Document:

After
Recording Return To:

    Salem
Agribusiness

    P.O. Box
13309

    Salem,
OR  97309

    

    
      
        
          
            	
                    Document 1 Title:
      Mortgage

                  	 
      
	 
      	 
      
	
                    Grantors:

                  	
                    Grantees:

                  
	 
      	 
      
	
                    Pope
      Resources, A Delaware Limited Partnership

                  	
                    Northwest
      Farm Credit Services, FLCA

                  
	
                    Document 2 Title:
      Financing Statement

                  	 
      
	 
      	 
      
	
                    Grantors:

                  	
                    Grantees:

                  
	 
      	 
      
	
                    Pope
      Resources, A Delaware Limited Partnership

                  	
                    Northwest
      Farm Credit Services, FLCA

                  
	
                    Document 3 Title:
      Fixture Filing

                  	 
      
	 
      	 
      
	
                    Grantors:

                  	
                    Grantees:

                  
	 
      	 
      
	
                    Pope
      Resources, A Delaware Limited Partnership

                  	
                    Northwest
      Farm Credit Services,
FLCA

                  

          

        

      

    

    

    Abbreviated
legal description:

    Ptns of
Sec. 24, T7N, R5E; Ptns. of Secs. 3-11; 14-23; 27-29 & 33, T7N, R6E;
Skamania County, Washington

     

    Additional
legal is on Exhibit A on Page 25-30

     

    Assessor's Property Tax Parcel
Numbers: 07-05-00-0-0-2600-0;
07-06-00-0-0-0200-00;  07-06-00-0-0-0300-00; 07-06-00-0-0-0400-00;
07-06-00-0-0-0500-00; 07-06-00-0-0-0600-00;  07-06-00-0-0-0700-00;
07-06-00-0-0-0800-00; 07-06-00-0-0-0900-00; 07-06-00-0-0-1000-00;
07-06-00-0-0-1200-00; 07-06-00-0-0-1300-00; 07-06-00-0-0-1400-00;
07-06-00-0-0-1490-00;  07-06-00-0-0-1480-00; 07-06-00-0-0-1590-00;
07-06-00-0-0-1500-00; 07-06-00-0-0-1600-00; 07-06-00-0-0-1700-00;
07-06-00-0-0-1800-00; 07-06-00-0-0-2600-00;
07-06-00-0-0-2700-00;  07-06-00-0-0-2800-00; 07-06-00-0-0-3000-00;
07-06-00-0-03100-00; 07-06-00-0-0-4200-00;

    

    MORTGAGE
(Open End) - 1

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Pope
Resources, A Delaware Limited Partnership

    Customer
No. 56548

    

    MORTGAGE
, FINANCING STATEMENT

    AND
FIXTURE FILING

    (Open
End)

    

    THIS
MORTGAGE IS ALSO INTENDED TO BE A SECURITY AGREEMENT.

    

    THIS
MORTGAGE IS ALSO INTENDED TO BE A FILING AGAINST TIMBER TO BE CUT.

    

    NOTICE:  THIS
MORTGAGE IS A LINE OF CREDIT MORTGAGE.  THE MAXIMUM PRINCIPAL AMOUNT
TO BE ADVANCED UNDER THE SECURED OBLIGATION (AS DEFINED BELOW) IS
$19,600,000.00.  IN ADDITION, THIS MORTGAGE SECURES ALL OTHER
INDEBTEDNESS EVIDENCED BY THE SECURED OBLIGATIONS OR OTHERWISE CREATED IN
CONNECTION WITH THIS MORTGAGE, WHICH INDEBTEDNESS IS POTENTIALLY
UNLIMITED.  THE SECURED OBLIGATIONS PROVIDE FOR LOAN MATURITY DATES AS
LATE AS OCTOBER 1, 2039 (EXCLUSIVE OF THE OPTION TO RENEW OR
EXTEND).

    

    ATTENTION:  COUNTY
RECORDER:  This Mortgage covers goods that are or are to become
affixed to or fixtures on the land described in Exhibit A hereto and is to be
filed for record in the records where mortgages on real estate are
recorded.  Additionally, this instrument covers and should be
appropriately indexed, not only as a mortgage, but also as a financing statement
covering timber to be cut and goods that are or are to become fixtures on the
real property described herein.

    

    NOTICE:  THE
OBLIGATIONS SECURED BY THIS MORTGAGE PROVIDE FOR A VARIABLE INTEREST
RATE.

    

    This
Mortgage, Assignment of Rents, Security Agreement, Financing Statement and
Fixture Filing (this “Mortgage”), dated as of September 25, 2009, is executed by
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP, a Delaware
limited partnership (“Mortgagor”), whose address is 19245 Tenth Ave NE, Poulsbo,
WA 98370, in favor of and for the benefit of NORTHWEST FARM CREDIT SERVICES,
FLCA, a corporation organized and existing under the laws of the United
States (“Mortgagee”), whose address is 1700 South Assembly Street, Spokane, WA
99224-2121, P. O. Box 2515, Spokane, WA 99220-2515.  Each capitalized
term used and not otherwise defined in this Mortgage shall have the meaning
given such term in the Master Loan Agreement (the “Loan Agreement”) executed by
Mortgagor, dated on or around even date.  “Loan Documents” as used
herein means all documents and instruments signed in connection with the Loan
(as defined herein) and other Loans made by Mortgagee to Mortgagor or an
affiliate of Mortgagor and any extensions, renewals, amendments, substitutions
and replacements thereto.

    

    MORTGAGE
(Open End) - 2

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Pursuant
to the terms and conditions of the Loan Agreement, Mortgagor has agreed to grant
this Mortgage in favor of Mortgagee to provide security for Mortgagor's
obligations under the Note described herein, the Loan Agreement and the related
Loan Documents and any and all other documents entered into pursuant
thereto.

    

    ARTICLE
1

    GRANT
OF SECURITY

    

    Mortgagor,
in consideration of the indebtedness secured by this Mortgage, irrevocably
bargains, sells, grants, mortgages, transfers, conveys, assigns and warrants to
Mortgagee, for the benefit and security of Mortgagee, all Mortgagor's existing
and future rights, titles, interests, estates, powers and privileges in or to
the following (collectively the “Collateral”):

    

    1.1         Real
Estate.

    

    a.           That
certain real property located in Skamania County, State of Washington, more
particularly described on Exhibit A attached hereto and incorporated herein (the
“Land”).

    

    b.           All
buildings, wells and other improvements now or hereafter located on the Land,
including, but not limited to, the Fixtures (as defined below), and all other
equipment, machinery, appliances and other articles attached to such buildings
and other improvements (collectively the “Improvements”);

    

    c.           All
fixtures (including without limitation, goods that are or become so related to
the Land that an interest in them arises under the real estate law) and any
additions or replacements (collectively the “Fixtures”) now or hereafter located
on, attached to, installed in or used in connection with the Land;

    

    d.          All
timber (aka “forest tree species”), whether standing or down, cut or under
contract to be cut, now or hereafter growing or located on the Land, and whether
or not said timber is merchantable, all logs, lumber and forest products of any
nature, all proceeds and products thereof (the “Timber”);

    

    e.          All
rights, rights-of-way, easements, licenses, profits, claims, demands,
privileges, grazing privileges, tenements, hereditaments and appurtenances now
owned or hereafter acquired by Mortgagor and used in connection with the Land
and the Improvements or as a means of access to either or both, including
without limitation, all rights over the property of third persons which are
related thereto, and all unaccrued trespass and surface damage claims
appurtenant thereto, and all written operations plans and all permits and
approvals related to the Land and Improvements;

    

    MORTGAGE
(Open End) - 3

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    f.        
 All of Mortgagor's right, title and interest in and to any land within any
right-of-way of any open or proposed street adjoining the Land, and any and all
sidewalks, alleys, strips and gores of land adjacent to or used in connection
with the Land and Improvements;

    

    g.        
 All of Mortgagor's existing and future rights in (including without
limitation, royalty and leasehold rights) oil, gas and other mineral rights in
or relating to the Land;

    

    h.        
 All waters, water courses, water rights and riparian rights (including
without limitation, shares of stock evidencing the same) in or relating to the
Land;

    

    i.        
  All existing and future leases and subleases relating to the Land and
Improvements or any interest in them, including without limitation, all
deposits, advance rentals and other similar payments, but not including the
Rents, as defined and separately assigned in Article 5;

     

    j.        
  All options to purchase, exchange or lease the Collateral or any interest
in it (and any greater estate in the Collateral and acquired by exercise of such
options);

    

    k.        
 All Mortgagor's other existing or future estates, homestead or other
claims or demands, both in law and in equity in the Land, including without
limitation, (i) all awards made for the partial or complete taking by eminent
domain, or by any proceeding or purchase in lieu of eminent domain, of the
Collateral, and (ii) all proceeds, including general intangibles and payment
intangibles, of any insurance covering the Collateral; and

    

    l.        
  All cash or non-cash proceeds of the sale, lease, license, exchange or
other disposition of the Collateral or general intangibles, including payment
intangibles, arising therefrom.  Proceeds include all subsidy
payments, in cash or in kind, which may be made to Mortgagor by any person,
entity or governmental agency, including but not limited to, payments and
entitlements from state and federal farm programs, as well as any type of
property insurance; and any rights arising out of Collateral, collections and
distributions on Collateral.

    

    MORTGAGE
(Open End) - 4

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.2        
Personal
Property.  As further security for the payment, performance and
observance of the Secured Obligations, Mortgagor, as debtor, hereby grants to
Mortgagee, as secured party, a security interest in all of Mortgagor's existing
and future right, title and interest in, to and under the
following:  all (a) contracts and policies of insurance and proceeds
thereof, which may insure all or any portion of the Collateral against
casualties and theft; (b) condemnation proceeds for all or any portion of the
Collateral; and (c) cash or non-cash proceeds of the Collateral (including but
not limited to, general intangibles, including payment intangibles, and all
proceeds, which constitute property of the types described in clauses (a)
through (c) of this Paragraph) and all right of Mortgagor to receive proceeds of
any insurance, indemnity, warranty or guaranty payable by reason of loss of or
damage to any of the Collateral.  This Mortgage constitutes a security
agreement for all purposes under the Uniform Commercial Code in effect in the
State where the Mortgagor resides.  In addition to all other rights
and remedies provided for in this Mortgage, Mortgagee shall have all of the
rights and remedies of a secured party under the Uniform Commercial
Code.  Mortgagor agrees that at least 10-days’ notice to Mortgagor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification with respect to the
personal property Collateral.  If Mortgagee shall so require,
Mortgagor upon the occurrence of an Event of Default, will make the Collateral
that constitutes personal property available to Mortgagee at a place designated
by Mortgagee, which is reasonably convenient to Mortgagee.  In
addition, Mortgagor shall execute such instruments and documents as Mortgagee
reasonably may require from time to time to further evidence, implement or
perfect any of Mortgagee's rights, remedies and security interests.

    

    1.3         Fixture Filing and Financing
Statement.  This Mortgage is intended to serve as a Fixture
filing and as a financing statement covering timber to be cut pursuant to the
terms of the applicable Uniform Commercial Code.  This Mortgage is to
be recorded in the real estate records of the County in which the Land is
located.  In that regard, the following information is
provided:

    

    
      
        	
                Name
      of Mortgagor, as Debtor:

              	
                Pope
      Resources, A Delaware Limited

              
	 
      	
                Partnership

              
	 
      	
                Attn:
      Thomas M. Ringo

              
	 
      	 
      
	
                Address
      of Mortgagor:

              	
                19245
      Tenth Ave, NE

              
	 
      	
                Poulsbo,
      WA 98370

              
	 
      	 
      
	
                Name
      of Mortgagee, as Secured Party:

              	
                Northwest
      Farm Credit Services, FLCA

              
	 
      	
                Attn:
      Kristy Searles

              
	 
      	 
      
	
                Address
      of Mortgagee:

              	
                P.O.
      Box 13309

              
	 
      	
                Salem,
      OR 97309

              

      

    

    

    ARTICLE
2

    REPRESENTATIONS
AND WARRANTIES

    

    2.1        
Representations and Warranties. Mortgagor represents and warrants to
Mortgagee as follows:

    

    a.        
 Mortgagor hereby authorizes Mortgagee to file, at anytime, one or more
financing statements and any amendments and continuations thereof, describing
any personal property or fixtures described herein, without further signature of
Mortgagor. Mortgagor hereby represents and warrants that Mortgagor’s State of
formation is the State of Delaware; and Mortgagor’s exact legal name is as set
forth herein.

    

    MORTGAGE
(Open End) - 5

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    b.           Mortgagor
is the sole legal and equitable owner of the Collateral;

    

    c.           Except
as otherwise previously disclosed to Mortgagee, Mortgagor has the exclusive
right to harvest any Timber, if any, from the Land and has the exclusive right
to use the appurtenant rights and the operating permits;

    

    d.           Without
thereby limiting the generality of the foregoing, and except as otherwise
previously disclosed to Mortgagee, Mortgagor has not assigned or granted any
harvest or access rights or interests, or sold or leased any part of the Land or
the Improvements, if any, to any other person (individual, organization or
governmental unit);

    

    e.           There
are no claims, liens, encumbrances (including judgments, levies and the like),
or security interest (“Liens”) covering the Collateral or any part or item
thereof except easements and reservations of record which are listed on the
title policy delivered by Mortgagor;

    

    f.          
 To the best of Mortgagor's knowledge, and other than have been disclosed
to Mortgagee, there are no federal, state or local laws, regulations, rules or
standards (“Laws”), or permits, orders, injunctions, citations, notices of civil
penalty, restraining orders, judgments or the like issued by any governmental
unit (“orders”) which are now in effect and which would restrict any material
use of the Collateral;

    

    g.           Mortgagor
has taken all actions necessary and has been duly authorized under its governing
limited partnership agreement to execute, acknowledge, deliver and perform the
Secured Obligations;

    

    h.           This
Mortgage has been executed, acknowledged and delivered on behalf of Mortgagor by
partners, members, representatives or officers, as applicable, of Mortgagor duly
authorized to perform such acts;

    

    i.         
  This Mortgage is the legally valid and binding contract of
Mortgagor, and is enforceable against Mortgagor in accordance with its terms
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the rights and
remedies of creditors generally and by general principles of equity, whether
applied by a court of law or equity; and

    

    j.      
     To the best of Mortgagor's knowledge, neither the
execution of this Mortgage nor the payment and performance of the Secured
Obligations will materially violate any Laws or orders affecting Mortgagor or
the Collateral or constitute a breach or Event of Default by Mortgagor under any
agreement, contract, loan indenture, lease, instrument or like document
(“Contract”) to which Mortgagor is a party or the Collateral is
bound.

    

    MORTGAGE
(Open End) - 6

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
foregoing representations and warranties will survive and not be merged or
otherwise eliminated by any conveyance, voluntarily or through foreclosure, of
the Collateral to Mortgagee or its nominee.  Mortgagor hereby agrees
to indemnify, defend and hold harmless Mortgagee from and against any and all
claims, loss, liability, damages, liens, penalties, costs and expenses of any
nature or kind whatsoever arising from or related to any misstatement of any
material fact in the foregoing representations and warranties or the omission
therein to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they are made, not
misleading.

    

    ARTICLE
3

    SECURED
OBLIGATIONS

    

    3.1         Secured
Obligations.  This Mortgage, and the lien it creates, is made
for the purpose of securing the following obligations (collectively the “Secured
Obligations”):

    

    a.           The
full and punctual payment of the indebtedness evidenced by that certain Note in
favor of Mortgagee (referenced as “Loan No. 56548-841,” the “Note” or “Loan”)
dated on or around even date, the final payment of which is due no later than
September 1, 2019, made by Mortgagor to the order of Mortgagee in the principal
face amount of Nine Million Eight Hundred Thousand and No/100’s Dollars
($9,800,000.00), with interest thereon at the rates therein provided which
interest rate and payment terms may be adjusted as provided in the Note and Loan
Documents, together with any and all renewals, modifications, consolidations and
extensions of the indebtedness evidenced by the Note, as well as any prepayment
fees or penalties provided for in the Note or as it may be amended to provide
for such prepayment fees or penalties;

    

    b.           It
is contemplated that this Mortgage shall secure additional loans made to
Mortgagor from time to time but not after October 1, 2019, and not having a
maturity date exceeding October 1, 2039.

    

    c.           Payment
and performance of Mortgagor's obligations under the Note and Loan Agreement and
under any and all other present and future agreements executed by Mortgagor and
relating to the Note;

    

    d.           Payment
of such additional sums with interest thereon as may be due to Mortgagee under
any provisions of this Mortgage;

    

    e.           Payment
of all indebtedness and performance of all other obligations which the then
record owner of the Collateral may agree to pay and perform for the benefit of
Mortgagee (including future advances to Mortgagor), and which are contained in a
document which recites that it is secured by this Mortgage;

    

    MORTGAGE
(Open End) - 7

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    f.           
Payment by Mortgagor of all amounts advanced by (or on behalf of) Mortgagee to
improve, protect or preserve the Collateral or the security of this Mortgage,
with interest on such amounts as provided in this Mortgage;

    

    g.           Payment
and performance of all amendments, modifications, extensions, renewals and
replacements of any of the foregoing, including without limitation, (i)
amendments or modifications of the required principal or interest payment dates
accelerating or deferring any such payment dates, or (ii) amendments,
modifications, extensions or renewals at a different rate of interest, whether
or not evidenced by a new or additional notes or other document;
and

    

    h.           Payment
of charges as allowed by law, when such charges are made for any Mortgagee
statement or other statement regarding the Secured Obligations.

    

    3.2         Notice.  Notice is
hereby given that the interest rate, payment terms or balance due on the
Notes(s) may be indexed, adjusted, renewed or renegotiated.

    

    3.3          Open End.  The
continuing validity and priority of this Mortgage for future Note(s) and
advances under the Note or prior Note shall not be impaired by the fact that at
certain times no outstanding indebtedness to Mortgagee exists.

    

    ARTICLE
4

    COVENANTS

    

    4.1         Payment of Secured
Obligations.  Mortgagor shall pay the Secured Obligations when
due.

    

    4.2         Maintenance,
Repair, Alterations.

    

    4.2.1      Maintenance, Repair, and
Alterations:  Affirmative Covenants.  Mortgagor
shall:

    

    a.          Keep
the Collateral in good condition and repair;

    

    b.          Complete
promptly and in a good and workmanlike manner, any Improvement which may be
constructed on the Land, and promptly restore in like manner any Improvement
which may be damaged or destroyed, and pay when due all claims for labor
performed and materials furnished for such construction or
restoration;

    

    c.          Comply
with all statutes, laws, ordinances, regulations, orders, rulings, rules,
consents, permits, licenses, conditions of approval and authorizations of any
court or governmental or regulatory body having jurisdiction over Mortgagor, the
Land or Improvements (“Laws and Ordinances”);

    

    MORTGAGE
(Open End) - 8

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    d.          Comply
with any condominium or other plan, declaration of covenants, conditions and
restrictions, reciprocal easement agreements to which the Land is subject
(“CC&Rs”), any owners' association articles and bylaws affecting the Land,
and such exceptions to title acceptable to Mortgagee (“Permitted
Exceptions”);

    

    e.          Keep
and maintain abutting grounds, sidewalks, roads, parking and landscape areas in
good, neat order and repair;

    

    f.          Comply
with the provisions of any leases constituting part of the
Collateral;

    

    g.          Obtain
and maintain in full force and effect all permits necessary for the use,
occupancy and operation of the Collateral; and

    

    h.          Do
any and all other acts, except as otherwise prohibited or restricted by the Loan
Documents, which may be reasonably necessary to protect or preserve the value of
the Collateral and the rights of Mortgagee in it.

    

    4.2.2      Maintenance, Repair and
Alterations:  Negative Covenants.  Mortgagor shall
not, except upon the prior written consent of Mortgagee, which shall not be
unreasonably withheld or delayed:

    

    a.          Remove,
demolish or materially alter any of the Improvements, other than to make
non-structural repairs in the ordinary course of business which preserve or
increase the value of the Land;

    

    b.          Commit,
suffer or permit any act to be done in, upon or to any part of the Collateral in
violation of any Laws and ordinances, CC&Rs, or Permitted Exceptions now or
hereafter affecting the Collateral;

    

    c.          Commit
or permit any waste or deterioration of the Collateral;

    

    d.          Take
(or fail to take) any action, which would increase the risk of fire or other
hazard occurring to or affecting the Collateral or which otherwise would impair
the security of Mortgagee in the Collateral; or

    

    e.          Initiate,
join in or consent to any change in any zoning ordinance, general plan, specific
plan, private restrictive covenant or other public or private restriction
limiting the uses that may be made of the Land or Improvements by Mortgagor
without the prior written consent of Mortgagee.  Mortgagor has
notified Lender that it is negotiating a conservation easement on a portion of
the Land.  Lender will be reasonable in evaluating any subordination
requests related to such conservation easement.

    

    MORTGAGE
(Open End) - 9

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.3         Insurance.

    

    4.3.1      Policies
Required.  Mortgagor shall at all times maintain in full force
and effect, at Mortgagor's sole cost and expense, with insurers reasonably
satisfactory to Mortgagee, insurance policies reasonably required by Mortgagee
from time to time that are usual and customarily in use in Mortgagor’s
industry.

    Prior to
the expiration of each policy, Mortgagor shall deliver to Mortgagee evidence
reasonably satisfactory to Mortgagee of renewal or replacement of such
policy.

    

    4.3.2      Required
Policy Provisions.  Each policy of insurance required under
this Mortgage shall meet such other requirements as Mortgagee may reasonably
require.

    

    4.3.3      Claims.  Mortgagor
shall give Mortgagee immediate notice of any claim to any portion of the
Collateral in excess of $100,000.00, whether or not covered by
insurance.  If covered, Mortgagor authorizes Mortgagee, if Mortgagee
so elects, to make proof of loss, and to commence, to appear in, defend and
prosecute any claim or action arising from any applicable policy and to settle,
adjust or compromise any claim under any such policy.  Mortgagor
irrevocably appoints Mortgagee its true and lawful attorney-in-fact for all such
purposes.  Neither Mortgagee nor Mortgagor shall settle, adjust or
compromise any such claim without the prior written approval of the other, which
approval shall not be unreasonably withheld or delayed.

    

    4.3.4      Assignment
of Policies.  If this Mortgage is foreclosed or other transfer
of title or assignment of the Collateral is made in satisfaction of all or part
of the Secured Obligations, then all right, title and interest of Mortgagor in
and to all policies of insurance required by Section 4.3.1 above and all
unearned premiums paid on them shall, without further act, pass to the purchaser
or grantee of the Collateral.  Provided, however, some policies of
insurance and related unearned premiums may require the policy underwriter’s
consent.

    

    4.3.5      Waiver
of Subrogation.  Mortgagor waives all right to recover against
Mortgagee (or any officer, employee, agent or representative of Mortgagee) for
any loss incurred by Mortgagor from any cause insured against or required by any
Loan Document to be insured against, provided however, that this waiver of
subrogation shall not apply to any insurance policy if such policy's coverage
would be materially reduced or impaired as a result.  Mortgagor shall
obtain only policies which permit this waiver of subrogation.

    

    4.4         Condemnation and Other
Awards.  Upon learning of the actual or threatened condemnation
or other taking for public or quasi-public use of all or any part of the Land,
Mortgagor shall immediately notify Mortgagee.  Mortgagor shall take
all actions reasonably required by Mortgagee in connection with such
condemnation or other taking to defend and protect the interests of Mortgagor,
Mortgagee in the Land.  At Mortgagee's option, Mortgagee or Mortgagor
may be the named party in such proceeding.  Regardless of the adequacy
of its security,
Mortgagee shall be entitled to participate in, control and be represented by
counsel of its choice in such proceeding.  All condemnation proceeds
shall first be applied to reimburse Mortgagee for all their reasonable costs and
expenses, including reasonable attorneys' fees, incurred in connection with the
collection of such award or settlement.  The balance of such award or
settlement shall be applied by Mortgagee against the Secured Obligations in such
order as Mortgagee may determine.

    

    MORTGAGE
(Open End) - 10

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.5        
Taxes and Impositions (Impounds).  Mortgagor shall pay, prior
to delinquency, all of the following (collectively the
“Impositions”):

    

    a.          
All general and special real property taxes and assessments imposed on the Land;
and

    

    b.          
All other taxes and assessments and charges assessed on the Land (or on the
owner and/or operator of the Land) which create or may create a lien on the Land
(or on any Improvement or Fixture used in connection with the Land); including,
without limitation, nongovernmental levies and assessments under applicable
CC&Rs; and

    

    c.          
All business taxes; and

    

    d.          
All license fees, taxes and assessments imposed on Mortgagee (other than
Mortgagee's income or franchise taxes) which are measured by or based upon (in
whole or in part) the amount of the Secured Obligations.

    

    If
permitted by law, Mortgagor may pay the Imposition in installments (together
with any accrued interest).  Upon demand by Mortgagee from time to
time, Mortgagor shall deliver to Mortgagee, within 30 days following the due
date of any Imposition, evidence of payment reasonably satisfactory to
Mortgagee.  In addition, upon demand by Mortgagee, at Mortgagor's
expense, from time to time, Mortgagor shall furnish to Mortgagee a tax reporting
service for the Collateral of a type and duration, and with a company reasonably
satisfactory to Mortgagee.

    

    4.5.1      Reserves
on Impositions (Impounds).  If Mortgagee requires following the
occurrence of an Event of Default, Mortgagor, at the time of making each
installment payment on the Note, or at such other intervals as Mortgagee
reasonably designates, shall deposit with Mortgagee such sum as Mortgagee
reasonably estimates to be necessary to pay installments of Impositions and
insurance policies next becoming due (collectively, the “Impounds”) upon any of
the Land, Fixtures and Improvements.  All such Impounds may be held by
Mortgagee and applied in such order as Mortgagee may elect for payment of
Impositions or other sums secured by this Mortgage at Mortgagee's
election.  Such Impounds shall constitute additional collateral for
the Secured Obligations.  Except as otherwise provided by law,
Mortgagee shall have no obligation regarding such Impounds other than to account
to Mortgagor for their receipt and application.  Upon any transfer by
Mortgagee of its rights or interests in the Secured Obligations or of this
Mortgage, Mortgagee may turn over to the transferee such of those Impounds as
Mortgagee then holds, and Mortgagee's responsibilities with respect to the
Impounds shall terminate.  Upon any transfer by Mortgagor of the Land
or Improvements, Mortgagor's interest in any such Impounds shall be deemed
automatically transferred to such transferee.

    

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    4.6         Utilities.  Mortgagor
shall promptly pay all gas, irrigation, electricity, water, sewer and other
utility charges incurred for the benefit of the Collateral or which may become a
lien against the Collateral; and all other similar public or private assessments
and charges relating to the Collateral, regardless of whether or not any such
charge is or may become a lien on the Collateral.

    

    4.7         Liens:  Non-Permitted
Exceptions. Mortgagor
shall not cause or permit, or agree or consent to cause or permit in the future
(upon the happening of a contingency or otherwise), any of the Collateral,
whether now owned or hereafter acquired, to be subject to a lien, whether
voluntarily or by operation of law, in each case, without the prior written
consent of Mortgagee, except the following:

    

    a.          
Liens securing taxes, assessments or governmental charges or levies being
contested in good faith by appropriate proceedings as permitted by
law;

    

    b.          
Statutory liens of carriers, mechanics, materialmen, loggers and other liens
imposed by law arising in the ordinary course of business of Mortgagor which are
in effect for no more than ninety (90) days (and which are satisfied or
discharged, including by bonding pursuant to ORS 87.076 before such period ends)
or which are being contested by Mortgagor in good faith by appropriate
proceedings, but which are in no event the subject of any foreclosure or similar
proceeding;

    

    c.          
Attachment or judgment liens in the amount of no more than $50,000.00 in respect
of judgments against Mortgagor that are either satisfied or discharged within
thirty (30) days or are stayed upon appeal, but which are in no event the
subject of any foreclosure or similar proceeding;

    

    d.          
Attachment or judgment liens in the amount of more than $50,000.00 in respect of
judgments against Mortgagor that are either satisfied or discharged (including
by way of posting a bond or other arrangement satisfactory to Mortgagee, in
Mortgagee’s sole discretion if the lien is being contested by borrower in good
faith by appropriate proceedings within thirty (30) days, but which are in no
event the subject of any foreclosure or similar proceeding;

    

    e.          
Liens in favor of the Mortgagee that secure obligations under any of the Loan
Documents;

    

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    Except as
provided above, Mortgagor shall not cause, incur or permit to exist any lien,
encumbrance or charge (“Non-Permitted Exceptions”) upon all or any part of the
Collateral or any interest in the Collateral other than Permitted
Exceptions.  Mortgagor shall pay and promptly discharge,
at Mortgagor's sole cost and expense, all such Non-Permitted
Exceptions.  If Mortgagor fails to do so, the Mortgagee may, but shall
not be obligated to, discharge them, without notice to or demand on Mortgagor,
and without inquiring into the validity of such Non-Permitted Exceptions or the
existence of any defense or offset to them.  Mortgagee may discharge
Non-Permitted Exceptions either by (a) paying the amount claimed to be due, or
(b) procuring their discharge by depositing in a court a bond or the amount
claimed or otherwise giving security for such claim, or (c) in any other manner
permitted or required by law.  Mortgagor shall, immediately upon
demand by Mortgagee, pay Mortgagee's reasonable costs and expenses incurred in
connection with such discharge, together with interest on such costs from the
date of such expenditure until paid at the default rate of interest described in
the Notes (“Default Interest Rate”).

    

    4.8         Sale or Lease of
Collateral:  Due on Sale Clause.  Except in the
ordinary course of business, Mortgagor shall not sell, lease, sublease or
otherwise transfer all or any part of the Collateral or any interest in it,
without the prior written consent of Mortgagee, which consent may be granted or
withheld in Mortgagee's sole and absolute discretion.  The sale and
harvesting of Timber shall be considered activity in the ordinary course of
business as long as Mortgagor maintains compliance with Section 9.02 (d) of the
Loan Agreement.  All material leases of any part of the Collateral
lasting in duration of more than one year, containing a provision of rental
income of more than $20,000 in any one year, or involving property of more than
100 acres of land must be submitted to Mortgagee for approval prior to
execution, which consent may be granted or withheld in Mortgagee's sole and
absolute discretion.  Transfers requiring Mortgagee's prior written
consent shall include, without limitation, the following:

    

    a.           Involuntary
transfers and transfers by operation of law;

    

    b.           Liens,
encumbrances and assignments as security for obligations, whether voluntary or
involuntary; and

    

    c.           Any
Change of Control of Mortgagor.  As used herein, "Change of Control"
shall mean a change in the power, directly or indirectly, to (i) vote 50% or
more of the voting securities (or membership interests, as applicable) having
ordinary voting power for the election of directors or officers (or Persons
functioning in substantially similar roles) of Mortgagor or (ii) direct or cause
the direction of the management and policies of Mortgagor whether by contract or
otherwise.  Transfer of the beneficial interests and/or voting rights
of the voting securities of the managing general partner of Mortgagee to or for
the benefit of lineal descendants of the current beneficial holders shall not be
deemed a "Change of Control" for purposes of this Mortgage.

    

    No sale,
lease or other transfer shall relieve Mortgagor from primary liability for its
obligations under the Notes and Loan Documents or relieve any guarantor from any
liability under any guaranty.  Upon any such transfer to which
Mortgagee does not consent, Mortgagee at its option may, without prior notice,
declare all Secured Obligations immediately due and payable without presentment,
demand, protest or further notice of any kind, and may exercise all rights and
remedies provided in this Mortgage or under applicable law.

    

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    4.9         Inspections.  Mortgagor
authorizes Mortgagee and its agents, representatives and employees, upon
reasonable notice to Mortgagor, to enter at any time upon any part of the
Collateral for the purpose of performing a Subsequent Valuation, inspecting the
Collateral, taking soil or groundwater samples and conducting tests to
investigate for the presence of hazardous materials, provided such entry shall
cause as little disruption to the occupants of the Collateral as possible, and
provided Mortgagee restores the Collateral to its pre-inspection condition if
Mortgagee's inspection activities cause damage to the
Collateral.  Mortgagor agrees to pay the costs and expenses of
Mortgagee incurred in such inspections and examinations, including without
limitation, Mortgagee's attorneys' fees, if such inspection was made necessary
because of an Event of Default, whether the services are provided by Mortgagee's
employees, agents or independent contractors.  Any inspection or
review by Mortgagee is solely for Mortgagee's benefit to protect Mortgagee's
security and preserve Mortgagee's rights under this
Mortgage.  Mortgagee owes no duty of care to protect Mortgagor or any
other party against, or to inform Mortgagor or any other party of, any adverse
condition affecting the Collateral, including any defects in the design or
construction of the Improvements or Fixtures.  No inspection by
Mortgagee shall constitute a waiver of any Event of Default.

    

    4.10       Defense of
Actions.  Mortgagor shall notify Mortgagee of any action or
proceeding purporting to affect (a) the security of this Mortgage, (b) any of
the Loan Documents, (c) all or any part of the Collateral or any interest in it,
(d) any additional or other security for the Secured Obligations, or (e) the
interests, rights, powers or duties of Mortgagee under this
Mortgage.  Mortgagor, at no cost or expense to Mortgagee, shall appear
in and defend the same.  If Mortgagee elects to become or is made a
party to such action or proceeding, Mortgagor shall indemnify, defend and hold
Mortgagee harmless from all related liability, damage, cost and expense
reasonably incurred by Mortgagee (including, without limitation, reasonable
attorneys' fees and expenses consistent with Section 4.13 of this Mortgage),
whether or not such action or proceeding is prosecuted to judgment or
decision.

    

    4.11       Protection of
Security.  If Mortgagor fails to make any payment or to do any
act required by this Mortgage or any of the other Loan Documents, Mortgagee may
do so.  Mortgagee may decide to do so, in its own discretion, without
obligation to do so, without further notice or demand, and without releasing
Mortgagor in such manner and to such extent as it may reasonably deem necessary
to protect the security of this Mortgage.  In connection with such
actions, Mortgagee has the right, without limitation, but not the
obligation:  (a) to enter upon and take possession of the Collateral;
(b) to make additions, alterations, repairs and improvements to the Land,
Improvements or Fixtures which in its judgment may be necessary or proper to
keep the Collateral in good condition and repair; (c) to appear and participate
in any action or proceeding affecting or which may affect the lien or charge of
this Mortgage or the rights or powers of Mortgagee; (d) to pay, purchase,
contest or compromise any encumbrance, claim, charge, lien or debt (excepting
Permitted Encumbrances) which in its judgment may affect the security of this
Mortgage or appear to be prior or superior to this Mortgage; and (e) in
exercising such powers, to pay all necessary or appropriate costs and expenses
and employ necessary or desirable consultants.

    

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    4.12       Mortgagee's
Powers.  If Mortgagor fails to pay any sum, other than
principal and interest on the Secured Obligations, or to perform or comply with
any other obligation required by any Loan Document, Mortgagee at its election
may pay such sum or comply with such obligation.  Without affecting
the liability of Mortgagor or any other person liable for the payment of any
Secured Obligation, and without affecting the lien or charge of this Mortgage,
Mortgagee may, from time to time, do any of the following:  (a)
release any person so liable, (b) extend the maturity or alter any of the terms
of any such obligation (provided however, that the consent of Mortgagor shall be
required for extension or alteration of any unpaid obligation of Mortgagor to
Mortgagee), (c) waive any provision of this Mortgage or grant other indulgences,
(d) release or reconvey, or cause to be released or reconveyed, at any time at
Mortgagee's option, all or any part of the Collateral, (e) take or release any
other or additional security for any Secured Obligation, or (f) make
arrangements with debtors in relation to the Secured
Obligations.  Waiver by Mortgagee of any right or remedy as to any
transaction or occurrence shall not be deemed to be a waiver of any future
transaction or occurrence.  By accepting full or partial payment or
performance of any Secured Obligation after due or after the filing of a notice
of default and election to sell, Mortgagee shall not have thereby waived its
right to (i) require prompt payment and performance in full, when due, of all
other Secured Obligations, (ii) declare a default for failure to so pay or
perform, or (iii) proceed with the sale under any notice of default and election
to sell previously given by Mortgagee, or as to any unpaid balance of the
indebtedness secured by this Mortgage.

    

    4.13       Reimbursement of Costs, Fees and
Expenses:  Secured by Mortgage.  Mortgagor shall pay,
on demand, to the maximum allowable under applicable law, all reasonable costs,
fees, expenses, advances, charges, losses and liabilities paid or incurred by
Mortgagee in administering this Mortgage, the collection of the Secured
Obligations, and Mortgagee's exercise of any right, power, privilege or remedy
under this Mortgage.  Such amounts include, without limitation (a)
foreclosure fees and expenses, receiver's fees and expenses, (b) costs and fees
paid or incurred by Mortgagee and/or any receiver appointed under this Mortgage
in connection with the custody, operation, use, maintenance, management,
protection, preservation, collection, appraisal, sale or other liquidation of
the Collateral, (c) advances made by Mortgagee to complete or partially
construct all or part of any Improvements which may have been commenced on the
Land, or otherwise to protect the lien or charge of this Mortgage, (d) costs of
evidence of title, costs of surveys and costs of appraisals, and costs resulting
from Mortgagor's failure to perform any of the provisions of this
Mortgage.  Fees, costs and expenses of attorneys shall include the
reasonable fees and disbursements of Mortgagee's outside and staff counsel and
of any experts and agents (including fees of law clerks, paralegals,
investigators and others not admitted to the bar but performing services under
the supervision of an attorney), and including such fees incurred in the
exercise of any remedy (with or without litigation), in any proceeding for the
collection of the Secured Obligations, in any foreclosure on any of the
Collateral, in protecting the lien or priority of any Loan Document, or in any
litigation or controversy connected with the Secured Obligations, including any
bankruptcy, receivership, injunction or other proceeding, or any appeal from or
petition for review of any such proceeding.  Reasonable counsel fees
shall include fees incurred not only in enforcing the Secured Obligations in any
bankruptcy or receivership proceeding, but also any fees incurred in
participating in the bankruptcy or receivership proceedings
generally.  Such sums shall be secured by this Mortgage and shall bear
interest from the date of expenditure until paid at the Default Interest
Rate.

    

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    ARTICLE
5

    ASSIGNMENT
OF RENTS, ISSUES AND PROFITS

    

    5.1         Assignment of Rents, Issues and
Profits.  Mortgagor absolutely, unconditionally and irrevocably
assigns and transfers to Mortgagee all of its right, title and interest in and
to all rents, issues, profits, royalties, income and other proceeds and similar
benefits derived from the Collateral (collectively the “Rents”), and gives to
Mortgagee the right, power and authority to collect such
Rents.  Mortgagor irrevocably appoints Mortgagee its true and lawful
attorney-in-fact, at the option of Mortgagee, at any time and from time to time,
to demand, receive and enforce payment, to give receipts, releases and
satisfactions, and or sue, in its name or in Mortgagor's name, for all Rents,
and to apply them to the Secured Obligations.  Mortgagee hereby grants
to Mortgagor a license to collect and retain Rents (but not more than one month
in advance unless the written approval of Mortgagee has first been obtained) so
long as an Event of Default shall not have occurred and be
continuing.  The assignment of the Rents in this Article 5 is intended
to be an absolute assignment from Mortgagor to Mortgagee and not merely the
passing of a security interest.

    

    5.2         Collection Upon
Default.  Upon the occurrence of an Event of Default,
Mortgagor's license to collect the Rents shall automatically
terminate.  Upon such termination, Mortgagee may, at any time, either
in person, by agent or by a receiver appointed by a court, and without regard to
the adequacy of any security for the Secured Obligations, do any of the
following:  (a) enter upon and take possession of all or any part of
the Collateral; (b) with or without taking possession of the Collateral in its
own name, sue for or otherwise collect Rents (including those past due and
unpaid, and all prepaid Rents and all other security or other deposits paid by
tenants to Mortgagor); and (c) apply the Rents (less costs and expenses of
operation and collection, including, without limitation, attorneys' fees,
whether or not suit is brought or prosecuted to judgment) to any Secured
Obligation, and in such order as Mortgagee may determine, even if payment or
performance of said Secured Obligation may not then be due.  Mortgagor
agrees that, upon the occurrence of any Event of Default, Mortgagor shall
promptly deliver all Rents and security deposits to Mortgagee.  The
collection of Rents, or the entering and taking possession of the Land, or the
application of Rents as provided above, shall not (i) cure or waive any Event of
Default or notice of default under this Mortgage or the other Loan Documents,
(ii) invalidate any act performed in response to such Event of Default or
pursuant to such notice of default, or (iii) cause Mortgagee to be deemed a
mortgage-in-possession of all or any part of the Land.

    

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    5.3         Assigned
Leases.  Mortgagor agrees, with respect to each lease and
sublease (collectively the “Assigned Leases”) any portion of which has been
assigned to Mortgagee under this Mortgage, as follows:

    

    5.3.1       Mortgagor
shall promptly perform all of Mortgagor's obligations as landlord under each
Assigned Lease and shall immediately notify Mortgagee in writing of any notice
of default received by Mortgagor from the tenant.  At Mortgagee's
request, Mortgagor will have tenant execute estoppel certificates and
subordination agreements acceptable to Mortgagee.

    

    5.3.2       Mortgagor
shall diligently enforce the performance of all of the obligations of the tenant
under each Assigned Lease; shall not waive any default or waive, release or
discharge any such tenant of or from any such obligation; and shall not cancel,
terminate or modify any Assigned Lease without Mortgagee's prior written
consent.

    

    5.3.3       Mortgagor
hereby represents and warrants to Mortgagee, with respect to each Assigned Lease
that is presently in effect (collectively the “Current Assigned Leases”), (a)
that Mortgagor has delivered to Mortgagee a true and complete copy of each
Current Assigned Lease, together with all amendments, modifications and
supplements thereto; (b) that Mortgagor has not accepted any payment of Rent (or
other charge) under any Current Assigned Lease more than one month in advance;
and (c) that, to the best of each Mortgagor's knowledge, no material default by
Mortgagor or any other person under any Current Assigned Lease remains
uncured.

    

    5.4         Further
Assignments.  Upon Mortgagee's demand from time to time,
Mortgagor shall execute and deliver to Mortgagee recordable assignments of
Mortgagor's interest in any and all leases, subleases, contracts, rights,
licenses and permits now or hereafter affecting all or any part of the
Land.  Such assignments shall be made by instruments in form and
substance satisfactory to Mortgagee; provided however, that no such assignment
shall be construed as imposing upon Mortgagee any obligation with respect
thereto.  Mortgagee may, at its option, exercise its rights under this
Mortgage or any such specific assignment and such exercise shall not constitute
a waiver of any right under this Mortgage or any such specific
assignment.

    

    ARTICLE
6

    REMEDIES
UPON DEFAULT

    

    6.1         Events of
Default.  The occurrence of any of the following events or
conditions shall constitute an event of default (“Event of Default”) under this
Mortgage:

    

    6.1.1      
Mortgagor fails to pay any amount owing under this Mortgage within three
business days after written notice from Mortgagee or Mortgagee’s agent that the
same is due; or

    

    6.1.2      
Mortgagor fails to pay any taxes, insurance premiums, assessments or rents
required under this Mortgage within thirty business days after written notice
from Mortgagee or Mortgagee’s agent that the same is due; or

    

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    6.1.3      
Mortgagor fails to observe or perform any other obligation contained in this
Mortgage within thirty business days after written notice from Mortgagee or
Mortgagee’s agent that the same is due; or

    

    6.1.4      
The occurrence of an Event of Default under the Notes, Loan Agreement or any
other Loan Documents; or

    

    6.1.5      
All or any portion of the Improvements or Fixtures are destroyed by fire or
other casualty and Mortgagor fails to satisfy all of the restoration conditions
within the time periods specified in Section 4.3 of this Mortgage;
or

    

    6.1.6      
All or any material part of the Land or other Collateral is condemned, taken in
eminent domain, seized or appropriated by any governmental or quasi-governmental
agency or entity.

    

    6.2         Acceleration Upon
Default:  Additional Remedies.  Upon the occurrence
of an Event of Default, Mortgagee may, at its option, exercise all of the
applicable rights and remedies set forth in the Notes, Loan Agreement or any
other Loan Documents and, in addition, declare all Secured Obligations to be
immediately due and payable without any presentment, demand, protest or further
notice of any kind; and whether or not Mortgagee exercises any said right or
remedy, Mortgagee may:

    

    6.2.1      
Either in person or by agent, with or without bringing any action or proceeding,
or by a receiver appointed by a court and without regard to the adequacy of its
Collateral;

    

    a.          Enter
upon and take possession of all or part of the Collateral, in its own name or in
the name of Mortgagee;

    

    b.          Conduct
environmental assessments and surveys and do any other acts which it deems
necessary or desirable to preserve the value, marketability or rentability of
all or part of the Collateral or interest in the Collateral or increase the
Collateral's income, or protect the lien or charge of this
Mortgage;

    

    c.          With
or without taking possession of the Collateral, sue for or otherwise collect the
Rents, including those past due and unpaid; and

    

    d.          Apply
the Rents (less costs and expenses of operation and collection including
attorneys' fees) to any Secured Obligations, all in such order as Mortgagee may
determine;

    

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    The
entering and taking possession of the Collateral, the collection of such Rents
and their application shall not cure or waive any Event of Default or notice of
default or invalidate
any act done in response to them.  Regardless of whether possession of
the Collateral or the collection, receipt and application of any of the Rents is
by Mortgagee or a receiver, the Mortgagee shall be entitled to exercise every
right provided for in the Loan Agreement and other Loan Document or by law upon
occurrence of any Event of Default, including the right to exercise the power of
sale;

    6.2.2      
Commence an action to foreclose this Mortgage, appoint a receiver, or
specifically enforce any of the covenants contained in this
Mortgage;

    

    6.2.3      
Exercise all of the rights and remedies available to a secured party under the
applicable Uniform Commercial Code in such order and in such manner as
Mortgagee, in its sole discretion, may determine, including without limitation,
requiring Mortgagor to assemble the Collateral and make the Collateral available
to Mortgagee at a reasonably convenient location.  The expenses of
retaking, holding, preparing for sale or the like shall include reasonable
attorneys' fees and other expenses of Mortgagee and shall be secured by this
Mortgage; and/or

    

    6.2.4      
Exercise all other rights and remedies provided in this Mortgage, in any other
Loan Document or other document or agreement now or hereafter securing all or
any portion of the Secured Obligations, or as provided by law or in
equity.

    

    6.3         Appointment of
Receiver.  Upon the occurrence of an Event of Default under
this Mortgage, Mortgagee, without notice to Mortgagor or anyone claiming under
Mortgagor, and without regard to the then value of the Collateral or the
interest of Mortgagor in it, shall have the right to enter the Land in person or
to apply to any court having jurisdiction to appoint a receiver or receivers of
the Land, Fixtures or Improvements.  Mortgagor irrevocably consents to
such appointment and waives notice of any such application.  The
actions that Mortgagee or such receiver may take in connection with such entry
may include, but are not limited to (a) modifying, compromising obligations
under, terminating and implementing remedies with respect to the Assigned
Leases, and (b) entering into, modifying or terminating any contractual
arrangements, subject to Mortgagee's right at any time to discontinue any of the
same without liability.  Mortgagee is further authorized by this
provision to request the court to appoint a general receiver and to empower the
receiver to (i) sell or lease all or any portion of the Land, Fixtures or
Improvements, (ii) collect and apply to the outstanding balances of the Notes
all sales or lease proceeds, or hold the proceeds pending a court order
approving the receiver's final report and account, and (iii) hold the
collections as cash collateral pending such court order or foreclosure
sale.  Any such receiver(s) shall also have all the usual powers and
duties of receivers in similar cases and all the powers and duties of Mortgagee
in case of entry as provided in this Mortgage, and shall continue to exercise
all such powers until the date of confirmation of sale of the Land, Fixtures or
Improvements, unless such receivership is sooner terminated.  If
Mortgagee elects to enter or take possession of the Land, Fixtures or
Improvements, it will not assume any liability to Mortgagor or any other person
for operation or maintenance of the Land, Fixtures or Improvements, and
Mortgagor expressly waives any such Mortgagee liability.

    

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    6.4         Application of Funds After
Default.  Except as otherwise provided in this Mortgage, upon
the occurrence of an Event of Default, Mortgagee may at any time, with notice to
Mortgagor if providing such notice will not adversely delay the exercise of
Mortgagee's rights or remedies, apply to any Secured Obligation, in such manner
and order as Mortgagee may elect, even if such Secured Obligation may not yet be
due, any amounts received and held by Mortgagee to pay insurance premium or
impositions or as Rents, or as insurance or condemnation proceeds, and all other
amounts received by Mortgagee from or on account of Mortgagor or the Collateral,
or otherwise.  The receipt, use or application of any such amounts
shall not affect the maturity of any Secured Obligation, any of the rights or
powers of Mortgagee under the terms of any Loan Document, or any of the
obligations of Mortgagor or any guarantor under the Loan Agreement or any other
Loan document; or cure or waive any Event of Default or notice of default under
the Note(s) and Loan Agreement or any other Loan Document; or invalidate any act
of Mortgagee.

    

    6.5         Remedies Not
Exclusive.  Mortgagee shall be entitled to enforce payment and
performance of any Secured Obligation and to exercise all rights and powers
under this Mortgage or any other Loan Document or other agreement or any law,
even if some or all of the Secured Obligations may be otherwise secured, whether
by guaranty, deed of trust, mortgage, pledge, lien, assignment or
otherwise.  Neither the acceptance nor enforcement (whether by court
action or pursuant to the power of sale or other powers herein contained) of
this Mortgage shall impair Mortgagee's right to realize upon or enforce any
other security held by Mortgagee.  Mortgagee shall be entitled to
enforce this Mortgage and any other security for the Secured Obligations held by
Mortgagee in such order and manner as it may in its absolute discretion
determine.  No remedy conferred upon or reserved to Mortgagee is
intended to be exclusive of any other remedy in this Mortgage, and other
agreement, or at law, but each shall be cumulative and in addition to every
other remedy available to Mortgagee.  Every power or remedy given by
any of the Loan Documents to the Mortgagee or to which it may be otherwise
entitled, may be exercised, concurrently or independently, from time to time and
as often as may be deemed expedient by the Mortgagee, and it may pursue
inconsistent remedies.  Mortgagor may be joined in any action brought
by Mortgagee to foreclose under or otherwise enforce this Mortgage.

    

    6.6         Request for
Notice.  Mortgagor requests that a copy of any notice of
default and that a copy of any notice of sale under this Mortgage be mailed to
it at the address set forth in the first paragraph of this
Mortgage.

    

    6.7         No Personal Liability of General
Partners.  In any action brought to enforce the obligation of
Mortgagor to pay the Secured Obligations, any judgment or decree shall not be
subject to execution on, nor be a lien on, the assets of the general partners of
Mortgagor, other than their interests in the Collateral.  The
foregoing shall in no way otherwise affect the personal liability of
Mortgagor.

    

    MORTGAGE
(Open End) - 20

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ARTICLE
7

    MISCELLANEOUS

    

     

    7.1           Amendments.  This
instrument cannot be waived, modified, discharged or terminated except in
writing signed by the party against whom enforcement of such changes is
sought.

     

    7.2           Waivers.  Mortgagor
waives, to the extent permitted by law, (a) the benefit of all laws (whenever
enacted) providing for any appraisal before sale of any portion of the
Collateral, (b) all rights of valuation, appraisal, stay of execution, notice of
election to mature or declare due the whole of the Secured Obligations and
marshaling in the event of foreclosure of this Mortgage, and (c) all rights and
remedies which Mortgagor may have under the laws of the State of Washington
regarding the rights and remedies of sureties.

     

    7.3           Statements by
Mortgagor.  Mortgagor shall, within 10 days after notice from
Mortgagee, deliver to Mortgagee a written statement setting forth whether
Mortgagor has any knowledge that any offset or defense exists against the
Secured Obligations.

     

    7.4           Statements by
Mortgagee.  For any statement or accounting requested by
Mortgagor or any other entitled person pursuant to applicable law, or for any
other document or instrument furnished to Mortgagor by Mortgagee, Mortgagee may
charge:  (a) the maximum amount permitted by law at the time of the
request, (b) if no such maximum, then the greater of Mortgagee's customary
charges or the actual cost to Mortgagee.

     

    7.5           Notices.  All
notices, demands, approvals and other communications shall be made in writing to
the appropriate party at the address set forth in the first paragraph of this
Mortgage.  All such notices shall be made in accordance with the Loan
Agreement.

     

    7.6           Headings.  Article
and section headings are included in this Mortgage for convenience of reference
only and shall not be used in construing this Mortgage.

     

    7.7           Severability.  Every
provision of this Mortgage is intended to be severable.  The
illegality, invalidity or unenforceability of any provision of this Mortgage
shall not in any way affect or impair the remaining provisions of this Mortgage,
which provisions shall remain binding and enforceable.

     

    7.8           Subrogation.  To the
extent that proceeds of the Note are used, either directly or indirectly, to pay
any outstanding lien, charge or prior encumbrance against the Collateral,
Mortgagee shall be subrogated to any and all rights and liens held by any owner
or holder of such outstanding liens, charges and prior encumbrances, regardless
of whether such liens, charges or encumbrances are released.

     

    MORTGAGE
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Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.9           No Merger of
Lease.  Foreclosure of the lien created by this Mortgage on the
Land, Fixtures or Improvements shall not destroy or terminate any Assigned Lease
or other lease or sublease then existing and affecting all or any portion of the
Land, Fixture or Improvement, unless the Mortgagee or any purchaser at such
foreclosure sale shall so elect.  No act by or on behalf of Mortgagee
or any such purchaser shall terminate any Assigned Lease or other lease or
sublease unless a Mortgagee or such purchaser shall give written notice of
termination to such tenant or subtenant.  If both the lessor's and
lessee's estate under any lease which constitutes a part of the Land, Fixture or
Improvement shall become vested in one owner, this Mortgage and its lien shall
not be destroyed or terminated by application of the doctrine of merger unless
Mortgagee so elects, as evidenced by recording a written declaration so
stating.  Until Mortgagee so elects, Mortgagee shall continue to have
and enjoy all of the rights, powers and privileges of Mortgagee under this
Mortgage as to the separate estates.

     

    7.10 Governing
Law.  This Mortgage shall be governed by, and construed in
accordance with, the substantive laws of the State of Washington except where
the location of the Land may require the application of the laws of another
state or where federal laws, including the Farm Credit Act of 1971, as amended,
may be applicable.

     

    7.11 Statute of
Limitations.  Mortgagor hereby waives, to the fullest extent
permitted by law, the right to plead, use or assert any statute of limitations
as a plea, defense or bar to any Secured Obligation, or to any complaint or
other pleading or proceeding filed, instituted or maintained for the purpose of
enforcing this Mortgage or any rights under it.

     

    7.12
Interpretation.  In this Mortgage the singular shall include
the plural and the masculine shall include the feminine and the neuter and vice
versa, if the context so requires; and the word “person” shall include
corporation, partnership or other form of association.  Any reference
in this Mortgage to any document, instrument or agreement creating or evidencing
an obligation secured hereby shall include such document, instrument or
agreement both as originally executed and as it may from time to time be
modified.

     

    7.13 Further
Assurances.  Mortgagor agrees to do or cause to be done such
further acts and things and to execute and deliver or to cause to be executed
and delivered such additional assignments, agreements, powers and instruments as
Mortgagee may reasonably require to:  (a) correct any defect, error or
omission in this Mortgage or the execution or acknowledgment of this Mortgage,
(b) subject to the lien of this Mortgage any of Mortgagor's properties covered
or intended to be covered by this Mortgage, (c) perfect, maintain and keep valid
and effective such lien, (d) carry into effect the purposes of this Mortgage, or
(e) better assure and confirm to Mortgagee its respective rights, powers and
remedies under this Mortgage.

     

    7.14 Successors and
Assigns.  Subject to Section 4.8 above, this Mortgage applies
to, inures to the benefit of and binds all parties to this Mortgage, their
heirs, legatees, devisees, administrators, executors, successors and
assigns.

     

    7.15 Appraisal and Property Valuation
Costs.  Mortgagor acknowledges that Mortgagee has a legitimate
business need to remain apprised of the current value of the Collateral, and
Mortgagee from time to time after recordation of this Mortgage may order a
valuation (“Subsequent Valuation”) of the Property.  Mortgagor shall
cooperate in allowing Mortgagee or its agents reasonable access to the
Collateral for the purpose of performing any such Subsequent Valuation, whether
it is in the form of an appraisal or any other method of valuing the Collateral.
Mortgagor shall pay promptly to Mortgagee, on demand, the costs of any such
Subsequent Valuation, whether performed by employees, agents, or independent
contractors of Mortgagee.

     

    MORTGAGE
(Open End) - 22

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      

      7.16 Waiver of Marshalling Rights.
Mortgagor for itself and for all parties claiming through or under
Mortgagor, and for all parties who may acquire a lien on or interest in the
Land, hereby waives all rights to have the Collateral and/or any other property
which is now or later may be security for any Secured Obligation (“Other
Collateral”) marshaled upon any foreclosure of this Mortgage or on a foreclosure
of any other security for any of the Secured Obligations. Mortgagee shall have
the right to sell, and any court in which foreclosure proceedings may be brought
shall have the right to order a sale of the Collateral and any or all of the
Other Collateral, as a whole or in separate parcels, in any order Mortgagee may
designate.

      

      7.17 WAIVER OF JURY TRIAL.
MORTGAGOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS LOAN DOCUMENT OR ANY OTHER LOAN DOCUMENTS AND ANY FUTURE MODIFICATIONS,
AMENDMENTS, EXTENSIONS, RESTATEMENTS AND SERVICING ACTIONS RELATING TO THIS LOAN
DOCUMENT AND ANY OTHER LOAN DOCUMENTS. THE PARTIES INTEND THAT THIS JURY WAIVER
WILL BE ENFORCED TO THE MAXIMUM EXTENT ALLOWED BY LAW.

      

      7.18 Permitted Exceptions. All
of the title exceptions set forth on the title commitment or commitments issued
in connection with the closing of the Loan secured by this Mortgage are
Permitted Exceptions, except for those monetary liens that are to be paid off in
connection with the closing of the Loan secured by this Mortgage.

      

      ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.

      

      IN
WITNESS WHEREOF, Mortgagor has duly executed this Mortgage as of the date first
above written.

      

      MORTGAGOR:

      POPE
RESOURCES, A DELAWARE LIMITED PARTNERSHIP

      By: Pope
MGP Inc., a Delaware corporation, its Managing General Partner

      

      
        
          
            
              
                
                  	
                          By

                        	
                          

                        
	
                          Name:

                        	
                          Thomas
      M. Ringo

                        
	
                          Title:

                        	
                          Vice
      President and
CFO

                        

                

              

            

          

        

      

      

      MORTGAGE
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Resources, A Delaware Limited Partnership; CIF No. 56548

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          
            
              	
                      STATE OF WASHINGTON

                    	
                      )

                    
	 
      	
                      )ss.

                    
	
                      County
      of Kitsap

                    	
                      )

                    

            

          

        

      

      

      On this
25th day of
September          
2009, before me personally appeared Thomas M.
Ringo                
, known to me to be the Vice President and CFO
                      of
Pope MGP Inc., the managing general partner of the limited partnership that
executed the within instrument, and acknowledged that he executed the same as
such   Vice
President and
CFO                  
of the managing general partner and in the limited partnership name
freely and voluntarily.

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	 
      	 
      	
                                              

                                            	 
	
                                              

                                            	 	
                                              Notary
      Public for the State of Washington                          

                                            	 
	 	
                                              Residing
      at     Suquamish,
      WA
                                                   

                                            	 
	 	
                                              My
      commission expires    May
      20,
      2010                               

                                            	 
	 
      	
                                              Printed
      Name Susan M.
      Graham–Schuyler                             

                                            	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      

      MORTGAGE
(Open End) - 24

      Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        
Mortgagee
acknowledges that this Mortgage is subject to a security interest in favor of
CoBank, ACB (“Bank”) and by its acceptance hereto and pursuant to and in
confirmation of certain agreements and assignments by and between Mortgagee and
Bank, does assign, transfer, and set over the same unto Bank, its successors and
assigns, to secure all obligations of Mortgagee to Bank, provided that pursuant
to such agreements and assignments Mortgagee has authority to perform all loan
servicing and collection actions and activities hereunder, including without
limitation thereto, releasing in whole or in part and foreclosing judicially or
otherwise this Mortgage until the Bank, by instrument recorded in the office in
which this Mortgage is recorded, revokes such authority. 

        

      

    

     

    MORTGAGE
(Open End) - 25

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Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

    PROPERTY
DESCRIPTION

    

     

    PARCEL
1

     

    Section
24, Township 7 North, Range 5 East of the Willamette Meridian, Skamania County,
Washington.  Except the Southeast Quarter of said Section
24.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots O-1 Through
O-24.

     

    PARCEL
2

     

    Section
3, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots D-1 Through
D-32.

     

    PARCEL
3

     

    Section
4, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots C-1 Through
C-32.

     

    PARCEL
4

     

    Section
5, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots B-1 Through
B-32.

     

    PARCEL
5

     

    Section 6
Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots A-1 Through
A-32.

    

    MORTGAGE
(Open End) - 26

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Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    PARCEL
6

     

    Section
7, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots E-1 Through
E-32.

     

    PARCEL
7

     

    All of
Section 8, Township 7 North, Range 6 East of the Willamette Meridian, in the
County of Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots F-1 Through
F-5,  F-7 Through F-28.

     

    Also F-6
together with the South Half of the North Half of the Southeast Quarter of the
Northwest Quarter.

     

    EXCEPT
that portion lying within Four Peaks Subdivision as recorded in Book B of Plats,
Page 60, Skamania County Records.

     

    PARCEL
8

     

    Section
9, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots G-1 Through
G-32.

     

    PARCEL
9

     

    Section
10, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots H-1 Through
H-32.

     

    PARCEL
10

     

    The West
Half of Section 11, Township 7 North, Range 6 East of the Willamette Meridian,
in the County of Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots I-1 Through
I-16.

    

    MORTGAGE
(Open End) - 27

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Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    PARCEL
11

     

    The North
Half of the Northeast quarter of Section 14, Township 7 North, Range 6 East of
the Willamette Meridian, in the County of Skamania, State of
Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots N-1 Through
N-4.

     

    PARCEL
12

     

    Section
15, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots M-1 Through
M-32.

     

    PARCEL
13

     

    Section
16, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots L-1 Through
L-32.

     

    PARCEL
14

     

    Section
17, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots K-1 Through
K-32.

     

    PARCEL
15

     

    Government
Lots 1, 2, 3 and 4, the East half of the West half, the North half of the
Northeast quarter, the Southwest quarter of the Southeast quarter and the
Southwest quarter of the Northeast quarter of Section 18, Township 7 North,
Range 6 East of the Willamette Meridian, in the County of Skamania, State of
Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots J-1 Through
J-23.

     

    EXCEPT
that portion conveyed to Marshall and Melba Moore, by deed recorded in Book 194,
Page 10.

    

    MORTGAGE
(Open End) - 28

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    PARCEL
16

     

    Section
19, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots P-1 Through
P-32.

     

    PARCEL
17

     

    Section
20, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots Q-1 Through
Q-32.

     

    PARCEL
18

     

    Section
21, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots R-1 Through
R-32.

     

    PARCEL
19

     

    Section
22, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots S-1 Through
S-32.

     

    PARCEL
20

     

    The West
half, the West half of the Southeast quarter and Government Lots 1 and 2, all in
Section 23, Township 7 North, Range 6 East of the Willamette Meridian, in the
County of Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots T-1 Through
T-19.

     

    Also Lot
T-20 being the South half of the Southwest Quarter of the Southeast Quarter and
the South Half of the Southeast Quarter of the Southeast Quarter.

     

    EXCEPT
that portion conveyed to Pine Creek Boulder recorded in Auditor File No.
2004155506.

    

    MORTGAGE
(Open End) - 29

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    PARCEL
21

     

    Section
27, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots W-1 Through
W-31.

     

    EXCEPTING
from said Section 27, the following described tracts:

     

    That
portion conveyed to Swift Creek Estates by deed recorded under Auditor’s File
No. 99965, Book 85, Page 66 described as follows:

     

    Beginning
at the Southeast corner of said Section 27; thence North 0°04’20” East 60.96
feet, more or less, along the Easterly line of said Section 27 to the Southerly
right of way boundary of Lewis River Road commonly called the N-90 Road; thence
South 86°17’00” West 569.87 feet, more or less, along said Southerly right of
way boundary; thence South 3°43’00” East 25 feet, more or less, to a point on
the Southerly line of said Section 27; thence South 89°48’15” East 566 feet,
more or less, along said Southerly line to the point of Beginning.

     

    ALSO
EXCEPTING that portion of the East half of the Southeast quarter of Section 27,
being that certain Short Plat as recorded in Skamania County on November 3,
1987, in Book 3 of Short Plats, Page 125, recorded under Auditor’s File No.
104203.

     

    PARCEL
22

     

    Section
28, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots V-1 Through
V-29.

     

    EXCEPTING
from said Section 28 the following described tracts:

     

    Beginning
at a point on the West line of said Section 28 which is South 0°16’55” East a
distance of 1,674.98 feet from the West quarter section corner thereof and
running thence South 25°37’ East 498.22 feet; thence South 47°34’30” East 595.58
feet; thence North 59°33’30” East 240.49 feet; thence South 40°26’ East 296.84
feet; thence South 89°49’45” West 1,050.02 feet to the Southwest corner of said
Section 28; and thence North 0°16’55” West 958.19 feet to the point of
beginning.

     

    MORTGAGE
(Open End) - 30

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ALSO
EXCEPTING, Beginning at a point on the South line of said Section 28 which is
North  89°49’45” East 2,006.72 feet from the Southwest corner thereof;
and running thence North 78°19’30” East 237.50 feet; thence North 33°28’ East
235.01 feet; thence North 63°23’ East 464.47 feet; thence North 21°05’30” East
360.93 feet; thence North 17°30’30” East 212.97 feet; thence North 57°42’ East
110.31 feet; thence South 16°09’30” East 375.99 feet; thence South 10°31’30”
East 336.26 feet; thence South 31°11’ West 416.74 feet to a point on the South
line of said Section 28, which is South 89°52’30” West 2,259.98 feet from the
Southeast corner thereof; thence South 89°52’30” West 380.01 feet to the South
quarter corner of said Section 28; and thence South 89°49’45” West 634.99 feet
to the Point of Beginning.

     

    PARCEL
23

     

    Section
29, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots U-1 Through
U-17.

     

    EXCEPT
that portion conveyed to Pacific Power and Light Co. By deed recorded under
Auditor’s File No. 55342, Book 46, Page 115, described as lying South and West
and below the 1,000 feet.

     

    PARCEL
24

     

    Section
33, Township 7 North, Range 6 East of the Willamette Meridian, in the County of
Skamania, State of Washington.

     

    Also as
described in Deed recorded in Auditor File No. 2007167218 as Lots V-25, V-26
& X-1.

     

    EXCEPT
that portion conveyed to Pacific Power and Light Co. By deed recorded under
Auditor’s File No. 55342, Book 46, Page 115, described as lying South and West
and below the 1,000 feet.

     

    Assessor's Property Tax Parcel
Numbers: 07-05-00-0-0-2600-0;
07-06-00-0-0-0200-00;  07-06-00-0-0-0300-00; 07-06-00-0-0-0400-00;
07-06-00-0-0-0500-00; 07-06-00-0-0-0600-00;  07-06-00-0-0-0700-00;
07-06-00-0-0-0800-00; 07-06-00-0-0-0900-00; 07-06-00-0-0-1000-00;
07-06-00-0-0-1200-00; 07-06-00-0-0-1300-00; 07-06-00-0-0-1400-00;
07-06-00-0-0-1490-00;  07-06-00-0-0-1480-00; 07-06-00-0-0-1590-00;
07-06-00-0-0-1500-00; 07-06-00-0-0-1600-00; 07-06-00-0-0-1700-00;
07-06-00-0-0-1800-00; 07-06-00-0-0-2600-00;
07-06-00-0-0-2700-00;  07-06-00-0-0-2800-00; 07-06-00-0-0-3000-00;
07-06-00-0-03100-00; 07-06-00-0-0-4200-00;

    

    MORTGAGE
(Open End) - 31

    Pope
Resources, A Delaware Limited Partnership; CIF No. 56548EXHIBIT
10.1

     

    EMPLOYMENT
AGREEMENT

     

    This
EMPLOYMENT AGREEMENT (“Agreement”) made effective as of July 17, 2009 by and
between BioMimetic
Therapeutics, Inc., a Delaware corporation (the “Company”), and Dr. Samuel E. Lynch (the
“Executive”).

     

    In
consideration of the mutual covenants contained in this Agreement, the parties
hereby agree as follows:

     

    1.           Employment.  The
Company agrees to employ the Executive and the Executive agrees to be employed
by the Company as President and Chief Executive Officer and to be responsible
for the typical management responsibilities expected of an officer holding such
position and such other responsibilities customarily pertaining to such office
as may be assigned to the Executive from time to time by the Board of Directors
of the Company (the “Board”), all for the Period of Employment as provided in
Section 2 below and upon the terms and conditions provided in the
Agreement.  During the Period of Employment, the Executive shall
manage the Company for the improvement of shareholder value to the best of his
ability and perform faithfully the duties that may be assigned to him from time
to time in accordance herewith by the Board.

     

    2.           Term.  The
period of Executive’s employment under this Agreement will commence as of July
17, 2009, and shall continue through December 31, 2012, subject to extension or
termination as provided in this Agreement (“Period of
Employment”).  On January 1, 2013 and each January 1 thereafter, the
Period of Employment will be extended for an additional one-year period, unless
either party gives notice of non-extension at least 90 days prior to any such
anniversary. If such written notice of non-renewal is delivered from one party
to the other, the Executive’s employment will terminate on December 31 of the
year in which such notice is delivered.

     

    3.           Compensation.  For
all services rendered by the Executive in any capacity during the Period of
Employment, the Executive shall be compensated as follows:

     

    (a)           Base
Salary.  The Company shall pay the Executive an annual base
salary of $410,000 (the “Base Salary”).  The Base Salary shall be
payable according to the customary payroll practices of the Company but in no
event less frequently than once every two weeks.  The Base Salary
shall be reviewed each fiscal period and shall be subject to increase according
to the policies and practices adopted by the Company from time to time, and at
the discretion of the Board.

     

    (b)           Incentive Compensation
Award.  The Executive shall be eligible to receive an annual
incentive cash bonus as may be granted by the Board or the Compensation
Committee of the Board under any executive bonus or incentive plan in effect
from time to time (the “Annual Incentive Award”).  The amount of any
Annual Incentive Award shall be determined by the Compensation Committee based
upon the satisfactory performance of goals set mutually by the Board and the
Executive on an annual basis. In no event shall the payment of any Annual
Incentive Award to the Executive be made later than March 15 of the calendar
year next following the calendar year during which such Annual Incentive Award
is earned.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)           Stock Options. As set
forth below, the Company will grant to the Executive options (the “Option”) to
acquire one percent (1%) of the Company’s Common Stock on a fully diluted basis
as of the fully executed date of this Agreement (which shall include all
outstanding Common Stock, warrants and options and shares reserved for issuance
pursuant to the Company’s stock option plan).  The Option grant shall
vest upon the earlier of the Company’s receipt of FDA approval of an orthopedic
PDGF product or December 31, 2012.

     

    Each such
Option grant shall be made pursuant to an Incentive Stock Option Agreement (“ISO
Agreement”) between the Company and the Executive to the extent the Executive is
eligible for incentive options under applicable tax laws and, with respect to
any excess, or in the event the Executive is not eligible for incentive stock
options, a Non-Qualified Stock Option Agreement (“NQSO Agreement”) between the
Company and the Executive.    In all events each such Option
shall be subject to the terms and conditions of the respective ISO Agreement or
NQSO Agreement, as applicable, as well as the Company's 2001 Stock Option Plan,
as the same may be amended from time to time or any new long term incentive plan
adopted by the Company.

     

    (d)           Additional
Benefits.  The Executive will be entitled to participate in all
employee benefit plans or programs and receive all benefits and perquisites for
which any salaried employees are eligible under any existing or future plan or
program established by the Company or its affiliates and available to any
employees of the Company, including participation in any stock option
plan.  The Executive will participate to the extent permissible under
the terms and provisions of such plans or programs in accordance with program
provisions.  These shall include, but not be limited to group
hospitalization, health, dental care, participation in Company retirement and
pension plans, life or other insurance and disability
insurance.  Nothing in this Agreement will preclude the Company or
Company affiliates from amending or terminating any of the plans or programs
applicable to salaried employees or senior executives as long as the total value
of all benefits is not materially decreased.  The Executive will be
entitled to an annual paid vacation of four weeks per year.

     

    4.           Business Expenses and Other
Expenses.  The Company will reimburse the Executive for all
reasonable travel and other business-related expenses and obligations incurred
by the Executive on behalf of the Company.

     

    5.           Disability.

     

    (a)           In
the event of the disability of the Executive during the Period of Employment,
the Company will continue to pay the Executive according to the compensation
provisions of this Agreement during the period of his disability, until such
time as any long term disability insurance benefits accruing to the Executive
are available. However, in the event the Executive is disabled for a continuous
period of six months, or for a total of 90 or more nonconsecutive days in any
270-day period, the Company may terminate the employment of the
Executive.  In this case, normal compensation will cease, except for
any earned but unpaid Base Salary and, effective as of his termination date, the
Executive shall be entitled to receive salary continuation for a period of six
(6) months thereafter, to be paid in substantially equal monthly installments in
accordance with the Company’s regular payroll practices applicable to similarly
situated active employees and determined by reference to his Base Salary as in
effect on the day immediately prior to his termination date.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)           During
the period the Executive is receiving payments of either regular compensation or
disability insurance described in this Agreement and to the extent reasonable
considering the Executive’s disability, the Executive will furnish information
and assistance to the Company and from time to time will make himself available
to the Company to undertake assignments consistent with his prior position with
the Company.  If the Company fails to make a payment or provide a
benefit required as part of the Agreement, the Executive’s obligation to furnish
information and assistance will end.

     

    (c)           For
purposes of this Agreement, the Executive will be considered to be “disabled” if
he satisfies the requirements necessary to receive benefits under the Company’s
long-term disability plan or, in the absence of any such plan, under any
insurance policy providing benefits for long-term disabilities that is procured
for the Executive pursuant to this Agreement or otherwise.

     

    6.           Death.  In
the event of the death of the Executive during the Period of Employment, the
Company’s obligation to make payments under this Agreement shall cease as of the
date of death, except for earned but unpaid Base Salary. The Executive’s
designated beneficiary will be entitled to receive the proceeds of any life
insurance or other death benefit programs that may be provided by the
Company.

     

    7.           Effect of Termination of
Employment.

     

    (a)           If
the Executive’s employment terminates due to a Without Cause Termination, as
defined below, or by the Executive for Good Reason, as defined below, or if the
Company elects not to renew Executive’s employment hereunder, the Company will
provide the Executive the following severance benefits: (i) continuation of the
Executive’s Base Salary (and an amount equal to 1/12th of the most recent annual
bonus and incentive award) on the Company’s regular payroll dates for a period
equal to eighteen (18) months following the termination date; (ii) reimbursement
to the Executive for the costs of the Executive’s group medical insurance
premiums for himself and his dependents for the 18-month period immediately
following his termination (or COBRA if applicable).  Earned but unpaid
Base Salary through the date of termination will be paid in a lump sum at such
time. Furthermore, all outstanding stock options, restricted stock, restricted
stock units, and any other unvested equity incentives shall become fully
exercisable and vested as of the Date of Termination (and shall remain
exercisable for their stated terms, with the exception of any incentive stock
options, which shall remain exercisable for three months following the Date of
Termination).  Subject to Section 12 below, the salary continuation
payments described in this Section 7 will commence within fourteen (14) days of
the Company’s receipt of the Executive’s executed general release of claims and
resignation required under Section 7(c)(ii) of this Agreement, and to the extent
permissible under Section 12 below, such salary continuation payments shall be
made retroactive back to the date the Executive’s employment with the Company
terminates.

     

    (b)           If
the Executive’s employment terminates due to Termination for Cause (as defined
below), material breach of this Agreement by Executive, or expiration of the
Period of Employment as a result of the Executive giving notice of non-extension
under Section 2 above, earned but unpaid Base Salary will be paid to the
Executive on the termination date.  No other payments will be made or
benefits provided by the Company.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (c)           For
this Agreement, the following terms have the following meanings:

     

    (i)           “Termination
for Cause” means termination of the Executive’s employment by the Board at any
time after the occurrence of one or more of the following events, in each case
as determined in good faith by the Board with Executive being afforded the
opportunity of presenting his case to the Board:  (a) the Executive’s
(i) willful misconduct or gross negligence in performance of his duties
hereunder, or (ii) repeated refusal or failure to comply with the legal
directives of the Board so long as such directives are not inconsistent with the
Executive’s position and duties, which is not remedied (if remediable) within
twenty (20) working days after written notice from the Board, which written
notice shall state that failure to remedy such conduct may result in Termination
for Cause; or (b) the Executive’s conviction of a felony or crime involving
moral turpitude causing material harm to the standing and reputation of the
Company.

     

    (ii)           “Without
Cause Termination” means termination of the Executive’s employment (x) other
than due to death, disability, or Termination for Cause, or  (y) as a
result of the resignation by Executive for “Good Reason,” as defined
below.(d)The Executive shall be entitled to receive benefits upon termination of
his employment by the Company only as set forth in this Section 7 (and to the
extent applicable, as set forth in Section 10).  The Executive’s
entitlement to such termination benefits shall be conditioned upon the
Executive’s and Company’s execution and delivery of a mutual general release of
claims and the resignation of Executive from all of the Executive’s positions
with the Company and its affiliates, other than Executive’s position as a member
of the Board.

     

    8.           Other Duties of the
Executive During and After the Period of Employment.

     

    (a)           The
Executive will, with reasonable notice during or after the Period of Employment,
furnish information as may be in his possession and cooperate with the Company
as may reasonably be requested in connection with any claims or legal actions in
which the Company is or may become a party.

     

    (b)           The
Executive recognizes and acknowledges that all non-public information pertaining
to the affairs, business, clients, customers or other relationships of the
Company, as hereinafter defined, is confidential and is a unique and valuable
asset of the Company.  Access to and knowledge of this information are
essential to the performance of the Executive’s duties under this
Agreement.  The Executive will not during the Period of Employment and
for 12 months thereafter except to the extent reasonably necessary in
performance of the duties under this Agreement, give to any person, firm,
association, corporation or governmental agency any non-public information
concerning the affairs, business, clients, customers or other relationships of
the Company, except as required by law. The Executive will not make use of this
type of information for his own purposes or for the benefit of any person or
organization other than the Company.  All records, memoranda, etc.,
relating to the business of the Company, whether made by the Executive or
otherwise coming into his possession, are confidential and will remain the
property of the Company.  Confidential information shall not include
information that (i) becomes generally available to the public other than as a
result of disclosure by the Executive, (ii) was available to the Executive on a
non-confidential basis prior to disclosure to the Executive in connection with
his duties to the Company, provided that the source of such information is not
known to the Executive to be bound by a confidentiality agreement or other
contractual obligation of confidentiality to the Company or (iii) becomes
available to the Executive on a non-confidential basis from a source other than
the Company (or any agent, employee or affiliate of Company) provided such
source is not known to the Executive to be bound by a confidentiality agreement
or other contractual obligation of confidentiality to the
Company.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (c)           During
the period of his employment and for a period of 12 months thereafter, the
Executive will not engage, directly or indirectly, in any business activity or
enterprise which is a “Competitive Activity.”  For purposes hereof,
“Competitive Activity” means any business or endeavor in which the Company is
engaged at the Date of Termination (or, if the Date of Termination occurs after
a Change in Control, immediately prior to the Change in Control, including if he
becomes involved as an owner, employee, employer, consultant, principal,
officer, director, independent contractor, agent, partner, advisor or in any
other capacity, with or without compensation, calling for the rendition of
personal services with any individual, partnership, corporation or other
organization that is engaged in any part of the Competitive Activity; provided,
however, that the Executive will not be prohibited from owning less than one
percent (1%) of any publicly traded corporation that is in competition with the
Company. The Executive acknowledges that the covenants contained herein are
reasonable as to geographic and temporal scope.

     

    (d)           The
Executive acknowledges that his breach or threatened or attempted breach of any
provision of this Section 8 would cause irreparable harm to the Company not
compensable in monetary damages and that the Company shall be entitled, in
addition to all other applicable remedies, to a temporary and permanent
injunction and a decree for specific performance of the terms of this Section 8
without being required to prove damages or furnish any bond or other
security.

     

    (e)           The
Executive shall not be bound by the provisions of this Section 8 in the event of
the default by the Company in its obligations under this Agreement that are to
be performed upon or after termination of this Agreement.

     

    (f)           For
purposes of this Section 8, the “Company” shall include any person or entity
that, directly or indirectly, controls or is controlled by the Company or is
under common control with the Company.

     

    9.           Indemnification;
Litigation.  The Company will indemnify the Executive to the
fullest extent permitted by the laws of the state of incorporation in effect at
that time, or certificate of incorporation and by-laws of the Company whichever
affords the greater protection to the Executive. The Executive will be entitled
to reimbursement of any reasonable fees or expenses incurred in connection with
any action, suit or proceeding to which he may be made a party by reason of
being a director or executive officer of the Company.  The foregoing
shall survive termination of the Executive’s employment or any future amendment
or modification of the Company’s articles of incorporation or
bylaws.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    10.         Effect of Change in
Control.

     

    (a)           In
the event there is a Change in Control (as defined below) and within the twelve
(12) month period following such event Executive is terminated in a Without
Cause Termination, the Company elects not to renew this Employment Agreement, or
Executive elects to resign upon written notice to the Company following an event
that constitutes Good Reason (as defined below), the Company shall pay to the
Executive in a lump sum 150% of Executive’s Annual Base Salary and most recent
Annual Incentive Award.  Without limiting the foregoing, any Without
Cause Termination or resignation for Good Reason that occurs within three (3)
months prior to a Change in Control shall be deemed to be made in contemplation
of such Change in Control.  In addition, the Company shall pay
Executive upon such termination or resignation, in exchange for Executive
agreeing to not solicit any of the then current customers or employees of the
Company for a period of twelve (12) months following his termination of
employment, a lump sum payment of twelve (12) months of his Base Salary plus an
amount equal to 100% of the most recent annual bonus and incentive
award.

     

    (b)           In
addition, all unvested stock options and restricted stock held by Executive
shall be deemed fully vested and immediately exercisable on the date of such
Change in Control.

     

    (c)           A
“Change in Control” shall be deemed to have occurred if (i) a tender offer shall
be made and consummated for the ownership of more than fifty percent (50%) of
the outstanding voting securities of the Company, (ii) the Company shall be
merged or consolidated with another corporation or entity and as a result of
such merger or consolidation less than fifty percent (50%) of the outstanding
voting securities of the surviving or resulting corporation or entity shall be
owned in the aggregate by the former shareholders of the Company, as the same
shall have existed immediately prior to such merger or consolidation, (iii) the
Company shall sell all or substantially all of its assets to another corporation
or entity which is not a wholly- owned subsidiary, or (iv) a person, within the
meaning of Section 3(a)(9) or of Section 13 (d)(3) (as in effect on the date
hereof) of the Securities and Exchange Act of 1934 (“Exchange Act”), shall
acquire more than fifty percent (50%) of the outstanding voting securities of
the Company (whether directly, indirectly, beneficially, or of
record).

     

    (d)           For
purposes hereof, ownership of voting securities shall take into account and
shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the Exchange
Act.

     

    (e)           A
resignation for “Good Reason” shall be deemed to have occurred if the Executive
resigns his employment with the Company after the occurrence of any of the
following events, to which the Executive has not expressly consented in writing:
(i) a material reduction in the Executive’s Base Salary (other than one
applicable to all executive officers); (ii) a material reduction in job duties,
authority, responsibilities and requirements inconsistent with the Executive’s
position with the Company and the Executive’s prior duties, authority,
responsibilities, and requirements or a change in the Executive’s reporting
relationship such that Executive is no longer reporting to the Board; (iii) a
relocation of the Executive to a facility or location more than fifty (50) miles
from the address of the Company’s headquarters office as of the effective date
of this Agreement, or (iv) material breach by the Company of any of the material
covenants herein.  Any of the foregoing conditions described in this
Section 10(e) will constitute “Good Reason” only if the Executive delivers a
Notice of Termination identifying such condition within ninety (90) days after
the initial existence of such condition and such condition must continue for a
period of thirty (30) days after the delivery of such Notice of
Termination.  Notwithstanding the foregoing, the Executive’s
termination of employment will not be considered to be for Good Reason unless
such termination of employment occurs within sixty (60) days after Company’s
failure to cure such condition or conditions during the foregoing thirty (30)
day period.

    
      
         

      

      
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    11.         Withholding
Taxes. The Company shall directly or indirectly withhold from any
payments under this Agreement all federal, state, city or other taxes as
required pursuant to any law or governmental regulation.

     

    12.         Tax
Provisions.

     

    (a)           Notwithstanding
any other provision of this Agreement whatsoever, the Company shall have the
right, after consulting with and securing the approval of the Executive (which
approval shall not unreasonably be withheld), to provide for the application and
effects of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) (relating to deferred compensation arrangements) and any related
regulatory or administrative guidance issued by the Internal Revenue Service
such that the severance and other benefits provided under this Agreement shall
not trigger the additional tax, interest, and any related penalties imposed by
Code Section 409A(l)(B).  Although the Company intends to administer
the Agreement so that it will comply with the requirements of Code Section 409A,
the Company does not represent or warrant that the Agreement will comply with
Code Section 409A or any other provision of federal, state, local or non-United
States law.  Neither the Company, its subsidiaries, nor their
respective directors, officers, employees or advisers will be liable to the
Executive (or any other individual claiming a benefit through the Executive) for
any tax, interest, or penalties the Executive may owe as a result of
compensation paid under the Agreement, and the Company and its subsidiaries will
have no obligation to indemnify or otherwise protect the Executive from the
obligation to pay any taxes pursuant to Code Section 409A.

     

    (b)           The
Company shall delay the payment of any portion of severance benefits payable
under this Agreement as required to comply with Code
Section 409A(a)(2)(B)(i) (relating to payments made to certain “specified
employees” of certain publicly-traded companies) and in such event, any such
amount to which the Executive would otherwise be entitled during the six (6)
month period immediately following his termination of employment shall instead
be accumulated through and paid or provided on the first business day following
the expiration of such six (6) month period, or if earlier, the date of his
death.  Only that portion of the severance benefits shall delayed that
is necessary to reduce payments to an amount that complies with Section
409(a)(2)(B)(i) during such six (6) month period.  For the avoidance
of doubt, no portion of any such severance benefits shall be subject to the
foregoing delay if and to the extent that such benefits (i) constitute a
“short term deferral” within the meaning of Section 1.409A-1(a)(4) of the
Treasury Regulations, or (ii) (A) are being paid due to the
Executive’s “involuntary separation from service” (within the meaning of Section
1.409A-1(n) of the Treasury Regulations); (B) do not exceed two times the lesser
of (1) the Executive’s annualized compensation from the Company for the
calendar year prior to the calendar year in which the termination occurs, or (2)
the maximum amount that may be taken into account under a qualified plan
pursuant to Code Section 401(a)(17) for the year in which the Executive’s
employment terminates; and (C) the payment is required under this Agreement to
be paid no later than the last day of the second (2nd) calendar year following
the calendar year during which the Executive’s “separation from service” (within
the meaning of Code Section 409A) occurs.  For purposes of Code
Section 409A, the Executive’s right to receive installment payments pursuant to
Section 7 above shall be treated as a right to receive a series of separate and
distinct payments.  The determination of whether the Executive is a
“specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the
time of his termination of employment shall made by the Company in accordance
with the terms of Code Section 409A and the applicable guidance thereunder
(including without limitation Treasury Regulation Section 1.409A-1(i) and any
successor provision thereto).

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (c)           The
continued employee benefits available under Sections 7 and 10 above that are
taxable benefits (and that are not disability pay or death benefit plans within
the meaning of Code Section 409A) are intended to comply, to the maximum extent
possible, with the exception to Code Section 409A set forth in Section
1.409A-1(b)(9)(v) of the Treasury Regulations (and any successor
thereto).  To the extent that any of those benefits either do not
qualify for that exception, or are provided beyond the applicable time periods
set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations, then such
amounts will be reimbursed or provided no later than December 31 of the
year following the year in which the expense was incurred and will be subject to
the following additional rules:  (i) the amount of in-kind
benefits provided, during any calendar year shall not affect the amount of
in-kind benefits to be provided, during any other calendar year; and (ii) the
right to in-kind benefits shall not be subject to liquidation or exchange for
another benefit.

     

    (d)           For
the avoidance of doubt, no amount subject to the requirements of Code Section
409A shall become payable to the Executive as a result of a termination of
employment that does not constitute a “separation from service” within the
meaning of Code Section 409A(a)(2)(A)(i) and Section 1.409A-1(h) of the Treasury
Regulations.

     

    13.         Consolidation; Merger or
Sale of Assets.  Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation that assumes this
Agreement and all obligations and undertakings of the Company
hereunder.  Upon such a consolidation, merger or sale of assets, the
term “the Company” as used will mean the other corporation and this Agreement
shall continue in full force and effect.

     

    14.         Modification.  This
Agreement may not be modified or amended except in writing signed by the
parties.  No term or condition of this Agreement will be deemed to
have been waived, except in writing by the party charged with
waiver.  A waiver shall operate only as to the specific term or
condition waived and will not constitute a waiver for the future or act on
anything other than that which is specifically waived.

     

    15.         Effective Prior
Agreements.  This Agreement contains the entire understanding
between the Company and the Executive with respect to the subject matter and
supersedes any prior employment or severance agreements between the Company and
its affiliates, and the Executive.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    16.         Governing
Law.  This Agreement has been executed and delivered in the
State of Tennessee and its validity, interpretation, performance and enforcement
shall be governed by the laws of that state.

     

    17.         Notices.  All
notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed to have been made when delivered or mailed
first-class postage prepaid by registered mail, return receipt requested, or
when delivered if by hand, overnight delivery service or confirmed facsimile
transmission, to the following:

     

    (a)           If
to the Company, at  BioMimetic Therapeutics, Inc.,
389  Nichol Mill Lane, Franklin, Tennessee 37067, Attention: General
Counsel with a copy to Mark Manner, Harwell Howard Hyne Gabbert & Manner,
315 Deaderick Street, Suite 1800, Nashville, Tennessee 37238, or at such other
address as may have been furnished to the Executive by the Company in writing;
or

     

    (b)           If
to the Executive, at 3340 Southall Road, Franklin, Tennessee 37064, or such
other address as may have been furnished to the Company by the Executive in
writing.

     

    18.         Binding
Agreement.  This Agreement shall be binding on the parties’
successors, heirs and assigns.

     

    IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

     

    
      
        
          
            
              
                	
                        EXECUTIVE

                      
	 
      
	
                         

                      
	
                        Dr.
      Samuel E. Lynch

                      
	 
      
	
                         

                      
	
                        Date

                      
	 
      
	
                        BIOMIMETIC
      THERAPEUTICS, INC.

                      
	 
      
	
                         

                      
	
                        Charles
      Federico, Chair of Compensation

                        Committee
      of Board of Directors

                      
	 
      
	
                         

                      
	
                        Date

                      

              

            

          

        

      

    

    
      
         

      

      
        9

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