TITLE









Exhibit

10.11




 




MASTER

TIMBER MANAGEMENT AGREEMENT




 




 




This Master Timber Management Agreement (the “Master

Agreement”) is made and entered into by and between Hancock Natural Resource

Group, Inc. (“HNRGI” or the “Client”) and H.A. Simons Ltd (the “Manager”), as

of this 5th day of December, 1997, to be effective as of January 1,

1998.




WHEREAS, Client manages timberlands and provides

timberland portfolio investment services to its parent, John Hancock Mutual

Life Insurance Company (“JHMLICO”), both for JHMLICO’s own account and for

separate accounts maintained by JHMLICO for the benefit of certain ultimate

clients, and to various partnerships, limited liability companies, corporations

and other entities (collectively, the “ultimate clients”); and




WHEREAS, Manager is an independent contractor engaged

in the business of operating and maintaining commercial timberlands through its

employees, agents and sub-contractors.




NOW THEREFORE, Client agrees to hire Manager to

perform, and Manager agrees to perform for Client non-exclusive timberland

property management, disposition and acquisition services, all as more fully

described below, on the terms and subject to the conditions set forth below.




Section 1.              Property Management Services:




1.01        Properties Covered:  Client hereby hires

Manager to provide property management services, and Manager hereby agrees to

provide such services with respect to the properties scheduled on Exhibit 1A

attached hereto, as such Exhibit may be amended from time to time in accordance

with the other provisions of this Master Agreement or as otherwise mutually

agreed from time to time by the parties. 

Exhibit 1A shall identify the properties covered by this Master

Agreement, the fees or fee schedule applicable to property management services

for such properties, any special conditions or services agreed to by the

parties for any property, and the expiration date of the term of this Master

Agreement with respect to each property. 

In addition, if Manager actually provides acquisition services requested

by Client pursuant to Section 3 hereof for any property acquired by Client (or

by an ultimate client portfolio managed by Client) during the term of this

Master Agreement, the parties shall negotiate in good faith regarding the terms

on which such new acquisition would be added to Exhibit 1A.  The parties shall endeavor to commence any

such negotiations at least 30 days prior to the expected acquisition closing

date.  Under no circumstances, however,

shall either party be obligated to continue any such negotiations past the

actual closing date of such acquisition. 

Client may, but shall have no obligation to, employ Manager for property

management services except with respect to properties listed on Exhibit 1A, as it

may be amended from time to time.




1.02        Manager’s Primary Duties and

Responsibilities:  With respect to any given property, the

parties may agree to exclude or forego any particular service described in this

Section 1, as circumstances may warrant. 

Unless otherwise agreed, however, the scope of property management

services shall be as set forth in Sections 1.02, 1.03 and 1.04 below.  Any such exclusions shall be identified or

referenced on Exhibit 1A.




 




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(a)           As

soon as possible following the execution of this Master Agreement, and on or

before November 1st (or other dates as may be required by certain ultimate

clients) of each subsequent year, Manager shall prepare and submit to Client

for Client’s approval, an annual budget, in a format compatible with the Client

Budget System (see 1.06), for each individual property subject to this Master

Agreement for the forthcoming fiscal year (the “Annual Budgets”).  Said Annual Budgets shall be based upon

Manager’s recommendations together with information supplied by Client as to

acceptable levels of income and expenditures. 

The Annual Budgets shall reflect on an annual basis all work to be

performed, all income to be received, and all expenses to be incurred with respect

to each property during the forthcoming fiscal year.  Upon approval by Client, Manager may expend the approved budgeted

amounts during suchfiscal year without further approval by Client.  However, Client shall have the right to

modify the Annual Budgets (other than the management fees set forth herein,

except as further provided in Section 1.07 of this Master Agreement), and to

the extent Manager has not yet incurred expenses or obligations, Manager will

comply with such modifications.  In

addition, to facilitate ongoing management of each property, Manager may exceed

any approved, budgeted line item amount, as provided in Exhibit 1B, by [Confidential Treatment for the

omitted material has been requested and has been filed separately with the

Securities and Exchange Commission], whichever

is greater.  Also, in the event of

emergencies or natural disasters that threaten the value or well-being of the

property, Manager shall have the obligation to protect the property and the

right to expend up to [Confidential Treatment for the omitted material has been requested and

has been filed separately with the Securities and Exchange Commission]  in extra-budgetary funds for such

purpose without prior approval of Client, subject to all other provisions of

this Agreement. Manager shall notify Client immediately of any such expenditure

and the reason therefor.  In the event

of any such emergency or natural disaster which necessitates an expenditure of

funds in excess of the monetary limitations set forth above, Manager shall

obtain the approval of Client before expending any such excess funds above the

monetary limits set above, and Manager shall seek such approval in a timely

manner.




“Fiscal Month” means the period commencing on the sixteenth day of any

calendar month and ending on the fifteenth day of the immediately following

calendar month, and “Fiscal Year” means the period commencing on the sixteenth

day of December in any calendar year and ending on the fifteenth day of

December in the immediately following calendar year; provided that the initial

fiscal month hereof shall begin January 1, 1998 and end January 15,

1998 and the initial fiscal year hereof shall begin January 1, 1998 and

end December 15, 1998.




(b)           Within

twenty (20) days after the end of each fiscal quarter, Manager shall prepare

and submit to Client statements setting forth actual expenditures incurred and

revenues generated during said quarter for each individual property.  Said statements shall be in a form approved

by Client.  Along with said statements,

Manager shall submit to Client, at Client’s request, revised Annual Budgets

(the “Forward Look Budgets”) based on actual levels of income and expenditures

for said quarter and revised forecasts of income and expenditures for the

balance of the fiscal year.  Upon

approval by Client, the Forward Look Budgets shall be used in place of the

original Annual Budgets for the remainder of the then current fiscal year.




(c)           Manager

shall submit to Client by the 10th day after each fiscal month a statement

setting forth expenditures incurred and revenues generated during the preceding

month.  Said statement shall be

delivered in both an electronic and a paper form approved by Client.  Manager




 




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will also provide Client with a monthly aging report

of accounts receivable.  Manager will

cause to be delivered to Client all bank statements as soon as said statements

have been received and reconciled.  In

addition to the quarterly statements required pursuant to paragraph (b) above,

Manager shall also submit variance reports and forecasts in a form and on a

schedule as may from time to time be requested by Client.




(d)           Manager

shall perform annual timber inventory updates (cruises) as outlined in Exhibit

1C, and shall maintain a computerized forest inventory system and a forest

mapping system (including GIS).  From

time to time upon Client’s request, Manager shall provide Client with a current

statement of timber inventory as of the last update performed in accordance with

Exhibit 1C.  In addition, by

June 1st and December lst of each year, Manager shall submit to

Client an updated estimate of inventory of the property in a form acceptable to

Client showing the acreage of the land, the volume of merchantable timber and

the premerchantable plantation acreage by species and age class.  Manager shall also conduct other cruising as

special circumstances may dictate, e.g., wind storm and ice storm damage,

trespass, granting of rights of way, etc.




(e)           Manager

shall maintain regular surveillance of all the property, including the

contracting for aerial surveillance as conditions require, to detect weather

damage, fire damage, insect and disease infestation, timber trespass or any

other detrimental occurrences and such surveillance shall comply with a

security plan developed by Manager and mutually agreeable to Client and

Manager.




(f)            Manager

shall assist, consult, and cooperate with Client, or Client’s agents, employees

or attorneys, in matters affecting Client’s ownership interests in and

obligations arising from each properly that is subject to this Master

Agreement, including the land and timber, whether growing or harvested, which

matters shall include unauthorized cuttings, trespass, entries, encroachments,

claims of adverse possession, right-of-way disputes, or any disputes respecting

taxes, charges, or assessments to the property.




(g)           Manager

shall manage and conduct the sale of all timber and logs from the

property.  All such sales shall be made

pursuant to timber sale contracts or log sale contracts between Client and the

timber or log buyer on contract forms approved by Client for such purpose.  Manager shall have the authority to sign on

Client’s behalf and without Client’s prior approval such contracts subject to

the limitations set forth on Exhibit 1B. 

Except as provided in Exhibit 1B, Manager shall not enter into any

timber sale contracts, log sale contracts or other forest products contracts

without the prior written approval of Client. 

Client agrees that all requests from Manager for such approval shall be

responded to without unreasonable delays. Manager’s services in connection with

timber or log sales shall include, but not be limited to, advertising,

processing and handling bids, control of contract compliance of timber

harvested, inspection of cutting and logging operations, collection of scale

tickets, and accounting for all timber and logs sold, and timber sale layout

which includes, but is not limited to: marking cutting lines, engineering and

marking roads, and obtaining necessary permits.  (Surveying is not included in the above definition of timber sale

layout.)  Manager shall also conduct a

credit check on each timber or log purchaser and report the results of such

credit check to Client before entering into any timber or log sales

contract.  Manager shall collect and

maintain (electronically, wherever feasible) log scaling data from log grading

and scaling bureaus.




 




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(h)           Manager

shall, in a fashion usual and customary to timberland management practices for

the area in question, manage and conduct the sale of all minerals, oil, rock

minor forest products and gravel from the property which are owned by each

ultimate client portfolio managed by Client. 

Mineral, oil, rock, minor forest products or gravel sales contracts

shall be directly between Client and the buyer and shall be subject to the

limitations and signature requirements set forth on Exhibit 1B.  Manager’s services in connection with the

mineral, oil or gravel sales shall include, as appropriate, but not be limited

to the following services: valuing, advertising, processing and handling bids,

control of contract compliance, inspection of mining and gravel removal,

collection of scale tickets, and accounting for all minerals, oil or gravel

sold.




(i)            Manager

shall, in a fashion usual and customary to timberland management practices for

the area in question, be responsible for monitoring the activities of third

parties who have a fee, leasehold, mineral, or other interest in the property.  Client shall extend to Manager whatever

reasonable aid that Manager shall reasonably request of Client to enable it to

carry out such monitoring duties. 

Manager shall be responsible for processing all documentation which is

required or desirable with respect to the rights of said third parties,

including pipeline easements and rights of way necessary for oil, gas or

mineral exploration, in all cases subject to the limitations and signature

requirements set forth on Exhibit 1B. 

Notwithstanding anything herein to the contrary, all permanent

easements, conservation easements, rights-of-way, mineral or other conveyances

of portions of the property must be signed by Client (or the appropriate title

holder), and Manager shall have no authority to sign said documents on behalf

of Client.




(j)            Manager

shall be responsible for the administration of any hunting, grazing, camping

and other leases or licenses generating income for Client or which affect the

property, subject to the limitations and signature requirements set forth on

Exhibit 1B.




(k)           By

February 1st of each year, Manager shall submit to Client a reconciliation

of the current year end appraisal volumes to the prior year end appraisal

volumes in a format approved by Client.




(l)            Manager

shall assist Client with obtaining semi-annual or annual appraisals of each

property by providing to Client relevant data for the property in a form

acceptable to Client, which data shall include the merchantable timber by

species groups and product classes, the premerchantable acreage by age class,

and the number and type of acres comprising the property.




(m)          Manager

shall be responsible for performing all usual and customary timberland

management functions, including but not limited to preparing all

easements.  In addition, Manager shall

establish and maintain a land record system in a form and pursuant to a time

schedule mutually agreeable to Client and Manager.




(n)           Manager

shall be responsible for the management of the property tax records for each

individual property.  Manager shall be

responsible for ensuring that all taxes (excluding any taxes based on income,

but including ad valorem real property taxes, timber harvest taxes, and

personal property taxes) on the property are paid in a timely manner.  Manager shall also ensure that all lease

payments required to be made with respect to each property are made in a timely

manner to the appropriate parties.




 




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(o)           Manager

shall provide annual updates of the long term investment analysis which is a

portion of the each property management plan (“Property Management Plans”) on

or before January 31 of each year during the term of this Master

Agreement.  Each update to the long term

investment analysis will incorporate as of January 1 new economic

assumptions and price forecasts using the current Annual Budget (or the Forward

Look Budget, if applicable) and will roll the existing long term harvest

schedules forward one year.  Updates to

the Property Management Plans will be accomplished as necessary upon mutual

agreement of the parties hereto.




(p)           Manager

shall be responsible for managing and implementing stewardship projects as

budgeted, or as otherwise mutually agreed.




(q)           Manager

shall perform an annual “Analysis of Harvest Results vs. Inventory Estimate of

Volume” which shall be submitted in writing to Client by March 31 of each

year.




1.03        Additional Duties and

Responsibilities of Manager:  Manager shall subcontract for, oversee and

monitor the providing of contractual services as set forth in sub-paragraphs

(a) through (s) hereinbelow. 

Manager’s responsibilities shall include soliciting, receiving and

awarding suitable bids, entering into satisfactory contracts, only in a form

acceptable to Client, in conformity with budgetary allocations and limits and

signature requirements set forth on Exhibit 1B and in compliance with

Client’s standards for subcontracting as set forth in this Agreement (or with

Client’s prior written approval if outside the agreed upon budget or

pre-approved form), and Manager will continuously monitor and oversee said

services for contractor compliance. 

Client shall be directly responsible for payments for all subcontracted

services specified below to the extent budgeted or otherwise authorized by

Client in this Master Agreement or in another writing.  Although Manager’s responsibility in

connection herewith shall be as overseer in nature, Manager may determine from

time to time that it is more feasible or economical for Manager’s employees to

perform said services.  In that event,

and with Client’s prior written approval, Manager shall perform said services

and Client shall pay Manager for such services at the agreed upon rates

specified in such written approval.




(a)           Site

preparation and planting.




(b)           Road,

bridge, gate and culvert construction and maintenance.




(c)           Plowing

and maintenance of firebreaks.




(d)           Property

boundary line maintenance (marking) and surveys.




(e)           Vegetation

management, chemical or mechanical.




(f)            Prescribed

burning.




(g)           Hardwood

control, chemical or mechanical.




(h)           Insect

and disease control.




(i)            Aerial

surveillance.




 




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(j)            Slash

burning and fire suppression.




(k)           Contract

logging and trucking.




(l)            Fertilization.




(m)          Stocking

control.




(n)           Animal

control.




(o)           Appraisals

of mineral and gravel sales.




(p)           Monitoring

of oil and gas activities.




(q)           Surveying

for threatened and endangered species.




(r)           archeological

or other specialized surveys outside the scope of services customarily provided

by professional timberland managers in the area in question.




(s)           All

other subcontractual work incurred at Client’s request with prior written

approval of Client.




1.04        Property Management Plans:  If any new property

is acquired by Client and added to this Master Agreement, Client may in its

sole discretion request that Manager prepare a postacquisition, long-term

property management plan for such new properly.  The costs of any such long-term plan shall be paid for by Client

on a time and material basis at the rates set forth in Exhibit 1A.  When a property management plan has been put

into effect for a particular property, the related long term investment

analysis shall be updated as set forth in paragraph (o) of Section 1.02.




1.05        Income and Expenses; Bank Accounts:  The payment of all

expenditures referred to in Section 1.03, to the extent budgeted or otherwise

permitted by the terms of Exhibit 1A, and any other expenditures expressly

approved in writing by Client, shall be the responsibility of Client.  Manager, however, shall review and approve

and certify for accuracy, as appropriate, all bills, invoices or claims for

payment relating to such expenditures, and shall cause such items to be paid

from Client’s designated account with United States Bank of Oregon, 1340 S.W. Second

Avenue, Portland, Oregon 97201 or The Bank of Nova Scotia, 602 W. Hastings,

Vancouver, British Columbia V6B 1 P3 (“Client’s Account”).  Manager’s authority to make such payments

from Client’s Account shall be subject to the limitations and requirements set

forth in Exhibit 1B to this Master Agreement.




Manager shall provide its own hardware compatible with Client’s Wide

Area Network (“WAN).  Each party shall

pay the costs of all hardware purchased and installed at its locations for use

in the (WAN).  However, the parties

shall split 50-50 any charges, such as line charges and other similar charges,

in connection with the use of such shared hardware between Client’s and

Manager’s primary offices.




 




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Manager shall arrange for all income, proceeds and fees generated by

each property (including but not limited to timber sales proceeds and fees from

leases and licenses), together with appropriate documentation thereof, to be

remitted to Client’s Account or as otherwise directed by Client with duplicate

sales documentation to Manager.  Manager

shall review said documentation and certify the accuracy thereof on the monthly

statement to Client required by paragraph (c) of Section 1.02.




Nothing in this Master Agreement shall be deemed to authorize Manager

to open any bank account in Client’s name or to deposit or cause to be

deposited any of Client’s funds in any bank account not expressly authorized by

Client for the purposes contemplated by this Master Agreement.  Signature authority with respect to bank

accounts established by Client may be granted to Manager by Client, in Client’s

sole discretion.




1.06        Property Records:  Manager shall

maintain and provide to Client full and accurate records covering the operation

and management of each property, which records shall be in such scope and

detail as to be satisfactory to Client and to satisfy ordinary and necessary

tax and accounting reporting requirements. 

Client and Client’s accountants at all reasonable times shall have

access upon demand to such records as well as to all other books and records of

Manager relating to the management and operation of each property.  Without limiting the foregoing, Manager

shall keep, in an organized manner, copies of records and documents relating to

purchase, sale, lease, easement and other transactions affecting or involving

each property subject to this Master Agreement, which are not maintained in

duplicate or original form by Client. 

Such property records and documents shall be maintained in a convenient

electronic form, in a standard ASCII text format suitable for use with a forest

management information system, with Client’s Timber Investment Model System,

a.k.a. “TIM,” and with its Client Budget System, a.k.a. “CBS.”  Such property records and documents shall

include but not be limited to stand data (by ultimate client portfolio), GIS

and GPS data, projection models (by stand), and long-term plans; shall be held

for ten (10) years and shall be made available to Client, its agents,

representatives and consultants, and for legal process, at Client’s reasonable

request.  Upon termination of this

Master Agreement with respect to any property, all records pertaining to such

property kept by Manager shall become the property of Client and shall be

turned over to Client forthwith.  Client

will also have access to any of Client’s computer data, and all other

information of Client which Manager has within its control, and shall, upon

request, provide such data to Client in a printed format and/or an ASCII format

or other appropriate and customary electronic format.  Any custom investment models or other custom computer software

provided to Manager by Client or otherwise developed, purchased or paid for by

Client for the purpose of acquiring, managing, or disposing of any property

that is subject to this Master Agreement (including without limitation TIM and

CBS) shall be deemed the property of Client and, at Client’s request, exact

copies thereof or the originals of any such items in the possession of Manager

shall be promptly made available to Client at Manager’s expense in the event of

termination of this Master Agreement.




1.07        Property Management Service Fees:  Property management

service fees shall be set forth in writing and included in Exhibit 1A as

described above.  [Confidential Treatment for the omitted material has

been requested and has been filed separately with the Securities and Exchange

Commission]  The Annual




 




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 Budget for each

property, as described in Section 1.02, shall be based (in pertinent part) on

the management service fees as so negotiated. 

Client shall pay to Manager the applicable property management service

fee for each property (as set forth in Exhibit IA) on a calendar month basis by

the tenth business day of the month following the month in which the charges

were incurred, or within five (5) days of Client’s receipt of Manager’s invoice

for the previous month, whichever is later. 

In the event of termination of this Master Agreement with respect to any

property, or the sale of any tract, Client shall pay only that daily pro rata

portion of the dollar-per-acre fee which has accrued to the date of termination

or sale.  In the event that significant

changes in the total management activities alter monthly budgeted cash flows

for any property by 50% or more for a period exceeding 90 consecutive days,

property management fees for that property will be re-examined and revised by

both parties as appropriate.  Such

reused fees shall only apply prospectively.




Section 2.              Disposition Services:




2.01        Properties to be Sold; Terms of Sale:  Client may from time

to time provide Manager, at Client’s sole discretion, with a list of properties

to be sold by Manager and guidelines as to sales prices and other matters as

may be directed by Client.  Such list,

together with said guidelines, shall hereinafter be referred to as the

“List”.  Said List may be amended, from

time to time, at Client’s sole discretion. 

Unless otherwise approved by Client in writing, all sales contracts

submitted by Manager for Client’s approval shall be made on Client’s approved

Standard Real Estate Sales Contract form for that area (“Real Estate Sales

Contract”).  A copy of one such form is

attached hereto and made a part hereof as Exhibit 2A  All offers and proposed purchase prices and terms shall in no way

bind or obligate Client until and unless expressly approved by Client’s

appropriate business people and Committees at Client’s or JHMLICO’s Home Office

in Boston and expressly accepted in writing by Client.




Manager acknowledges and agrees that Client has the sole, exclusive and

unilateral right to engage and contract with brokers or agents to sell any

property and that Client has the absolute and exclusive right to pledge,

encumber, sell, transfer, or dispose of all or any portion of any property

without the consent of Manager, and Manager shall not allow or cause any lien,

charge, or claim to attach to any property or to any timber or other rights

located on any property.  Manager

represents and warrants that it will comply with all laws and regulations

associated with the sale of any property for which it provides services

pursuant to this Section 2, and that Manager will endeavor to provide

information that is both adequate and accurate for its intended purpose,

including (where Manager is to provide such services) adequate and accurate

descriptions to be used by Client in drawing deeds and easements.




Manager expressly acknowledges and agrees that Manager shall have no

authority to (i) commit Client to any sale of any property; or

(ii) make unsubstantiated statements or representations about said

properties.




2.02        Disposition Services:  To the extent

requested by Client, Manager shall assist, cooperate and consult with Client,

its appointed brokers and agents, and shall provide the following disposition

services from time to time with respect to each proposed disposition property

for which it then serves as property manager:




 




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(a)           Assist

Client in identifying properties to be put in the List based on criteria

established by Client.




(b)           Arrange

for and supervise disposition cruises, prepare internal property valuations and

assist Client in preparing Client’s “vote” packages.




(c)           Solicit

and procure purchasers for the properties contained in the List, market same

and develop purchaser interest and summary of prospective purchasers thereof,

which summary shall be updated as Client may reasonably request.




(d)           Assist

Client in screening prospective purchasers.




(e)           Contract

for any reasonable advertising program for the sale of the List properties

solely in Manager’s own name and at Manager’s sole discretion.




(f)            Distribute

sales information approved by Client to prospective purchasers.




(g)           Receive

and answer inquiries from prospective purchasers.




(h)           Show

identified properties to such prospective purchasers.




(i)            Negotiate

with prospective purchasers on Client’s behalf certain terms and conditions in

accordance with Client’s instructions.




(j)            Assist

in closing sale transactions, including assisting in the verification of legal

descriptions of sale properties.




(k)           Assist

in preparing conveyance deeds and identifying unrecorded documents which affect

sale properties and in the assigning of easements and other rights.




(l)            Send

to Client a closing statement showing prorations or adjustments promptly after

each closing.




(m)          Perform

such other services as Client may reasonably request in writing.




The foregoing notwithstanding, Client shall not be

obligated to employ, to offer to employ or to negotiate terms of employment

with Manager for any disposition services. 

However, if at the time a particular disposition is proposed Manager is

the current provider of property management services for that property, Manager

shall be given “first consideration” for providing disposition services with

respect to such disposition upon the terms and conditions set forth in this

Master Agreement.  Whether or not Client

employs Manager to perform disposition services for any property owned by

Client and managed by Manager, because Manager is the provider of Property

Management Services for such property, and may have access to confidential

information regarding such property and will have continuing responsibilities

for management of such property unless and until it is sold, Manager shall not

acquire, attempt to acquire, advise or assist any other person in its attempt

to acquire said property (or any portion thereof).




 




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2.03        Compensation for Disposition

Services:




(a)           For

disposition services actually performed, Manager shall be paid [Confidential Treatment for the omitted material has

been requested and has been filed separately with the Securities and Exchange

Commission]




(b)           In

some instances, Client may desire to exchange a property or portions of a

property for other timberland, rather than disposing of same for cash.  In such event, Manager shall provide the

same services on the same terms and conditions to Client as are described in

this Master Agreement regarding dispositions for cash.  In such event, if Manager is employed by

Client to provide both disposition and acquisition services, Manager shall

document separately the services it performs for disposition of the property

and the services it performs for the acquisition of the timberland received in

the exchange.  Manager’s compensation

with respect to the property disposed of shall be as described above, and its

compensation with respect to the timberland acquired in the exchange shall be

calculated separately in accordance with Section 3.03 of this Master Agreement.




Section 3.              Acquisition Services:




3.01        Acquisitions:  Regardless of a

property’s location, Manager may but shall not be obligated to bring any

acquisition opportunity to Client’s attention. 

Client may but shall not be obligated to employ, or to offer to employ,

Manager to provide acquisition services for any acquisition, even if brought to

Client’s attention by Manager.  Client

shall not be obligated to pay Manager with respect to any acquisition unless

Manager actually performs acquisition services requested by Client with respect

to such property.  Manager may but shall

not be obligated to accept any offer from Client to perform acquisition

services for any acquisition, and (subject to Section 4.02 below) Manager may

attempt to acquire or assist any other person in its attempt to acquire any

acquisition property; provided however, if Manager performs acquisition

services for Client with respect to a particular acquisition, (except in the

case of a joint acquisition approved by Client) Manager shall not attempt to

acquire that property for its own account or for the account of any other

person, nor shall it assist any other person in any attempt to acquire that

property or compete with or hinder Client in its attempt to acquire that

property.




3.02        Scope of Acquisition Services:  The potential scope

of acquisition services shall be as follows:




(a)           Identify,

investigate, and inspect (if appropriate) relevant properties offered for sale

by other parties, and develop financial investment models and conduct

valuations as necessary for Client’s evaluation of the property(ies).




(b)           Assist

Client in preparing Client’s bid proposal, vote packages, supervise third party

timber inventory verification, value the acquisition property by parcels at the

request of Client and cooperate with third party review of the parcelization

process.




 




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(c)           Review

legal and historical access to the property for the purpose of managing the

property.




(d)           Assist

Client and Client’s counsel in the negotiations for acquisition of the property

in accordance with verbal directions given by Client.




(e)           Assist

Client and Client’s legal counsel with the preparation and review of various

acquisition documents, including but not limited to acreage verification,

review of title commitments and title exception documents.




(f)            Assist

Client and Client’s legal counsel in the verification of all closing documents

and the closing statement for the acquisition of the property.




(g)           Conduct

a preliminary field inspection of the property and cooperate with and assist

the environmental consultant retained by Client in conducting the consultant’s

environmental review of the property.




With respect to any given acquisition, however, Client

shall be free to perform any or all acquisition services itself, and may

request Manager to perform fewer services. 

Any request by Client for Manager’s acquisition services shall be in a

writing which shall reasonably describe the services requested and such other

matters as the parties deem relevant. 

Manager represents and warrants that it will comply with all laws and

regulations associated with the acquisition of all properties for which it

provides services pursuant to this Section 3.




All acquisition contracts shall be in a form approved

by Client and prepared by counsel for Client. 

No offer or proposed term or condition shall bind or obligate Client until

and unless approved and accepted in writing by Client’s appropriate business

people and Committees at Client’s or JHMLICO’s home office in Boston and

expressly accepted in writing by Client. 

Manager shall have no authority to commit Client to any purchase of any

property.




3.03        Compensation for Acquisition

Services:  Client shall not be obligated to pay, and Manager shall have no

right to receive, any finder’s or other fee for bringing acquisition

opportunities to Client’s attention. 

However, if Manager actually performs acquisition services requested by

Client with respect to a property, Client shall pay Manager monthly in arrears,

subject to the prior receipt of an invoice describing in reasonable detail the

services actually performed during the month and the charges for such services,

on a time and materials basis at the rates set forth in Exhibit 1A.




Section 4.              Conflicts of Interest.

Confidentiality and Non-Compete:




4.01        Confidentiality:  The parties

acknowledge that Client serves as an investment fiduciary for certain pension

plans, foundations, endowments and other entities, and that Manager will have

access to, and from time to time will obtain, confidential information.  The parties agree that Manager’s receipt,

use and disclosure of confidential information shall be restricted as set forth

in Exhibit 4A to this Master Agreement.




4.02        Non-Compete:  So long as this

Master Agreement shall remain in effect, Manager agrees that it will not

compete with Client by (a) performing or offering timberland portfolio

investment




 




11



























 




services for pension plans, foundations or endowments;

(b) soliciting or attempting to raise timberland investment capital from

pension plans, foundations or endowments; or (c) managing timberland

properties for timberland investment portfolio managers who compete with Client

in the market for the funds of pension plans, foundations or endowments.  In addition, recognizing Client’s need to

protect its legitimate business interests, and as a further inducement to

Client to continue to enter into this Master Agreement, Manager hereby

covenants and agrees with Client that during the term of this Master Agreement,

Manager will not, directly or indirectly, for itself or any other person, business

or entity: (x) have any ownership interest in any Competing Business

(other than passive ownership of publicly traded securities constituting less

than a 1% interest); or (y) attempt to employ or recruit, or assist any

other person or entity in employing or recruiting, in any Competing Business,

any employee who is employed by Client. 

For purposes of the preceding sentence, “Competing Business” means any

business that acquires, owns and/or manages timberlands within the continental

United States or Canada primarily for the benefit of pension fund or retirement

accounts, endowments or foundations.




Manager acknowledges that any violation or threatened

violation of the restrictions contained herein would cause irreparable harm to

Client and that damages at law would be inadequate.  Manager therefore agrees that in the event of any breach or

threatened breach of the provisions of this Section 4.02 by Manager, Client

shall be entitled to preliminary and permanent injunctive relief, without bond,

in addition to any other remedy which it may have at law or in equity.




Section 5.                                          Insurance. Indemnity, Status, Standard of Performance and Legal

Compliance:




5.01        Insurance and Bonding:  (a) During

the term of this Master Agreement, and any extensions thereof, Manager shall

maintain in full force and effect at least the following minimum levels of

insurance with financially stable insurance carriers satisfactory to Client:




(i)            Manager shall maintain a policy of commercial general

liability insurance insuring Manager and Client (and the owner of each property

that is subject to this Master Agreement) against any liability for bodily

injury or property damage claimed to have resulted from or be in any way

connected with Manager’s operations under this Master Agreement, in the minimum

amount of $500,000 for each occurrence, $500,000 general aggregate, plus

umbrella coverage of $7,000,000.  The

premiums and other costs of such general liability insurance shall be paid for

by Manager as a cost associated with the operations of Manager under this

Master Agreement.  All other insurance

required under this Section 6 shall also be the obligation of Manager and shall

be paid for by Manager, and Client shall not reimburse Manager for such expenses.




(ii)           Manager shall maintain a policy of automobile liability

insurance, including coverage for scheduled autos, hired autos and non-owned

autos, insuring Manager and Client (and the owner of each property that is

subject to this Master Agreement against any liability for bodily injury or property

damage claimed to have resulted from or be in any way connected with Manager’s

operations under this Master Agreement, in the minimum of $1,000,000 for bodily

injury per accident and $500,000 for property damage.




 




12





























 




(iii)         Manager shall maintain Workers’ Compensation Liability

coverages as required by law and Employer’s Liability Insurance in the amount

of $500,000.  Said policies shall

contain a provision under which the insurer waives any right of subrogation as

against Client, the owner of each property that is subject to this Master

Agreement, and their respective agents or employees.




(b)           Manager

shall also be responsible for requiring and verifying that all contractors or

subcontractors hired to perform any work relating to the property acquire and

maintain the following insurance requirements unless otherwise approved by

Client, which approval will not be unreasonably withheld or delayed by Client,

provided, that Manager may at its own volition waive such insurance

requirements, in whole or in part, in emergency situations for the period of

such emergency:




(i)            Contractors or subcontractors shall maintain a policy of

commercial general liability insurance insuring contractor or subcontractor, as

the case may be, and Client (and the owner of each property that is subject to

this Master Agreement) against liability for bodily injury or property damage

claimed to have resulted from or be in any way connected with contractor’s or

subcontractor’s operations under this Master Agreement, in the minimum amount

of $500,000 for each occurrence and $1,000,000 general aggregate.  The premiums and other costs of such general

liability insurance shall be paid for by the contractor or subcontractor as a

cost associated with their operations. 

All other insurance required under this Section 5(b) shall also be the

obligation of contractor or subcontractor and shall be paid for by contractor

or subcontractor.




(ii)           Contractors or subcontractors shall maintain a policy of

automobile liability insurance, including coverage for scheduled autos, hired

autos and non-owned autos, insuring contractor or subcontractor and Client (and

the owner of each property that is subject to this Master Agreement) against

any liability for bodily injury or property damage claimed to have resulted

from or be in any way connected with Manager’s operations under this Master

Agreement, in the minimum of $500,000 for bodily injury per accident and

$250,000 for property damage.




(iii)         Contractors or subcontractors shall maintain Workers’

Compensation Liability coverages as required by law and Employer’s Liability

Insurance in the amount of $500,000. 

Said policies shall contain a provision under which the insurer waives

any right of subrogation as against Client, the owner of each property that is

subject to this Master Agreement, and their respective employees.




(c)           All

insurance coverages required hereunder shall not be subject to change or

cancellation without at least ten (10) days’ prior written notice to Client.




(d)           Manager

shall furnish evidence satisfactory to Client that Manager is maintaining such

insurance coverage.




(e)           Manager

and all employees of Manager who handle or who are responsible for the handling

of Client’s monies shall, at all times during the term of this Master

Agreement,




 




 




13





























 




without

expense to Client, be bonded by a fidelity bond acceptable both to Manager and

Client, in an amount of not less than [Confidential Treatment for the omitted material has been

requested and has been filed separately with the Securities and Exchange

Commission]   and by a company acceptable to Manager and

Client.  A certificate verifying the

existence of such a bond shall be furnished to Client by Manager.




(f)            The

foregoing insurance and bonding coverage are minimum requirements and the

maintenance thereof shall no way limit the liability of Manager under this

Master Agreement.




5.02        Indemnity - Liability:  Manager agrees to

defend, with counsel mutually acceptable to both Client and Manager, indemnify

and hold Client, the owner of each property that is subject to this Master

Agreement, and their respective agents, employees, officers, directors and

affiliated companies free and harmless from and against all claims, suits,

actions or proceedings, whether civil or criminal, and liabilities, losses,

injuries, damages, judgments or expenses, including court costs and reasonable

attorney’s fees, arising out of Manager’s operation and maintenance of the

property and caused by Manager’s improper performance of its duties and

obligations under this Master Agreement or by the negligent acts or omissions

of Manager, or of subcontractors employed by Manager pursuant to activities

associated with the duties and responsibilities described in Section 1, made or

done in the performance of, or failure to perform, its obligations under this

Master Agreement, and not caused by the Client’s (or such owner’s) negligent or

willful acts or omissions, provided that Manager’s liability under this

Master Agreement resulting from the negligent or intentional acts or omissions

of any contractor or subcontractor utilized by Manager shall be limited to [Confidential Treatment for the

omitted material has been requested and has been filed separately with the

Securities and Exchange Commission]  in

the aggregate for any one calendar year. 

Client agrees to defend and hold Manager, its agents, employees,

officers, directors and affiliated companies free and harmless from and against

all claims, suits, actions or proceedings, and all liabilities, losses,

injuries, damages, judgments or expenses caused by Client’s negligent or

improper performance of Client’s obligations hereunder.




5.03        Independent Contractor:  Manager’s status

hereunder is that of an independent contractor, and Manager shall not contract

for or on behalf of Client without Client’s express written consent and Manager

shall not represent to any third party that its relationship to Client is other

than that of an independent contractor. 

Except as otherwise provided in Exhibit 1B, Manager shall subcontract in

its own name.  All work performed

pursuant to this Master Agreement shall be by independent contractors or by

employees of Manager.  With respect to

the latter, Manager shall obtain and maintain Workers’ Compensation Insurance

as required by law and under this Master Agreement.  With respect to the former, Manager shall be responsible for

ascertaining that all subcontractors are in compliance with all applicable

Workers’ Compensation requirements. 

While Client shall have the right, as contemplated herein, to direct and

require Manager to perform certain functions, the manner in which same are to

be performed shall be determined by Manager. 

All persons required to perform services in connection with the Property

shall be employed by and be employees of Manager or of contractors or

subcontractors with which it deals, and Client shall have no right to direct or

to control these persons in any respect whatsoever.  Anything herein to the contrary notwithstanding, Manager’s use of

contractors or subcontractors shall in no way exonerate Manager from full

performance of its duties and obligations under this Master Agreement, except

as may be limited by Section 5.02 hereof.




 




14





























 




5.04        Standard of Performance:  Manager shall

(a) discharge its duties with the care, skill, prudence and diligence

under the circumstances then prevailing that a prudent person acting in a like

capacity and familiar with such matters would use in the conduct of an

enterprise of alike character and with like aims, using generally accepted and

proper land management and forestry practices and procedures acceptable to

Client, and (b) act in accordance with the standards in effect from time

to time under federal, state and local laws, rules, regulations, and ordinances

applicable to its forestry and management operations.  Acting through its qualified subsidiaries, agents and employees,

Manager shall generally manage, oversee, and supervise each property listed

from time to time on Exhibit 1B and all forestry operations thereon or incident

thereto and shall furnish or subcontract for all labor, materials, equipment,

supplies and services necessary to operate and maintain each property, and

shall perform and carry out the duties and responsibilities as generally

outlined in this Master Agreement. 

Manager agrees to act in good faith and with due care in selecting

reputable and qualified subcontractors to be employed by Manager.




Notwithstanding anything herein to the contrary,

Manager shall expend no funds with respect to any property or enter into any

contracts or other agreements affecting any property in contravention of the

limitations and signature requirements set forth on Exhibit 1B.




5.05        Governmental Compliance:  Manager hereby

represents and warrants to Client that Manager has obtained and will maintain

all necessary permits and licenses required for Manager to fulfill its

obligations under this Master Agreement. 

Manager shall take, or timely recommend, such action as shall be

necessary to comply with all federal, state, and other governmental laws,

orders or requirements applicable to its management and forestry operations

under this Master Agreement.  Whenever a

report, application, notice or other document is required to be filed or

reported with any governmental agency in connection with the Property or any

forestry operations being conducted by Manager hereunder, Manager shall

immediately notify Client of the same, and the Manager where necessary will

prepare initial drafts of any such report, application, notice or other

document for filing or reporting. 

Manager shall ensure that any and all contractors or subcontractors performing

services on or relating to the Property comply with all applicable federal,

state, and other governmental laws, orders or requirements relating to said

contractors or subcontractors or relating to each property.  Upon request, Manager shall provide Client

with evidence satisfactory to Client of Manager’s compliance hereunder.




Section 6.              Term and Termination:




6.01        Term:  The term of this

Master Agreement shall commence as of January 1, 1998, and shall continue

to and including December 31, 1999.




6.02        Termination for Fraud or Failure to

Perform:  Either party may terminate this Master Agreement, in whole or in

part with respect to any property or properties, at any time, upon not less

than 10 days’ prior written notice thereof to the other party based on: (i) fraud

or criminal activity by such party, or (ii) any material breach by such

party of its obligations under this Master Agreement.  Any notice given pursuant to this Section 6.02 shall describe the

reason for termination in reasonable detail, shall stipulate the effective date

of termination, and whether such notice of termination applies to the Master

Agreement in its entirety or to specific properties which shall be identified

in the notice.  The other party shall

have 10 days following 




 




15





























 




its receipt of any such notice in which to respond and, if

possible, remedy any breach or other reason for termination, failing which this

Master Agreement shall terminate to the extent specified in the notice.




6.03        Automatic Termination:  This Master Agreement

shall automatically terminate, in its entirety and with respect to all

properties, if: (i) there are no properties with respect to which Manager

is then providing property management services as contemplated by Section 1

above; (ii) either party is adjudicated as insolvent or to be liquidated,

files or consents to the filing against it of a petition for relief or

reorganization in bankruptcy (or under any similar law), consents to the

appointment of a receiver, trustee or similar officer with respect to it or

with respect to a substantial part of its property, or fails to dismiss within

30 days any petition or order seeking to effect any of the foregoing; or

(iii) either party shall sell substantially all of its assets, merge or

consolidate with an unaffiliated third party in such a manner that the party to

this Master Agreement shall not be the survivor of such merger or

consolidation, or otherwise cease to exist. 

This Master Agreement shall automatically terminate with respect to a

given property (or any portion thereof if and when that property (or portion)

is sold or disposed of; and no longer owned by or for the account of any

ultimate client portfolio managed by Client.




6.04        Survival of Obligations:  Notwithstanding any

other provision hereof, the following obligations, as set forth in this Master

Agreement, shall survive any partial termination: (i) the provisions of

Sections 1 and 2 (including the Exhibits thereto and all other provisions of

this Master Agreement that are incorporated by reference in Section 1 or in

Exhibit lA) shall survive with respect to a given property so long as that

property remains subject to this Master Agreement; and (ii) the provisions

of Section 4 shall continue in effect until this Master Agreement has terminated

with respect to all properties.




6.05        Winding Up Following Termination:  Within thirty (30)

days following termination of this Master Agreement in its entirety, Client

shall pay to Manager all amounts (if any) then due but unpaid under this Master

Agreement, including without limitation all fees prorated to the date of

termination.  Within thirty (30) days

following notification of termination of this Master Agreement with respect to

any property, Manager shall turn over to Client all records, photos, maps, surveys,

title data, custom computer software (as defined in Section 1.06 above),

documents and other property or items relating to such property, including

without limitation any Confidential Information (as defined in Exhibit 4A)

relating to such property, along with all copies and abstracts of such

Confidential Information.




Section 7.              Notices:  All notices required

or permitted under this Master Agreement shall be in writing and shall be

effective at the earlier of the time when actually received by the party

receiving notice, regardless of the method of delivery, or one day after

mailing if by reputable overnight courier or three days after mailing if by

certified United States mail, to the parties at the following addresses (or to

such other addresses as either party may designate from time to time in a

writing delivered to the other):




	

   


  	

  AS TO

  THE CLIENT:


  	

   


  	

  [Confidential Treatment for the

  omitted material has been requested and has been filed separately with the

  Securities and Exchange Commission]


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  





 




16





























 




	

   


  	

   


  	

   


  	

  Attn:


  	

  [Confidential

  Treatment for the omitted material has been requested and has been filed

  separately with the Securities and Exchange Commission]


  





 




 




	

   


  	

  AS TO

  THE MANAGER:


  	

   


  	

  Simons

  Reid Collies, a division of H.A. Simons Ltd


  Suite 300


  475 West Georgia Street


  Vancouver, B.C., Canada V6B4M9


  Attn: Charles Goodbrand


  





 




In the event that the last day for giving any notice

hereunder falls upon a Sunday or legal holiday, the last day shall be deemed to

be the next day which is neither a Sunday nor a legal holiday.




Section 8.              Title to Property and Timber:  Manager shall not by

reason of this Master Agreement acquire title to any portion of the properly or

any timber located thereon.  In

addition, Client reserves the right to designate the party or parties to whom

any or all of the timber located on the property may be sold during the term of

this Master Agreement or any extension thereof.  The rights of Manager hereunder shall be subject and subordinate

to all liens which may now or hereafter be placed on the property.




Section 9.              Miscellaneous:




9.01        This

Master Agreement shall be governed by the laws of the Commonwealth of

Massachusetts.




9.02        This

Master Agreement shall be binding upon the parties hereto and their successors

and permitted assigns.




9.03        Neither

party may assign this Master Agreement or any part thereof without the express

written consent of the other party, except Client may assign this Master

Agreement without such consent to another subsidiary or affiliate of Client.




9.04        This

Master Agreement may not be changed orally but may only be modified by an

agreement in writing executed by the parties hereto.




9.05        The

headings in this Master Agreement are for purposes of reference only and shall

not limit or define the meaning hereof. 

Unless otherwise specified, all references to dollars or $ shall refer

to Canadian dollars.




9.06        If

any term of this Master Agreement shall be held to be invalid, illegal or

unenforceable, the validity of the other terms of this Master Agreement shall

in no way be affected thereby.




 




17





























 




9.07        Client

and its authorized representatives shall have the right to enter any portion of

the property at any time, and to take any and all such actions with respect

thereto as Client in its sole discretion deems necessary or appropriate to

protect its interest in the property and the timber and other property rights

located thereon.




9.08        This

Master Agreement constitutes the entire agreement between the Client and

Manager and supersedes (i) all previous agreements between Client and

Manager relating to the property, and (ii) all prior drafts of and

negotiations relating to this Master Agreement.  This Master Agreement may be executed in any number of

counterparts, each of which shall be an original but all of which together

shall constitute but one instrument.




Section 10.            Non-Discrimination:  During the term of

this Master Agreement; Manager shall not unlawfully discriminate against any

employee or applicant for employment because of race, religion, color, national

origin, ancestry, physical handicap, medical condition, marital status, age

(over 40), or sex.




IN WITNESS WHEREOF, the undersigned have duly executed

this Agreement as of the date first written above, to be effective as of

January 1, 1998.




HANCOCK

NATURAL RESOURCE GROUP, INC.




 




 




	

  By:


  	

  /s/

  [Confidential Treatment for the omitted material has been requested and has

  been filed separately with the Securities and Exchange Commission]


  
	

  [Confidential

  Treatment for the omitted material has been requested and has been filed

  separately with the Securities and Exchange Commission]


  
	

  Senior

  Vice President


  





 




Acknowledged

and agreed to:




 




H. A.

Simons Ltd.




 




 




	

  By:


  	

  /s/

  Charles Goodbrand


  
	

  Charles

  Goodbrand


  
	

  Vice

  President and General Manager


  





 




18





























 




EXHIBIT 1A




1998 Property Management Fees




	

  Property


  	

   


  	

  1/1/98 Acreage


  	

   


  	

  Rate  $/Acre


  
	

  Comox


  	

   


  	

  27,864


  	

   


  	

  [Confidential

  Treatment for the omitted material contained in the entire column has been

  requested and has been filed separately with the Securities and Exchange

  Commission] 


  
	

  Cowichan


  	

   


  	

  32,135


  	

   


  
	

  Total


  	

   


  	

  59,999


  	

   


  





 




A.            These

rates are for calendar year 1998 and are expressed in Canadian dollars.




B.                                     The 1999 property specific rates shall be

revised to reflect the planned 1999 activity levels per property, provided that

the weighted average rate for the combined Comox and Cowichan properties shall

equal [Confidential

Treatment for the omitted material has been requested and has been filed

separately with the Securities and Exchange Commission].




C.                                     For Acquisition, Disposition, and

Property Management Plan services:




Employee hourly base rate* times         [Confidential Treatment for the omitted material has

been requested and has been filed separately with the Securities and Exchange

Commission]                equals billable hourly rate.




*Employee hourly base

rate is annual salary before bonus, expressed as an hourly rate.




 




19





























 




Cost of materials times        [Confidential

Treatment for the omitted material has been requested and has been filed

separately with the Securities and Exchange Commission]                  equals billable amount.




Mileage      [Confidential Treatment for the omitted material has

been requested and has been filed separately with the Securities and Exchange

Commission]        




              (rate per mile)




 




20





























 




EXHIBIT

“1B”







DECISION MAKING and SIGNING AUTHORITY




	

  CATEGORY


  	

   


  	

  MANAGER’S

  AUTHORITY ($US)


  
	

  1.

  Timber sales contracts


  stumpage and log sales

  including salvage and misc. forest products


  	

   


  	

  [Confidential

  Treatment for the omitted material contained in the entire column has been

  requested and has been filed separately with the Securities and Exchange

  Commission]


  
	

   


  	

   


  	

   


  
	

  2.

  Logging and trucking contracts


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  3.

  Land Use permits


  i.e., road use,

  rock/gravel/leases, regulatory permits, licenses (inc. hunting), ferns, oil

  and gas, etc.


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  4.

  Budgeted Capital Expenses


  contracts and checks,

  i.e., site prep, planting, herbicide, PCT, logging roads, etc...


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  5.

  Budgeted Operating Expenses


  checks, except

  management fees


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  6.

  Budgeted Operating Expenses


  checks; management fees


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  7.

  All legal invoices


  	

   


  	

   


  





 




21





























 




	

  8. Disposition of

  properties — with HNRIC/COF approval closing costs; expenses; manager’s

  compensation; P&S contracts and closing documents


  	

   


  	

  [Confidential

  Treatment for the omitted material contained in the entire column has been

  requested and has been filed separately with the Securities and Exchange

  Commission]


  
	

   


  	

   


  	

   


  
	

  9. Disposition of

  properties — with HNRIC/COF approval Closing costs expenses; Manager’s

  compensation; P&S contracts & closing documents


  	

   


  	

   


  





 




All Hancock contracts to be signed by authorized

preparer and a minimum of two authorized individuals up to respective limits of

their signing authority




Manager - to provide and update list of its authorized

individuals periodically




Authorized HNRGI Associates: Director Acquisitions;

Manager of Acquisitions; Director of Forestry Operations & Stewardship;

Regional Forestry Managers; Regional Foresters; CalPERS Forest Operations

Manager; Ca1PERS CIO; Managing Director




Decision making authority:




•                                          Budget approval must be made by the HNRGI

(i) Regional Forestry Manager and Director of Forestry Operations &

Stewardship, or (ii) Calipers Operations Manager and CalPERS CIO;




•                                          Acquisitions and Dispositions require

approval of Hancock Natural Resource Investment Committee and JHMLICO Committee

of Finance; except that dispositions under [Confidential Treatment for the omitted material has

been requested and has been filed separately with the Securities and Exchange

Commission] must be approved by (i) a Regional Forestry Manager or

Director of Forestry Operations & Stewardship, or (ii) CalPERS Operations

Manager or Ca1PERS CIO;




•                                          All recorded instruments (including

deeds) to be signed by authorized officers of JHMLICO, John Hancock Timber

Resource Corp., or other legal owner, respectively.




 




22





























 




EXHIBIT

1C







TIMBER INVENTORY SCHEDULE




Annual timber inventory updates will be done to

collect the following information on the following schedule:




I.              EVEN-AGED

MANAGED PROPERTIES




	

  TIME

  OF ENTRY


  	

   


  	

  INFORMATION


  TO

  BE COLLECTED


  
	

  Approx.

  5 years after planting


  	

   


  	

  Species,

  trees per acre, average stand diameter and height


  
	

  When

  12 — 25 years old


  	

   


  	

  Species,

  trees per acre, average stand diameter and height


  
	

  When

  over 25 years old: 


  (1) approx. 10% of acres over 25 years old to be inventoried annually; and 


  (2) following major events (e.g., final harvest, commercial

  thinning, material storm, bug or fire damage)


  	

   


  	

  Species,

  trees per acre, diameter at breast height (“DBH”), tree height, age


  
	

   


  	

   


  	

   


  





 




II.            UNEVEN-AGE MANAGED

PROPERTIES




 




	

  TIME

  OF ENTRY


  	

   


  	

  INFORMATION


  TO

  BE COLLECTED


  
	

  Within

  one year following major events


  	

   


  	

  Species,

  trees per acre, DBH, stand height by DBH class


  
	

  Approx.

  every 10 years for stands with no major activities planned (e.g.,

  plantations)


  	

   


  	

  Species,

  trees per acre, DBH, stand height by DBH class


  





 




III.           ACCURACY




 




Inventory will be

maintained so that the total volume will be within 10% +/- of the true volume

at the 95% confidence interval.




 




23





























 




 




EXHIBIT

“2A”







REAL ESTATE SALES CONTRACT




 




	

  Date:


  	

   


  	

   


  	

  R.E.

  No:


  	

   


  
	

   


  	

   


  	

  Contract

  No.:


  	

   


  





 




                                                                    

of                                                               ,

City of                                 

, County of




                                    , Province

of hereinafter referred to as “BUYER” hereby agrees to purchase from JOHN

HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation, hereinafter

referred to as “SELLER”, AND SELLER hereby agrees to sell and convey to BUYER

that certain real estate described in Exhibit A attached hereto and made a part

hereof, hereinafter referred to as the “Property”, upon the following terms and

conditions:




1.             Purchase

Price.  BUYER hereby agrees to pay

for said Property the amount of                                       dollars ($                   ) (“Purchase Price”),

with                                         

dollars ($                )

(“Deposit”) to be paid by BUYER to SELLER at the time of the execution of this

Contract, and the balance to be paid by BUYER to SELLER at “Closing” described

in Paragraph 4 below; said Purchase Price to be paid to SELLER in cash, by

official bank cashier’s check, or by wiring immediately available Federal Funds

to the closing agent or to such bank account as SELLER shall designate to

BUYER.




2.             Closing

Costs.  SELLER shall pay the cost of

preparation of the deed, for the release of any encumbrances of record not

excepted below, any transfer tax imposed upon the SELLER by law, and the

expenses of its own attorney.  BUYER

shall pay all other closing costs including without limitation other taxes,

recording fees, and all fees and expenses of BUYER’S attorneys.




3.             Conveyance.  SELLER agrees to convey the Property at the

Closing by a duly executed, good and sufficient deed, free and clear of all

encumbrances not specifically excepted in this contract.  Such conveyance shall be subject to

easements, restrictions, reservations, rights of way, roadways, mineral rights

or reservations, oil, gas or other mineral leases, parties in possession,

leases or rights of any tenants or lessees, and all other matters which an

accurate survey would show applicable to or affecting the Property.  Real Estate taxes shall be prorated to the

date of Closing, with the Buyer responsible for any taxes accruing or due and

payable after the Closing contemplated herein. 

If BUYER desires an examination of title, BUYER shall pay costs thereof.  If upon examination of title BUYER finds

flaws in title to which BUYER objects, BUYER shall report same in writing to

the SELLER before the Closing or BUYER shall be deemed to have waived such

objections.  SELLER shall have sixty

(60) days from receipt of any such title objections to cure same, or SELLER may

elect not to cure same and return the Deposit within fifteen (15) days of

receipt of objections; and this Contract shall thereupon terminate.




 




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4.             Closing.  The Closing contemplated herein shall mean

the simultaneous closing of the sale by execution and delivery by SELLER of the

deed to BUYER and payment by BUYER of the Purchase Price.  Closing date to be




                        , unless the date of

Closing is extended in writing by mutual agreement at least ten (10) days prior

to the aforesaid date.  THE PARTIES

AGREE THAT TIME IS OF THE ESSENCE WITH RESPECT TO THIS CONTRACT.  The Closing shall be held at the offices of                                      ,                           ,                              ,                       unless another place is

agreed upon.




5.             Deposit.  The Deposit is delivered to SELLER to

evidence BUYER’s good faith. It is understood and agreed that same will be

returned to the BUYER in the event SELLER does not execute this Contract.  In the event that the Closing contemplated

herein occurs, the Deposit, at the closing shall be returned to BUYER or

credited to the Purchase Price.  IN THE

EVENT THAT THE CLOSING DOES NOT OCCUR FOR ANY REASON, WHATSOEVER, OTHER THAN

THE FAULT OF THE SELLER, SELLER SHALL RETAIN THE DEPOSIT AS A MEASURE OF

LIQUIDATED DAMAGES, IT BEING FURTHER UNDERSTOOD AND AGREED THAT IT WOULD

OTHERWISE BE IMPOSSIBLE OR IMPRACTICABLE TO MEASURE THE ACTUAL DAMAGES CAUSED

TO OR SUFFERED BY THE SELLER DUE TO THE FAILURE OF THE CLOSING TO OCCUR THIS

PROVISION SHALL IN NO WAY AFFECT SELLER’S RIGHT TO RELY UPON AND TO EXERCISE

ANY OTHER LEGAL REMEDIES OR RECOURSE AVAILABLE TO SELLER, INCLUDING WITHOUT

LIMITATION, SPECIFIC PERFORMANCE IN THE EVENT THE CLOSING CONTEMPLATED HEREIN

DOES NOT OCCUR DUE TO ANY REASON ATTRIBUTABLE TO OR DEFAULTED BY BUYER.




6.             Possession.  BUYER shall obtain possession of the

Property upon the Closing of this Contract, subject to all the matters

described in Paragraph 3 hereof.




7.             Acreage.  SELLER is selling the Property by the tract

or parcel only, it being understood and agreed that the acreage of the Property

is not guaranteed or warranted in any way by SELLER.




8.             Assignment.  This Contract shall not be assigned or

encumbered, or otherwise transferred in any way, by BUYER without the prior

written consent of SELLER, and shall not be recorded in any County Records or

other office where public records are maintained.




9.             Bankruptcy.  SELLER shall not be obligated or under any

duty to close this transaction in the event of the filing of any bankruptcy or

insolvency petition or action by or against BUYER.




10.           Condition

of Property.  BUYER agrees that it

has inspected and is thoroughly familiar with the Properly and is acquiring the

Property in its “as is” condition. 

BUYER understands and agrees that SELLER has not made and makes no

representations or warranties of any kind with respect to the condition of the

Property or its fitness, suitability or acceptability for any particular use or

purpose; and SELLER shall not be liable or any latent or patent defects

therein.  SELLER shall have no

obligation to repair or make any improvements to the condition of the Property

prior to Closing.  THE PROPERTY MAY NOT

BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES.  THE PROPERTY IS 




 




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SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH MAY

NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE. BEFORE SIGNING OR

ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY

SHOULD CHECK WITH THE APPROPRIATE AUTHORITIES TO VERIFY APPROVED USES AND

EXISTEINCE OF FIRE PROTECTION FOR STRUCTURES. 

BUYER hereby releases SELLER and its agents, representatives and

employees from any and all claims BUYER may discover after Closing that relate

to:




(a)           The

condition of the Property at any time, before or after Closing, including

without limitation, the presence of any hazardous substances; and




(b)           Any

other matter pertaining to the Property.




11.           Risk

of Loss or Damage.  SELLER shall

bear the risk of loss or damage to the Property and improvements thereon from

any cause whatsoever, or condemnation of any portion of the Property, prior to

closing.  In the event of such loss,

damage or condemnation prior to closing, BUYER, at its election, may terminate

this agreement.  If BUYER does not elect

to terminate this agreement for said reasons, the transaction shall be closed

as otherwise agreed to, without reduction in Purchase Price, unless the parties

shall agree thereto.  In the event both

parties are not able to agree to close without reduction in Purchase Price, or

agree on any adjustment in Purchase Price, then this transaction shall

terminate without any further liability of either party to the other, except

that SELLER shall refund to BUYER any portion of the Purchase Price previously

paid.




12.           Broker.  BUYER agrees to indemnify and hold SELLER

harmless from any commission, broker’s fee, finder’s fee or other payment by

reason of action by the BUYER.




13.           Acceptance

of Deed.  The acceptance of the deed

by BUYER shall be deemed to be a full performance and discharge of every

agreement and obligation of SELLER herein contained and expressed.




14.           Effective

Date.  This Contract shall become

effective and in full force only when duly and properly executed, authorized

and delivered by the parties hereto.




15.           Miscellaneous.  This Contract may be changed, waived,

discharged or terminated only by an instrument in writing, signed by the party

against which enforcement of such change, waiver, discharge or termination is

sought.  The headings in this Contract

are for purposes of reference only and shall not limit or define the meanings

thereof.  The terms BUYER and SELLER

together with any pronoun used in connection therewith, wherever used in this

Contract, shall include the singular and plural and the masculine and feminine,

so far as the context may permit or require. 

This Contract shall inure to and be binding upon heirs, successors and

assigns of the parties hereto, subject to the terms hereof.




 




26





























 




THIS AGREEMENT is hereby duly executed in triplicate by BUYER and

SELLER on the date first above written.




	

  BUYER:


  	

   


  	

  SELLER:


  	 

	

   


  	

   


  	

  JOHN

  HANCOCK MUTUAL LIFE


  	 

	

   


  	

   


  	

  INSURANCE

  COMPANY


  	 

	

  By:


  	

   


  	

   


  	

  By:


  	

   


  	 

	

   


  	 

	

  **************


  	 

	

   


  	 

	

  Deliver promptly

  to BUYER, either manually or by registered mail, a copy hereof showing

  SELLER’s acceptance.


  	 

	

   


  	 

	

  Buyer

  acknowledges receipt of the


  	

   


  	

  Copy

  hereof showing Seller’s signed


  	 

	

  foregoing

  instrument bearing his signature


  	

   


  	

  acceptance

  sent Buyer by registered mail to


  	 

	

  and

  that of the Seller showing acceptance.


  	

   


  	

  Buyer’s

  above address.


  	 

	

  Date


  	

   


  	

   


  	

   


  	

   


  	

  Buyer


  	

   


  	

  (return

  receipt requested) on 


  	

   


  	

   


  	

  , 19


  
	

  Time


  	

   


  	

   


  	

   


  	

   


  	

  Buyer


  	

   


  	

  Return

  receipt card received and attached


  	 

	

   


  	

   


  	

  to

  broker’s copy 19


  	 

														





 




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EXHIBIT

“4A”







Confidential Information




1.             Manager and Client

acknowledge that each has invested and will continue to invest considerable,

effort and expense in developing techniques and strategies for timberland

acquisitions, investment, management, valuation, pricing, marketing, etc.,

which information is proprietary and confidential, gives competitive advantage

to each and will be imparted to the other and its employees during the course

of this Master Agreement.  Manager and

Client further acknowledge that in the absence of adequate protections for

each, each party would be unwilling to enter into this Master Agreement or to

share with the other and its employees the information that provides both with

its competitive advantage.  Accordingly,

the parties agree as follows.




2.             For purposes of and

as used in this Exhibit 4A, the words and phrases below shall have the

following meanings and definitions:




(a)           “Communications”

shall mean all contacts and discussions, direct or indirect, written or oral,

between Manager and/or one or more of its employees on the one hand and Client

on the other hand concerning any and all aspects of Client’s business, which

contain, incorporate or utilize Confidential Information.




(b)           “Confidential

Information” shall mean and include any information, data and know-how

relating to the business of Client that is disclosed to Manager and/or one or

more of its employees by Client, or known by Manager and/or one of more of its

employees as a result of Manager’ s relationship with Client, and not generally

within the public domain (whether constituting a trade secret or not),

including without limitation, the following information: non-public financial

information that relates to Client’s earnings, asset, asset valuations, debts,

prices, profit margins, projections, budgets, tax information or other

non-public financial data; pricing and purchasing strategies; details of

particular transactions; marketing information, such as details about ongoing

or proposed marketing programs, information about pending transactions;

timberland acquisition and dispositions information, such as any compilations

or lists of past, existing or prospective purchases or sales of timberland,

including proposals, bids or agreements relating to purchases or sales of

timberland, from or to Client (or any account or portfolio managed by Client);

operations manuals, plus any information as marked “Confidential” by Client.




The term “Confidential

Information” does not include (i) information that has been made generally

available to the public by the act of one who has the right to disclose such

information without violating any right of Client, though to the extent Client

compiles or otherwise arranges such publicly available information in a unique

and non-public manner, such compilation or arrangement shall constitute

Confidential Information hereunder, or (ii) information substantially developed

or created by Manager.




3.             Manager

acknowledges that Client’s business is highly competitive and strongly

dependent upon Manager and its employees, and upon confidential methods,

techniques and strategies in which Manager and its employees have received or

will receive extensive




 




28





























 




instruction from Client.  Manager further acknowledges that competitors are engaged in

businesses similar in nature to the business of Client.  Manager further acknowledges that Manager’s

and its employees’ services and relationship to Client are of a special, unique

and extraordinary character and place Manager and its employees in a position

of confidence and trust with access to Communications and Confidential

Information.




4.             During the term of

this Master Agreement, Manager agrees to hold in confidence and not to directly

or indirectly copy, use, disseminate, disclose or in any manner publish any

Communications or Confidential Information, except to the extent necessary for

Manager to discharge responsibilities to Client.  Notwithstanding the foregoing, with respect to each item of

Confidential Information that constitutes a trade secret under applicable law,

the obligations of confidentiality and non-disclosure hereunder apply to the

maximum extent permitted by applicable law as long as such information

continues to constitute a trade secret. 

The rights of Client hereunder are in addition to and not in lieu of any

rights Client may have under civil or criminal law relating to protection of

trade secrets.




5.             Manager shall

return all written, printed or other tangible Confidential Information to

Client upon termination of this Master Agreement, or upon any earlier request

therefor by Client, along with all copies and abstracts of such Confidential

Information.




6.             Recognizing

Client’s needs to protect its legitimate business interests, and the dependency

of Client’s business on the skills and expertise of Manager’s employees (as

enhanced by the Confidential Information disclosed to such employees), and as

further inducement to Client to enter into this Master Agreement, Manager

agrees to request each of its employees whose duties require having access to

Confidential Information, to execute agreements with Manager, in form and

substance acceptable to Client, pursuant to which each such employee

individually agrees to be bound by and comply with the covenants set forth in

paragraphs 4 and 5 above with respect to Manager with the following

modifications:




(a)           the

covenants set forth in paragraph 4 shall be limited to the shorter of the term

of this Master Agreement or each employee’s employment with Manager (except

with respect to trade secrets which shall continue as set forth therein); and




(b)           each

employee of Manager that has had access to Confidential Information shall agree

to return all Confidential Information to Manager upon termination of said

employee’s employment with Manager.




7.             Manager agrees to

defend, indemnify and hold harmless Client and its directors, officers,

employees, agents, affiliates, successors and assigns, from and against any and

all claims, obligations, losses, damages, liabilities, costs and expenses of

any kind or nature (including without limitation) (i) reasonable attorneys’

fees and expenses, (ii) attorneys fees and expenses necessary to enforce its

right to indemnification hereunder, whether accrued, absolute, contingent,

known, unknown, or otherwise asserted against, imposed upon or incurred by

Client or any of its directors, officers, employees, agents, affiliates,

successors or assigns or for which any of the above is liable, by reason of,

resulting from, arising out of, based upon, awarded or asserted against in

respect of (i) the breach by any employee or former employee of Manager of the

terms of any agreement described above entered into between Manager and such

employee or 




 




29





























 




employees and (ii) any acts or omissions of any

employees) or of Manager that would constitute a violation of any agreement

described above had such been entered into between Manager and such

employee(s).




8.             It is the intention

of the parties hereto that the provisions of this Exhibit 5A shall be enforced

to the fullest extent permissible under the laws or policies of each state and

jurisdiction in which such enforcement is sought, but that the unenforceability

or invalidity of any provision hereof (or the modification thereof to conform

with such laws or public policies) shall not render unenforceable or impair the

remainder of this Exhibit 4A, which shall be deemed amended to delete or

modify, as necessary, the invalid or unenforceable provisions.  Manager hereby consent to and affirmatively

requests that this Exhibit 4A be reformed to the extent necessary to allow for

its enforcement.  This Exhibit 4A shall

be governed by the laws of the Commonwealth of Massachusetts, without reference

to conflicts of law.




9.             Manager agrees and

acknowledges that the restrictions contained in this Exhibit 4A are

reasonable and necessary in order to protect valuable proprietary assets,

goodwill and business of Client and that the restrictions will not prevent or

unreasonably restrict Managers business activities.




10.           Manager acknowledges

that any violation or threatened violation of the restrictions contained herein

would cause irreparable harm to Client and that damages at law would be inadequate.  Manager therefore agrees that in the event

of any breach or threatened breach of the provisions of this Exhibit 4A by

Manager, Client shall be entitled to preliminary and permanent injunctive

relief, without bond, in addition to any other remedy which it may have at law

or in equity.




 




30