joseph m. vanleuven, osb #082418 davis wright...

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- COMPLAINT DAVIS WRIGHT TREMAINE LLP 1300 S.W. Fifth Avenue, Suite 2400

Portland, Oregon 97201-5610 (503) 241-2300 main (503) 778-5299 fax

JOSEPH M. VANLEUVEN, OSB #082418 [email protected] DAVIS WRIGHT TREMAINE LLP 1300 S.W. Fifth Avenue, Suite 2400 Portland, Oregon 97201-5610 Telephone: (503) 241-2300 Facsimile: (503) 778-5299

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

EUGENE DIVISION

BANNER BANK, a Washington State chartered bank, PLAINTIFF, v. ALLEN J. RUSSELL, CAROL A. RUSSELL, RUSSELL CRANBERRY COMPANY, an Oregon corporation, and BANDON CRANBERRY COMPANY, an Oregon limited liability company, DEFENDANTS.

Case No. _________________ COMPLAINT DECLARATION OF SUCCESSOR LIABILITY, APPOINTMENT OF A RECEIVER, SPECIFIC PERFORMANCE, CLAIM AND DELIVERY, INJUNCTION and MONEY JUDGMENT ON GUARANTY(28 U.S.C. §1332)

For its Complaint against Defendants, Plaintiff alleges as follows:

THE PARTIES

1. Banner Bank (“Bank” or “Plaintiff”) is a Washington State chartered bank,

qualified to do business in the State of Oregon.

Case 6:15-cv-00029-AA Document 1 Filed 01/06/15 Page 1 of 8

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2. Allen J. Russell and Carol A. Russell (“Borrowers”) are individuals residing in

Coos County, Oregon.

3. Russell Cranberry Company (“Russell”) is an Oregon corporation owned by

Borrowers, with its principal place of business in Coos County, Oregon.

4. Bandon Cranberry Company (“Bandon”) is an Oregon limited liability company,

also owned by Borrowers, with its principal place of business in Coos County, Oregon.

JURISDICTION AND VENUE

5. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 because

the parties are citizens of different states and the amount in controversy exceeds $75,000.

6. This Court has personal jurisdiction over Defendants because Defendants are

found and transact business in the State of Oregon. Venue is proper in the District of Oregon

pursuant to 28 U.S.C. § 1391(b) because a substantial part of the events giving rise to these

claims occurred in Oregon, and because Defendants are subject to personal jurisdiction in

Oregon.

UNDERLYING FACTUAL ALLEGATIONS

7. This is an action to enforce defaulted commercial loans (the “Loans”). As

described in more detail below, Borrowers own certain real property commonly known as 89358

Cranberry Lane, Bandon, Oregon 97411 (the “Farm”). At the time the Loans were made, Russell

(which is wholly-owned by Borrowers) grew cranberries on the farm and sold them to a variety

of customers. Bandon is Russell’s successor-in-interest and has taken over the operation of the

farm and/or sale of the cranberry crop.

8. Bank’s predecessor-in-interest, Sterling Savings Bank (“Sterling”), loaned money

to Borrowers to support operations on the Farm. The Loans were used to fund Russell’s farming

operations. Bank succeeded to the interest of Sterling under the Loans and is the owner and

holder of the below-described Notes and other Loan Documents. The Loans are in payment

default.


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9. The Loans were evidenced by various “Loan Documents,” including promissory

notes originally executed in 2009 and 2010. Attached as Exhibit 1 is a copy of the note dated

8/11/10 (the “2010 Note”). The 2009 notes were replaced by a single note dated 7/2/12, a copy

of which is attached as Exhibit 2 (the “2012 Note”). The 2010 and 2012 Notes shall be referred

to as the “Notes.” The terms of the Notes are incorporated by reference.

10. Borrowers’ obligations under the Loan Documents are secured by deeds of trust

(the “Trust Deeds”), which encumber the Farm.

11. Russell guaranteed payment and performance of the Loan obligations of

Borrowers to Bank pursuant to a Commercial Guaranty, a copy of which is attached as Exhibit 3

and incorporated by reference. Russell’s obligations under the Commercial Guaranty are secured

by a security interest in Defendants’ crops, farm products, inventory, equipment, accounts and

other personal property (the “Collateral”) pursuant to two Agricultural Security Agreements

(collectively, the “Security Agreement”), copies of which are attached as Exhibit 4 and 5 and

incorporated by reference herein.

12. The terms of the Loans were modified by a Forbearance Agreement in July 2012,

and further modified by a Loan Workout Agreement and Release (“Workout Agreement”) dated

as of 9/5/12, a copy of which is attached as Exhibit 6 and incorporated by reference.

13. The 2010 Note was last paid on 8/25/14, covering the 8/5/14 payment. Borrowers

failed to make the payment due 9/5/14 or any payment thereafter. The 2012 Note was last paid

on 1/27/14, covering the 1/25/14 payment. Borrowers failed to make the semi-annual payment of

$25,613.40 due on 7/25/14 or any payment thereafter. As a result of Borrower’s uncured

defaults, after due notice, Banner Bank accelerated the balances due on the Notes, effective

December 15, 2014. The principal balance now due on the 2010 Note is $191,871 and the

principal balance now due on the 2012 Note is $551,973.

14. In February of 2012, without advising Sterling, Borrowers formed Bandon as part

of a shell game to hinder, delay and defraud the Bank.. Borrowers are the sole owners of each


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company. They operate the companies from the same location. Bandon is simply a different shell

under which Borrowers have continued some or all of Russell’s business, selling to the same

customers as Russell, from the same location, using the same facilities and equipment, with the

same owners and employees. The companies use the same website,

http://www.bandoncranberrycompany.com/Russell_Cranberry_Company.php.

15. Borrowers filed personal bankruptcy in July 2012. Although Bandon had already

been formed, they did not list “Bandon Cranberry Company” as a name under which they were

doing business, nor did they list an interest in Bandon as an asset on their sworn bankruptcy

schedules. They continued to keep Bandon’s existence secret during negotiations with Sterling

leading to the Workout Agreement. It was not until early October 2012, after the Workout

Agreement had been signed and the bankruptcy case dismissed, that Sterling discovered

Bandon’s existence during routine due diligence. Sterling promptly filed financing statements in

Bandon’s name on the basis that Bandon, as a successor-in-interest, was obligated with Russell

under the Guaranty and Agricultural Security Agreement. Sterling’s lawyer promptly notified

Russell’s and Borrowers’ lawyer, Rex Daines, by email, stating: “In order to protect its security

interests, Sterling Savings Bank has filed both a UCC initial financing statement and an EFS-1,

naming Bandon Cranberry Company LLC as debtor (along with the Russells). Information about

the filings is attached. If you have any questions regarding this email or the actions taken by the

bank please contact me at your convenience.” Mr. Daines responded simply “Thank You.”

16. Thereafter, until the present defaults in 2014, Borrowers continued to pay the

Notes with proceeds from the sale of cranberries grown on the farm, whether those sales were by

Russell or Bandon. Defendants have never denied or disputed that Bandon is jointly obligated

with Russell on the Guaranty for the amounts due on the Loans and for the obligations arising

under the Agricultural Security Agreement.

17. Bank has performed all of its obligations under the agreements documenting the

Loans.


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FIRST CLAIM FOR RELIEF

(AGAINST BANDON FOR DECLARATION OF SUCCESSOR LIABILITY)

18. Bank realleges and incorporates by reference the allegations contained in

Paragraphs 1 through 17 above.

19. Bank is entitled to a judgment declaring that Bandon is liable for all of the debts

and obligations of Russell to Bank, and that Bank’s security interest attached to any and all

Collateral owned by Bandon.

SECOND CLAIM FOR RELIEF

(AGAINST ALL DEFENDANTS FOR APPOINTMENT OF A RECEIVER)



21. By the terms of the Security Agreement and Oregon law, Bank is entitled as a

matter of right to the appointment of a receiver for the Collateral, to protect and preserve the

Collateral pending turnover to and foreclosure by the Bank, collect the accounts, sell any

remaining inventory, recover all products and proceeds of the Collateral from bank accounts and

otherwise, pay over all proceeds and collections to the Bank for application to the Loans, and

coordinate with the Bank in recovering possession of the tangible Collateral.

THIRD CLAIM FOR RELIEF

(AGAINST RUSSELL AND BANDON FOR SPECIFIC PERFORMANCE)



23. Pursuant to the terms of the Security Agreement and applicable law, Bank is

entitled to possession of the Collateral. As provided in the Security Agreement, Russell and

Bandon are required to assemble the Collateral and turn it over to Bank.


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FOURTH CLAIM FOR RELIEF

(AGAINST ALL DEFENDANTS FOR CLAIM AND DELIVERY)


Paragraphs 1 through 17 and 23 above.

25. The Collateral is being wrongfully detained by defendants.

FIFTH CLAIM FOR RELIEF

(AGAINST ALL DEFENDANTS FOR INJUNCTION)



27. Defendants continue in possession of the Collateral. Due to the seasonality of

cranberry sales, most of defendants’ annual revenues are generated by sales in November and

December. The sale proceeds collected by defendants, which are all Collateral securing the

Loans, are cash that is easily secreted, spent or transferred. The Russells have already

demonstrated their willingness to hinder and delay the Bank by secretly forming Bandon and

concealing its existence on a sworn bankruptcy petition and schedules and during negotiations

for the Workout Agreement. Bank will suffer irreparable injury for which no adequate remedy at

law exists unless Defendants and other persons and firms having knowledge of this injunction

are (a) enjoined from spending, transferring or secreting the cash proceeds of the Collateral; (b)

ordered to advise Bank of the location of all Collateral and proceeds of Collateral; and (c)

ordered to surrender the Collateral and all records pertaining thereto to Bank or the receiver, if

one is appointed.

SIXTH CLAIM FOR RELIEF

(AGAINST RUSSELL AND BANDON FOR MONEY JUDGMENT ON GUARANTY)




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29. Russell and Bandon are jointly and severally liable to Bank for all amounts due on

the Loans, together with Bank’s attorney fees, expenses, costs and disbursements incurred in this

action.

PRAYER FOR RELIEF

WHEREFORE, Bank prays:

1. On its First Claim for Relief, for judgment declaring Bandon to be liable as a

successor for all of Russell’s obligations to Bank, and that Bank’s security interest extends to any

and all Collateral owned by Bandon.

2. On its Second Claim for Relief, for appointment of a Receiver for the Collateral.

3. On its Third Claim for Relief, for judgment directing Russell and Bandon to

specifically perform their obligations under the Security Agreement to assemble the Collateral,

and all bank account records and other documents pertaining to the Collateral, and turn over

possession of same to Bank or the receiver, if one is appointed.

4. On its Fourth Claim for Relief, for judgment (i) that Bank is entitled to immediate

possession of the Collateral; and (ii) directing the U.S. Marshall or other appropriate officer to

take and deliver possession of the Collateral to Bank or to the receiver, if one is appointed.

5. On its Fifth Claim for Relief, for judgment that Defendants and other persons and

firms having knowledge of the injunction be enjoined from spending, transferring or secreting

any proceeds of the Collateral (except for payment to the Bank or receiver, if one is appointed),

ordered to advise Bank and any receiver of the location of all Collateral and proceeds of

Collateral, and ordered to surrender the Collateral and all records pertaining thereto to Bank or

the receiver, if one is appointed.

6. On Bank’s Sixth Claim for Relief, for judgment against Bandon and Russell,

jointly and severally, for the total of the following amounts, for each Note (since the interest

rates on the Notes are different):


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a. The principal amount due on such Note;

b. Prejudgment interest on such principal sum at the default rate established

in such Note from December 15, 2014, until the date judgment is entered;

c. One-half of Bank’s reasonable attorney fees and expenses incurred in this

action;

d. One-half of Bank’s costs and disbursements incurred in this action; and

e. Post-judgment interest on the above sums from the date judgment is

entered in this case until paid in full, at the default rates established in

such Note.

7. That Bank be granted such other and further relief as this Court deems just and

equitable.

DATED this 6th day of January, 2015.

DAVIS WRIGHT TREMAINE LLP By /s/ Joseph M. VanLeuven

Joseph M. VanLeuven OSB #824189 Telephone: (503) 241-2300 Facsimile: (503) 778-5299 [email protected] Attorneys for Plaintiff

Exhibit 1 – Promissory Note dated 8/11/10 (the “2010 Note”) Exhibit 2 – Replacement Promissory Note dated 7/2/12 (the “2012 Note”) Exhibit 3 – Commercial Guaranty Exhibits 4 and 5 – Agricultural Security Agreements Exhibit 6 – Loan Workout Agreement and Release


ffi

PROMISSORY NOTE

Borrower: ALLEN J RUSSELLCAROL A RUSSELL89358 CRANBERRY LANEBANDON, OR 9741 1

Lender: Sterling Savings BankCoos Bay Cornmercial Banking Genter212 S srh StCoos Bay, OR 97420

Principal Amount: $200,000.00 Date of Note: August 11, ZO1OPRoMISE TO PAY' ALLEN J RUSSELL and CAROL A RUSSELL ("Borrower") jointly and severally promise to pay to Sterting Savings Bank("Lender")' or order, in lawful money of the United States of America, the prlncipál amount of iwo Hundred Thousand & 00/1 00 Dollars($200'000'00)orsomuchasmaybeoutstandlng,togetherwithinterestonttråunpåiooutstanaingprincipal balanceofeachã¿u.n"". Interestshall be calculated from the date of each advance until repayment of each advance.PAYMÊNT' Borrower w¡ll pay th¡s loan in one payment.of all outstanding principal plus all accrued unpaid interest on January 6,2012. lnaddition' Borrowerwill pay regular monthly payments_of all accrued unpaid inierest dué as of each payment date, beginning Septemoer 6, 2010,with all subseguent interest payments to be due on the same day of each month after that. Unleis ãtherwise ág¡g;a àr i"qùir"d by applicablelaw, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collectiõn costs; and then to any latecharges. Borrower will pay Lender at Lender's address shown above or at such other place as Lende/ may designate in writing.VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent indexwhich is the Wall Street Journa.l Prime Rate (the "lndex"). The lndex is not necessar¡ly the lowest rate charged by- Lender on its loans. lf thelndex becomes unavailable dur¡ng the term of this loan, Lender may designate a substitute index after nolitying Borrower. Lender will tellBorrower the current lndex rate upon Borrower's request. The interest rate change will not occur more otten ifia-n each day using the currentindex published in the "Money Rates" section of the Wall Street Journal Borrower understands that Lender may make loáns based on otherrates as well. The lndex currentþ-1s-9'?90% per annum. lnterest on the unpaid principal balance of this Note will

-be calculated as described inthe "INTEREST CALCULATION METHOD" paragraph using a rate of 4.750 percentage points over the lndex, adjusted if necessary for any

min¡mum and maximum rate limitations described below, resulting in an initial rate of A.OOOy" per annum baséd on a year of S-OO OayéNOTICE: Under no circumstances will the inlerest rale on this Note be less than 8.000% per annum or more than the maximúm rate allowed byapplicable law.

INTEREST CALCULATION METHOD' lnterest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rateover a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number-of-days the principal balance isoutstanding. All interest payable under this Note is computed using this method.

PREPAYMENT' Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not besubject to refund upon early payment (whether voluntary or as a result of default), except as otñerwise required by law. Except for theforegoing, Borrower may pay without penalty all or a portion of the amount owed earlíer than it is due. Early pãymenté will not, unle'ss agreedto by Lender in writing, relieve Borrower of Borrower's obl¡gation to continue to make payments oï accrúed únpaid inierest. Rather,äadypayments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in iull", ',withoui recourse", oisimilar language. lf Borrower sends such a payment, Lender may accept it without losing any of Lender's iights under this Note, and Borrowerwill remain obligated to pay any further amount owed to Lender. All written communications concerning OisputeO amounts, including any checkor other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with otherconditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Sterling Savings Bank, Loan Support, pOBox2224 Spokane, WA 992'1 0.

LATE CHARGE. lf a payment is 15 days or more late, Borrower will be charged 5.OOO% of the reguldly scfrecfr.rled payrÞr¡t or $50.00,whiclrcr¡er is greater.

INTEREST AFIER DEFAULT. Upon default, including.failure to pay upon fìnal maturity, the ¡nterest rate on this Note shall be increased byadding an additional 5.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeedinginterest rate change that would have applied had there been no default. However, in no event will the inierest raie êxceed the maximuminterest rate limitations under applicable law.

DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note:

Payment Default. Borrower faíls to make any payment when due under this Note.

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained ¡n this Note or inany of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreementbetween Lender and Borrower.

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase orsales agreement, or any other agreement, in favor of any other creditor or person that may mater¡ally affect any of Borrower's property orBorrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under thisNote or the related documents is false or misleading in any material respect, either now or at the time mâde or furnished or becomes falseoi misleading at any time thereafter.

*eatÍ'l or lnsolvency. The death of Borrower or the dissolution or termínation of Borrower's existence as a going business, the insolvencya! Ssrrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of cred¡tors, any type ofcreditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceed¡ngs, whether by judicial proceeding, self-help,repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shaltnot apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the bas¡s of the creditor orfoifeiture proceeding and if Borrower gives Lender written notice of the creditor or forfe¡ture proceed¡ng and deposits with Lender monies ora surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole d¡scretion, as being an adequatereserve or bond for the dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation pariyof any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes ordisputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Adverse Ghange. A rnaterial adverse change occurs in Bonower's financial condition, or Lender believes the prospect of payrnent orperforrnance of this Note is impaired.

lnsecuríty. Lender in good faith believes itself insecure.

Cure Provisions. lf any default, other than a default in payment is curable and ¡f Borrower has not been given a notice of a breach of thesame provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice toBorrowerdemandingcureof suchdefault: (1) curesthedefaultwithinfìfteen(15) days; or (2) if thecurerequiresmorethanfifteen(15)days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereaftercont¡nues and completes all reasonable and necessary steps suff¡cient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid ¡nterestimmediately due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will payLender that âmount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether ornot there is a lawsuit, ¡ncluding attorneys' fees, expenses for bankruptcy proceedings (includ¡ng efforts to modify or vacate any automatic stayor injunction), and appeals. lf not prohibited by applicable law, Borrolrer also will pay any court costs, in addition to all other sums provided bylaw.

JURY WAIVER. Lender and Borrower hereby waive the right to any jr,ry trial in any act¡on, proceeding, or countercla¡m brought by either Lenderor Borrower against the other.

GOVERNING LAW. This Note will be governed by federal law applicalrle to Lender and, to the extent not preempted by federal law, the laws of

EXHIBIT 1, Page 1 of 2

Case 6:15-cv-00029-AA Document 1-1 Filed 01/06/15 Page 1 of 30

Loan No: 6002

BORROWER:

PROMISSORY NOTE(Continued) Page 2

the State of Oregon without ¡egard to its conflicts of law provlsions. Thls Note has been accepted by Lender in the State of Oregon.CHOICE OF VENUE. lf there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Ooos CounÇ,State of Oregon.

DISHONORED ITEM FEE- Borrower will pay a fee to Lender of $2O.OO if Borrower makes a payment on Borrower,s loan and the check orpreauthorized charge with which Borrower pays is later dishonored.

R]GHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whetherchecking, savings, or some other account). This includes all accounts Borrower holas ¡ointty with someone else and all accounts Borrower mayopen in the future. However, this does not include qny lRA or Keogh accounts, or any truðt accounts for which setoff wouid be prohibited bylaw' Borrower authorizes Lender, to the extent permitted by applicable law, to charge ôr setoff all sums owing on the indebtedness aga¡nst anyand all such accounts, and, at Lende/s option, to administrátiveiy freeze all such acðounts to allow l-ender to protect Lende/s charge and setoffrights provided in this paragraph.

CoLLATERAL. Borrower.lcklgwlgd_ges th¡s Note is secured by A DEED oF TRUST DATED AUGUST 11, 2O1O ON pROpERry LOCATED AT8s358 cRA IBERRY I-ANE, BANDON, oR 97411 AND A SEcURITY AGREEMENT DATED AUGUST ,t1,2010 covERtNc TNVENToRv,CI-TATTEL PAPER GENERAL INTANGIBLES AND CROPS.

LINE oF cREDlT. This Note evidences a revolvinq line of credit. Advances. unde¡ this Note may be requested either orally or in writing byBorrowerorasprovidedinthisparagraph. Lenderiray,butneednot,requirethatall oral reguestsbeconfirmedinwriting. All commun¡cat¡ons,¡nstruct¡ons, or directions by telephone or othen¡vise to Lender are to be directed to Lendêr's office shown above. T-he following person orpersons are authorized, except as provided in this paragraph, to request advances and authorize payments under the line of credit until Lenderreceives from Borrower, at Lende/s address shown ãbove, writtén notice of revocation ot sticn àuthority: ALLEN RUSõELL and CAROLRUSSELL. Advances may b¡ requ_ested by any one (l) authorlzed person. Borrower agrees to be liable forãll sums eittrer: 1nf advanced inaccordance with the instruct¡ons of an authorized person or (B) credited to any of Borrõwer's accounts with Lender, regardlesò óf the fact thatpersons other than those authorized to borrow have au.thority lo draw against tire accounts. The unpaid principal balancä owing on this Note atany time may be evidenced by endorsements on this Note or by Lender'l internal records, including ãaily'computer print-outs. iender will haveno obligation to advance funds under this Note if: (A)

.. Borrower or any guarantor is in default unler the terms of this Note or any agreementthat Borrower or any guarantor has with Lender, including any agreeméni made in connection with the signing of thi; Note;

-1Bj' Borrower or

any guarantor ceases doing business or is insolvent; .(C) any guarantor seeks, claims or otherw¡se attemptJto limit, modiÇó revoke suchguarantor's guarantee of this Note or any other loan with Lende¡ (D) Borrower has applied funds provided pursuant tó tfris Ñoæ for purposesother than those authorized by Lendeq or (E) Lender in good fa¡th bel¡eves itself insecure.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representat¡ves,successors and assigns, and shall inure to the benefit of Lender and itC successors and assigns,'

GENERAL PROVISIONS. lf any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender rnay delay or forgoenforcing any of its rights or rernediæ under this Note w¡thout los¡ng them. Each Borrower understands and agrees tnãt, w¡tn oí w¡tnout not¡ceto.Borrower, Lender nray with respect to any other Borrower (a) nrake one or rnore additional secured or unsecured loans or othen¡¡ise extendadditional credit; (b) alter, compromise, renew, extend, accelerate, or otherwise change one or rþre times the time for prynr.ni ór other terrnsof any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (c) exchange, enforce, waive, subordinate,fail or decide not to perfect, and release any security, with or without the substitution of new colla'teài; tal aõpfv iJcrr-"écri¡tv-ånO direct theorder or rranner of sâle thereof, induding without lim¡tation, .any non-judicial sale permitted by the terms df ihe';;troll¡ng

".òráty agreernents,

as Lender in its discretion nray determine; (e) release, substitute, agree not to sue, or deal with any one or rþre ol gorrower,ã sureties,endorsers, or other guarantors on any terms or in any nanner Lender may choose; and (f) determine how, when and what application ofpayrnents and credits shall be nrade on any other indebtedness owing by such other Borower. Borrower and any other person who signs,guarantees or endorses this Note, to the extent allor¡ved by law, waive presentment, denend for payment, and notice of dishonor. Uponãnychange in the terms of this Note, and unless otherwise expressly stated ¡n writing, no party who signi this Note, whether as -átãr, gtiarantoi,accomrnodation nraker or endorser, shall be released from liabil¡ty. All such parties agree inat LenOer nì€¡y renew or extend (repeated-ly and foiany length of time) this loan or release any party or guarantor or collateral; or impair, Íail to realize upon ór perfect Lender/s i"ãriity interest inthe collateral; and take any other action deened necessary by Lender without the consent of or notice to anyone. All such partieé dso agreethat Lender rnay modify this loan without the consent of or notice to anyone other than the party with whom the modification is nrade. Theobligations under this Note are joint and several.

UITDER OREGON LAWI.IUOEI..A-GREEUIENTS, PROMISES AND COMMITMENTS MADE BY US ILENDER}coNcERNING LoANS AND orHER cRE_p_tr_eïr_eHSron5 wHión-ÃñÊ.'ñöi'ïõn'ÞÈnSoñÀl,-É¡il¡ìlïöËHousEHoLD PURPoSES oR sEcuRED SOLELY BY rHE aQnEqW-EtS nesioeñcÈ Mit5i 'b-e'lñ'vüR,lir¡o,EXPRESS CONSIDERATION AND BE SIGNED BY US TO BÈENFôRCCÃELË.PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THEVAR]ABLE INTEREST RATE PROVISIONS. EACH BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

XA

G€R ÞRO !..d¡ñ9, V.'. 5.52 00.005 Copr. H!&.d Fh¡ndål goturbñ!, lnc. f997, 2010. All Rþùlr R.¡ôrâd. . OR ClCFtt4þ2o.FC rR-i267s6 pR¿7



REPLACEMENT PROMISSORY NOTE

$779,058.70 . Portlancl- ()regon

S'ry **tmr?'dzolz

THIS REPLACEMENT PROMISSORY NOTE REPLACES AìID SUPERSEDES:

(A) THAT CERTAIN PROMISSORY NOTE DATED JULY 15' 2009 FROM

BORROWER TO LENDER IN THE ORIGINAL PRINCIPAL AMOTINT OF

$604,226.00; AND (B) TIIAT CERTAIN PROMISSORY NOTE DATED JULY 30' 2009

F'ROM BORRO\ilER TO LENDER IN THE ORIGINAL PRINCIPAL AMOUNT OF

$225,000.00.

'['he undersigned ("Borrower") for value received, promises to pay to the order of STERLIN!

SAVINGS BANK, its succeséors and assigns ("Lender") the principal sum of Seven Hundred

seventy Nine Thousand Fifty Eight and z07to0 Dollars ($779,058.70) and to pay interest on the

unpaid principal thereof from the date of disbursement of principal at the rates hereinafter set

ørttr, together with all costs and fees, including attorneys'fees, incurred by Lender in enforcing

tne ofng-ations of this Note. Amounts due hereunder are payablc to Lcnder at 111 N. Wall Street,

Spokanã, Washington 99201or such other place as Lender may direct, in such coin or currency

of the United States of America as at the timã of payment shall be legal tender for the payment of

public and private debts.

1. Interest. Interest shall be computed on a 365/360 basis; that is, by applying the

ratio of the annual interest rate over a year of :oo days, multþlied by the outstanding principal

balance, multiplied by the actual number of days the principal balance is outstanding' This Note

shall bear interest frâm the date of disbursement of principal hereunder. The annual rate of

interest shall be equal to six and sixty-five one hundredths percent (6.65%)'

Z. Monthly Pavments. On July 25,2012 and January 25,2013, and continuing on

thesameauy'@er,principalandinterestshallbepayableininstallmentsof529,869.74 each (based on a 30 year amortization)'

3. Application of payment-s. All payments made herein shall apply first against

costs,ifany,t@f*y,thenagainstaccruedinterestandthenagainstprincipal.

4. Ma$rrilg. The entire principal and any accrued interest on this Note shall be paid

in full on February 28,2013 (the "Maturity Date").

S. prepaymglrt. Borrower shall have the right, at any time, to prepay the whole or

any part h"rro[ffi]lch additional payments shall be credited first upon accrued interest

and ihen upon the last maturing installment of principal'

6, Default. Following any default hereunder or default under any of the covenants

or conditiorm of ffiorbearance Agrôement of even date herewith between Borrower, Lender

and others (,,Forbearance Agreem"rrf'¡, or any other document executed in connection with or to

secwe this Note (collectiváy, the "Loan l)ocuments") and expiration of the applicable cure

PROMISSORYNOTE - Ic:v)o.umçrts and s€fl¡ngs\jmm wKLAW\Lwal scttings\Appliçarion D8tûNyoRLI)OX\ZMS\00l\wdæs\pokmain\81314\293T\1lÙ'l24 DOC



period, if any, Lender may elect to (i) declare the whole amount then unpaid on this Note

i-*",iiut ly -due

and collectible, and/or (ii) declare an increase in the rate of interest so that this

Note shall thereafter bear interest at the rate contained herein, plus five percent (5.0%) per

annum. Lender may exercise either or both of the foregoing remedies, and failure to exercise

either of these optións shall not constitute a waiver of the right to exercise the same at any other

time.

In the event that any payment or portion thcreof is not paid within ten (10) days after the

date it is due, Lender may -collect,

and Borrower agrees to pay with suoh payment, 1 ."1a19

charge" of five cents ($0.0j) not each dollar so over due as liquidated damages fbr the additional

,*p.îr. of handling such delinquent payments. Such late charge represents the reasonablç

esiimate by Lender ãnd Bonower of a fair average compensation due to the failure of Boffower

to make timely payments. Such late charge shall be paid without prejudice to the rights of the

I-,ender to collect any other amounts providcd to be paid or to declare a default under this Note or

under the Loan Documents.

No right or obligation under this Note witl be deemed to havc bcen waived unless

evidenced by a writing signed by the party against whom the waiver is asserted. Any waiver

given will bå ef1ective only with respect to the speoif,rc instance involved, and will not impair or

t"imit the right of the waiving parfy to insist upon strict performance of the right or obligation on

any other iãstance, in any oinãr térp.ct, or at any other time. No failure on the part of Lender to

exãrcise, and no delay in exercising, any right or remedy under this Note shall operate as a

waiver thereof.

If Borrower shall default or breach any term or conditions of'this Note or other Loan

Documents, Borrower agrees to pay on demand all costs and expenses of Lender in connection

with said default or breach by Borrower, including all attorneys' fees, costs and expenses

incurred by Lender in enforcing any term or provision of this Note or the Loan Documents, or in

collecting payments due underlhis Note whether through litigation or other dispute resolution or

otherwisã,-Such fees, costs and other expenses shall include without limitation all costs and

disburscments, all ,ort, urro.iated with discovery, depositions and expert witnsss fees, and all

out-of'-pocket costs incurred by Lender in the prosecution or defense of any action. For purposes

of this'paragraph, the phrase ilitigation or other dispute resolution" shall be deemed to include

uny p.ór".,littg ro**.nced in any court of general or limited jurisdiction, any arbitration or

,rrådiutiorr, *y pror..ding commenced in the bankruptcy courts of the United States, and any

appeal from any of the fiiregoing. The amount of all such fees, costs and expenses shall bear

inierest at the default rate set forth in this Note from the date of demand'

To the extent permitted by applicable law, Lender rescrves a right of setoff in all of

Borrower's accounts ùith tendei 1*h"ther checking, savings, or some other account). 'rhis

includes all accounts Borrower holds jointly with someone else and all accounts Borrower may

open in the future. gorrower authorizes Lender, to the extent permitted by applicable law, to

.hu.g" or setoff all sums owing on this Note or under the Loan Documents against any and all

such accounts, and, at LendeÃ option, to administratively freeze all such âccounts to allow

Lender to protect Lender's charge and setoff rights provided hcrein.

PROMISSORY NOTE - 2c:\Docûr'onts uild selt¡ùgs\mDì wKLAW\Læâl Settings\Appliution Dsts\woR l.DOxv.Ms\001\wdtrslspokma¡n\81314\¿93n710?24 DOC



Time is of the essence. Borrower and any endorsers severally waive presentment, protest

and demand, notice of protest, demand of dishonor, and payment of this Note, and expressly

agrees that this Note, oiurry payment hereunder, may be extended from time to time without in

uãy *uy affecting the liability of Borrower and any endorsers hereof.

Borrower and any endorsers severally waive the right to demand any marshalling of

assets as a condition to u, in .ooo"ction with the bringing of action hereon. Lender may accept

additional or substitute security, or may release in whole or in part the sccurity descrited.in the

Loan Documents and now oi hereafter securing this Note without in any way affecting or

impairing the indebtedness evidenced hereby or the liability of Borrower and any endorsers,

guarantors or suretics hereof'

This Note is to be governed by and construed in accordance with the laws of the State of

Oregon. At the option oilender, the venue of any action hereon may be iaid in Multnomah

County, Oregon, or in any county wherein is situate property subject to the Loatr Documents'

This Note is given for an actual loan of the above amount and is seoured by the Security

Documents (as definãd in the Forbearance Agreement), which is a lien upon the properly therein

described and to which reference is madc for a fulI description of the security granted. Borrower

acknowledges that the Security l)ocuments and the remaining L,oan Documents contain certain

provisions restricting the conveyance, transfer or further encumbrance of the property

äncumbered by the Sõcurity l)ocuments without the prior written consent of Lender'

It is expressly stipulated and agreed to be the inlent of Borrower and Lender at all times

to comply wiftr appticable state law ãr applicable United States federal law (to the extent it

permits Lender to contract for, charge, takè, reserve, or receive a greater amount of interest than

under state law) and that this paragraph shall control every other covenant and agreement in this

Note and the other Loan Documents. If the applicable iaw (state or federal) is ever judicially

interpreted so as to render usurious any a*out t calle! for urder this Note or under any of the

other Loan l)ocuments, or contracted for, oharged, taken, reserved, or received with respect to

this Note or the other Loan Documents, or if Lender's exercise of the option to accelerate the

Maturity Date, or if any prepayment premium or defeasance fee by Borrower results in Borrower

having þaid any interestìn å*ð"s of that permitted by applicable law, then it is Lender's express

intent that all excess amounts theretofore collected by Lender shall be credited on the principal

balance of this Note and the provisions of this Note and the other Loan Documents immediately

be deemed reformed and the amounts thereafter collectible hereunder or thereunder reduced,

without the necessity of the execution of any new clocuments, so as to comply ryjth- t!'applicable law, bur áo u, to permit the recovôry of the fullest amount otherwise called for

hèieunder or thereunder. All sums paid or agreed to be paid to Lender for the use, forbearance' or

detention of amounts duc under tñis Note shall, to the extent permitted by applicable law, b.e

amortized, prorated, allocated, and spread throughout the full stated term of this Note until

payment in nU so that the rate or amount of interest on account of this Note does not exceed the

maximum tawful rate from time to time in effect and applicable to this Note f'or so long as this

Note is outstanding. Notwithstanding anything to the contrary contained herein or in any of the

other Loan Docum-ents, it is not the intention of Lender to accelerate the maturity of any interest

that has not accrued at the time of such acceleration or to collect unearned interest at the time of

such acceleration.

PROMISSORY NOTE . 3cì\lDocuments ild sclt¡18!! û!n.\ilKLAW1¡æsl Se¡1ings\Appli(6tion DstE\góRLI)OXVMS\001\wdwÑpokmsin\813 ] 4\2917\7l0724 l)()c



If this Note is executed by more than one maker, each maker's liability hereunder shall be

joint and several. All references to Borrower shall be deemed to refer to each maker. Allref'erences to the singular shall include the plural. The section and subsection titles of this

Agreement are insertËd for convenience of reference only and shall in no way alter, modify,

define, or be used in construing the text ofsuch section or subsections'

If this Note is executed by a married individual, Borrower's obligations hereunder shall

bind both Borrower's separate and community property.

EACH AND EVERY BORROWER HERNOF AGREIìS THAT IT HAS RECEIVED

VAI,UATILE CONSIDERATION HEREUNDER, THAT IT SIGNS THIS NOTE AS ABoRRowER AND NOT AS A SURETY, AND THAT ANY AND ALL SURIT]].YSHIP

DEFENSES ARE HERIIBY WAIVED.

BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN

AN'Y ACTION OR PROCEEDING TO JUDICIALLY ENFORCE OR DEFEND ANY

RIGHTS TJNDER THIS NOTE, OR THE LOAN DOCUMENTS OR UNDER ANY

AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED (OR

WIIICH MAY IN THE FUTURE BE DELIVERED) IN CONNECTION HEREWITH OR

ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION

WITH THIS NOTE OR THE LOAN DOCUMENTS. BORROWER AGREES TIIATANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEF'ORE A COURT AND

NOT BEFORE A.IURY.

BORROWER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT ORALAGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT

OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEI¡T ARE NOT

ENFORCEABLE A¡ID IIE,REBY CONFIRMS THAT LENDER HAS NOT MADE OR

GIVEN AI\Y PROMISES OR COMMITMENTS THAT ARE NOT EXPRESSLY SET

FORTH HEREIN OR IN THE OTHER LOAN DOCUMENTS.

UNDER OREGON LAW MOST AGREEME,NTS, PROMISES AND COMMITMENTSMADE BY LENDERS CONCERNING LOANS AND OTHER CREDIT EXTENSIONS

\ilHICH ARE NOT FOR PERSONAL, FAMILY OR IIOUSEHOLD PURPOSES OR

SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING'EXPRESS CONSIDERATION AND BE SIGNED BY LENDER TO BE ENF'ORCEABLE.

Executecl and delivered on the date first set forth above

á:r**- l'A RUSSELL

I, A. [ì

PROMISSORY NO'TE . 4C;\Documents and SetringB\jmm WKLAW\Local Settings\Appliqlion DaIa\WORLDOXVMS\00 t\wdws\poknain\81314V93?1710724 DOC



COMMERCIAL GUARANTY

ALLEN RUSSELLCAROL RUSSELL89358 CRANBERRY LANEBANDON, OR 97411

RUSSELL CRANBERRY COMPANY89358 CRANBERRY LANEBANDON, OR 97411

Lender:

coNTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionallyguarantees full and punctual payment and sat¡sfact¡on of the lndebtedness of Borrower, or any one or more of them, to Lender, and the

f,erformance and dis'charge oi ajl Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and

þerformance and not of óollection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's

remedies against anyone else obligated to pay the lndebtedness or against any collateral securing the lndebtedness, this Guaranty or any otherguaranty oith" lndébtedness. Guarantor wiil make any payments to.Lender or its order, on demand, in legal tender of the United States ofÁmer¡cá, ¡n same-day funds, without set-off or deductioñ or ôounterclaim, and will otherwise perform Borrower's obligations under the Note and

Related Documents. Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.

INDEBTEDNESS. The word "lndebtedness" as used in th¡s Guaranty means all of the principal amount outstanding from time to time and at any

one or more t¡mes, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys' fees,

arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower

indiviãually or côllectively or interchangeably with others, owes or will owe Lender. "lndebtedness" includes, without limitation, loans, advances,

debts, ov'erdraft indebtódness, credit card indebtedness, lease obligations, liabilities and obligations under any ¡nterest rate proiection

agreements or foreign currency exchange agreements or commodity pr¡ce protection agreements, other obligations, and liabilities of Borrower, or

uñy on" or more oi them, and any pieseñt or future judgments against Borrower, or any one or more of them, future advances, loans or

transactions that renew, extend, modify, refinance, consolidate or subst¡tute these debts, liabilities and obligations wheiher: voluniarily or

invoiuntarily incurred; due or to oeco.u due by their terms or acceleration; absolute or contingent; liquidated or unliquiciated; determined or

undeterminêd; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or

joint and sevêral; evidenced by a negôtiable or non-negotlable instrument or wr¡ting; originated by Lender or another or others; baned or

Lnenforceable against Borroweifor any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, ¡nsanity,

ultra vires or othlrwise); and originated then reduced or extinguished and then afterwards increased or reinstated.

lf Lender presenfly holds one or more guaranties, or hereafter receives add¡tional guaranties from Guarantor, Lender's rights under all guaranties

shall be cumulative. This Guaranty shãll not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties.

Guarantor's liability will be Guaranior's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties-

CONT]NUING GUARANTY. THIS IS A -CONTINUING GUARANTY' UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND

PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER, OR ANY ONE OR MORE OF THEM, TO

LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS

MADE ON THE INDEBTEDNÊSS WILL NOT DISCHARGÊ OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILIry UNDER THIS GUARANTY

FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE AZERO BALANCE FROM TIME TO TIME.

DURATION OF GUARANTy. This Guaranty will take effect when received by Lender without the necess¡ty of any acceptance by Lender, or any

not¡ce to Guarantor or to Borrower, and will continue in full force until all the lndebtedness incurred or contracted before receipt by Lender ofany notice of revocation shall have been fully and finally paid and satisfìed and all of Guarantor's other obligations under this Guaranty shall have

beên performed in full. lf Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor's wr¡tten notice of|.euocäiion must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in wr¡ting.

Written revocation of this Guaranty will apply only to new lndebtedness created after actual receipt by Lender of Guarantor's written revocation.pàr tñ¡s purpose and without limitation, the teim "new lndebtedness" does not include the lndebtedness which at the time of noiice ofrevocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidaied, determined or due- For thispurpose and withoui limitation, "new lndebtedness" does not ìnclude all or part of the lndebtedness that is: incurred by Borrower pr¡or to

ievocation; incuned under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications ofthe lndebtedness. This Guaranty shall bind Guarantor's estate as to the lndebtedness created both before and after Guarantor's death or

incapacity, regardless of Lender,s actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other

tegai repiésenìtative may terminate this Guaranty in the same manner in which Guarantor might have term¡nated it and w¡th the same effect.

Rðlease of any other guarantor or termination of any other guaranty of the lndebtedness shall not affect the liabil¡ty of Guarantor under this

Crãiá.ty. A ievocatiõn Lender receives from any oñe or rnore Guaiantors shall not affect the liability of any remaining Guarantors under this

GuaranÇ. lt is anticipated that fluctuations nray occur in the aggregate amount of the lndebtedness covered by this Guaranty, and Guarantor

"p..¡n"jfly acknowleóges and agrees that reduct¡ons in the amount of the lndebtedness, even to zero dollars ($0-00), shall not constitute a

términation of this Guãranty. ftt¡s Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the

lndebtedness rernains unpaiã and even though the lndebtedness may from t¡me to time be zero dollars ($0-00)'

GUARANTOR'S AUTHORIZATION TO LENDER Guarantor authorizes Lender, either before or after any revocation hereof, without notice or

demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make

one or more additional se"*"d or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend

addìtional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or rìore times the time for payrnent

o!- other terms of the lndebteáness or any part of the lndebtedness, including increases and decreases of the rate of interest on the

índebtedness; extensions rnay æ repeated anO rnay be for longer than the original loan term; (C) to take and hold secur¡ty for the payrìent ofthis GuaranÇ or the lndebtedîess, and exchange, enforce, waive, subordìnate, fail or decide not to perfect, and release any such security, withor without tËe substitution of new collateral; (-D) to release, substitute, agree not to sue, or deal with any one or rrlore of Borrowe/s sureties,

endorsers, or other guarantors on any terms oi in any rnanner Lender may choose; (E) to determine how, when and what application ofpayments'and creditð shall be rnade on the lndebtedness; (F) to apply such security and direct the order or rrE¡nner of sale thereof, including

w¡inout limitation, any nonjudicial sale permitted by the terms of the controlling security agreernelt or deed of trust, as Lender in its discretion

may determine; ic) -to

séll, transfer, assign or giant participat¡ons in all or any part of the lndebtedness; and (H) to assign or transfer this

Guaranty in whole or ¡n Part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or

agreements of any kind have been made to Guarantor which would limit or qualify ¡n any way the terms of this Guaranty; (B) this Guaranty is

eiecuted at Borrówer's request and not at the request of Lender; (C) Guarantor has full power, right and author¡ty to enter into this Guaranty;

aDt th" piovisions of this òuaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor

and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, withouithe prior written consent of Lendei, seli, leãse, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of

Guaiantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form

acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to

Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial

information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent

fìnancial statements provided to Lender and no event has occurred whích may materially adversely affect Guaranior's fìnancial condition; (H)

no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or

threatãned; (l) Lender haã made no representaiion to Guarantor âs to the creditworthiness of Borrower; and (J) Guarantor has establ¡shed

adequate meàñs oi obtaining from Borrower on a cont¡nuing basis information regarding Borrower's financial condition. Guarantor agrees to

keej adequately informed frõm such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under thisGuåranty, and

'Guarantor further agrees that, absent a request for information, Lender shall have no obligation to disclose to Guarantor any

information or documents acquired by Lender in the course of its relationship with Borrower.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending

money or to extend other credìt to Borrower; (B) to rnake any presentment, protest, dernand, or not¡ce of any kind, including notice of any

nonpãvr.ent of the lndebtedness or of any nonpayrnent related to any collateral, or notice of any action or nonaction on the part of Borrower,

l"nã.í, any surety, endorser, or other guarantor in connection with the lndebtedness or in connection wifh the creation of new or additional

loán" "|.

o¡l¡gat¡onJ; (C) to resort for paynrent or to proceed directly or at once against any person, including Borrower or any other guarantor;

(D) to proJed directiy against or exhauét any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give

Borrower:

Guarantor:

Sterl¡ng Savings BankCoos Bay Commercial Banking Center212 S sth StCoos Bay, OR 97420



COMMERCIAL GUARANTY(Gontinued) Page 2Loan No: 6O0l

notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply w¡thany other applicable provisions of the Uniform Commercial Code; (Ð to pursue any other remedy within Lende/s power; or (G) to commit anyact or omission of any kind, or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights ordefenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any

action, including a claim for deficiency, against Guarantor, before or after Lende/s commencement or completion of any foreclosure action,either judicially or by exercise of a powei of sale; (B) any election of remedies by Lender wh¡ch destroys or otheM¡se adversely affectsGuarañtor's subrogaiion rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss ofrights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the lndebtedness; (C) any disability or other defense ofBórrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liabiliÇ from any cause whatsoever, otherthan payment ¡ñ tutt ¡n legal tender, of the lndebtedness; (D) any right to claim discharge of the lndebtedness on the basis of unjustifiedimpairmênt of any collateràl for the lndebtedness; (Ð any statute of limitations, if at any tìme.any action or suit brought by Lender againstGuarantor is commenced, there is outstanding lndebtedness which is not baned by any applicable statute of limitations; or (F) any defensesg¡ven to guarantors at law or in equity other than actual payment and performance of the lndebtedness. lf payment is made_ by Borrower,úhether vbluntarily or otherwise, or by any third party, on the lndebtedness and thereafter Lender is forced to remit the amount of that payment

to Bonower's truétee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, thelndebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any

claim of setoff, counterclaim, ðounter demand, recoupment or similar right, whether such claim, demand or right may be asserted by theBorrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING wlTH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above ismade with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and

not contrary to public policy or law. lf any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be

effective only to the extent permitted by law or public policy-

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender(whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accountsòuarantor may opén in thã future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would beprohibited by iaw. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lendermay apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the lndebtedness, whether now existing or hereaftercreated, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomesinsolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to anyclaim that Lender may now or hereafter have against Borrower. ln the event of insolvency and consequent liquidation of the assets of Borrower,through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable tothe pãyment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the lndebtedness.Guarantor does hereby assign to Lender all claims which it may have or acquire aga¡nst Borrower or against any ass¡gnee or trustee in

bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in

legal tender of the lndebtedness. lf Lender so requests, any notes or cred¡t agreements now or hereafter evidencing any debts or obligations ofBõrrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantoragrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statementsañd to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rightsunder this Guaranty.

MISCELI-ANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty:

Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as

to the mâtters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing andsigned by the party or parties sought to be charged or bound by the alteration or amendment.

Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' feesand Lender's legal expenses, incuned ¡n connection with the enforcement of this Guaranty. Lender may hire or pay someone else to helpenforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender'sattorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcyproceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collectionservices. Guarantor also shall pay all court costs and such additional fees as may be directed by the court.

Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or defìne theprovisions of this Guaranty.

Goveming Law, This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, thelaws of the State of Oregon without regard to its confl¡cts of law provisions.

Ghoice of Venue. lf there ¡s a lawsuit, Guarantor agrees upon Lender's request to submit to the jurisdiction of the cÐurts of Coos County,State of Oregon.

lntegration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had theopportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parolevidence is not required to interpret the terms of this Guaranty- Guarantor hereby indemnifies and holds Lender harmless from all losses,claims, damages, and costs (including Lende/s attorneys'fees) suffered or incuned by Lender as a result of any breach by Guarantor of thewarranties, representations and agreements of this paragraph.

lnterpretation. ln all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shallbe deemed to have been used in the plural where the context and construct¡on so require; and where there ¡s more than one Borrowernamed in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words "Borrowern and "Guarantor"respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors,assigns, and transferees of each of them. lf a court finds that any provision of this Guaranty is not valid or should not be enforced, thatfact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of theprovisions of th¡s Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. lf any one or more ofborrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it ¡s not necessary for Lender to inquireinto the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act ontheir behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under th¡sGuaranty.

Notices. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor,shall be effeótive when actually delivered, when actually received by telefacs¡m¡le (unless otherwise required by law), when deposited witha nationally recognized ovemight courier, or, if mailed, when deposited in the United States mail, as first class, certified or reg¡stered ma¡lpostage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be inwriting and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled 'DURATION OF GUARANTY."Any party may change its address for notices under this Guaranty by giving formal written not¡ce to the other parties, specifying that thepurpose of the not¡ce is to change the party's address. For notice purposes, Guarantor agrees to keep Lender informed at all times ofGuarantor's current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lenderto any Guarantor is deemed to be notice given to all Guarantors.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver ¡s given in writing ands¡gned by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any otherright. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a wa¡ver of Lender's right otherwise to demandstrict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing betweenLender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions.Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitutecontinuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld inthe sole discretion of Lender.

Successors and Assigns. Subject to any limitations stated in this Guaranty on transfer of Guarantor's interest, this Guaranty shall bebinding upon and inure to the benef¡t of the parties, their successors and assigns.

Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either



Loan No: 6001COMMERCIAL GUARANW

(Continued) Page 3

Lender or Guarantor against the other.

FRAUD5 DtsclosuR6. UNDER OREGON LAW, MOST AGREEME-NIS--P-$Q-ryUS.-Eç.AND COMMITMENTS i,lADE BYijf rtÉñbïRi õöñCÉRñpùG tõÂñS ãruo orneR cREDrr ExrËNStoNs wHlcH ARE Nor FoR PEESqUA.L,ËÃilltLy'óC'hõùSE-n-ótil-ÈunÞoSÈs oR sEcuRED SoLELY BY rHE BoBEt_oWER's RESIDENcE MUSr BE lNiúÈìl¡ñelExpneSS c-oñstDERATroN AND BE STGNED BY us ro BE ENFoRCEABLE.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifìcally

slated to the contrary, all reierences to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms

,!ãã I inã singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not othen¡vise

defined in this êuaranty shall have the meanings attributed to such terms in the Un¡form Commercial Code:

Borrower. The word "Borrower" means ALLEN RUSSELL and CAROL RUSSELL and includes all co-signers and co-makers signing the Note

and all their successors and assigns.

Guarantor. The word 'Guarantor" means everyone signing this Guaranty, including without limitation RUSSELL CRANBERRY CoMPANY,

and in each case, any signer's successors and assigns.

Guaranty. The word "Guaranty" means this guaranty from Guarantor to Lender.

lndebtedness. The word "lndebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty.

Lender. The word "Lender" means Sterling Savings Bank, its successors and assigns.

Note. The word "Note" means and includes w¡thout limitation all of Borrower's promissory notes and/or credit agreements evidencing

Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of , refìnancings of, consolidations

of and substitutions for promissory notes or credit agreements.

Related Documents, The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental

agreements, guaranties, security agreements, mortgages, deeds oi trust, security deeds.,.co_llateral mortgages, and all other ¡nstruments,

aireements a-nd documents, whether now or hereafter existing, executed in connection with the lndebtedness-

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANW AND AGREES TO ITS

TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND

DELIVERY OF TH]S GUARANTY TO LENDER AND THAT THE GUARANTY WLL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORT}I

IN THE SEGTION TITLED .DURATION OF GUARANTY'. NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANW

EFFECTIVE. THIS GUARANTY IS DATED JULY 30, 2009.

GUARANTOR:

RUSSELI- CRANBERRY COMPANY

CRANBERRY COMPANY CRANBERRY

NER mO Lèndinc, vor, 5.45.00.004 coD. Éltbnd Finôúlsotulio¡t, lnc 1997 2009 411 Rþhlt Rè!.ry.d. .OR CICF&PL\E20.FC lRnl?æ3 ÞR{6



AGRICULTURAL SECURITY AGREEMENT

Borrower: Lender: Sterling Savings BankCoos Bay Commercial Banking Center2í2 S sth stGoos Bay, OR 97420

Grantor:

THIS AGRICULTURAL SECURITY AGREEMENT dalgd July 30, 2009, ls made and executed among RUSSELL 6RANBERRy coMpANy("Grantor"); ALLEN RUSSELL and CAROL RUSSELL ("Borrower');'and Sterling Savings B""il;G;d;;i.GRÂNT OF SECURITY INTEREST. For valuable consìderation, Grantor grants to Lender a security interest ln the Collateral to secure thelndebtedness and agrees that Lender shall have the rights stated ln this Alreement with respect to tÉe Collaterat, ln aAait¡àliã att ottrer righ[which Lender may have by law.

COLLATERAL DEscRlPTloN' The word "Collateral' as used in this Agreement means the following described property, whether now owned orhereafter acquired, whether now existing or hereafter arising, and whérever located, in which crañtor is giving to'¡-en'¿'eiáìàðurity interest forthe payment of the lndebtedness and performance of all other obl¡gations under the Note and this Agreement:All lnventory, Ghattel Paper, Accounts, General lntangibles and Crops

The Collateral includes any and all of Grantor's present and future inventory (including consigned inventory), related equipment, goods,merchandise and other items of personal property, no matter where located, of évery type ãnd des-cription, induáing without limitation añy andall of Grantor's present and future raw materials, components, work-in-process, n'n¡étieO items, pa'cking and shi[ping r.tðriãii, conta¡ners,items held for sale, items held for lease, items for which Grantor is lessor, goods to be furnished uñder còntract toi señ¡ces, materials used orconsumed in Grantor's business, whether held by Grantor or by others, and all documents of title, warehouse receipts, bills of lading, and otherdocuments of every type _covering all .or any part of the foregoing, and any and all additions thereto and substitutions or replacemeñts therefor,and all accessories, attachments, and accessions thereto, whether added now or later, and all products and proceeds derived or to be derivedtherefrom, including without limitation all insurance proceeds and refunds of insurance premiums, if any, and all sums that may be due fromthird parties who mây cause damage to any of the-foregoing, or from any insurer, whether due to judgment, set¡ement, or otheí process, andany and all present and future accounts, contract rights, chattel paper, instruments, documents, añd ñotes that may be derived from the sale,lease or other disposition of any of the foregoing, and any rights of Grantor to collect or enforce payment thereof, as well as to enforce anyguarantees of the forgoing and security therefor, and_ all of Granto/s present and future general intangibles in any way related or pertaining tóthe ownership, operation, use, or,collection of any of the foregoing, including without limitation Grantór's books, iecords, files, computer dlsksand software, and all rights that Grantor may have with regard thereto, lnventory includes inventory temporarily out of Grantor's possession orcustody and all returns on accounts, chattel paper and ¡nstruments.

The Collateral includes any and all of Grantor's present and future chattel paper, equipment lêâses, retail installment contracts, notes and chattelmortgages, notes and security agreements, instruments, documents, and all other similar obligations and indebtedness fhat may now and in thefuture be owed to or held by Grantor from whatever source arising, and all monies and proceeds payable thereunder, and all of Grantor's rightsand remedies to collect and enforce payment and performance thereof, as well as to enforce any guaranties of the foregoing and securitytherefor, and all of Grantor's present and future rights, title and interest in and with respect to the goods or other property that may give rise toor that may secure any of the foregoing, including without l¡mitation Grantor's insurance rights w¡th regard thereto, and any and all present andfuture general intangibles of Grantor in any way related or pertaining to any of the foregoing, including without limitation Grantor's accountledgers, books, records, files, computer disks and software, and all rights that Grantor may have with regard thereto.

The Collateral includes any and all of Grantor's prêsent and future accounts, accounts receivable, other receivables, contract rights, instruments,documents, notes, and all other similar oblígations and indebtedness that may now and in the future be owed to or held by Grantor fromwhatever source arising, and all mon¡es end proceeds payable thereunder, and all of Grantor's rights and remedies to collect and enforcepayment and performance thereof, as well as to enforce any guaranties of the foregoing and secur¡ty therefor, and all of Grantor's present andfuture rights, title and interest in and with respect to the goods, serv¡ces, and other property that may give rise to or that may secure any of theforegoing, including without limitation Grantor's insurance rights with regard thereto, and all present and future general intangibles of Grantor ínany way related or pertaining to any of the foregoing, including without limitation Grantor's account ledgers, books, records, files, computerdisks and software, and all rights that Grantor may have with regard thereto.

The Collateral includes all general intangibles, choses in action and causes of action and all other intangible personal property and rights ofGrantor of every nature and kind, now owned or hereafter acquired, including without limitation corporate or other business records, inventions,designs, blueprints, plans, specif¡cations, patents, patent applícations, trade marks, trade names, trade secrets, goodwill, copyrights,registrations, licenses, franchises, tax refund claims, insurance proceeds, including without limitation insurance covering the lives of keyemployees on which Grantor is beneficiary, and any letter of credit, guaranty, cla¡m, security interest, or other security held or granted toGrantor to secure payment of any indebtedness.

The Collateral includes any and âll of Grantor's present and future rights, title and interest in and to all crops growing or to be planted,cultivated, grown, raised and/or haruested together with âny and all agricultural and farm products produced or derived therefrom, of evèrynature ând kind whatsoever, including aquat¡c goods produced ¡n aquacultural operations, together with all present or future inventory of Grantorand the products lhereof, of every type and description, derived or to be derived therefrom, whether held by Grantor or by others, and alldocuments of title, warehouse receipts, bills of lading, and other documents of every type covering all or any part of the foregoing, and all ofGrantor's related equipment, and any and all additions thereto and substitutions and replacements therefor, and all accessories, attachments,and accessions thereto, and all proceeds derived or to be derived therefrom, whether in cash, farm products, or otherw¡se, and whether from orthrough any federal or state govemment agency or program or otherwise, including without limitation all easements, Prof¡ts, rights of storage,trailiné and-grazing, and irrigátion and water rights; all ent¡tlements, rights to payment, and payments, in whatever form received, including butnot liñited [o, payments under any govemmental agricultural diversion programs, governmental agricultural assistance programs, the Fârm

Services Agency Wheat Feed Grain Program, and any other such program of the Un¡ted Stetes Departmentof Agriculture, warehouse receipts,chemicals ãnd iertilizers, documents, lètters of entitlement, and defic¡ency, conservation reserye, and diversion and storage payments, all

insurance proceeds and refunds of insurance premiums, if any, and all sums that may be due from third parties who may cause damage to any

of the forégoing, or from any insurer, whether due to judgment, settlement or other process, and any and all present and future accounts,contract rigits,ãnattet paper, lnstruments, documents, and notes that may be derived from the sale or otherdisposition of any of the foregoing,

"nà any rijnts ot Grantor'to collect and enforce payment thereof, as well as to enforce any guarantees of the foregoing and security therefor,

and all of örantor's present and future general intangibles in any way relating or pertaining to any of.the foregoing, including without limitation

Grantor,s books, recbrds, files, computer d¡sks and software, and all rights that Grantor may have with regard thereto'

ALLEN RUSSELLCAROL RUSSELL89358 CRANBERRY LANEBANDON, OR 974IIRUSSELL CRANBERRY GOMPANY89358 CRANBERRY LANEBANDON, OR 97411

some or all of the collateral may be located on the following described real estate:

SEE ÀTTACHED LEGAL DESCRIPTION

cRoss.coLLATERALlZATlON. ln addition to the Note, this Agreernent secures all obligations, debts and liabil¡ties, plus interest thereon, ofeither Grantor or Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower and Grantor or any one or

räié of ittu., whether now ex¡sting or h-ereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or

otherwise, whether due or not due, d-irect or indirect, detérmined or undetermined, âbsolute or contingent, liquidated.or. unliquidated, whethergóriolné.ôr Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or othenvise,

and whether recovery upon such amounts niay 6e or hereafter may become.baned by any statute of limitations, and whether the obligation to

repay su6h amounts inay be or hereafter may become otherwise unenforceable.

FUTURE ADVANCES. ln addition to the Note, this Agreement secures ell future advances made by Lender to Borrower regardless of whether

the advances afe mede e) pursuant to a commitment or b) for the same purposes.

BORROWER'S WAIVERS AND RESPONSIBILIT|ES. Except as otherwise required under this Agreement or by applicable law, (A) Borrower

ãgreès that Lender need not tell Boffower about any action or inaction Lender takes in connection with this Agreement; (B) .Borrower assumes

thË-r."ö.;;ibli¡t' tor Ue¡ng ãnã ¡.""p¡ng informed a-bout the Collateral; and (C) Bonower waives any defenses that may arise because of any

å"iion o. inactioî ot LenOËr, includihgiitnout l¡mitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing



Loan No:6001Page 2

upon the Collateral; and BorrowerAgreement.

agrees to remain liable under the Note no matter what action Lender takes or fails to take under this

GRANToR'S REPRESENIATIoNS AND WARRANTIES. Grantor wanants that; (A) this Agreement is executed at Borrower,s request and notat the request or Lendeñ (B) Grantor has the full right, power a_ncLaùhàr¡ii,ìà ";t;r into.thìs Añ;;"ì and to ptedge the coilateiat to Lender;(c) Grantor has established adequate means of outãinini trom eonã;äiôrí å'cont¡nuin9 ù"d i;i;;;iån about Bonower,s financiat condition;and (D) Lender has made no representation to Grantor albout Bonoweioigorowers creditworthiness.

GRANToR'S wAlvERs' Grantor waives all requirements of presentment,.protest, demand, and notice of dishonor or non-pãyment to Borroweror Grantor' or any other party to the lndebtedn'ess or the cojtatera¡. [en'¿ãiìnay oo any o't tt e ioliäw¡rìg w¡p,. respect to any obligation of anyBorrower, without rirst obtainins the consent of Grantor:_(A) é;;i "ny

&;;1ú; ö,.gäiöËïliåt",, re.l srant any renewai, (c) permitany modlfication of pavment terms or other terms, or. to) êxËnàngË il;Ëå." any coilaterat ór!ìÉôi ,u.urity. No such act or faiture to actshall affect Lender,s rights against Grantor or the iollateraìRIGHT oF SEToFF' To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor,s accounts with Lender (whetherchecking' savings, or some other account¡' rnis'includes all accounts o¡,antor holãs Joinfly *iÜr sómãon" else and alt accounts èrantor mayopen in the future' However, this does not include gny IRA oi K;éh;.ä;nì", or. any truét accounts for which setoff would be prohibited bylaw' Grantor authorízes Lender, to the extent permitted. by applicabL rãw, ió cnarge ór setoff all sums Àwing on tlre lnoeuteãnesJ against any

ruÍ,:"ff11år"ïil['rï:äåt h:nder's option, io adminisúati;"v ñ;.;;i sicn ac-counts to arrá*-ienãer to þrotect L;"¡;is;h*.õe ànd setoi

:trS3[åtri:5:"t[âlj"Ns AND WARRANTIES wlrH REsPEcr ro rHE CoL]-ATERAL' with respect to the cottateral, Grantor represents

Perfec'tion of security lnterest' Grantor agrees to execute financing statements and to take whatever other actions are requested by Lenderto perfect and continue Lende/s security interest in the collaterai.-Ùpon i"qr".t of Lender, orãnìoi wi¡ deliver to Lender any and alt of thedocuments evidencingorconstituting.the collateral, and Grantorwill'náte Lend.e/s-interest upon anyand all chattel paperand ¡nstrumentsif not delivered to Leñder tot pãssesËion-bt-Ëù;r. ih¡"1;;;;;ihrrn!-security Agreementãdïíil cont¡nue in effecr even though ail orany part of the lndebtedness ls paid ln full and even though for a perlod ãr time aôrr;w"r ¡n"y noiu"-indebted to Lender.Notices to Lender' Grantor will promptly notify Lender in_writing at Lende/s.address shown above (or such other addresses as Lender maydesignate from time to time) pr¡or to any 1t¡

'change ¡n orànio?s nãr";-tzl cr'ange-in-ðiantoi'.'Àrrrø busíness name(s); (3) changein the management of the corporation èrânior;

. (4j change ¡n Ûre áuirräriìzéa signér1s¡;..-pi ãr'ã"0" in Grantor,s principal office address;(6) change in Grantor's state of organization; 1l¡'conveËion or erãñtoi'to a né* dr'á¡riéíenì ÇpË or business entity; or (B) change inany other aspect of Grantor that directly or indirectly relates to an_y agreements between Grantor ánd Lenaer. l,¡o cnanõe ¡n e-ráto.," n"n.,"or state of organization will take effect until after Lender has receiveJ'notice.

No violation' The execution and delivery of this Agreement will not violate.any law or agreement governing Grantor or to which Grantor isa partv' and its certificate or articles of incorporation and bylaws do not prohibít "ny

t"rr"oiìðnãitËn or tn¡Ë ngieemãnt.- " "'-'

Enforceablllty of collateral. To the extent the collateral consists of accounts, chattel paper, or general intangibles, as defined by theuniform commercial code, the collateral is enforceable in accordance with .its teims. ¡s gJ;;Àe, ãnolullv complieî wiiË ãrr ãpfìicaore ra*sand regulations conceming form, content and manner of preparation "n¿

erãcùtión; il-äiiËõns appearing to be obtigated on theCollateral have authority and capacity to contract-and are in'fact obligated as they appear to u" ãn iñ" collateral. At the time any accounrbecomes subject to a security ¡nterest in favor of Lender, the accouñt shall.be a goóåãnovãi¿ã"ðórnt representing an undisputed, bonafide indebtedness incuned by the account debtor, for merchandise held subject tä oeriuérv ¡nsi*ðt¡ãn. or previously shipped or deliveredpursuant to a contract of sale,..or for services previously.performed by Grant'or with or tor irre acòãùnt debtãr. 5; Ë"õ ä"thi. Agreementremains in effect, Grantor shall not, without Lender's þrior written cónsent, compromise, ."ttrã, ã¿¡u.t, or extend payment under or w¡thregard to any such Accounts. There shall be no setofis or countercteims against' any of ine cãiuìèià1, 'and

nò agËáô;.,î;r,äti have beenmade under wh¡ch any deductions or discounts may be claimed concerning tñe collatéø ei."ptìr,o." oi"rlosed to-LenJÀ, in *üiing.Location of the collateral. Except in the ordinary course of Granto/s business,. Grantor agrees to keep the collateral (or to the extent thecollateral consists of intangible pPperty such as accounts or. general intangibles, the iecords cãn'ceming the coli;te;;li ãt cranto¡saddress shown above or at such other loôations as are acceptablito Lender. Ùpon leno"rã Ëqr"it]'cr"ntor will deliver to Lender in formsatisfactory to Lender a schedule of real properties and collateral locations relating to Grantor's'op"råtion", including *itnouirir¡tation thefollowing: (l) all real propertyGrantorownsorispurchasing; (2) all real,prope-rtyGrantorisrentingorlêasìngr 1-sj'äli Jåiäö"facititiesGrantor owns, rents, leases, or uses; and (J) all other qropertieè where coltäteiat ié or may ¡e rocaieã. crantoiirdníptry Jãifirocure tneexecution, acknowledgment, and delivery of such subordination, consent, waiver, estoppel, and ottrér. agr"ements'as Lènáer shail require byholders of any encumbrances upon or by owners of such lands where Coilateral ¡s or w¡il bê located. Giantor consents to Lenáãr,s rights ofaccess for cultivat¡on of crops upon such terms âs Lender may deem satisfactory.Removal of the Collateral. Except in the ordinary course of Grantor's business, including the sales of inventory, Grantor shall not removethe Collateral from its existing location without Lende/s prior written consent. To the-extent that the Collatéral consists of vehicles, orother titled property, Grantor shall not take or permit any action which would require application for certificates of tifle for the veh¡clesoutside the State of Oregon, without Lende/s pr¡or written consent. Grantor si5all, wËenever requested, advise Lender of the exactlocation of the Collateral.

Transactlons lnvolvlng Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or asotherwise provided for in this Agreement, Grantor sháll not sell, offer to sell, or otherwise transfår or dispose oi 6tá bõ¡1.*.rat. WhileGrantor is not in default underthis Agreement, Granlor may,sell inventory, but only in the ordinary course of iis bus¡nesJaÀJ oìÇ to Ury"owho gualify as a buyer in the ordinary course of business. A sale in the órdinary c-ourse of Grantó/s business does not ináu¡ã ;transfer inpartial or total satisfaction of a debt or any bulk sale. Grantor shall not pledgé, mortgage, encumber or othenvise permit thé Collateral tobe subject to any lien, security interest, encumbrance, or charge, other ihan-the secúrifo interest provided for in ttiis Àlreôrãrìt, w¡thoutthe prior written consent of Lender. Th¡s includes security interests even if junior in light to the security interests iranted under thisAgreement. Unless waived by Lender, all proceeds from any disposition of thè Colateraf (for whatever reáson) shall b! held in trust forLender and shall not be commingledwith_any other funds; provided however, this reguirement shall not constitute consent by Lender to anysale or other disposit¡on. Upon receipt, Grantor shall immediately deliver any such prôceeds to Lender.

Sale of Collateral. The following provisions relate to any sale, consignment, lease, license, exchange, transfer, or other disposition of cropsincluded as all or a part of the Collateral:

(1) To induce Lender to extend the credit or other financial accommodations secured by this Agreement, Grantor represents andwarrants to Lender that Grantor will sell, consign, lease, license, exchange, or trânsfer the Collateral only lo those peisons whosenames and addresses have been set forth on sales schedules delivered to Lender. Each schedule shall be in such form as Lender mayrequire, including identification of each type of Collateral.

(?) Grantor agrees to provide the Lender a written list or schedule of the buyers, commission merchants, and selling agents to orthrough an individual including the entity name, contact name and address to whom or through whom the crops

-ma-y be sold,consigned or transferred. All such schedules and notif¡cations shall be in writing and shall be delivered to Lender noi less thanfourteen (14) days prior to any such sale, consignment or transfer of the crops. Also, the Grantor agrees to provide any updates oramendments to these schedules or lists to the Lender.

(3) All proceeds of any sale, consignment, lease, license, exchange, transfer, or other disposition shall be made immediatelyavailable to Lender.in a form jointly.payable to Grantor and Lender. No provisions in this Agreement shall be interpreted to authorizêany sale or disposition of Collateral unless authorized by the Lender in writing. All chattel paper, contracts, wärehouse receipts,documents, and other evidences of ownership or obligations relating to the Collateral, whether issued by a co-op, grain elevâtor,warehouse, marketing entity, or bailee, and all accounts and other proceeds of the Collateral shall be immeàiately endoised, assignedand delivered by Granlor to Lender as security for the lndebtedness. At any time before or after the occurrence of an Event of Defãult,Lender may collect all proceeds of the Collateral without notice to Grantor. All proceeds of the Collateral, when received by Lender,may at Lender's sole d¡scretion be applied to the lndebtedness. Grantor grants Lender a limited power of attomey to sign or endorseGrantor's name on all writings described in this section.

(4) Grantor acknowledges that if the crops âre sold, consigned, or transfened to any person not listed on a schedule delivered toLender as provided above, and if Lender has not received an accounting (including the proceeds) of such sale, consignment or transferwithin ten (10) days of the sale, consignment or transfer, then under federal law, Grantor shall be subject to a fine which is the greaterof $5,000 or 15o/o of the value of benefit received from the sale, consignment or transfer to en unlisted buyer, consigñee ortransferee.

Care and Preservatlon of the Grops, Grantorshall (1) At seasonable and propertimes and in accordance with the best practices of goodhusbandry attend to and care for the crops and the tillage of the land and do, or c¿¡use to be done, any and âll acts that may at any time beappropriate or necessary to grow, farm, cultivate, irrigate, fertilize, fumigate, prune, harvest, pick, clean, preserve, and protect the crops;

AGRICULTURAL SECURITY AGREEMENT(Continued)



Loan No:6001AGRICULTURAL SECURITY AGREEMENT

(Continued) Page 3

(2) Not commit or suffer to be committed any ctarnage to, destruction of, or waste of the crops; (3) permit Lender and any of itsemployees and agents to enter upon the premises.whére the ".oi".qr"

located at any reasonable time and from time to time for thepurpose of examining and inspecting the crops.and.the premises; 1a¡- ff"*"st ãÃ¡ p¿#" th" ;;o_p.. {o, market and prompty notify Lenderwhen any of the crops are ready for marketi . (5) Keei the crois iépa,qte ano.atwayå c"påole of being identified; J"i iãl promprty giveLender written notice of anv disease to, any deèiruaion or, an/ããiráciation ¡n tne vãG äïãîã.v o"-rãsãiå ilîö;. ,",

Title' Grantor rePresents and ìivarrants to Lender that Grantor holds good and marketable tifle to the collateral, free and clear of all liensand encumbrancês except for the lien of this Agreement. No nnãÃ"ing state.ment covering any of the collateiãl -¡i

ðnìie ¡n any publicoffice other than those which reflect the secuiity interest "r"åt"o

oy tttis Agreemenlorio'*t¡.t Lender has specifically consented.Grantor shall derend Lender's rights in the cottaterá against tre clãimiánd ¿emaîãð äiãil óinài i"rsonr.Repairs and Malntenance' Grantor agrees to keep and maintain, and to cause others to keep and maintain, the collateral in good order,repair and condition at all times while this Agreement remains in effecl .prantgr iurtñ"i"òiðã.ìo p"y when due a¡ ctaims for work doneon, or services rendered or materiâl fumished in connection with Ûrã collateral so Ûrat no"iien or encumbrance may ever attach to or befiled against the Collateral.

lnspection of collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to exam¡neand inspect the Collateral wherever located.

Taxe5, [55s55ments and Llens. Grantor wíll pay when due all taxes, assessments and liens upon the collateral, its use or operation, uponthis Agreement, upon any promissory note oi notes evidencing theinàebteon"J., ðr'rfãn *'v åt the other Related Documents. Grantormay withhold any such payment or may elect to contest any lie-n if Grantor is in good taittr conáuct¡ng an appropriate proceeding to contestthe obligation to pay and so long as Lende/s interest ¡n itre Colãteial is not-jeofardËeá-in Länoe¡s sole opinion. lf the coltateral issubjected to a lien which is not discharged within fifteen (15) days, Grantor shátl åeposit with Lender casi,, a'sumcient corporate sureÇbond or other security satisfactory to Lender in an amount ãaeóuåtã to provide roi ftre ¿iiCr'ãrge of the lien ptus any inrerest, costs,attorneys' fees or other charges that could accrue as a result of foreclosure or sale of the collateã|. ln any conieii oránìo,. shall defenditself and Lender and. shall satisfy any final adverse judgment before enforcement ãgãínst tne ðìilatera¡. Grantor shall name Lender as anadditional obligee under.any surety bond fumished in thã.contest proceedings. cranioiturfiãrã!r"". to fumish Lenderwith evidence thatsuch taxes, assessments, and govemmental and other charges hàve been þaid in full and il a ìimely ;;*r dñrr äày withhold anysuch payment or may elect to contest any l¡en if Grantor ig In good faith conducting "" "ppiopriäte

proceeding to contest the obt¡gâtion topay and so long as Lende¡,s interest in the Collateral is not jeopãrdized.

compliance with Govemmental Requirements... Grantor. shall comply promptly with all laws, ordinances, rules and regulations of allgovemmental authorlties, now or hereafter in effect, appl¡cable to Ûrè ównerstr¡p, proouCtion, áüposition, or use of tne õolãteral, includingall laws or regulations relating to the undue erosion of highly-erodlble þna or retäiiåg to the óÀvärs¡on oíwet"ñoË ràitñe'froouction of anagricultural product or commodity. Grantor may.conteitin good faith any such-law, ordinance or regulation and withhold complianceduring any proceeding, including appropriate appeals, so long aé Lender's intérest ¡n tne'collaieiai-in r-rn-iot-opi"Ë;, i.';;il"opardized.llazardous substances' Grantor represents and warrants that the collatgral never has been, and never will be so long as this Agreementremains a lien on the collateral' used in violation of any Environmental.Laws or ror irrJ!ãn"i"tion, manufacture,

"iôiajã,-ir"n"portat¡on,treatment, disposal, release or threatened release of any Hazardous Substance. rne repieséniãitns ana warranties contained herein arebased on Grantor's due diligence in investigating the cóilateral for Hazardous substances. crantor-hereby (1) relãaãesãno waives anyfuture claims ega¡nst Lender for indemnity or òontribution in the event Grantor becomes liablá for cbánup'or otnei-costs under anyEnvironmental Laws, and (2) agrees to indemnify, defend, and hold harmless.Lendgi "j"ìnã

å"v àna all claimå and losses-resutring from abreach of thls,provision of this Agreement. This obligation to indemnify and defend shãll surv¡vé the payment of the lndebtedness and thesatisfaction of this Agreement.

Maintenance of casualty lnsurance. Grantor shall procure and maintain.all risks insurance, including without limitation fìre, hail, theft andliability coverage together with such other insurance as Lender may require with respect toinJCoi¡ateral, in form, amounts, coverages andbasis reasonably acceptable to Lender and issued by a company or companíes reasänably acceptàble to Lender. 'ln

"ããitìã'n, Grantor shallobtain at its expense..any federal or state crop insuànce requiréd by Lender. Grantor, uþon re{uèst of Lender, will ¿elivãi tä Lender fromtime to time the policies or certificates of ínsurance in form satisfactory to Lendei, including stipulations irt"i

"*ôogäs will not becancelled or diminished without at least ten (10) days'prior written notióe to Lender and not-incti¡ding any O¡sclaimèiËi the insurer,sliab¡lity for failure to give such a notice. Each insurance policy also shall include an endorsement provioinjtnàí cãuãrãgtin favor of Lenderwill not be impaired.in any way by any act, omission or defãult of Grantor or any other person. ln coñneciioÃ-*ìiñälr"poti"ies

"oueringassets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or òtnãi ånJorsements asLender may require. lf Grantor at any t¡me fails to obtain or maintain any insurance as required under ìhís agreemÀnt, Lender may lbutshall not be obligated to) obtain such insurance..as Lender deems appropñate, including if lender so chooses ;single inierest insurãnèe,'which will cover only Lende/s interest in the CollatêrâI.

Applicatlon of lnsurance Proceeds. Grantor shall promptly notify Lender of any loss or dâmege to the Collateral, whether or not suchcasualty or loss is covered by insurance. Lender. may _make proof of loss if Grantor fails to do sã within fifteen (1 Si days oi the casualty.All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as'part òí tne Coltaterat. tfLender consents to repâir or replacement of the damaged or destroyed Collateral, Lender shall, upon sat¡sfactory pioof of expenditure, payor reimburse Grantor from the proceeds for the reasonable cost of repair or restorâtion. lf Lendei does not cons-ent to repair br replacemeniof the Collateral, Lender shall retain a suffìcie.nt amount of the proceeds to pay all of the lndebtedness, and shall å"V t¡'. balance toGrantor. Any proceeds which have not been disbursed w¡thin six (6) months àftêr their receipt and which Grantor ha's ríot committed tothe repair or restoration of the Collateral shall be used to prepay the lndebtedness.

lnsurance Rese¡ves- .Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shallbe created by monthly payments from Grantorof.a sum estimated by Lenderto be sufficient to produce, aì least fiftäen (1S) days beforethe premium due date, amounts at least equal to the insurance premiums to be paid" lf fifteen (1 5) days before payment ¡" iré, thê reservefunds are insufficient, Grantor sha_ll upon demand pay any defìciency to Lender. The reservs fuirds-shall be held by Lender as a generaldeposit and shall constitute a non'interest-bearing account which Lender may satisfy by payment of the insurance prémiums reguireã to bepaid by Grantor as they become due. Lender does not hold the reserye funds in trust for Grantor, and Lender is not the agent of Grantorfor payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiurñs shall remainG rantor's sole responsibility.

lnsurance Reports. Grantor, upon request of Lender, shall fumish to Lender reports on each existing policy of insurance showing suchinformation as Lender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amountof the policy; (4) the property insured; (5) the then curent value on the basis of which insurance has been obta¡ned and the manner ofdetermining that value; and (6) the expiration date of the policy, ln addition, Grantor shall upon request by Lender (however not moreoften than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost ofthe Collateral.

Flnanclng Statements, Grantor authorizes Lender to fìle a UCC financing statement, or alternatively, a copy of this Agreement to perfectLende¡rs security interest. At Lende/s request, Grantor additionally agrees to sign all other documents that are necessary to perfect,protect, and continue Lende/s security interest in the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costsinvolved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor inevocably appoints Lender toexecute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a fìnancing statement. lfGrantor changes Grantor's name or address, or the name or address of any person granting a security interest under this Agreementchanges, Grantor will promptly notify the Lender of such change.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS, Until default and except as otherwise provided below with respect toaccounts and above in the paragraph titled "Transactions lnvolving Collaferal" , Grantor may have possession of the tang¡ble personal propertyand beneficial use of all the Collateral and may use it in any lawful manner not ¡nconsistent with this Agreement or the Related Documents,provided that Granto/s right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender isrequired by law to perfect Lende/s security interest in such Collateral. Until othenvise notified by Lender, Grantor may collect any of theCollateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its rights to collect the âccountsand to notify account debtors to make payments directly to Lender for application to the lndebtedness. lf Lender at any time has possession ofany Collateral, whether before or after an Event of Default, Lender shall be deerned to have exercised reasonable care in the custody andpreservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lende/s sole discretion, shalldeem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercisereasonable câre. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor toprotect, preserve or maintain any security interest given to secure the lndebtedness. Grantor agrees to pursue and conduct diligently Grantor'sfarming, agricultural and other business operations for as long as this Agreement remains in effect. Grantor further agrees that Lender may fromt¡me to time enter upon Granto/s premlses for the purpose of ascerta¡ning whethér Grantor is properly and prudently conducting Grantor'sfarming, agricultural and other business operations. Grantor shall promptly pay when due all costs and expenses associated with Grantor's



AGRICULTURAL SECURITY AGREEMENTLoan No: 600i (Gontinued) page 4

farming operations, including without limitat¡on Crops.

LENDER'S ExPENDlruRES... lf any action or proceeding is comrnencedjrlal yo_uld rnaterially affect Lender,s interest in the c-o¡aterat or ifGrantor fails to comPly with any Provis¡on of tns Rgõernent or àny Retateo D.currìs;Ë, i;Juäing out not limited to Granto/s fa¡lure todischarge or pay when due any anþunts Grantor is.requircd to dischárge or pay.under this Agreement or any Related Docurnents, Lender onGrantor's behalf rnav (but shall not be obligated to) takö any aøon tÀài r-enieloeens àpõóòiãid, ¡ncruc¡ng'bui-nü ¡.ñä'to discharging orpaying all taxes, l¡ens, security interests, encumbrances and other clainF,.at any time leviäl or ÈËced on the collateral and paying all costs forinsuring, nraintaining and preseMng the collateral. All. such expend¡tures ¡ncunéd or æ¡o bv L"fuè¡. ror such purpæes will then bear interest atthe rate chaçed under the Note from the date incurr.ed.or pa¡d by Ler¡derto the date df ..pãydnily Grântor. All such expenses will becorne apart of the lndebtedness and, at Lenders option, will (n)'be paþole on oennnd; lei *iãoo"¿ ìãi¡'" u"¡"n"" òtiñã r,lãõ and be apporrionedanrcng and be payable with any installment payments to beconre due during either ií¡ the term of any applicable insurance Þolicy; or (2) thererna¡n¡ng term of the Note; or (c) be treated as a balloon payrnent wnicn i_¡lt u. oùj"À¿-pãËËlã at the Note s maturity. The Agreement alsowill secure payment of these amounts. such right shall bé in addition to all other rignts ánã ¿n¡edies to which Lender rnay be entítled uponDefault.

DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:Payment Default. Borrower fails to make any payment when due under the lndebtedness.other Defaults' Bonower or Grantor fails to .comply with or to perform any other term, obligation, covenant or condition contained in thisAgreement or in any of the Related Documents or'to comply with or to perfórm a"v i".-,ã-u'r-¡g"i¡on, covenant or;ã"áitio; conta¡ned in anyother agreement between Lender and Bonower or Grantoi.

-

Default ln Favor of Thlrd Parties. Bonower, any guarantor or Grantor. defaults under any loan, extension of credit, secur¡ty agreement,purchase or sales agreement, or any other agreement, in favor of any other creditor or peüon tfrat may materially affect any of Borrower,s,any guarantorrs or Grantor's property or ability to perform their respeqt¡ve obtigations-un¿er t¡r¡é ngreeméni oi-änv ot the RelatedDocuments.

False Statements. Any.wananty, representation or statement made or fumished to Lender by Borrower or Grantor or on Borrowe/s orGranto/s behalf under this Agreement or the Related Documents is false or ri"rãaJin!-in ány'rrr"turi"l respect, either now or at the timemade or fumished or becomes false or misreading at any time thereafier.Defectlve collateral¡zatlon. This Agreement or any of the Related Documents ceases to be ín full force and effect (including failure of anycollateral document to create a valid and perfected security interest or lien) at any time and for

"ny ¡""".on.

Death or lnsolvency. The death of Borrower or Grantor or the d¡ssolution or termination of Borrower's or Grantor,s ex¡stence as a go¡ngbusiness, the insolvency of Borrower or Grantor, the appointment of a receiver roi ãny-pJrt of Borrower,s oieì.niort property, anyassignment for the benef¡t of creditors, any typê of crediior workout, or the commencement of any proceed¡ng under any bankruptcy orinsolvency laws by or against Borrower or Grantor.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, wh-ether by judicial proceeding, self-help,repossession or any other method, by any creditor of Bonower or Grantor o_r by airy govem-måntal agency ádi;sì €iny-ç-gfrateiår-securlíjthe lndebtedness. This includes a gamishment of any of Bonowerþ or Grantoré ãccounts, induãing aeõos¡l accäunts, with Lender.However' this Event of. Default shall not apply jf there isa good faith diqpqte by Borrower or Giåntor as tð the variaity oi-iåsonabteness ofthe claim which is the basis of the creditor or forfe¡ture proceeding and ii Borrówer or Grantor gives Lender written notice of the cred¡tor orforfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or foríeiture proceeding, in aÀãrnount determinedby Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.Events AffectÍng Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the lndebtedness or Guarantordies or becomes incompetent or revokes or disputes the validity of, or liabiliþ under, any Guaranty of the lndebtedness.Adverse Change. A nraterial ad'rerse change occurs in Bonowe/s or Granto/s financial condition, or Lender believes the prospect ofpayrrìent or perforrnance of the lndebtedness is impaired.

lnsecurity. Lender in good faith believes itself insecure.

Cure Provlslons. lf any default, other than a defau-lt in payment is cr¡rable and lf Grantor has not been g¡ven a not¡ce of a breacl of thesane provision of this Agreement within the preceding twelve (12) months, it nuy be cured if Grantor, aftér Lender sends written notice toBorrower derranding 9yr9 of sucfr default:. (l) orres the defauh within fiftee.n 1t5) da;æ; or (2)_¡f thé orre requires nnã ihan fifteen (1S)days' immediately in¡tiates steps which Lender deens in Lender's sole discietíon io be èu'tricient to cure inã-OéAud-and thereaftercontinues and completes all reasonable and necessary steps sufficient to produce compliance æ soon as reasonably practical.

RIGHTS AND REMEDIES ON DEFAULT. lf an Ever¡t of Default occurs under this Agreern€nt, at any time thereafter, Lender sha¡ have all therights of a sgcured party under the Oregon Uniform Connrercial Code. ln addition añd without l¡mitaiion, Lenoer n¡¿y exeøèãnv one or npreof the following rights and renredies:

Accelerate lndebtedness. Lender may declare the entire lndebtedness, including any prepayment penalty which Borrower would be requiredto pay, immediately due and payable, without notice of any kind to Borrower or Grantor.Assemble Collâter:ll. Lender may req¡ire Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of tifleand other documents relating to the Collateral. Lender may reguire Grantor to'assemble the Collateral and makó it available to Lender at aplace to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take poÁsession of andremove the Collateral. lf the Collateral contains other goods not covered by this Agreement ät ttre time of repossessién, Grantor agreesLender may take such other goods, provided that Lender makes reasonable efforts toleturn them to Grantor after repossession.Care and Posses-sion of the Crops' Lender may enter upon the premises where any Collateral consisting of crops is located and, using anyand all of Grantor's-eq.uipme_nt, machinery, tools,.farming implements, and supplies, and improvements-locatêd'on the premises: (a) Farm,cult¡vate, ¡rrigate, fertilize, fumigate, prune, and perform any other act or àcts appropriàte or necessary to grow,'care for, máinta¡n,preserve and protect th9 cropg (using any waler located in, on or adjacent to the premises); (b) Harvest, piók, cleãn, and remove the cropsfrom the premises; and (c) To the extent then permitted under Oregon law, appraise, store, prepare for publ¡c or private sale, exhibit,market and sell the crops and any products of the crops; provided that Grantor hereby agrees tt¡at if Grantoi is the owner of record of thepremises upon which the crops and any products of the crops are located, Lender shâll not be responsible or liable for retuming thepremises to their condition immediately preceding. the use of the premises as provided herein or for doing such acts as may be necessãry topermit future crops to be maintaíned on the premises.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender'sown name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to declinespeedily in value or,is of a type customarily sold on a recognized market, Lender wíll give Grantor, and other persons as required by law,reasonable notice of the t¡me and place of any public sale, or the time after which any private sale or any other disposition of'the Coliateraiis to be made. However, no notice need be,prwided to any person who, after Default occurs, enters inio and authenticates an agreementwaiving that person's right to notification of sgle. Tñ.e requirements of reasonable notice shall be met if such not¡ce is given at ieast ten(10)daysbeforethetimeofthesaleordisposition. All expensesrelatingtothedispositionoftheCollateral,includingwithiuilimitationtheexpenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the lndebtédness secured by thisAgreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with thepower to Protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the Rents from theCollateral and apply the proceeds, over and above the cost of the receivership, against the lndebtedness. The receiver may serve withoutbond if permitted by law. Lende/s right to the appo¡ntment of a receiver shall exist whether or not the apparent value df the Collateralexceeds the lndebtedness by a substantial amount. Employment by Lender shall not disqual¡fy a person from serving as a receiver.

Gollect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collèct the payments, rents, income, and revenues fromthe Collateral. Lender may at any time in Lende/s d¡scretion transfer any Collateral into Lender's own name or that of Lende/s nomineeand receive the. payments, rents, income, and revenues therefrom and hold the same as security for the lndebtedness or apply ¡t topayment of the lndebtedness in such order of preference as Lender may determine. lnsofar as the Collateral consists of accounts, jeneralintangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for,settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not lndebtedness orCollateral is then due. For these purposes, Lender may, on behalf of and in the nâme of Grantor, receive, open and dispose of mailaddressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders,documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lendermay notify account debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. lf Lender chooses to sell any or all of the Collateral, Lender rnay obtain a judgment against Borrower for any deficienqy



Loan No: 6001

remaining on the lndebtednessAgreement. tsorrower shall bepaper.

AGRICULTURAL SEGURITY AGREEMENT(Continued)

Page 5

due to Lender after application of all amounts received from the exercise of the r¡ghts provided in thisliable for a deficiency even if the transaction described in th¡s suÞsãcìiñã ã sate of accounts or chattei

other Rlghts and Remedles' Lender shall have all the rights and remedies of a secured creditor under the provisions of the uniform:.Hi,:,'".;Î'"'""it;åå'J;ti::iEÏïi 3;,r;r"n"n,:'i" äåi¡iå", Lender shail h;;; ;;J'"y exercise äny oi ãii-ott,er rishts and

Election of Remedles. Except as may be prohibited by. applicable law, all .of Lender,s rights and remedies, whether evidenced by thisAgreement, the Related Documents, oi by ãny. other *rít¡nd,-s¡'ãrr'beiumulat¡ve an¿ mãv oË àre'rcise¿ singularly or concurrenfly. Electionby Lender to pursue any remedy shall noi exáude putsr¡t "oiãnv otñe-r remeoy, ano an élect¡on io make expenditures or to take action to

ffÍi[r:ß"'?t|:t#HHjf*""i under this Asreement, after Gránro/s faiture iä Ñ"-, ;;iinoì arect Lender,s risht ro dectare a defautt

FRAUDS DlscLosuRE. UNDER OREGON LAW, MOST AGREEMENTS,.PBOMTSES AND.ç^Ojíu!TMENTS MADE By US(LENDER) coNcERNrNe toÂñsÃñD'oj-ttËh-õBÉò'íi-EïiÈjùåiöñ=s'iù-üicìi Ãn'ç.¡_ol¡q,ß peris-oñnl, FAMtLyPfrH9$EBRb?rËH[çP"ttlröSrt='S[n'=r" ÈçTr+SijlÏr3g5trg'=X'Ë ËËsio'e¡¡'c¿'i,rìr'sîËË'iñ'-ituhäiä-c,

MISGELLANEoUS PRovlsloNS. The following miscellaneous provisions are a part of this Agreement:Amendments' This Agreement, together with any Related Documents, constitutes the ent¡re understanding and agreement of the partiesas to the matters set forth in this Agreement. Nó alteration or or amènoment to thii Âst*r"r'i.hall be effective unless given in writingand signed by the party or parties sought to be charged or bound by tnã ateration or amendment.Attorneys' Fees; Expenses' Grantor agrees to pay upon demand all of Lende¡,s

-costs and expenses, including Lender,s attorneys, fees andLende/s legal'expenses, incuned in cõnnection witú ttte enforcement of this Agreement. lãnJ"r may hire or pay someone etse to helpenforce this Agreement, and Grantor shall pay the costs and expóÀses of suih enrorceméni. costs and expenses inctude Lende/sattorneys' fees and legal expenses whether or not there is a lawsuit, .including "ttãr*v"; i""s and legal expenses for bankruptcyproceedings (including efforts to modify or vacate.any.automatic stay or injunct¡."i appãáí",'ãnd any anticipated post-judgment collectionservices. Grantor also shall pay all court costs and súch additional feäs as may be áir"äiuo oy iÁe court.

Caption Headings. caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define theprovisions of this Agreement.

Govemíng Law' This Agreement wlll be governed by federal law applicable to Lender and, to the extent not preempted by federal law, thelaws of the state of oregon wlthout regaid to its conflicts ot law ióvisions. Thls Ágrããnie;t ha"'oeen accôitãJ Ë;-Lild";i" the srate ofOregon.

choice of venue. lf there is a lawsuit, Grantor agrees upon Lender's request to submit to the jurisdiction of the courts of coos county,State of Oregon.

Joínt and several Llabillty. All obligations of Borrower and Grantor under this Agreement shall be joint and severâ¡, and all references toGrantor shall mean each and every Grantor, and all references to Borrower shali-mean each and every Bonower. This rneans that eachBonower and Grantor signing below is responsible for.all obligations in th¡s ngreemenl- n/i;ã¡. "ny

one or rnore of the parties ¡s âcorporat¡on' partnership, l¡m¡ted liability company or similar entifu, it is not neceéary tor t-enJeiio inquire into tnã õo*"Ë of any of theofficers, directors, partners, members, or other agents acting ó purporting to aa'on tlrã eniity,s berrall and "ny

ãurigãtions made orcreated ¡n rel¡ance upon the professed exercise of such powers shali ui guaãnteeo under this Àgiãr-ent.Preference Payments. Any monies Lender pay.s because^of an asserted preference claím in Borrowe/s or Grantor's bankruptcy will becomea part of the lndebtedness and, at Lende/s option, shall be payable by Borrower and Grantor as provided in this ÀgrÀeme'tl--'No Walver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writingand signed by Lender. No delay or omission on the part of Lender in exércising.any right'sh.all àperate as a waiver of su-ctr right or anyother right' A waiver by Lender of a provision of this Agreement shall not pre¡u:dice or-constiiutJ'a waiver of I-ãnOefs ffi othenvise todemand strict compliance with that provision or any other provision of.thiö.Agreement. No prior waiver by Lender, nor any course ofdealing between Lender and Grantor, shall constitute a.waiver of any of Lende/i rights or ot aåy ãt Grantor's o¡i¡gai¡óns-as to any futuretransactions. Whenever the consent of Lender is required under this Agreement, tñe granting of such consent by-Lender in any instanceshall not constitute continuing consent to subsequent instances where such consent-is reqõired and in all casés such consent may begranted or withheld in the sole discretion of Lender.

Notlces, Any notice required to be given under this Agreement shall be.given in writing, and shall be effective when actually delivered,when actuaìly recelved by telefacsimile (unless otherwise rgOuired by law), when deposited with a nationally recognized ouã.i'gf,t courier,or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage preþaid, directed to the addressesshown near the beginning of this Agreement. Any party may change its address foi notices unOèr thiõ Agreäment by giving formal writtennotice to the other parties, specifying that the purpose of the notice is to change the party's address. Fo-r notice puipã"éJ]Oontor agreesto keep Lender informed at all times of Grantor's current address. Unless otherwlse provided or required by law,'if tirere is more than oneGrantor, any notice given by Lender to any Grantor is deemed to be notice given to all'Grantors.Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documentsnecessery to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination o1 titiirgs of othersecured parties. Lender may at any t¡me, and w¡thout further authorization from Grantor, file a carbon, photographic or other reproductionof anyfinancing statement or of _this Agreement f9¡ us9 as a financing statement. Grantor will reimburse Le-ndertor all expenses for theperfection and the continuation of the perfection of Lender's security interest in the Collateral.

Waiver of Co-Obllgor's Rights. lf nore than one person is obligated for the lndebtedness, Grantor irrevocably waives, disdaims andrelinquishes all claims ?sainst such other person which Grantor has or would otherwise have by virtue of payrnerit of the l;debtedness orany part thereof, spec¡f¡cally including but not limited to all rights of indemnity, contribution or exoneration.

Severablllty, lf a court of competent jurisdiction finds any prwision of this Agreement to be illegal, invalid, or unenforceable as to anycircunstance, that finding shall not neke the offendíng provision illegal, invalid, or unenforceable as to any other circumstance. lf feasibláthe offending provision shall be considered modÍfied so that it beconres legal, valid and enforceable. lf the offending provision cannot be somodified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the íllegality, invaÍdity, or unenforceabilityof any provision of this Agreen'ìent shall not affect the legality, validity or enforceabilþ of any other provision of this Agreement.Successors and Assigns. Subject to any limitations stated in this Agreement on transfer of Grantor's interest, thís Agreement shall bebinding upon end inure to the benefit of the parties, their successors and assigns. lf ownership of the Collateral becomes vested in aperson other than Grantor, Lender, without notice to Grantor, may deal with Granto/s successors with reference to thls Agreement and thelndebtedness by way of forbearance or e*ension w¡thout releasing Grantor from the obligations of this Agreement or liability under thelndebtedness.

Survlval of Representations and Warranties. All representations, wananties, and agreements made by Grantor in this Agreement shallsurvive the execution and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such timeas Borrowe/s lndebtedness shall be paid in full.

Time is of the Essence, Time is of the essence in the performance of this Agreement.

Waive Jury, All parties to this Agreement hereby waive the rlght to any jury trial in any actlon, proceeding, or counterclaim brought by anyparty against any other party.

DEFINITIONS, The followlng cap¡talized words and terms shall have the following meanings when used in th¡s Agreement. Unless specificallystated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and termðused in the singular shall include the plural, and the plural shall include the slngular, as the context may require. Words and terms not otherwisedefined in this Agreement shall have the meanings attr¡buted to such terms in the Un¡form Commercial Code:

Agreement, The word 'Agreement" means this Agricultural Security Agreement, as this Agricultural Security Agreement may be amendedor modifìed from time to time, together with all exhibits and schedules attached to this Agricultural Security Agreement from time to time.

Borrower. The word 'Borrower' means ALLEN RUSSELL and CAROL RUSSELL end includes all co-signers end co-makers signing the Noteand all their successors and assigns.

Collateral. The word "Collateral' means all of Grantor's right, title and interest in and to all the Collateral as described in the CollateralDescription section of this Agreement.

Default. The word "Default' means the Default set forth in this Agreement ¡n the section titled "Default"-



Loan No:6001

RUSSELL CRANBERRY COMPANY

CRANBERRY COMPANY

BORROWER:

AGRICULTURAL SECURITY AGREEMENT(Continued)

CRANBERRY

x

WER æl.ndhg, v.r. 5.¡t.00.00¡ Corr. 8.ôú Ffrrát gotuflon., rÂc. lsr.2æ9. 4 Rþñtt F.Émd. . oR clcFMl\go.Fc m.ll?s3 pR¡6

Page 6

Envlronmental Laws' The words 'Environmental Laws' mean any and all state, federal and local statutes, regulations and ordinancesrelating to the protection of human health or the environment, ináuoing without limitation tne õomprenens¡ve Énv¡rónm"it"l R"spon.",compensation, and Liabilitv Act of 1980, as amended,42 u.b.c. secìíon.9001,.;1ü¡-"i"öÉn-crn"l, the superfund Amendments andReauthorizatíon Act of 1986, Pub. L' No. 99-499 f:s^.R-Al), the Hazardous Materiars rr"nlpL.t"tton eci, ¿s u.s.c. section'ieot, "t."q.,the Resource conservation and Recovery ect, 4z u.s.c.'sect¡on eôbr, et

"eã, oióir{"i'ãä-pi¡""uÉ .t"i"-ói rðããiã taws, rutes, orregulations adopted pursuant thereto or intended to protect human health or the environment. rsu.r ør rd

Event of Default' The words 'Event of Default" mean any of the events of default set forth in this Agreement in the default section of thisAgreement.

Grantor, The word "Grantor" means RUSSELL CRANBERRY COMPANY.Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the lndebtedness.Guaran$r' The word "Guaranty' means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of theNote.

Hazardous substances. The words 'Hazardous substances' mean materials that, 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 whenimproperly used, treated, stored, disposed of, generaieo, mai"rutaciureo, 'tranJlortea oi-ot¡r"*¡"" handled. The words "Hazardoussubstances" are used in their very broadest sensê and incÍude without limitation'any ãnã all -r,ãäroous

or toxic substances, mate¡als orwaste as defined by or listed under the Environmental Laws. The term 'Hazaráous Substances" also includes, without l¡mitation,petroleum, including crude oil and any fraction thereof and asbestos.lndebtedness. The word "lndebtedness'means the ¡ndebtedness evidenced by the Note or Related.Documents, íncluding all principal andinterest together with all other indebtedness and costs and expenses tor wnlcn'eóiow¿i ¡i'reiîãìã¡r" under this Agreement or under anyof the Related Documents- . Specifically, without limitation, lndebtedness includes the ruturã-ããvãnces set forth in the Future Advancesprovision, together with all interest thereon and all amounts that may be indirectty

"""ur"d uyìñ" cro""-coti;i;i;.ì; p*räision of thisAgreement.

Lender. The word'Lender" meansSterling Savings Bank, its successors and assigns.Note. The word 'Note" means the Note executed by ALLEN RUSSELL and cARoL RUSSELL in the principal amount of 9225,000.00 datedJuly 30' 20-09, together with all renewals of, extensions of, modifications of, refinancings oi, conåol¡oations of, and substitutíons for thenote or credit agreement.

Property. The word 'lP.rgngrtV" means all of Grantor's right, title and interest in and to all the property as described in the "CollateralDescription' section of this Agreement.

Related Documents. The words'Related Documentsn mean.all promissory notes, cred¡t agreements, loen agreements, environmentalagreements, guaranties, security agreements, mort-gages, deeds of trust, seturity dêeds, coilãteral mortgages, and all other ¡nstruments,agreements and documents, whether now or hereafter existing, executed in connection w¡in tne tndebtedñesi.BORROWER AND GRÂNTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGRICULTURAL SECURITY AGREEMENT ANDAGREE TO ITS TERMS. THIS AGREEMENT IS DATED JULY 30, 2009.

GRANTOR:



AGRICULTURAL SECURITY AGREEMENT

Borrower: Lender: Sterling Savings BankCoos Bay Gommercial Banking Center212 S sth StCoos Bay, OR 97420

Grantor:

THIS AGRICULTURAL SECURIW AGREEMENT dated August 11, 2010, is made and executed among RUSSELL CRANBERRY COMPANy,ALLEN J RUSSELL and GAROL A RUSSELL ("Grantor"); ALLEN J RUSSELL and CAROL A RUSSELL ("Borrower"); and Sterling Savings Bank("Lender").

GRANT OF SECURITY INTEREST. For valuable consideratlon, Grantor grants to Lender a security interest in the Gollateral to secure thelndebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rightswhich Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned orhereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest forthe payment of the lndebtedness and performance of all other obligations under the Note and this Agreement:

All lnventory, Chattel Paper, General lntangibles and Grops

The Collateral includes any and all of Grantor's present and future inventory (including consigned inventory), related equipment, goods,merchandise and other items of personal property, no matter where located, of every type and description, including without limitation any andall of Grantor's present and future raw materials, components, work-in-process, finished items, packing and shipping materials, containers,items held for sale, items held for lease, items for which Grantor is lessor, goods to be furnished under contract for services, materials used orconsumed in Grantor's business, whether held by Grantor or by others, and all documents of title, warehouse receipts, bills of lading, and otherdocuments of every type covering all or any part of the foregoing, and any and all additions thereto and substitutions or replacements therefor,and all accessories, attachments, and accessions thereto, whether added now or later, and all products and proceeds derived or to be derivedtherefrom, including without limitation all insurance proceeds and refunds of insurance premiums, if any, and all sums that may be due fromthird parties who may cause damage to any of the foregoing, or from any insurer, whether due to judgment, settlement, or other process, andany and all present and future accounts, contract r¡ghts, chattel paper, instruments, documents, and notes that may be derived from the sale,lease or other disposition of any of the foregoing, and any rights of Grantor to collect or enforce payment thereof, as well as to enforce anyguarantees of the forgoing and security therefor, and all of Grantor's present and future general intangibles in any way related or pertaining tothe ownership, operation, use, or collection of any of the foregoing, including without limitation Grantor's books, records, files, computer disksand software, and all rights that Grantor may have with regard thereto. lnventory includes inventory temporarily out of Grantor's possession orcustody and all returns on accounts, chattel paper and instruments.

The Collateral includes any and all of Grantor's present and future chattel paper, equipment leases, retail installment contracts, notes and chattelmoñgages, notes and security agreements, instruments, documents, and all other similar obligations and indebtedness that may now and in thefuture be owed to or held by Grantor from whatever source arising, and all monies and proceeds payable thereunder, and all of Grantor's rightsand remedies to collect and enforce payment and performance thereof, as well as to enforce any guaranties of the foregoing and securitytherefor, and all of Grantor's present and future rights, title and interest in and with respect to the goods or other property that may give r¡se toor that may secure any of the forego¡ng, including without limitation Grantor's insurance rights with regard thereto, and any and all present andfuture general intangibles of Grantor in any way related or pertaining to any of the foregoing, including without limitation Grantor's accountledgers, books, records, files, computer disks and software, and all rights that Grantor may have with regard thereto.

The Collateral includes all general intangibles, choses in action and causes of action and all other intangible personal property and rights ofGrantor of every nature and kind, now owned or hereafter acquired, including without limitation corporate or other business records, inventions,designs, blueprints, plans, specifications, patents, patent applications, trade marks, trade names, trade secrets, goodwill, copyrights,registrations, licenses, franchises, tax refund claims, insurance proceeds, including without limitation insurance covering the lives of keyemployees on which Grantor is beneficiary, and any letter of credit, guaranty, claim, security interest, or other security held or granted toGrantor to secure payment of any indebtedness.

The Collateral includes any and all of Grantor's present and future rights, title and interest in and to all crops growing or to be planted,cultivated, grown, raised and/or harvested together with any and all agricultural and farm products produced or derived therefrom, of everynature and kind whatsoever, including aquatic goods produced in aquacultural operations, together with all present or future inventory of Grantorand the products thereof, of every type and description, derived or to be derived therefrom, whether held by Grantor or by others, and alldocuments of title, warehouse receipts, bills of lading, and other documents of every type covering all or any part of the foregoing, and all ofGrantor's related equipment, and any and all additions thereto and substitutions and replacements therefor, and all accessories, attachments,and accessions thereto, and all proceeds derived or to be derived therefrom, whether in cash, farm products, or otherwise, and whether from orthrough any federal or state government agency or program or othenvise, including without limitation all easements, profits, rights of storage,trailing and grazing, and irrigation and water rights; all entitlements, rights to payment, and payments, ¡n whatever form received, including butnot limited to, payments under any governmental agricultural diversion programs, governmental agr¡cultural assistance programs, the FarmServ¡ces Agency Wheat Feed Grain Program, and any other such program of the United States Department of Agriculture, warehouse receipts,chemicals and fertilizers, documents, letters of entitlement, and deficiency, conservation reserye, and diversion and storage payments, allinsurance proceeds and refunds of insurance premiums, if any, and all sums that may be due from third parties who may cause damage to anyof the foregoing, or from any insurer, whether due to judgment, settlement or other process, and any and all present and future accounts,contract rights, chattel paper, instruments, documents, and notes that may be derived from the sale or other disposition of any of the foregoing,and any r¡ghts of Grantor to collect and enforce payment thereof, as well as to enforce any guarantees of the foregoing and security therefor,and all of Grantor's present and future general intangibles in any way relating or pertaining to any of the foregoing, including without limitationGrantor's books, records, files, computer d¡sks and software, and all rights that Grantor may have with regard thereto.

Some or all of the Collateral may be located on the following described real estate:

REAL PROPERW LOCATED AT 89358 CRANBERRY LN, BANDON, OR 9741 I (the record owners of the real property is ALLEN J RUSSELL

and CAROL A RUSSELL, 89358 CRANBERRY LANE, BANDON, OR 9741 I ).

CROSS-COLLATERALIZATION. ln addition to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, ofeither Grantor or Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower and Grantor or any one ormore of them, whether now existing or hereafter ar¡sing, whether related or unrelated to the purpose of the Note, whether voluntary orotherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or cont¡ngent, liquidated or unliquidated, whetherBorrower or Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise,and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obl¡gat¡on lorepay such amounts may be or hereafter may become otherwise unenforceable.

FUTURE ADVANCES. ln addition to the Note, this Agreement secures all future advances made by Lender to Borrower regardless of whetherthe advances are made a) pursuant to a commitment or b) for the same purposes'

BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this Agreement or by applicable law, (A) Borroweragrees that Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement; (B) .Borrower assumesthl responsibility for being and keeping informed about the Collateral; and (C) Borrower waives any defenses that may arise because of any

action or inaction of Lendèr, including without limitation any failure of Lender to realize upon the Collateral or any delay by Lender ¡n real¡zing

upon the Collateral; and Borrower agrees to remain liable under the Note no matter what action Lender takes or fails to take under this

Agreement.

GRANTOR'S REPRESENTATIONS AND WARRANTIES, Grantor warrants that: (A) this Agreement is executed at Borrower's request and not

ãt tne request of Lender; (B) Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender;

(C) Granior has established adequate means of obtãining from Borrower on a continuing basis information ebout Borrower's financial condition:

ALLEN J RUSSELLCAROL A RUSSELL89358 CRANBERRY LANEBANDON, OR 97411

RUSSELL CRANBERRY COMPANY, ALLEN JRUSSELL and CAROL A RUSSELL89358 CRANBERRY LANEBANDON, OR 974II




(Gontinued) Page 2

and (D) Lender has made no representation to Grantor about Borrower or Borrower's creditworthiness.

GRANTOR'S WAIVERS, Grantor waives all requ¡rements of presentment, protest, demand, and notice of dishonor or non-payment to Borroweror Grantor, or any other party to the lndebtedness or the Collateral. Lender may do any of the following with respect to any obligation of anyBorrower, without f¡rst obtaining the consent of Grantor: (A) grant any extension of tinre for any payment, (B) grant any renewal, (C) permitany modification of payment terms or other terms, or (D) exchange or release any Collateral or other security. No such act or failure to actshall affect Lende/s rights against Grantor or the Collateral.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff ¡n all Grantor's accounts with Lender (whetherchecking, savings, or sorne other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor mayopen ¡n the future. However, th¡s does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited bylaw. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the lndebtedness against anyand all such accounts, and, at Lendefs opt¡on, to administratively freeze all such accounts to allow Lender to protect Lende/s charge and setoffrights provided in this paragraph.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor representsand promises to Lender that:

Perfectlon of Secur¡ty lnterest. Grantor agrees to execute financing statements and to take whatever other act¡ons are requested by Lenderto perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of thedocuments evidencing or const¡tut¡ng the Collateral, and Grantor will note Lender's interest upon any and all chattel paper and instrumentsif not delivered to Lender for possession by Lender. This ls a continuing Security Agreement and will continue in effect even though all orany part of the lndebtedness ls paid in full and even though for a period of time Borrower may not be indebted to Lender.

Notices to Lender. Grantor will promptly notify Lender in writing at Lende/s address shown above (or such other addresses as Lender maydesignate from t¡me to time) prior to any (1 ) change in Grantor's name; (2) change in Grantor's assumed business name(s); (3) changein the management of the Corporation Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address;(6) change in Grantor's state of organization; (7) conversion of Grantor to a new or d¡fferent type of business entity; or (8) change inany other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender. No change in Grantor's nameor state of organization will take effect until after Lender has received notice.

No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor isa party, and its certificate or articles of ¡ncorporation and bylaws do not prohibit any term or condition of this Agreement.

Enforceability of Colfateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by theUniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable lawsand regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on theCollateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. There shall be no setoffsor counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may beclaimed concerning the Collateral except those disclosed to Lender in writing.

Location of the Collateral, Except ¡n the ordinary course of Grantor's business, Grantor agrees to keep the Collateral (or to the extent theCollateral consists of intangible property such as accounts or general intangibles, the records concerning the Collateral) at Grantor'saddress shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in formsatisfactory to Lender a schedule of real properties and Collateral locatìons relating to Grantor's operations, includ¡ng without l¡mitat¡on thefollowing: (1) all real propertyGrantorownsorispurchasing; (2) all real propertyGrantorisrentingorleasing; (3) all storagefacilitiesGrantor owns, rents, leases, or uses; and (4) all other properties where Collateral is or may be located. Grantor promptly shall procure theexecution, acknowledgment, and delivery of such subordinatíon, consent, waiver, estoppel, and other agreements as Lender shall require byholders of any encumbrances upon or by owners of such lands where Collateral is or will be located. Grantor consents to Lender's rights ofaccess for cult¡vation of crops upon such terms as Lender may deem satisfactory.

Removal of the Gollateral, Except in the ordinary course of Grantor's business, including the sales of inventory, Grantor shall not removethe Collateral from ¡ts existing location without Lende/s prior written consent. To the extent that the Collateral consists of vehicles, orother titled property, Grantor shall not take or permit any action which would requíre application for certifìcates of title for the vehiclesoutside the State of Oregon, without Lender's pr¡or written consent. Grantor shall, whenever requested, advise Lender of the exactlocation of the Collateral.

Transactlons lnvolving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as

otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. WhileGrantor is not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyerswho qualify as a buyer in the ordinary course of business. A sale ¡n the ordinary course of Grantor's business does not include a trãnsfer inpartiai or tòtal satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherw¡se permit the Collateral tobe subject to any lien, secur¡ty interest, encumbrance, or charge, other than the security interest provided for in this Agreement, withoutthe priôr written consent of Lender. This includes security ¡nterests even if junior in right to the secur¡ty interests granted under thisAgreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for.whatever reason) shall be held in trust forLðnder and shall not be commingled with any other funds; prov¡ded however, this requirement shall not const¡tute consent by Lender to anysale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

Sale of Collateral. The following provisions relate to any sale, consignment, lease, license, exchange, transfer, or other disposition of ciopsincluded as all or a part of the Collateral:

(1) To induce Lender to extend the credit or other financial accommodations secured by this Agreement, Grantor represents and

wánants to Lender that Grantor will sell, consign, lease, license, exchange, or transfer the Collateral only to those persons whosenames and addresses have been set forth on sales schedules delivered to Lender. Each schedule shall be in such form as Lender may

require, including identifìcation of each type of Collateral.

(2) Grantor agrees to provide the Lender a written list or scfredule of the buyers, commission merchants, and selling agents to orìhíougn an indiiidual inðuding the ent¡ty narne, contact narrÞ and address to whom or through whom the crops nray be sold'

consilned or transfened. Alisuch schedules and notifications shall be in writing and shall be delivered to Lender not less than

fourte"en (14) days prior to any such sale, consignrnent or transfer of the crops. Also, the Grantor agrees to provide any updates or

arnendrnents to these scfredules or lists to the Lender.

(3) All proceeds of any sale, consignment, lease, license, exchange, transfer, or other disposition shall be rnade. immediately

àúa¡lable to Lender in a forín jo¡nity payãOte to crantor and Lender. No provisions in this Agreement shall be interpreted to author¡ze

any sale or d¡spos¡tion of Cólateiai uñless arfhorized by the Lender ín writing. All chattel .paper, contracts, warehouse rece¡pts,

dotuments, and other evidences of ownership or obligaiions relating to the Collateral, whether issued by a co-op, grain elevator,

warehouse, marketing entity, or bailee, and all'accountõ and other proceeds of the Collateral shall be immediately endorsed, assigned

and delivered by Grañtor to Lender as security for the lndebtedness. At any time before or after the occurence of an Event of Default'

Lender may coúect all proceeds of the Collateral without notice to Grantor. All proceeds of the Collateral, when received by Lender'

may at Leñder,s sole discret¡on be applied to the lndebtedness. Grantor grants Lender a limited power of attorney to sign or endorse

Grantor's name on all writings described in this section.

(4) Grantor acknowledges that if the crops are sold, consigned, or transfened to any person not l¡sted on a schedule delivered to

Lender as provided above] and if Lender has not received an aicounting (including_the procee_ds) of such sale, consignment or transfer

w¡thin ten ir O) ¿avs of thå sale, consignment or transfer, then under federal law, Grantor shall be subject to a fine which is the greater

of $5,000 or' 1Sâ/o of the value of tenefit received from the sale, consignment or transfer to an unlisted buyer, consignee or

transferee.

Care and preservation of the Crops. Grantor shall (1 ) At seasonable and proper times and in accordance with the best pract¡ces of good

husbandry attend to and care for the crops and the tìttåge or the, land and do, or cause to be done, any and all acts that may.at âny time be

appropriaie o|. n""es""ry tò gro*, farm, cultivate, irrigãte, fertilize, fumigate, prune, harvest, pick, clean, preserve, and protect the crops;

täi ñot commit or .uff". tõ be'committed any darñage to., destruction of, or waste of the crops; (3) Permit Lender and any of its

èmployees ano agents'iõ Ñ"r-rpon the premises whére the crops are located at any reasonable time and from time to time for the

ñ,þ;" of examiñing and inspect¡ng the crops and the premises; (4) Harvest and prepare the crops for market and promptly notify Lender

iur,ån any ot tne croþs åie rãããy ioi mart<eti (5) Keei the crops 'séparate

and always capable of being identifled; and (6) Promptly give

Lender written notice of any diséase to, any destruction of, any depreciation in the value of, or any damage to the crops.

Title. Grantor represents and werrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens

and encumbran""" "r"épt-fo|.

the lien of this Agreement. No financing statement covering any.of .the collateral is on file in any public

office other than those which reflect the secuiity interest creâted by tnis ngreement or to which Lender has specifìcally consented.

Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons.



AGRICULTURAL SECURITY AGREEMENT(Gontinued)Loan No:6001 Page 3

Repa¡rs and Malntenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order,repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work doneon, or seryices rendered or material fumished in connection with the Collateral so that no lien or encumbrance may ever attach to or bef¡led against the Collateral.

lnspect¡on of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examineand inspect the Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, uponthis Agreement, upon any promissory note or notes evidencing the lndebtedness, or upon any of the other Related Documents. Grantormay withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contestthe obligation to pay and so long as Lende/s interest in the Collateral is not jeopardized in Lender's sole opinion. lf the Collateral issubjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a suff¡cient corporate suretybond or other secur¡ty satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs,attorneys' fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. ln any contest Grantor shall defenditself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as anadditional obligee under any surety bond fumished ¡n the contest proceedings. Grantor further agrees to furnish Lender with evidence thatsuch taxes, assessments, and govemmental and other charges have been paid in full and in a timely manner. Grantor may withhold anysuch payment or may elect to contest any l¡en if Grantor is in good faith conducting an appropriate proceeding to contest the obligation topay and so long as Lende/s interest in the Collateral is not jeopardized.

Compliance with Govemmental Requirements, Grantor shall comply promptly with all laws, ordinances, rules and regulations of allgovernmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, includingall laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of anagricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold complianceduring any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreementremains a l¡en on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation,treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein arebased on Grantor's due diligence ¡n invest¡gat¡ng the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives anyfuture claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under anyEnvironmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from abreach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the lndebtedness and thesatisfaction of this Agreement.

Ma¡ntenance of Casualty lnsurance. Grantor shall procure and maintain all risks insurance, including without limitation fìre, hail, theft andliability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages andbasis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. ln addition, Grantor shallobtain at ¡ts expense any federal or state crop insurance required by Lender. Grantor, upon request of Lender, will del¡ver to Lender fromtime to time the policies or cert¡ficates of ¡nsurance in form sat¡sfactory to Lender, including stipulations that coverages will not becancelled or diminished without at least ten (10) days'prior written notice to Lender and not including any disclaimer of the insurer'sl¡ability for failure to give such a notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lenderwill not be impaired in any way by any act, omission or default of Grantor or any other person. ln connection with all policies coveringassets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements asLender may require. lf Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (butshall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance,"which will cover only Lende¡'s ¡nterest in the Collateral.

Application of lnsurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not suchcasualty or loss is covered by insurance. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty.All proceeds of any ¡nsurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. lfLender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, payor reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. lf Lender does not consent to repair or replacementof the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the lndebtedness, and shall pay the balance toGrantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed tothe repair or restoration of the Collateral shall be used to prepay the lndebtedness.

lnsurance Reserves, Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shallbe created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fìfteen (15) days beforethe premium due date, amounts at least equal to the insurance premiums to be paid. lf fifteen (15) days before payment is due, the reservefunds are insuff¡cient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a generaldeposit and shall constitute a non-interest-bearing account which Lender may sat¡sfy by payment of the insurance premiums required to bepaid by Grantor as they become due. Lender does not hold the reserve funds in trust for Grantor, and Lender ¡s not the agent of Grantorfor payment of the insurance premiums required to be paid by Grantor. The responsib¡l¡ty for the payment of premiums shall remainG rantor's sole responsib¡lity.

lnsurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing suchinformationasLendermayreasonablyrequestincludingthefollowing: (1) thenameof theinsurer; (2) therisksinsured; (3) theamountof the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner ofdetermining that value; and (6) the expiration date of the policy. ln addition, Grantor shall upon request by Lender (however not moreoften than annually) have an independent apprâiser satisfactory to Lender determine, as appl¡cable, the cash value or replacement cost ofthe Collateral.

Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfectLender's security interest. At Lender's request, Grantor additionally âgrees to sign all other documents that are necessary to perfect,protect, and continue Lender's security interest in the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costsinvolved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender toexecute documents necessary to transfer title if there is a defaull. Lender may file a copy of this Agreement as a financing statement. lfGrantor changes Grantor's name or address, or the name or address of any person granting a security interest under this Agreementchanges, Grantor will promptly notify the Lender of such change.

GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the tangible personal property and benef¡cial use of all theCollateral and may use it in any lawful manner not ¡nconsistent with this Agreement or the Related Documents, provided that Grantor's right topossession and benefìcial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfectLende/s secur¡ty interest in such Collateral. lf Lender at any time has possession of any Collateral, whether before or after an Event of Default,Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral ¡f Lender takes such action for thatpurpose as Grantor shall request or as Lender, in Lende/s sole d¡scretion, shall deem âppropriate under the circumstances, but failure to honorany request by Grantor shall not of itself be deerned to be a failure to exercise reasonable care. Lender shall not be required to tâke any stepsnecessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to securethe lndebtedness. Grantor agrees to pursue and conduct diligently Grantor's farming, agricultural and other business operations for as long asthis Agreement remains in effect. Grantor further agrees that Lender may from time to time enter upon Grantor's premises for the purpose ofascertàining whether Grantor is properly and prudently conduct¡ng Grantor's farming, agricultural and other business operations. Granlor shallpromptly pãy when due all costs and expenses associated with Grantor's farming operations, including without limitation Crops.

LENDER'S EXPENDITURES. lf any action or proceeding is comrnenced that would materially affect Lende/s interest in the Collateral or ifGrantor fails to comply with any provision of this Agreement or any Related Docurnents, including but not limited to Granto/s failure todischarge or pay when due any arnounts Grantor is required to discharge or pay under this Agreement or any Related Docurnents, Lender onGrantois behalf may (but shall not be obligated to) take any action that Lender deens appropriate, including but not limited to discharging orpaying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and pay¡ng all costs forinsuriñg, rrnintaining and praserving the Collateral. All such expenditures incuned or paid by Lender for such purpæes will then bear interest atthe rate cfrarged under the Note from the date incuned or paid by Lender to the date of repayment by Grantor. All such expenses will becone apart of the lnðebtedness and, at Lender's option, will (A) be payable on dernand; (B) be added to the balance of the Note and be apportionedarrpng and be pa¡rable with any installrnent payments to beconæ due during either (1) the term of any applicable insurance policy; or (2) therenraiñing term of the Nole; or (C) be treated as a balloon paynìent which will be due and payraUe at the Note's maturity. The Agreement alsowill secure payÍìent of these amounts. Such right shall be in addition to all other rights and rernedies to which Lender ntay be entitled uponDefault,




(Continued) Page 4

DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:

Payment Default. Borrower fails to make any payment when due under the lndebtedness.

Other Defaults. Bonower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in thisAgreement or in any of lhe Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any

other agreement between Lender and Borrower or Grantor'

Default in Favor of Thlrd Parties. Borrower or Grantor defaults under any ¡oan, extens¡on of credit, security agreement, purchase or sales

agreement, or any other agreement, in favor of any other credjtor or person that may materially _affect any of Borrower's or Grantor'spioperty or ability-to perform their respective obl¡gations under this Agreement or any of the Related Documents.

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or Grantor or on Borrower's or

Granto/s behalf under this Agreêment or the Related Documents is false or misleading in any material respect, either now or at the timemade or furnished or becomes false or misleading at any time thereafter.

Defective Goltateralization, This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any

collateral document to create a valid and perfected securiÇ interest or lien) at any time and for any reason.

Death or lnsolvency, The death of Borrower or Grantor or the dissolution or termination of Borrower's or Grantor's existence as a going

business, the insolvency of Borrower or Grantor, the appointment of a receiver for any part of Borrower's or Grantor's property, any

assignmént for the benéfit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or

insolvency laws by or against Borrower or Grantor.

Creditor or Forfeiture proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help'repossession or any other method, by any creditor of Borrower or Grantor or by any governmental_agency against any collateral securing

th; lndebtedness. This includes a garníshment of any of Borrower's or Grantor's accounts, including deposit accounts, with Lender.

However, this Event of Default shall ñot apply if there isa good faith dispute by Borrower or Grantor.as to the validity or rea-sonableness ofthe claim which is the basis of the creditorbi fofeiture proceeOing and if Bomor¡,er or Grantor gives Lender written notice of the creditor or

forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined

by Lender, in its solõ discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, sufety, or accommodation party

of any of the lnãebtedness or guãrantor, endorser, sureÇ, or accommodation pârty d¡es or becomes incompetent or revokes or disputes the

valid¡ty of, or liability under, any Guaranty of the lndebtedness-

Adverse Ghange. A nraterial adverse change occurs iir Borrower's or Grantor's tìnancial condition, or Lender believes the prospect ofpayment or performance of the lndebtedness is impaired.

lnsecurity. Lender in good faith believes ¡tself insecure.

Cure provisions. lf any default, other than a default in payment is curable and if Grantor has not been given a notice .of a.breach of the

same provision of this Ágreement within the preceding tweÍve (12) month-s, it may be cured if Grantor, after Lender sends written notice to

Bonowerdenendingcr¡réofsuchdefault:1i¡ cureslhedefaultwithinfifteen(15)days; or (2)_ifthecurerequiresrnorethanfifteen(15)days, imrnediatety ¡'n¡t¡atei steps which Lènder deems in Lendefs sole discretion to be sufficient to cure the default and thereafter

coñtinues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably pract¡cal.

RIGHTS AND REMEDIES ON DEFAULT. lf an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the

i¡gñi. õt á sãcured party under the oregon Uniform Commercial Code. ln addition and without limitation, Lender may exercise any one or more

of the following rights and remedies:

Accelerate lndebtedness. Lender may declare the entire lndebtedness, including any prepayment penalty which Borrower would be required

to pay, immediately due and payable, without notice of any kind to Borrower or Grantor.

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the_ Collateral and any and all certificates of title

and other documents retating to ihe ôollateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a

place to be designateJ by iender. Lender also shall havê fuil power to enter upon the property of Grantor to take possession of and

|.emoue the Collateral. ¡iihe Collateral contains other goods noi covered by this Agreement at the time of repossession, Grantor agrees

Lender may take such other goods, provided that Lendeimakes reasonable efforts to return them to Grantor after repossession.

Care and possession of the Crops. Lender may enter upon the premises where any Collateral consisting of crops is located _and, using any

and all of Grantor's equipment, 'machinery, toois, farming implements, and supplies, and improvements located on the premises: (a) Farm,

cultivate, irrigate, fertilize, fum¡gate, prune, and perfoñn äny other act or 'acts

appropr¡ate or necessary to grow, care for, maintain,

preserve and-protect the ciops (ùsing any waler located in, on or adjacent to the premises); (b) Harvest, pick, clean, and remove the crops

from the premises; "nJ t")'ro tne"extént then permitted under oiegon law, appraise, store, prep-are for public or private_ sale, exhib¡t,

market and sell the riop" ãÁo any products of thé crops; provided that Grantor hereby agrees that if Gr.antor is the owner_of record of the

prð,.n¡".i upon wnicn-[ne ".p"'"ñ¿ any products oi the crops are located, Lender shall not be responsible or liable for returning the

bremises to their condition immediately pieðeding the use of the prernises as provided herein or for doing such acts as may be necessary to

þermit future crops to be maintained on the premises.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherw¡se deal w¡th the Collateral or proceeds thereof in Lende/s

own name or that or Grantor. lenoer mäy seil the collateral at public auction or pr¡vate sale. Unless the Collateral threatens to decline

speedily in value o,. i"ãiã typ"ãstomarity sold on a recognized market, Lender will give Grantor, and other persons as required by law'

reasonable notice of the timé'and place of ány public sale, o-r the time after which any private sale or any other disposìtion of the Collateral

is to be made. Howevãr, no notic'e need be irövided to any person who, after Default occurs, enters into and authenticates an agreement

waiving that person,s rìght to notification of sale. The requiiements of reasonable notice shall be met if such notice is given at least ten

(10)daysbeforethei¡.Ë.rtn"saleordisposit¡ãn. Ái "*pän"esrelating_tothedispositionoftheCollateral,includingwithoutlimitationthe

expenses of retaking, holding, insuring, preparlng for sale ånd selling the-Collateral, shall become a part of the lndebtedness secured by this

ÃCír"é,nãni "nO

sr'aìí Ue päai¡è ãn oeäänd, witñ interest at the Noie rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the right to have a receiver appo¡nted to take possession of all or any part of the Collateral, with the

power to protect and preserve the collateral, t" õ;r"t" tlre colËteral preceding ioreclosure. or sale, and to collect the Rents from the

collateral and appty tí.,å p."e"¿i, ovãr and aooue tñe cost of the receivership, against the lndebtedness. The receiver may serve without

bond if permitteo oy lãvi. -Låno"is

right to theãpfointment of .a receiver shall éxist whether or not the apparent value of the collateral

exceeds the lndebtedness by a substañt¡at amount. Employment by Lender shall not disqualify a person from serving as a receiver'

collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from

the co¡aterat. r-enoei''n ãîãã',iv'ti*á i. lénaer's discretion trãnsfer any collatéral into Lenóer;s own nâme or that of Lende/s nominee

and receive the payments, rents, income, and-revenues therefrom and hold the same as security .lor th9 lndebtedness or apply it topayment of the lndebtednãss in súcn order of preÉtãnóã

"i Lender may determine. lnsofar as the collateral consists of accounts, general

intangibles, ¡nsurance policies, instruments, cf,atìel óåóãr, choses in aótion, or similar property, Lender may demand, collect, receìpt for'

settle, compromise, adjust, sue for, toreclose, ài i"ãl¡r" on the collaterai as Lender may determine' whether or not lndebtedness or

collateral is then due. For these purposes, r-eno"r rn"y, on behalf of and in the nâme of Grantor, receive, open and dispose of mail

addressed to Grantor; change any address to which nraiiand payments are to be sent; and endorse notes, checks, drafts, money orders,

documents of tifle, ¡nstruments and items pertã''ning i; pãvrãni, shipment, or storage of êny collateral. To facilitate collection, Lender

n.,ãV ".ìrv accorni debtors and obligors on any Collãteral to make payments directly to Lender.

obtain Deficiency. lf Lender chooses to sell any or all of_the.collateral, Lender may obtain_ a judgment against Borrower for any deficiency

remaining on the lndÃteãness due to Lender änei apptication of all amounts reäe¡uec from tñe exercise of the rights provided in this

Agreement. gonowei shail be liable for a deficiency även it the transacfion described in this subsection is a sale of accounts or chattel

paper.

other Rights and Remedies. Lender shall have all the rights and remedies of a secured cred¡tor under the provisions of the uniform

commercial code, as may be amended from time to timel ln addition, Lender shall have and may exercise any or all other rights and

remedies it rrey have available at law, in equ¡ty, or otherwise'

Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this

Asreement, the Relaied oocüments, oi uy any ol¡'ài *iúirti,'shall be cumulative and mey bã exercised singularly or concurrently. Election

by Lender to pursue any renredy shall not ""orJéiroritóf any oth,x.remedy, and an élection to make expenditures or to take act¡on to

perform an obligation oíGrantoíunder tnis ngråãmãnt, åt"r Grántor's failure to perform, shall not affect Lende/s right to declare a default

and exercise its remedies.

FRAUDS DrscLosuRE. UNDER OREGON LAw, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US



AGRICULTURAL SECURITY AGREEMENT(Continued)Loan No:6001 Page 5

ILENDERI CONCERNING LOANS AND OTHER CRED|T EXTENSTONS WHTCH ARE NOT FOR PERSONAL, FAMtLyÞ8_tlg_u_sEHoLD PURPoSES on SeêuhÈD-soaÈlY eV-ïnÈ loänowÈrii äÈStoeN'cg úù'sî BÈ'ñ'livättiñö,EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE ENFORCEABLE.

-

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:Amendments. This Agreement, together with any Related Documents, const¡tutes the entire understanding and agreement of the partiesas to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be e-ffective-unless given in writingand signed by the party or parties sought to be charged or bound by the alteration or amendment.

Attorneys'Fees; Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees andLende/s legal expenses, incuned in connection with the enforcement of this Agreement. Lender may hire or pay someone ãlse to helpenforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expênses include Lende/sattorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcyproceedings (including efforts to modify or vacate any automat¡c stay or injunction), appeals, and any anticipãted post-judgment collectioñservices. Grantor also shall pay all court costs and such additional fees as may be directed by the court.Caption Headings' .Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define theprovisions of this Agreement.

Governing Law. This_Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, thelaws of the State of Oregon without rêgard to its conflicts of law provisions. Thls Agreement has been accepted Uy tencier in the State ofOregon.

Choice of Venue. lf there is a lawsuit, Grantor agrees upon Lender's request to submit to the jurisd¡ction of the courts of Coos County,State of Oregon.

Joint and Several Llability. All obligations of Borrower and Grantor under this Agreement shall be joint and several, and all references toGrantor shall mean each and every Grantor, and all references to Borrower shall mean each and every Borrower. This means that eachBorrower and Grantor signing below is responsible for all obligations in this Agreement. Where any one or more of the part¡es is acorporation, partnership, limited liability company or s¡milar ent¡ty, it is not necessary for Lender to inqu¡re into the powers of any of theofficers, directors, partners, members, or other agents act¡ng or purporting to act on the entity's behalf and any obligations made orcreated in reliance upon the professed exerdse of such powers shall be guaranteed under th¡s Agreement.Preference Payments. Any monies Lender pays because of an asserted preference claim in Borrower's or Grantor's bankruptcy will becomea part of the lndebtedness and, at Lende/s option, shall be payable by Bonower and Grantor as provided in this Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is gíven in writingand signed by Lender. No delay or omission on the part of Lender in exercising any r¡ght shall operate as a waiver of such right or anyother right. A wäiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otñerwise tódemand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course ofdealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any futuretransactions. Whenever the consent of Lender is required under this Agreement, the granting of such consenl by Lender in any instanceshall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may begranted or withheld in the sole discretion of Lender.

Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered,when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier,or, ¡f mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addressesshown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal writtennot¡ce to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agreesto keep Lender informed at all times of Grantor's current address. Unless othenvise provided or required by law, if there is more than oneGrantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.

Power of Attorney. Grantor hereby appoints Lender as Grantor's inevocable attorney-in-fact for the purpose of executing any documentsnecessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of fìlings of othersecured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproductionof any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for theperfection and the continuation of the perfection of Lender's security ¡nterest in the Collateral.

Waiver of Co-Obligo/s Rights. lf more than one person is obligated for the lndebtedness, Grantor inevocably waives, disclaims andrelinquishes all clains against such other person which Grantor has or would otherwise have by virtue of payrnent of the lndebtedness orany part thereol spec¡fically including but not limited to all rights of indemnity, contribution or exoneration.

Severability. lf a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to anyperson or circumstance, that finding shall not nrake the offending provision illegal, invalid, or unenforceable as to any other person orcircumstance. lf feasible, the offending provision shall be considered rnodif¡ed so that it becorres legal, val¡d and enforceable. lf theoffending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, theillegality, inval¡dity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any otherprovision of th¡s Agreement.

Successors and Assígns. Subject to any limitations stated ¡n th¡s Agreement on transfer of Grantor's ¡nterest, this Agreement shall bebinding upon and inure to the benefit of the parties, their successors and assigns. lf ownership of the Collateral becomes vested in aperson other than Grantor, Lender, without notice to Grantor, may deal with Grantor's successors with reference to this Agreement and thelndebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under thelndebtedness.

Survival of Representations and Warranties. All representations, warranties, and agreernents made by Grantor in this Agreement shallsurv¡ve the execution and delivery of this Agreement, shall be cont¡nuing in nature, and shall remain in full force and effect until such timeas Borrower's lndebtedness shall be paid in full.

Time ls of the Essence. Time is of the essence in the performance of this Agreement.

Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by anypafi against any other party,

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specificallystated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of Amer¡ca. Words and termsused in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms nol otherwisedefined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement. The word "Agreement" means this Agricultural Security Agreement, as th¡s Agricultural Secur¡ly Agreement may be amendedor modif¡ed from time to t¡me, together with all exhibits and schedules altached to this Agricultural Security Agreement from time to time.

Borrower. The word "Borrower" means ALLEN J RUSSELL and CAROL A RUSSELL and includes all co-signers and co-makers signing theNote and all their successors and assigns.

Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the CollateralDescription section of this Agreement.

Default. The word "Default' means the Default set forth in this Agreement in the section titled "Default".

Environmental Laws, The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinancesrelating 1o the protection of human health or the env¡ronment, ¡nclud¡ng without limitat¡on the Comprehensive Environmental Response,Compensation, and Liability Act of 1980, as amended,42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments andReauthorization Act of 1986, Pub. L. No. 99-499 ('SARA'), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 , et seq.,the Resource Conservation and Recovery Acl,42 U.S.C. Section 6901, et seq., or other appl¡cable state or federal laws, rules, orregulations adopted pursuant thereto or intended to protect human health or the environment.

Event of Default. The words "Event of Default" mean any of the events of default set forth in th¡s Agreement in the default section of thisAgreement.

Grantor. The word "Grantor" means RUSSELL CRANBERRY COMPANY, ALLEN J RUSSELL and CAROL A RUSSELL.

Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser, surety, or accommodation party to Lender, including



Loan No:6001AGRIGULTURAL SEGURITY AGREEMENT

(Continued) Page 6

without limitation a guaranty of all or part of the Note.

Hazardous substances. The words "Hazardous Suþstances" mean materials that, because of their quantity, concentretion or physical,chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment whenimproperly used, treated, slored, disposed of, generated, manufactured, transported or othenvise handled. The words "HazardousSubstances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials orwaste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation,petroleum, including crude oil and any fraction thereof and asbestos.

lndebtedness. The word "lndebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and¡nterest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under anyof the Related Documents. Specifically, without limitation, lndebtedness includes the future advances set forth in the Future Advanceiprovision, together with all interest thereon and all amounts that may be indirectly secured by the Cross-Collateralization provision of thisAgreement.

Lender. The word "Lender" means Sterling Savings Bank, its successors and assigns.

Note. The word ''Note', means PROMISSORY NOTE DATED JULY 30, 2OO9 IN THÊ PRINCIPAL AMOUNT OF $225,OOO.OO FROM ALLENRUSSELL AND CAROL RUSSELL TO LENDER, TOGETHER WITH ALL RÊNEWALS OF, EXTENSIONS OF, MODIFICATIONS OF,REFINANCINGS OF, CONSOLIDATIONS OF, AND SUBSTITUTIONS FOR THE PROMISSORY NOTE.

Owner. The word "Owner" means RUSSELL CRANBERRY COMPANY, ALLEN J RUSSELL and CAROL A RUSSELL and any and all personsand entities executing this Agreement, including without limitation all Borrowers and Owners named above. Any Owner who signs thisContract, but does not sign the Note, is signing this Contract only to grant and convey that Owner's interest in the Real Property and togrant a security interest in Owner's interest in the Rents and Personal Property to Lender and is not personally liable under the Note exceptas otherwise provided by contract or law.

Property. The word "Property" means all of Grantor's right, t¡tle and interest in and to all the Property as described in the "CollateralDescription" section of this Agreement.

Related Documents, The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmentalagreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments,agreements and documents, whether now or hereafter existing, executed in connection with the lndebtedness.

BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGRICULTURAL SECURITY AGREEMENT ANDAGREE TO ITS TERMS. THIS AGREEMENT IS DATED AUGUST 11,2O1O.

GRANTOR:

RUSSELL CRANBERRY COMPANY

By:tuCRANBERRY COMPANY

tuBORROWER:

X

USER4OLôõdh!,V.r,5,52,OOoosCopr.H.6ndFh.ñúlSolul¡on¡.hc.1907,2010- AllRklhl.R.!.ñ0d. -ORCTCFML\Eao.FClR-126t2tPR-2s

x

x



LOAN WORKOUT AGREEMENT AND RELEASE

This LoAN WoRKOUT AGREEMENT AND RELEASE (this "Agreement") is dated and effective

as of September 5, 2012 (the "Effective Date"), by and among STERLING SAVINGS BANK, awuin¡ng'ton state-ähartered commercial bank doing business as Sterling Bank whose address forpurporór of this Agreement is Attention: Mr. Jerad Keister, 111 North Wall Street, Spokane,

Waónington 99201 ("Lender") on the one hand, and ALLEN J. RUSSELL and CAROL A.

RUSSEIL (together, jointly and severally, the "Russells") and Russell Cranberry Company' an

active and validly exiiting 'Oregon

corporation ("Russell Cranberry" or the "Guarantor") whose

address togethei for purposes of this Agreement is 89358 Cranberry Lane, Bandon, Oregon

974IL (toglther, jointly and severally, the Russells and Russell Cranberry comprising the

'.Borrower Parties") on the other hand. Collectively, Lender, the Russells, and Russell

Cranberry comprise the "Parties" to this Agreement.

RECITALS

A. The Russells are obligated to Lender on account of the following commercialloans (collectively, the "Loans") :

which Loans are evidenced by an agricultural loan agreement dated July 20, 1011 (the "LoanAgreement"), a promissory note dated luly 15, 2009 having a stated principal of $604,226.00(the"Loan 9OO1 Note"), a promissory note dated July 30,2009, having a stated principalamount of $225,000.00 (the"Loan 6001 Note"), and a promissory note dated August 11,2010,having a stated principal amount of $200,000.00 (the "Loan 6002 Note"). Collectively, thetoan ggOt Note, the Loan 6001 Note, and the Loan 6002 Note are sometimes referred to in thisAgreement as the "Notes".

B. As of (i.e., through and including) the Effective Date of this Agreement, theRussells owe to Lender a total of $1,065,149.59 on account of the Loans (the "Indebtedness")which total amount is comprised of a combined principal balance of $954,330'55 together withaccrued and unpaid interest totaling 575,447.40 plus Lender's unpaid loan fees, late charges,protective advances (if any), costs, and collection expenses of (including Lender's unpaidattorneys'fees and costs) of $35,371'64.

C. The Russells'obligations of payment and performance to Lender on account ofthe Loans, including their obligation to pay to Lenderthe full amount of the Indebtednessset forth in Recital B above, forth above, is secured by:

1. The Russells'grant to and in favor of Lender of a perfected, firstpriority security interest in and lien upon:

a. Certain real property and improvements upon which Russell

Cranberry conducts its faming operations, commonly known as 89358Cranberry Lane, Bandon, Oregon 9747L, as more particularly and legallydescribed in (i) that certain deed of trust dated July 15, 2009, and recorded

1

Loan Principal Balance Accrued and UnpaidInterest

Unpaid Fees, Costs, ExPenses(excluding attorneys' fees and costs)

9001 s583.330.20 $42,892.12 $ 6,532.346001 9r75,271.85 $ 1s,380.10 $ 137.00

6002 $195,728.50 $ 17,1 75.18 $ 91,00TOTALS $954,330.55 575,447.40 $6.760.34

857748.3



on July 31, 2009, in the official real property records of coos county, oregon,

as instrument number 2009-7699 (the "2OO9 Deed of Trust"), and (ii) that

certain line of credit instrument deed of trust dated August 11, 201,0,-and

recorded on August 13, 2010, in the official real property records of Coos

County, Oregonl as inslrument number ZO]-O-7413 (the "First 2O1O Deed ofTrust,;j, un¿ (i¡i) that certain line of credit instrument deed of trust dated

Rugusf tt, Zotd, and recorded on August 13, 2010, in the offìcial real

property records of coos county, oregon, as instrument number 2010-7414

itnå "så"ond 2o1o Deed of Trust") (the "Real Property Collateral"); and

b. All rents arising out of the Real Property Collateral, as the term.Rents' is defined in that certain assignment of rents dated July 15, 2009, and

recorded on July 31, 2009, in the official real property records of Coos

county, oregon, as instrument number 2oo9-77OO (the "Assignment ofRents") (the "Rents Collateral"); and

Z. Russell Cranberry's grant to and in favor of Lender of a perfected, firstpriority security interest in and lien upon all of its Inventory, Chattel Paper,

Âccounts, Genéral Intangibles, Crops, and Farm Products, whether now owed

or hereafter acquired, together with additional personal property owned by

Russell Cranberry, all as more particularly set forth in that certain agricultural

security agreement dated July 20, 1011 (the "security Agreement"), and as

evrdenced by Lender's filing with the State of Oregon Secretary of State of (a)

a Uniform Commercial Codè ("UCC") initial financing statement filed on July

31, 2009, as filing number 8326337 (the "20o9 ucc Filing"), (b) a uccinitial financing s[atement filed on August L2, 2OIO, as filing number 8597803(the..2O1O UõC f¡l¡ng"), (c) an effective financing statement filed on August

iZ, ZOIO as filing number 8597897 (the "2O1O EFS Filing"), (d) an effective

financing statemãnt filed on January 25,20L2, as filing number 89104890(the..Fiist 2Or.Z EFS Filing"), and (e) an effective financing statement filed

on January 26,2OL2, as filing number 89106016 (the "Second 2012 EFS

Filing") (the "Personal PropeÉy Collateral")'

Collectively, the Real Property Collateral, the Rents Collateral, and the Personalproperty collateral compiise ih" "coltateral" securing the Indebtedness due under the Loans.

D. On or about January !!,20!0, A & B Cranberries, Inc., an Oregon corporation

("A&8,,), merged with Russell Cranberry, with A&B as the surviving entity. On or about April

)l,ZOt,j,In Àpril 2010, A&B changed its name to Russell Cranberry Company' Russell

Crånberry unconditionaily guuruntees immediate payment to Lender of the full amount of the

Indebtedness due under the Loans pursuant to the terms of commercial guaranties dated July

30, 2009 and May 11, 2009 (together, the "Guaranties")'

E. The Russells'obligations to Lender under the Loan Documents (as that term is

defined below) and underthis Agreement are further supported by subordination agreements

executed in favor of Lender by Bradley Russell, Marian Russell, Howard Russell, and Sally

Russell (collectively, the "subordinated Creditors"), dated May B, 2009 or May 11, 2008 (the,'subordtination Agreements") under which the Subordinated Creditors have agreed not to

accept payments fiom, and the Russells have agreed not to make payments to the

subordinated creditoró on u..ount of, the obligations owed by the Russells to the subordinated

Creditors, until the Loans have been paid to Lender in full'

F. Lender, the Russells, and Russell Cranberry are parties to a forbearance

agreement dated and' eftective as of July 2,2012 (the "Forbearance Agreement"). The

2857748.3



Borrower Parties subsequently defaulted on theír obligations to Lender under the ForbearanceAgreement' on July 77', 201;, the nusselb .orr"n.ää'ã na.nkruptcy case under chapter 12 ofrhe united states Bankruptcv boaé, il y:ç.5g 1-0¡ ;r"o; {the *Bankruptcy code,,), in theunited states Bankruptcy court for'the Distriã[ of o;g;;-(the ,,court,,),

âs bãnkruptcy casenumber lZ-63L45 (the .'-Bankruptcy Case,,). - -r-"

G' For purposes of this Agt.u^"T-1ni. collectively, the Loan Agreement, the Loan 9oo1Note, the Loan 6001 Note, the toanËooz Note, the z.ooí Deed of Trust, the First 2010 Deed ofTrust' the second 20i9P::lorriusi, the Assilnmeni'oi nentra.the security Agreement, rhe200e ucc Filins' th-e2010 ucc Fil¡;é,'ll¡-e ?0^i0;Ës Ë,li"b, rhe First 2012 EÉs Firins, rhe second2012 EFS Filing, the Guarant¡es, aii É.etate.d.Documã"ir ¿å! the term,'Rerated Documenrs,, isdefined in each of the,preced¡ng Jocrm"ntr), the suboràination Agreements, the ForbearanceAgreement' and all other loan ão.umånts.aáâ..securiiv iÃrï.u*:nl: arising out of or in any wayrelated to any of theforegoing,.otpiir" the "Loan óocJments,,). All capitalized terms not

::TüJ'Ë.ï;::åXäffiån;:*"ntÏåu" ''" m"ãning,Ëcribed í" **'-il,ìîe Loan Documents

H' The Borrower Parties have proposed that the Russells dismíss their Bankruptcycase in exchange for Lender't ugi"urånt to amend ftre loan Documents and modify the termsunder which the Borrower Parties will repay the Loani. Ãitiougn it has no ánrigution to do so,to avoid the derav and expense arisins ?jl "ltne sanrruöi.v cä, - Ë;;rîJ*,r,¡ng ro asree toamend the Loan Documents with respËct to the ao.ro*"ipurties, repayment of the Loans onthe terms and conditions set ro.rn iñiÃìs Agreemenr.

AGREEMENTS

Now' THEREFoRE' for good and valuable consideratíon, the receipt and sufficiency of which ishereby acknowredged, thõ part¡às tàìÃis ngreement agree as foilows:

1 . ,The parties to this Agreementacknowledge and agree tnai all or tñJn".it.bã th.Gñîset forth above are fu'yrncorporated into and made part of this Agreement.

2Except as Lender hasexpressly modified , consented to, or agreed to forbear under this Agreement, the BorrowerParties joinily and severally (a) hereby acknow ledge, confirm, and ratify all of the terms andconditions set forth in, and all of their obligatio ns under, all of the Loan Documen ts, (b) agreethat all of the terms and conditions set forth in the Loan Docu ments are incorpo rated into andmade part of this Ag reement by thís reference as if set forth i n full hereunder , and (c) withoutlimiting any of the foregoing, Russell Cranbe rry expressly acknowledges and reaffirms itsunconditional obliga tion of payment of the Indebtedness to Lender as set forth in the Guaranties,

3Parties joinily and severally expressly and unco nditionally acknowl edge, agreef warrant, and

The Borrowerrep resent that (a) they jointly and severally owe ímmediate and u nconditional payment toLen der of the full am ount of the Indebtedn ess due under the Loa ns as set forth in Recltal Babove, an amount that as of the Eftective Date of this Agreemen t is $1,065,149.59 , withoutoffset, defense , counterclaim, or claim of recoupment of any ki nd whatsoever ; and (b) Lenderhas fully perlo rmed all of its obligations to them, whether joi ntly or severally, whether underthe Loan Docu ments, on account of the Loans, or otherwise.

4

rs) expressly reaffi agree thatTheRussells and Russell Cranberry (as granto

3

rm, acknowledge, and

857748.3EXHIBIT 6, Page 3 of 9


their respective prior grants to and in favor of Lender of the pertected security interests in

and liens upon tire Coilateral securing the Indebtedness due under the Loans were' are, and

shall hereafter remain valid, not subject to avoidance, and enforceable without offset,

defense, counterclaim, or claim of recoupment of any kind whatsoever'

5 Effect on Loan Documents; No Novation. This Agreement does not serve as

a novation of any of any of the Loan Documents but only serves as an amendment of the Loan

Documents. This Agreement supersedes and shall control over any inconsistent provisions set

forth in any of the Lãan Documents. Notwithstanding the foregoing, and except as expressly set

forth hereunder, the Loan Documents remain in full force and effect as written, and the terms,

conditions, and other provisions set forth thereunder remain unaffected, unchanged, and

unimpaired therebY.

6 Change in Terms of Repavment of the Loans, Provided that from and afterthe Effective Date of tn¡s Agreement (a) there is no breach by the Borrower Parties of any of theirobligations of payment and performance to Lender hereunder and (b) there is no new Event of

Defãult (as that term is defined in the Loan Documents) by the Borrower Parties, Lender agrees

that the payment terms of the Notes are amended as follows:

6.1 Loan 9001 C!_osing Payment. Concurrently with the Borrower Parties'

execution and delivery of this Agreement to Lender, Guarantor shall pay toLender the sum of g25,613.40 in immediately available funds representing thepayment on account of Loan 9001 that was due on July 37,ZOLZ (the "LoangOOl Closing Payment"); thereafter, the Russells shall make payments toLender on acðount of Loan 9001 in the amounts and on the dates set forth in theLoan 9001 Note.

6.2 Not later thanNovember 15,2O]2, the Russells shall pay to Lender the sumimmediately available funds for application to Loan 6001 and

unpaid interest having accrued on account of the two loans to

of $42,067.31 inLoan 6002 on account ofNovember 15,20L2.

6.3 l-Ìrrnno tn I n=n Áññl and I nan Ãñô? t\lnn-ñof>rrlt T racÌ Þrla

6.4 I n:n 6,fìfì1 ná ln=n Ã,ñfì? Matlrritrr ñrl-a. l^nmhínorl Mnn lrr Drr¡manf

From and

after November 16, 2Q72, the non-default interest rate applicable to the unpaiprincipal portion of Loan 6001 and Loan 6002 will be six percent per annum (6

d.0o/o ) .

Absent an earlier Event of Default, the Russells shall pay Loan 6001 and Loan 6002

in full in one payment comprised of all principal owing under the Loan 6001 Note and

the Loan 6002 Note plus all accrued and unpaid ¡nterest then due under the Loan

6001 Note and the Loan 6002 Note, on September 5, 2015 (the "Loan 6OO1 andLoan 6OO2 Maturity Date"). In addition, commencing November 5, 2012, and

continuing on the same day of each month thereafter until the Loan 6001 and Loan

6002 Maturity Date, the Russells shall pay to Lender monthly payments of $2,198'69in immediately available funds, which payments Lender will allocate on a pro-rata

basis to Loan 6001 and Loan 6001, applying the proceeds of each payment to Loan

6001 and Loan 6002 first to pay outstanding accrued interest and then to reduce the

unpaid principal balance due under each loan.

6.5 Annual Supplemental Loan 6001 and Loan 6002 Payment. Commencing on

:anuary 3t,2.013:, and on the same date annually thereafter until Loan 6001 and

Loan 6bOZ are both paid in full, the Russells shall pay to Lender the sum ofg100,OOO.O0 in immediately available funds, the proceeds of which payment Lender

will apply in the following order: first, to Lender's unpaid fees, costs, and expenses

4857748.3



(including Lender's unpaid attorneys'fees and costs); second, to all accrued interestthen due on account of Loan 6001 and Loan 6002; third, to reduce the then-outstanding principal balance under Loan 6001, and when Loan 6001 has been paid

in full, to reduce the then outstanding principal balance under Loan 6002.

7 Conditions Precedent; Closing. The Borrower Parties agree to fulfill each

of the following conditions precedent not later than the deadline set for each condition as

determined by Lender in its sole discretion (full and timely completion of each of the following

resulting in the "Closing" of this Agreement):

7.I Not later than September 12, 20t2, Lender receives from theBorrower Parties two (2) original, ink-signed counterparts of this Agreement(without revision of any kind), each counterpart duly and property executed by

the Russells and by Russell Cranberry through its duly authorized and

empowered officer(s) ; and

7.2 Not later than September 14, 2012, Lender receives fromGuarantor the Loan 9001 Closing Payment; and

7.3 Not later than September 30. 2012, Lender receives from theRussells a photocopy of an order entered by the Court dismissing or closing theBankruPtcY case.

B No Additional Advances; No Overdrafts. The Borrower Parties

acknowledge and agree that (a) Lender has no obligation to make any additional advances tothem or foi the¡r benefit (whether jointly or severally), whether under the Loan Documents, thisAgreement, or otherwise; and (b) Lender will not allow any overdrafts on any account depositaccount any one or more of them maintain(s) with Lender and that if sufficient immediatelyavailable funds are not on deposit at the time any item is presented for payment, Lender has

the absolute right, but not the obligation, to return such item "for lack of sufficient funds" orwith some similar notation.

9 Further Assurances. Each of the Borrower Parties promises and agrees

that until the Russells have paid to Lender the full amount of the Indebtedness evidenced by

the Loan Documents (as and to the extent modified by this Agreement), they shall promptlyexecute, cause to be notarized and deliver to Lender all documents and instruments Lender

deems necessary or advisable in Lender's sole and absolute discretion, including, but notlimited to, such documents and instruments evidencing, perÍecting, or continuing Lender's

security interests in or liens against the Collateral, or to give effect to and provide Lender withthe benefits of this Agreement.

10 Express Waiver of Defenses and Claims. The Borrower ParLies jointlyand severally, for themselves and all of their successors and assigns. expressly and

irrevocably waive and affirmatively agree not to allege or otherwise pursue any or all

defenses, affirmative defenses, counterclaims, claims, causes of action, setoffs or other rightsthey have or claim to have, whether jointly or severally, whether known or unknown, based

on events occurring prior to the date of this Agreement or facts existing as of the date of thisAgreement (whether known or unknown), to contest: (a) any provision of the Loan

Dócuments or this Agreement; (b) the validity, priority, and enforceability of Lender's securityinterests in and liens upon the Collateral or any portion thereof; and/or (c) the conduct ofLender (including all of Lender's current and former attorneys, consultants, directors,employees, officérs, and other pariies employed by or retained by Lender in connection withits administration of the Loans and all advances processed or rejected by Lender in connection

5857748.3



with the Loans, and the financing arrangements between Lender and the Borrower Parties

evidenced by the Loan Documents).

11 Express Release of Claims by Borrower Parties. Immediately upon

their respective executiõn of ihis Agruement, the Russells and Russell Cranberry, jointly and

severally, on their own behalf and on behalf of all of their respective successors and

assigns, ñereby expressly and forever release, remise, acquit and forever discharge Lender

anaãtt of Lender's accountants, affiliates and related corporate divisions, agents' attorneys,

consultants, directors, employees, fiduciaries, holding company and/or parent company,

officers, partners, predecessors/ representatives, subsidiaries, and all of their respective

successors and assigns (collectively, the "Released Parties"), from any and all actions and

causes Of aCtion, cla-ims, damages (whether economic, monetary, or otherwise), debts,

demands, executions, expense-, judgments, liabilities, obligations, requests for contribution

or reimbursement, suits (whether threatened or commenced), and violations or alleged

violations of any local, county, state, or federal statute, of any and every character, known

or unknown, direct and/or indirect, at law or in equity, of whatsoever kind or nature,

including any and all claims which may not have been known to the Borrower Parties, or any

one or more'of them, from the beginning of time through and including the Effective Date of

this Agreement, for or because of any matter or things done, omitted or suffered to be done

Uy an! of the Released Parties from the beginning of time and through and including the

effectíve Date of this Agreement, and in any way directly or indirectly arising out of or inany way connected to ihe Loans, the Loan Documents, this Agreement, Lender's dealings

and interactions with the Russells and/or Russell Cranberry, or any other third party acting

on their behalf, and all correspondence, conferences (whether in person, telephonically, or

otherwise), discussions, meetìngs, and negotiations of every kind and nature arising out of

or in any way connected to any of the foregoing (collectively, the "Released Matters") (the,'Releaje"). Without limiting the foregoing, the Borrower Parties jointly and severally

expressly ácknowledge that âlthough ordinarily a general release does not extend to claims

*n¡.fr the releasing party does not know or suspect to exist in its favor, which if known by itmust have materiálly affected its settlement with the party released, each of them, The

Russells and Russell Cranberry, having had fair and reasonable opporiunity to consult withlegal counsel of their choice with respect to the Release set forth in this Section 11 have

ca?efully considered and taken into account in determining to enter into this Agreement and

the documents contemplated hereby and execute in favor of Lender the Release contained

herein, the possible existence of such unknown losses or claims' The Borrower Parties

furthei jointly and severally expressly acknowledge and agree that the Release set forth in

this Section 11 is intended to be in full satisfaction of all or any alleged injuries or damages

arising in connection with the Released Matters with respect to each of the Released Parties

and in connection with the foregoing further expressly acknowledge that: (a) the Release

set forth in this Section 11 constitutes a material inducement to the Lender's agreements

set forth in and under this Agreement; (b) Lender would not have been willing to enter into

this Agreement without the express acceptance of and agreement by The Russells and

Russeil Cranberry to the Release; and (c) the Release set forth in this Section 11 shall

survive the Loans and the expiration or earlier termination of this Agreement.

IZ Express and Mutual Waiver of Jury Trial. Because disputes arising in

connection with commeicial financial transactions are most quickly and economically resolved

by an experienced and expert person and because the parties to this Agreement wish applicable

state and federal laws to apply (rather than arbitration rules), each of the Parties to thisAgreement (Lender, the Russells, and Russell Cranberry) desire and expressly agree that their

disputes be resolved by a judge applying such applicable laws, Therefore, to achieve the best

combination of the benefits oithu iudicial system and of arbitration, by signing below, theparties to this Agreement mutually expressly and irrevocably waive all right to trial by jury in

any action, suit, or proceeding brought to resolve any dispute, whether sounding in contract,

6857748.3



tort, or otherwise, between the parties arising out of, connected with, related to, or incidental

to tÍ-re relationship established between them in connection with this Agreement, the Loan

Documents, and any agreements, documents, and instruments arising out of, relating to, or inany way pertaining to any of the foregoing and all of the transactions related thereto.

13 Confidentiality. The Parties agree that the terms and conditions of this

Agreement shall remain confidential as between the Parties, and that they shall not disclose

thäm to any other person, other than by court order, except as Lender may be required to

make disclosures to federal and/or state governmental regulatory agencies, and/or to theparties' legal and financial advisors and auditors, who shall also be advised of itsconfidentiãli¡y and who shall agree to be bound by this confidentiality agreement. Without

limiting the generality of the foregoing, the Parties shall not respond to or in any wayparticiþate in or contribute to any public discussion, notice or other publicity concerning or

in any-*ay relating to execution or the terms of this Agreement or the Loans'

t4 Mutual Non-Disparaqement, As a condition of this Agreement, theparties agree that they will not act in any manner that might damage the business orreputatioir of the other in the community. Without limiting any of the foregoing, the Russells

and Russell Cranberry agree to refrain from any defamation, libel or slander of Lender, and

further agree to refrain from making any negative or derogatory comments concerning

Lender, and/or Lender's business, attorneys, directors, employees, or officers. Conversely,

Lender agrees to refrain from any defamation, libel or slander of the Russells and/or Russell

Cranberry, and further agrees to refrain from making any negative or derogatory commentsconcerning the Russells and/or Russell Cranberry.

15 Voluntary Act; Opportunity to Consult. The Russells and Russell Cranberry

expressly acknowledge. warrant, and represent that they are executing this Agreement,knbwingÍy and voluntarily and for their own benefit. In addition, each of the Borrower Parties

acknowie'dge that they have been afforded a fair and reasonable opportunity to consult with

independeñt accounting, financial , and/or legal professionals of their own choice concerning thisAgreement and the doðuments and instruments arising hereunder, the Express Waiver of

Dãfenses and Claims set fofth in Section 10 of this Agreement, the Release in favor of theReleased parties set forth in Section 11 of this Agreement, and the express mutual waiver ofjury trial set forth in Section 12 of this Agreement'

16 Integration; No Changes Except in Writinq. The Parties expressly

acknowledge and agree that this Agreement represents the complete and total agreement ofLender on the one ñand, and the Russells and Russell Cranberry pm the other hand, withrespect to the subject matter hereof and there are no promises or representations of Lender

not contained herein. Any change to this Agreement to be effective and enforceable againstLender, must set forth in ã furtnér writing in a form and content acceptable to Lender in its sole

discretion and signed on behalf of Lender by its authorized representative.

t7 Counterparts. This Agreement may be executed in multiple counterparts,each of which shall be deemed to be an original and all of which when taken together shall

constitute one and the same instrument.

1B This Agreement is made for the protection and benefit of Lender, its

successors and assigns, andshall bind the respective heirs, executors, administrators and assigns

of the Russells and Russell Cranberry.

19 Notices. All notices, requests and demands to or upon the Lender or to

the Russells and/or Rrissell Cranberry, to be effective, shall be in writing and shall be deemed

to have been duly given or made upon the earlier to occur of actual delivery or refusal of a

7857748.3



party to accept delivery thereof, and, in any case shall be delivered by: (a) hand delivery;(b) nat¡onally-recognized overnight courier (such as UPS, FedEx, DHL, etc.); or (c) United

States mails, via certified mail, return receipt requested, full postage prepaid, and properlyaddressed to the intended recipíent. All notices shall be addressed to the applicable recipient(s)using the addresses for such party/parties as first shown above in this Agreement. Any of theparties to this Agreement may change their respective addresses for purposes of notice by

giving the other parties to this Agreement notice in the manner provided for in this Section 19.

20 Governing Law. THIS AGREEMENT HAS BEEN ENTERED INTO IN, AND

SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF

THE STATE OF OREGON APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE

WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.

2t STATUTORY NOTICE. NOTICE: UNDER OREGON LAW' MOSTAGREEMENTS, PROMISES, AND COMMITMENTS MADE BY THE LENDER,CONCERNING LOAN AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FORPERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THEBORROWER'S RESIDENCE, MUST BE IN WRTTTNG, EXPRESS CONSTDERATTON ANDBE SIGNED BY THE LENDER TO BE ENFORCEABLE.

IN WITNESS WHEREOF, Lender, the Russells, and Russell Cranberry have executed thisAgreement as of the day and year first above written.

LENDER: THE RUSSELLS:

STERLING SAVINGS BANK, a Washington ALLEN l. RUSSELL

By:

state-chartered commercial bank doingbusiness as Sterling Bank øe_ il-

RUSSELL CR.ANBERRY / GUARANTOR:

RUSSELL CRANBERRY COMPANY, AN ACtiVC

and validly existing Oregon corporation

By: á7ãã^its President

and

A.NameTirle:

B

Byry

857748.3



party to accept delivery thereof, and, in any case shall be delivered by: (a) hand delivery;

(b) nationally-recogniz'ed ovurnight courier (such as UPS,,FedEx, DHL, etc'); or (c) United

States mails, via certified mail, return receipt requested, full postage prepaid,.and properly

addressed to the intãnoìo ieciþient, All notices shall be addressed to the applicable reciplent(s)

using the addressesiãiiu.fl party/parties as first shown above in this Agreement. Any of the

parties to this Agreement may change their respective addresses for purposes of notice by

giving the other parties to this Agreement notice in the manner provided for in this Section 19'

ZO Governing Law. THIS AGREEMENT HAS BEEN ENTERED INTO IN' AND

SHALL BE GOVERNfO aV¿rrlprcOr.lSTRUED iN ACCORDANCE WITH, THE INTERNAL LAWS OF

THE STATE OF OREGON APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE

WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS'

2ISTATUT.oRYNoTIcE.NOTICE:UNDERoREGoNLAw'MosTA6REEMENT5, pRoü-ffi llND cot"lMrrÞlrNTs MADE BY THE LENDER,

CONCERNING LOAN AND bTHER CREDIT EXTENSIONS WHICH ARE NOT FOR

pERsoNAL, FAMTLV, oR HoUsEHoLD PURPosES oR SEçURED S9LELY BY THE

BoRRowER's RESIóENCE, MUsT BE IN WRITING, EXPRESS CoNSIDERATIoN AND

BE SIGNED BY THE LENDER TO BE ENFORCEABLE.

IN WITNESS WHEREOF, Lender, the Russells, and Russell cranberry have executed this

Agreement as of the day and year first above written'

LENDER:

STERLING SAVINGS BANK, a Washingtonstate-chartered commercial bank doing

business as Sterling Bank

ByNa

THE RUSSELLS:

ALLEN J. RUSSELL

CAROL A. RUSSELL

RUSSELL CRANBERRY / GUARANTOR:

RUSSELL CRANBERRY COMPANY, an activeand validly existing Oregon corporation

ByIts President

and

By

eTitle

I

Its SecretarY

857748,3



JS 44 (Rev. 12/12) CIVIL COVER SHEETThe JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except asprovided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for thepurpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)

I. (a) PLAINTIFFS DEFENDANTS

(b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED.

(c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known)

II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff(For Diversity Cases Only) and One Box for Defendant)

’ 1 U.S. Government ’ 3 Federal Question PTF DEF PTF DEFPlaintiff (U.S. Government Not a Party) Citizen of This State ’ 1 ’ 1 Incorporated or Principal Place ’ 4 ’ 4

of Business In This State

’ 2 U.S. Government ’ 4 Diversity Citizen of Another State ’ 2 ’ 2 Incorporated and Principal Place ’ 5 ’ 5Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State

Citizen or Subject of a ’ 3 ’ 3 Foreign Nation ’ 6 ’ 6 Foreign Country

IV. NATURE OF SUIT (Place an “X” in One Box Only)CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES

’ 110 Insurance PERSONAL INJURY PERSONAL INJURY ’ 625 Drug Related Seizure ’ 422 Appeal 28 USC 158 ’ 375 False Claims Act’ 120 Marine ’ 310 Airplane ’ 365 Personal Injury - of Property 21 USC 881 ’ 423 Withdrawal ’ 400 State Reapportionment’ 130 Miller Act ’ 315 Airplane Product Product Liability ’ 690 Other 28 USC 157 ’ 410 Antitrust’ 140 Negotiable Instrument Liability ’ 367 Health Care/ ’ 430 Banks and Banking’ 150 Recovery of Overpayment ’ 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS ’ 450 Commerce

& Enforcement of Judgment Slander Personal Injury ’ 820 Copyrights ’ 460 Deportation’ 151 Medicare Act ’ 330 Federal Employers’ Product Liability ’ 830 Patent ’ 470 Racketeer Influenced and’ 152 Recovery of Defaulted Liability ’ 368 Asbestos Personal ’ 840 Trademark Corrupt Organizations

Student Loans ’ 340 Marine Injury Product ’ 480 Consumer Credit (Excludes Veterans) ’ 345 Marine Product Liability LABOR SOCIAL SECURITY ’ 490 Cable/Sat TV

’ 153 Recovery of Overpayment Liability PERSONAL PROPERTY ’ 710 Fair Labor Standards ’ 861 HIA (1395ff) ’ 850 Securities/Commodities/ of Veteran’s Benefits ’ 350 Motor Vehicle ’ 370 Other Fraud Act ’ 862 Black Lung (923) Exchange

’ 160 Stockholders’ Suits ’ 355 Motor Vehicle ’ 371 Truth in Lending ’ 720 Labor/Management ’ 863 DIWC/DIWW (405(g)) ’ 890 Other Statutory Actions’ 190 Other Contract Product Liability ’ 380 Other Personal Relations ’ 864 SSID Title XVI ’ 891 Agricultural Acts’ 195 Contract Product Liability ’ 360 Other Personal Property Damage ’ 740 Railway Labor Act ’ 865 RSI (405(g)) ’ 893 Environmental Matters’ 196 Franchise Injury ’ 385 Property Damage ’ 751 Family and Medical ’ 895 Freedom of Information

’ 362 Personal Injury - Product Liability Leave Act Act Medical Malpractice ’ 790 Other Labor Litigation ’ 896 Arbitration

REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS ’ 791 Employee Retirement FEDERAL TAX SUITS ’ 899 Administrative Procedure’ 210 Land Condemnation ’ 440 Other Civil Rights Habeas Corpus: Income Security Act ’ 870 Taxes (U.S. Plaintiff Act/Review or Appeal of ’ 220 Foreclosure ’ 441 Voting ’ 463 Alien Detainee or Defendant) Agency Decision’ 230 Rent Lease & Ejectment ’ 442 Employment ’ 510 Motions to Vacate ’ 871 IRS—Third Party ’ 950 Constitutionality of’ 240 Torts to Land ’ 443 Housing/ Sentence 26 USC 7609 State Statutes’ 245 Tort Product Liability Accommodations ’ 530 General’ 290 All Other Real Property ’ 445 Amer. w/Disabilities - ’ 535 Death Penalty IMMIGRATION

Employment Other: ’ 462 Naturalization Application’ 446 Amer. w/Disabilities - ’ 540 Mandamus & Other ’ 465 Other Immigration

Other ’ 550 Civil Rights Actions’ 448 Education ’ 555 Prison Condition

’ 560 Civil Detainee - Conditions of Confinement

V. ORIGIN (Place an “X” in One Box Only)

’ 1 OriginalProceeding

’ 2 Removed fromState Court

’ 3 Remanded fromAppellate Court

’ 4 Reinstated orReopened

’ 5 Transferred fromAnother District(specify)

’ 6 MultidistrictLitigation

VI. CAUSE OF ACTION

Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): Brief description of cause:

VII. REQUESTED IN COMPLAINT:

’ CHECK IF THIS IS A CLASS ACTIONUNDER RULE 23, F.R.Cv.P.

DEMAND $ CHECK YES only if demanded in complaint:JURY DEMAND: ’ Yes ’ No

VIII. RELATED CASE(S) IF ANY (See instructions):

JUDGE DOCKET NUMBERDATE SIGNATURE OF ATTORNEY OF RECORD

FOR OFFICE USE ONLY

RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE


JS 44 Reverse (Rev. 12/12)

INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44

Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers asrequired by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, isrequired for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk ofCourt for each civil complaint filed. The attorney filing a case should complete the form as follows:

I.(a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title.

(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.)

(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, notingin this section "(see attachment)".

II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an "X" in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box.Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked.Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.)

III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark thissection for each principal party.

IV. Nature of Suit. Place an "X" in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerk(s) in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive.

V. Origin. Place an "X" in one of the six boxes.Original Proceedings. (1) Cases which originate in the United States district courts.Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petition for removal is granted, check this box.Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date.Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date.Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers.Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this box is checked, do not check (5) above.

VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service

VII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P.Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction.Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.

VIII. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases.

Date and Attorney Signature. Date and sign the civil cover sheet.


AO 440 (Rev. 06/12) Summons in a Civil Action

UNITED STATES DISTRICT COURTfor the

__________ District of __________

))))))))))))

Plaintiff(s)

v. Civil Action No.

Defendant(s)

SUMMONS IN A CIVIL ACTION

To: (Defendant’s name and address)

A lawsuit has been filed against you.

Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if youare the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ.P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 ofthe Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney,whose name and address are:

If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court.

CLERK OF COURT

Date:Signature of Clerk or Deputy Clerk

District of Oregon

BANNER BANK

ALLEN J. RUSSELL, CAROL A. RUSSELL,RUSSELL CRANBERRY COMPANY, and BANDON

CRANBERRY COMPANY

Allen J. Russell89358 Cranberry LaneBandon, OR 97411

Joseph M. VanLeuvenDavis Wright Tremaine LLP1300 SW Fifth Avenue, Suite 2400Portland, OR [email protected]


AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2)

Civil Action No.

PROOF OF SERVICE(This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l))

This summons for (name of individual and title, if any)

was received by me on (date) .

I personally served the summons on the individual at (place)

on (date) ; or

I left the summons at the individual’s residence or usual place of abode with (name)

, a person of suitable age and discretion who resides there,

on (date) , and mailed a copy to the individual’s last known address; or

I served the summons on (name of individual) , who is

designated by law to accept service of process on behalf of (name of organization)

on (date) ; or

I returned the summons unexecuted because ; or

Other (specify):

.

My fees are $ for travel and $ for services, for a total of $ .

I declare under penalty of perjury that this information is true.

Date:Server’s signature

Printed name and title

Server’s address

Additional information regarding attempted service, etc:

0.00




__________ District of __________

))))))))))))

Plaintiff(s)

v. Civil Action No.

Defendant(s)






CLERK OF COURT


District of Oregon

BANNER BANK


CRANBERRY COMPANY

Carol A. Russell89358 Cranberry LaneBandon, OR 97411




Civil Action No.





on (date) ; or






on (date) ; or


Other (specify):

.





Server’s address


0.00




__________ District of __________

))))))))))))

Plaintiff(s)

v. Civil Action No.

Defendant(s)






CLERK OF COURT


District of Oregon

BANNER BANK


CRANBERRY COMPANY

Russell Cranberry CompanyAllen J. Russell, Registered Agent89358 Cranberry LaneBandon, OR 97411




Civil Action No.





on (date) ; or






on (date) ; or


Other (specify):

.





Server’s address


0.00




__________ District of __________

))))))))))))

Plaintiff(s)

v. Civil Action No.

Defendant(s)






CLERK OF COURT


District of Oregon

BANNER BANK


CRANBERRY COMPANY

Bandon Cranberry Company LLCAllen Russell, Registered Agent89358 Cranberry LaneBandon, OR 97411




Civil Action No.





on (date) ; or






on (date) ; or


Other (specify):

.





Server’s address


0.00
