by Deed to the State of Oregon, by and through its Department of Transportation, Highway Division, recorded December 10, 1990, Recording No. 90-67371.

PARCEL II:

A tract of land created after January 1, 2008 pursuant to Property Line Adjustment Case File 14-031-PLA and Property Line Adjustment Deed recorded August 13, 2014, Recording No. 2014-050769, described as follows:

A tract of land situated in the Southwest one-quarter of Section 33, Township 1 North, Range 1 West of the Willamette Meridian, Washington County, Oregon, being a portion of Lots 4 and 5, SUNSET SCIENCE PARK, being more particularly described as follows:

Commencing at the Northwest corner of said Lot 4, said Northwest corner being on the Southerly right of way line of N.W. Science Park Drive; thence South 88o43'00" East along said right of way line a distance of 494.88 feet to a point of curve; thence along said curve to the right having a radius of 188.85 feet through a central angel of 27o27'37" (chord bears South 74o59'12" East 89.65 feet) an arc distance of 90.51 feet to the True Point of Beginning; thence leaving said right of way, South 28o11'28" West, a distance of 355.41 feet; thence South 19o18'20" West, a distance of 54.92 feet; thence South 28o10'27" West a distance of 106.22 feet to the Southerly line of Lot 4, SUNSET SCIENCE PARK, said point also being on the Northerly right of way line of Sunset Highway (US Highway 26); thence South 61o50'00" East along said Southerly line of Lot 4, a distance of 569.94 feet to the Southeast corner thereof; thence leaving said Northerly right of way line of Sunset Highway, North 17o57'55" East, a distance of 389.70 feet to a point on the Northerly line of Lot 5, SUNSET SCIENCE PARK and Southerly right of way line of N.W. Science Park Drive; thence North 88o45'36" West along said right of way line, a distance of 13.19 feet to a point of curve; thence along said curve to the right having a radius of 248.85 feet through a central angle of 59o29'48" (chord bears North 59o00'42" West 246.95 feet) an arc distance of 258.41 feet to a point of tangent; thence North 29o15'48" West, a distance of 179.22 feet; thence on a curve to the left 

having a radius of 188.85 feet through a central angle of 31o59'35" (chord bears North 45o15'36" West 104.09 feet) an arc distance of 105.45 feet to the True Point of Beginning.Exhibit

ESI LEASING, LLC, as grantor 
(Borrower)
to
WFG National Title Insurance Company, as trustee
(Trustee)

for the benefit of
FIRST TECHNOLOGY FEDERAL CREDIT UNION, as beneficiary
(Lender)
__________________________
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, AND FIXTURE FILING
__________________________
Dated:        As of January 9, 2017
Location:    Portland, Oregon
County:    Washington County, Oregon 
The tax account numbers for the real property covered 
by this Deed of Trust are R633345, R2183655, R633327, R2180015, R2143262, P852848

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING (this "Security Instrument") is made as of January ____, 2017, by ESI LEASING, LLC, an Oregon limited liability company, having its principal place of business at 13900 N.W. Science Park Drive, Portland, Oregon 97229, as grantor (together with its respective permitted successors and assigns, "Borrower") to WFG National Title Insurance Company, an Oregon Corporation, having an address at 12909 SW 68th Parkway, Suite 350, Portland, OR 97223, as trustee ("Trustee"), for the benefit of FIRST TECHNOLOGY FEDERAL CREDIT UNION, a federally chartered credit union having an address at 3555 SW 153rd Drive, Beaverton, OR 97003, Attn:  Commercial Lending, as beneficiary (together with its successors and assigns, "Lender").
W I T N E S S E T H:
WHEREAS, this Security Instrument is given to secure a loan (the "Loan") in the principal sum of FOURTEEN MILLION AND NO/100 DOLLARS ($14,000,000.00) pursuant to that certain Loan Agreement dated as of the date hereof between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Loan Agreement") and evidenced by that certain Promissory Note dated the date hereof made by Borrower to Lender (such Note, together with all extensions, renewals, replacements, amendments, restatements or modifications thereof being hereinafter referred to as the "Note"); and
WHEREAS, Borrower desires to secure the payment of the Debt and the performance of all of its obligations under the Note, the Loan Agreement and the other Loan Documents; and
WHEREAS, this Security Instrument is given pursuant to the Loan Agreement, and payment, fulfillment, and performance by Borrower of its obligations thereunder and under the other Loan Documents are secured hereby, and each and every term and provision of the Loan Agreement and the Note, including the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties of the parties therein, are hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Security Instrument.
NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Security Instrument:
		
	Article 1
	- GRANTS OF SECURITY

Section 1. 1Property Conveyed.  Borrower does hereby irrevocably grant, bargain, sell, pledge, assign, warrant, transfer and convey and grant a security interest to Trustee and its successors and assigns, in trust, with Power of Sale for the benefit of Lender as beneficiary in trust, the following property, rights, interests and estates now owned, or hereafter acquired by Borrower (collectively, the "Property"):

(a)Land.  The real property located at 13900 and 14000 N.W. Science Park Drive, Portland, Oregon 97229 described in Exhibit A attached hereto and made a part hereof (the "Land");

(b)Additional Land.  All additional lands, estates and development rights hereafter acquired by Borrower for use in connection with the Land and the development of the Land or for any other use and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of this Security Instrument regardless of the ownership thereof (the "Additional Land");

(c)Improvements.  The buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land or the Additional Land (collectively, the "Improvements");

(d)Easements and Other Beneficial Interests.  All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land, the Additional Land, and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land or the Additional Land and the Improvements and every part and parcel thereof, with the appurtenances thereto;

(e)Equipment.  All "equipment," as such term is defined in Article 9 of the Uniform Commercial Code (as hereinafter defined), now owned or hereafter acquired by Borrower, which is used at or in connection with the Improvements or the Land or the Additional Land or is located thereon or therein (including, but not limited to, all machinery, equipment, furnishings, and electronic data-processing and other office equipment now owned or hereafter acquired by Borrower and any and all additions, substitutions and replacements of any of the foregoing), together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto (collectively, the "Equipment").  Notwithstanding the foregoing, Equipment shall not include any property belonging to tenants under leases except to the extent that Borrower shall have any right or interest therein;

(f)Fixtures.  All Equipment now owned, or the ownership of which is hereafter acquired, by Borrower which is so related to the Land or the Additional Land and Improvements forming part of the Property that it is deemed fixtures or real property under the law of the particular state in which the Equipment is located, including, without limitation, all building or construction materials intended for construction, reconstruction, alteration or repair of or installation on the Property, construction equipment, appliances, machinery, plant equipment, fittings, apparatuses, fixtures and other items now or hereafter attached to, installed in or used in connection with (temporarily or permanently) any of the Improvements or the Land or the Additional Land, including, but not limited to, engines, devices for the operation of pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses and equipment, heating, ventilating, plumbing, laundry, incinerating, electrical, air conditioning and air cooling equipment and systems, gas and electric machinery, appurtenances and equipment, pollution control equipment, security systems, disposals, dishwashers, refrigerators and ranges, recreational equipment and facilities of all kinds, and water, gas, electrical, storm and sanitary sewer facilities, utility lines and equipment (whether owned individually or jointly with others, and, if owned jointly, to the extent of Borrower's interest therein) and all other utilities whether or not situated in 

easements, all water tanks, water supply, water power sites, fuel stations, fuel tanks, fuel supply, and all other structures, together with all accessions, appurtenances, additions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof (collectively, the "Fixtures").  Notwithstanding the foregoing, "Fixtures" shall not include any property which tenants are entitled to remove pursuant to leases except to the extent that Borrower shall have any right or interest therein;

(g)Personal Property. All furniture, inventory and articles of personal property and accessions thereof and renewals, replacements thereof and substitutions therefor and other tangible property of every kind and nature whatsoever (as defined in and subject to the provisions of the Uniform Commercial Code as hereinafter defined), other than Fixtures, which are now or hereafter owned by Borrower and which are located within or about the Land and the Improvements, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof (collectively, the "Personal Property"), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (the "Uniform Commercial Code"), superior in lien to the lien of this Security Instrument and all proceeds and products of the above;

(h)Leases and Rents.  All leases, subleases, rental agreements, registration cards and agreements, if any, lettings, licenses, concessions or other agreements (whether written or oral) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of the Land and the Improvements, and every modification, amendment or other agreement relating to such leases, subleases, or other agreements entered into in connection with such leases, subleases, or other agreements and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the "Bankruptcy Code") (collectively, the "Leases") and all right, title and interest of Borrower, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues, registration fees, if any, and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and/or the Improvements, all income, rents, use or occupancy of all or only part of, issues, profits, revenues, deposits, accounts and other benefits from the Land and/or the Improvements (collectively, the "Rents") and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt;

(i)Condemnation Awards.  All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including but not limited to any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property;

(j)Insurance Proceeds.  All proceeds of and any unearned premiums on any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;

(k)Tax Certiorari.  All refunds, rebates or credits in connection with reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction;

(l)Rights.  The right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property;

(m)Agreements.  All agreements, contracts, certificates, instruments, letters of credit, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Borrower thereunder;

(n)Trademarks.  All tradenames, trademarks, servicemarks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used in connection with the operation of the Property;

(o)Accounts Receivables.  All right, title and interest of Borrower arising from the operation of the Land and the Improvements in and to all payments for goods or property sold or leased or for services rendered, whether or not yet earned by performance, and not evidenced by an instrument or chattel paper (hereinafter referred to as "Accounts Receivable") including, without limiting the generality of the foregoing, (i) all accounts, contract rights, book debts, and notes arising from the use or occupancy of all or any part of the Land and the Improvements or arising from the sale, lease or exchange of goods or other property and/or the performance of services, (ii) Borrower's rights in, to and under all purchase orders for goods, services or other property, (iii) Borrower's rights to any goods, services or other property represented by any of the foregoing, (iv) monies due to or to become due to Borrower under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services including the right to payment of any interest or finance charges in respect thereto (whether or not yet earned by performance on the part of Borrower) and (v) all collateral security and guaranties of any kind given by any person or entity with respect to any of the foregoing.  Accounts Receivable shall include those now existing or hereafter created, substitutions therefor, proceeds (whether cash or non-cash, movable or immovable, tangible or intangible) received upon the sale, exchange, transfer, collection or other disposition or substitution thereof and any and all of the foregoing and proceeds therefrom; and

(p)Other Rights.  Any and all other rights of Borrower in and to the items set forth in Subsections (a) through (o) above.

AND without limiting any of the other provisions of this Security Instrument, to the extent permitted by applicable law, Borrower expressly grants to Trustee, as secured party, a security interest in the portion of the Property which is or may be subject to the provisions of the Uniform Commercial Code which are applicable to secured transactions; it being understood and agreed that the Improvements and Fixtures are part and parcel of the Land (the Land, the Improvements and the Fixtures collectively referred to as the "Real Property") appropriated to the use thereof and, whether affixed or annexed to the 

Real Property or not, shall for the purposes of this Security Instrument be deemed conclusively to be real estate and conveyed hereby.
Section 1. 2Assignment of Rents.  Borrower hereby absolutely and unconditionally assigns to Lender and Trustee all of Borrower's right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only.  Nevertheless, subject to the terms of Section 7.1(h) of this Security Instrument, Lender grants to Borrower a revocable license to collect, receive, use and enjoy the Rents.  Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.

Section 1. 3Security Agreement.  This Security Instrument is both a real property deed of trust and a "security agreement" within the meaning of the Uniform Commercial Code.  The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property.  By executing and delivering this Security Instrument, Borrower hereby grants to Lender, as security for the Obligations (hereinafter defined), a security interest in the Fixtures, the Equipment, the Personal Property and other property constituting the Property to the full extent that the Fixtures, the Equipment, the Personal Property and such other property may be subject to the Uniform Commercial Code (said portion of the Property so subject to the Uniform Commercial Code being called the "Collateral").  If an Event of Default shall occur and be continuing, Lender, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Collateral.  Upon request or demand of Lender after the occurrence and during the continuance of an Event of Default, Borrower shall, at its expense, assemble the Collateral and make it available to Lender at a convenient place (at the Land if tangible property) reasonably acceptable to Lender.  Borrower shall pay to Lender on demand any and all expenses, including reasonable legal expenses and attorneys' fees, incurred or paid by Lender in protecting its interest in the Collateral and in enforcing its rights hereunder with respect to the Collateral after the occurrence and during the continuance of an Event of Default.  Any notice of sale, disposition or other intended action by Lender with respect to the Collateral sent to Borrower in accordance with the provisions hereof at least ten (10) business days prior to such action, shall, except as otherwise provided by applicable law, constitute reasonable notice to Borrower.  The proceeds of any disposition of the Collateral, or any part thereof, may, except as otherwise required by applicable law, be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper.  The principal place of business of Borrower (Debtor) is as set forth on page one hereof and the address of Lender (Secured Party) is as set forth on page one hereof.

Section 1. 4Fixture Filing.  Certain of the Property is or will become "fixtures" (as that term is defined in the Uniform Commercial Code) on the Land, described or referred to in this Security Instrument, and this Security Instrument, upon being filed for record in the real estate records of the city or county wherein such fixtures are situated, shall operate also as a financing statement naming Borrower as the Debtor and Lender as the Secured Party filed as a fixture filing in accordance with the applicable provisions of said Uniform Commercial Code upon such of the Property that is or may become fixtures.

Section 1. 5Pledges of Monies Held.  Borrower hereby pledges to Lender any and all monies now or hereafter held by Lender or on behalf of Lender in connection with the Loan, including, 

without limitation, any Reserve Funds, any sums deposited in the Accounts and Net Proceeds, as additional security for the Obligations until expended or applied as provided in this Security Instrument.

CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and to the use and benefit of Trustee and its successors and assigns, forever;
IN TRUST, WITH POWER OF SALE, to secure payment to Lender of the Obligations at the time and in the manner provided for its payment in the Note and in this Security Instrument.
PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Lender the Debt at the time and in the manner provided in the Note, the Loan Agreement and this Security Instrument, shall well and truly perform the Other Obligations as set forth in this Security Instrument and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note, the Loan Agreement and the other Loan Documents, these presents and the estate hereby granted shall cease, terminate and be void; provided, however, that Borrower's obligation to indemnify and hold harmless Lender pursuant to the provisions hereof shall survive any such payment or release.
		
	Article 2
	- DEBT AND OBLIGATIONS SECURED

Section 2.1Debt.  This Security Instrument and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the Debt which by its definition (as set forth in Loan Agreement) includes, but is not limited to, the obligations of Borrower to pay to Lender the principal and interest owing pursuant to the terms and conditions of the Note.

Section 2.2Other Obligations.  This Security Instrument and the grants, assignments and transfers made in Article 1 are also given for the purpose of securing the following (the "Other Obligations"):
a.the performance of all other obligations of Borrower contained herein;
b.the performance of each obligation of Borrower contained in the Loan Agreement and any other Loan Document, except that the obligations of Borrower and Guarantor under the Environmental Indemnification Agreement shall not be secured by this Security Instrument and such obligations shall survive any foreclosure of this Security Instrument; and
c.the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement or any other Loan Document.

Section 2.3Debt and Other Obligations.  Borrower's obligations for the payment of the Debt and the performance of the Other Obligations may sometimes be referred to collectively herein as the "Obligations."

Article 3- BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1Payment of Debt.  Borrower will pay the Debt at the time and in the manner provided in the Loan Agreement, the Note and this Security Instrument.  The maturity date of the Debt when all principal and interest is due and payable is January 1, 2027.

Section 3.2Incorporation by Reference.  All the covenants, conditions and agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and any of the other Loan Documents, are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein.

Section 3.3Insurance.  Borrower shall obtain and maintain, or cause to be maintained, in full force and effect at all times insurance with respect to Borrower and the Property as required pursuant to the Loan Agreement.

Section 3.4Maintenance of Property.  Borrower shall cause the Property to be maintained in a good and safe condition and repair.  Except as permitted under the Loan Documents, the Improvements, the Fixtures, the Equipment and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Fixtures, the Equipment or the Personal Property, tenant finish and refurbishment of the Improvements) without the consent of Lender.  Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any Casualty, or become damaged, worn or dilapidated or which may be affected by any Condemnation, and shall complete and pay for any structure at any time in the process of construction or repair on the Land.

Section 3.5Waste.  Borrower shall not commit or suffer any waste of the Property or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or allow the cancellation of any Policy, or do or permit to be done thereon anything that may in any way materially impair the value of the Property or the security of this Security Instrument.  Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof.

Section 3.6Payment for Labor and Materials.  
(a) Borrower will promptly pay when due all bills and costs for labor, materials, and specifically fabricated materials ("Labor and Material Costs") incurred in connection with the Property and never permit to exist beyond the due date thereof in respect of the Property or any part thereof any lien or security interest, even though inferior to the liens and the security interests hereof, and in any event never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest other than the liens or security interests hereof except for the Permitted Encumbrances.

(b) After prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any of the Labor and Material Costs, provided that (i) no Event of Default has occurred and is continuing under the Loan Agreement, the Note, this Security Instrument or any of the other Loan Documents, (ii) Borrower is permitted to do so under the provisions of any other mortgage, deed of trust or deed to secure debt affecting the Property, (iii) such proceeding shall suspend the collection of the Labor and Material Costs from Borrower and from the Property or Borrower shall have paid all of the Labor and Material Costs under protest, (iv) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder, (v) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost, and (vi) Borrower shall have furnished the security as may be required by Oregon Revised Statute Section 87.076 or as may be reasonably requested by Lender to insure the payment of any contested Labor and Material Costs, together with all interest and penalties thereon.

Section 3.7Performance of Other Agreements.  Borrower shall observe and perform each and every term, covenant and provision to be observed or performed by Borrower pursuant to the Loan Agreement, any other Loan Document and any other agreement or recorded instrument affecting or pertaining to the Property and any amendments, modifications or changes thereto.

Section 3.8Change of Name, Identity or Structure.  Borrower shall not change Borrower's name, identity (including its trade name or names) or, if not an individual, Borrower's corporate, partnership or other structure without first (a) notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change, (b) taking all action required by Lender for the purpose of perfecting or protecting the lien and security interest of Lender and (c) in the case of a change in Borrower's structure, without first obtaining the prior written consent of Lender.  Borrower shall promptly notify Lender in writing of any change in its organizational identification number.  If Borrower does not now have an organizational identification number and later obtains one, Borrower shall promptly notify Lender in writing of such organizational identification number.  Borrower shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein.  At the request of Lender, Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.

Article 4OBLIGATIONS AND RELIANCES

Section 4.1Relationship of Borrower and Lender.  The relationship between Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Borrower, and no term or condition of any of the Loan Agreement, the Note, this Security Instrument and the other Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor.

Section 4.2No Reliance on Lender.  The general partners, officers, shareholders, members, principals and/ or other beneficial owners of Borrower are experienced in the ownership and operation of properties similar to the Property, and Borrower and Lender are relying solely upon such expertise and business plan in connection with the ownership and operation of the Property.  Borrower is not relying on Lender's expertise, business acumen or advice in connection with the Property.

Section 4.3No Lender Obligations.  (a)  Notwithstanding the provisions of Section 1.1(h) and (m) or Section 1.2, Lender is not undertaking the performance of (i) any obligations under the Leases; or (ii) any obligations with respect to such agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses and other documents.

a.By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Security Instrument, the Loan Agreement, the Note or the other Loan Documents, including, without limitation, any officer's certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal, or insurance policy, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, the legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender.

Section 4.4Reliance.  Borrower recognizes and acknowledges that in accepting the Loan Agreement, the Note, this Security Instrument and the other Loan Documents, Lender is expressly and primarily relying on the truth and accuracy of the warranties and representations set forth in Article III of the Loan Agreement without any obligation to investigate the Property and notwithstanding any investigation of the Property by Lender; that such reliance existed on the part of Lender prior to the date hereof, that the warranties and representations are a material inducement to Lender in making the Loan; and that Lender would not be willing to make the Loan and accept this Security Instrument in the absence of the warranties and representations as set forth in Article III of the Loan Agreement.

Article 5- FURTHER ASSURANCES

Section 5.1Recording of Security Instrument, etc.  Borrower forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, will cause this Security Instrument and any of the other Loan Documents creating a lien or security interest or evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property.  Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Note, this Security Instrument, the other Loan Documents, any note, deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property and any instrument of further assurance, and any modification or amendment of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Security Instrument, any deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of the foregoing documents, except where prohibited by law so to do.

Section 5.2Further Acts, etc.  Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, deeds of trust, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the property and rights hereby deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument or for filing, registering or recording this Security Instrument, or for complying with all Legal Requirements.  Borrower, on demand, will execute and deliver, and in the event it shall fail to so execute and deliver, hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements (including, without limitation, initial financing statements and amendments thereto and continuation statements) with or without the signature of Borrower as authorized by applicable law, to evidence more effectively the security interest of Lender in the Property.  Borrower also ratifies its authorization for Lender to have filed any like initial financing statements, amendments thereto and continuation statements, if filed prior to the date of this Security Instrument.  Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including without limitation such rights and remedies available to Lender pursuant to this Section 5.2.  To the extent not prohibited by applicable law, Borrower hereby ratifies all acts Lender has lawfully done in the past or shall lawfully do or cause to be done in the future by virtue of such power of attorney.

Section 5.3Changes in Tax, Debt, Credit and Documentary Stamp Laws.  (a) If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender's interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any.  If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury then Lender shall have the option by written notice of not less than one hundred twenty (120) days to declare the Debt immediately due and payable.
a.Borrower will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Security Instrument or the Debt.  If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than one hundred twenty (120) days, to declare the Debt immediately due and payable.
b.If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, this Security Instrument, or any of the other Loan Documents or impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any.

Section 5.4Splitting of Deed of Trust.  This Security Instrument and the Note shall, at any time until the same shall be fully paid and satisfied, at the sole election of Lender, be split or divided into two or more notes and two or more security instruments, each of which shall cover all or a portion of the Property to be more particularly described therein.  To that end, Borrower, upon written request of Lender, shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered by the then owner of the Property, to Lender and/or its designee or designees substitute notes and security instruments in such principal amounts, aggregating not more than the then unpaid principal amount of the Note, and containing terms, provisions and clauses similar to those contained herein and in the Note, and such other documents and instruments as may be required by Lender.

Section 5.5Replacement Documents.  Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Note or other Loan Document, Borrower will issue, in lieu thereof, a replacement Note or other Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

Article 6- DUE ON SALE/ENCUMBRANCE

Section 6.1Lender Reliance.  Borrower acknowledges that Lender has examined and relied on the experience of Borrower and its general partners, members, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Borrower's ownership of the Property as a means of maintaining the value of the Property as security for repayment of the Debt and the performance of the Other Obligations.  Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the repayment of the Debt or the performance of the Other Obligations, Lender can recover the Debt by a sale of the Property.

Section 6.2No Transfer.  Borrower shall not permit or suffer any Transfer to occur, unless specifically permitted by Article VII of the Loan Agreement or unless Lender shall consent thereto in writing.

Section 6.3Transfer Defined.  As used in this Article 6 "Transfer" shall mean any voluntary or involuntary sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of: (a) all or any part of the Property or any estate or interest therein including, but not be limited to, (i) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments, (ii) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder and its affiliates or (iii) a sale, assignment or other transfer of, or the grant of a security interest in, Borrower's right, title and interest in and to any Leases or any Rents; or (b) any ownership interest in (i) Borrower or (ii) any indemnitor or guarantor of any Obligations or (iii) any corporation, partnership, limited liability company, trust or other entity owning, directly or indirectly, any interest in Borrower or any indemnitor or guarantor of any Obligations.

Section 6.4Lender's Rights.  Without obligating Lender to grant any consent under Section 6.2 hereof which Lender may grant or withhold in its sole discretion, Lender reserves the right to condition the consent required hereunder upon (a) a modification of the terms hereof and of the Loan Agreement, the Note or the other Loan Documents; (b) an assumption of the Loan Agreement, the Note, this Security Instrument and the other Loan Documents as so modified by the proposed transferee; (c) payment of all of Lender's expenses incurred in connection with such transfer; (d) if requested by Lender, the delivery of a nonconsolidation opinion reflecting the proposed transfer satisfactory in form and substance to Lender; (e) the proposed transferee's continued compliance with the representations and covenants set forth in Sections 3.1.24 and 4.2.13 of the Loan Agreement; (f) the proposed transferee's ability to satisfy Lender's then-current underwriting standards; or (g) such other conditions as Lender shall determine in its reasonable discretion to be in the interest of Lender, including, without limitation, the creditworthiness, reputation and qualifications of the transferee with respect to the Loan and the Property.  Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon a Transfer without Lender's consent.  This provision shall apply to every Transfer, other than any Transfer permitted pursuant to the Loan Agreement, regardless of whether voluntary or not, or whether or not Lender has consented to any previous Transfer.

Article 7- RIGHTS AND REMEDIES UPON DEFAULT

Section 7.1Remedies.  Upon the occurrence and during the continuance of any Event of Default, Borrower agrees that Lender or Trustee, or both, may take such action, without notice (except as expressly set forth in the Loan Documents) or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender or Trustee may determine, in their sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender or Trustee:
a.declare the entire unpaid Debt to be immediately due and payable;
b.institute proceedings, judicial or otherwise, for the complete foreclosure of this Security Instrument under any applicable provision of law, in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;

c.with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Security Instrument for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Security Instrument for the balance of the Debt not then due, unimpaired and without loss of priority;
d.sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice thereof, all as may be required or permitted by law; and, without limiting the foregoing:
i.In connection with any sale or sales hereunder, Lender or the Trustee shall be entitled to elect to treat any of the Property which consists of a right in action or which is property that can be severed from the Real Property covered hereby or any improvements without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of Real Property.  Where the Property consists of Real Property, Personal Property, Equipment or Fixtures, whether or not such Personal Property or Equipment is located on or within the Real Property, Lender and/or the Trustee shall be entitled to elect to exercise its rights and remedies against any or all of the Real Property, Personal Property, Equipment and Fixtures in such order and manner as is now or hereafter permitted by applicable law;
ii.Lender and/or the Trustee shall be entitled to elect to proceed against any or all of the Real Property, Personal Property, Equipment and Fixtures in any manner permitted under applicable law; and if Lender and/or the Trustee so elects pursuant to applicable law, the power of sale herein granted shall be exercisable with respect to all or any of the Real Property, Personal Property, Equipment and Fixtures covered hereby, as designated by Lender and/or the Trustee and Trustee is hereby authorized and empowered to conduct any such sale of any Real Property, Personal Property, Equipment and Fixtures in accordance with the procedures applicable to Real Property;
iii.Should Lender and/or the Trustee elect to sell any portion of the Property which is Real Property or which is Personal Property, Equipment or Fixtures that the Lender and/or the Trustee has elected under applicable law to sell together with Real Property in accordance with the laws governing a sale of Real Property, Lender and/or the Trustee shall give such notice of Event of Default, if any, and election to sell as may then be required by law.  Thereafter, upon the expiration of such time and the giving of such notice of sale as may then be required by law, and without the necessity of any demand on Borrower, Lender and/or the Trustee at the time and place specified in the notice of sale, shall sell such Real Property or part thereof at public auction to the highest bidder for cash in lawful money of the United States.  Lender or the Trustee may from time to time postpone any sale hereunder by public announcement thereof at the time and place noticed therefor;
iv.If the Property consists of several lots, parcels or items of property, Lender or the Trustee shall, subject to applicable law, (A) designate the order in which such lots, parcels or items shall be offered for sale or sold, or (B) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner Lender or the Trustee designates.  Any Person, other than the Trustee, including Borrower or Lender, may purchase at any sale hereunder.  Should Lender or the Trustee desire that more than one sale or other disposition of the Property be conducted, Lender or the Trustee shall, subject to applicable law, cause such sales or dispositions to be conducted 

simultaneously, or successively, on the same day, or at such different days or times and in such order as Lender or the Trustee may designate, and no such sale shall terminate or otherwise affect the lien of this Security Instrument on any part of the Property not sold until all the Debt has been paid in full.  In the event Lender or the Trustee elects to dispose of the Property through more than one sale, except as otherwise provided by applicable law, Borrower agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein such sale may be made;
e.institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note, the Loan Agreement or in the other Loan Documents;
f.recover judgment on the Note either before or after dismissal of any proceedings for the enforcement of this Security Instrument or the other Loan Documents, and following a judicial foreclosure of this Security Instrument, obtain a judgment on the Note in the amount of any deficiency between the foreclosure sale proceeds and the amount owing on the Note;
g.apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any guarantor, indemnitor with respect to the Loan or of any Person, liable for the payment of the Debt;
h.the license granted to Borrower under Section 1.2 hereof shall automatically be revoked and Lender may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof; (v) require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (vi) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment of the Debt, in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys' fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, insurance and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Lender, its counsel, agents and employees;
i.exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing:  (i) the right to take possession of the Fixtures, the Equipment and the Personal Property, or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Fixtures, the Equipment and the Personal Property, and (ii) request Borrower at its expense to assemble the Fixtures, the Equipment and the Personal Property and make it available to Lender at a convenient place acceptable to Lender.  Any notice 

of sale, disposition or other intended action by Lender with respect to the Fixtures, the Equipment and/or the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower;
j.apply any sums then deposited or held in escrow or otherwise by or on behalf of Lender in accordance with the terms of the Loan Agreement, this Security Instrument or any other Loan Document to the payment of the following items in any order in its uncontrolled discretion:
i.Taxes and Other Charges;
ii.Insurance Premiums;
iii.Interest on the unpaid principal balance of the Note;
iv.Amortization of the unpaid principal balance of the Note;
v.All other sums payable pursuant to the Note, the Loan Agreement, this Security Instrument and the other Loan Documents, including without limitation advances made by Lender pursuant to the terms of this Security Instrument;
k.pursue such other remedies as Lender may have under applicable law; or
l.apply the undisbursed balance of any Net Proceeds Deficiency deposit, together with interest thereon, to the payment of the Debt in such order, priority and proportions as Lender shall deem to be appropriate in its discretion.
In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority.
Section 7.2Application of Proceeds.  The purchase money, proceeds and avails of any disposition of the Property, and or any part thereof, or any other sums collected by Lender pursuant to the Note, this Security Instrument or the other Loan Documents, may be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper, to the extent consistent with law.

Section 7.3Right to Cure Defaults.  Upon the occurrence and during the continuance of any Event of Default, Lender may remedy such Event of Default in such manner and to such extent as Lender may deem necessary to protect the security hereof, but without any obligation to do so and without notice to or demand on Borrower, and without releasing Borrower from any obligation hereunder.  Lender is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt, and the cost and expense thereof (including reasonable attorneys' fees to the extent permitted by law), with interest as provided in this Section 7.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand.  All such costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any such action or proceeding shall bear interest at the Default Rate, for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender.  All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by this Security Instrument and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor.

Section 7.4Actions and Proceedings.  Lender or Trustee has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its discretion, decides should be brought to protect its interest in the Property.

Section 7.5Recovery of Sums Required To be Paid.  Lender shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender or Trustee thereafter to bring an action of foreclosure, or any other action, for a default or defaults by Borrower existing at the time such earlier action was commenced.

Section 7.6Examination of Books and Records.  At reasonable times and upon reasonable notice, Lender, its agents, accountants and attorneys shall have the right to examine the records, books, management and other papers of Borrower which reflect upon its financial condition, at the Property or at any office regularly maintained by Borrower where the books and records are located.  Lender and its agents shall have the right to make copies and extracts from the foregoing records and other papers.  In addition, at reasonable times and upon reasonable notice, Lender, its agents, accountants and attorneys shall have the right to examine and audit the books and records of Borrower pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Borrower where the books and records are located.  This Section 7.6 shall apply throughout the term of the Note and without regard to whether an Event of Default has occurred or is continuing.

Section 7.7Other Rights, Etc.  (a) The failure of Lender or Trustee to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Security Instrument.  Borrower shall not be relieved of Borrower's obligations hereunder by reason of (i) the failure of Lender or Trustee to comply with any request of Borrower or any guarantor or indemnitor with respect to the Loan to take any action to foreclose this Security Instrument or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for the Debt or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, this Security Instrument or the other Loan Documents.
a.It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured.  Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender's possession.
b.Lender may resort for the payment of the Debt to any other security held by Lender in such order and manner as Lender, in its discretion, may elect.  Lender or Trustee may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender or Trustee thereafter to foreclose this Security Instrument.  The rights of Lender or Trustee under this Security Instrument shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others.  No act of Lender or Trustee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision.  Neither Lender nor Trustee shall be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

Section 7.8Right to Release Any Portion of the Property.  Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Security Instrument, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as 

Lender may require without being accountable for so doing to any other lienholder.  This Security Instrument shall continue as a lien and security interest in the remaining portion of the Property.

Section 7.9Violation of Laws.  If the Property is not in material compliance with Legal Requirements, Lender may impose additional requirements upon Borrower in connection herewith including, without limitation, monetary reserves or financial equivalents.

Section 7.10Recourse and Choice of Remedies.  Notwithstanding any other provision of this Security Instrument or the Loan Agreement, Lender and other Indemnified Parties (as hereinafter defined) are entitled to enforce the obligations of Borrower, any guarantor and indemnitor contained in Section 9.2 and Section 9.3 herein and Section 10.12 of the Loan Agreement without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure, exercise of a power of sale or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, or otherwise causes Trustee to exercise the power of sale pursuant to this Security Instrument, Lender is entitled to pursue a deficiency judgment with respect to such obligations against Borrower and any guarantor or indemnitor with respect to the Loan.  Borrower and any guarantor or indemnitor with respect to the Loan are fully and personally liable for the obligations pursuant Section 9.2 and Section 9.3 herein and Section 10.12 of the Loan Agreement.  The liability of Borrower and any guarantor or indemnitor with respect to the Loan pursuant to Section 9.2 and Section 9.3 herein and Section 10.12 of the Loan Agreement is not limited to the original principal amount of the Note.  Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender or Trustee from foreclosing or exercising a power of sale pursuant to this Security Instrument or exercising any other rights and remedies pursuant to the Loan Agreement, the Note, this Security Instrument and the other Loan Documents, whether simultaneously with foreclosure proceedings or in any other sequence.  A separate action or actions may be brought and prosecuted against Borrower pursuant to Section 9.2 and Section 9.3 herein and Section 10.12 of the Loan Agreement, whether or not action is brought against any other Person or whether or not any other Person is joined in the action or actions.  In addition, Lender shall have the right but not the obligation to join and participate in, as a party if it so elects, any administrative or judicial proceedings or actions initiated in connection with any matter addressed in the Environmental Indemnity.

Section 7.11Right of Entry.  Upon reasonable notice to Borrower, Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.

Article 8- INTENTIONALLY OMITTED

Article 9- INDEMNIFICATION

Section 9.1General Indemnification.  Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including but not limited to reasonable attorneys' fees and other costs of defense) (collectively, the "Losses") imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following:  (a) ownership of this Security Instrument, the Property or any interest therein or receipt of any Rents; (b) any amendment to, or restructuring of, the Debt, and the Note, the Loan Agreement, this Security Instrument, or any other Loan Documents; (c) any and all lawful action that may be taken by 

Lender in connection with the enforcement of the provisions of this Security Instrument or the Loan Agreement or the Note or any of the other Loan Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any guarantor or indemnitor and/or any partner, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (e) any use, nonuse or condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (f) any failure on the part of Borrower to perform or be in compliance with any of the terms of this Security Instrument; (g) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof; (h) the failure of any person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with this Security Instrument, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Security Instrument is made; (i) any failure of the Property to be in compliance with any Legal Requirements; (j) the enforcement by any Indemnified Party of the provisions of this Article 9; (k) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants, or agreements contained in any Lease; (1) the payment of any commission, charge or brokerage fee to anyone claiming through Borrower which may be payable in connection with the funding of the Loan; or (m) any misrepresentation made by Borrower in this Security Instrument or any other Loan Document.  Any amounts payable to Lender by reason of the application of this Section 9.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date loss or damage is sustained by Lender until paid.  For purposes of this Article 9, the term "Indemnified Parties" means Lender and any Person who is or will have been involved in the origination of the Loan, any Person who is or will have been involved in the servicing of the Loan secured hereby, any Person in whose name the encumbrance created by this Security Instrument is or will have been recorded, persons and entities who may hold or acquire or will have held a full or partial interest in the Loan secured hereby (including, but not limited to, investors or prospective investors in the Securities, as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan secured hereby for the benefit of third parties) as well as the respective directors, officers, shareholders, partners, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including but not limited to any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan, whether during the term of the Loan or as a part of or following a foreclosure of the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender's assets and business).  Notwithstanding the foregoing, Borrower shall not be liable for the payment of Losses to the extent they arise by reason of the gross negligence, illegal acts, fraud, or willful misconduct of an Indemnified Party.

Section 9.2Mortgage and/or Intangible Tax.  Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on the making and/or recording of this Security Instrument, the Note or any of the other Loan Documents, but excluding any income, franchise or other similar taxes.

Section 9.3ERISA Indemnification.  Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all 

Losses (including, without limitation, reasonable attorneys' fees and costs incurred in the investigation, defense, and settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Lender's sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Sections 3.1.8 or 4.2.10 of the Loan Agreement.

Section 9.4Duty to Defend; Attorneys' Fees and Other Fees and Expenses.  Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties.  Notwithstanding the foregoing, if the defendants in any such claim or proceeding include both Borrower and any Indemnified Party and Borrower and such Indemnified Party shall have reasonably concluded that there are any legal defenses available to it and/or other Indemnified Parties that are different from or additional to those available to Borrower, such Indemnified Party shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Party, provided that no compromise or settlement shall be entered without Borrower's consent, which consent shall not be unreasonably withheld.  Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

Article 10- WAIVERS

Section 10.1Waiver of Counterclaim.  To the extent permitted by applicable law, Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Security Instrument, the Loan Agreement, the Note, any of the other Loan Documents, or the Obligations.

Section 10.2Marshalling and Other Matters.  To the extent permitted by applicable law, Borrower hereby waives the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein.  Further, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by applicable law.

Section 10.3Waiver of Notice.  To the extent permitted by applicable law, Borrower shall not be entitled to any notices of any nature whatsoever from Lender or Trustee except with respect to matters for which this Security Instrument or the Loan Documents specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower and except with respect to matters for which Lender or Trustee is required by applicable law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender or Trustee with respect to any matter for which this Security Instrument does not specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower.

Section 10.4Waiver of Statute of Limitations.  To the extent permitted by applicable law, Borrower hereby expressly waives and releases to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to payment of the Debt or performance of its Other Obligations.

Section 10.5Survival.  The indemnifications made pursuant to Section 9.3 herein and the representations and warranties, covenants, and other obligations arising under the Environmental Indemnity, shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by:  any satisfaction, release or other termination of this Security Instrument, any assignment or other transfer of all or any portion of this Security Instrument or Lender's interest in the Property (but, in such case, shall benefit both Indemnified Parties and any assignee or transferee), any exercise of Lender's rights and remedies pursuant hereto including but not limited to foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Loan Agreement, the Note or any of the other Loan Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), any amendment to this Security Instrument, the Loan Agreement, the Note or the other Loan Documents, and any act or omission that might otherwise be construed as a release or discharge of Borrower from the obligations pursuant hereto.

Article 11- NOTICES
All notices or other written communications hereunder shall be delivered in accordance with Section 10.6 of the Loan Agreement.
Article 12- APPLICABLE LAW

Section 12.1GOVERNING LAW; WAIVER OF JURY TRIAL; JURISDICTION.  IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY INSTRUMENT AND THE OBLIGATIONS ARISING HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OREGON, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.  TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS SECURITY INSTRUMENT AND THE NOTE, AND THIS SECURITY INSTRUMENT AND THE NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON, AND ANY LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO NATIONAL BANKS.

TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION RELATING TO THE LOAN AND/OR THE LOAN DOCUMENTS.  BORROWER, TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (a) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF OREGON OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS SECURITY INSTRUMENT, (b) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF OREGON, (c) SUBMITS TO THE JURISDICTION AND VENUE OF SUCH COURTS AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT, AND (d) AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN WILL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).  BORROWER FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY 

REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO BORROWER AT THE ADDRESSES FOR NOTICES DESCRIBED IN THIS SECURITY INSTRUMENT, AND CONSENTS AND AGREES THAT SUCH SERVICE WILL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN WILL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
Section 12.2Usury Laws.  Notwithstanding anything to the contrary, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed interest, the interest contracted for, charged or received by Lender shall never exceed the maximum lawful rate or amount, (b) in calculating whether any interest exceeds the lawful maximum, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest in excess of the lawful maximum, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.

Section 12.3Provisions Subject to Applicable Law.  All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law.  If any term of this Security Instrument or any application thereof shall be invalid or unenforceable, the remainder of this Security Instrument and any other application of the term shall not be affected thereby.

Article 13- DEFINITIONS

All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement.  Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form and the word "Lender" shall mean "Lender and any subsequent holder of the Note," the word "Note" shall mean "the Note and any other evidence of indebtedness secured by this Security Instrument," the word "Property" shall include any portion of the Property and any interest therein, and the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include any and all attorneys', paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder.
Article 14- MISCELLANEOUS PROVISIONS

Section 14.1No Oral Change.  This Security Instrument, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

Section 14.2Successors and Assigns.  This Security Instrument shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

Section 14.3Inapplicable Provisions.  If any term, covenant or condition of the Loan Agreement, the Note or this Security Instrument is held to be invalid, illegal or unenforceable in any respect, the Loan Agreement, the Note and this Security Instrument shall be construed without such provision.

Section 14.4Headings, etc.  The headings and captions of various Sections of this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Section 14.5Number and Gender.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

Section 14.6Subrogation.  If any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for the repayment of the Debt, the performance and discharge of Borrower's obligations hereunder, under the Loan Agreement, the Note and the other Loan Documents and the performance and discharge of the Other Obligations.

Section 14.7Entire Agreement.  The Note, the Loan Agreement, this Security Instrument and the other Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connection with the Debt and supersede all prior written or oral understandings and agreements between Borrower and Lender with respect thereto.  Borrower hereby acknowledges that, except as incorporated in writing in the Note, the Loan Agreement, this Security Instrument and the other Loan Documents, there are not, and were not, and no persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the transaction which is the subject of the Note, the Loan Agreement, this Security Instrument and the other Loan Documents.

Section 14.8Limitation on Lender's Responsibility.  No provision of this Security Instrument shall operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the tenants or any other Person, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee or stranger.  Nothing herein contained shall be construed as constituting Lender a "mortgagee in possession."

Article 15- DEED OF TRUST PROVISIONS
Section 15.1Concerning the Trustee.  Trustee shall be under no duty to take any action hereunder except as expressly required hereunder or by law, or to perform any act which would involve Trustee in any expense or liability or to institute or defend any suit in respect hereof, unless properly indemnified to Trustee's reasonable satisfaction.  Trustee, by acceptance of this Security Instrument, covenants to perform and fulfill the trusts herein created, being liable, however, only for willful negligence or misconduct, and hereby waives any statutory fee or other compensation, except as set forth in Section 15.2 hereof, for any services rendered by Trustee in accordance with the terms hereof.  Trustee 

may resign at any time upon giving thirty (30) days' notice to Borrower and to Lender.  Lender may remove Trustee at any time or from time to time and select a successor trustee.  In the event of the death, removal, resignation, refusal to act, or inability to act of Trustee, or in its sole discretion for any reason whatsoever Lender may, without notice and without specifying any reason therefor and without applying to any court, select and appoint a successor trustee, by an instrument recorded wherever this Security Instrument is recorded and all powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon become vested in such successor.  Such substitute trustee shall not be required to give bond for the faithful performance of the duties of Trustee hereunder unless required by Lender.  The procedure provided for in this paragraph for substitution of Trustee shall be in addition to and not in exclusion of any other provisions for substitution, by law or otherwise.

Section 15.2Trustee's Fees.  Unless required pursuant to applicable Legal Requirements, no fees, costs or expenses shall be or become payable to Trustee or Trustee's agents and counsel in connection with the performance by Trustee of Trustee's duties hereunder; provided that, in connection with services rendered by Trustee in connection with any foreclosure or sale in accordance with the terms hereof or with respect to the release and discharge of the lien and security interest of this Security Instrument upon the full and final payment of the Debt, Trustee shall be entitled to reasonable and customary fees and reimbursement of reasonable out-of-pocket costs and expenses incurred by Trustee.  The foregoing permitted fees, costs and expenses shall be paid by Borrower to Trustee and Trustee's agents and counsel promptly upon request and such fees, costs and expenses shall be secured by this Security Instrument.

Section 15.3Certain Rights.  With the approval of Lender, Trustee shall have the right to take any and all of the following actions:  (i) to select, employ, and advise with counsel (who may be, but need not be, counsel for Lender) upon any matters arising hereunder, including the preparation, execution, and interpretation of the Loan Agreement, the Note, this Security Instrument or the other Loan Documents, and shall be fully protected in relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder either directly or through his agents or attorneys, (iii) to select and employ, in and about the execution of his duties hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of Trustee, and Trustee shall not be answerable for any act, default, negligence, or misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for Trustee's gross negligence or bad faith, and (iv) any and all other lawful action as Lender may instruct Trustee to take to protect or enforce Lender's rights hereunder.  Trustee shall not be personally liable in case of entry by Trustee, or anyone entering by virtue of the powers herein granted to Trustee, upon the Property for debts contracted for or liability or damages incurred in the management or operation of the Property.  Trustee shall have the right to rely on any instrument, document, or signature authorizing or supporting an action taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine.  Trustee shall be entitled to reimbursement for actual expenses incurred by Trustee in the performance of Trustee's duties hereunder and to reasonable compensation for such of Trustee's services hereunder as shall be rendered.

Section 15.4Retention of Money.  All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by applicable law) and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder.

Section 15.5Perfection of Appointment.  Should any deed, conveyance, or instrument of any nature be required from Borrower by any Trustee or substitute trustee to more fully and certainly vest in and confirm to the Trustee or substitute trustee such estates rights, powers, and duties, then, upon request by the Trustee or substitute trustee, any and all such deeds, conveyances and instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded and/or filed by Borrower.

Section 15.6Succession Instruments.  Any substitute trustee appointed pursuant to any of the provisions hereof shall, without any further act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its or his predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of Lender or of the substitute trustee, the Trustee ceasing to act shall execute and deliver any instrument transferring to such substitute trustee, upon the trusts herein expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and moneys held by such Trustee to the substitute trustee so appointed in the Trustee's place. 
PART II
		
	Article 16
	- STATE-SPECIFIC PROVISIONS

Section 16.1Principals Of Construction.  In the event of any inconsistencies between the terms and conditions of this Article 16 and the other terms and conditions of this Security Instrument, the terms and conditions of this Article 16 shall control and be binding.

Land Use Disclaimer:
BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010.  THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010.

Forced Place Insurance:
WARNING

UNLESS YOU (BORROWER) PROVIDE US (LENDER) WITH EVIDENCE OF THE INSURANCE COVERAGE AS REQUIRED BY THE LOAN AGREEMENT, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTEREST. THIS INSURANCE MAY, BUT NEED NOT, ALSO PROTECT YOUR INTEREST. IF THE COLLATERAL BECOMES DAMAGED, THE COVERAGE WE PURCHASE MAY NOT PAY ANY CLAIM YOU MAKE OR ANY CLAIM MADE AGAINST YOU. YOU MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT YOU HAVE OBTAINED PROPERTY COVERAGE ELSEWHERE.
YOU ARE RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED BY US. THE COST OF THIS INSURANCE MAY BE ADDED TO YOUR CONTRACT OR LOAN BALANCE. IF THE COST IS ADDED TO YOUR CONTRACT OR LOAN BALANCE, THE INTEREST RATE ON THE UNDERLYING CONTRACT OR LOAN WILL APPLY TO THIS ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE YOUR PRIOR COVERAGE LAPSED OR THE DATE YOU FAILED TO PROVIDE PROOF OF COVERAGE.
THE COVERAGE WE PURCHASE MAY BE CONSIDERABLY MORE EXPENSIVE THAN INSURANCE YOU CAN OBTAIN ON YOUR OWN AND MAY NOT SATISFY ANY NEED FOR PROPERTY DAMAGE COVERAGE OR ANY MANDATORY LIABILITY INSURANCE REQUIREMENTS IMPOSED BY APPLICABLE LAW.

Statute of Frauds:
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE ENFORCEABLE.
[NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower as of the day and year first above written.

	
		
	 
	BORROWER:

ESI LEASING, LLC, an Oregon limited liability company

By:  
Paul R. Oldham, Manager

State of Oregon

County of _________________
The foregoing instrument was acknowledged before me on this 9th day of January, 2017, by Paul R. Oldham, as Manager for ESI Leasing, LLC.
Notary Public for the State of Oregon
My commission expires:________________

EXHIBIT A

Legal Description

PARCEL I:

Lot 5, SUNSET SCIENCE PARK, in the County of Washington and State of Oregon.

EXCEPTING THEREFROM a portion of Lot 5, SUNSET SCIENCE PARK, a plat of record in the Southwest quarter of Section 33, Township 1 North, Range 1 West of the Willamette Meridian, Washington County, Oregon, said point being more particularly described as follows:
Beginning at the Southwest corner of said Lot 5, being also the Southeast corner of Lot 4, said SUNSET SCIENCE PARK, and running thence, along the line common to said Lot 4 and Lot 5, North 10o17' East 380.94 feet to a point on the Southerly right-of-way line of Science Park Drive, a point on the arc of a 248.85 foot radius curve, the radius point of which bears North 10o17' East; thence, along said Southerly right-of-way line, on the arc of said radius curve (the long chord of which bears South 84o12'59" East 39.04 feet) 39.09 feet; thence, along said Southerly right-of-way line, South 88o43' East 14.08 feet; thence South 18o04'22" West 389.80 feet to the point of beginning.
 
FURTHER EXCEPTING THEREFROM that portion conveyed by Deed to the State of Oregon, by and through its Department of Transportation, Highway Division, recorded December 10, 1990, Recording No. 90-67371.

PARCEL II:

A tract of land created after January 1, 2008 pursuant to Property Line Adjustment Case File 14-031-PLA and Property Line Adjustment Deed recorded August 13, 2014, Recording No. 2014-050769, described as follows:

A tract of land situated in the Southwest one-quarter of Section 33, Township 1 North, Range 1 West of the Willamette Meridian, Washington County, Oregon, being a portion of Lots 4 and 5, SUNSET SCIENCE PARK, being more particularly described as follows:

Commencing at the Northwest corner of said Lot 4, said Northwest corner being on the Southerly right of way line of N.W. Science Park Drive; thence South 88o43'00" East along said right of way line a distance of 494.88 feet to a point of curve; thence along said curve to the right having a radius of 188.85 feet through a central angel of 27o27'37" (chord bears South 74o59'12" East 89.65 feet) an arc distance of 90.51 feet to the True Point of Beginning; thence leaving said right of way, South 28o11'28" West, a distance of 355.41 feet; thence South 19o18'20" West, a distance of 54.92 feet; thence South 28o10'27" West a distance of 106.22 feet to the Southerly line of Lot 4, SUNSET SCIENCE PARK, said point also being on the Northerly right of way line of Sunset Highway (US Highway 26); thence South 61o50'00" East along said Southerly line of Lot 4, a distance of 569.94 feet to the Southeast corner thereof; thence leaving said Northerly right of way line of Sunset Highway, North 17o57'55" East, a distance of 389.70 feet to a point on the Northerly line of Lot 5, SUNSET SCIENCE PARK and Southerly right of way line of N.W. Science Park Drive; thence North 88o45'36" West along said right of way line, a distance of 13.19 feet to a point of curve; thence along said curve to the right having a radius of 248.85 feet through a central angle of 59o29'48" (chord bears North 59o00'42" West 246.95 feet) an arc distance of 258.41 feet to a point of tangent; thence North 29o15'48" West, a distance of 179.22 feet; thence on a curve to the left 

having a radius of 188.85 feet through a central angle of 31o59'35" (chord bears North 45o15'36" West 104.09 feet) an arc distance of 105.45 feet to the True Point of Beginning.

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