Loan Agreement

THIS LOAN AGREEMENT is entered into as of May 1, 2008 (the “Effective Date”)
between Centaur Farms of Southern California, Inc., a California corporation
(“Lender”) and U.S. Farms, Inc., a Nevada corporation (“Borrower”), who agree as
follows:
 
1.  Loan.  Subject to all of the terms and conditions set forth herein, Lender
agrees to loan to Borrower $125,000.00 evidenced by a promissory note in the
form attached hereto as Exhibit A (the “Promissory Note”) secured by
substantially all of the assets (the “Collateral”) of Borrower in accordance
with a security agreement, in the form attached as Exhibit B (the “Security
Agreement”) and certain shares of common stock of Borrower pledged by one of
Borrower’s principal stockholders pursuant to the terms and conditions of a
stock pledge agreement in the form attached hereto as Exhibit C (“Stock Pledge
Agreement”).  The principal outstanding balance of this loan shall be due and
payable by the Borrower to the Lender in full, without demand, on or before the
120th day after the Effective Date (the “Due Date”).  The unpaid principal
balance of the loan shall bear interest at the rate of twenty percent (20%) per
annum or the maximum permitted by law, whichever is less.

2.  Additional Consideration. As additional consideration for the Loan, Borrower
hereby agrees to issue and deliver to Lender, 500,000 shares of Borrowers’
common stock ($.001 par value) which shares shall be delivered upon the
execution of this Loan Agreement.

3.  Security For Loan.  As security for Borrower’s obligations under the
Promissory Note, and as a condition precedent to Lender making the loan to
Borrower, Borrower shall cause the following:

(a) Borrower shall execute the Security Agreement in favor of Lender, securing
all of the assets of Borrower; and

(b) Borrower’s President, Yan K. Skwara (“Skwara”), shall deliver into escrow
and pledge as security for Borrower’s obligations under the Promissory Note and
all related agreements twelve million five hundred thousand (12,500,000) shares
of Series C Convertible Preferred Stock of Borrower in the name of Skwara (the
“Shares”), pursuant to the terms and conditions of the Stock Pledge Agreement by
and among Skwara, Borrower, and Lender, and an Escrow Agreement in the form
attached hereto as Exhibit D (the “Escrow Agreement”) by the same
parties.  Borrower represents and warrants that such Shares are duly authorized,
validly issued and fully paid for by Skwara.

(c) Borrower’s representations and warranties made in connection with this
Agreement shall be true and correct in all material respects.

4.  Escrow Agent.  The escrow agent under the Escrow Agreement shall be de
Castro, P.C., 309 Laurel Street, San Diego, California 92101 (“DPC”).  All
parties understand that DPC is also counsel to Lender.  DPC shall have the right
to continue acting as counsel to Lender, notwithstanding its duties as escrow
agent under the Escrow Agreement.  All parties expressly consent to such
arrangement.

 
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5.  Closing.  The closing of this transaction (the “Closing”) shall take place
at such time and place as the parties may mutually agree to, but in no event
later than May 2, 2008.

6.  Deliveries at Closing:  The parties shall deliver the following at the
Closing::

(a) Borrower shall deliver the following to Lender (unless otherwise
specifically noted):

i.  
The Promissory Note, duly executed by Borrower in favor of Lender;

ii.  
The Security Agreement, duly executed by Borrower in favor of Lender;

iii.  
The Stock Pledge Agreement, duly executed by Skwara and Borrower in     favor of
Lender;

iv.  
The Escrow Agreement, duly executed by Skwara and Borrower;

v.  
The Stock certificates representing the Shares, delivered to Escrow Agent; and

vi.  
Such other documents and instruments as may be reasonably requested.

(b) Lender shall deliver to Borrower:
 
i.  
$125,000 cash; and

 
ii.  
The Security Agreement, the Stock Pledge Agreement, and the Escrow Agreement
duly executed by Lender.

7.  Representations.  In connection with the Loan provided for herein, the
Borrower hereby represents and warrants as follows, with each representation
being material and relied upon by the Lender:

(a) Due Organization.  The Borrower is a corporation, duly organized and validly
existing and in good standing under the laws of the State of Nevada and has full
power and authority to enter into this Agreement and consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions provided for herein will not violate or
conflict with any restrictions, covenants, agreements or other provisions made
by the Borrower, or to which the Borrower may be subject.

(b) Corporate Approval.  The execution of this Agreement and approval of the
transaction provided for herein have been duly authorized by the Board of
Directors of the Borrower and, if necessary, by its shareholders and all
necessary regulatory authorities.

 
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(c) Marketable Title.  The Borrower has good and marketable title in and to the
Collateral and will, in accordance with the terms of the Security Agreement,
pledge and grant to the Lender a security interest in the Collateral which is
free and clear of any and all liens, claims, encumbrances, other pledges or
security interests and all other defects of title or other matters whatsoever.

(d) Enforceability. This Agreement, the Promissory Note, Security Agreement, the
Escrow Agreement, and the Stock Pledge Agreement (collectively, the “Loan
Documents”) will be valid and binding obligations of Borrower, enforceable
according to their terms, except as may be limited by: (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights; (ii) general principles
of equity that restrict the availability of equitable or legal remedies.

8.  Covenants.  So long as the Loan shall remain unpaid, the Borrower hereby
covenants and agrees with the Lender as follows:

(a) The Borrower will not, without the prior written consent of Lender, further
encumber or grant additional security interests in and to the Collateral.

(b) The Borrower shall execute any and all other instruments or documents as may
reasonably be required to consummate the agreements of the Borrower under the
terms of the Loan Documents.

9.  Events of Default. For purposes of this Agreement, “Event of Default” means:
(a) the failure of Borrower to pay any monetary amount within five (5) days of
the due date thereof as provided under the Loan Documents; or (b) the failure by
a party to satisfy a non-monetary obligation under the Loan Documents within 10
days after receiving a written notice of default from the other party.

10.  Remedies.  Upon the occurrence of an Event of Default or at any time
thereafter, the Lender may, at its option and without notice, accelerate the
maturity of the Loan and proceed with each and every right, power and remedy
provided for in the Loan Documents.  The Lender may pursue any other right,
power or remedy available to it, whether at law, in equity, by statute or
otherwise, to enforce collection of all amounts and performance of all other
obligations due and owing to him.  The Lender shall be entitled to recover all
of its costs and expenses, including reasonable attorney’s fees, incurred in
connection with the enforcement of any and all rights, powers and remedies under
the Loan Documents and in addition Lender shall be entitled to recover from
Borrower, as Liquidated Damages, the sum of $50,000, in addition to all other
obligations of Borrower to Lender.

11.  Notices.  Unless otherwise changed by notice given in accordance with this
provision, any notice or other communication required or permitted herein shall
be in writing and shall be deemed to have been duly given if delivered by hand,
overnight courier, facsimile transmission or prepaid cable or
telegram  and  confirmed in writing,  or mailed  first  class,  postage
prepaid,  by registered or certified  mail,  return  receipt  requested  (mailed
notices and notices sent by facsimile  transmission, cable or telegram shall be
deemed to have been given on the date sent) as follows:

 
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 If to the Lender, as follows:
Centaur Farms of Southern California
Attention:  Gary Cropp, President
P.O. Box 675645
14725 Rancho Santa Fe Farms Road
Rancho Santa Fe, CA 92067

         With a copy to:
Stanley M. Moskowitz, Esq.
de Castro,P.C.
309 Laurel Street
San Diego, CA 92101
FAX:  619-702-9401

         If to the Borrower, as follows:

US Farms, Inc.
1635 Rosecrans Street, Suite C
San Diego, CA 92106
FAX: 858-488-2828

         With a copy to:

12.  Counterparts; Facsimile Execution.  This Agreement may be executed in
counterparts, each of which is deemed an original and all of which together
constitute one document. This Agreement may be executed in counterparts by
original or telefax signatures, and all counterparts of this Agreement which are
executed by telefax signature shall be valid and binding as original signatures
for all purposes (evidentiary or otherwise).

13.  Governing Law.  This Agreement is governed by and construed in accordance
with the laws of the State of California.  All actions and proceedings arising
in connection with this Agreement must be tried and litigated exclusively in the
State and Federal courts located in San Diego County, State of California, which
courts have personal jurisdiction and venue over each of the parties to this
Agreement for the purpose of adjudicating all matters arising out of or related
to this Agreement.

14.  Drafting Ambiguities.  Each party to this Agreement and its legal counsel
have had an opportunity to review and revise this Agreement.  The rule of
construction that ambiguities are to be resolved against the drafting party may
not be employed in the interpretation of this Agreement or any amendment to this
Agreement.

15.  Entire Agreement.  This Agreement and all documents specifically referred
to and executed in connection with this Agreement:  (a) contain the entire and
final agreement of the parties to this Agreement with respect to the subject
matter of this Agreement, and (b) supersede all negotiations, stipulations,
understandings, agreements, representations and warranties, if any, with respect
to such subject matter, which precede or accompany the execution of this
Agreement.

 
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16.  Modification.  This Agreement may be modified only by a contract in writing
executed by the party to this Agreement against whom enforcement of the
modification is sought.

17.  Further Assurances.  Borrower shall take such further actions and execute
such other documents as may be necessary to effectuate the terms of the Loan
Documents.

18.  Severability.  In the event that any provision of this Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Note.

LENDER:                                                                                     BORROWER:

CENTAUR FARMS OF
SOUTHERN                                                                                                US
FARMS, INC.
CALIFORNIA,
INC.                                                                           A
NEVADA CORPORATION
a California corporation

By/s/ Gary
Cropp                                                                By: /s/ Yan
Skwara
Gary Cropp,
President                                                                                                Yan
Skwara, CEO

 
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EXHIBIT A
PROMISSORY NOTE

$ 125,000                                  May 1, 2008
                                 San Diego, California

         FOR VALUE RECEIVED, US Farms, Inc., a Nevada corporation, whose address
is 1635 Rosecrans Street, Suite C, San Diego, California 92106 ( the "Company"),
promises to pay to Centaur Farms of Southern California, Inc. ("Holder"), or its
assigns, the principal sum of One Hundred Twenty Five Thousand Dollars
($125,000) (the “Principal Amount”), or such greater amount as shall equal the
outstanding principal amount hereof and any unpaid accrued interest hereon, as
set forth below, shall be due and payable on September 2, 2008.

         The following is a statement of the rights of Holder and the conditions
to which this Note is subject, and to which Holder, by the acceptance of this
Note, agrees:

            1.      Interest. Commencing on the date above written and
thereafter until all outstanding principal and interest on this Note shall have
been paid in full, Company shall pay interest at the rate of twenty percent
(20%) per annum on the Principal Amount of this Note.

            2.     Prepayment. This Note may be prepaid in whole or in part at
any time by the Company without the prior written consent of Holder. Any such
prepayment will be applied first to the payment of interest accrued on this Note
and second, if the amount of prepayment exceeds the amount of all accrued
interest, to the payment of principal of this Note.

            3.      Events of Default. The occurrence of any of the following
shall constitute an "Event of Default" under this Note:

                         (a) Failure to Pay.  If Company shall fail to pay any
payment when due, and any interest required under the terms of this Note on the
date due and such payment shall not have been made within five (5) days of the
due date; or

                        (b) Voluntary Bankruptcy or Insolvency Proceedings. If
the Company shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of its or any of
its creditors, , (iii) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it, or (iv) take any action for the purpose of effecting any
of the foregoing;

                        (c) Involuntary Bankruptcy or Insolvency Proceedings. If
proceedings for the appointment of a receiver, trustee, liquidator or custodian
of the Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law or hereafter in effect shall be
commenced, and an order for relief entered in such proceeding shall not be
dismissed or discharged within thirty (30) days of the entry of such an order.

 
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           4.      Rights of Holder Upon Default. Upon the occurrence or
existence of any Event of Default and at any time thereafter during the
continuance of such Event of Default, Holder may declare all outstanding
obligations payable by Borrower hereunder to be immediately due and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived. In addition to the foregoing remedies, upon
the occurrence or existence of any Event of Default, Holder may exercise any
other right, power or remedy granted to it or otherwise permitted to it by law,
either by suit in equity or by action at law, or both.
 
   5.      Costs and Expenses--Liquidated Damages  The Lender shall be entitled
to recover all of its costs and expenses, including reasonable attorney’s fees,
incurred in connection with the enforcement of any and all rights, powers and
remedies under the Loan Documents and in addition Lender shall be entitled to
recover from Borrower, as Liquidated Damages, the sum of $50,000, in addition to
all other obligations of Borrower to Lender.
 
           6.      Security Interest.  The Holder has been granted a security
interest in certain Shares of common stock as more fully described in the Pledge
Agreement dated as of the date hereof between the Holder, the Company, and the
Pledgor as described in such Agreement, as well as in substantially all of the
assets of the Company as more fully described in the Security Agreement between
the Company and Holder.

            7.      Successors and Assigns. The rights and obligations of the
Company and the Holder of this Note shall be binding upon and benefit the
successors, assigns, heirs, administrators and transferees of the parties.

            8.      Waiver and Amendment. Any provision of this Note may be
amended, waived or modified upon the written consent of the Company and the
Holder.

            9.      Notices. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given (i) upon receipt if personally delivered, (ii) three (3) days after being
mailed by registered or certified mail, postage prepaid, or (iii) one day after
being sent by recognized overnight courier or by facsimile, if to the Holder, at
Centaur Farms of Southern California, Inc.,  Attention:  Gary Cropp, President,
P.O. Box 675645, 14725 Rancho Santa Fe Farms Road, Rancho Santa Fe, CA 92067, or
at such other address or number as the Holder shall have furnished to Company in
writing, or if to Company, at 1635 Rosecrans Street, Suite C, San Diego, CA
92106 or at such other address or number as the Company shall have furnished to
the Holder in writing.

            10.    Payment. Payment shall be made in lawful tender of the United
States.

 
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           11.     Governing Law. The descriptive headings of the several
sections and paragraphs of this Note are inserted for convenience only and do
not constitute a part of this Note. This Note and all actions arising out of or
in connection with this Note shall be governed by and construed in accordance
with the laws of the State of California, without regard to the conflicts of law
provisions of the State of California, or of any other state.
 
  12.     Severability.  In the event that any provision of this Note is invalid
or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Note.

         IN WITNESS WHEREOF, Company has caused this Note to be issued as of the
date first written above.

                                              US Farms, Inc.
                                              a Nevada corporation

                                              By:
                                                 /s/ Yan
Skwara                                                      

                                              Title:
                                                    Chief Executive
Officer                                                      

 

 
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EXHIBIT B
SECURITY AGREEMENT

 
SECURITY AGREEMENT (this “Agreement”), dated as of  May 1, 2008, by and between
Centaur Farms of Southern California, Inc., a California corporation (“Lender”)
and U.S. Farms, Inc., a Nevada corporation (“Borrower”).
 
W I T N E S S E T H:
 
WHEREAS, pursuant to a Loan Agreement, dated the date hereof, between the Lender
and the Borrower, the Lender has agreed to loan to Borrower $125,000.00
evidenced by a promissory note (the “Note”) of Borrower;
 
WHEREAS, in order to induce the Lender to purchase the Note, the Borrower has
agreed to execute and deliver to the Lender this Agreement for the benefit of
the Lender and to grant to it security interest in substantially all of the
assets (the “Collateral”) to secure the prompt payment, performance and
discharge in full of all of the Borrower’s obligations under the Loan Documents
(as defined in the Loan Agreement);
 
NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
 
ARTICLE I Certain Definitions.  As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1.  Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as “general intangibles” and “proceeds”) shall have the respective
meanings given such terms in Article 9 of the UCC.
 
1.1 “Collateral” means the collateral in which the Lender is granted a security
interest by this Agreement and which shall include the following, whether
presently owned or existing or hereafter acquired or coming into existence, and
all additions and accessions thereto and all substitutions and replacements
thereof, and all proceeds, products and accounts thereof, including, without
limitation, all proceeds from the sale or transfer of the Collateral and of
insurance covering the same and of any tort claims in connection therewith:
 
(a) cash, cash equivalents, accounts, accounts receivable, and deposit accounts
(collectively “Cash Equivalents”); and
 
(b) All Goods of the Borrower, including, without limitations, all machinery,
equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices
and other equipment of every kind and nature and wherever situated, together
with all documents of title and documents representing the same, all additions
and accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with the Borrower’s businesses and all improvements thereto
(collectively, the “Equipment”); and
 
 
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(c) All Inventory of the Borrower; and
 
(d) All of the Borrower’s contract rights and general intangibles, including,
without limitation, all partnership interests, stock or other securities,
licenses, distribution and other agreements, computer software development
rights, leases, franchises, customer lists, quality control procedures, grants
and rights, goodwill, trademarks, service marks, trade styles, trade names,
patents, patent applications, copyrights, deposit accounts, and income tax
refunds (collectively, the “General Intangibles”); and
 
(e) All Receivables of the Borrower including all insurance proceeds, and rights
to refunds or indemnification whatsoever owing, together with all instruments,
all documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the same
may represent, and all right, title, security and guaranties with respect to
each Receivable, including any right of stoppage in transit; and
 
(f) All of the Borrower’s documents, instruments and chattel paper, files,
records, books of account, business papers, computer programs, and all other
assets of Borrower, and the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(vi) above.
 
1.2 “Obligations” means all of the Borrower’s Obligations under  the Loan
Documents, in each case, whether now or hereafter existing, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later decreased, created or incurred,
and all or any portion of such Obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from the Lender as a preference, fraudulent transfer or otherwise as
such Obligations may be amended, supplemented, converted, extended or modified
from time to time.
 
1.3 “UCC” means the Uniform Commercial Code, as currently in effect in the State
of California.
 
ARTICLE II Grant of Security Interest.  As an inducement for the Lender to
purchase the Note and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Borrower
hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the
Lender, a continuing security interest in, a continuing lien upon, an
unqualified right to possession and disposition of and a right of set-off
against, in each case to the fullest extent permitted by law, all of the
Borrower’s right, title and interest of whatsoever kind and nature in and to the
Collateral (the “Security Interest”).
 
ARTICLE III Representations, Warranties, Covenants and Agreements of the
Borrower.  The Borrower represents and warrants to, and covenants and agrees
with, the Lender as follows:
 
 
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3.1 The Borrower has the requisite corporate power and authority to enter into
this Agreement and otherwise to carry out its Obligations.  The execution,
delivery and performance by the Borrower of this Agreement and the filings
contemplated therein have been duly authorized by all necessary action on the
part of the Borrower and no further action is required by the Borrower.  This
Agreement constitutes a legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor’s rights generally.
 
3.2 The Borrower represents and warrants that its principal place of business is
located in San Diego, California, where its respective books of account and
records are kept (other than temporarily at the offices of its attorneys or
accountants) or places where Collateral is stored or located, except as set
forth on Schedule A attached hereto;
 
3.3 The Borrower is the sole owner of the Collateral (except for non-exclusive
licenses granted by the Borrower in the ordinary course of business), free and
clear of any liens, security interests, encumbrances, rights or claims, and is
fully authorized to grant the Security Interest in and to pledge the Collateral,
there is not on file in any governmental or regulatory authority, agency or
recording office an effective financing statement, security agreement, license
or transfer or any notice of any of the foregoing (other than those that have
been filed in favor of the Lender pursuant to this Agreement) covering or
affecting any of the Collateral except as set forth on Exhibit 3(c).  So long as
this Agreement shall be in effect, the Borrower shall not execute and shall not
knowingly permit to be on file in any such office or agency any such financing
statement or other document or instrument (except to the extent filed or
recorded in favor of the Lender pursuant to the terms of this Agreement).
 
3.4 No part of the Collateral has been judged invalid or unenforceable.  No
written claim has been received that any Collateral or the Borrower’s use of any
Collateral violates the rights of any third party. There has been no adverse
decision to the Borrower’s claim of ownership rights in or exclusive rights to
use the Collateral in any jurisdiction or to the Borrower’s right to keep and
maintain such Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of the Borrower,
threatened before any court, judicial body, administrative or regulatory agency,
arbitrator or other governmental authority.
 
3.5 The Borrower shall at all times maintain its books of account and records
relating to the Collateral at its principal place of business and its Collateral
at the locations set forth on Schedule A attached hereto and may not relocate
such books of account and records or tangible Collateral unless it delivers to
the Lender at least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the United States)
and (ii) evidence that appropriate financing statements and other necessary
documents have been filed and recorded and other steps have been taken to
perfect the Security Interest to create in favor of the Lender valid, perfected
and continuing liens in the Collateral.
 
3.6 This Agreement creates in favor of the Lender a valid security interest in
the Collateral securing the payment and performance of the Obligations.
 
3.7 On the date of execution of this Agreement, the Borrower will deliver to the
Lender one or more executed UCC financing statements on Form-1 with respect to
the Security Interest for filing with the jurisdictions indicated on Schedule B,
attached hereto and in such other jurisdictions as may be requested by the
Lender.
 
 
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3.8 The execution, delivery and performance of this Agreement does not conflict
with or cause a breach or default, or an event that with or without the passage
of time or notice, shall constitute a breach or default, under any agreement to
which the Borrower is a party or by which the Borrower is bound.  No consent
(including, without limitation, from stock holders or creditors of the Borrower)
is required for the Borrower to enter into and perform its Obligations
hereunder.
 
3.9 The Borrower shall at all times cooperate with the Lender in maintaining the
liens and Security Interest provided for hereunder as valid and perfected, first
priority, liens and security interests in the Collateral in favor of the Lender
until this Agreement and the Security Interest hereunder shall terminate
pursuant to Section 11.  The Borrower hereby agrees to defend the same against
any and all persons.  The Borrower shall safeguard and protect all Collateral
for the account of the Lender.  At the request of the Lender, the Borrower will
sign and deliver to the Lender at any time or from time to time one or more
financing statements pursuant to the UCC (or any other applicable statute) in
form reasonably satisfactory to the Lender and will pay the cost of filing the
same in all public offices wherever filing is, or is deemed by the Lender to be,
necessary or desirable to effect the rights and Obligations provided for herein.
Without limiting the generality of the foregoing, the Borrower shall pay all
fees, taxes and other amounts necessary to maintain the Collateral and the
Security Interest hereunder, and the Borrower shall obtain and furnish to the
Lender from time to time, upon demand, such releases and/or subordinations of
claims and liens which may be required to maintain the priority of the Security
Interest hereunder.
 
3.10 The Borrower shall keep and preserve its Equipment, Inventory and other
tangible Collateral in good condition, repair and order and shall not operate or
locate any such Collateral (or cause to be operated or located) in any area
excluded from insurance coverage.
 
3.11 The Borrower shall, within ten (10) days of obtaining knowledge thereof,
advise the Lender promptly, in sufficient detail, of any substantial change in
the Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Lender’s security
interest therein.
 
3.12 The Borrower shall promptly execute and deliver to the Lender such further
deeds, mortgages, assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Lender may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral including, without limitation, the execution and delivery of a
separate security agreement with respect to the Borrower’s intellectual property
(“Intellectual Property Security Agreement”) in which the Lender has been
granted a security interest hereunder, substantially in a form acceptable to the
Lender, which Intellectual Property Security Agreement, other than as stated
therein, shall be subject to all of the terms and conditions hereof.
 
 
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3.13 The Borrower shall permit the Lender and its representatives and agents to
inspect the Collateral at any time during reasonable business hours, and to make
copies of records pertaining to the Collateral as may be requested by the Lender
from time to time, so long as the Lender provides the Borrower with reasonable
prior notice.
 
3.14 The Borrower will take all steps reasonably necessary to diligently pursue
and seek to preserve, enforce and collect any rights, claims, causes of action
and accounts receivable in respect of the Collateral.
 
3.15 The Borrower shall promptly notify the Lender in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by the
Borrower that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Lender hereunder.
 
3.16 All information heretofore, herein or hereafter supplied to the Lender by
or on behalf of the Borrower with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.
 
ARTICLE IV Defaults.  The following events shall be “Events of Default”:
 
4.1 The occurrence of an Event of Default (as defined in the  Loan Agreement);
 
4.2 Any representation or warranty of the Borrower in any Loan Document shall
prove to have been incorrect in any material respect when made;
 
4.3 The failure by the Borrower to observe or perform any of its Obligations
hereunder for ten (10) days after receipt by the Borrower of notice of such
failure from the Lender; and
 
ARTICLE V Duty To Hold In Trust.  Upon the occurrence of any Event of Default
and at any time thereafter, the Borrower shall, upon receipt by it of any
revenue, income or other sums subject to the Security Interest, whether payable
pursuant to the Note or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Lender and shall forthwith endorse and transfer
any such sums or instruments, or both, to the Lender for application to the
satisfaction of the Obligations.
 
ARTICLE VI Rights and Remedies Upon Default.  Upon occurrence of any Event of
Default and at any time thereafter, the Lender shall have the right to exercise
all of the remedies conferred hereunder and under the Note, and the Lender shall
have all the rights and remedies of a Lender under the UCC and/or any other
applicable law (including the Uniform Commercial Code of any jurisdiction in
which any Collateral is then located).  Without limitation, the Lender shall
have the following rights and powers:
 
 
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6.1 The Lender shall have the right to take possession of the Collateral and,
for that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and the Borrower shall assemble the Collateral and make it available to
the Lender at places which the Lender shall reasonably select, whether at the
Borrower’s premises or elsewhere, and make available to the Lender, without
rent, all of the Borrower’s respective premises and facilities for the purpose
of the Lender taking possession of, removing or putting the Collateral in
saleable or disposable form.
 
6.2 The Lender shall have the right, but not the obligation, to operate the
business of the Borrower using the Collateral and shall have the right to
assign, sell, lease or otherwise dispose of and deliver all or any part of the
Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future
delivery, in such parcel or parcels and at such time or times and at such place
or places, and upon such terms and conditions as the Lender may deem
commercially reasonable, all without (except as shall be required by applicable
statute and cannot be waived) advertisement or demand upon or notice to the
Borrower or right of redemption of the Borrower, which are hereby expressly
waived.  Upon each such sale, lease, assignment or other transfer of Collateral,
the Lender may, unless prohibited by applicable law which cannot be waived,
purchase all or any part of the Collateral being sold, free from and discharged
of all trusts, claims, right of redemption and equities of the Borrower, which
are hereby waived and released.
 
6.3 The Lender shall have the right to require Borrower to, and Borrower shall
be obliged to, immediately take such steps as may be necessary to perfect
Lender’s first priority interest in all  Cash Equivalents under the UCC,
including, without limitation, the execution of a lock-box agreement in such
form as may be reasonably required by Lender with any and all banks at which
Borrower holds any Cash Equivalents giving Lender control over such Cash
Equivalents.
 
ARTICLE VII Applications of Proceeds.  The proceeds of any such sale, lease or
other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys’ fees and expenses incurred by the Lender in enforcing its rights
hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations, and to the payment of
any other amounts required by applicable law, after which the Lender shall pay
to the Borrower any surplus proceeds.  If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Lender is legally entitled, the Borrower will be liable for
the deficiency, together with interest thereon, at the rate of 25% per annum
(the “Default Rate”), and the reasonable fees of any attorneys employed by the
Lender to collect such deficiency.  To the extent permitted by applicable law,
the Borrower waives all claims, damages and demands against the Lender arising
out of the repossession, removal, retention or sale of the Collateral, unless
due to the gross negligence or willful misconduct of the Lender.
 
 
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ARTICLE VIII Costs and Expenses. The Borrower agrees to pay all out-of-pocket
fees, costs and expenses incurred in connection with any filing required
hereunder, including without limitation, any financing statements, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Lender.  The Borrower
shall also pay all other claims and charges which in the reasonable opinion of
the Lender might prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein.  The Borrower will also, upon demand, pay to the
Lender the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the Lender
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Lender under the Note.  Until so paid, any fees payable
hereunder shall be added to the principal amount of the Note and shall bear
interest at the Default Rate.
 
ARTICLE IX Responsibility for Collateral.  The Borrower assumes all liabilities
and responsibility in connection with all Collateral, and the Obligations of the
Borrower hereunder or under the Loan Documents shall in no way be affected or
diminished by reason of the loss, destruction, damage or theft of any of the
Collateral or its unavailability for any reason.
 
ARTICLE X Security Interest Absolute.  All rights of the Lender and all
Obligations of the Borrower hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of any Loan Document
or any agreement entered into in connection with the foregoing, or any portion
hereof or thereof; (b) any change in the time, manner or place of payment or
performance of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from the Loan
Documents or any other agreement entered into in connection with the foregoing;
(c)  any exchange, release or nonperfection of any of the Collateral, or any
release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by the Lender to obtain, adjust, settle and cancel
in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to the Borrower,
or a discharge of all or any part of the Security Interest granted
hereby.  Until the Obligations shall have been paid and performed in full, the
rights of the Lender shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy.  The Borrower expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance.  In the event
that at any time any transfer of any Collateral or any payment received by the
Lender hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Lender, then, in any such event, the
Borrower’s Obligations hereunder shall survive cancellation of this Agreement,
and shall not be discharged or satisfied by any prior payment thereof and/or
cancellation of this Agreement, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof.  The Borrower
waives all right to require the Lender to proceed against any other person or to
apply any Collateral which the Lender may hold at any time, or to marshal
assets, or to pursue any other remedy.  The Borrower waives any defense arising
by reason of the application of the statute of limitations to any obligation
secured hereby.
 
 
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ARTICLE XI Term of Agreement.  This Agreement and the Security Interest shall
terminate on the date on which all payments under the Note have been made in
full and all other Obligations have been paid or discharged.  Upon such
termination, the Lender, at the request and at the expense of the Borrower, will
join in executing any termination statement with respect to any financing
statement executed and filed pursuant to this Agreement.
 
ARTICLE XII Power of Attorney; Further Assurances.
 
12.1 The Borrower authorizes the Lender, and does hereby make, constitute and
appoint it, and its respective officers, agents, successors or assigns with full
power of substitution, as the Borrower’s true and lawful attorney-in-fact, with
power, in its own name or in the name of the Borrower, to, after the occurrence
and during the continuance of an Event of Default, (i) endorse any notes,
checks, drafts, money orders, or other instruments of payment (including
payments payable under or in respect of any policy of insurance) in respect of
the Collateral that may come into possession of the Lender; (ii) to sign and
endorse any UCC financing statement or any invoice, freight or express bill,
bill of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or
threatened against the Collateral; (iv) to demand, collect, receipt for,
compromise, settle and sue for monies due in respect of the Collateral; and
(v) generally, to do, at the option of the Lender, and at the Borrower’s
expense, at any time, or from time to time, all acts and things which the Lender
deems necessary to protect, preserve and realize upon the Collateral and the
Security Interest granted therein in order to effect the intent of the Loan
Documents, all as fully and effectually as the Borrower might or could do; and
the Borrower hereby ratifies all that said attorney shall lawfully do or cause
to be done by virtue hereof.  This power of attorney is coupled with an interest
and shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding.
 
12.2 On a continuing basis, the Borrower will make, execute, acknowledge,
deliver, file and record, as the case may be, in the proper filing and recording
places in any jurisdiction, all such instruments, and take all such action as
may reasonably be deemed necessary or advisable, or as reasonably requested by
the Lender, to perfect the Security Interest granted hereunder and otherwise to
carry out the intent and purposes of this Agreement, or for assuring and
confirming to the Lender the grant or perfection of a security interest in all
the Collateral.
 
12.3 The Borrower hereby irrevocably appoints the Lender as the Borrower’s
attorney-in-fact, with full authority in the place and stead of the Borrower and
in the name of the Borrower, from time to time in the Lender’s discretion, to
take any action and to execute any instrument which the Lender may deem
necessary or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without the
signature of the Borrower where permitted by law.
 
ARTICLE XIII Notices.  All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:
 
 
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If to the Lender, as follows:
Centaur Farms of Southern California
Attn:  Mr. Gary Cropp, President
P.O. Box 675645
14725 Rancho Santa Fe Farms Road
Rancho Santa Fe, CA 92067

         With a copy to:
Stanley M. Moskowitz, Esq.
de Castro,P.C.
309 Laurel Street
San Diego, CA 92101
FAX:  619-702-9401

         If to the Borrower, as follows:
US Farms, Inc.
1635 Rosecrans Street, Suite C
San Diego, CA 92106
FAX: 858-488-2828

         With a copy to:
___________________________
___________________________
___________________________

 
ARTICLE XIV Other Security.  To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Lender shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Lender’s rights and
remedies hereunder.
 
ARTICLE XV Severability. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Note.
 
 
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ARTICLE XVI Miscellaneous.
 
16.1 No course of dealing between the Borrower and the Lender, nor any failure
to exercise, nor any delay in exercising, on the part of the Lender, any right,
power or privilege hereunder or under the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
 
16.2 All of the rights and remedies of the Lender with respect to the
Collateral, whether established hereby or by the Note or by any other
agreements, instruments or documents or by law shall be cumulative and may be
exercised singly or concurrently.
 
16.3 This Agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto.  Except as
specifically set forth in this Agreement, no provision of this Agreement may be
modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.
 
16.4 In the event that any provision of this Agreement is held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, unless such
provision is narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable.  If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.
 
16.5 No waiver of any breach or default or any right under this Agreement shall
be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach or
default or right, whether of the same or similar nature or otherwise.
 
16.6 This Agreement shall be binding upon and inure to the benefit of each party
hereto and its successors and assigns.
 
16.7 Each party shall take such further action and execute and deliver such
further documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
 
16.8 This Agreement shall be construed in accordance with the laws of the State
of California, except to the extent the validity, perfection or enforcement of a
security interest hereunder in respect of any particular Collateral which are
governed by a jurisdiction other than the State of California in which case such
law shall govern.  Each of the parties hereto irrevocably submit to the
exclusive jurisdiction of any California or United States Federal court sitting
in San Diego County over any action or proceeding arising out of or relating to
this Agreement, and the parties hereto hereby irrevocably agree that all claims
in respect of such action or proceeding may be heard and determined in such
California or Federal court.  The parties hereto agree that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  The parties hereto further waive any objection to venue in the State
of  California and any objection to an action or proceeding in the State of
California on the basis of forum non conveniens.
 
 
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16.9 EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION.  THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  IN THE EVENT OF A
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
 
16.10 This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.  In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
 
(Signatures on Next Page)
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.
 
LENDER:                                                                                     BORROWER:

CENTAUR FARMS OF SOUTHERN                                           US FARMS,
INC.
CALIFORNIA,
INC.                                                                      a
Nevada corporation
a California corporation

By/s/ Gary
Cropp                                                                           
By: /s/ Yan Skwara
         Gary Cropp,
President                                                                     
Yan K. Skwara, CEO

 

 

 

 

 

 
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EXHIBIT C
STOCK PLEDGE AGREEMENT

This Pledge Agreement made this 1st day of May 2008 by and among Centaur Farms
of Southern California, Inc., a California corporation ("Lender"),  US Farms,
Inc., a Nevada corporation ("Borrower"), Yan K. Skwara, an individual
(“Pledgor”), and de Castro, P.C., a California professional law corporation, as
escrow agent ("'Escrow Agent").

WHEREAS, Lender has loaned or will loan to Borrower a total of $125,000 (the
"Principal Sum") pursuant to the terms of a Loan Agreement of even date hereof;

WHEREAS, Borrower has issued a secured promissory note (the "Note") of even date
herewith in the which Note bears interest at the rate of 20% per annum; and

WHEREAS, Pledgor is a substantial stockholder and has a substantial financial
stake in the Borrower and will substantially benefit from the Loan Agreement and
Note;

WHEREAS, to induce Lender to lend Borrower the Principal Sum, Pledgor has agreed
to pledge 12,500,000 shares of Series C Preferred Stock, (which is convertible
into 12,500,000 shares of common stock) in Borrower as collateral for the
repayment of the Note and all other obligations, which shares are represented by
the stock certificates listed on Appendix "A", attached hereto (the "Shares"),
and

WHEREAS, the Shares are to be held in in escrow pursuant to an Escrow Agreement
referenced in the Loan Agreement.

NOW THEREFORE, the parties hereto agree and acknowledge that the foregoing
recitals are true and correct and to the following:

1.      Payment of Indebtedness. Borrower hereby agrees pay to Lender the sum of
$125,000, plus accrued interest and any costs in accordance with the terms of
the Note, and to satisfy any other obligations under any Loan Document (as
defined in the Loan Agreement).

2.      Pledge of Collateral. As collateral security for the repayment all
indebtedness under the Loan Documents, the Pledgor hereby pledges and grants to
the Lender a security interest in and to the Shares, as identified in Appendix
A, and any and all stock rights, powers and other distributions, dividends or
proceeds thereof. In addition, any stock rights, dividends, powers or other
distributions or proceeds received by the Pledgor shall be held in escrow for
and delivered to the Lender to be held in accordance with the terms of the
Escrow Agreement, and shall be included in the Shares described above.  Pledgor
consents to the Lender jointly receiving the Shares and acknowledge that in the
event of default, as defined in Section 7 below, Lender may sell the Shares in
either Lender' name, and distribute the proceeds thereof as set forth below, in
addition to any other remedies available to them.

 
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3.      Delivery of the Shares. The Shares shall be delivered to the Escrow
Agent, together with undated stock powers executed in blank. The Shares shall be
held and delivered by the Escrow Agent in accordance with the terms of the
Escrow Agreement to be executed by all parties concurrently with this Agreement.

4.      Pledgor's and Borrower’s Warranties and Indemnity.

4.1           Each of Pledgor and Borrower represents, warrants and covenants
(a) that Pledgor is the lawful owner of the Shares, (b) that the Shares are
fully paid and nonassessable, (c) that as of the date hereof, the Shares are
free and clear of all liens, encumbrances, security, interests or other
restrictions, and this pledge constitutes a valid and perfected first priority
security interest in the Shares enforceable against the Pledgor, (d) that the
Shares are not subject to any outstanding rights of redemption or options to
purchase or sell except as set forth in the Company's Certificate of
Incorporation and By-laws, (e) that the Pledgor has the sole right and lawful
authority to pledge the Shares and otherwise to comply with the provisions
hereof, (f) no litigation is pending or threatened against the Pledgor, which if
adversely determined, would have a material adverse effect against the Pledgor
or the Lender' rights in respect of the Shares, (g) that the Pledgor agrees to
defend the Lender' title in the Shares and the security interest therein against
any and all claims and demands, (h) this Agreement constitutes the legal, valid
and binding obligation of the Pledgor, enforceable against the Pledgor in
accordance with its terms, and, (i) the Pledgor has received adequate
consideration for the pledge of the Shares and acknowledges that Lender would
not make the Loan if Pledgor did not pledge the Shares.

4.2           If any adverse claim is asserted in respect of the Shares or any
portion thereof, except as such may arise from the wanton, reckless or
unauthorized acts of the Lender, each of Pledgor and Borrower agrees to
indemnify the Lender and hold the Lender harmless from and against any
reasonable liabilities or damages, and reasonable attorney's fees incurred by
the Lender in exercising any right, power or remedy of the Lender hereunder. Any
such loss, liability or expense so incurred shall be paid by the Pledgor upon
demand, become part of the Indebtedness secured by the Shares and bear interest
at the rate of 25% per annum.

5.      Voting of Collateral. While Borrower is not in default in the payments
under the Notes, Pledgor may vote the Shares, provided that said voting shall be
in conformity with the Pledgor's performance under this Agreement and the Note.

 
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6.      Dividends and Other Distributions. While Borrower is not in default
hereunder, Pledgor may receive all cash dividends, payments of principal and
interest, and other distributions payable with respect to Shares, provided,
however, that Pledgor shall immediately inform Lender of the receipt of any such
dividend, payment or other distribution and shall deliver such dividend, payment
or other distribution to the Escrow Agent, unless and until Lender shall in
writing release Pledgor from making such delivery to the Escrow Agent. Pledgor
shall cause all non-cash dividends and distributions with respect to Shares to
be distributed directly to the Escrow Agent, to be held by Escrow Agent as
additional security, and if any such distribution is made to Pledgor they shall
receive such distribution in trust for Lender and shall immediately deliver it
to Escrow Agent.

7.      Default.  Borrower shall be in default hereunder upon the occurrence of
any of the following events:

(a) Any event of default shall occur under any Loan Document;

(b) If Borrower or the Pledgor is not paying debts as they become due, becomes
insolvent, files or has filed against any of them a petition under any chapter
of the United States Bankruptcy Code, 11 U.S.C. ss. 101 et seq. (or any similar
petition under any insolvency law of any jurisdiction), proposes any
liquidation, composition or financial reorganization with his creditors, makes
an assignment or trust mortgage for the benefit of creditors, or if a receiver,
trustee, custodian or similar agent is appointed or takes possession with
respect to any property or business of Borrower, or Pledgor;

(c) If any lien, encumbrance or adverse claim of any nature whatsoever is
asserted with respect to any Shares;

(d) If any representation or warranty of Borrower or the Pledgor hereunder is or
shall become false;

(e) If Borrower or Pledgor fails to fulfill any obligation hereunder;

(f) If Borrower or Pledgor fails to pay any indebtedness or perform any of
the  obligations when such payment or performance is due,

8.      Lender' Rights upon Default. Upon the occurrence of any default as
defined in Section 7 hereof, Lender may notify the Escrow Agent of such default.
Escrow Agent shall comply with the terms of the Escrow Agreement and deliver the
Shares to the Lender then Lender may elect, in their sole discretion, to take
any one or more of the following actions:

 
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8.1           at any time and from time to time sell, assign and deliver all or
any part of the Shares, or any interest therein, at any public or private sale,
for cash, on credit or for other property, for immediate or future delivery
without any assumption of credit risk, and for such price or prices and on such
terms as Lender in their absolute discretion may determine; provided that (i) at
least five (5) days' notice of the time and place of any such sale shall be
given to Guarantor and Pledgor, and (ii) in the case of any sale, such notice
shall also contain the terms of the proposed sale and Lender shall sell the
Shares proposed to be sold to any purchaser procured by Pledgor who is ready,
willing and able to purchase, and who prior to the time of such sale tenders the
purchase price of, such Shares on terms more favorable to Lender than the terms
contained in such notice; provided, further, the Pledgor acknowledges that the
Lender may be unable to effect a public sale of all or part of the Shares by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment, and
not with a view to the distribution or resale thereof. The Pledgor acknowledges
that any such private sale may be at prices and on terms less favorable to the
seller than if sold at public sales and that private sales shall be deemed to be
made in a commercially reasonable manner notwithstanding that such a private
sale may result in a lower sale price.

8.2           exercise the right to vote, the right to receive cash dividends
and other distributions, and all other rights with respect to the Shares as
though Lender was the absolute owner thereof, whether or not such rights were
retained by Pledgor as against Lender before default; and

8.3           exercise all other rights available to a secured party under the
Uniform Commercial Code and other applicable law. The rights and remedies
available pursuant to the Agreement are cumulative, and not exclusive of any
other rights or remedies otherwise available to the Lender.

9.      Application of Sale Proceeds. In the event of a sale of Shares, the
proceeds shall first be applied to the payment of the expenses of the sale,
including brokers' commissions, counsel fees, any taxes or other charges imposed
by law upon the Shares or the transfer thereof and all other charges paid or
incurred by Lender pertaining to the sale; and, second, to satisfy outstanding
indebtedness, and, third, the surplus (if any) shall be paid to Pledgor.

10.    Notices. Any notice or request hereunder may be given to a party hereto
at the respective addresses set forth below or as may hereafter be specified in
a notice designated as a change of address under this Section. Any notice or
request hereunder shall be given by registered or certified mail, return receipt
requested, hand delivery, overnight mail or telecopy (confirmed by mail),
Notices and requests shall be, in the case of those by hand delivery, deemed to
have been given when delivered to any party to whom it is addressed, in the case
of those by mail or overnight mail, deemed to have been given three (3) Business
Days after the date when deposited in the mail or with the overnight mail
carrier, and, in the case of a telecopy, when confirmed.

 
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LENDER:

Centaur Farms of Southern California, Inc.
           Attention:  Gary Cropp, President
P.O. Box 675645
14725 Rancho Santa Fe Farms Road
Rancho Santa Fe, CA 92067

BORROWER:                                           

US Farms, Inc.
1635 Rosecrans Street, Suite C
San Diego, CA 92106
FAX: 858-488-2828

PLEDGOR:

Yan K. Skwara
1635 Rosecrans Street, Suite C
San Diego, CA 92106

or such other address as may be designated in writing hereafter.

11.    Heirs, Successors, Etc. This Agreement and all of its terms and
provisions shall benefit and bind the heirs, successors, assigns, transferees,
executors and administrators of each of the parties hereto.

12.    Lender' Forbearance. Any forbearance, failure or delay by Lender in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
such right, power or remedy. Any single or partial exercise of any right, power
or remedy of Lender shall continue in full force and effect until such right,
power or remedy is specifically waived in writing by Lender.

13.    Further Assurances. The Pledgor covenants and agrees to execute and
deliver, or cause to be executed or delivered, all such other stock powers,
proxies, instruments, UCC 1 Financing Statements and documents, and will take
such other action or actions as the Lender may reasonably request from time to
time in order to perfect its first priority security interest in the Shares and
to carry out the provisions and purposes hereof.

14.    Termination. This Agreement and the pledge and security interest
represented hereby shall terminate upon the indefeasible payment in full of the
Note and the satisfaction by Borrower and/or Pledgor of all of their obligations
under the Loan Documents.

 
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15.    Miscellaneous. (a) This Agreement or any part thereof cannot be changed,
waived, or amended except by an instrument in writing signed by Lender; and
waiver on one occasion shall not operate as a waiver on any other occasion. (b)
The Uniform Commercial Code and other laws of the State of California shall
govern the construction and enforcement of this Agreement. (c) If any part of
this Agreement or any agreement, document, or instrument executed in connection
herewith shall be deemed invalid or unenforceable by a court of competent
jurisdiction, the remaining provisions shall remain in full force and effect,
and shall continue to be binding upon the parties. (d) This Agreement may be
executed in one or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute one and the
same instrument.

16.    Jurisdiction. Each of the Borrower and Pledgor irrevocably submits to the
jurisdiction of the courts of the State of California and the United States
District Court for the Southern District of California for the purpose of any
suit, action or other proceeding brought by the Lender arising out of or
relating to this Agreement, and each of the Borrower or Pledgor waives and
agrees not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that the Borrower or the Pledgor are not
personally subject to the jurisdiction of the courts of the State of California
or the United States District Court for the Southern District of California that
the Borrower's or the Pledgor's property is exempt or immune from execution or
attachment, either prior to judgment or in aid of execution, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper, or that this Agreement or the
subject matter hereof may not be enforced in or by such court.

EACH OF THE BORROWER AND THE PLEDGOR HEREBY WAIVES ANY AND ALL RIGHTS TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH ALL MATTERS CONTEMPLATED
HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH.

17.    Construction. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means including, without limitation.

18.    Severability.  In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Note.
 
 
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officer of each party hereto as of the date first above written.
 
CENTAUR FARMS OF SOUTHERN CALIFORNIA,
a California corporation

By:/s/ Gary
Cropp                                                                           
Gary Cropp, President

US FARMS, INC.,
a Nevada corporation

By: /s/ Yan
Skwara                                                                           
Yan K. Skwara, President

/s/ Yan
Skwara                                                                           
Yan K. Skwara, an individual as Pledgor

 

 
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EXHIBIT D
ESCROW AGREEMENT

This Escrow Agreement made this 1st day of May, 2008, by and between Centaur
Farms of Southern California, Inc., a California corporation (hereinafter
referred to as “Lender”), US Farms, Inc., a Nevada corporation (“Borrower”), Yan
Skwara, an individual (“Pledgor)” and de Castro P.C. a California Professional
Corporation (“Escrow Agent”)  In this agreement, Borrower and Pledgor are
sometimes referred to as the “Parties.”

WHEREAS, Pledgor is a major stockholder and Chief Executive Officer and
President of Borrower, and Borrower has borrowed funds from Lender pursuant to
the terms of a Loan Agreement of even date hereof;

WHEREAS, the Parties have entered into a Pledge Agreement dated the 2nd day of
May, 2008, (the “Pledge Agreement”) (all capitalized terms herein shall have the
have the meaning set forth in the Loan Agreement); and

WHEREAS, for valuable consideration, the Pledgor has agreed that shares of
Common Stock of Borrower (the “Escrow Shares”) currently beneficially owned by
Pledgor shall be placed in escrow with the Escrow Agent pursuant to Pledge
Agreement;

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions
hereinafter set forth, the parties hereto hereby agree as follows:

1.      Deposit of Escrow Shares; Duties of Escrow Agent. Upon receipt of the
stock certificates set forth on Appendix “A” to the Pledge Agreement (the
“Certificates”) representing the Escrow Shares, Pledgor shall immediately
deposit the Certificates with the Escrow Agent.  In addition, Pledgor shall
deposit with the Escrow Agent duly executed Stock Powers, endorsed in blank for
the Certificates.  Escrow Agents sole responsibility shall be to hold the Escrow
Shares and Stock Powers pursuant to this Agreement and to perform only such
duties as are expressly provided for under this Agreement.

2.      Duration of Escrow Period.   The Escrow Period shall commence on the
date upon which the Escrow Shares are received by the Escrow Agent and shall
terminate at 5 .00 P.M. PDT on the 120th day following the date of this
Agreement (the “Termination Date”), unless sooner terminated in accordance with
this Agreement.

3.      Release and Delivery of Escrow Shares.

 a) In the event that Borrower shall pay to Lender all amounts due to Lenders
pursuant to the Agreement on the Termination Date, or sooner,  then the Escrow
Agent shall deliver the Escrow Shares to Pledgor, and Escrow Agent’s obligations
under this Agreement shall be terminated.

 
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 b) In the event that the Lender is not paid all amounts due by the Termination
Date or there is otherwise an event of default, as set forth in any Loan
Document, and Escrow Agent shall have received notice in writing of such
non-payment or other default (the “Notice of Default”) by the Lenders, then the
Escrow Agent shall, within five (5) days after the receipt of the Notice of
Default, deliver the Escrow Shares to the Lenders, provided however that the
Lenders shall have, on the same date as they send the Notice of Default to the
Escrow Agent, had sent a copy of such Notice of Default  to the Borrower and
the  Pledgor at the addresses set forth below.  Upon release of the Escrow
Shares in accordance with this Paragraph, Escrow Agent’s obligations under this
Agreement shall be terminated.
 
4.      Non-transferability of Escrow Shares. During the Escrow Period, none of
the Escrow Shares deposited in the Escrow Account shall be sold, pledged,
hypothecated or otherwise transferred or delivered out of the Escrow Account.

5.      Receipt of Distributions and Dividends.  During the term of the Escrow
Period, if US Farms, Inc. (“USFI”) issues any distributions, dividends, rights
or other property with respect to the Escrow Shares, or in the event of a share
split, recapitalization, or other transaction affecting the capitalization of
the USFI, then, in such event, USFI shall be authorized to send evidence of such
distributions, dividends, rights, share certificates or other property directly
to the Escrow Agent, who is hereby authorized to hold and retain possession of
all such evidences of distributions, dividends, rights or other property until
termination of the Escrow Period. Upon termination of the Escrow Period, the
Escrow Agent is hereby authorized, empowered and instructed to deliver all such
evidences of distributions, dividends, rights, Common Stock or other property to
Lenders or Pledgor, as the case may be.

6.      Limitation of Liability of Escrow Agent.  In acting pursuant to this
Agreement, the Escrow Agent shall be protected fully in every exercise of its
discretion and shall have no obligation hereunder to the Parties or to any other
party except as expressly set forth herein.  In performing any of his duties
hereunder, the Escrow Agent shall not incur any liability to any person for any
damages, losses or expenses, except for willful default or gross negligence and
it shall, accordingly, not incur any such liability with respect to (1) any
action taken or omitted in good faith relating to the duties and
responsibilities of the Escrow Agent under this Agreement, and (2) any action
taken or omitted in reliance upon any instrument, including written notices
provided for herein, not only to its due execution and validity and
effectiveness of its provisions, but also to the truth and accuracy of any
information contained therein, which the Escrow Agent shall in good faith
believe to be genuine, to have been signed and presented by a proper person or
persons and to be in compliance with the provisions of this Agreement.

7.      Indemnification.  The Parties, jointly and severally, shall indemnify
and hold harmless the Escrow Agent against any and all losses, claims, damages,
liabilities and expenses, including reasonable costs of investigation and
counsel fees and disbursements, which may be imposed upon the Escrow Agent or
incurred by the Escrow Agent in connection with his acceptance of appointment as
Escrow Agent or the performance of his duties hereunder, including any
litigation arising from this Agreement or involving the subject matter hereof.
 
8.      Payment of Fees.  The Parties, jointly and severally, shall be
responsible for all reasonable fees (at its standard hourly rates) and expenses
of the Escrow Agent incurred by it in the course of performing hereunder.

 
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9.      Change of Escrow Agent.  Escrow Agent may resign from its duties
hereunder with ten (10) days prior written notice to the other parties. In the
event the Escrow Agent notifies the Parties that its acceptance of the duties of
Escrow Agent has been terminated by the Escrow Agent, or in the event the Escrow
Agent files for protection under the United States Bankruptcy Code or is
liquidated or ceases operations for any reason, the Parties shall have the right
to jointly designate a replacement Escrow Agent who shall succeed to the rights
and duties of the Escrow Agent hereunder.  Any such replacement Escrow Agent
shall be a trust or stock transfer company experienced in stock transfer, escrow
and related matters. Upon appointment of such successor Escrow Agent, the Escrow
Agent shall be discharged from all duties and responsibilities hereunder.

10.    Notices.  All notices, demands or requests required or authorized
hereunder shall be deemed given sufficiently if in writing and sent by
registered mail or certified mail, return receipt requested and postage prepaid,
or by tested telex, telegram or cable to, in the case of the Stockholder, the
address as set forth in the records of the Escrow Agent;

LENDERS                   Centaur Farms of Southern California, Inc.
Attention: Gary Cropp, President
P.O. Box 675645
14725 Rancho Santa Fe Farms Road
Rancho Santa Fe, CA 92067

BORROWER              US Farms, Inc.
1635 Rosecrans Street, Suite C
San Diego, CA 92106

PLEDGOR                  Yan K. Skawara
1635 Rosecrans Street, Suite C
San Diego, CA 92106

ESCROW AGENT      de Castro P.C.
309 Laurel Street
San Diego, CA 92101
Attention: Audie de Castro, Esq.

or such other address as may be designated in writing hereafter.

12.    Counterparts.  This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same Agreement.  Facsimile signatures shall be accepted by the parties
hereto as original signatures for all purposes.

 
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13.    Governing Law; Venue.  The validity, interpretation and construction of
this Agreement and of each part hereof shall be governed by the laws of the
State of California.  All actions and proceedings arising in connection with
this Agreement must be tried and litigated exclusively in the State and Federal
courts located in the County of San Diego, State of California, which courts
have personal jurisdiction and venue over each of the parties to this Agreement
for the purpose of adjudicating all matters arising out of or related to this
Agreement.  Each party authorizes and accepts service of process sufficient for
personal jurisdiction in any action against it as contemplated by this paragraph
by registered or certified mail, return receipt requested, postage prepaid, to
its address for the giving of notices set forth in this Agreement.

14.    Disputes.  In the event of a dispute, Escrow Agent shall have the right,
but not the obligation, to:  (a) refrain from taking any action other than to
continue holding the Escrow Shares and/or Stock Powers pending a joint written
instruction from all affected parties; (b) commence an interpleader action or
similar action, suit or proceeding for the resolution of the dispute; and/or (c)
deposit the Escrow Shares and Stock Power, as the case may be, with any court of
competent jurisdiction in the State of California, in which case Escrow Agent
shall give written notice to the other parties.  In such event, Escrow Agent is
authorized to comply with and obey any court orders.  Escrow Agent has the right
to retain counsel to advise it on any matters relating to a dispute, and the
parties shall, jointly and severally, bear the reasonable fees and costs
associated therewith.

15.    Acknowledgement.  The parties acknowledge that Escrow Agent is also
counsel to Lenders (and no other party) and may continue to act in such
capacity, even as Escrow Agent performs its duties hereunder.  All parties agree
that Escrow Agent shall be permitted to act as counsel for the Company with
respect to any matter, or any dispute as to the disposition of the Escrow Shares
and in any other dispute or matter between the Parties, whether or not Escrow
Agent still has duties hereunder.

 

(Signatures on Next Page)

 
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          IN WITNESS WHEREOF, the Parties have executed this Escrow Agreement on
the day and year first above written to be effective as of the Effective Date.

CENTAUR FARMS OF SOUTHERN CALIFORNIA, INC.
a California corporation,

By: /s/ Gary
Cropp                                                                
Gary Cropp, President

US FARMS, INC.,
a Nevada corporation

/s/ Yank Skwara                                                                
YAN K. SKWARA, individual and as
Pledgor

ACCEPTANCE OF DUTIES BY ESCROW AGENT:
DE CASTRO P.C.
a California professional corporation. as Escrow Agent

By: /s/ Audie de
Castro                                                                
Audie de Castro, President

 

 
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