Document:

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Exhibit 10.2

WHEN RECORDED RETURN TO:
David J. Buono
200 S.W. Market Street, Suite 1600
Portland, OR 97201

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

      THIS TRUST DEED, ASSIGNMENT OF RENTS, SECURITY AGREEMENT, AND FIXTURE
FILING (this "Trust Deed") is made as of the 15th day of October, 2002 by
Yamhill Valley Vineyards, Inc., an Oregon corporation having its office at 16250
S.W. Oldville Road, McMinnville, OR 97128 ("Grantor"), to First American Title
Insurance Company of Oregon, having its office at 200 Market Street, Suite 250,
Portland, OR 97201 ("Trustee"), for the benefit of James W. Shires and Scott
Crawford whose address for notice purposes is 1955 Hall Street, West Linn, OR
97068 ("Beneficiary").

      WHEREAS, Beneficiary has offered to make a loan to Grantor in the sum of
$400,000.00, which loan is to be evidenced by a Promissory Note of even date
herewith. The loan, if not sooner paid, is due and payable in full on September
30, 2002 (the Promissory Note as modified, supplemented, extended, renewed, or
replaced from time to time is referred to below as the "Note"); and

      WHEREAS, as a condition to the making of the loan to Grantor, Beneficiary
has required, and Grantor has agreed to execute and deliver, this Trust Deed.

      NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and for the purpose of securing the Obligations described
in Section 1.1 below, Grantor irrevocably grants, bargains, sells, conveys,
assigns, and transfers to Trustee in trust for the benefit and security of the
Beneficiary, with power of sale and right of entry and possession, all of
Grantor's right, title, and interest in and to the real property located in
Yamhill County, Oregon, including but not limited to all buildings and other
improvements of every nature (the "Improvements"), and more particularly
described in Exhibit A attached hereto and incorporated herein (the "Property");

      TO HAVE AND TO HOLD the Property to Trustee and its successors and assigns
for the benefit of Beneficiary and its successors and assigns, forever.

      PROVIDED ALWAYS, that if all the Obligations (as defined in Section 1.1
below) shall be paid, performed, and satisfied in full, then the lien and estate
granted by this Trust Deed shall be reconveyed.

      This Trust Deed, the Note, and the Security Agreement executed in
connection therewith, as they may be amended or supplemented from time to time,
are sometimes collectively referred to below as the "Loan Documents."

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      TO PROTECT THE SECURITY OF THIS TRUST DEED, GRANTOR HEREBY COVENANTS AND
AGREES AS FOLLOWS:

                                   ARTICLE I
                 PARTICULAR COVENANTS AND WARRANTIES OF GRANTOR

      1.1   Obligations Secured. This Trust Deed secures the following,
collectively referred to as the "Obligations":

            (1)   The payment of all indebtedness, including but not limited to
principal and interest, and the performance of all covenants and obligations of
Grantor, under the Note, whether such payment and performance is now due or
becomes due in the future; and

            (2)   The payment and performance of all covenants and obligations
in this Trust Deed and in the other Loan Documents.

      1.2   Payment of Indebtedness; Performance of Covenants. Grantor shall
duly and punctually pay and perform all of the Obligations.

      1.3   Property. Grantor warrants that it holds good and merchantable title
to the Property, free and clear of all liens, encumbrances, reservations,
restrictions, easements, and adverse claims except those specifically listed in
Exhibit B. Grantor covenants that it shall forever defend Beneficiary's and
Trustee's rights under this Trust Deed against the adverse claims and demands of
all persons.

      1.4   Further Assurances; Filing; Refiling; Etc.

            (1)   Grantor shall execute, acknowledge, and deliver, from time to
time, such further instruments as Beneficiary or Trustee may require to
accomplish the purposes of this Trust Deed.

            (2)   Grantor, immediately on the execution and delivery of this
Trust Deed, and thereafter from time to time, shall cause this Trust Deed, any
supplemental security agreement, mortgage, or deed of trust and each instrument
of further assurance, to be recorded and rerecorded in such manner and in such
places as may be required by any present or future law in order to perfect, and
continue perfected, the lien and estate of this Trust Deed.

            (3)   Grantor shall pay all recording fees incident to the recording
of this Trust Deed; and all federal, state, county, and municipal taxes,
assessments and charges arising out of or in connection with the execution,
delivery, and recording of this Trust Deed.

      1.5   Compliance with Laws. Grantor further represents, warrants, and
covenants that:

            (1)   The Property, if developed, has been developed, and all
Improvements, if any, have been constructed and maintained, in full compliance
with all applicable laws, statutes, ordinances, regulations, and codes of all
federal, state, and local governments (collectively "Laws"), and all covenants,
conditions, easements, and restrictions affecting the Property (collectively
"Covenants"); and

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            (2)   Grantor and its operations on the Property currently comply,
and will hereafter comply, in all material respects with all applicable Laws and
Covenants.

      1.6   Definitions; Environmental Covenants; Warranties and Compliance.

            (1)   For purposes of this section, "Environmental Law" means any
federal, state, or local law, statute, ordinance, or regulation pertaining to
Hazardous Substances, health, industrial hygiene, or environmental conditions,
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA), as amended, 42 USC
Sections 9601 - 9675, and the Resource Conservation and Recovery Act of
1976 (RCRA), as amended, 42 USC Sections 6901 - 6992.

            (2)   For the purposes of this section, "Hazardous Substance"
includes without limitation, any material, substance, or waste that is or
becomes regulated or that is or becomes classified as hazardous, dangerous, or
toxic under any federal, state, or local statute, ordinance, rule, regulation,
or law.

            (3)   Grantor will not use, generate, manufacture, produce, store,
release, discharge, or dispose of on, under or about the Property or the
Property's groundwater, or transport to or from the Property, any Hazardous
Substance and will not permit any other person to do so, except for such
Hazardous Substances that may be used in the ordinary course of Grantor's
business and in compliance with all Environmental Laws, including but not
limited to those relating to licensure, notice, and recordkeeping.

            (4)   Grantor will keep and maintain the Property in compliance
with, and shall not cause or permit all or any portion of the Property,
including groundwater, to be in violation of any Environmental Law.

            (5)   Grantor shall give prompt written notice to Beneficiary of:

                  (a)   Any proceeding, inquiry, or notice by or from any
governmental authority with respect to any alleged violation of any
Environmental Law or the presence of any Hazardous Substance on the Property or
the migration of any Hazardous Substance from or to other premises;

                  (b)   All known claims made or threatened by any person
against Grantor or with respect to the Property or Improvements relating to any
loss or injury resulting from any Hazardous Substance or the violation of any
Environmental Law;

                  (c)   The existence of any Hazardous Substance on or about all
or any portion of the Property; or

                  (d)   Grantor's discovery of any occurrence or condition on
any real property adjoining or in the vicinity of the Property that could in
Grantor's judgment cause any restrictions on the ownership, occupancy,
transferability, or use of the Property under any Environmental Law.

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            (6)   Grantor shall promptly provide to Beneficiary copies of all
reports, documents, and notices provided to or received from any agency
administering any Environmental Laws. Beneficiary shall have the right to join
and participate, in its own name if it so elects, in any legal proceeding or
action initiated with respect to the Property in connection with any
Environmental Law and have its attorney fees in connection with such an action
paid by Grantor, if Beneficiary determines that such participation is reasonably
necessary to protect its interest in the Property.

            (7)   If any investigation, site monitoring, containment, cleanup,
removal, restoration, or other remedial work of any kind or nature (the
"Remedial Work") is required under any applicable Environmental Law, any
judicial order, or by any governmental agency or person because of, or in
connection with, the current or future presence, suspected presence, release or
suspected release of a Hazardous Substance on, under, or about all or any
portion of the Property, or the contamination (whether presently existing or
occurring after the date of this Trust Deed) of the buildings, facilities, soil,
groundwater, surface water, air, or other elements on or under any other
property as a result of Hazardous Substances emanating from the Property,
Grantor shall, within such period of time as may be required under any
applicable law, regulation, order, or agreement, commence and thereafter
diligently prosecute to completion all such Remedial Work. All costs and
expenses of such Remedial Work shall be paid by Grantor.

            (8)   Grantor shall hold Beneficiary, its directors, officers,
employees, agents, successors, and assigns, harmless from, indemnify them for,
and defend them against any and all losses, damages, liens, costs, expenses, and
liabilities directly or indirectly arising out of or attributable to any
violation of any Environmental Law, any breach of Grantor's warranties in this
Section 1.6, or the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal, or presence of a Hazardous Substance
on, under, or about the Property, including without limitation the costs of any
required repair, cleanup, containment, or detoxification of the Property, the
preparation and implementation of any closure, remedial or other required plans,
attorney fees and costs (including but not limited to those incurred in any
proceeding and in any review or appeal), fees, penalties, and fines.

            (9)   Grantor represents and warrants to Beneficiary that:

                  (a)   Neither the Property nor Grantor is in violation of or
subject to any existing, pending, or threatened investigation by any
governmental authority under any Environmental Law.

                  (b)   Grantor has not and is not required by any Environmental
Law to obtain any permit or license other than those it has obtained to
construct or use the Improvements.

                  (c)   To the best of Grantor's knowledge, no Hazardous
Substance has ever been used, generated, manufactured, produced, stored,
released, discharged, or disposed of on, under, or about the Property in
violation of any Environmental Law.

      1.7   Maintenance and Improvements. Grantor shall not permit all or any
part of the Improvements to be removed, demolished, or materially altered
without Beneficiary's prior

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written consent; provided, however that Grantor may remove, demolish, or
materially alter such Improvements as become obsolete in the usual conduct of
Grantor's business, if the removal or material alteration does not materially
detract from the operation of the Grantor's business and if all Improvements
that are demolished or removed are promptly replaced with Improvements of like
value and quality. Grantor shall maintain every portion of the Property and
Improvements in good repair, working order, and condition, except for reasonable
wear and tear, and shall at Beneficiary's election restore, replace, or rebuild
all or any part of the Improvements now or hereafter damaged or destroyed by any
casualty (whether or not insured against or insurable) or affected by any
Condemnation (as defined in Section 2.1 below). Grantor shall not commit,
permit, or suffer any waste, strip, or deterioration of the Property.

      1.8   Liens. Grantor shall pay when due all claims for labor, materials,
or supplies that if unpaid might become a lien on all or any portion of the
Property. Grantor shall not create, or suffer, or permit to be created, any
mortgage, deed of trust, lien, security interest, charge, or encumbrance on the
Property prior to, on a parity with, or subordinate to the lien of this Trust
Deed, except as specifically provided in Exhibit B.

      1.9   Impositions.

            (1)   Grantor shall pay or cause to be paid, when due and before any
fine, penalty, interest, or cost attaches, all taxes, assessments, fees, levies,
and all other governmental and nongovernmental charges of every nature now or
hereafter assessed or levied against any part of the Property (including,
without limitation, levies or charges resulting from Covenants), or on the lien
or estate of Beneficiary or Trustee (collectively, the "Impositions"); provided,
however that if by law any such Imposition may be paid in installments, whether
or not interest shall accrue on the unpaid balance, Grantor may pay the same in
installments, together with accrued interest on the unpaid balance, as the same
become due, before any fine, penalty, or cost attaches.

            (2)   Grantor may, at its expense and after prior notice to
Beneficiary, contest by appropriate legal, administrative, or other proceedings
conducted in good faith and with due diligence, the amount, validity, or
application, in whole or in part, of any Imposition or lien on the Property or
any claim of any laborer, materialman, supplier, or vendor or lien, and may
withhold payment of the same pending completion of such proceedings if permitted
by law, provided that (a) such proceedings shall suspend collection from the
Property; (b) no part of or interest in the Property will be sold, forfeited, or
lost if Grantor pays the amount or satisfies the condition being contested, and
Grantor would have the opportunity to do so in the event of Grantor's failure to
prevail in the contest; (c) neither Beneficiary nor Trustee shall, by virtue of
such permitted contest, be exposed to any risk of liability for which Grantor
has not furnished additional security as provided in clause (d) below; and (d)
Grantor shall have furnished to Beneficiary cash, corporate surety bond, or
other additional security in respect of the claim being contested or the loss or
damage that may result from Grantor's failure to prevail in such contest in an
amount sufficient to discharge the Imposition and all interest, costs, attorney
fees, and other charges that may accrue in connection with the Imposition.
Grantor shall promptly satisfy any final judgment.

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            (3)   Grantor shall furnish to Beneficiary, promptly on request,
satisfactory evidence of the payment of all Impositions. Beneficiary is hereby
authorized to request and receive from the responsible governmental and
nongovernmental personnel written statements with respect to the accrual and
payment of all Impositions.

      1.10  Limitations of Use. Grantor shall not initiate, join in, or consent
to any rezoning of the Property or any change in any Covenant or other public or
private restrictions limiting or defining the uses that may be made of all or
any part of the Property and the Improvements without the prior written consent
of Beneficiary.

      1.11  Insurance.

            (1)   Property and Other Insurance. With respect to the Property,
Grantor shall maintain insurance in amounts and covering risks as is customary
among prudent persons engaged in businesses similar to that of Grantor. Unless
otherwise specified herein or agreed to in writing Beneficiary, each casualty
insurance policy referred to in the preceding sentence shall name Beneficiary as
a named assured and a loss payee as its interest may appear, the parties
agreeing that such interest of Beneficiary shall be equal to the total of all
amounts owed under the Note.

            (2)   Insurance Proceeds. All proceeds from any insurance on the
Property shall be used in accordance with the provisions of Section 1.13.

      1.12  Assignments of Policies on Foreclosure. In the event of foreclosure
of the lien of this Trust Deed or other transfer of title, or assignment of the
Property in whole or in part, all right, title, and interest of Grantor in and
to all policies of insurance procured under Section 1.11 shall inure to the
benefit of and pass to the successors in interest of Grantor or the purchaser or
grantee of all or any part of the Property.

      1.13  Casualty/Loss Restoration.

            (1)   After the occurrence of any casualty to the Property, whether
or not required to be insured against as provided in this Trust Deed, Grantor
shall give prompt written notice of the casualty to Beneficiary, specifically
describing the nature and cause of such casualty and the extent of the damage or
destruction to the Property. Beneficiary may make proof of loss if it is not
made promptly and to Beneficiary's satisfaction by Grantor.

            (2)   Subject to the rights of any superior mortgagee or trust deed
beneficiary as provided in Section 6.10 below, Grantor assigns to Beneficiary
all insurance proceeds that Grantor may be entitled to receive with respect to
any casualty. All insurance proceeds shall be held by Beneficiary as collateral
to secure performance of the Obligations secured by this Trust Deed, provided
that Grantor is not in default under this Trust Deed, Beneficiary shall permit
such amounts of the insurance proceeds to be used by Grantor for repair or
restoration of the Improvements (subject to reasonable disbursement procedures
established by Beneficiary). Any excess insurance proceeds shall be applied by
Beneficiary toward payment of all or part of the outstanding balance under the
Note in such order as Beneficiary may determine.

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      1.14  Insurance Warning.

            (1)   Unless Grantor provides Beneficiary with evidence of the
insurance coverage required by this Trust Deed, Beneficiary may purchase
insurance at Grantor's expense to protect Beneficiary's interest. This insurance
may, but need not, also protect Grantor's interest. If the Property becomes
damaged, the coverage Beneficiary purchases may not pay any claim Grantor makes
or any claim made against Grantor. Grantor may later cancel this coverage by
providing evidence that Grantor has obtained property coverage elsewhere.

            Grantor is responsible for the cost of any insurance purchased by
Beneficiary. The cost of this insurance may be added to the Note balance. If the
cost is added to Grantor's Note balance, the interest rate on the underlying
Note will apply to this added amount. The effective date of coverage may be the
date Grantor's prior coverage lapsed or the date Grantor failed to provide proof
of coverage.

            The coverage Beneficiary purchases may be considerably more
expensive than insurance Grantor can obtain on its own and may not satisfy any
need for property damage coverage or any mandatory liability insurance
requirements imposed by applicable law.

            (2)   If Grantor fails to promptly perform any of its obligations
under Section 1.9 or 1.11 of this Trust Deed, Beneficiary may require Grantor
thereafter to pay and maintain with Beneficiary reserves for payment of such
obligations. In that event, Grantor shall pay to Beneficiary each month a sum
estimated by Beneficiary to be sufficient to produce, at least 20 days before
due, an amount equal to the Impositions and/or insurance premiums. If the sums
so paid are insufficient to satisfy any Imposition or insurance premium when
due, Grantor shall pay any deficiency to Beneficiary on demand. Beneficiary
shall hold the reserve in trust for Grantor in an interest bearing account
(interest being for the account of Grantor), and Beneficiary shall pay taxes and
assessments required to be paid by Grantor from such reserves, to the extent of
available funds.

                                   ARTICLE II
                                  CONDEMNATION

      2.1   Condemnation.

            (1)   Should any part of or interest in the Property be taken or
damaged by reason of any public improvement, eminent domain, condemnation
proceeding, or in any similar manner (a "Condemnation"), or should Grantor
receive any notice or other information regarding such action, Grantor shall
give immediate notice of such action to Beneficiary.

            (2)   Subject to the rights of any superior mortgagee or trust deed
beneficiary as provided in Section 6.10 below, all compensation, awards, and
other payments or relief ("Condemnation Proceeds") shall be held by Beneficiary
and applied in a like manner as for insurance proceeds under Section 1.13(2);
provided, however if the Property is taken in its entirety by condemnation, all
Obligations secured by this Trust Deed, at Beneficiary's election, shall become
immediately due and collectible, and Beneficiary may apply the Condemnation
Proceeds to the Note balance.

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                                  ARTICLE III
                ASSIGNMENT OF LEASES, RENTS, ISSUES, AND PROFITS

      3.1   Assignment. Grantor assigns and transfers to Beneficiary (1) all
leases, subleases, licenses, rental contracts, and other agreements, whether now
existing or hereafter arising, and relating to the occupancy or use of all or
any portion of the Property, including all modifications, extensions, and
renewals thereof (the "Leases"), and (2) all rents, revenues, issues, profits,
income, proceeds, and benefits derived from the Property and the lease, rental,
or license of all or any portion thereof, including but not limited to lease and
security deposits (collectively, the "Rents"). This assignment is intended by
Grantor and Beneficiary to create a present and unconditional assignment to
Beneficiary, subject only to the license set forth in Section 3.4 below.

      3.2   Rights of Beneficiary. Subject to the provisions of Section 3.4
below giving Grantor a revocable, limited license, Beneficiary shall have the
right, power, and authority to:

            (1)   Notify any and all tenants, renters, licensees, and other
obligors under any of the Leases that the same have been assigned to Beneficiary
and that all Rents are to be paid directly to Beneficiary, whether or not
Beneficiary shall have foreclosed or commenced foreclosure proceedings against
the Property, and whether or not Beneficiary has taken possession of the
Property;

            (2)   Discount, settle, compromise, release, or extend the time for
payment of, any amounts owing under any of the Leases and any Rents, in whole or
in part, on terms acceptable to Beneficiary;

            (3)   Collect and enforce payment of Rents and all provisions of the
Leases, and to prosecute any action or proceeding, in the name of Grantor or
Beneficiary, with respect to any and all Leases and Rents; and

            (4)   Exercise any and all other rights and remedies of the lessor
in connection with any of the Leases and Rents.

      3.3   Application of Receipts. Beneficiary shall have the right, power,
and authority to use and apply any Rents received under this Trust Deed (1) for
the payment of any and all costs and expenses incurred in connection with
enforcing or defending the terms of this assignment or the rights of
Beneficiary, and in collecting any Rents; and (2) for the operation and
maintenance of the Property and the payment of all costs and expenses in
connection therewith, including but not limited to the payment of utilities,
taxes, assessments, governmental charges, and insurance. After the payment of
all such costs and expenses, and after Beneficiary shall have set up such
reserves as it deems necessary in its sole discretion for the proper management
of the Property, Beneficiary shall apply all remaining Rents collected and
received by it to the reduction of the Obligations in such order as Beneficiary
shall determine. The exercise or failure by Beneficiary to exercise any of the
rights or powers granted in this assignment shall not constitute a waiver of
default by Grantor under this Trust Deed, the Note, or any of the other Loan
Documents.

      3.4   License. Beneficiary hereby grants to Grantor a revocable license to
collect and receive the Rents. Such license may be revoked by Beneficiary,
without notice to Grantor, on the

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occurrence of any event of default under this Trust Deed, including any default
by Grantor of its covenants in this Article III. Unless and until such license
is revoked, Grantor agrees to apply the proceeds of Rents to the payment of the
Obligations and to the payment of taxes, assessments, governmental charges,
insurance premiums, and other obligations in connection with the Property, and
to the maintenance of the Property, before using such proceeds for any other
purpose. Grantor agrees to (1) observe and perform every obligation of Grantor
under the Leases; (2) enforce or secure at its expense the performance of every
obligation to be performed by any lessee or other party under the Leases; (3)
promptly give notice to Beneficiary of any default by any such lessee or other
party under any of the Leases, and promptly provide Beneficiary a copy of any
notice of default given to any such lessee or other party; (4) not collect any
Rents more than 30 days in advance of the time when the same shall become due,
or anticipate any other payments under the Leases, except for bona fide security
deposits not in excess of an amount equal to two months' rent; (5) not further
assign or hypothecate any of the Leases or Rents; (6) except with Beneficiary's
prior written consent, not waive, release, or in any other manner discharge any
lessee or other party from any of its obligations under any of the Leases; (7)
except with Beneficiary's prior written consent, not modify or amend any of the
Leases; (8) except with Beneficiary's prior written consent, not cancel,
terminate, or accept surrender of any of the Leases unless Grantor shall have
entered into a Lease for the space to be vacated on terms at least as favorable
to Grantor, commencing within 30 days after such cancellation, termination, or
surrender; (9) obtain Beneficiary's prior written approval on the form and
content of all future leases and any modifications of any present or future
leases; (10) deliver copies of all present and future leases to Beneficiary
promptly; and (11) appear in and defend, at Grantor's sole cost and expense, any
action or proceeding arising out of or in connection with the Leases or the
Rents.

      3.5   Limitation of Beneficiary's Obligations. Notwithstanding the
assignment provided for in this Article III, Beneficiary shall not be obligated
to perform or discharge, and Beneficiary does not undertake to perform or
discharge, any obligation or liability with respect to the Leases or the Rents.
This assignment shall not operate to place responsibility for the control, care,
maintenance, or repair of the Property on Beneficiary, or to make Beneficiary
responsible for any condition of the Property. Beneficiary shall be accountable
to Grantor only for the sums actually collected and received by Beneficiary
pursuant to this assignment. Grantor shall hold Beneficiary fully harmless from,
indemnify Beneficiary for, and defend Beneficiary against any and all claims,
demands, liabilities, losses, damages, and expenses, including attorney fees,
arising out of any of the Leases, with respect to any of the Rents, or in
connection with any claim that may be asserted against Beneficiary on account of
this assignment or any obligation or undertaking alleged to arise therefrom.

      3.6   Termination. The assignment provided for in this Article III shall
continue in full force and effect until all the Obligations have been fully paid
and satisfied. At such time, this assignment and the authority and powers herein
granted by Grantor to Beneficiary shall cease and terminate.

      3.7   Attorney-in-Fact. Grantor irrevocably constitutes and appoints
Beneficiary, and each of its officers, as its true and lawful attorney-in-fact,
with power of substitution, to undertake and execute any and all of the rights,
powers, and authorities described in this Article III with the same force and
effect as if undertaken or performed by Grantor, and Grantor

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ratifies and confirms any and all such actions that may be taken or omitted to
be taken by Beneficiary, its employees, agents, and attorneys.

                                   ARTICLE IV
                     SECURITY AGREEMENT AND FIXTURE FILING

      To secure the Obligations, Grantor grants to Beneficiary a security
interest in the following: (1) all causes of action, claims, security deposits,
advance rental payments, utility deposits, refunds of fees or deposits paid to
any governmental authority, refunds of taxes, and refunds of insurance premiums
relating to the Property; (2) vineyard/winery equipment and irrigation system;
and (3) all present and future attachments, accessions, amendments,
replacements, additions, products, and proceeds of every nature of the
foregoing. This Trust Deed shall constitute a security agreement and "fixture
filing" under the Uniform Commercial Code - Secured Transactions statutes of the
state of Oregon. The mailing address of Grantor and the address of Beneficiary
from which information may be obtained are set forth in the cover sheet of this
Trust Deed.

                                   ARTICLE V
                          EVENTS OF DEFAULT; REMEDIES

      5.1   Events of Default. Each of the following shall constitute an event
of default under this Trust Deed and under each of the other Loan Documents:

            (1)   Nonpayment. Failure of Grantor to pay any of the Obligations
when due.

            (2)   Breach of Other Covenants. Failure of Grantor to perform or
abide by any other covenant included in the Obligations, including without
limitation those covenants in the Note, in this Trust Deed, or in any other Loan
Document.

            (3)   Misinformation. Falsity when made in any material respect of
any representation, warranty, or information furnished by Grantor or its agents
to Beneficiary in or in connection with any of the Obligations.

            (4)   Other Default. The occurrence of any other event of default
under the Note or any of the other Obligations.

            (5)   Bankruptcy. The occurrence of any of the following with
respect to Grantor: (a) appointment of a receiver, liquidator, or trustee for
any such party or any of its properties; (b) adjudication as a bankrupt or
insolvent; (c) filing of any petition by or against any such party under any
state or federal bankruptcy, reorganization, moratorium or insolvency law; (d)
institution of any proceeding for dissolution or liquidation; (e) inability to
pay debts when due; (f) any general assignment for the benefit of creditors; or
(g) abandonment of the Property.

            (6)   Transfer; Due-on-Sale; Due-on-Encumbrance. Any sale, gift,
conveyance, contract for conveyance, transfer, assignment, encumbrance, pledge,
or grant of a security interest in all or any part of the Property, or any
interest therein, either voluntarily, involuntarily, or by the operation of law
(a "Transfer"), without Beneficiary's prior written consent, shall constitute an
event of default. For the purpose of clarification, and without limiting the
generality

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of the foregoing, the occurrence at any time of any sale, conveyance,
assignment, or other transfer of, or the grant of a pledge of or security
interest in, any shares of the capital stock of Grantor shall be deemed to be a
Transfer in violation of this section. The provisions of this subsection (6)
shall apply to each and every Transfer, regardless of whether or not Beneficiary
has consented or waived its rights in connection with any previous Transfer.
Beneficiary may attach such conditions to its consent under this subsection (6)
as Beneficiary may determine in its sole discretion, including without
limitation an increase in the interest rate or the payment of transfer or
assumption fees, and the payment of administrative and legal fees and costs
incurred by Beneficiary.

      5.2   Remedies in Case of Default. If an Event of Default shall occur,
Beneficiary or Trustee may exercise any one or more of the following rights and
remedies, in addition to any other remedies that may be available by law, in
equity, or otherwise:

            (1)   Acceleration. Beneficiary may declare all or any portion of
the Obligations immediately due and payable.

            (2)   Receiver. Beneficiary may have a receiver appointed for the
Property. Beneficiary shall be entitled to the appointment of a receiver as a
matter of right whether or not the apparent value of the Property exceeds the
amount of the indebtedness secured by this Trust Deed. Employment by Trustee or
Beneficiary shall not disqualify a person from serving as receiver. Grantor
consents to the appointment of a receiver at Beneficiary's option and waives any
and all defenses to such an appointment.

            (3)   Possession. Beneficiary may, either through a receiver or as
lender-in-possession, enter and take possession of all or any part of the
Property and use, operate, manage, and control it as Beneficiary shall deem
appropriate in its sole discretion. On request after an Event of Default,
Grantor shall peacefully relinquish possession and control of the Property to
Beneficiary or any receiver appointed under this Trust Deed.

            (4)   Rents. Beneficiary may revoke Grantor's right to collect the
Rents, and may, either itself or through a receiver, collect the same.
Beneficiary shall not be deemed to be in possession of the Property solely by
reason of exercise of the rights contained in this subsection (4). If Rents are
collected by Beneficiary under this subsection (4), Grantor hereby irrevocably
appoints Beneficiary as Grantor's attorney-in-fact, with power of substitution,
to endorse instruments received in payment thereof in the name of Grantor and to
negotiate such instruments and collect their proceeds. After payment of all
Obligations, any remaining amounts shall be paid to Grantor and this power shall
terminate.

            (5)   Power of Sale. Beneficiary may direct Trustee, and Trustee
shall be empowered, to foreclose the Property by advertisement and sale under
applicable law.

            (6)   Foreclosure. Beneficiary may judicially foreclose this Trust
Deed and obtain a judgment foreclosing Grantor's interest in all or any part of
the Property and giving Beneficiary the right to collect any deficiency
remaining due after disposition of the Property.

            (7)   Fixtures and Personal Property. With respect to any
Improvements and other personal property subject to a security interest in favor
of Beneficiary, Beneficiary may

PAGE 11 - TRUST DEED
<PAGE>
exercise any and all of the rights and remedies of a secured party under the
Uniform Commercial Code.

            (8)   Abandonment. Beneficiary may abandon all or any portion of the
Property by written notice to Grantor.

      5.3   Sale. In any sale under this Trust Deed or pursuant to any judgment,
the Property, to the extent permitted by law, may be sold as an entirety or in
one or more parcels and in such order as Beneficiary may elect, without regard
to the right of Grantor, any person claiming under Grantor, or any guarantor or
surety to the marshalling of assets. The purchaser at any such sale shall take
title to the Property or the part thereof so sold, free and clear of the estate
of Grantor, the purchaser being hereby discharged from all liability to see to
the application of the purchase money. Any person, including Beneficiary, its
officers, agents, and employees, may purchase at any such sale. Beneficiary and
each of its officers are irrevocably appointed Grantor's attorney-in-fact, with
power of substitution, to make all appropriate transfers and deliveries of the
Property or any portions thereof so sold and, for that purpose, Beneficiary and
its officers may execute all appropriate instruments of transfer. Nevertheless,
Grantor shall ratify and confirm, or cause to be ratified and confirmed, any
such sale or sales by executing and delivering, or by causing to be executed and
delivered, to Beneficiary or to such purchaser or purchasers all such
instruments as may be advisable, in the judgment of Beneficiary, for such
purpose.

      5.4   Cumulative Remedies. All remedies under this Trust Deed are
cumulative and not exclusive. Any election to pursue one remedy shall not
preclude the exercise of any other remedy. No delay or omission in exercising
any right or remedy shall impair the full exercise of that or any other right or
remedy or constitute a waiver of the default.

      5.5   Application of Proceeds. All proceeds realized from the exercise of
the rights and remedies under this Section Article V shall be applied as
follows:

            (1)   Costs and Expenses. To pay all costs of exercising such rights
and remedies, including the costs of maintaining and preserving the Property,
the costs and expenses of any receiver or lender-in-possession, the costs of any
sale, and the costs and expenses provided for in Section 6.7 below.

            (2)   Indebtedness. To pay all Obligations, in such order as
Beneficiary shall determine in its sole discretion.

            (3)   Surplus. The surplus, if any, remaining after satisfaction of
all the Obligations shall be paid to the clerk of the court in the case of a
judicial foreclosure proceeding, otherwise to the person or persons legally
entitled to the surplus.

      5.6   Deficiency. No sale or other disposition of all or any part of the
Property pursuant to this Article V shall be deemed to relieve Grantor of any of
the Obligations, except to the extent that the proceeds are applied to the
payment of such Obligations and except to the extent required by law. If the
proceeds of a sale, a collection, or other realization of or on the Property are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Obligations, Grantor shall remain liable for any deficiency to
the fullest extent permitted by law.

PAGE 12 - TRUST DEED
<PAGE>
      5.7   Waiver of Stay, Extension, Moratorium, and Valuation Laws. To the
fullest extent permitted by law, Grantor waives the benefit of any existing or
future stay, extension, or moratorium law that may affect observance or
performance of the provisions of this Trust Deed and any existing or future law
providing for the valuation or appraisal of the Property prior to any sale.

                                   ARTICLE VI
                               GENERAL PROVISIONS

      6.1   Time Is of the Essence. Time is of the essence with respect to all
covenants and obligations of Grantor under this Trust Deed.

      6.2   Reconveyance by Trustee. At any time on the request of Beneficiary,
payment of Trustee's fees, if any, and presentation of this Trust Deed, without
affecting liability of any persons for the payment of the Obligations, Trustee
may reconvey, without warranty, all or any part of the Property. The grantee in
any reconveyance may be described as the "person or persons legally entitled
thereto," and the recitals therein of any facts shall be conclusive proof of the
truthfulness thereof.

      6.3   Notice. Except as otherwise provided in this Trust Deed, all notices
pertaining to this Trust Deed shall be in writing and may be delivered by hand,
or mailed by first-class, registered, or certified mail, return receipt
requested, postage prepaid, and addressed to the appropriate party at its
address set forth at the outset of this Trust Deed. Any party may change its
address for such notices from time to time by notice to the other parties.
Notices given by mail in accordance with this section shall be deemed to have
been given on the date of mailing; notices given by hand shall be deemed to have
been given when actually received.

      6.4   Substitute Trustee. In the event of dissolution or resignation of
Trustee, Beneficiary may substitute one or more trustees to execute the trust
hereby created, and the new trustee(s) shall succeed to all the powers and
duties of the prior trustee(s).

      6.5   Trust Deed Binding on Successors and Assigns. This Trust Deed shall
be binding on and inure to the benefit of the successors and assigns of Grantor,
Trustee, and Beneficiary. If the Property or any portion thereof shall at any
time be vested in any person other than Grantor, Beneficiary shall have the
right to deal with such successor regarding this Trust Deed, the Property, and
the Obligations in such manner as Beneficiary deems appropriate in its sole
discretion, without notice to or approval by Grantor and without impairing
Grantor's liability for the Obligations.

      6.6   Indemnity. Grantor shall hold Beneficiary and Trustee and their
respective directors, officers, employees, agents, and attorneys, harmless from
and indemnify them for any and all claims, demands, damages, liabilities, and
expenses, including but not limited to attorney fees and court costs, arising
out of or in connection with Trustee's or Beneficiary's interest under this
Trust Deed, except Grantor shall not be liable for acts performed by Beneficiary
or Trustee in violation of applicable law.

      6.7   Expenses and Attorney Fees. If Beneficiary is the prevailing party
in any litigation instituted in connection with any of the Obligations; or if
Beneficiary or any other

PAGE 13 - TRUST DEED
<PAGE>
person initiates any judicial or nonjudicial action, suit, or proceeding in
connection with any of the Obligations or the Property (including but not
limited to proceedings under federal bankruptcy law, eminent domain, under
probate proceedings, or in connection with any state or federal tax lien), and a
lawyer is employed by Beneficiary to (1) appear in any such action, suit, or
proceeding, or (2) reclaim, seek relief from a judicial or statutory stay,
sequester, protect, preserve, or enforce Beneficiary's interests, then in any
such event Grantor shall pay reasonable attorney fees, costs, and expenses
incurred by Beneficiary or its lawyer in connection with the above-mentioned
events or any appeals related to such events, including but not limited to costs
incurred in searching records, the cost of title reports, and the cost of
surveyors' reports. Such amounts shall be secured by this Trust Deed and, if not
paid on demand, shall bear interest at the rate specified in the Note.

      6.8   Applicable Law. The Trust Deed and the validity, interpretation,
performance, and enforcement of the Trust Deed shall be governed by the laws of
the state of Oregon.

      6.9   Captions. The captions to the articles and sections of this Trust
Deed are included only for the convenience of the parties and shall not have the
effect of defining, diminishing, or enlarging the rights of the parties or
affecting the construction or interpretation of any portion of this Trust Deed.

      6.10  Rights of Prior Mortgagee. If all or any portion of the Property is
subject to a superior mortgage or trust deed specifically permitted under
Exhibit B, the rights of Beneficiary with respect to insurance and condemnation
proceeds as provided in Sections 1.14 and 2.1, and all other rights granted
under this Trust Deed that have also been granted to such a superior mortgagee
or trust deed beneficiary, shall be subject to the rights of the superior
mortgagee or trust deed beneficiary. Grantor hereby authorizes all such superior
mortgagees and beneficiaries, on satisfaction of the indebtedness secured by
their mortgage or trust deed, to remit all remaining insurance or Condemnation
proceeds and all other sums held by them to Beneficiary to be applied in
accordance with this Trust Deed.

      6.11  Person Defined. As used in this Trust Deed, the word person shall
mean any natural person, partnership, trust, corporation, or other legal entity
of any nature.

      6.12  Severability. If any provision of this Trust Deed shall be held to
be invalid, illegal, or unenforceable, such invalidity, illegality, or
unenforceability shall not affect any other provisions of this Trust Deed, and
such other provisions shall be construed as if the invalid, illegal, or
unenforceable provision had never been contained in the Trust Deed.

      6.13  Entire Agreement. This Trust Deed contains the entire agreement of
the parties with respect to the Property. No prior agreement, statement, or
promise made by any party to this Trust Deed that is not contained herein shall
be binding or valid.

      6.14  Commercial Property. Grantor covenants and warrants that the
Property and Improvements are used by Grantor exclusively for business and
commercial purposes. Grantor also covenants and warrants that the Property and
Improvements are not now, and at no time in the future will be, occupied as the
principal residence of Grantor, Grantor's spouse, or Grantor's minor or
dependent child.

PAGE 14 - TRUST DEED
<PAGE>
      6.15  Standard for Discretion. The standard for any consent, approval,
determination, or similar discretionary action is good faith, fairness, or
reasonableness.

      6.16  ORS 93.040 Warning. THIS INSTRUMENT WILL NOT ALLOW USE OF THE
PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS
AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON
ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR
COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS
ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930.

                                          GRANTOR:

                                          YAMHILL VALLEY VINEYARDS, INC.

                                          By:  _________________________________
                                               Denis Burger, President

STATE OF OREGON         )
                        ) ss.
County of __________    )

      On this _____ day of October, 2002, before me personally appeared Denis
Burger, who being duly sworn, stated that he is the President of Yamhill Valley
Vineyards, Inc., an Oregon corporation, and acknowledged the foregoing
instrument to be the voluntary act and deed of the corporation, executed by
authority of its board of directors.

                                          ______________________________________
                                          Notary Public for Oregon
                                          My commission expires: _______________

PAGE 15 - TRUST DEED
<PAGE>
                                   EXHIBIT A
                               LEGAL DESCRIPTION

PARCEL I:

Beginning at the Southeast corner of the Southeast Quarter of the Northwest
Quarter of Section 10, Township 5 South, Range 5 West of the Willamette
Meridian, Yamhill County, Oregon. Said point being also the most Southerly
Southwest corner of land owned by Lloyd Bennett and E.E. Goucher and running
thence East 15.00 chains to the West line of the John Boyd Donation Land Claim
and Southeast corner of said Bennett and Goucher land; thence North along the
West line of said Boyd Donation Land Claim and along the extension of said line
16-2/3 chains; thence West 15.00 chains; thence South 16-2/3 chains to the place
of beginning, and being a part of the Southeast Quarter of the Northwest Quarter
of said Section 10.

PARCEL II:

A tract of land being a portion of the Ralph W. Macy tract as described in deed
recorded October 5, 1951 in Book 163, Page 224, Yamhill County Deed Records,
being more particularly described as follows, to-wit:

Commencing at the Northwest corner of the Donation Land Claim of John Boyd and
wife, Notification No. 2417, Claim No. 58 in Township 5 South, Range 5 West of
the Willamette Meridian, Yamhill County, Oregon; thence North 89(degree)54'20"
East along the North line of said Macy tract, a distance of 1340.77 feet to an
iron pipe and the true POINT OF BEGINNING of the tract being described herein;
thence South 0(degree)33'30" West on a line which is parallel to the West line
of said Macy tract, a distance of 1318.66 feet to an iron pipe; thence South
60(degree)28' East a distance of 153.26 feet to an iron pipe; thence South
64(degree)44' East a distance of 102.50 feet to an iron pipe; thence South
62(degree)11'30" East a distance of 924.43 feet to an iron pipe set in the
Westerly right of way line of County Road No. 431; thence North 21(degree)22'
East along said Westerly right of way line a distance of 847.46 feet to an iron
pipe; thence along the arc of a 602.96 foot radius curve (the long chord of
which bears North 27(degree)14'20" East 123.38 feet) a distance of 123.59 feet
to an iron pipe; thence North 0(degree)02' West a distance of 313.40 feet to an
iron pipe set in CSP 4945; thence South 89(degree)23'15" West a distance of
648.02 feet to an iron pipe set in CSP 6231; thence North 0(degree)03'20" East a
distance of 670.01 feet, more or less, to an iron pipe set on the North line of
said Macy tract; thence South 89(degree)16'48" West along the North line of said
Macy tract a distance of 458.09 feet to an iron pipe; thence South
89(degree)54'20" West continuing along the North line of said Macy tract a
distance of 290.51 feet to the true point of beginning.

PARCEL III:

A tract of land in Section 10, Township 5 South, Range 5 West of the Willamette
Meridian in Yamhill County, Oregon, and being a portion of the Ralph W. Macy
tract as described in Deed recorded October 5, 1951 in Book 163, Page 224,
Yamhill County Deed Records, more particularly described as follows:

PAGE 1 -  EXHIBIT A
<PAGE>
Beginning at the Northwest corner of the John Boyd and wife Donation Land Claim
No. 58, Notification No. 2417, in Township 5 South, Range 5 West of the
Willamette Meridian in Yamhill County, Oregon; thence South 0(degree)33'30" West
along the West line of said John Boyd Donation Land Claim, 882.61 feet to a
point; thence North 85(degree)29' East 314.29 feet; thence North 88(degree)06'
East 117.54 feet; thence South 70(degree)36' East 142.63 feet; thence South
60(degree)57' East 146.50 feet; thence South 59(degree)57' East 226.36 feet;
thence South 63(degree)21' East 244.08 feet; thence South 60(degree)28' East
265.71 feet to an iron pipe; thence North 0(degree)33'30" East 1318.66 feet to
an iron pipe on the North line of the John Boyd Donation Land Claim; thence
South 89(degree)54'20" West along the North line of said Claim, 1340.77 feet to
the point of beginning.

EXCEPTING THEREFROM the following tract: Beginning at the Northwest corner of
the John Boyd and wife Donation Land Claim No. 58, Notification 2417 in Township
5 South, Range 5 West of the Willamette Meridian in Yamhill County, Oregon;
Thence North 89(degree)54'20" East 1340.77 feet to an iron pipe; thence South
0(degree)33'30" West 888.66 feet to the true POINT OF BEGINNING of the tract
described herein; thence South 0(degree)33'30" West 430 feet to an iron pipe;
thence North 60(degree)28' West 265.71 feet to a point; thence North
38(degree)12'34" East 380.53 feet to the true POINT OF BEGINNING.

PARCEL IV:

A tract of land in Section 10, Township 5 South, Range 5 West of the Willamette
Meridian in Yamhill County, Oregon and being a portion of the Ralph W. Macy
tract as described in Deed recorded October 5, 1951 in Book 163, Page 224, Deed
Records of Yamhill County, Oregon, and being more particularly described as
follows:

Beginning at the Northwest corner of the John Boyd and wife Donation Land Claim
No. 58, Notification No. 2417, in Township 5 South, Range 5 West of the
Willamette Meridian in Yamhill County, Oregon; thence North 89(degree)54'20"
East 1340.77 feet to an iron pipe; thence South 0(degree)33'30" West 888.66 feet
to the true POINT OF BEGINNING of the tract described herein; thence South
0(degree)33'30" West 430 feet to an iron pipe; thence North 60(degree)28' West
265.71 feet to a point; thence North 38(degree)12'34" East 380.53 feet to the
true POINT OF BEGINNING.

TOGETHER WITH an easement to be used in common with others for ingress and
egress and utility purposes over and across a strip of land 60 feet wide, the
South line of said easement strip being described as follows:

Beginning at the Northwest corner of the John Boyd Donation Land Claim No. 58,
Notification No. 2417, in Township 5 South, Range 5 West of the Willamette
Meridian in Yamhill County, Oregon; thence South 0(degree)33'30" West along the
West line of said John Boyd Donation Land Claim No. 58 a distance of 942.61 feet
to the true POINT OF BEGINNING of the South line being described; thence North
85(degree)29' East 314.29 feet; thence North 88(degree)06' East 117.54 feet;
thence South 70(degree)36 East 142.63 feet; thence South 60(degree)57' East
146.50 feet; thence South 59(degree)57' East 226.86 feet; thence South
63(degree)21' East 244.08 feet; thence South 60(degree)28' East 384.98 feet;
thence South 64(degree)44' East 103.31 feet; thence South 62(degree)11'30" East
929.88 feet to a point on the Westerly right of way line of County Road No. 431
and the terminus of the South line herein described.

PAGE 2 -  EXHIBIT A
<PAGE>
PARCEL V:

Part of the John Boyd Donation Land Claim No. 58 in Section 10, Township 5
South, Range 5 West of the Willamette Meridian in Yamhill County, Oregon, being
further described as follows:

Commencing at the Northwest corner of said John Boyd Claim; thence South
00(degree)33'30" West along the West line of said Claim, 942.61 feet to an iron
pipe on the South line of a 60 foot wide right of way, being the POINT OF
BEGINNING; thence South 00(degree)33'30" West along the West line of said Claim
1115.93 feet; thence South 89(degree)52' East 2314.61 feet to the Westerly right
of way line of County Road No. 431; thence North 21(degree)22' East along said
road line, 151.08 feet to an iron pipe; thence North 62(degree)11'30" West
929.88 feet to an iron pipe; thence North 64(degree)44' West 103.31 feet to an
iron pipe; thence North 60(degree)28' West 384.98 feet to an iron pipe; thence
North 63(degree)21' West 244.08 feet to an iron pipe; thence North 59(degree)57'
West 226.86 feet to an iron pipe; thence North 60(degree)57' West 146.50 feet to
an iron pipe; thence North 70(degree)36' West 142.63 feet to an iron pipe;
thence South 88(degree)06' West 117.54 feet to an iron pipe; thence South
85(degree)29' West 314.29 feet to said point of beginning.

PARCEL VI:

A part of the John Boyd Donation Land Claim No. 58 in Section 10, Township 5
South, Range 5 West or the Willamette Meridian in Yamhill County, Oregon, being
further described as follows:

Commencing at the Northwest corner of the John Boyd Donation Land Claim No. 58,
Notification No. 2417, in Township 5 South, Range 5 West of the Willamette
Meridian, County of Yamhill, State of Oregon; thence South 0(degree)33'30" West
along the West line of said John Boyd Donation Land Claim No. 58 a distance of
942.61 feet to the true POINT OF BEGINNING; thence North 85(degree)29' East
314.29 feet; thence North 88(degree)06' East 117.54 feet; thence South
70(degree)36' East 142.63 feet; thence South 60(degree)57' East 146.50 feet;
thence South 59(degree)57' East 226.86 feet; thence South 63(degree)21' East
244.08 feet; thence South 60(degree)28' East 384.98 feet; thence South
64(degree)44' East 103.31 feet; thence South 62(degree)11'30" East 929.88 feet
to a point on the Westerly right of way line of County Road No. 431; thence
Northeasterly along the right of way line of County Road No. 431, 60 feet, more
or less, to the most Easterly Northeast corner of that tract of land conveyed to
Eugene J. Schmidt, et ux, by Deed recorded January 25, 1979 in Film Volume 136,
Page 1461, Deed and Mortgage Records; thence along the North line of the Schmidt
tract, North 62(degree)11'30" West 924.43 feet to an iron pipe; thence North
64(degree)44' West 102.50 feet to an iron pipe; thence North 60(degree)28' West
153.26 feet to an angle corner of the Schmidt tract; thence North 60(degree)28'
West 265.71 feet; thence North 63(degree)21' West 244.08 feet; thence North
59(degree)57' West 226.86 feet; thence North 60(degree)57' West 146.50 feet;
thence North 70(degree)36' West 142.63 feet; thence South 88(degree)06' West
117.54 feet; thence South 85(degree)29' West 314.29 feet to the West line of the
John Boyd Donation Land Claim; thence South 0(degree)33'30" West along the
Donation Land Claim line 60 feet, more or less, to the true POINT OF BEGINNING.

PAGE 3 -  EXHIBIT A
<PAGE>
                                   EXHIBIT B
                              PERMITTED EXCEPTIONS

1.    Taxes, 2002-2003: $63.67 UNPAID. Tax Lot R5510-1700. Acct. No. 208064.
      Taxes, 2002-2003: $3,795.76 UNPAID. Tax Lot R5510-1801. Acct. No. 423474.
      Taxes, 2002-2003: $1,716.07 UNPAID. Tax Lot R5510-1900. Acct. No. 384257.
      Taxes, 2002-2003: $4.98 UNPAID. Tax Lot R5510-2000. Acct. No. 384266.
      Taxes, 2002-2003: $1,505.11 UNPAID. Tax Lot R5510-2100. Acct. No. 208135.

2.    As disclosed by the tax rolls, the premises herein described have been
zoned or classified for farm use. At any time that said land is disqualified for
such use the property will be subject to additional taxes or penalties and
interest. (Affects Tax Lots 1700, 2000 & 2100)

3.    Rights of the public in and to any portion of the herein described
premises lying within the boundaries of roads or highways.

4.    Roadway Easement, including the terms and provisions thereof, as set forth
in document recorded January 25, 1979 in Film Volume 136, Page 1458, Deed and
Mortgage Records.

5.    Access Easement, including the terms and provisions thereof, from Yamhill
Valley Vineyards, Inc. to Moe Momtazi, as set forth in document recorded April
3, 1997 as Instrument No. 199705213, Deed and Mortgage Records.

6.    Trust Deed, including the terms and provisions thereof, given by Yamhill
Valley Vineyards, Inc. as trustor, to U.S. Bank Trust Company, National
Association, as trustee, and U.S. Bank National Association as beneficiary,
dated September 15, 1999, recorded September 28, 1999, as Instrument No.
199919684, Deed and Mortgage Records, to secure the payment of $450,000.00.

      The beneficial interest in the above trust deed was assigned to U.S. Bank
Trust National Association, as Custodian/Trustee, by instrument recorded
September 28, 1999 as Instrument No. 199919685, Deed and Mortgage Records.

PAGE 1 -  EXHIBIT B<PAGE>

EXHIBIT 10.3

THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT COVERING SUCH SECURITIES, (II) THE SALE IS MADE IN ACCORDANCE WITH RULE
144 UNDER THE ACT, OR (III) THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT.

                         YAMHILL VALLEY VINEYARDS, INC.

                          COMMON STOCK PURCHASE WARRANT

         FOR VALUE RECEIVED, Yamhill Valley Vineyards, Inc., an Oregon
corporation (the "Company"), grants to James W. Shires (the "Purchaser") the
right, subject to the terms and conditions herein set forth, to purchase at any
time prior to the termination of this Warrant pursuant to Section 7 below, at a
price per share equal to $0.001 (the "Warrant Price"), that number of fully paid
and nonassessable shares of the Common Stock of the Company determined in
accordance with Section 1 below (the "Warrant Shares"). This Warrant is
nontransferable and may only be exercised at one time for all Warrant Shares and
not in partial increments.

         1.       Number of Warrant Shares. The number of shares of the
Company's Common Stock for which this Warrant is exercisable shall be equal to
the quotient obtained by dividing (a) $200,000 by (b) the greater of (i) the
price at which the Company agrees to sell shares of its in the Company's initial
public offering (the "Initial Public Offering") or (ii) $5.00. In the event that
the Initial Public Offering does not close on or before the first anniversary of
the date hereof, the number of shares of the Company's Common Stock for which
this Warrant is exercisable shall equal 33,334.

         2.       Adjustment of Warrant Price and Warrant Shares. The Warrant
Shares issuable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time, and the Company agrees to provide
notice upon the happening of certain events, as follows:

                  (a)      Reclassification, etc. If the Company at any time
shall, by subdivision, combination or reclassification of securities or
otherwise, change any of the securities to which purchase rights under this
Warrant exist into the same or a different number of securities of any class or
classes, this Warrant shall thereafter be to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision.

                                       1
<PAGE>

combination, reclassification or other change. If shares of the class of the
Company's stock for which this Warrant is being exercised are subdivided or
combined into a greater or smaller number of shares of stock, the Warrant Price
shall be proportionately reduced in the case of subdivision of shares or
proportionately increased in the case of combination of shares, in both cases by
the ratio which the total number of shares of such class of stock to be
outstanding immediately after such event bears to the total number of shares of
such class of stock outstanding immediately prior to such event.

                  (b)      Adjustment for Dividends in Stock. In case at any
time or from time to time on or after the date hereof the holders of the shares
of the Company's capital stock of the same class and series as the Warrant
Shares (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received, or, on or after the record
date fixed for the determination of eligible shareholders, shall have become
entitled to receive, without payment therefor, other or additional stock of the
Company by way of dividend, then and in each case, the holder of this Warrant
shall, upon the exercise hereof, be entitled to receive, in addition to the
number of shares of Warrant Shares receivable thereupon, and without payment of
any additional consideration therefor, the amount of such other or additional
stock of the Company which such holder would hold on the date of such exercise
had it been the holder of record of such Warrant Shares on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
receivable by it as aforesaid during such period, giving effect to all
adjustments called for during such period by this Section 2.

         3.       No Shareholder Rights. This Warrant, by itself, as
distinguished from any shares purchased hereunder, shall not entitle its holder
to any of the rights of a shareholder of the Company.

         4.       Exercise of Warrant. This Warrant may be exercised in whole by
the holder, at any time after the date hereof and prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise attached hereto as Attachment 1, duly completed and executed at the
principal office of the Company, accompanied by payment in full of the Warrant
Price in cash or by check with respect to the shares of Warrant Shares being
purchased. This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Warrant Shares issuable
upon such exercises shall be treated for all purposes as holder of such shares
of record as of the close of business on such date. As promptly as practicable
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Warrant Shares issuable upon such exercise.

         5.       Certificate of Adjustment. Whenever the Warrant Price or
number or type of Warrant Shares is adjusted, as herein provided, the Company
shall promptly deliver to the record holder of this Warrant a certificate of an
officer of the Company setting forth the nature of such adjustment and a brief
statement of the facts requiring such adjustment.

         6.       Transfer of Warrant. This Warrant may not be transferred or
assigned by the holder hereof in whole or in part.

                                       2
<PAGE>

         7.       Termination. This Warrant shall terminate upon the earlier of
(i) 5:00 p.m., Oregon time, on the first anniversary of the date hereof, or (ii)
the date on which the Company executes an underwriting agreement in connection
with the Initial Public Offering.

         8.       "Market Stand-Off" Agreement. As a condition to the Company's
obligation to issue the Warrant Shares upon exercise of this Warrant, the
Purchaser shall enter into an agreement with the Company, in the form requested
by the Company, that the Purchaser shall not, to the extent requested by the
Company or an underwriter of securities of the Company, sell or otherwise
transfer or dispose of or engage in any other transaction regarding any of the
Warrant Shares for one (1) year following the effective date of the Initial
Public Offering. The Company shall have the right to place restrictive legends
on the certificates representing the shares subject to such agreement and to
impose stop transfer instructions with respect to such shares until the end of
such period.

         9.       Miscellaneous. This Warrant shall be governed by the laws of
the State of Oregon, as such laws are applied to contracts to be entered into
and performed entirely in Oregon by Oregon residents. The headings in this
Warrant are for purposes of convenience and reference only, and shall not be
deemed to constitute a part hereof. Neither this Warrant nor any term hereof may
be changed or waived orally, but only by an instrument in writing signed by the
Company and the holder of this Warrant. All notices and other communications
from the Company to the holder of this Warrant shall be delivered personally or
mailed by first class mail, postage prepaid, to the address furnished to the
Company in writing by the last holder of this Warrant who shall have furnished
an address to the Company in writing, and if mailed shall be deemed given three
days after deposit in the United States mail.

                [Remainder of page is intentionally left blank.]

                                       3
<PAGE>

ISSUED:  October 15th, 2002

                                      YAMHILL VALLEY VINEYARDS, INC.

                                      Signed:
                                             -----------------------------------

                                      Printed:
                                             -----------------------------------

                                      Title:
                                             -----------------------------------

<PAGE>

                                  Attachment 1

                               NOTICE OF EXERCISE

TO:  Yamhill Valley Vineyards, Inc.

         1. The undersigned hereby elects to purchase _____________________
shares of Common Stock of Yamhill Valley Vineyards, Inc., pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.

         2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:

-------------------------------------
(Name)

-------------------------------------
(Address)

-------------------------------------     --------------------------------------
(Date)                                    (Name of Warrant Holder)

                                          By:
                                             -----------------------------------

                                         Title:
                                               ---------------------------------
                                               (Name of purchaser, and title and
                                               signature of authorized person)

                                       5
<PAGE>

THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT COVERING SUCH SECURITIES, (II) THE SALE IS MADE IN ACCORDANCE WITH RULE
144 UNDER THE ACT, OR (III) THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT.

                         YAMHILL VALLEY VINEYARDS, INC.

                          COMMON STOCK PURCHASE WARRANT

         FOR VALUE RECEIVED, Yamhill Valley Vineyards, Inc., an Oregon
corporation (the "Company"), grants to Scott Crawford (the "Purchaser") the
right, subject to the terms and conditions herein set forth, to purchase at any
time prior to the termination of this Warrant pursuant to Section 7 below, at a
price per share equal to $0.001 (the "Warrant Price"), that number of fully paid
and nonassessable shares of the Common Stock of the Company determined in
accordance with Section 1 below (the "Warrant Shares"). This Warrant is
nontransferable and may only be exercised at one time for all Warrant Shares and
not in partial increments.

         1.       Number of Warrant Shares. The number of shares of the
Company's Common Stock for which this Warrant is exercisable shall be equal to
the quotient obtained by dividing (a) $200,000 by (b) the greater of (i) the
price at which the Company agrees to sell shares of its in the Company's initial
public offering (the "Initial Public Offering") or (ii) $5.00. In the event that
the Initial Public Offering does not close on or before the first anniversary of
the date hereof, the number of shares of the Company's Common Stock for which
this Warrant is exercisable shall equal 33,334.

         2.       Adjustment of Warrant Price and Warrant Shares. The Warrant
Shares issuable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time, and the Company agrees to provide
notice upon the happening of certain events, as follows:

                  (a)      Reclassification, etc. If the Company at any time
shall, by subdivision, combination or reclassification of securities or
otherwise, change any of the securities to which purchase rights under this
Warrant exist into the same or a different number of securities of any class or
classes, this Warrant shall thereafter be to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision. combination, reclassification or other
change. If shares of the class of the Company's stock for which this Warrant is
being exercised are subdivided or combined into a greater or smaller number of
shares of stock, the Warrant Price shall be proportionately reduced in the case
of

                                       6
<PAGE>

subdivision of shares or proportionately increased in the case of combination
of shares, in both cases by the ratio which the total number of shares of such
class of stock to be outstanding immediately after such event bears to the total
number of shares of such class of stock outstanding immediately prior to such
event.

                  (b)      Adjustment for Dividends in Stock. In case at any
time or from time to time on or after the date hereof the holders of the shares
of the Company's capital stock of the same class and series as the Warrant
Shares (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received, or, on or after the record
date fixed for the determination of eligible shareholders, shall have become
entitled to receive, without payment therefor, other or additional stock of the
Company by way of dividend, then and in each case, the holder of this Warrant
shall, upon the exercise hereof, be entitled to receive, in addition to the
number of shares of Warrant Shares receivable thereupon, and without payment of
any additional consideration therefor, the amount of such other or additional
stock of the Company which such holder would hold on the date of such exercise
had it been the holder of record of such Warrant Shares on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
receivable by it as aforesaid during such period, giving effect to all
adjustments called for during such period by this Section 2.

         3.       No Shareholder Rights. This Warrant, by itself, as
distinguished from any shares purchased hereunder, shall not entitle its holder
to any of the rights of a shareholder of the Company.

         4.       Exercise of Warrant. This Warrant may be exercised in whole by
the holder, at any time after the date hereof and prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise attached hereto as Attachment 1, duly completed and executed at the
principal office of the Company, accompanied by payment in full of the Warrant
Price in cash or by check with respect to the shares of Warrant Shares being
purchased. This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Warrant Shares issuable
upon such exercises shall be treated for all purposes as holder of such shares
of record as of the close of business on such date. As promptly as practicable
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Warrant Shares issuable upon such exercise.

         5.       Certificate of Adjustment. Whenever the Warrant Price or
number or type of Warrant Shares is adjusted, as herein provided, the Company
shall promptly deliver to the record holder of this Warrant a certificate of an
officer of the Company setting forth the nature of such adjustment and a brief
statement of the facts requiring such adjustment.

         6.       Transfer of Warrant. This Warrant may not be transferred or
assigned by the holder hereof in whole or in part.

                                       7
<PAGE>

         7.       Termination. This Warrant shall terminate upon the earlier of
(i) 5:00 p.m., Oregon time, on the first anniversary of the date hereof, or (ii)
the date on which the Company executes an underwriting agreement in connection
with the Initial Public Offering.

         8.       "Market Stand-Off" Agreement. As a condition to the Company's
obligation to issue the Warrant Shares upon exercise of this Warrant, the
Purchaser shall enter into an agreement with the Company, in the form requested
by the Company, that the Purchaser shall not, to the extent requested by the
Company or an underwriter of securities of the Company, sell or otherwise
transfer or dispose of or engage in any other transaction regarding any of the
Warrant Shares for one (1) year following the effective date of the Initial
Public Offering. The Company shall have the right to place restrictive legends
on the certificates representing the shares subject to such agreement and to
impose stop transfer instructions with respect to such shares until the end of
such period.

         9.       Miscellaneous. This Warrant shall be governed by the laws of
the State of Oregon, as such laws are applied to contracts to be entered into
and performed entirely in Oregon by Oregon residents. The headings in this
Warrant are for purposes of convenience and reference only, and shall not be
deemed to constitute a part hereof. Neither this Warrant nor any term hereof may
be changed or waived orally, but only by an instrument in writing signed by the
Company and the holder of this Warrant. All notices and other communications
from the Company to the holder of this Warrant shall be delivered personally or
mailed by first class mail, postage prepaid, to the address furnished to the
Company in writing by the last holder of this Warrant who shall have furnished
an address to the Company in writing, and if mailed shall be deemed given three
days after deposit in the United States mail.

                [Remainder of page is intentionally left blank.]

                                       8
<PAGE>

ISSUED:  October 15th, 2002

                                      YAMHILL VALLEY VINEYARDS, INC.

                                      Signed:
                                             -----------------------------------

                                      Printed:
                                              ----------------------------------

                                      Title:
                                            ------------------------------------

<PAGE>

                                  Attachment 1

                               NOTICE OF EXERCISE

TO:  Yamhill Valley Vineyards, Inc.

         1. The undersigned hereby elects to purchase _____________________
shares of Common Stock of Yamhill Valley Vineyards, Inc., pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.

         2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:

--------------------------------
(Name)

--------------------------------
(Address)

--------------------------------        --------------------------------
(Date)                                  (Name of Warrant Holder)

                                     By:
                                        -----------------------------

                                     Title:
                                           --------------------------
                                           (Name of purchaser, and title and
                                            signature of authorized person)

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