EXHIBIT 10









EXHIBIT 10.33




 




POPE RESOURCES, A DELAWARE LIMITED

PARTNERSHIP




 






















 




NOTE PURCHASE AGREEMENT




 






















 




March 29, 2001




 




John Hancock Life Insurance Company




John Hancock Place




200 Clarendon Street




P.O. Box 111




Boston, MA 02117




 




John Hancock Variable Life Insurance Company




John Hancock Place




200 Clarendon Street




P.O. Box 111




Boston, MA 02117




 




Ladies and Gentlemen:




 




POPE RESOURCES, A DELAWARE LIMITED LIABILITY PARTNERSHIP, together with

its successors and assigns (“Borrower”), hereby agrees with you to

the following.  Certain of the terms

used herein are defined as provided for in Annex II hereto.




 




SECTION 1.  PURCHASE AND SALE OF NOTES.




 




1.1    Issuance of Notes.  Borrower has authorized the issuance

of three 7.63% Fixed Rate Senior Secured Notes dated of even date herewith

in the aggregate original principal amount of $30,000,000 having a maturity

date of April 1, 2011, (said Notes, together with any and all replacements,

supplements, modifications, amendments, restatements, renewals or extensions

thereof hereinafter collectively and severally referred to herein as the (“Notes”).




 




1.2    Registration of Notes;

Substitution of Notes.




 




(a)     Registration of Notes.  Borrower shall cause to be kept at its

principal place of business a register for the registration and transfer of the

Notes.  The name and address of each

Holder of the Notes, each transfer thereof and the name and address of each

transferee of one or more Notes will be registered in the register, provided

such transfer is not in violation of subsection 1.2(b) below.  The Person in whose name any Note shall be

registered will be deemed and treated as the owner and holder thereof for all

purposes hereof, and Borrower will not be affected by any notice or knowledge

to the contrary.  Borrower shall update

the register from




 




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time to time with respect to any Note upon the written instructions of

the Person in whose name such Note is registered.




 




(b)     Exchange of Notes.  Subject to the last sentence of this

subsection (b), upon surrender of any Note at the Borrower’s principal place of

business duly endorsed or accompanied by a written instrument of transfer duly

executed by the registered holder of such Note or his or its attorney duly

authorized in writing, Borrower shall execute and deliver, at such holder’s

expense, new notes in exchange therefor in an aggregate principal amount equal

to the unpaid principal amount of the surrendered Note.  Each such new note shall be payable to such

Person as such holder may request and shall be substantially in the form of the

surrendered Note.  Each such new note

shall be dated and bear interest from the date to which interest shall have

been paid on the surrendered Note or dated the date of the surrendered Note if

no interest shall have been paid thereon. 

Each holder of Notes will not sell or otherwise transfer any Note to any

Person other than an Institutional Accredited Investor; provided, if there is a

Default or Event of Default, each holder of Notes shall have control over the

disposition of all of its assets to the fullest extent required by applicable

insurance law or other applicable law, and may sell to any Person.  Each transfer of Notes hereunder shall

consist of a pro rata share of the Notes outstanding at the time of the transfer

based on the relative principal balances then outstanding under each type of

Note.




 




(c)     Replacement of Notes.  Upon receipt by Borrower of evidence

reasonably satisfactory to it of the ownership of and the loss, theft,

destruction or mutilation of any Note; and




 




(1)   in the case of loss, theft

or destruction, of indemnity reasonably satisfactory to it (provided that if

the holder of such Note is an Institutional Investor with respect to which

Borrower has no reasonable grounds to question its continued solvency, such

holder’s own unsecured written agreement of indemnity shall be deemed to be

satisfactory), or




 




(2)   in the case of mutilation,

upon surrender and cancellation thereof;




 




Borrower will execute and deliver, in lieu thereof, a new Note, dated

and bearing interest from the date to which interest shall have been paid on

such lost, stolen, destroyed or mutilated Note or dated the date of such lost,

stolen, destroyed or mutilated Note if no interest shall have been paid

thereon; provided, all expenses associated with issuing such new Notes shall,

including, without limitation Borrower’s reasonable attorneys fees shall be

paid by the Holder requesting the new Note.




 




1.3   The Closing.




 




(a)   Borrower hereby agrees to sell to you and you

agree to purchase from Borrower, in accordance with the provisions of this

Agreement, Notes at 100% of the principal amounts thereof.




 




(b)   The closing (the “Closing”) of your

purchase shall be held at 11 a.m., pacific time, on such date (the “Closing

Date”) not later than March 29, 2001, as shall have been agreed




 




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to by you and Borrower, at Land America, 1200 Sixth

Avenue, Suite 1910, Seattle, WA 98101. At the Closing, Borrower will deliver to

you the Notes duly executed by Borrower and dated the Closing Date at Seattle,

Washington and payable to you, against payment of the purchase price therefor

by bank wire transfer of immediately available funds to an account or accounts

designated by Borrower in writing at or prior to Closing.




 




1.4   Purchase for Investment.




 




(a)   You represent to Borrower that you are

purchasing the Notes for your own account for investment or for one or more

separate accounts maintained by you or for the account of one or more funds

managed by you and with no present intention of distributing or reselling the

Notes or any part thereof, but subject, nevertheless, to any requirement of law

that the disposition of your or their property be within your control at all

times.




 




(b)   You acknowledge that the Notes have not been

registered under the Securities Act of 1933, as amended, or any state

securities law, by reason of their issuance in a transaction intended to be

exempt from the registration requirements of said Act and any of said

securities laws which are applicable and that the Notes being acquired by you

pursuant hereto accordingly may not be transferred unless the Notes are

registered under said Act and any applicable state securities laws or such

Notes may, at the time of transfer, lawfully be transferred without such

registration.  It is understood that

Borrower shall have no obligation to you at any time to register the Notes

under the Securities Act of 1933 or under any other state or federal securities

laws, and that Borrower is relying upon your representations contained in this

Agreement in connection with the issuance of the Notes.




 




(c)   You represent that at least one of the

following statements is an accurate representation as to each source of funds

(a “Source”)

to be used by you to pay the purchase price of the Notes purchased by you

hereunder:




 




(1)   if you are an insurance

company, the Source is an “insurance company general account,” as such term is

defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (issued

July 12, 1995) (“PTCE 95-60”) and the purchase of the

Notes is exempt under the provisions of PTCE 95-60; or




 




(2)   the Source is either (A) an

insurance company pooled separate account, within the meaning of Prohibited

Transaction Class Exemption 90-1 (issued January 29, 1980) (“PTCE 90-1”),

or (B) a bank collective investment fund, within the meaning of Prohibited

Transaction Class Exemption 91-38 (issued July 12, 1991) (“PTCE 91-38”) and,

except as you have disclosed to Borrower in writing pursuant to this paragraph

(2), no employee benefit plan or group of plans maintained by the same employer

or employee organization beneficially owns more than 10% of all assets

allocated to such pooled separate account or collective investment fund; or




 




(3)   the Source is an “investment

fund” (within the meaning of Part V or Prohibited Transaction Class Exemption

84-14 (issued March 13, 1984) (the “QPAM Exemption”) managed by a

“qualified professional asset manager” (“QPAM”) (within




 




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the meaning of

Part V of the QPAM Exemption) which has been identified pursuant to this

paragraph (3), such that the purchase by or on behalf of such investment fund

is exempt from the application of the prohibited transaction rules of ERISA and

Section 4975 of the Code, provided that no other party to the transactions

described in this Agreement and no affiliate (within the meaning of Section

V(c)(1) of the QPAM Exemption) of such other party has at this time, and has

not at any time during the immediately preceding year exercised, the authority

to appoint or terminate the identified QPAM as manager of the assets of any

employee benefit plan that has an interest in such investment fund (which plans

have been identified pursuant to this paragraph (3)) or to negotiate the terms

of said QPAM’s management agreement on behalf of any such identified plan; or




 




(4)   the Source is a

“governmental plan” as defined in Title I, Section 3(32) of ERISA; or




 




(5)   the Source is one or more

“employee benefit plans” or a separate account or trust fund comprised of one

or more “employee benefit plans,” each of which has been identified to the

Borrower in writing pursuant to this paragraph (5); or




 




(6)   the Source does not include

assets of any employee benefit plan, other than a plan exempt from coverage

under ERISA.




 




As used in this subsection (c), “plan” or “plans” shall have the

meaning set forth in Title I, Section 3(3) of ERISA.




 




1.5   Failure to Deliver; Failure of Conditions.  If at the Closing, Borrower fails to tender

to you the Notes, or if the conditions specified in Section 3 have not

been fulfilled, you may thereupon elect to be relieved of all further

obligations under this Agreement. 

Nothing in this Section shall operate to relieve Borrower from any of

its obligations hereunder or to waive any of your rights against Borrower.




 




1.6   Expenses; Brokers.




 




(a)   Whether or not the Notes are sold, Borrower

promptly (and in any event within thirty (30) days of receiving any statement

or invoice therefor) will pay all reasonable out-of-pocket expenses relating to

this Agreement, including but not limited to:




 




(1)   the cost of reproducing this

Agreement, the Notes and all other Financing Documents;




 




(2)   the fees and disbursements

of your outside counsel;




 




(3)   the costs of the Timber

Cruise required by Section 9.3(a), title examination, title insurance,

environmental site assessments, recording and filing taxes and fees, abstract

continuation, UCC search fees, mortgage or similar taxes, revenue or

documentary stamps, intangibles tax and similar costs;




 




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(4)   the cost of delivering to

your home office, insured to your satisfaction, the Notes issued to you at the

Closing;




 




(5)   all reasonable out-of-pocket

expenses (including those of the types described in (1) through (4) of this

subsection 1.6(a)) relating to any amendment, modification, waiver or consent

requested by Borrower pursuant to the provisions hereof or of any of the other

Financing Documents, whether or not the same is finalized or declared

effective; and




 




(6)   all fees for special

investigations or technical audits, including, without limitation the

Environmental Reports, and the fees of the Forestry Consultant and other

similar fees incurred in connection with the issuance of the Notes and the

transactions contemplated by this Agreement.




 




(b)   Borrower represents and warrants to you that

no broker, finder, investment banker, or other similar Person, has been

retained by Borrower in connection with the issuance of the Notes and the transactions

contemplated by this Agreement.  You

represent and warrant to Borrower that no broker, finder, investment banker, or

other similar Person, has been retained by you in connection with the issuance

of the Notes and the transactions contemplated by this Agreement.




 




(c)   The obligations of Borrower under Section

1.6(a) and the representations and warranties of the parties under Section

1.6(b) shall survive the payment or prepayment of the Notes and the

termination of this Agreement.




 




SECTION 2.  WARRANTIES AND REPRESENTATIONS




 




To induce you

to enter into this Agreement and to purchase the Notes, Borrower warrants and

represents to you that:




 




2.1           Ownership of Borrower.  Borrower is a limited partnership, duly

formed, validly existing and in good standing under the laws of the State of

Delaware and is qualified to do business in all states where its business is

conducted (other than states where failure to be so qualified would not have a

material adverse effect on the business, properties, operations or financial

condition of the Borrower), including, specifically, in the State of

Washington.  The managing general

partner of Borrower is Pope MPG, Inc., a Delaware corporation.




 




2.2           Intentionally

Deleted.




 




2.3           Intentionally

Deleted.




 




2.4           Authority.  Borrower has all requisite power and

authority and all necessary licenses and permits to own and operate its

Property, to carry on its business as now conducted and to carry out the

transactions contemplated hereby and by the other Financing Documents, except

where the failure to be so qualified would not have a material adverse effect

on the business, properties, operations or financial condition of the

Borrower.  Borrower shall obtain all

necessary licenses and permits as may be required to operate its Property in

the future.




 




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2.5           Indebtedness. The financial

information, reports and other materials that Borrower has provided to you with

respect to Borrower fully and correctly describe the general nature of the business

of Borrower in all material respects and do not contain any untrue material

fact or omit to state a material fact necessary in order to make the statements

contained therein not misleading in any material respect.  Borrower’s audited financial statements

dated as of December 31, 2000, (i) were prepared in accordance with GAAP

consistently applied throughout the period covered thereby, except as otherwise

expressly noted therein; (ii) fairly present the financial condition of

Borrower as of the date thereof and its results of operations for the period

covered thereby in accordance with GAAP consistently applied throughout the

period covered thereby, except as otherwise expressly noted therein; and

(iii) show all material indebtedness and other liabilities, direct or

contingent, of as of the date thereof, including liabilities for taxes,

material commitments and Debt in accordance with GAAP consistently applied

throughout the period covered thereby. 

Since the date of such statements there has been no material adverse

change in the financial condition or operations of the Borrower. Except as

described in Exhibit A and/or as reflected in Borrower’s financial

statements, there is no other Debt. 

There are no material agreements affecting the Timberlands.




 




2.6           Full Disclosure.  Neither this Agreement nor any written

certificate, written statement or other written information furnished to you by

or on behalf of Borrower in connection with the negotiation of the sale of the

Notes contains any untrue statement of a material fact or omits to state any

material fact necessary to make the information contained therein or herein not

misleading as of the date when made. 

Except for the Port Gamble Environmental Issue, there is no fact known

to Borrower which Borrower has not disclosed to you in writing which could

reasonably be expected to materially adversely affect the business, Property,

profits or condition (financial or otherwise) of Borrower, or the ability of

Borrower to perform its obligations set forth in this Agreement or in the other

Financing Documents in all material respects.




 




2.7           Pending Litigation.  Except for the Port Gamble Environmental

Issue there are no actions, suits or legal, equitable, arbitrative or

administrative proceedings pending against the Timberland or Borrower, or to

the knowledge of Borrower, threatened against Borrower or the Timberland before

any Governmental Authority, and there are no outstanding judgments,

injunctions, writs, rulings or orders by any such governmental entity affecting

the Timberland or against Borrower which do or could reasonably be expected to

materially and adversely affect Borrower or the Timberland, the ownership or

use of any of Borrower’s assets or the Timberland, Borrower’s business or

financial condition or prospects, or Borrower’s right or ability to enter into

the Financing Documents and the other transactions contemplated thereby or to

perform its obligations thereunder.




 




2.8           Title to the Timberland.  Other than as disclosed in the Title

Policies or on Exhibit A hereto, Borrower has Good Title to the

Timberland free and clear of all Liens or other encumbrances affecting

Borrower’s title thereto.




 




2.9           Enforceable Obligations.  This Agreement is, and the Notes, and the

other Financing Documents upon the execution and delivery thereof will be,

valid, binding and enforceable obligations of Borrower, enforceable in

accordance with their respective terms, except as the enforceability thereof

may be adversely affected by applicable bankruptcy laws affecting




 




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creditors’ rights

generally (other than laws described in the following sentence) and except that

equitable principles may limit the availability of certain equitable remedies

(such as specific performance) in certain circumstances.  The enforceability of such obligations of

Borrower is not currently adversely affected by, and Borrower has no reason to

believe that, upon the commencement of any proceeding in bankruptcy or otherwise

or upon any other circumstance, the enforceability of such obligations would be

adversely affected by, any law, rule or regulation governing fraudulent

conveyances or obligations or constructively fraudulent conveyances or

obligations.




 




2.10         No Conflicts or Consents.  Subject to the accuracy of your

representations in Section 1.4, the execution and delivery by Borrower

of this Agreement, the Notes, and the other Financing Documents the performance

of its obligations thereunder and the consummation of the transactions

contemplated thereby do not and will not (a) conflict with any provision of (i)

any applicable domestic or foreign law, statute, rule or regulation (including

without limitation the Securities Exchange Act of 1934 and state securities

laws and the regulations and rules promulgated thereunder), or (ii) any

agreement, judgment, license, order or permit applicable to or binding upon

Borrower, (b) result in the acceleration of any Debt of Borrower, (c) result in

a default, or event of default of Borrower under any other material agreement

(as described in Section 2.12), or (d) result in or require the creation

of any Lien upon any Property of Borrower, except those created or permitted in

the Financing Documents.  Except as

described on Exhibit A, and except for those which have been obtained

and those which if not obtained would not have a material adverse effect on the

business, properties, operations or financial condition of the Borrower, and

except for filing and/or recording any Financing Statement, including the

Mortgages no consent, approval, authorization or order of, and notice to or

filing with, any Governmental Authority or third parties is required in

connection with the execution, delivery or performance by Borrower of any

Financing Document or the consummation of any transaction contemplated by the

Financing Documents.




 




2.11         Names and Places of Business.  Borrower has not, during the preceding five

(5) years, been known by or used any fictitious or assumed names.  The principal place of business of Borrower

is set out in Section 12.1.




 




2.12         No Defaults.  No event has occurred and is continuing and

no condition exists which, upon the issuance of the Notes would constitute a

Default or an Event of Default under this Agreement.  Borrower is not in violation of any material term contained in

any material agreement or other material instrument to which it is a party or

by which it or its Property may be bound. As used herein, “material term” shall

mean any term which, if  violated, could

reasonably be expected to result in termination or cancellation of the

agreement or other instrument or, except for those which have previously been

disclosed in writing to you, could reasonably be expected to result in actual

or liquidated damages in excess of $250,000. For purposes of this Section

2.12 and Section 2.10, “material agreement” and “material

instrument” shall mean an agreement or instrument the breach of which would

have a material adverse effect on the business, profits, or condition,

financial or otherwise, of Borrower.




 




2.13         Governmental Consent.  Neither (a) the nature of any of the

respective businesses or Property of Borrower nor (b) any relationship between

Borrower and any other Person, nor (c)




 




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any circumstance in

connection with the offer, issuance, sale or delivery of the Notes is such as

to require a consent, approval or authorization of, or filing, registration or

qualification with, any other Person (including without limitation any

Governmental Authority or any creditor of or lender to Borrower) on the part of

Borrower as a condition to the execution and delivery of this Agreement or the

offer, issuance, sale or delivery of the Notes, other than (i) those which have

been obtained, and (ii) the filing of the Financing Documents necessary to

perfect the Liens created thereunder.




 




2.14         Taxes and Insurance.




 




(a)   Returns Filed; Taxes Paid. Borrower

has filed all tax returns which are required to be filed in any jurisdiction,

and has paid, or made provision for the payment of, all taxes with respect to

the periods, property or transactions covered by said returns, or pursuant to

any assessment received by Borrower, except (a) such taxes, if any, as

are being Contested in Good Faith by appropriate proceedings and as to which adequate

reserves have been established and maintained, and (b) immaterial taxes. 

Except for property tax audits, Borrower has not received

any notice that any tax year or tax return of Borrower is currently being

audited by the United States Internal Revenue Service or other governmental

entity.  Borrower’s fiscal year end is

December 31.




 




(b)   Intentionally Omitted.




 




(c)   Insurance.  Borrower has obtained the policies of insurance described on Annex

IV, all of such policies are in full force and effect on the Closing Date,

and Borrower has previously furnished to you certificates of insurance

evidencing the issuance of each such policy and will promptly upon your request

after the date hereof deliver to you a true, correct and complete copy of each

such policy.




 




2.15         Securities Laws.  None of the transactions contemplated in

this Agreement (including, without limitation thereof, the use of proceeds from

the sale of the Notes) will violate or result in a violation of Section 7 of

the Securities Exchange Act of 1934, as amended, or any regulations issued

pursuant thereto, including, without limitation, Regulations U, T and X of the

Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter 11.  Borrower does not own or intend to carry or

purchase any “margin security” within the meaning of said Regulation U,

including margin securities originally issued by it.  None of the proceeds from the sale of the Notes will be used to

purchase or carry (or refinance any borrowing the proceeds of which were used

to purchase or carry) any “security” within the meaning of the Securities

Exchange Act of 1934, as amended, if the purchase or continued ownership of the

security would result in a violation of said Regulations U, T or X.




 




2.16         Private Offering.  Borrower has not offered the Notes for sale

to,  or

solicited offers to buy the Notes or otherwise approached or negotiated with

respect thereto with, any prospective purchaser other than you.  No Person has been authorized or employed by

Borrower to act as an agent, broker, dealer or otherwise in connection with the

offering or sale of the Notes.  Borrower

agrees that it will not offer the Notes or any part thereof or any similar

Securities for issue or sale to, or solicit any offer to acquire any of the

same from, anyone so as




 




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to bring the offer or

issuance and sale of the Notes within the provisions of Section 5 of the

Securities Act of 1933, as amended. 

Upon issuance of the Notes, the Notes are not, or will not be, of the

same class as securities listed on a national securities exchange registered

under Section 6 of the Securities Exchange Act of 1934, as amended, or quoted

in a U.S. automated inter-dealer quotation system, within the meaning of Rule

144A under the Securities Act of 1933. Neither Borrower nor any affiliate (as

that term is defined in Rule 501(b) promulgated under the Securities Act of

1933) is disqualified from using the exemptions from the registration

requirements of Section 5 of the Securities Act of 1933 provided by Rules 504,

505, and 506 promulgated under the Securities Act of 1933 by virtue of Rule

507(a) promulgated under the Securities Act of 1933.




 




2.17         Compliance with Law. Except for

the matters expressly set forth in Exhibit A:




 




(a)   Except as may be set forth in the

Environmental Report and except for the Port Gamble Environmental Issue,

Borrower and Timber Property are not in violation of or subject to any

existing, pending, or, to the knowledge of Borrower, threatened investigation

or inquiry by any Governmental Authority or, to the knowledge of Borrower, to

any remedial obligations under Applicable Environmental Laws pertaining to the

Timber Property which does or could reasonably be expected to materially and

adversely affect Borrower, the ownership or use of any of its assets or

Property, its business or financial condition or Borrower’s right or ability to

enter into the Financing Documents or to perform its obligations thereunder.




 




(b)   Except for the Port Gamble Environmental

Issue, Borrower is not required to obtain any permits, licenses or similar

authorizations to construct, occupy, operate or use any buildings,

improvements, fixtures and equipment forming a part of the Timber Property by

reason of any Applicable Environmental Laws (other than permits, licenses and

similar authorizations which have been obtained or which will be obtained

promptly after the date hereof), where the failure to obtain such permits,

licenses and authorizations will have a material adverse effect on the business,

properties, operations or financial condition of the Borrower.




 




(c)   Borrower has undertaken appropriate inquiry

into the previous ownership and uses of the Timber Property consistent with

good commercial practice and has obtained and delivered to the Holders the

Environmental Reports and has no knowledge of any violation of any Applicable

Environmental Laws with respect to Hazardous Materials only, except as may be

disclosed in such Environmental Report and except for the Port Gamble

Environmental Issue.




 




(d)   Except for the Port Gamble Environmental

Issue, Borrower has not failed to obtain any license, permit, franchise or

other governmental authorization necessary to the ownership of the Timber

Property, where the failure to obtain such permits, licenses and authorizations

will have a material adverse effect on the business, properties, operations or

financial condition of the Borrower.




 




2.18         Restrictions on Borrower.  Other than as described on Exhibit A,

Borrower is not a party to any contract or agreement, which materially and

adversely affects the Collateral.




 




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2.19         ERISA.  Borrower represents and warrants that no employee benefit plan

established or maintained by Borrower, which is subject to Part 3 of Subtitle B

of Title I of ERISA, had an accumulated funding deficiency (as that term is

defined in Section 302 of ERISA) as of the most recent fiscal year of such plan

ended prior to the Closing Date which was or would have been material to Borrower;

no liability to the Pension Benefit Guaranty Corporation has been, or is

expected by Borrower to be, incurred with respect to any employee benefit plan

maintained by Borrower, which is subject to Part 3 of Subtitle B of Title I of

ERISA, which would be material to Borrower; and Borrower is in compliance in

all material respects with all applicable provisions of ERISA and the

regulations and published interpretations thereunder.  Borrower further represents and warrants that the consummation of

the transactions contemplated by this Agreement will neither result in a  “prohibited transaction” as described in

Section 406(a) of ERISA nor a tax under Section 4975 of the Code. The foregoing

representation is made in reliance upon your representations in subsection

1.4(c) hereof as to the Source to be used to purchase the Notes.




 




2.20         Investment Company Act.  Borrower is not an “investment company” or a

company “controlled” by an “investment company,” or an “open-end investment

company,” a “unit investment trust,” or a “face-amount certificate company,”

within the meaning of the Investment Company Act of 1940, as amended.




 




2.21         Intentionally Omitted.




 




2.22         Intentionally Omitted.




 




SECTION 3.  CLOSING CONDITIONS.




 




Your obligation to

purchase and to pay for the Notes to be delivered to you at the Closing and on

the Closing Date shall be subject to the following conditions precedent to be

satisfied before or coincident with the Closing:




 




3.1      Timber Property.  Borrower shall own the Timberlands, which

shall be free and clear of all Liens and other encumbrances to title, other

than those matters disclosed in the Title Policies.




 




3.2      Intentionally Omitted.




 




3.3      Financing Documents.  Borrower shall have executed and delivered

the Notes, the Mortgages, the Financing Statements, the Indemnification

Agreement and the other Financing Documents, including without limitation the

Collateral Agreement.




 




3.4      Title Insurance.  Title Insurer shall have issued its

commitment to deliver the Title Policies, and Title Reinsurers shall have issued

its commitment to deliver the Title Reinsurance, in the forms approved by the

Administrative Agent and its counsel.




 




3.5      Warranties and Representations True.  At the time of the purchase of the Notes and

also after giving effect thereto, the warranties and representations contained

in Section 2 of this Agreement shall be true and correct in all material

respects.




 




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3.6      No Prohibited Action.  Borrower shall not have taken any action or

permitted any condition to exist which would have been prohibited by the

Financing Documents had the Financing Documents been binding and effective at

all times during the period from the date of this Agreement through and

including the Closing Date.




 




3.7      Compliance with Agreements.  Borrower shall have performed and complied

with all agreements and conditions contained herein which are required to be

performed or complied with by it before or at the Closing.  Borrower shall be in compliance with all of

the terms, provisions and covenants of the Financing Documents as of the

Closing.




 




3.8      Opinions of Counsel.  You shall have received an opinion of

counsel from (i) Borrower’s counsel, and (ii) your outside counsel in form

and substance satisfactory to you.




 




3.9      Proceedings Satisfactory.  All documents and papers relating to the

issuance and sale of the Notes shall be satisfactory to you and your

counsel.  You and your outside counsel

shall have received copies of such documents and papers as you or they may

reasonably request in connection therewith, all in form and substance

satisfactory to you and your outside counsel.




 




3.10    Intentionally Omitted.




 




3.11    Intentionally Omitted.




 




3.12    Payment of Transaction Costs.  Borrower shall have paid all fees, expenses

and disbursements incurred by you at or prior to the time of the Closing and

for which invoices have been delivered to Borrower in connection with the

transactions contemplated by this Agreement and the other Financing Documents,

including without limitation the fees, expenses and disbursements of your

special counsel.  To the extent not

available at Closing, Borrower agrees that it will promptly pay upon its

receipt any and all additional invoices delivered to Borrower after Closing

relating to any such fees, expenses and disbursements.




 




3.13    Bank of America.  You shall have reviewed and approved the

financial covenants and reporting requirements of the Bank of America revolving

line of credit facility with Borrower.




 




3.14    Related Agreements.  Borrower shall have executed and delivered

to the Administrative Agent, in form and substance reasonably acceptable to the

Administrative Agent, such other documents reasonably required by the

Administrative Agent to consummate the transaction contemplated hereunder,

including without limitation, the Indemnification Agreement, the Collateral

Agreement, an amendment to the 1992 Deed of Trust (to cross default and cross

collateralize the same with the Mortgages), an amendment to the promissory note

secured by the 1992 Deed of Trust, and such collateral assignments of certain

agreements to which Borrower is a party. 

Following the Closing, the parties to this Agreement shall execute and

deliver any and all other documents or instrument necessary and appropriate to

complete the transaction contemplated hereunder, including, without limitation

the consulting agreement with Atterbury Consultants, Inc.




 




11





























 




SECTION 4.  PAYMENTS AND DISTRIBUTION THEREOF.




 




4.1      Direct Payment.  Subject to the provisions of Section 5

hereof with respect to the Collateral Account, Borrower will pay all amounts

payable with respect to the Notes (without any presentment of the Notes and

without any notation of such payment being made thereon) by crediting before

12:00 noon eastern time, by bank wire transfer of immediately available funds,

to such account of the Administrative Agent or the Holders as may be designated

from time to time in writing by the Administrative Agent, or in such manner as

may be directed or to such other address in the United States as may be

designated in writing by the Administrative Agent.  The address and other instructions of the Administrative Agent

that are set forth in Annex I shall be deemed to constitute notice,

direction or designation (as appropriate) to Borrower with respect to direct

payment as aforesaid.  If for any reason

there is no Administrative Agent for the Holders or the Administrative Agent

cannot perform its duties hereunder, the Holders may upon proper notice to

Borrower receive all payments under the Notes directly.  Each Holder agrees, by its acceptance of the

Notes issued to it, that in the event it shall sell or transfer the Notes it

will, prior to the delivery of the Notes (unless it has already done so), make

a notation thereon of all principal, if any, paid on the Notes and will also

note thereon the date to which interest has been paid on the Notes.  If any payment to be made by Borrower shall

come due on a day other than a Business Day, payment shall instead be considered

due on the next succeeding Business Day, and such extension of time shall be

reflected in computing interest and fees.




 




4.2      Issuance Taxes.  Borrower will pay all taxes, assessments and

charges in connection with the issuance and sale of the Notes and the

execution, delivery and recording of the Financing Documents, and in connection

with any modification of the Notes and/or Financing Documents (but excluding

any income taxes or other similar taxes based on the gross receipts, gross

income or net income of any Holder) and will save each Holder harmless, without

limitation as to time, against any and all liabilities with respect to all such

taxes, assessments and charges.  The

obligations of Borrower under this Section 4.2 shall survive the

prepayment or payment of the Notes and the termination of this Agreement.




 




4.3      Payment Terms Applicable to Notes.




 




(a)           Interest Rate.  Interest shall accrue on the aggregate

unpaid principal amount of the Notes from the date hereof through and including

April 1, 2011at a rate of Seven and Sixty-three Hundredths percent (7.63%) per

annum.  Interest under the Notes shall

be calculated on the basis of a 360-day year.




 




(b)           Required Interest Payments.  Borrower shall pay to the Administrative

Agent, as agent for itself and the Holders, all accrued, unpaid interest on the

Notes monthly, in arrears, beginning on May 1, 2001,and continuing on the

first day of each calendar month thereafter through and including April 1,

2011.




 




(c)           Required Principal Payments.  The principal amount of the Notes is due and

payable, and shall be repaid by Borrower in full, as follows:




 




12





























 




(i)            On

April 1, 2002, an installment in the aggregate of $500,000; shall be due and

payable to the Administrative Agent, as agent for itself and the Holders;




 




(ii)           Commencing

on April 1, 2003, and continuing on each April 1 thereafter through and

including April 1, 2006, an annual installment in the aggregate of $1,000,000

shall be due and payable to the Administrative Agent, as agent for itself and

the Holders;




 




(iii)          Commencing

on April 1, 2007, and continuing on each April 1 thereafter through and

including April 1, 2010, an annual installment in the aggregate of $750,000

shall be due and payable to the Administrative Agent, as agent for itself and

the Holders; and




 




(iv)          A

final installment shall be due and payable to the Administrative Agent, as

agent for itself and the Holders, on April 1, 2011, in the aggregate amount of

the then unpaid principal balance remaining on the Notes.




 




(d)           Maturity

Date.  Unless previously paid in

full in accordance with the provisions of this Agreement and the Notes, the

entire unpaid principal balance of the Notes, together with all accrued, unpaid

interest and other charges due hereunder or thereunder, or under any of the

other Financing Documents shall be due and payable on April 1, 2011 (the “Maturity

Date”).




 




(e)           Optional

and Mandatory Prepayments.  The

Notes may not be paid except as required or permitted under this Section 4.3

or Section 4.7 below.  Borrower

may prepay the Notes as provided below:




 




(1)   Optional Prepayment.  Prior to the Maturity Date, up to $3,000,000

in the aggregate in excess of the scheduled principal installment payments may

be prepaid at par plus accrued interest; provided, however, Borrower may only

use cash flow from its operations for this purpose.  Thereafter, Borrower may, on any scheduled Payment Date (or, with

respect to a prepayment in  full of the entire principal balance

of the Notes, on any Business Day), upon delivery of notice to Holders as

provided in subsection (2) below, prepay the principal of the Notes in whole or

in part, provided Borrower also pays to the Holders all accrued interest, if

any, on the principal amount so prepaid accrued to the prepayment date, and the

applicable Prepayment Premium (hereafter defined).




 




(2)   Notice.  Borrower will give notice of any optional

prepayment of the Notes pursuant to this subsection to the Holders not less

than fifteen (15) days nor more than sixty (60) days before the date fixed for

prepayment (though if such prepayment is to occur on a date other than a

Payment Date in accordance with the provisions of subsection 4.3(e)(1) above,

such notice shall be delivered not less than thirty (30) days before the date

fixed for prepayment), specifying (A) the date of such prepayment,

(B) the principal amount of the Notes to be prepaid on such date, and

(C) the estimated accrued interest applicable to the prepayment.  Notice of prepayment having been so given,

the aggregate principal amount of the Notes specified in such notice, together

with




 




13





























 




the accrued interest

thereon and the Prepayment Premium applicable thereto shall become due and

payable on the specified prepayment date.




 




(3)   Mandatory Prepayment.  Other than as provided in subsection 4.3(c)

above and in Section 4.7 below, no mandatory prepayments of principal

under the Notes are required of Borrower.




 




(4)   Prepayment Premium.  The “Prepayment Premium” applicable to

principal under the Notes prepaid during any Note Year shall be an amount equal

to the applicable Make-Whole Premium Amount. 

Any payment of the indebtedness evidenced by the Notes following

acceleration of such indebtedness by the Holders upon an Event of Default

hereunder shall be deemed to be a voluntary prepayment of such indebtedness by

Borrower and shall be subject to the Prepayment Premium provided for

hereunder.  Notwithstanding the

foregoing, if (i) Borrower obtains casualty insurance on the Timberlands,

and if the proceeds of such casualty insurance are the source of any such

prepayment, or (ii) if the source of any such prepayment is condemnation

proceeds received with respect to a condemnation or similar taking of any

portion of the Timber Property by any governmental authority, then no

Prepayment Premium shall be payable with respect to such prepayment.




 




(f)            Late Payments.  Any payments required to be made with

respect to the Notes (whether at maturity, upon acceleration or otherwise)

which are not made when due shall bear interest at the Default Rate from the

date such payment was due through the date such payment is received by the

Holders.




 




4.4      Intentionally Deleted.




 




4.5      Intentionally Deleted.




 




4.6      Application of Payments. All

payments made with respect to the Notes in accordance with the provisions of

this Section 4 shall be applied ratably to all Notes then

outstanding.  All regular installment

payments made on the Notes shall be applied first to any interest accrued to

the date of such payment with the remainder applied toward principal.  However, in connection with any optional or

mandatory prepayment, payments shall be applied first to the then applicable

Prepayment Premium, if any, next to any interest accrued on the principal being

prepaid and the remainder applied toward the principal installments due on the

Notes.




 




4.7      Payments from Collateral Account.

With respect to monies deposited in the Collateral Account pursuant to Section

5.5, Section 5.6 , Section 9.3 and Section 9.4 hereof,

such monies, excluding any interest or earnings thereon, on deposit in the

Collateral Account shall be disbursed from the Collateral Account on each

Quarterly Payment Date as follows:




 




(1)   To pay the annual principal

payment on the Notes, if then due; and then




 




(2)   To reduce the outstanding

principal balance of the Notes, subject to the applicable Prepayment Premium.




 




14





























 




All interest and earnings on such monies held in the Collateral Account

shall belong to Borrower and may, at Borrower option, be paid to Borrower or

applied as against the Notes as set forth above; provided, if an Event of

Default exists, all such earnings and interest shall be disbursed and applied

in the same manner as the monies otherwise deposited into the Collateral

Account.




 




SECTION 5.  CUTTING RIGHTS; RELEASE PROVISIONS; PAYMENTS

TO COLLATERAL AGENT.




 




So long as the 1992 Note or any of the Notes or remain outstanding,

Borrower covenants that it will not, without the prior written consent of the

Required Holders:




 




5.1      Cutting and Removal of Timber.  Except for pre-commercial thinnings and cull

tree removals performed in accordance with standard industry practices and

except as provided in this Section 5, Borrower shall not cut or

remove or permit the cutting or removal of any Timber without the prior written

consent of the Required Holders.




 




5.2      Cutting Privileges.




 




(a)   Subject to Section 5.3 hereof,

Borrower shall have the privilege to cut and remove during calendar year 2001

and during each calendar year thereafter (each such calendar year being

referred to herein as a “Cutting Year”) a maximum volume of Merchantable Timber

(the “Annual Allowable Cut”).  Subject

to Section 5.3, the Annual Allowable Cut for cutting year 2001 shall be

27MMBF, Scribner; and the Annual Allowable Cut for the calendar years 2002,

2003, 2004, and 2005 shall be 32.8MMBF, Scribner.  Notwithstanding the foregoing, for the fraction of calendar year

2001 after the date of this Agreement and for the fraction of the calendar year

in which the final payment of principal on the Notes is due, the permitted

volume of cutting in any Category shall be proportionate to the number of days

in such fractional calendar year (the permitted volume of cutting for such

fractional calendar year shall be multiplied by a fraction, the numerator of

which is the number of days in the fractional calendar year and the denominator

of which is 365).  For purposes of this Section

5.2 all Merchantable Timber otherwise cut, sold and conveyed by Borrower

during any Cutting Year shall be deemed to have been cut and removed by

Borrower hereunder.  The Annual

Allowable Cut shall be reduced by the excess volume of Timber cut or removed

during the preceding Cutting Years pursuant to Section 5.5 hereof, unless

and until Borrower deposits into the Collateral Account the amounts required

under subsection 5.5(a) below with respect to such overcutting.




 




(b)   After five (5) years, the Administrative Unit

Values will be reset to reflect the then-existing market conditions.  The Administrative Unit Values will be reset

by (i) mutual agreement of Borrower and the Administrative Agent, or in

the event an agreement cannot be reached, then by (ii) the product of one

plus the percentage change in delivered log prices as described in Exhibit C

attached hereto, times the original Administrative Unit Values.  Price changes will be reflected in

“Loglines”, or its successor, or similar publication, and other relevant

information, as required and mutually agreed upon.  If no such mutually acceptable publication exists, then the

Forestry Consultant will be retained at Borrower’s expense to determine the

Administrative Unit Value reset by multiplying the then current retail unit

prices by 64.75%.  If after the reset,

the Administrative Unit Value increases, then some portion of the




 




15





























 




Timber Property may be released from the Mortgage, or

the Borrower will have an additional borrowing base available due to increase

in values.  If, after the reset, the

Administrative Unit Value has declined, Borrower will be required to provide

additional unsecured timberlands to the Collateral or pay down the Notes such

that the Loan to Value Ratio equals that prior to the reset.




 




(c)   Borrower may, at its election, cut less than

100% of the volumes allowed during any Cutting Year (determined on a

Category-by-Category basis) pursuant to subsection 5.2(a) above (hereinafter

referred to as an “Under Cut”), and in such event, Borrower shall be permitted to

cut, without penalty or payment, the remainder of such permitted volume (plus

4% annual growth) in any subsequent Cutting Year included within the five (5)

year projected growth report used to establish the allowable volume of cutting

for such Cutting Year.




 




(d)   Prior to commencing any harvesting activities

with respect to any Timber to be included within the Annual Allowable Cut for

any Cutting Year, Borrower shall prepare and submit to the Administrative Agent

an annual harvesting plan for such Cutting Year indicating, by plat, the area

or areas to be harvested, which plan shall include an estimate of the

Administrative Unit Values of Timber to be removed based upon the utilization

limits and specifications set forth in this Agreement (the “Annual Harvesting

Plan”).  Once submitted for use by the

Administrative Agent, the submitted Annual Harvesting Plan shall govern

Borrower’s harvesting activities during the applicable Cutting Year.  During the year the Annual Harvest Plan may

be revised by Borrower in response to changing conditions, such as weather

conditions and market conditions; provided, that Borrower promptly notifies the

Administrative Agent thereof.  All prior

and anticipated changes to the Annual Harvest Plan shall be reported in the

semi-annual harvesting reports pursuant to Section 9.4 hereof.




 




5.3      Revision of Cutting Privileges.




 




(a)   The Annual Allowable Cut  may be periodically reviewed

and adjusted from time to time by the Administrative Agent in its commercially

reasonable discretion: (i) upon Collateral substitution; (ii) upon

receipt of new or improved inventory information, (iii) as required to

maintain a management strategy that is consistent with responsible sustainable

forest management principles and practices, (iv) as needed to comply with

any changes in applicable government laws or regulations, (v) to

accommodate partial releases made which in the aggregate exceed 10% of the

total Administrative Value of the Timberlands; and/or (vi) to obtain

appropriate amortization in the event timber market conditions undergo

significant adverse change which, if not adjusted for, would materially affect

the value of the Collateral; provided, with respect to items (ii) and (iv)

above to the extent new inventory or growth information, including, without

limitation increased “set asides” in response to environmental or other

regulations, or changes in the applicable laws affecting forest management,

suggest or mandate a reduction of the commercially available sustained yield

harvest is warranted, the Annual Allowable Cut will be reduced by the implied

percentage reduction of the commercially available sustained yield.




 




(b)   Borrower may not cut or remove any Timber if

any Event of Default exists and is continuing.




 




16





























 




5.4      Timber Deemed Cut or Removed.  Any Timber which is Destroyed Timber shall

be deemed to have been cut or removed for purposes of determining the Annual

Allowable Cut by Borrower during the calendar year in which it became Destroyed

Timber, and accounted for in the semi-annual report required by Section 9.4

hereof; provided, any Timber which becomes Destroyed Timber on twenty-five (25)

or less acres per occurrence shall not be deemed to have been cut or removed

for purposes of determining the Annual Allowable Cut by Borrower during the

calendar year in which it became Destroyed Timber nor shall it be reported in

the semi-annual report required by Section 9.4 hereof.  Borrower agrees that it will immediately

notify Lender in writing of any damage to the Timberlands caused by fire,

windstorm, condemnation, disease, infestation or other natural disaster

affecting more than 100 acres of the Timberlands.




 




5.5      Excess Cutting or Removal.




 




(a)   Subject to the provisions of Section 5.3

hereof, Borrower may cut or remove volumes of Merchantable Timber in excess of

the volumes permitted under Section 5.2 hereof during any calendar year,

provided Borrower deposits into the Collateral Account, in the manner

provided for hereunder, an amount equal to the sum of the products obtained by

multiplying (i) the differences between the volumes for each Category of

Merchantable Timber actually cut and removed during any calendar year and the

permitted volume for each such Category established pursuant to Section 5.2

for such calendar year, by (ii) the Administrative Unit Values of each

such Category set forth in the following subsection (b).




 




(b)   For purposes of determining the amount of

payment to the Collateral Account for excess cutting or removal of Merchantable

Timber during any calendar year, the Administrative Unit Values for each such

category for the applicable calendar year shall be as indicated on Exhibit C.




 




(c)   If at any time during a calendar year

Borrower determines that it has cut or removed volumes of Merchantable Timber

in any Category in excess of the volumes permitted under Section 5.2

hereof, Borrower shall immediately deliver written notice of such excess

cutting to the Holders and, thereafter, shall deposit into the Collateral

Account on a monthly basis the amounts required to be paid pursuant to

subsection 5.5(b) hereof.  The

monthly payments into the Collateral Account required under this

subsection 5.5(c) shall be made on or before the thirtieth (30th) day of

the calendar month following the calendar month in which the overcutting to

which such payments relate occurred.




 




17





























 




5.6      Land Sales, Condemnation and Release

Procedure.




 




(a)   Subject to compliance with all provisions of

this Section 5.6, and provided (i) no Event of Default exists and

is continuing hereunder, and (ii) the Loan to Value Ratio is fifty percent

(50%) or less before such sale, and will continue to be fifty percent (50%) or

less after such sale, Borrower may, from time to time, sell portions of the

Land, and the Holders shall release in the manner hereinafter provided such

portions of the Land, and any Timber thereon, from the Lien of the Financing

Documents; provided, that, in each case, Borrower shall deposit into the

Collateral Account an amount equal to one hundred percent (100%) of the Total

Administrative Value of the Land and Timber to be conveyed and released, as

determined by Borrower as of the date of such sale and release; provided such

Administrative Value shall at Administrative Agent’s option be subject to

independent verification by the Forestry Consultant of the accuracy of the

information set forth therein; and provided further, however, any such deposits

into the Collateral Account shall be subject to Section 4.3(e) above; and

provided further, that such Total Administrative Value shall be adjusted to

take into consideration the value of the Land and Timber being released and the

impact, if any, of the release upon the overall security position of the

Administrative Agent in the remaining encumbered Land and Timber as well as the

amount of the outstanding, unpaid balance due under the Notes as of the date of

such sale and release.




 




(b)   Borrower shall promptly give notice to the

Holders of any Condemnation.  Any

Condemnation shall be deemed to be a sale under (a) above and be governed by

the requirements thereof.




 




(c)   Unless otherwise agreed to by the Required

the Holders, all requests for partial releases of Land and Timber pursuant to

subsection (a) and (b) above shall:




 




(1)   Be presented to the

Administrative Agent in writing;




 




(2)   Be accompanied by a copy of

the contract or agreement of sale or condemnation documents for which such

partial release is sought, certified as being a true and accurate copy thereof

by the Borrower;




 




(3)   Be accompanied by a legal

description of the tract(s) or parcel(s) of Land for which the partial release

of all or a portion is sought and include evidence reasonably satisfactory to

the Administrative Agent that such partial release will not adversely affect

access to any other tract or parcel of Land;




 




(4)   If less than an entire

contiguous tract is to be released, be accompanied by a plat of survey of the

portion of the Timber Property to be released prepared by a reputable

registered engineer or land surveyor reasonably acceptable to the

Administrative Agent;




 




(5)   Be accompanied by a report

in all respects reasonably satisfactory to the Administrative Agent in its sole

discretion stating (i) the acreages and volumes, as the case may be, of Land,

Pre-Merchantable Timber, Sub-Merchantable Timber, and Merchantable Timber

contained within that portion of the Timber Property for which the




 




18





























 




partial release is

sought, (ii) the Total Administrative Value of that portion of the Timber

Property to be released, (iii) the then estimated Total Administrative

Value of the entire Timber Property, determined both before and after such

release, and (iv) the then estimated value of any and all Buildings and other

improvements located on that portion of the Timber Property to be released,

which report, if not prepared by the Forestry Consultant, shall be subject to

independent verification by the Administrative Agent of the accuracy of the

information set forth therein;




 




(6)   Be accompanied by an

appropriate instrument of partial release in form and substance reasonably

satisfactory to the Administrative Agent; and




 




(7)   Be accompanied by a

servicing fee payable to the Administrative Agent in the amount of $500.00 for

each “group” of requests for releases submitted by Borrower.




 




(8)   Be accompanied by copies of

the proposed deed of conveyance and related documentation (easements,

restrictions, releases, etc.) by which the Timber Property is to be conveyed,

which deed and related documentation shall be in form and substance reasonably

acceptable to the Administrative Agent; and




 




(9)   Be accompanied by a

commitment from the Title Insurer to issue an endorsement to the Title Policy

in favor of Administrative Agent which (i) reflects the release of such

Timber Property from the lien of the Mortgage, (ii) confirms that the

release of such Timber Property does not adversely affect the priority of the

lien of the Mortgage with respect to the remaining Land and Timber covered by

the Mortgages, and (iii) is otherwise in form and substance reasonably

acceptable to the Administrative Agent.




 




                Upon compliance by Borrower with

the foregoing, the Administrative Agent shall, within thirty (30) days after

receipt of such request, notify Borrower of its acceptance or rejection of the

accompanying documents and, in the case of acceptance, acknowledge their

agreement to execute and deliver to the Collateral Agent the partial release

instrument simultaneously with the payment to Collateral Agent of the amount

required to be paid into the Collateral Account in accordance with subsection

(a) above; provided, the Administrative Agent shall not unreasonably

withhold its acceptance under this Section 5.6(c).  Borrower shall pay any and all reasonable costs and attorneys’

fees incurred by the Administrative Agent in connection with any release or

proposed release pursuant to the provisions of this section, including, without

limitation, the servicing fee described in subsection (7) above.  Borrower agrees that it will submit no more

than 12 groups (for purposes of this section, a “group” consists of one or more

requests for releases made simultaneously by Borrower to the Holders) of

requests for releases to the Administrative Agent during any calendar

year.  Any sale of Timber pursuant to

subsections 5.6 (a) and (b) above shall not be considered as part of

Borrower’s Annual Allowable Cut.




 




(d)           If Borrower, whether voluntarily or

by operation of law, sells or otherwise transfers the Timberland or any portion

thereof, exceeding 100 acres, other than in the ordinary course of business,

without the prior written consent of the Administrative Agent (“Improper




 




19





























 




Transfer”), the Administrative

Agent, at its option, shall have the right to declare the Notes immediately due

and payable; provided, however, if such Improper Transfer was unintentional and

in good faith and did not transfer a material portion of the Timberland,

Borrower shall have five (5) business days after discovery by either the

Borrower or the Administrative Agent, to cure such Improper Transfer before the

Administrative Agent has a right to declare the Notes immediately due and

payable as a result of such Improper Transfer.




 




5.7      Cutting and Release Provisions Affected

by Default.  Notwithstanding any

provision of this Agreement to the contrary, Borrower shall not be permitted

(i) to cut any Timber on the Timberlands, or (ii) to sell to any

Person any Land or standing Timber (or to request a partial release of the

Mortgages with respect to any such Land and/or Timber) at any time during which

an Event of Default shall exist under this Agreement.




 




5.8      Payments to Collateral Account.  All payments to the Collateral Account shall

be due as follows:




 




(a)   With respect to payments required by Section

5.5 hereof relating to cutting of Merchantable Timber by Borrower in excess

of permitted volumes, such payments shall be made on or before the thirtieth

(30th) day of the calendar month following the calendar month in which such

overcutting occurred.




 




(b)   With respect to payments required by Section

5.6 hereof relating to sale of certain portions of the Timberlands by

Borrower, such payments shall be made simultaneously with the delivery of the

partial release document by the Administrative Agent to the Borrower releasing

such Land sold from the lien of the Security Documents.




 




(c)   With respect to payments required by

subsection 9.3(b) hereof relating to deposits required of Borrower, such

payments shall be made within fifteen (15) days following delivery of the

certificates required of Borrower under such subsection; and with respect to

the transfer of other unencumbered timber property or land owned by Borrower in

lieu of such payments, Borrower shall, at the time of the delivery of the

certificates required of Borrower under such subsection, provide Holders with

reasonable assurances that such transfer shall be completed within forty-five

(45) days of the date such certificate is delivered to Administrative Agent.




 




5.9      Third Party Restrictions.  No contracts or agreements (whether written

or oral) for the lease, sale, or disposition of timber wherein third parties

are granted the privilege of entry upon the Timberland for cutting and removal

of timber shall be made for a term (including renewal options) of more than

twenty-four (24) months.




 




SECTION 6.  DEFAULTS – REMEDIES.




 




6.1      Nature of Events.




 




An

“Event of Default” shall exist if any of the following occurs and is

continuing:




 




20





























 




(a)   Principal and Other Payments.  Borrower fails to make any payment or

prepayment of principal, Prepayment Premium or other sum owing on the Notes or

pursuant to this Agreement or any other Financing Document within three (3)

business days of the date such payment or prepayment is due;




 




(b)   Interest Payments. Borrower fails to

make any payment of interest owing on the Notes within three (3) business days

of the date such payment is due;




 




(c)   Breach of Particular Covenants.  Borrower fails to comply with any covenant,

agreement or obligation contained in Section 5 hereof, in Section 8 hereof, in

Section 9.1 hereof or in the Indemnification Agreement and such failure

continues for more than fifteen (15) days after the first to occur of

Borrower’s actual knowledge of such failure or notice from the Administrative

Agent or any Holder of such failure; provided, however, if such failure is

incapable of cure within a fifteen (15) day period and if Borrower shall have

commenced such cure within said fifteen (15) day period and thereafter

diligently pursues such cure, the period for effecting such cure shall be

extended for an additional fifteen (15) day period.




 




(d)   Other Defaults.  Borrower fails to perform or observe any

covenant, agreement, condition or provision of this Agreement or any other

Financing Document (other than those which constitute an Event of Default under

other subsections of this Section 6.1), and such failure continues

for more than thirty (30) days after the first to occur of Borrower’s actual

knowledge of such failure or notice to Borrower from the Administrative Agent

or any Holder of such failure; provided, however, if such failure is incapable

of cure within a thirty (30) day period and if Borrower shall have commenced

such cure within said thirty (30) day period and thereafter diligently pursues

such cure, the period for effecting such cure shall be extended for an

additional thirty (30) day period.




 




(e)   Warranties or Representations.  Any warranty, representation or other

statement by or on behalf of Borrower contained in this Agreement, or any of

the other Financing Documents, or in any instrument or document furnished by

Borrower in compliance with or in reference to this Agreement or any other

Financing Document proves to be false or misleading in any material respect as

of the date made;




 




(f)    Default on Indebtedness.  Borrower fails to make any payment of

principal, premium or interest due on any indebtedness (other than indebtedness

owing pursuant to the Financing Documents) representing obligations in excess

of $100,000 and such failure is continuing beyond any applicable grace period

and not Contested in Good Faith;




 




(g)   Undischarged Final Judgments.   Final judgment or judgments for the payment

of money aggregating in excess of $100,000

is or are outstanding against Borrower and such judgments have been outstanding

for more than 30 days from the date of entry and have not been discharged in

full or are not stayed and Contested in Good Faith;




 




(h)   Involuntary Bankruptcy Proceedings.  A receiver, custodian, liquidator or trustee

of Borrower, the Timber Property, the Collateral Account, or any other portion

of the Collateral is appointed by court order and such order is consented to by

Borrower, or remains in




 




21





























 




effect for more than 60 days after the commencement of

such action; or an order for relief under any state or federal bankruptcy law

is entered with respect to Borrower, or Borrower is adjudicated a bankrupt or

insolvent; or the Timber Property, the Collateral Account or any substantial

part of the Property of Borrower is sequestered by court order and such order

is consented to by Borrower, or remains in effect for more than 60 days after

the commencement of such action; or a petition is filed against Borrower under

any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,

dissolution or liquidation law of any jurisdiction, whether now or hereafter in

effect, and is not dismissed within 60 days after such filing;




 




(i)    Voluntary Petitions.  Borrower files a petition in voluntary

bankruptcy or seeking relief under any provision of any bankruptcy,

reorganization, arrangement, insolvency, readjustment of debt, dissolution or

liquidation law of any jurisdiction, whether now or hereafter in effect, or

consents to the filing of or any order for relief under any petition against it

under any such law;




 




(j)    Assignments for Benefit of Creditors.

etc.   Borrower makes an assignment

for the benefit of its creditors, or admits in writing its inability, or fails,

to pay his debts generally as they become due, or consents to the appointment

of a receiver, conservator, custodian, liquidator or trustee of Borrower;




 




(k)   Default in Related Documents.  An “event of default” (as therein defined)

shall exist under any Financing Document other than this Agreement and such

default or event of default is not remedied within the applicable grace period

(if any) and is not waived;




 




(l)    Attachment.  Borrower suffers a writ or warrant of attachment or any similar

process to be issued by any court against the Timber Property, the Collateral

Account, or any part of its Property having a fair market value of $100,000 or

more and such writ or warrant of attachment or any similar process is not

released within 30 days after the commencement of such action or is not fully

bonded and Contested in Good Faith; or




 




(m)  Default in 1992 Loan.  An “Event of Default” shall exist under

either that certain Promissory Note dated April 29, 1992, made by Borrower in

favor of John Hancock Mutual Life Insurance Company in the original amount of

$16,000,000, as amended by instruments dated May 25, 1993, December 19, 1995,

and December 20, 1999, and instrument dated of even date herewith (such Promissory

Note, as amended previously and as may be amended hereafter, is herein referred

to as the “1992 Note”), or any instrument given to secure Borrower’s payment or

performance obligations under the 1992 Note, including, without limitation that

certain Timberland Deed of Trust and Security Agreement with Assignment of

Rents by and between Borrower, as Grantor, and John Hancock Mutual Life

Insurance Company, as Beneficiary, dated April 29, 1992, and recorded on

April 29, 1992, in volume 371, pages 237-332, Jefferson County, Washington

official records, as amended by instrument recorded August 26, 1992, in Volume

385, Pages 204-206, Jefferson County, Washington official records, as amended

by instrument recorded on June 14, 1993, in Volume 417, Pages 297-299,

Jefferson County, Washington official records, as amended by instrument

recorded on December 29, 1995, in Volume 542, Pages 447 and 448, Jefferson

County, Washington official records, as amended by instrument recorded on

December 30, 1999, in Volume 666, Pages 274-




 




22





























 




278, Jefferson County,

Washington official records, and as amended and restated by instrument dated of

even date herewith (such Deed of Trust, as amended previously and as may be

amended hereafter, is herein referred to as the “1992 Deed of Trust”).




 




6.2      Acceleration of Notes.




 




(a)   Automatic Acceleration.  If an Event of Default exists under Subsection 6.1(h)

or (i), the principal and interest accrued on the Notes, together with the

applicable Prepayment Premium (subject to any limitations in Section 11.5),

shall automatically become forthwith due and payable, without any notice or

action required by the Holders.




 




(b)   Optional Acceleration.  If any other Event of Default exists, the

Required Holders, may declare the entire principal and all interest accrued on

the Notes (or any of them) to be, and the Notes shall thereupon become,

forthwith due and payable together with the applicable Prepayment Premium

(subject to any limitations in Section 11.5) without presentment,

demand, protest or other notice of any kind (including without limitation any

notice of intent to accelerate maturity or any notice of acceleration of

maturity), all of which are hereby expressly waived, and Borrower will forthwith

pay to the Holders the entire principal balance of and interest accrued on the

Notes as of the date of such declaration, together with the applicable

Prepayment Premium.




 




6.3      Default Remedies.




 




(a)   If an Event of Default exists, the Holders

acting through the Administrative Agent, as agent for itself and the other

Holders, may exercise all of the rights and remedies granted to the Holders

under each of the other Financing Documents, and all of the rights and remedies

herein conferred, it being expressly understood that no such remedy is intended

to be exclusive of any other remedy or remedies; but each and every remedy

shall be cumulative and shall be in addition to every other remedy given herein

or now or hereafter existing at law or in equity or by statute, and may be

exercised from time to time as often as may be deemed expedient by the

Administrative Agent.




 




(b)   If an Event of Default exists, the

Administrative Agent may give notice to the Collateral Agent demanding that the

Collateral Agent pay to the Holders the balance then in the Collateral Account,

and upon receipt of such funds the Holders may apply the amounts so received

toward the amounts owing in connection with the Financing Documents in the

following order:  first to the then

applicable Prepayment Premium (it being agreed that, subject to the limitations

in Section 11.5, a Prepayment Premium shall be due and payable in

connection with such funds if and to the extent that principal under the Notes

is thereby prepaid), next to any interest accrued on the principal prepaid and

the remainder applied toward the principal installments due on the Notes.




 




(c)   If an Event of Default exists, each Holder,

to the extent it may lawfully do so, may also, with or without proceeding with

sale or foreclosure or demanding payment of its Note without further notice,

appropriate and apply to the payment of the obligations secured hereunder any

and all balances, credits, deposits, accounts, reserves, or other monies due or

owing to




 




23





























 




Borrower held by such Holder (the offset rights set

forth in this subsection being expressly limited to the assets of Borrower and

not to the assets of Borrower’s constituent partners or members).




 




(d)   All covenants, conditions, provisions,

warranties, guaranties, indemnities and other undertakings of Borrower

contained in this Agreement, or in any document referred to herein or in any

agreement supplementary hereto or in any other Financing Documents, shall be

deemed cumulative to and not in derogation or substitution of any of the terms,

covenants, conditions, or agreements of Borrower contained herein.




 




6.4      Other Enforcement Rights.




 




(a)   The Administrative Agent may proceed to

protect and enforce this Agreement, each other Financing Document and the Notes

by suit or suits or proceedings in equity, at law or in bankruptcy, and whether

for the specific performance of any covenant or agreement herein granted, or

for foreclosure thereunder, or for the appointment of a receiver or receivers

for the foreclosure thereunder, or for the appointment of a receiver or

receivers for the Collateral or any part thereof, for the recovery of judgment

for the indebtedness hereby secured or for the enforcement of any other proper

legal or equitable remedy available under applicable law.




 




(b)   In the event that an Event of Default has

occurred and is continuing and there shall be pending any case or proceedings

for the bankruptcy or for the reorganization or arrangement of Borrower under

the federal bankruptcy laws or any other applicable law or in connection with

the insolvency of Borrower or in the event that a custodian, receiver or

trustee shall have been appointed for Borrower or the Collateral, or in the

event of any other proceedings in respect of Borrower or the Collateral

irrespective of whether the principal of the Notes shall then be due and

payable as therein expressed, by proceedings for the payment thereof, by

declaration or otherwise, the Holders shall be entitled and empowered to file

and prove a claim for the whole amount of principal and interest, if any, owing

and unpaid in respect of the Notes, and any other sum or sums owing thereon or

pursuant thereto or hereto, and to collect and receive any monies or other

property payable or deliverable on any such claim, and to distribute the same

after the deduction of its charges and expenses; and any receiver, custodian,

assignee or trustee in bankruptcy, trustee or debtor in reorganization or

trustee or debtor in any proceedings for the adoption of an arrangement is

hereby authorized by each Holder, by the acceptance of the Notes held by it to

pay to each of the Holders any amount due it for compensation and expenses,

including counsel fees, incurred by it up to the date of such distribution.




 




6.5      Effect of Sale, etc.




 




(a)   Subject to any rights of redemption and to

the maximum extent permitted by law, any sale or sales pursuant to the

provisions of any Financing Documents, whether under any power of sale granted

thereby or pursuant to any legal proceedings, shall operate to divest Borrower

of all right, title, interest, claim and demand whatsoever, either at law or in

equity, of, in and to the Collateral, or any part thereof, so sold.  At any such sale the Holders may bid for




 




24





























 




and purchase the Collateral sold and may make payment

therefor as set forth below, and the Holder so purchasing the Collateral upon

compliance with the terms of sale, may hold, retain and dispose of such

Collateral without further accountability.




 




(b)   The receipt by any Holder, or by any Person

authorized under any judicial proceedings to make any such sale, of the

proceeds of any such sale shall be a sufficient discharge to any purchaser of

the Collateral, or of any part thereof, sold as aforesaid; and no such

purchaser shall be bound to see to the application of such proceeds, or be

bound to inquire as to the authorization, necessity or propriety of any such

sale.  In the event that, at any such

sale, any Holder is the successful purchaser, it shall be entitled, for the

purpose of making settlement or payment, to use and apply the Notes by

crediting thereon the amount apportionable and applicable thereto out of the

net proceeds of such sale.




 




6.6      Delay or Omission; No Waiver; Expenses.  No course of dealing on the part of the

Holders nor any delay, omission or failure on the part of the Holders to

exercise any right or power shall exhaust or impair such right or power or

operate as a waiver of such right or power or prevent its exercise during the

continuance of a default or otherwise prejudice the Holders’ rights, powers and

remedies.  Every right and remedy given

by this Agreement, by any other Financing Document or by law to any Holder may

be exercised from to time as often as may be deemed expedient without in any

manner exhausting, impairing, waiving, preventing or otherwise prejudicing the

Holders’ other rights, powers and remedies. 

If Borrower fails to pay when due the principal or interest on the

Notes, or fails to comply with any other provision of this Agreement or any

other Financing Document, Borrower will pay to the Holders to the extent

permitted by law, such further amounts as shall be sufficient to cover such

reasonable costs and expenses, including but not limited to reasonable

attorneys’ fees, as may be incurred by such Holders in collecting any sums due

on the Notes or in otherwise enforcing any of its rights.




 




6.7      Restoration of Rights and Remedies.  If the Holders shall have instituted any

proceeding to enforce any right or remedy under this Agreement or any other

Financing Document and such proceeding shall have been continued or abandoned

for any reason, or shall have been determined adversely to the Holders, then

and in every such event, the Holders and Borrower shall, to the maximum extent

permitted by law and subject to any determination in such proceeding, be

restored severally and respectively to their former positions hereunder and

thereunder, and thereafter rights and remedies of the Holders shall continue as

though no such proceeding had been instituted.




 




6.8      Cumulative Remedies.  No waiver by the Holders of any such

default, whether such waiver be full or partial, shall extend to or be taken to

affect any subsequent default, or to impair the rights resulting therefrom

except as may be otherwise expressly provided herein.  No remedy hereunder is intended to be exclusive of any other

remedy but each and every remedy shall be cumulative and in addition to any and

every other remedy given hereunder or otherwise existing nor shall the giving,

taking or enforcement of any other or additional security, collateral or

guaranty for the payment of the indebtedness secured under this Agreement

operate to prejudice, waive or affect the security of this Agreement or any rights,

powers or remedies hereunder, nor shall the Holders be required to first look

to, enforce or exhaust such other or additional security, collateral or

guaranties.




 




25





























 




6.9      Suits for Principal and Interest.  Nothing in any provision of this Agreement

or in the Notes or other Financing Documents shall affect or impair the

obligation of Borrower, which is absolute and unconditional, to pay the

principal of and interest, if any, on the Notes to the Holders on the dates

when due, and in the manner provided for such payments, whether upon

acceleration or otherwise, or affect or impair the right of action, which is

also absolute and unconditional, of the Holders to institute suit to enforce

such payment by virtue the contract embodied in the Notes.




 




6.10    Waiver by Borrower.  To the extent it lawfully may do so,

Borrower hereby covenants that it will not at any time insist upon or plead, or

in any manner claim or take the benefit or advantage of, any stay (except in

connection with a pending appeal), valuation, appraisal, or extension law now

or at any time hereafter in force which, but for this waiver, might be

applicable to any sale made under any judgment, order or decree based on the

Notes or this Agreement or any other Financing Document; and, to the extent it

lawfully may do so, Borrower hereby expressly waives and relinquishes all

benefit and advantage of any and all such laws and hereby covenants that it

will not hinder, delay or impede the execution of any power herein granted and

delegated to any Holder, but it will suffer and permit the execution of every

such power as though no such law or laws had been made or enacted.




 




SECTION 7.  AFFIRMATIVE COVENANTS.




 




Borrower covenants that on and after the date of initial issuance of

the Notes, so long as any amounts due under the 1992 Note or any of the Notes

are outstanding:




 




7.1      Payment of Taxes, Claims and Other

Obligations.  Borrower will pay or

discharge, before they become delinquent and where the failure to pay or

discharge such amounts will have a material adverse effect on the business,

properties, operations, or financial condition of Borrower:




 




(a)   all taxes, assessments and governmental

charges or levies imposed upon it or upon its income, profits or Property; and




 




(b)   all claims or demands of materialmen,

mechanics, carriers, warehousemen, landlords and other like Persons which, if

unpaid, might result in the creation of a Lien upon its Property; and




 




(c)   all other Debt;




 




provided that items of the foregoing description (other than those

owing to the Holders) need not be paid while they are being Contested in Good

Faith.




 




7.2      Maintenance of Properties, Etc.  Borrower will:




 




(a)   Property.  Maintain, preserve, protect and keep all of the Collateral in good

condition and repair and in compliance in all material respects with all

applicable laws, rules and regulations, and from time to time make all repairs,

renewals and replacements needed to enable the business and operations carried

on in connection therewith to be promptly and




 




26





























 




advantageously conducted at all times; provided,

however, that Borrower shall be permitted to dispose of equipment and other

personal property in the ordinary course of Borrower’s business of which

Borrower has no further need;




 




(b)   Insurance.  Maintain in full force and effect the policies of insurance

described on Annex IV;




 




(c)   Financial Records.  Keep true books of records and accounts in

which full, true and correct entries will be made of all its business

transactions, all in accordance with GAAP;




 




(d)   Compliance with Law.  Not be in violation of any law, ordinance or

governmental rule and regulation to which the Collateral is subject, including

specifically, without limitation, any Applicable Environmental Law, and will

not fail to obtain any license, permit, franchise or other governmental

authorization necessary to the ownership of the Collateral or to the conduct of

his business in connection therewith, which violation or failure to obtain

could reasonably be expected to materially and adversely affect the Collateral.




 




(e)   Intentionally Omitted.




 




(f)    Company Existence.  Conduct continuously and actively its

business, will keep in full force and effect its existence as a partnership in

good standing under the laws of the state of its formation, and qualified to do

business in the State of Washington and any other states in which it conducts

business (except where failure to qualify would be immaterial), and make all

such reports and pay all such franchise and license and similar taxes and fees

and do all other such acts and things as may be necessary to maintain its

rights, licenses, powers and franchises under the laws of the United States and

the states and jurisdictions in which it does business, other than such matters

which, if not done, would be immaterial.




 




7.3      Payment of Notes and Maintenance of

Office.  Borrower will punctually

pay or cause to be paid the principal, interest and premium, if any, to become

due in respect of the Notes according to the terms thereof.  Borrower will maintain an office where

notices, presentations and demands in respect of this Agreement or the Notes

may be made upon it.  Such office shall

be maintained at the address specified for Borrower in or pursuant to Section

12 until 30 days after such time as Borrower shall notify the Holders of

any change of location of such office. 

In the event Borrower shall fail to maintain any such office or agency

(and this sentence shall not be deemed to waive such failure), such

presentations may be made at the address specified for Borrower in or pursuant

to Section 12.




 




7.4      Financial and Business Information.  Borrower will deliver to the Administrative

Agent:




 




(a)   Financial Statements.  Borrower shall furnish to the Administrative

Agent as soon as practical after the end of each fiscal year, and in any event

within ninety (90) days thereafter, financial statements for such year,

including without limitation balance sheets, income statements and cashflow statements

prepared in accordance with GAAP, which have been audited, at Borrower’s

expense, by an independent certified public accountant reasonably




 




27





























 




acceptable to the Administrative Agent who is a member

of the American Institute of Certified Public Accountants.  Such audited financial statements shall be

accompanied by a certificate of an officer of Borrower stating that stating

that he is familiar with the financial requirements of this Agreement, the Notes,

the Mortgages and all other Financing Documents and that, after diligent

inquiry, he is unaware of the existence of any Default or any Event of Default,

or, alternatively, specifying the nature and period of any Default or any Event

of Default of which he is aware. 

Borrower shall also furnish to the Administrative Agent as soon as

practical after the end of each fiscal quarter of Borrower, and in any event

within forty-five (45) days thereafter, quarterly, unaudited financial

statements, including without limitation balance sheets, income statements and

cashflow statements, prepared in accordance with GAAP, set forth in reasonable

detail, using the same format and categories as the last audited financial

statements and accompanied by a certificate of the chief financial officer of

Borrower to the effect that such statements are true and correct in all

material respects and reflect such matters as would be reflected in audited

financial statements.




 




(b)   Officer Certificate.  Simultaneously with the delivery of the

annual and quarterly financial statements required by subsection 7.4(a) above,

the chief financial officer of Borrower shall execute and deliver to the

Administrative Agent a certificate (supported by schedules showing all

calculations necessary to determine Borrower’s compliance with the provisions

of the Financing Documents) stating that he is familiar with the financial

requirements of this Agreement, the Notes, the Mortgages and all other

Financing Documents and that, after diligent inquiry, he is unaware of the

existence of any Default or Event of Default, or, alternatively, specifying the

nature and period of any Default or any Event of Default of which he is aware.




 




(c)   Other Data.  With reasonable promptness, Borrower shall furnish to the Administrative

Agent such additional financial or other data as the Administrative Agent may

reasonably request.




 




7.5      Inspection.  Borrower will permit the Administrative

Agent and/or other representatives of the Required Holders to visit and inspect

the Collateral, to examine all of its books of account, records, reports and

other papers, to make copies and extracts therefrom, and to discuss Borrower’s

business affairs, finances and accounts with its officers and to cause all of

their books of account, records, reports and other papers to be audited by

independent public accountants selected by the Administrative Agent, all at

such reasonable times and as often as may be reasonably requested; provided,

however, absent an Event of Default, such audits shall be limited to once per

year.  The party or parties exercising

the inspection and audit rights provided above will pay the fees and expenses

of any officers, partners, employees, independent public accountants, attorneys

or other advisers employed by such party or parties in connection with such

inspection and/or audit; provided, however, that Borrower shall be required to

pay any and all such fees and expenses relating to such inspection or audit

performed by or on behalf of the Administrative Agent or any other

representative of the Required Holders following a Default or Event of Default

hereunder.




 




7.6      Agreement to Deliver Security Documents.  Borrower agrees to deliver, to further

secure the Notes whenever requested by the Administrative Agent in its reasonable

discretion,




 




28





























 




deeds of trust,

mortgages, deeds to secure debt, chattel mortgages, security agreements,

financing statements and other security documents in form and substance

reasonably satisfactory to the Administrative Agent for the purpose of granting

to, confirming, and perfecting in favor of the Holders, liens or security

interests in any real or personal property which is at such time Collateral or

which was intended to be Collateral pursuant to any security document

previously executed.




 




7.7      Outstanding Environmental Issues.  The Environmental Report is described in Exhibit

B and except for the Port Gamble Environmental Issue, attached hereto as Exhibit

B-1 is a schedule of certain environmental issues reflected in the

Environmental Report, the legal requirements or actions to be taken with

respect to each such issue, and the time within which such action must be

completed (or the frequency with which such actions are to be taken).  Borrower shall comply with the requirements

and take the actions described in Exhibit B-1 within the time periods

(or with the frequencies) therein described.




 




7.8      Intentionally Deleted.




 




7.9      Intentionally Omitted.




 




SECTION 8.  NEGATIVE COVENANTS.




 




So long as the 1992 Note or any of the Notes remain outstanding,

Borrower covenants that it will not, without the prior written consent of the

Required Holders:




 




8.1      Additional Liens. Place, incur,

assume or suffer to exist, any Lien upon any of its Property, assets or revenues,

whether now owned or hereafter acquired, except: (i) Liens pursuant to

any Financing Document; (ii) Liens on the Property that secure the Debt under

the Bank of America revolving line of credit; (iii) Liens existing on the date

hereof and any renewals or extensions thereof, provided that the

Property covered thereby is not increased and any renewal or extension of the

obliga­tions secured or benefited thereby is permitted by Section 8.2 hereof;

(iv) Ordinary Course Liens; and (v) Other Liens securing Debt in an aggregate

principal amount not exceeding $500,000 at any time.  Notwithstanding anything herein to the contrary, under no

circumstances shall Borrower place, incur, assume or suffer to exist, any Lien

on the Timber Property, other than Ordinary Course Liens.  Notwithstanding the foregoing, it is

anticipated that there will be a need for additional financing as Borrower

grows through acquisition.  It is

further anticipated that Borrower will utilize the security for this loan as

equity in new acquisitions such that additional loans from John Hancock may be

funded based on the Timberlands, up to a Loan to Administrative Value of

50%.  To the extent Borrower has

unencumbered timberlands, those lands may be used to secure additional loans,

at a Loan to Administrative Value of not more than 50%, on terms similar to

this financing, but taking into account then-current market conditions.  Moreover,

each such additional loan by John Hancock will be subject to approval of its

investment committees at such later date as its principal terms are known.




 




8.2      Additional Debt. Create, incur,

assume or suffer to exist any Debt, except: (i) Debt under the

Financing Documents; (ii) Debt under the Bank of America revolving line of

credit




 




29





























 




and all other Debt

outstanding on the date hereof and any refinancings, refundings, renewals or

extensions thereof, provided that the amount of such Debt is not

increased at the time of such refinancing, refunding, renewal or extension

except by an amount equal to the premium or other amount paid, and fees and

expenses incurred, in connection with such refinancing and by an amount equal

to any utilized commitments thereunder; (iii) Ordinary Course

Indebtedness; and (iv) Unsecured Debt in an aggregate principal amount not

exceeding $500,000 at any time.




 




8.3      Intentionally Omitted.




 




8.4      Cash Flow Coverage.  Permit Borrower’s Cash Flow Coverage Ratio

to be less than 1.10 to 1.00 during: 

(i) the six months ending June 30, 2001, (ii) the three

calendar quarter periods ending September 30, 2001, (iii) the four

calendar quarter periods December 31, 2001, or (iv) any period of

four (4) consecutive calendar quarters ending on or after March 31, 2002.




 




8.5      Distributions to Partners.  Make any distributions of cash or other

Property to any of its partners, or redeem any outstanding equity interest in

Borrower, except in accordance with the provisions of this Section 8.5,

as follows:  So long as no Default or

Event of Default shall exist hereunder either before or after such

distribution, Borrower shall be permitted to distribute, on a cumulative,

calendar year basis, to each of its partners, no more frequently than once per

calendar quarter, fifty percent (50%) of Net Income, excluding distributions to

pay the estimated federal and state income tax payable by each partner (or its

constituent partners or members) on such partner’s share of the taxable income

of Borrower (as calculated for federal income tax purposes); provided, however,

in no event shall such quarterly, cumulative distributions exceed seventy-five

percent (75%) of Net Income on a calendar year basis; and provided further,

that Borrower may not purchase, redeem or retire any outstanding partnership

units if after giving effect to any such purchase, redemption, or retirement,

Borrower would be in violation of any of the terms or covenants of this

Agreement or the other Financing Statements. 

Prior to any such distribution, Borrower’s chief financial officer shall

prepare and deliver to the Administrative Agent a sworn certificate of

distribution and a brief summary of the Borrower’s methodology in establishing

the amount of the dividends paid.




 




8.6      Intentionally Omitted.




 




8.7      No Transfers.  Except as may be specifically permitted or

provided for in this Agreement and except for the disposition of equipment and

other personal property in the ordinary course of Borrower’s business of which

Borrower has no further need, Borrower shall not transfer, sell, lease,

encumber, assign or convey or place restrictive covenants upon, or grant or

create any legal, equitable or beneficial interest in, the Timber Property or

any of the other Collateral, or any interest therein or any part thereof,

whether as security, through the use of any kind of trust or otherwise.




 




8.8      Transactions with Affiliates.  Borrower shall not conduct any transactions

with an affiliate or related entity of Borrower unless such transaction is

conducted on an “arms length” basis at terms no less favorable than what could

be received in the market; provided, however, that the Borrower

may provide or receive reasonable services to or from an affiliate or related

entity in exchange for smaller compensation (including no compensation) than

the Borrower or




 




30





























 




such affiliate or related

entity would receive were it to perform comparable services in an arm’s-length

transaction for a person not affiliated with Borrower.




 




8.9   Purchase of Notes.  Directly or indirectly, purchase or

otherwise acquire, or offer to purchase or otherwise acquire or permit any

Affiliate of Borrower to, directly or indirectly, purchase or otherwise

acquire, or offer to purchase or otherwise acquire, any of the outstanding

Notes except (i) by way of payment or prepayment in accordance with the

provisions of the Notes and this Agreement, or (ii) pursuant to any

identical offer made by the Borrower pro rata and on the same terms to each

Holder of the Notes at the time outstanding.




 




8.10    Assignment.  Assign its rights under this Agreement or any of the other

Financing Documents to any other Person.




 




8.11      No Mergers.  Enter into any merger, consolidation or

other reorganization with any other Person, unless Borrower survives in

substantially the same line of business with similar credit characteristics.




 




8.12      Subsidiaries; Collateral Ownership.  Create, acquire or otherwise invest in any

Affiliate or Subsidiary, or otherwise move, transfer or change the ownership of

any of the Timber Property into an Affiliate or Subsidiary.




 




8.13      Intentionally Omitted.




 




8.14      Debt to Total Capitalization.  Debt to Total Capitalization shall not

exceed fifty percent (50%) on a market value basis, based on Borrower’s Closing

Unit Price at the end of each quarter, so long as Borrower is publicly traded.




 




8.15      Lease Obligations.  Enter into any lease agreements of any type

as lessee other than Permitted Leases.




 




SECTION 9.  TIMBER COVENANTS AND PROVISIONS.




 




Borrower covenants that on and after the date of initial

issuance of the Notes, so long as any amounts due under the 1992 Note or

the Notes (or any of them) are

outstanding:




 




9.1   Intentionally Omitted.




 




9.2   Timber Management.  Borrower will operate the Timber Property

for its highest and best use as such, having due regard to soil conditions, stand

arrangements and other factors relevant to the conduct of sound silvicultural

and harvesting practices.  Borrower

further covenants and agrees:




 




(a)   Harvesting Operations and Thinning.

All cutting, logging, and removal shall be completed in accordance with good

forestry practices and shall be conducted in such a manner as to realize the

greatest return from the individual tree and from the Collateral, to effect

suitable utilization of the Timberland, and to foster the regeneration of the

Timberland, if clearcut, or that all desirable trees which are not at the time

being harvested, including young




 




31





























 




trees, shall be protected against unnecessary injury

from felling, skidding, and hauling, and that all measures reasonably

practicable shall be used to prevent soil erosion including the proper location

of skidways and roads.  In addition,

Borrower shall comply in all material respects with all then current and applicable

federal, state, and local laws, regulations, ordinances, and guidelines and

policies concerning the harvesting of timber.




 




(b)   Intentionally Omitted.




 




(c)   Salvage.  To the extent economically feasible, all trees which are dead,

diseased, fallen or otherwise damaged by casualty or as a result of insect

infestation, shall be salvaged and harvested in accordance with sound

silvicultural  practices and shall be

reported in the semi-annual reports prepared in accordance with the provisions

of Section 9.4 hereof.




 




(d)   Fire Protection.  All measures shall be taken which are

reasonably necessary to protect the Land and the Timber thereon from loss by

fire, which measures shall be at least equal to fire-control practices

generally followed on timber-producing property in the same general area including

the adoption of suitable prevention and control measures, proper disposal of

slash and slabs, and full cooperation with local, state and federal agencies on

matters of fire prevention control.




 




(e)   Maintenance of Roads.  Borrower shall maintain an adequate system

of roads and roadways in such a manner as to permit access of mobile fire

fighting equipment to all parts of the Timber Property in accordance with

either recognized industry standards or in accordance with all state approved

road maintenance plans.




 




(f)    Regeneration.  All reasonable measures shall be taken to

ensure proper regeneration of Timber on the Timber Property, including the

following:  (i) all reforestation

requirements imposed by state, local or federal laws, regulations or ordinances

shall be complied with in all material respects, (ii) each clearcut area

without adequate seed source for regeneration by natural means shall be

site-prepared and replanted in accordance with industry standards.  To the extent weather permits, all such clear-cut

areas shall be site-prepared and replanted within twenty-four (24) months of

such clear-cutting.




 




(g)   Control of Disease and Insects.

Borrower shall utilize sound silvicultural practices and take all reasonable

and effective measures to prevent the development of and to control the spread

of disease and insect infestation on the timberland, including, but not limited

to, the shifting of logging operations. to the extent economically feasible, to

remove diseased or insect-infested trees and other trees threatened with

disease or insect infestation, and all other such accepted forest sanitation

and control measures as are necessary to prevent the development and spread of

disease and insect infestation.




 




(h)   Trespass.  Prior to the commencement by Borrower of any harvesting, mining,

or similar activities near any boundary line of the Timber Property, Borrower

shall have said boundaries marked in order to prevent unauthorized harvesting

from occurring.  Borrower shall cause

the Timber Property to be inspected periodically for the purpose of preventing

the unauthorized cutting of Timber.




 




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(i)    Contracts. No contracts or agreements

(whether written or oral) for the lease, sale or disposition of Timber wherein

third parties are granted the privilege of entry upon the Timber Property for

cutting and removal of Timber or sale of all or part of the Timber Property for

a term of more than twenty-four (24) months have been or shall be made without

the prior written approval of the Administrative Agent.




 




9.3   Timber Cruises and Growth Studies; Escrow

Deposits.




 




(a)   Borrower shall cause to be prepared by the

Forestry Consultant, and delivered to the Holders by March 31, 2006, a

detailed report showing the results of a new Timber Cruise of all of the Land,

the remaining Timber inventory (including the ages of Pre-Merchantable Timber

and Sub-Merchantable Timber broken down into the number of acres by age class)

and a Timber growth projection showing the projected annual Timber growth on

the Land for each of the five (5) years immediately following the date of each

such report.  The report of the results

of the Timber Cruise shall be in form reasonably satisfactory to the

Administrative Agent and shall show shall show the volumes of each Category of

Merchantable Timber and acreage of Pre-Merchantable Timber and Sub-Merchantable

Timber on the Timberlands and the Total Administrative Value of the

Timberlands, using the format and unit values set forth in Exhibit C.  Any undercutting during the previous

five-year period shall be included within the inventory for purposes of

establishing the Annual Allowable Cut for the next five years.




 




(b)   Upon completion of each such Timber Cruise

required by subsection (a) above, Borrower shall prepare and deliver to

the Holders, within ten (10) days following delivery by the Forestry Consultant

of the report of such Timber Cruise, a certificate of Borrower’s chief

financial officer setting forth a calculation of the Loan to Value Ratio using the

revised Total Administrative Value of the Timberlands set forth in the Forestry

Consultant’s report.  If the Loan to

Value Ratio thus established is in excess of fifty percent (50%), Borrower

shall, within fifteen (15) days following the delivery of such certificate to

the Holders, (i) deposit into the Collateral Account an amount which, if

applied against the then outstanding principal balance of the Notes, would

reduce the Loan to Value Ratio to fifty percent (50%) or less or

(ii) transfer other unencumbered timber property or land owned by Borrower

the Total Administrative Value of which, if applied against the then

outstanding principal balance of the Notes, would reduce the Loan to Value

Ratio to fifty percent (50%) or less;




 




9.4   Semi-Annual Cutting Reports; Escrow

Deposits.  Borrower shall furnish to

the Administrative Agent, on or before (i) July 31 and of each

calendar year with respect to the 6–month period ending on June 30 of the

immediately preceding calendar year, and (ii) January 31 of each calendar

year with respect to the 6-month period ending on December 31 of such

calendar year, commencing with July 31, 2001, a report showing the

following information for the immediately preceding semi-annual period:  (i) the volumes of all Merchantable Timber,

by Category, cut or removed from the Timberlands (including Timber deemed cut

or removed under Section 5.4 hereof) with such volumes being

calculated in accordance with the provisions of Section 9.6 hereof;

(ii) the number of acres of the Land on which cutting in the form of final

harvest and intermediate thinnings or cut to be held for sale was conducted,

with the number of acres for each such form of cutting being separately stated

and the location of the acreage for each such form of cutting being identified

according to the




 




33





























 




description of parcels

used in the Mortgages or by “Stand Numbers” corresponding to stand maps used to

maintain the Timber Property; (iii) subject to the 25-acre de minimus exception

contained in Section 5.4, a description of Destroyed Timber on the

Timberlands (and, in the case of Destroyed Timber which is Pre–Merchantable

Timber and Sub-Merchantable Timber, the acreage thereof for each Category of

Pre-Merchantable Timber and Sub-Merchantable Timber) with the number of acres

lost or destroyed by each cause being separately stated, the location of the

acreage lost or destroyed by each cause being identified according to

descriptions contained in the mortgages or by “Tract Numbers” corresponding to

tract maps used to maintain the Timber Property, and the approximate date of

destruction; (iv) the number of acres of the Land which were site-prepared

and replanted, with their location being identified according to such descriptions;

(v) a description of all improvements made on the Land (including, but not

limited to, all buildings, forest roads and clearings or thinnings for sale

other than for forestry purposes) and the acres affected by each such

improvement, with the location of such improvements and acres being identified

according to descriptions contained in the Mortgages or by “Tract Numbers”

corresponding to tract maps used to maintain the Timber Property; and

(vi) such other information as the Administrative Agent may reasonably

request from time to time with respect to the management of and activities on

the Timber Property, and including a calculation of the Total Administrative

Value of the Timberlands as of the end of such semi-annual period in the form

attached hereto as Exhibit C. 

Borrower shall also furnish with each such report maps reasonably

satisfactory to the Administrative Agent showing the location of the parcels on

which the cutting, loss or destruction, site preparing and replanting and

improvements reported on by Borrower occurred or were made.  Reports may be prepared by Borrower’s own

foresters, but, in such case, the Administrative Agent shall have the option to

have such reports verified by the Forestry Consultant at Borrower’s expense,

which verification may include investigation and observation of on–site

conditions in a manner as complete as that required for an original

report.  Acreages reported in such

reports may be estimated from aerial photographs, cruise maps or by other

reasonable means, and need not be verified by survey.  In the event of an over cut situation, the reporting requirements

under this section 9.4(a) shall become a monthly requirement for the

remaining calendar year.




 




9.5   Retaining Forestry Consultant.  Borrower will, at the request of the

Administrative Agent and at Borrower’s sole cost and expense, employ the

Forestry Consultant for the purposes of (i) developing, determining,

and/or confirming the Annual Allowable Cut for each Cutting Year, and the

growth assumptions in accordance with Exhibit C attached hereto, and analyzing

and advising the Administrative Agent with respect to each Annual Harvest Plan

submitted by Borrower pursuant to Section 5.2 above,

(ii) monitoring general forest management activities required by this

Agreement, (iii) making semi-annual inspections to verify the information

set forth in the Semi-Annual Cutting Reports prepared by Borrower pursuant to Section 9.4

above, (iv) performing the Timber Cruise or auditing a Timber Cruise

performed by another party as required by subsection 9.3(a), and (v)

auditing inventory procedures and data, and performing ample field sampling to

verify the reasonability of the timber volumes, age classes, and stand typing

on the Timberlands, and/or (vi) performing such other services from time

to time as the Administrative Agent may deem reasonably necessary or

appropriate.




 




34





























 




9.6   Timber Categories and Calculations.  For all purposes of this Agreement, “Merchantable

Timber” means, and shall be classified by species, product and

size in the following categories:




 




(a)   Softwood Timber.  “Softwood Timber” means Douglas fir,

hemlock, cedar, pine and other species commonly utilized in the production of

‘softwood’ timber products.  Merchantable

Softwood Timber shall follow the Log Scaling and Grading Bureau guidelines, and

shall be classified as:




 




(i)            HI-EX:            High quality export logs, 16” or

larger in small-end diameter, inside bark, with 8 growth rings or more per

inch, containing at least 60 board feet.




 




(ii)           EX:                  Export logs, 8 inches or

larger in small-end diameter, inside bark, scattered knots, defect of 10% or

less, containing 50 board feet minimum.




 




(iii)          2S:                   Domestic grade logs, 12

inches or larger in small-end diameter, inside bark, not suitable for above

sorts, meeting Scaling Bureau requirements for number 2 saw logs, containing 50

board feet minimum.




 




(iv)          3S:                   Domestic grade logs, 6 inches

or larger in small-end diameter, inside bark, not suitable for above sorts,

meeting Scaling Bureau requirements for number 3 saw logs, 50 board feet

minimum.




 




(v)           CNS:               Chip-n-Saw logs, 5 to 7 inches in

small-end diameter, inside bark, scattered knots, not suitable for above sorts,

10 board feet minimum.




 




(vi)          PU:                  Pulpwood logs, 4 inches or

larger in small-end diameter, inside bark, not suitable for above sorts.  Must have at least 50% gross volume suitable

for chipping, 10 board feet minimum.




 




(b)   Hardwood Timber.  “Hardwood Timber” means Red Alder, Maple and

other species commonly utilized in the production of ‘hardwood’ timber

products.  Merchantable Hardwood Timber

shall follow the Log Scaling and Grading Bureau guidelines, and shall be

classified as:




 




(i)            SL:                  Domestic grade logs, 6 inches

or larger in small-end diameter, inside bark, meeting Scaling Bureau

requirements for number 3 saw logs, 50 board foot minimum.




 




(ii)           PU:                  Pulpwood logs, 4 to 6 inches

in small-end diameter, inside bark, not suitable for SL.  Must have at least 50% gross volume suitable

for chipping, 10 board foot minimum.




 




9.7   Inspections.  Each of the Forestry Consultant, the Administrative Agent, and

other representatives of the Required Holders shall have the right at all

reasonable times to enter upon




 




35





























 




and inspect the Timber

Property, or any part thereof, and to inspect and review scaling slips and

summaries to confirm Borrower’s compliance with the terms and provisions of

this Agreement.




 




9.8   Reasonableness.  Borrower acknowledges the importance of the

Collateral as security for payment of the Notes, and acknowledges that the

protections afforded to the Holders pursuant to the Financing Documents are

reasonable.




 




SECTION 10.  HAZARDOUS MATERIALS.




 




10.1         Definitions:  Borrower and Holders agree that, for

purposes of this Agreement, the following terms shall have the meaning herein

specified:




 




(a)   “Governmental Authority” shall mean

the United States, the states, the counties, the cities, or any other political

subdivision in which the Timber Property or any portion thereof is located, and

any other political subdivision, agency, or instrumentality exercising

jurisdiction over Borrower or the Timber Property.




 




(b)   “Environmental Laws” shall mean all

laws, ordinances, orders, interpretations, rules and regulations of any Governmental

Authority applicable to Borrower or the Timber Property relating to the

protection of human health or the environment from Hazardous Materials and

pollution, including, without limitation, RCRA and CERCLA (as hereinafter

defined), the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq.,

the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,

all as now or hereafter amended, as well as any comparable state law

provisions.




 




(c)   “Hazardous Materials” shall mean any

of the following: (i) any “hazardous waste” as defined by the Resource

Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901, et seq.),

as amended from time to time, and regulations promulgated thereunder (“RCRA”);

(ii) any “hazardous substance,” “pollutant” or “contaminant,” as defined

by the Comprehensive Environmental Response, Compensation and Liability Act of

1980 (42 U.S.C. Section 9601, et seq.), as amended from time to time,

and regulations promulgated thereunder (“CERCLA”); (iii) asbestos (whether or

not friable) and asbestos-containing materials; (iv) any volatile organic

compounds, including oil and petroleum products; (v) any substances which

because of their quantitative concentration, chemical, radioactive, flammable,

explosive, infectious or other characteristics, constitute or may reasonably be

expected to constitute or contribute to a danger or hazard to public health,

safety or welfare or to the environment, including, without limitation, any

polychlorinated biphenyls (PCBs), toxic metals, etchants, pickling and plating

wastes, explosives, reactive metals and compounds, pesticides, herbicides,

radon gas, urea formaldehyde foam insulation and chemical, biological and

radioactive wastes; (vi) any other substance the presence of which on the

Timber Property is prohibited by any Environmental Laws; and (vii) any

other substance which by any Environmental Laws requires special handling or

notification of any federal, state or local governmental entity in its

collection, storage, treatment, or disposal.




 




(d)   “Hazardous Materials Contamination”

shall mean the contamination (whether presently existing or hereafter

occurring) of the buildings, facilities, soil, groundwater, air or




 




36





























 




other elements on or of the Timber Property by

Hazardous Materials, or the contamination (whether presently existing or

hereafter occurring) of any buildings, facilities, soil, groundwater, air or

other elements on or of any other property as a result of Hazardous Materials at

any time (whether before or after the effective date hereof) emanating from the

Timber Property.




 




10.2         Borrower’s Warranties.  Borrower hereby represents and warrants

that:




 




(a)   Borrower has obtained and delivered to

Holders the Environmental Reports, and, except as may be disclosed in the

Environmental Reports and except for the Port Gamble Environmental Issue,

Borrower has no knowledge of any violations of any Environmental Laws

applicable to the Timber Property.




 




(b)   Except as disclosed in the Environmental

Reports and except for the Port Gamble Environmental Issue, to the best

knowledge of Borrower’s officers and key management personnel (“Borrower’s

best knowledge”), after due inquiry, there have been no releases

of Hazardous Materials either at, upon, under or within the Timber Property,

and no Hazardous Materials have migrated to the Timber Property from

neighboring properties.




 




(c)   Except as disclosed in the Environmental

Reports and except for the Port Gamble Environmental Issue, to Borrower’s best

knowledge, no Hazardous Materials are located on or have been stored (except in

such amounts and in such manner as permitted in accordance with all applicable

laws), processed or disposed of on, or released or discharged from (including

discharges to groundwater), the Timber Property or any other adjoining property

in violation of any Environmental Laws, and, except as disclosed in the

Environmental Reports, to Borrower’s best knowledge, no above or underground

storage tanks exist on the Timber Property.




 




(d)   Except as disclosed in the Environmental

Reports and except for the Port Gamble Environmental Issue, to Borrower’s best

knowledge, no notice has been issued by any Governmental Authority with respect

to any release of Hazardous Materials at, upon, under or within the Timber

Property, and to Borrower’s best knowledge, no investigation, administrative

order, consent order and agreement, litigation or settlement with respect to

Hazardous Materials or Hazardous Materials Contamination is proposed, threatened,

anticipated or in existence with respect to the Timber Property.  To Borrower’s best knowledge, no portion of

the Timber Property is currently on, and has ever been on, any federal or state

“Superfund” or “Superlien” list.




 




(e)   Except as disclosed in the Environmental

Report and except for the Port Gamble Environmental Issue, to Borrower’s best

knowledge, there is no asbestos or asbestos-containing materials, PCBs, radon

gas, or urea formaldehyde foam insulation at or within the Timber Property or

the improvements located thereon.




 




(f)    Borrower possesses all permits, licenses,

registrations, and similar authorizations required to operate the Timber

Property under Environmental Laws, which, if not obtained, could, either

individually or in the aggregate, reasonably be expected to have a material and

adverse effect on the business, prospects, profits or condition (financial or

otherwise) of Borrower or the value of the Timber Property, and except as

disclosed in the Environmental




 




37





























 




Report and except for the Port Gamble Environmental

Issue, to Borrower’s best knowledge, the Timber Property and all operations

conducted thereon are currently in compliance with all Environmental Laws.




 




10.3         Borrower’s Covenants:  Borrower hereby covenants and agrees as

follows:




 




(a)   Borrower shall not undertake, or authorize or

permit any other person to undertake, any activity on the Timber Property which

would cause (i) the Timber Property to be considered a hazardous waste treatment,

storage or disposal facility as defined under any Environmental Laws;

(ii) a release or threatened release of Hazardous Materials on or from the

Timber Property in violation of any Environmental Laws; or (iii) the

discharge of Hazardous Materials into any watercourse, surface or subsurface

water or wetland, or the discharge into the atmosphere of any Hazardous

Materials in each case requiring a permit under any Environmental Laws and for

which no such permit has been issued.




 




(b)   Borrower will strictly comply with all

Environmental Laws, and except for the Port Gamble Environmental Issue,

Borrower shall immediately notify the Holders in writing should Borrower’s

officers or key management personnel become aware of (i) any release or

threatened release of any petroleum products or other Hazardous Materials or

the occurrence of any other environmental problem or liability on or with

respect to the Timber Property in violation of any Environmental Laws which

could subject Borrower, the Holders or the Timber Property to a claim under any

Environmental Laws or to any restriction on ownership, occupancy,

transferability or use of any portion of the Timber Property, (ii) any

lien filed, action taken or notice given with respect to any such release, threatened

release, environmental problem or liability, (iii) any notice given to

Borrower from any tenant or other occupant of the Timber Property or from any

other person with respect to any release or threatened release of Hazardous

Materials, or (iv) the commencement of any litigation or threat of

litigation relating to any alleged release of any petroleum products or other

Hazardous Materials or other environmental contamination, liability or problem

with respect to or arising out of or in connection with any portion of the

Timber Property.  Borrower will deliver

to the Administrative Agent any documentation or records the Administrative

Agent may request and which are susceptible of being obtained by Borrower

without undue cost or expense and without the necessity for initiating legal

proceedings to obtain the same in connection with all such notices, inquiries,

and communications, and shall advise the Administrative Agent of any subsequent

developments.




 




(c)   Except for the Port Gamble Environmental

Issue, if at any time required by any Governmental Authorities, or if otherwise

required to comply with the provisions of any applicable Environmental Laws,

Borrower shall, at its own cost and expense, take all actions as shall be

necessary or advisable for the clean-up of the Timber Property, including all

removal, containment and remedial action in accordance with all applicable

Environmental Laws, and shall further pay or cause to be paid at no expense to

the Holders all clean-up, administrative, and enforcement costs of all

Governmental Authorities or the parties protected by Environmental Laws which

may be asserted against the Timber Property or any other property previously or

subsequently owned or operated by Borrower or any affiliate of Borrower, the

owner or operator thereof or a lienholder secured thereby.  All costs (including, without limitation,

those costs described above), damages, liabilities, losses, claims, expenses

(including, without limitation,




 




38





























 




attorneys’ fees and disbursements) which are incurred

by the Holders with respect to the matters addressed in this section, without

the requirement that the Holders wait for the ultimate outcome of any

litigation, claim or other proceeding, shall be paid by Borrower to the Holders

within ten (10) days after delivery of notice to Borrower from the Holders

itemizing the amounts incurred to the effective date of such notice, with

interest thereon from the date of payment by the Holders at the Default Rate.  Until such amounts shall be paid by

Borrower, they shall be added to and become a part of the Indebtedness secured

hereby.




 




10.4    Site Assessments: Except for the Port

Gamble Environmental Issue, in the event that the Administrative Agent at any

time and from time to time, either prior to or after the occurrence of an Event

of Default, reasonably believes that conditions may exist with respect to the

Timber Property, or any part thereof, which could constitute a violation of any

Environmental Laws and could reasonably be expected to threaten potential

liability in excess of $250,000, the Administrative Agent may contract for the

services of persons (the “Site Reviewers”) to perform

environmental site assessments (“Site Assessments”) on the Timber

Property for the purpose of determining whether there in fact exists on the

Timber Property any environmental condition which could reasonably be expected

to result in any liability, cost or expense to the owner, occupier or operator

of such Timber Property arising under any Environmental Laws.  To the extent reasonably possible, the

Administrative Agent shall limit the scope of any such Site Assessment to those

portions of the Timber Property which the Administrative Agent believes are

affected by an adverse environmental condition.  The Site Reviewers are hereby authorized to enter upon the Timber

Property for such purposes.  The Site

Reviewers are further authorized to perform both above and below ground testing

for environmental damage or the presence of Hazardous Materials on the Timber

Property and such other tests on the Timber Property as may be necessary to

conduct the Site Assessments in the reasonable opinion of the Site

Reviewers.  Borrower will supply to the

Site Reviewers such historical and operational information regarding the Timber

Property as may be reasonably requested by the Site Reviewers to facilitate the

Site Assessments and will make available for meetings with the Site Reviewers

appropriate personnel having knowledge of such matters.  So long as the Site Assessment establishes a

material violation of an Environmental Law that could reasonably be expected to

result in a potential liability in excess of $250,000, the cost of performing

such Site Assessment shall be paid by Borrower to the Administrative Agent

within ten (10) days after notice to Borrower from the Administrative Agent

itemizing the amounts incurred to the effective date of such notice, with

interest thereon from the date of payment by the Administrative Agent at the

Default Rate.  Until such amounts shall

be paid by Borrower, they will be added to and become a part of the

indebtedness secured by the Mortgages.




 




10.5    INDEMNIFICATION:  BORROWER HEREBY AGREES TO UNCONDITIONALLY

AND ABSOLUTELY INDEMNIFY, DEFEND AND HOLD HARMLESS EACH OF THE INDEMNIFIED

PARTIES (AS HEREINAFTER DEFINED) FROM AND AGAINST ANY AND ALL DAMAGES, LOSSES,

LIABILITIES (INCLUDING STRICT LIABILITY), OBLIGATIONS, PENALTIES, CLAIMS,

LITIGATION, DEMANDS, DEFENSES, JUDGMENTS, SUITS, PROCEEDINGS, FINES, COSTS,

DISBURSEMENTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ AND

EXPERTS’ FEES AND EXPENSES, CLEAN-UP COSTS, WASTE DISPOSAL COSTS AND OTHER SUCH

SIMILAR COSTS), OF ANY KIND OR NATURE WHATSOEVER (HEREINAFTER




 




39





























 




COLLECTIVELY CALLED THE “LOSSES”)

WHICH MAY AT ANY TIME BE IMPOSED UPON, INCURRED BY OR ASSERTED OR AWARDED

AGAINST ANY OF THE INDEMNIFIED PARTIES AND ARISING FROM ANY ENVIRONMENTAL

MATTER DESCRIBED HEREIN OR IN THE INDEMNIFICATION AGREEMENT, INCLUDING, WITHOUT

LIMITATION, MATTERS ARISING OUT OF ANY BREACH OF THE COVENANTS, REPRESENTATIONS

AND WARRANTIES SET FORTH HEREIN AND IN THE INDEMNIFICATION AGREEMENT, WHETHER

ANY SUCH MATTERS ARISE BEFORE, DURING OR AFTER ANY FORECLOSURE OF THE MORTGAGES

OR OTHER TAKING OF TITLE TO ALL OR ANY PORTION OF THE TIMBER PROPERTY OR THE

ENFORCEMENT OF ANY OTHER REMEDIES UNDER THE FINANCING DOCUMENTS,

NOTWITHSTANDING THE CONCURRENT OR COMPARATIVE NEGLIGENCE OF ANY OF THE

INDEMNIFIED PARTIES, BUT ONLY WITH RESPECT TO EVENTS OCCURRING PRIOR TO THE

CUTOFF DATE.  THE FOREGOING

INDEMNIFICATION SHALL INCLUDE, BUT NOT BE LIMITED TO, INDEMNIFICATION FOR

LOSSES ARISING OR RESULTING FROM (A) THE PRESENCE ON OR UNDER, OR THE ESCAPE,

SEEPAGE, LEAKAGE, SPILLAGE, DISCHARGE, EMISSION OR RELEASE FROM THE TIMBER

PROPERTY OF ANY HAZARDOUS MATERIALS (WHETHER OCCURRING BEFORE OR AFTER THE

EFFECTIVE DATE HEREOF BUT PRIOR TO THE CUTOFF DATE), (B) ANY HAZARDOUS

MATERIALS CONTAMINATION (WHETHER OCCURRING BEFORE OR AFTER THE EFFECTIVE DATE

HEREOF BUT PRIOR TO THE CUTOFF DATE), (C) THE ENVIRONMENTAL CONDITION OF THE

TIMBER PROPERTY AND ANY VIOLATION OF ANY ENVIRONMENTAL LAW WITH RESPECT TO THE

TIMBER PROPERTY (WHETHER OCCURRING BEFORE OR AFTER THE EFFECTIVE DATE HEREOF

BUT PRIOR TO THE CUTOFF DATE), AND/OR (D) THE APPLICABILITY OF ANY

ENVIRONMENTAL LAWS RELATING TO HAZARDOUS MATERIALS (INCLUDING, WITHOUT

LIMITATION, CERCLA OR ANY FEDERAL, STATE OR LOCAL SO-CALLED “SUPERFUND” OR

“SUPERLIEN” LAWS, STATUTE, LAW, ORDINANCE, CODE, RULE, REGULATION, ORDER OR DECREE),

REGARDLESS OF WHETHER OR NOT CAUSED BY OR WITHIN THE CONTROL OF BORROWER, AND

NOTWITHSTANDING THE CONCURRENT OR COMPARATIVE NEGLIGENCE OF THE HOLDERS.  The Indemnification Obligations and other

covenants, warranties and representations contained in this Section 10

are in addition to, and not in lieu of, the Indemnification Obligations and

other covenants, warranties and representations contained in the

Indemnification Agreement.  The

representations, covenants, warranties and indemnifications contained in this Section 10

shall survive the foreclosure or release of the Mortgages as follows:  (a) indefinitely after a foreclosure or

the acceptance of a deed in lieu of foreclosure, the exercise by the Holders of

any other remedies under the Financing Documents, the discharge of Indemnitor’s

obligations under any of the other Financing Documents, or any transfer of the

Timber Property, even if, as a part of such foreclosure, deed in lieu of

foreclosure or other enforcement action, the indebtedness evidenced by the

Notes and secured by the Mortgages is satisfied in full, and (b) for a

period of five (5) years after the voluntary release of the Mortgages in

connection with the full satisfaction of such indebtedness which is not related

to a foreclosure, deed in lieu of foreclosure or other enforcement action.  For purposes of this paragraph, the term

“Indemnified Parties” shall refer collectively and severally to (a) any

subsequent owner or holder of the Notes or the Mortgages, and (b) any

officers, directors, shareholders, partners,




 




40





























 




policyholders, employees,

agents and attorneys of any of the persons or entities described in clauses (a)

and (b) of this sentence.  As used

herein, the term “Cutoff Date” with respect to the Timber Property shall mean

either (A) the date on which (i) the liens created by the Mortgages

relating to the Timber Property are foreclosed (which for purposes of this

Agreement shall include the acceptance of a deed in lieu of foreclosure with

respect to the Timber Property) and (ii) Borrower shall have delivered

possession of the Timber Property to the Holders or to the purchaser at any

such foreclosure sale and shall have vacated the Timber Property, or

(B) the date on which the Holders voluntarily release the liens created by

the Mortgages with respect to the Timber Property.  The limitations contained herein relating to the Cutoff Date are

intended to relate solely to the occurrence of the event which gives rise to

the indemnification obligation, not the date on which the Indemnified Parties

discover that such event has occurred or the date on which the Indemnified

Parties have a right to enforce the indemnification obligations of the

Borrower.  Notwithstanding the

indemnification provisions of this Section 10.5, Borrower shall not

be liable for losses caused solely by the actions of the Holders or others

after the Cutoff Date.




 




10.6      Cure Violations of Environmental Laws:  If Borrower fails to comply with the

requirements of any Environmental Laws, the Administrative Agent shall have the

right (but not the obligation) prior or subsequent to an Event of Default, to

give such notices or cause such work to be performed at, upon, under or within

the Timber Property, or to take any and all other actions as the Administrative

Agent deems necessary, to cure said failure of compliance.  All amounts paid or incurred by the

Administrative Agent in the exercise of any such rights shall be paid by

Borrower to the Administrative Agent within ten (10) days after notice to

Borrower from the Administrative Agent itemizing the amounts incurred to the

effective date of such notice, with interest thereon from the date of payment

by the Administrative Agent at the Default Rate.  Until such amounts shall be paid by Borrower, they shall be added

to and become a part of the indebtedness evidenced and secured hereby and by

the other Financing Documents.




 




SECTION 11.  INTERPRETATION OF THIS AGREEMENT.




 




11.1      Disclosure.  Whenever the phrase “except as previously

disclosed in writing” or any similar phrase is used herein, such phrase shall

refer to matters expressly described or disclosed in a writing delivered to

you, and shall not refer to matters described or disclosed in a document

incorporated by a reference contained in any such writing unless a copy of such

incorporated document is also delivered to you.




 




11.2      Governing Law.  THIS AGREEMENT AND THE NOTES SHALL BE

GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE

OF WASHINGTON AND APPLICABLE FEDERAL LAW.




 




11.3      Section Headings, Table of Contents and

Construction.  The titles of the

Sections and the Table of Contents appear as a matter of convenience only, do

not constitute a part of this Agreement and shall not affect the construction

hereof.  Each warranty, representation,

condition or other provision contained in this Agreement shall be construed

(absent an express contrary provision herein) as being independent of each

other warranty, representation, condition or other provision contained herein,

and compliance with any one warranty, representation, condition or




 




41





























 




other provision shall not

(absent such an express contrary provision) be deemed to excuse compliance with

one or more other warranties, representations, conditions or other provisions.




 




11.4      Partial Invalidity.  The unenforceability or invalidity of any

provision or provisions of this Agreement shall not render any other provision

or provisions herein contained unenforceable or invalid.




 




11.5      Limitation on Interest.  It is expressly stipulated and agreed to be

the intent of Borrower and the Holders at all times to comply with applicable

Washington law governing the maximum rate or amount of interest payable on or

in connection with the Financing Documents and the extension of credit

evidenced by the Notes (the “Credit Extension”).  If the applicable law is ever judicially

interpreted so as to render usurious any amounts called for under any Financing

Document, or contracted for, charged, taken, reserved or received with respect

to the Credit Extension, or if acceleration of maturity of the Notes or if any

prepayment by Borrower results in Borrower having paid any interest in excess

of that permitted by applicable law, then it is Borrower’s and the Holders’

express intent that all excess amounts theretofore collected by the Holders be

credited on the principal balances of the Notes (or, if the Notes have been or

would thereby be paid in full, refunded to Borrower), and the provisions of the

Financing Documents immediately be deemed reformed and the amounts thereafter

collectible thereunder reduced, without the necessity of the execution of any

new document, so as to comply with the applicable law, but so as to permit the

recovery of the fullest amount otherwise called for under the Financing

Documents.  The right to accelerate

maturity of the Notes does not include the right to accelerate any interest

which is not otherwise accrued on the date of such acceleration, and the

Holders do not intend to collect any unearned interest in the event of

acceleration.  If the Prepayment Premium

payable upon acceleration of maturity of the Notes constitutes interest under

applicable law, the amount of such Prepayment Premium, together with all other

amounts which constitute interest under applicable law, will not exceed the

maximum amount of interest which may be lawfully charged or received with

respect to the Credit Extension for the actual period such Credit Extension is

outstanding.  All sums paid or agreed to

be paid to the Holders for the use, forbearance or detention of the Credit

Extension shall, to the extent permitted by 

applicable law, be amortized, prorated, allocated and spread throughout

the full term of the Credit Extension until payment in full so that the rate or

amount of interest on account of such Credit Extension does not exceed the

applicable usury ceiling.




 




11.6      Exhibits.




 




All references

herein to Exhibits or Annexes shall be to the Exhibits and Annexes attached to

this Agreement unless the context otherwise requires reference to an exhibit or

annex to another document.  All Exhibits

and Annexes attached to this Agreement are made a part hereof for all purposes.




 




42





























 




SECTION 12.  MISCELLANEOUS.




 




12.1      Notices.




 




(a)   Method; Address.  All notices and communications required or

permitted to be given under this Agreement shall be in writing and shall either

be mailed by first class United States mail, postage prepaid, registered or

certified with return receipt requested, or delivered in person to the intended

addressee, or sent by telecopier, prepaid telegram or telex, or sent by

reliable express mail (such as Federal Express or U.S. Express Mail), and shall

be addressed,




 




(1)   if to you, at your address

shown in Annex I to this Agreement, marked for attention as there

indicated, or at such other address as you shall have furnished to Borrower in

writing, or




 




(2)   if to Borrower, at the

following address:




 




Pope

Resources


19245 Tenth Avenue Northeast


Poulsbo, WA 98370


Attention:  Mr. Thomas M. Ringo




 




With copies to:




 




Mr. Greg Adams


Davis Wright Tremaine LLP


2600 Century Square


1501 Fourth Avenue


Seattle, WA 98101-1688




 




or at such other address as Borrower shall have furnished in writing to

the Administrative Agent.




 




(b)   When Given.  Any notice so mailed shall be deemed to be given and become

effective three (3) days after deposit in the U.S. Mail.  Any notice given in any other manner shall

be deemed to be given and become effective only if and when actually received

(or rejected) by the addressee.




 




12.2      Reproduction of Documents.




 




                This Agreement and all documents relating

hereto, including, without limitation, (a) consents, waivers and

modifications which may hereafter be executed, (b) documents received by

you at the Closing of your purchase of the Notes (except the Notes themselves),

and (c) financial statements, certificates and other information

previously or hereafter furnished to you, may be reproduced by you by any

photographic, photostatic, microfilm, microcard, miniature photographic or

other similar process and you may destroy any original document so

reproduced.  Borrower agrees and

stipulates that any such reproduction shall be admissible in evidence as the

original itself in any judicial or administrative proceeding (whether or not

the




 




43





























 




original is in existence and

whether or not such reproduction was made by you in the regular course of

business) and that any enlargement, facsimile or further reproduction of such

reproduction shall likewise be admissible in evidence.




 




12.3      Survival.  All warranties, representations, certifications and covenants

made by Borrower herein or in any written certificate or other written

instrument delivered to you or a representative thereof by Borrower or on

behalf of Borrower under this Agreement shall be considered to have been relied

upon by you and shall survive the delivery to you of the Notes regardless of

any investigation made by you or on your behalf.  All statements  in any

such certificate or other instrument shall constitute warranties and

representations hereunder.




 




12.4      Successors and Assigns.  This Agreement shall inure to the benefit of

and be binding upon the successors and assigns of each of the parties to this

Agreement.  The provisions of this

Agreement are intended to be for the benefit of all the Holders, from time to

time, of the Notes, and shall be enforceable by the Administrative Agent on

behalf of any or all the Holders who acquire an interest in any one or more of

the Notes in a transaction which does not violate the provisions of

subsection 1.2(b) above.




 




12.5      Amendments and Waiver.




 




(a)   Requirements.  This Agreement may be amended, and the

observance of any term of this Agreement may be waived with (and only with) the

written consent of Borrower and the Holders, as more particularly described in Section 13.7

below.




 




(b)   Binding Effect.  Any such amendment or waiver shall be

binding upon the Holders and upon Borrower whether or not the Notes shall have

been marked to indicate such amendment or waiver.  No such amendment or waiver shall extend to or affect any

obligation, covenant, agreement, Default or Event of Default not expressly

amended or waived or any right consequent thereon.




 




12.6      Duplicate Originals; Execution in

Counterpart.  Two or more duplicate

originals of this Agreement may be signed by the parties, each of which shall

be an original but all of which together shall constitute one and the same

instrument.  This Agreement may be

executed in one or more counterparts and will be effective when at least one

counterpart has been executed by each party hereto, and each set of

counterparts which, collectively, show execution by each party hereto shall

constitute one duplicate original.




 




12.7      Intentionally Deleted.




 




12.8      Entire Agreement.  The Financing Documents constitute the

entire agreement between Borrower and the Holders, and supersede all prior

negotiations and agreements relating to the subject matter thereof.




 




12.9      Conflicts.  If and to the extent the provisions of this

Agreement conflict with or are inconsistent with any of the provisions of any

other Financing Documents, the provisions of this Agreement shall control;

provided that the parties agree that this Agreement and the other Financing

Documents shall be interpreted and construed, to the fullest extent possible,

so as not




 




44





























 




to be in conflict with

each other, it being the intent of the parties that all provisions of this

Agreement and the other Financing Documents shall be enforceable to the fullest

extent possible.




 




12.10    No Personal Liability of General Partners.  In any action brought to enforce the

obligation of the maker of the Notes to pay the indebtedness evidenced by such

Notes or to enforce the obligation of Borrower to pay any indebtedness or

obligation created or arising under this Agreement, the Deed of Trust, or any

Financing Statement any judgment or decree shall be enforceable against the

General Partners of Borrower only to the extent of their interests in the

Collateral, and any such judgment or decree shall not be subject to execution

on, nor be a lien on, assets of such General Partners of Borrower other than

their interests in the Collateral.  The

foregoing shall in no way otherwise affect the personal liability of Borrower.




 




SECTION 13.  APPOINTMENT, RIGHTS AND OBLIGATIONS OF THE

ADMINISTRATIVE AGENT.




 




13.1      Appointment.  The Holders, by their acceptance of the

benefits of this Agreement, hereby irrevocably designate John Hancock as the

initial Administrative Agent to act as specified herein.  Each Holder hereby irrevocably authorizes,

and each subsequent holder of any of the Notes by the acceptance of any such

note shall be deemed irrevocably to authorize, the initial Administrative Agent

to take such action on its behalf under the provisions of this Agreement and to

exercise such powers and to perform such duties hereunder as are specifically

delegated to or required of the Holders by the terms hereof and such other

powers as are reasonably incidental thereto. 

The Administrative Agent may perform any of its duties hereunder by or

through its agents or employees.




 




13.2      Nature of Duties.  The Administrative Agent shall have no

duties or responsibilities except those expressly set forth in this

section.  Neither the Administrative

Agent nor any of its officers, directors, employees or agents shall be liable

to the Holders for any action taken or omitted by it as agent hereunder or in

connection herewith unless caused by its or their gross negligence or willful

misconduct.  The duties of the

Administrative Agent shall be mechanical and administrative in nature; the

Administrative Agent shall not have by reason of this Agreement a fiduciary

relationship in respect of any Holder, and nothing in this Agreement, expressed

or implied, is intended to or shall be so construed as to impose upon the

Administrative Agent any obligations in respect of this Agreement except as

expressly set forth in this section.




 




13.3      Lack of Reliance.  Independently and without reliance upon the

Administrative Agent, each Holder, to the extent it deems appropriate, has made

and shall continue to make (i) its own independent investigation of the

financial condition and affairs of the Borrower in connection with the

indebtedness evidenced by the Notes and the taking or not taking of any action

in connection therewith, and (ii) its own appraisal of the

creditworthiness of Borrower, and the Administrative Agent shall have no duty

or responsibility, either initially or on a continuing basis, to provide any

Holder with any credit or other information with respect thereto, whether

coming into its possession before the purchase of any Notes, or at any time or

times thereafter.  The Administrative

Agent shall not be responsible to any Holder for any recitals, statements,

information, representations or warranties herein or in any document,

certificate or




 




45





























 




other writing delivered

in connection herewith or for the execution, effectiveness, genuineness,

validity, enforceability, perfection, collectibility, priority or sufficiency

of this Agreement or any of the other Financing Documents or the financial

condition of the Borrower or be required to make any inquiry concerning either

the performance or observance of any of the terms, provisions or conditions of

this Agreement, or the financial condition of the Borrower or the existence or

possible existence of any Event of Default.




 




13.4      Certain Rights of John Hancock.  For purposes of this Agreement, the Holders

holding at least sixty-six and two-thirds percent (66.67%)  of the aggregate principal

amount of the Notes at any one time shall be referred to collectively as the “Required

Holders”.  If the

Administrative Agent shall request instructions from the Required Holders with

respect to any act or action (including failure to act) in connection with this

Agreement, the Mortgages or any other Financing Document, the Administrative

Agent shall be entitled to refrain from such act or taking such action unless

and until it shall have received instructions from the Required Holders, and to

the extent requested, appropriate indemnification in respect of actions to be

taken; and the Administrative Agent shall not incur liability to any Person by

reason of so refraining.  Without

limiting the foregoing, no Holder shall have any right of action whatsoever

against the Administrative Agent as a result of the Administrative Agent acting

or refraining from acting hereunder in accordance with the instructions of the

Required Holders.




 




13.5      Reliance.  The Administrative Agent shall be entitled to rely, and shall be

fully protected in relying, upon any note, writing, resolution, notice,

statement, certificate, telex, teletype or telecopier message, cablegram,

radiogram, order or other document or telephone message signed, sent or made by

the proper Person or entity on behalf of any Holders, and, with respect to all

legal matters pertaining to this Agreement and its duties hereunder, upon

advice of counsel selected by it. Borrower shall be entitled to rely, and shall

be fully protected in relying, on the fact that John Hancock is acting as

Administrative Agent on behalf of the Holders until such time as Borrower shall

have received a written notice from John Hancock stating that John Hancock is

no longer acting in its capacity as Administrative Agent for the Holders and on

the assumption that as Administrative Agent, John Hancock has received the

requisite consent of the Required Holders for any acts it purports to take on

their behalf.




 




13.6      Note Assignment; Participation

Interests.




 




(a)   Each holder of Notes will not sell or

otherwise transfer any Note to any Person other than an Institutional

Accredited Investor; provided, if there is a Default or Event of Default, each

holder of Notes shall have control over the disposition of all of its assets to

the fullest extent required by applicable insurance law or other applicable

law, and may sell to any Person.  Upon

any such sale such purchaser or assignee shall, upon compliance with the

registration requirements of Section 1.2 above, become a Holder

hereunder.




 




(b)   Each Holder may, without the consent of the

Borrower, sell participations to one or more banks or Institutional Investors

in all or a portion of its rights and obligations under this Agreement and the

other Financing Documents; provided, however, that (i) such Holder’s

obligations under this Agreement and the other Financing Documents shall remain

unchanged, (ii) such Holder shall, vis a vis such participant, remain solely

responsible to the other parties




 




46





























 




hereto for the performance of such obligations,

(iii) such Holder shall remain the holder of the Notes held by it for all

purposes of this Agreement, (iv) the Borrower and the other Holders shall

continue to deal solely and directly with such Holder in connection with such

Holder’s rights and obligations under this Agreement and the other Financing

Documents.  Any Holder selling a

participation to any bank or Institutional Investor that is not an affiliate of

such Holder shall give notice thereof to the Borrower and the Administrative

Agent.




 




13.7      Amendments to Financing Documents.  Any term, covenant, agreement or condition

of this Agreement and, unless explicitly provided otherwise therein, of any of

the other Financing Documents, other than the 1992 Note and the 1992 Deed of

Trust, may, with the consent of Borrower, be amended, or compliance therewith

may be waived (either generally or in a particular instance and either

retroactively or prospectively), by one or more substantially concurrent

written instructions signed by the Required Holders, provided that:




 




(a)   No such amendment or waiver shall, without

the consent of all of the Holders,




 




(1)   change the amount of the

principal of any of the Notes or change the amounts or dates of payment of any

payment or prepayment of principal due upon any of the Notes or reduce the rate

or change the time of payment of interest on any of the Notes, or subordinate

the obligation of Borrower to pay the principal of, premium, if any, and

interest on the Notes to any other obligation, or modify any of the provisions

of this Agreement or of the Notes with respect to the payment or prepayment

thereof (including the amount of any premium payable on any prepayment); or




 




(2)   change the percentage of the

Holders of Notes required to approve any such amendment, effectuate any such

waiver or accelerate payment of the Notes, without the consent of the Holders

of all of the Notes at the time outstanding; and




 




(b)   No such amendment or waiver shall extend to

or affect any obligation not expressly amended or waived or impair any right

consequent thereon




 




/ / /




 




/ / /




 




/ / /




 




/ / /




 




/ / /




 




/ / /




 




/ / /




 




/ / /




 




47





























 




If this Agreement is satisfactory to you, please so indicate by signing

the acceptance at the foot of a counterpart of this Agreement and return such

counterpart to Borrower, whereupon this Agreement will become binding between

us in accordance with its terms.




 




	

   


  	

  Very truly yours,


  
	

   


  	

   


  
	

   


  	

  POPE RESOURCES, A DELAWARE


  
	

   


  	

  LIMITED PARTNERSHIP, a Delaware


  
	

   


  	

  limited partnership


  
	

   


  	

   


  
	

   


  	

  By:  Pope MPG, Inc., a

  Delaware corporation,


  
	

   


  	

  its managing general partner


  
	

   


  	

  By:


  	

  /s/ Thomas M. Ringo


  	

   


  
	

   


  	

   


  	

  Name:


  	

  Thomas M. Ringo


  	

   


  
	

   


  	

   


  	

  Title:


  	

  Vice President & CFO


  	

   


  
	

   


  	

   


  
						





 




	

   


  	

   


  
	

  The

  foregoing Agreement is hereby


  	

   


  
	

  accepted as

  of the date first above written:


  	

   


  
	

   


  	

   


  
	

  JOHN HANCOCK

  LIFE INSURANCE


  COMPANY


  	

   


  
	

   


  	

   


  
	

  By:


  	

  /s/ C.

  Whitney Hill


  	

   


  
	

   


  	

  Name:


  	

  C. Whitney

  Hill


  	

   


  
	

   


  	

  Title:


  	

  Director


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

  JOHN HANCOCK

  VARIABLE LIFE


  INSURANCE COMPANY


  	

   


  
	

   


  	

   


  
	

  By:


  	

  /s/ C.

  Whitney Hill


  	

   


  
	

   


  	

  Name:


  	

  C. Whitney

  Hill


  	

   


  
	

   


  	

  Title:


  	

  Director


  	

   


  
						





 




48





























 




ANNEX

I.




 




SCHEDULE

OF INFORMATION FOR PAYMENT AND NOTICES




 




JOHN HANCOCK LIFE INSURANCE COMPANY




 




JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY




 




1.             All

payments on account of Notes or other obligations in accordance with the

provisions thereof shall be made by bank wire transfer in immediately available

funds for credit, not later than 12 noon, Boston time, to:




 




Wire money to:                     Bank

One, Illinois




ABA # 071100269




For credit to:    John Hancock Champaign Service 




Center- Mtg/Bond




Account # 617423603




Reference: Loan # 163908




 




2.             Contemporaneously

with the above wire transfer, advice setting forth:




 




(1)           the

full name, interest rate and maturity date of the Notes or other obligations;




 




(2)           allocation

of payment between principal and interest and any special payment; and




 




(3)           name

and address of Bank from which wire transfer was sentshall be delivered or

mailed to:




 




John Hancock Financial Services




Bond and Corporate Service Center




201 Knollwood Dr., Suite A




Champaign, IL  61820-7594




Attn: Accounting




Phone No. 217-356-6464




Facsimile No. 217-356-1031




 




with a copy to:




 




John Hancock Life Insurance Company




Bond and Corporate Finance Group




2520 Venture Oaks Way, Suite 120




Sacramento, CA  95833




Attn:  C. Whitney Hill




 




3.             All

notices with respect to prepayments, both scheduled and unscheduled, whether

partial or in full, and notice of maturity shall be delivered or mailed to:




 




49





























 




John Hancock

Financial Services




Bond and

Corporate Service Center




201

Knollwood Dr., Suite A




Champaign,

IL  61820-7594




Phone No.

217-356-6464




Facsimile No.

217-356-1031




 




with a copy

to:




 




John Hancock

Life Insurance Company




Bond and

Corporate Finance Group




2520

Venture Oaks Way, Suite 120




Sacramento, CA  95833




Attn:  C. Whitney Hill




 




and:




 




John Hancock

Life Insurance Company




John Hancock

Place




200 Clarendon

Street




Boston, MA

02117




Attention: Investment Law Division, T-30




4.             All other communications which

shall include, but not be limited to, financial statements and certificates of

compliance with financial covenants, shall be delivered or mailed to:




John Hancock

Life Insurance Company




John Hancock

Place




200 Clarendon

Street




P.O. Box 111




Boston, MA

02117




Attention:

Bond and Corporate Finance Group T–57




 




with a copy

to:




 




John Hancock

Life Insurance Company




Bond and

Corporate Finance Group




2520

Venture Oaks Way, Suite 120




Sacramento, CA  95833




Attention:  C. Whitney Hill




 




50





























 




5.             All Securities shall be registered

in the name of John Hancock Life Insurance Company with respect to Notes F-1

and F-2 referenced on Annex VI and John Hancock Variable Life Insurance Company

with respect to Note F-3 referenced on Annex VI.




6.             Borrower’s Tax I.D. No.:

91-1313292.




 




51





























 




ANNEX

II.




DEFINED

TERMS




As

used in this Agreement, the following terms have the respective meanings set

forth below or set forth in the Section of the Note Purchase Agreement

following such term (all such definitions to be equally applicable to both the

singular and plural forms of the terms defined):




Administrative

Agent — initially John Hancock, and thereafter such

Person as may be designated from time to time by the Holders to act as

“Administrative Agent” hereunder.




Administrative

Values — for each Category of the Land, the Pre–Merchantable

Timber, Sub-Merchantable Timber and the Merchantable Timber, the value per unit

(either acre or ton) as set forth in Exhibit C.




Affiliate

— a Person which directly or indirectly through one or more intermediaries

controls, or is controlled by, or is under common control with Borrower.  The term “control” means the possession,

directly or indirectly, of the power to direct or cause the direction of the

management and policies of a Person, whether through the ownership of voting

securities, by contract or otherwise.




Agreement

— this Note Purchase Agreement, as the same may be amended, supplemented,

restated or assigned from time to time (subject to the consent required under Section

12.5 hereof).




Applicable

Environmental Laws — any applicable laws pertaining to

human health and/or the environment, including, without limitation, CERCLA,

RCRA and the applicable provisions of any other laws of the United States of

America and/or the State Washington dealing with similar matters, including

specifically, without limitation, the “Environmental Laws” as defined in

subsection 10.1(b) above.




Assets

— anything owned or controlled by Borrower and any right or interest therein.




Borrower

— POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP, a Delaware limited

partnership, and its permitted successors and assigns.




Business Day

— a day other than a Saturday, a Sunday or a day on which national banks in

Washington are closed for business.




Cash Flow

Coverage Ratio —” means, as of any date of

determination, the ratio of (a) EBITDA for the period of calculation minus internally

financed capital expenditures made by Borrower and its subsidiaries during such

period, to

(b) the sum of (i) Interest Charges during such period plus

(ii) all scheduled payments of principal with respect to Required Debt

Service required to be made by Borrower and its subsidiaries during such

period.




 




52





























 




 




Category

— each of the categories of Land, Merchantable Timber, Pre–Merchantable

Timber, and Sub-Merchantable Timber set forth on Exhibit C to this

Agreement.




CERCLA

— subsection 10.1(a).




Closing

— Section 1.3(b).




Closing Date

— Section 1.3(b).




Code

— the Internal Revenue Code of 1986, as amended.




Collateral

— the Timber Property, the Collateral Account, all other Property of Borrower

described in the Financing Documents from time to time securing payment of the

Notes, and all permits, governmental approvals, data, files, and computer

software and hardware relating to the Timber Property.




Collateral

Account — collectively, (i) the Collateral

Account and all substitutions held by the Collateral Agent pursuant to the

Collateral Agreement, (ii) any and all sums paid to or deposited with

Collateral Agent pursuant to the provisions of the Collateral Agreement (the

“Escrowed Funds”), (iii) any and all interest, dividends and other

earnings on the Escrowed Funds, (iv) any and all instruments evidencing

the Escrowed Funds, and (v) any and all substitutions therefor, increases

thereto and proceeds thereof.




Collateral

Agent —John Hancock or any successor approved by

Borrower and the Administrative Agent.




Collateral

Agreement — the Cash Pledge and Security Agreement

dated of even date herewith between Borrower and the Holder, as same may be

amended, restated, modified or assigned from time to time.




Condemnation

— any taking of the Land or Timber on the Land or any interest therein under

the exercise of the power of eminent domain, or any transfer of the Land or

Timber, or any interest therein, by sale in lieu of the exercise of such power.




Contested in

Good Faith — any claim, demand, levy, assessment or

other matter shall for purposes of this Agreement be deemed to be “Contested in

Good Faith” if:  (i) no Event of

Default exists hereunder at the time such contest is commenced or at any time

during the pendency of such contest, (ii) such claim, demand, levy,

assessment or matter is actively contested in good faith by appropriate

proceedings in a manner not prejudicial to the Holders or the rights of the

Holders hereunder or under the other Financing Documents, (iii) such

contest (as opposed to the outcome of any such contest) could not reasonably be

expected to have a material adverse effect on the Timberland or Borrower or its

businesses, profits, or condition (financial or otherwise), (iv) where the

amount being contested, if determined adversely to Borrower, would have a

material adverse effect on Borrower, the Timberland, or Borrower’s business,

Borrower, at its option, shall have either (A) established adequate book

reserves with respect to the 




 




53





























 




 




amounts contested, determined

in accordance with GAAP, or (B) within five (5) days after written demand

of the Holders either deposited funds with the Holders or obtained a bond in

form and substance and with an issuing company acceptable to the Holders in an

amount sufficient to cover any amount which may be owing in the event the

contest is unsuccessful (the decision of whether to deposit funds or to deliver

a bond being expressly reserved to the Borrower), and (v) such contest

does not continue beyond the date on which the Timberlands or any of the other

Collateral could be sold due to the nonpayment of the amount contested.  In the case of any contest in respect of

which a negative outcome could reasonably be expected to have a material

adverse effect on the Timberland or Borrower or its businesses, profits, or

condition (financial or otherwise), the appropriateness of the proceedings

shall be supported by an opinion of the independent counsel responsible for

such proceedings (which opinions need not predict the outcome of any such

proceeding), which opinion shall be supplemented from time to time at the

request of the Holders.




Credit

Extension — Section 11.5.




Cutting Year

— Section 5.2(a)




DBH

— with respect to Timber, the Diameter Breast Height or the diameter of any

tree as measured at a point four and one–half feet above the ground.




Debt

— means, as to any Person at a particular time, all of the following: (a) all

obligations of such Person for borrowed money; (b) any direct or

contingent obligations of such Person arising under letters of credit

(including standby and commercial), banker’s acceptances, bank guaranties,

surety bonds and similar instruments; (c) net obligations under any Swap

Contract in an amount equal to (i) if such Swap Contract has been closed

out, the termination value thereof, or (ii) if such Swap Contract has not

been closed out, the mark–to–market value thereof determined on the

basis of readily available quotations provided by any recognized dealer in such

Swap Contract; (d) whether or not so included as liabilities in accordance

with GAAP, all obligations of such Person to pay the deferred purchase price of

property or services, and indebtedness (excluding prepaid interest thereon)

secured by a Lien on property owned or being purchased by such Person

(including indebtedness arising under conditional sales or other title

retention agreements), whether or not such indebtedness shall have been assumed

by such Person or is limited in recourse; (e) lease payment obligations

under capital leases or synthetic lease obligations; (f) all Guaranty

Obligations of such Person in respect of any of the foregoing; and (g) purchase

money indebtedness incurred solely to finance the payment of all or part of the

purchase price of any equipment, software licenses, or other fixed assets

acquired in the ordinary course of Borrower’s business.  For all purposes of this Agreement, the Debt

of any Person shall include the Debt of any partnership or joint venture in

which such Person is a general partner or a joint venturer, unless such Debt is

expressly made non-recourse to such Person except for customary exceptions

acceptable to Required Holders.




54





























 




Default

— an event or condition the occurrence of which would, with the lapse of time

or the giving of notice or both, become an Event of Default.




Default Rate

— an interest rate per annum equal to the lesser of (a)  two percent (2%)

over the interest rate applicable to the Notes from time to time, and

(b) the highest rate per annum permitted to be charged in accordance with

applicable law.




Destroyed

Timber — Timber which is (i) cut or removed by

any Person other than a Person authorized by Borrower, or (ii) which is

lost, damaged or destroyed by fire, windstorm, disease, infestation, act of any

Governmental Authority, war or third parties.




Disposal or

Disposed — shall have the meaning specified in RCRA,

provided in the event that RCRA is amended to broaden the meaning of this term

such broader meaning shall apply subsequent to the effective date of such

amendment and provided further to the extent that the laws of the State of

Washington establish a meaning for “disposal” which is broader than that

specified in RCRA, such broader meaning shall apply.




Environmental

Reports — the environmental site assessment or

assessments more particularly identified and described on Exhibit B attached

hereto and incorporated herein by this reference.




EBITDA

- means, for any period, for Borrower and its subsidiaries on a consolidated

basis, an amount equal to the sum of (a) Net Income, (b) Interest

Charges, (c) the amount of taxes, based on or measured by income, used or

included in the determination of such Net Income, (d) the amount of

depreciation, amortization, and depletion expense deducted in determining such

Net Income, and (e) the cost basis of land sold.




ERISA

— the Employee Retirement Income and Security Act of 1974, as amended.




Event of

Default — Section 6.1.




Financing

Documents — this Agreement, the Notes, the 1992 Note,

the Mortgages, the Indemnification Agreement, the Collateral Agreement, the

Financing Statements and all other documents or instruments executed and

delivered in connection with this Agreement or the indebtedness evidenced by

the Notes and secured by the Mortgages, as from time to time modified, amended,

restated or supplemented, and all other documents and instruments executed and

delivered in connection therewith.




Financing

Statements — collectively, the UCC-1 Financing

Statements required by the Administrative Agent to be executed by Borrower and

filed in the appropriate state and county offices to perfect the Holders’

security interest in those portions of the Collateral consisting of personal

property.




Fiscal Year

— means a twelve–month period ending on December 31 of any year.




 




55





























 




Forestry

Consultant — initially Atterbury Consultants, Inc., or

such other forestry consultants selected by the Administrative Agent and

approved by Borrower, which approval will not be unreasonably withheld.




GAAP

— such accounting principles as conform at the time to the generally accepted

accounting principles announced by the Financial Accounting Standards Board or

its equivalent, consistently applied and maintained throughout the period

indicated.




Good Title

— good, marketable and insurable title to real property (in fee simple unless a

different estate is expressly called for), and good and marketable title to

personal property.




Governmental

Authority — subsection 10.1(a).




Guaranty

Obligation — means, as to any Person, any

(a) guaranty by such Person of Debt of, or other obligation payable or

performable by, any other Person or (b) assurance, agreement, letter of

responsibility, letter of awareness, undertaking or arrangement given by such

Person to an obligee of any other Person with respect to the payment or

performance of an obligation by, or the financial condition of, such other

Person, whether direct, indirect or contingent, including any purchase or

repurchase agreement covering such obligation or any collateral security

therefor, any agreement to provide funds (by means of loans, capital

contributions or otherwise) to such other Person, any agreement to support the

solvency or level of any balance sheet item of such other Person or any

“keep-well” or other arrangement of whatever nature given for the purpose of

assuring or holding harmless such obligee against loss with respect to any

obligation of such other Person; provided, however, that the term

Guaranty Obligation shall not include endorsements of instruments for deposit

or collection in the ordinary course of business.  The amount of any Guaranty Obligation shall be deemed to be an

amount equal to the stated or determinable amount of the related primary

obligation, or portion thereof, covered by such Guaranty Obligation or, if not

stated or determinable, the maximum reasonably anticipated liability in respect

thereof as determined by the Person in good faith.




Hardwood

Timber — Section 9.6.




Hazardous

Materials — subsection 10.1(c).




Holders

— initially, John Hancock and the initial Holders listed on Annex VI

hereof, and thereafter, collectively, any and all owners and holders of the

Notes at the applicable time, including their successors and assigns.




Indemnification

Agreement — the Indemnification Agreement of even date

herewith executed by Borrower in favor of the Holders, as same may be amended,

modified, restated and assigned from time to time.




Institutional Accredited Investor —is an Institutional Investor that is an accredited




 




 




56





























 




investor within the meaning of Rule 501(a)(7)

under the Securities Act of 1933, as amended.




 




Institutional

Investor — any insurance company, pension fund, mutual

fund, investment company, bank, savings bank, savings and loan association,

investment banking company, trust company or any finance or credit company, any

portfolio or any investment fund managed by any of the foregoing, or any other

similar institutional investor, and any nominee of any of the foregoing.




Interest

Charges - means, for any period, for Borrower and its

subsidiaries on a consolidated basis, the sum of (a) all interest, premium

payments, fees, charges and related expenses of Borrower and its subsidiaries

in connection with Required Debt Service (including capitalized interest) or in

connection with the deferred purchase price of assets, in each case to the

extent treated as interest in accordance with GAAP, and (b) the portion of

rent expense of Borrower and its subsidiaries with respect to such period under

capital leases that is treated as interest in accordance with GAAP.




John Hancock

— John Hancock Life Insurance Company, a Massachusetts corporation.




Land

— the tracts of land covered by the Mortgages at the applicable time.




Lien

— with respect to Property, any right or interest therein of a creditor to

secure Debt owed to him or any other arrangement with such creditor

(i) which provides for the payment of such Debt out of such Property or

(ii) which allows him to have such Debt satisfied out of such Property, in

either case prior to the general creditors of any owner thereof, including

without limitation any lien, mortgage, deed to secure debt, deed of trust,

assignment of production, security interest, pledge, deposit, production

payment, rights of a vendor under any title retention or conditional sale

agreement or lease substantially equivalent thereto, or any other charge or

encumbrance for security purposes, whether arising by law or agreement or

otherwise, but excluding any right of offset which arises in the ordinary

course of business.




Loan to Value

Ratio — at any time, the fraction, expressed as a

percentage, determined by (i) subtracting the then current balance in the

Collateral Account from the aggregate outstanding principal balances of the

Notes, and then (ii) dividing the amount determined in accordance with

clause (i) hereof by the Total Administrative Value of the Timberlands.




Make-Whole Premium

Amount — as defined in Annex V.




Maturity Date

— subsection 4.3(d).




Merchantable

Timber — as defined in Section 9.6.




Mortgages

— collectively and severally, the mortgages, deeds of trust and/or deeds to

secure debt of even date herewith from Borrower to John Hancock, as agent for

the 




 




57





























 




Holders, and the mortgages,

deeds of trust and/or deeds to secure the 1992 Note, including, without

limitation the 1992 Deed of Trust, which are more particularly described on Exhibit

F attached hereto and incorporated herein by this reference covering, among

other things, Borrower’s interest in the Timber Property, as same may from time

to time be modified, amended, renewed, restated or assigned pursuant to the

terms hereof and thereof.




Net Income

— the net income (or net loss) of Borrower for the period in question

determined in accordance with GAAP.




Notes

— Section 1.1.




Note Year

— the periods of 12 calendar months commencing on January 1 of each calendar

year, except that the first Note Year shall commence on the date of issuance of

the Notes and end on December 31, 2001.




Ordinary

Course Indebtedness — means (a) intercompany

Guaranty Obligations of Borrower or any subsidiaries guarantying Debt otherwise

permitted hereunder of Borrower or any subsidiary; (b) Debt arising from

the honoring of a check, draft or similar instrument against insufficient

funds; (c) obligations in respect of Swap Contracts; (d) trade and

other accounts payable in the ordinary course of business in accordance with

customary trade terms and which are not overdue for a period of more than 60

days; and (e) deferred taxes.




Ordinary

Course Liens - means: (a) Liens for taxes not yet

due or which are being Contested in Good Faith and by appropriate proceedings,

if adequate reserves with respect thereto are maintained on the books of the

applicable Person in accordance with GAAP; (b) carriers’, warehousemen’s,

mechanics’, loggers’, materialmen’s, repairmen’s or other like Liens arising in

the ordinary course of business which are not overdue for a period of more than

30 days or which are being Contested in Good Faith and by appropriate

proceedings, if adequate reserves with respect thereto are maintained on the

books of the applicable Person; (c) pledges or deposits in connection with

worker’s compensation, unemployment insurance and other social security

legislation; (d) deposits to secure the performance of bids, trade

contracts (other than for borrowed money), leases, statutory obligations, surety

and appeal bonds, performance bonds and other obligations of a like nature

incurred in the ordinary course of business; (e) easements, rights-of-way,

restrictions and other similar encumbrances affecting real property which, in

the aggregate, are not substantial in amount, and which do not in any case

materially detract from the value of the property subject thereto or materially

interfere with the ordinary conduct of the business of the applicable Person;

and (f) attachment, judgment or other similar Liens arising in connection

with litigation or other legal proceedings (and not otherwise a Default

hereunder) in the ordinary course of business that is currently being Contested

in Good Faith by appropriate proceedings and adequate reserves have been set

aside and no material property is subject to a material risk of loss or

forfeiture.




 




58





























 




Partnership

Agreement - that certain Partnership Agreement of

Borrower dated November 7, 1985, as the same may be amended, restated or  modified from time to time.




Payment Date

— any scheduled date upon which an installment of principal, interest, or both,

is due and payable by Borrower to the Holders under the Notes pursuant to the

provisions of this Agreement.




Permitted

Leases — collectively and severally, leases entered

into by Borrower for equipment, software licenses or other fixed assets in the

ordinary course of Borrower’s business, but only to the extent that the annual

lease payments due under such leases, do not exceed $2,000,000 in the

aggregate.




Person

— an individual, general partnership, limited partnership, limited liability

company, corporation, trust, unincorporated organization, government,

governmental agency or governmental subdivision, including, without limitation

Borrower.




Port Gamble

Environmental Issue — means the contamination of

Borrower’s property at Port Gamble, Washington, which is the subject of ongoing

inquiry and oversight by the State of Washington Department of Ecology and

remediation activity of Borrower and Pope & Talbot, Inc., and for which

(1) based on information obtained to date, the cost of remediation of the

Port Gamble site is estimated by outside consultants to be $10-12 million;

(2) Borrower is continuing to negotiate liability issues with Pope &

Talbot, Inc., with a current best estimate of net cost to Borrower of $2-3

million; and (3) a total of $2 million has been reserved in the 2000

financial statements of Borrower.




Pre–Merchantable

Timber — at any time, softwood timber stands less than

30 years old, at such time.




Prepayment

Premium — Section 4.3(e).




Property

— any interest of Borrower in any kind of property or asset, whether real,

personal or mixed, and whether tangible or intangible, including without

limitation the Timber Property.




Quarterly

Payment Date — in each case, the first (1st) day of

January, April, July and October during each calendar year




RCRA

— Resource Conservation and Recovery Act of 1976, as amended by the Used Oil

Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the

Hazardous and Solid Waste Amendments of 1984, as amended.




Release or

Released — shall have the meaning specified in CERCLA,

provided in the event that CERCLA is amended to broaden the meaning of this

term such broader meaning shall apply subsequent to the effective date of such

amendment and provided further to the extent that the laws of the State of

Washington establish a meaning for “release” which is broader than that

specified in CERCLA, such broader meaning shall apply.




 




59





























 




Required Debt

Service — means, as of any date of determination, for

Borrower and its subsidiaries on a consolidated basis, the sum of (a) the

outstanding principal amount of all obligations and liabilities, whether

current or long-term, for borrowed money (including obligations hereunder),

(b) that portion of obligations with respect to capital leases that are

capitalized in the consolidated balance sheet of Borrower and its subsidiaries,

and (c) without duplication, all Guaranty Obligations with respect to Debt

of the type specified in subsections (a) and (b) above of Persons other than

Borrower or any subsidiary.




Required

Holders — Section 13.4.




Security

— shall have the same meaning as in Section 2(1) of the Securities Act of 1933,

as amended.




Softwood

Timber — Section 9.6.




Solid Waste

— shall have the meaning specified in RCRA, provided in the event that RCRA is

amended to broaden the meaning of this term such broader meaning shall apply

subsequent to the effective date of such amendment and provided further to the

extent that the laws of the State of Washington establish such a meaning for

“solid waste” which is broader than that specified in RCRA, such broader

meaning shall apply.




Sub-Merchantable

Timber —Timber stands which are more than 30 but less

than 45 years old.




Subsidiary

— any corporation or other legal entity in which a majority of the securities

(stock, partnership interests, etc.) which have voting power are controlled by

Borrower. For the purpose of this Agreement, a corporation or other legal

entity in which a majority of the securities which have voting power are owned

by a Subsidiary, as defined in the preceding sentence, shall also be deemed to

be a Subsidiary.




Swap Contract

- means (a) any and all rate swap transactions,

basis swaps, credit derivative transactions, forward rate transactions,

commodity swaps, commodity options, forward commodity contracts, equity or

equity index swaps or options, bond or bond price or bond index swaps or options

or forward bond or forward bond price or forward bond index transactions,

interest rate options, forward foreign exchange transactions, cap transactions,

floor transactions, collar transactions, currency swap transactions,

cross-currency rate swap transactions, currency options, spot contracts, or any

other similar transactions or any combination of any of the foregoing

(including any options to enter into any of the foregoing), whether or not any

such transaction is governed by or subject to any master agreement, and

(b) any and all transactions of any kind, and the related confirmations,

which are subject to the terms and conditions of, or governed by, any form of

master agreement published by the International Swaps and Derivatives

Association, Inc., any International Foreign Exchange Master Agreement, or any

other master agreement (any such master agreement, together with any related

schedules, as amended, restated, extended, supplemented or otherwise modified

in writing from time to time, a 




 




 




60





























 




“Master

Agreement”), including any such obligations or liabilities under any Master

Agreement.




Timber

— all timber and trees now or hereafter standing or lying or planted or growing

on or in the Timber Property, and all timber and trees which may be severed

from the Timber Property in which Borrower maintains an ownership or other

legal or equitable interest, including, without limitation, all

Sub-Merchantable Timber and Pre-Merchantable Timber.




Timber Cruise

— an estimation of Pre–Merchantable Timber, Sub-Merchantable Timber, and

Merchantable Timber quantities and conditions performed in accordance with the

specifications set forth on Exhibit E attached hereto.




Timber

Property or Timberlands — approximately 70,000 acres

of timberland located in Mason, Kitsap, Clallam, and Jefferson Counties,

Washington, more particularly described in Exhibit D attached hereto and

incorporated herein by this reference and the property presently encumbered by

the 1992 Deed of Trust, and commonly known as the Hood Canal Tree Farm.  The Timber Property is further described in

the map attached hereto as Exhibit G. 

Following any sale or release pursuant to the provisions of Section 5

hereof, the term Timberlands or Timber Property shall thereafter exclude the

Land and Timber so released.




Title Insurer

— initially Lawyer’s Title Insurance Company of Virginia and thereafter such

title company as may be selected by Borrower and reasonably acceptable to the

Administrative Agent, or in the absence of an Administrative Agent, the

Required Holders.




Title Policies

— The Mortgagee Policy of Title Insurance in the amount of $30,000,000 issued

by Title Insurer insuring that liens on the Timber Property are first and prior

liens and containing exceptions approved by the Administrative Agent.




Title

Reinsurance — collectively, facultative Reinsurance

Agreements between Title Insurer and Title Reinsurers to which secondary

liability under the Title Policy is ceded to and assumed by the Title Reinsurers.




Title

Reinsurers — those title insurance companies more

particularly described on Exhibit G attached hereto and incorporated

herein by this reference.




Total

Administrative Value — at any time and with respect to

that portion of the Timberlands for which such value is being calculated, the

sum of:  (i) for each Category of

Land set forth on Exhibit C hereto, the number of acres of Land in such

Category multiplied by the specified Administrative Value per acre for such

Category; (ii) for each Category of Pre-Merchantable Timber set forth on Exhibit

C hereto, the number of acres in such Category multiplied by the specified

Administrative Value per acre for such Category; (iii) for each Category of

Sub-Merchantable Timber set forth on Exhibit C hereto, the number of

acres in such Category multiplied by the specified Administrative Value per

acre for such Category; plus (iv) for each Category of Merchantable Timber

set




 




61





























 




forth on Exhibit C

hereto, the volumes of Timber in such Category multiplied by the specified

Administrative Value per ton for such Category.




Total

Capitalization — means Debt, plus Borrower’s Unit

Price at the end of each quarter in question, multiplied by the number of units

outstanding.




Under Cut

— subsection 5.2(c).




Unit Price

— means a dollar amount equal to the average (rounded to the nearest penny) of

the close bid and ask prices (per partnership unit) of Borrower’s partnership

units on the NASDAQ national market system during such quarter, as reported in

the Wall Street Journal.




 




62





























 




ANNEX

III.




FORM

OF NOTES




POPE RESOURCES, A DELAWARE LIMITED

PARTNERSHIP




POPE RESOURCES, A DELAWARE LIMITED

PARTNERSHIP




Class A Fixed Rate Senior Secured Note,




due April 1, 2011








	

  $


  	

   


  	

   


  	

  Poulsbo, Washington


  
	

   


  	

   


  	

   


  	

  March 29, 2001


  










 




1.     POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP, a Delaware limited

partnership (herein, together with successors and assigns, called “Maker”), for

value received, hereby promises to pay to JOHN HANCOCK LIFE INSURANCE COMPANY, a

Massachusetts corporation (herein, together with each subsequent owner and

holder of this Note, called “Payee”), the principal sum of                                                                                  and NO/100 DOLLARS ($                  ), together with interest on the unpaid principal

balance from time to time outstanding hereunder from the date hereof to

maturity (except as hereinafter provided) at the rate of 7.63 % per annum and

to pay on demand interest on any overdue principal (including any overdue

prepayment of principal) at the “Default Rate” provided for under the Agreement

(as hereinafter defined).




2.     This

Class A Fixed Rate Senior Secured Note (this Note, as it may be amended,

restated, or modified hereafter is herein referred to as this “Note”) is issued

under that certain Note Purchase Agreement (as amended, modified, supplemented

or restated from time to time, the “Agreement”) dated of even date herewith

made by and between Maker, Payee, and the other Holders, as defined in the

Agreement, and is entitled to the benefits thereof.  The Agreement also provides for the issuance by Maker to Payee of

Class A Fixed Rate Senior Secured Notes (including this Note) of even date

herewith in the aggregate principal amount of $30,000,000 (said Notes, including

this Note, as may be amended, restated, or modified hereafter are collectively

referred to herein as the “Fixed Rate Notes”). 

As provided in the Agreement, this Note is subject to regular monthly

payments of interest beginning May 1, 2001, annual payments of principal

beginning April 1, 2002, and optional and mandatory prepayments, as specified

in the Agreement.  Maker agrees to make

required payments on account of this Note in accordance with the provisions of

the Agreement, including, without limitation Section 4 thereof.  The Fixed Rate Notes, including this Note,

are secured as set forth in the Agreement. 

In connection with principal prepayments the Agreement requires the

Maker to pay a prepayment premium under certain circumstances.




3.     Each

“Event of Default” under the Agreement shall be deemed an event of default

under this Note.




 




63





























 




4.     Under

certain circumstances, as specified in the Agreement, the principal and accrued

interest of this Note may be declared due and payable in the manner and with

the effect provided in the Agreement.




5.     Limitations

on the rate and amount of interest payable pursuant to this Note are contained

in Section 11.5 of the Agreement.




6.     Maker

is liable for the payment of attorneys fees and collection costs to the Payee

in accordance with Section 6.6 of the Agreement.




7.     Maker

hereby waives notice (including without limitation notice of intention to

accelerate maturity, notice of acceleration of maturity, notice of nonpayment

and notice of protest), demand, presentment for payment, protest, bringing of

suit and diligence in taking any action to collect amounts owing hereunder or

in proceeding against any of the rights and properties securing payment hereof,

and is directly and primarily liable for the amount of all sums owing or to be

owing hereon.  Maker agrees that the

time for payments hereunder may be extended from time to time without notice,

and consents to the acceptance of further security or the release of any existing

security for this Note without in any manner affecting Maker’s liability with

respect to this Note.  Maker agrees that

its liability on or with respect to this Note shall not be affected by any

release of or change in any guaranty or security at any time or by any failure

to perfect or maintain perfection of any lien against or security interest in

any such security or the partial or complete unenforceability of any guaranty

or other surety obligation, in each case in whole or in part, with or without

notice and before or after maturity.  No

extension of the time for the payment of this Note or any installment hereof

made by agreement with any person now or hereafter liable for the payment of

this Note shall operate to release, discharge, modify, change or affect the

original liability of Maker under this Note.




8.     Section

12.10 of the Agreement sets forth an exoneration of the general partners of the

Maker from personal liability for the indebtedness evidenced by this Note.




9.     THIS

NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED BY THE

LAWS OF THE STATE OF WASHINGTON EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY

APPLICABLE FEDERAL LAW.




	

   


  	

   


  	

  POPE

  RESOURCES, A DELAWARE LIMITED 


  PARTNERSHIP, a Delaware limited partnership,


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

  Pope MPG,

  Inc., a Delaware corporation,


  its managing partner


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  By:


  	

   


  
	

   


  	

   


  	

   


  	

  Name:


  	

   


  
	

   


  	

   


  	

   


  	

  Title:


  	

   


  
						





 




 




64





























 




ANNEX IV.




 




INSURANCE REQUIREMENTS




 




Commercial General Liability Insurance with Borrower as the named

insured and the Holders as additional insureds on a primary and noncontributory

basis in commercially reasonable amounts and terms and issued by an insurer or

insurers reasonably satisfactory to the Holders.  A portion of such insurance coverage may be maintained in the

form of an excess liability (umbrella) policy. 

Certificates of insurance and, if the Holders so request, certified

copies of the insurance policies, shall be delivered to the Holders no less

than 15 days prior to the expiration of the then current policies.




 




65





























 




ANNEX

V.




MAKE–WHOLE

PREMIUM AMOUNT




 




In the event of any optional prepayment of the Notes, or acceleration

of maturity of the Notes while an Event of Default exists, the Make–Whole

Premium Amount shall be calculated as follows:




First, determine the amount of

principal being prepaid (“Prepaid Principal”) and the proposed

date of such prepayment (“Prepayment Date”).  In connection with acceleration of maturity,

the Prepaid Principal shall be the entire principal balance on the date of

acceleration and the Prepayment Date shall be the date of acceleration.




Second, use the Treasury

Constant Maturity Series from Bloomberg, or if not available, the U.S. Federal

Reserve Statistical Release H–15 Report (or its successor publication) published

most recently as of the date which is three days prior to the Prepayment Date

for U.S. Treasury obligations to determine the “Reinvestment Yield”,

with the interpolated constant maturity period matching the remaining average

life of the Notes as of the Prepayment Date (assuming no additional prepayments

other than the Prepaid Principal) determined through the Maturity Date. If

necessary, interpolation shall be used to determine the Reinvestment Yield, if

the remaining average life does not match the maturities in the series listed

above.




The “Make–Whole Premium Amount”

shall mean the following: with respect to the Prepaid Principal on each

Prepayment Date, “Make-Whole Premium Amount” shall mean the excess (but in no

event less than zero) of (i) the net present value of all scheduled

payments of principal and/or interest pursuant to Section 4.3 of the

Note Purchase Agreement on the Prepaid Principal which would have been made

following the Prepayment Date if the Prepaid Principal had not been prepaid on

the Prepayment Date, determined by discounting (on a semi-annual basis) the

amount of each such scheduled payment of principal and/or interest from the

date such payments would have been required to be made to the Prepayment Date

at a rate which is equal to the sum of the Reinvestment Yield, plus either (A)

50 basis points (.5%) if the funds for prepayment are generated solely from

operations of the Borrower on the Timberlands and the sale of Land and/or

Timber pledged as Security, or (B) zero basis points (0.00%) if the funds from

prepayment are from any other source, over (ii) 100% of the Prepaid

Principal, in each case first applying the Prepaid Principal to the principal

installments due on the Notes in reverse order of maturity.




 




66





























 




ANNEX

VI.




LIST

OF NOTES TO BE ISSUED AT CLOSING




NOTES




	

  Holder


  	

   


  	

   


  	

  Designation


  	

   


  	

   


  	

  Amount


  	

   


  
	

  John Hancock

  Life Insurance Company


  	

   


  	

  Note F-1


  	

   


  	

  $4,500,000


  
	

  John Hancock

  Life Insurance Company


  	

   


  	

  Note F-2


  	

   


  	

  $23,500,000


  
	

  John Hancock

  Variable Life Insurance Company


  	

   


  	

  Note F-3


  	

   


  	

  $2,000,000


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  TOTAL


  	

   


  	

  $30,000,000.00


  





 




 




67





























 




EXHIBIT

A




TO

NOTE PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Disclosures




INDEBTEDNESS




 




	

  DEBTHOLDER


  	

   


  	

  Principal Amt Owed 


  @ March 27, 2001


  	

   


  
	

  JOHN HANCOCK LIFE INSURANCE CO.


  	

   


  	

  $


  	

  12,864,764


  	

   


  
	

  JOHN HANCOCK LIFE INSURANCE CO.

  (anticipated to fund by 3/30/01)


  	

   


  	

  $


  	

  30,000,000


  	

   


  
	

  LOCAL IMPROVEMENT DISTRICT

  (LID) OBLIGATIONS:


  	

   


  	

   


  	

   


  
	

  GIG HARBOR


  	

   


  	

  114,280


  	

   


  
	

  EVERETT


  	

   


  	

  44,970


  	

   


  
	

  SEABECK


  	

   


  	

  35,176


  	

   


  





 




LETTERS

OF CREDIT




 




	

  ISSUED BY


  	

   


  	

  BENEFICIARY


  	

   


  	

   


  	

  AMOUNT


  	

   


  
	

  BANK OF AMERICA


  	

   


  	

  CANADIAN  INTERNATIONAL

  DEVELOPMENT AGENCY (CIDA)


  	

   


  	

  C$


  	

  136,250


  	

   


  
								





 




LEASE

AND SURFACE MINING BONDS




 




	

  TYPE OF BOND


  	

   


  	

  PURPOSE


  	

   


  	

  NAME


  	

   


  	

  Prem. Renewal Date


  	

   


  	

  BOND $


  	

   


  
	

  SURFACE MINING


  	

   


  	

   


  	

   


  	

  CHAMBERS 


  CONSTRUCTION


  	

   


  	

  6/28/01


  	

   


  	

  5,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  SURFACE MINING


  	

   


  	

   


  	

   


  	

  BEAVER VALLEY


  	

   


  	

  1/11/02


  	

   


  	

  8,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  SURFACE MINING


  	

   


  	

   


  	

   


  	

  BEAVER VALLEY


  	

   


  	

  2/27/02


  	

   


  	

  36,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  LEASE BOND


  	

   


  	

  FOR TIDE LANDS


  	

   


  	

  LUDLOW MARINA


  	

   


  	

  2/1/02


  	

   


  	

  16,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  SUB TOTAL


  	

   


  	

  65,000


  	

   


  





 




 




68





























 




CONSTRUCTION

BONDS




 




	

  TYPE OF BOND


  	

   


  	

  PURPOSE


  	

   


  	

  NAME


  	

   


  	

  Prem. Renewal Date


  	

   


  	

  BOND $


  	

   


  	

   


  
	

  PERFORMANCE


  	

   


  	

  CONTRACTOR SURETY


  	

   


  	

  STATE OF WA


  	

   


  	

  6/1/01


  	

   


  	

  6,000


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  PERFORMANCE


  	

   


  	

  SUBDIVISION IMPROVEMENTS


  	

   


  	

  SEABECK HEIGHTS


  	

   


  	

  6/13/01


  	

   


  	

  37,746


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  LICENSE/PERMIT


  	

   


  	

   


  	

   


  	

  SEABECK HEIGHTS


  	

   


  	

  9/17/01


  	

   


  	

  2,500


  	

   


  	

  Cxld 03/05/01


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  PERFORMANCE


  	

   


  	

  MURRELET 

  SURVEYS


  	

   


  	

  CITY OF MONTESANO


  	

   


  	

  3/7/01


  	

   


  	

  1,000


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  PERFORMANCE


  	

   


  	

  DNR CONTRACT


  	

   


  	

  WA ST DNR


  	

   


  	

  8/8/01


  	

   


  	

  5,094


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Permit Bond — Aberdeen


  	

   


  	

  Road Construction


  	

   


  	

  WA St DOT


  	

   


  	

  10/5/00


  	

   


  	

  2,500


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Performance Bond


  	

   


  	

  Sewer Line Borgen Blvd.


  	

   


  	

  City of Gig Harbor


  	

   


  	

  7/26/00


  	

   


  	

  39,306


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Performance Bond


  	

   


  	

  Street, Storm, Swr, Wtr, & Signs


  	

   


  	

  Timberton Village Phase III


  	

   


  	

  1/23/02


  	

   


  	

  90,800


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Maintenance Bond


  	

   


  	

  Completed Work


  	

   


  	

  City of Gig Harbor


  	

   


  	

  2/22/02


  	

   


  	

  5,783


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Cashiers Ck in Leu of Performance Bond


  	

   


  	

  Sewer work performance


  	

   


  	

  City of Gig Harbor


  	

   


  	

  N/A Issued 02/28


  	

   


  	

  750


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  SUB TOTAL


  	

   


  	

  191,479


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  TOTAL BONDS


  	

   


  	

  256,479


  	

   


  	

   


  





 




 




69





























 




NOTARY BONDS


As of 02/28/01




	

  BOND#


  	

   


  	

  ASSIGNEE


  	

   


  	

  EXPIRATION DATE


  	

   


  	

  BOND $


  
	

  5851095


  	

   


  	

  Mary Corbett


  	

   


  	

  2/27/04


  	

   


  	

  10,000


  
	

  5863199


  	

   


  	

  Cynde Mayson


  	

   


  	

  4/1/04


  	

   


  	

  10,000


  
	

  5863209


  	

   


  	

  Michelle Wilcox


  	

   


  	

  4/4/04


  	

   


  	

  10,000


  
	

  5904342


  	

   


  	

  Pam Grove


  	

   


  	

  5/7/01


  	

   


  	

  10,000


  
	

  5930195


  	

   


  	

  Fay Schultz


  	

   


  	

  1/23/02


  	

   


  	

  10,000


  
	

  5930280


  	

   


  	

  Wendy Battaglino


  	

   


  	

  4/9/02


  	

   


  	

  10,000


  
	

  5930281


  	

   


  	

  Craig Jones


  	

   


  	

  4/10/02


  	

   


  	

  10,000


  
	

  5939523


  	

   


  	

  Michael Morgan


  	

   


  	

  6/4/02


  	

   


  	

  10,000


  
	

  5939542


  	

   


  	

  Dani Aldana


  	

   


  	

  6/23/02


  	

   


  	

  10,000


  
	

  5939590


  	

   


  	

  Miriam Villiard


  	

   


  	

  8/21/02


  	

   


  	

  10,000


  
	

  593596


  	

   


  	

  Jacqueline McClurg


  	

   


  	

  9/14/02


  	

   


  	

  10,000


  
	

  5812134


  	

   


  	

  Penny Henderson


  	

   


  	

  2/5/03


  	

   


  	

  10,000


  
	

  6055822


  	

   


  	

  D. Susan Schroader


  	

   


  	

  8/1/04


  	

   


  	

  10,000


  
	

  6103299


  	

   


  	

  Ember Krumwied


  	

   


  	

  1/24/05


  	

   


  	

  10,000


  
	

   


  	

   


  	

   


  	

   


  	

  SUB TOTAL


  	

   


  	

  140,000


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  NON EMPLOYEE


  	

   


  	

   


  
	

  *5897967


  	

   


  	

  Gwynne Bennett


  	

   


  	

  3/1/01


  	

   


  	

  10,000


  
	

  *5904342


  	

   


  	

  Pam Grove


  	

   


  	

  5/7/01


  	

   


  	

  10,000


  
	

  *5915444


  	

   


  	

  Noreen James


  	

   


  	

  10/1/01


  	

   


  	

  10,000


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  SUB TOTAL


  	

   


  	

  30,000


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  TOTAL ORM


  	

   


  	

  140,000


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  TOTAL ALL


  	

   


  	

  170,000


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  * Per PS&F these people are no longer our employees, therefore

  there is no liability to us.


  
								





 




 




 




70





























 




Letters of

Credit




As of 02/28/01




	

  Letter #


  	

   


  	

  Issued By


  	

   


  	

  Expiration Date


  	

   


  	

  Amount


  	

   


  	

  Project


  	

   


  	

  Purpose


  	

   


  
	

  3020784


  	

   


  	

  Bank of America


  	

   


  	

  December 2, 2002


  	

   


  	

  $113,760.00


  	

   


  	

  CIDA


  	

   


  	

  Canadian Government — Contract Canadian $


  	

   


  





 




 




 




71





























 




EXHIBIT

B




TO

NOTE PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Environmental

Report




Set forth on the following pages to this Exhibit B is that certain

Phase I Environmental Site Assessment, Hood Canal Tree Farm, Northwestern

Washington, prepared by URS Corporation for Olympic Resource Management, URS

Job No. 53-02000130.02, and dated March 23, 2001, as supplemented by Report

Addendum dated March 27, 2001.




 




72





























 




EXHIBIT

B-1




TO

NOTE PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Certain

Environmental Issues




On or before June

1, 2001, Borrower and URS shall investigate the status of the aboveground

storage tanks and chemical containers mentioned in the “Field Reconnaissance”

portion URS’s Report Addendum dated March 27, 2001, in connection with the

“Duck Club.”  Borrower shall complete

whatever action is recommended by URS with respect to such tanks and containers

within six months of such recommendation.




 




73





























 




EXHIBIT

C




TO

NOTE PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Categories

and Administrative Values 




Applicable

to the Timberlands




Hood

Canal Tree Farm




Projected

Inventory as of YE ‘00




	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  Acres


  	

   


  	

  Administrative

  Unit Value


  	

   


  	

  Administrative

  Value


  	

   


  
	

  Timberland:


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  59,713


  	

   


  	

  $


  	

  161.88


  	

   


  	

  $


  	

  9,666,042


  	

   


  
	

  Non-Forest Land


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  9,836


  	

   


  	

  $


  	

  32.38


  	

   


  	

  $


  	

  318,441


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  69,549


  	

   


  	

   


  	

   


  	

  $


  	

  9,984,482


  	

   


  
	

  Pre-Merch Plantations


  	

   


  	

  Retail

  Unit Value


  	

   


  	

  Age


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  $


  	

  0


  	

   


  	

  Clearcut


  	

   


  	

  0


  	

   


  	

  $


  	

  0.00


  	

   


  	

  $


  	

  0


  	

   


  
	

   


  	

   


  	

  $


  	

  202


  	

   


  	

  0-4


  	

   


  	

  9,215


  	

   


  	

  $


  	

  130.80


  	

   


  	

  1,205,276


  	

   


  
	

   


  	

   


  	

  $


  	

  280


  	

   


  	

  5-9


  	

   


  	

  8,226


  	

   


  	

  $


  	

  181.30


  	

   


  	

  $


  	

  1,491,374


  	

   


  
	

   


  	

   


  	

  $


  	

  389


  	

   


  	

  10-14


  	

   


  	

  4,089


  	

   


  	

  $


  	

  251.88


  	

   


  	

  $


  	

  1,029,927


  	

   


  
	

   


  	

   


  	

  $


  	

  541


  	

   


  	

  15-19


  	

   


  	

  7,520


  	

   


  	

  $


  	

  350.30


  	

   


  	

  $


  	

  2,634,237


  	

   


  
	

   


  	

   


  	

  $


  	

  752


  	

   


  	

  20-24


  	

   


  	

  10,020


  	

   


  	

  $


  	

  486.92


  	

   


  	

  $


  	

  4,878,938


  	

   


  
	

   


  	

   


  	

  $


  	

  807


  	

   


  	

  25-29


  	

   


  	

  5,956


  	

   


  	

  $


  	

  522.53


  	

   


  	

  $


  	

  3,112,204


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Total

  Pre-merch


  	

   


  	

   


  	

   


  	

  45,026


  	

   


  	

   


  	

   


  	

  $


  	

  14,351,956


  	

   


  
	

  Sub-Merch Timber (30-44)


  	

   


  	

  $


  	

  1,451


  	

   


  	

  30-34


  	

   


  	

  1,725


  	

   


  	

  $


  	

  939.52


  	

   


  	

  $


  	

  1,620,676


  	

   


  
	

   


  	

   


  	

  $


  	

  2,016


  	

   


  	

  35-39


  	

   


  	

  925


  	

   


  	

  $


  	

  1,305.36


  	

   


  	

  $


  	

  1,207,458


  	

   


  
	

   


  	

   


  	

  $


  	

  2,801


  	

   


  	

  40-44


  	

   


  	

  1,285


  	

   


  	

  $


  	

  1,813.65


  	

   


  	

  $


  	

  2,330,537


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Total Sub-merch


  	

   


  	

   


  	

   


  	

  3,935


  	

   


  	

   


  	

   


  	

  $


  	

  5,158,671


  	

   


  
	

  Merchantable Timber (45+)


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Deliv. Logs


  	

   


  	

  Retail Stumpage


  	

   


  	

  Volume, MBF


  	

   


  	

  Administrative Unit Value


  	

   


  	

  Administrative Value


  	

   


  
	

  Douglas fir


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  PU


  	

   


  	

  $


  	

  157


  	

   


  	

  $


  	

  18


  	

   


  	

  46,812


  	

   


  	

  $


  	

  11.66


  	

   


  	

  $


  	

  545,594


  	

   


  
	

  2S


  	

   


  	

  $


  	

  524


  	

   


  	

  $


  	

  385


  	

   


  	

  41,611


  	

   


  	

  $


  	

  249.29


  	

   


  	

  $


  	

  10,373,102


  	

   


  
	

  3S


  	

   


  	

  $


  	

  478


  	

   


  	

  $


  	

  339


  	

   


  	

  49,413


  	

   


  	

  $


  	

  219.50


  	

   


  	

  $


  	

  10,846,277


  	

   


  
	

  CNS


  	

   


  	

  $


  	

  403


  	

   


  	

  $


  	

  264


  	

   


  	

  49,413


  	

   


  	

  $


  	

  170.94


  	

   


  	

  $


  	

  8,446,658


  	

   


  
	

  Export


  	

   


  	

  $


  	

  744


  	

   


  	

  $


  	

  605


  	

   


  	

  72,819


  	

   


  	

  $


  	

  391.74


  	

   


  	

  $


  	

  28,525,933


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  260,068


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Hemlock/fir


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  PU


  	

   


  	

  $


  	

  133


  	

   


  	

  $


  	

  0


  	

   


  	

  16,094


  	

   


  	

  $


  	

  0.00


  	

   


  	

  $


  	

  0


  	

   


  
	

  2S


  	

   


  	

  $


  	

  351


  	

   


  	

  $


  	

  212


  	

   


  	

  3,313


  	

   


  	

  $


  	

  137.27


  	

   


  	

  $


  	

  454,776


  	

   


  
	

  3S


  	

   


  	

  $


  	

  299


  	

   


  	

  $


  	

  160


  	

   


  	

  4,260


  	

   


  	

  $


  	

  103.60


  	

   


  	

  $


  	

  441,336


  	

   


  
	

  CNS


  	

   


  	

  $


  	

  270


  	

   


  	

  $


  	

  131


  	

   


  	

  19,880


  	

   


  	

  $


  	

  84.82


  	

   


  	

  $


  	

  1,686,271


  	

   


  
	

  Export


  	

   


  	

  $


  	

  399


  	

   


  	

  $


  	

  260


  	

   


  	

  3,787


  	

   


  	

  $


  	

  168.35


  	

   


  	

  $


  	

  637,541


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  47,334


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Hardwood


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  PU


  	

   


  	

  $


  	

  140


  	

   


  	

  $


  	

  1


  	

   


  	

  25,401


  	

   


  	

  $


  	

  0.65


  	

   


  	

  $


  	

  16,447


  	

   


  
	

  SL


  	

   


  	

  $


  	

  513


  	

   


  	

  $


  	

  374


  	

   


  	

  8,022


  	

   


  	

  $


  	

  242.17


  	

   


  	

  $


  	

  1,942,648


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  33,423


  	

   


  	

   


  	

   


  	

  $


  	

  63,916,583


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  Large Volume% of Retail:


  	

   


  	

  64.75


  	

  %


  
	

   


  	

   


  	

   


  	

   


  	

  Grand Total Administrative Value:


  	

   


  	

  $


  	

  93,411,693


  	

   


  





 




 




74





























 




EXHIBIT

D




TO

NOTE PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Timberlands




The real property presently encumbered by the 1992 Deed of Trust and

the property described in the attached legal descriptions covering other

property in Jefferson, Kitsap, Mason, and Clallam Counties, Washington.




 




75





























 




PARCEL 1:




Government

Lot 3, EXCEPT the West 1/2 of the North 660 feet thereof and All of Government

Lot 4 and the South 1/2 of the Northwest 1/4 in Section 3;




Government

Lot 1 through 4, South 1/2 of the North 1/2 and the North 1/2 of the South 1/2,

and the Southwest 1/4 of the Southwest 1/4 of Section 4;




Government

Lots 1 and 5 and the West 3/4 of Section 5;




The

Northeast 1/4 and the North 1/2 of the Northwest 1/4 and the Southeast 1/4 of

the Northwest 1/4 of Section 16; Government Lot 3 in Section 20;




South 1/2 of the Northwest 1/4 and the North 1/2 of

the Southwest 1/4 of Section 29, EXCEPT the East 30 feet of the Northeast 1/4

of the Southwest 1/4; ALSO EXCEPT the following described tract:




a)           Beginning at the Southeast corner of the Southeast 1/4 of

the Northwest 1/4 of said Section 29;


thence North 80 rods;


thence West 40 rods;


thence South to the Creek;


thence following along said Creek back to the place of beginning;


said tract being designated on the County Assessor’s Plat and Description Book

as Tax No. 4 in said Section 29;




All in Township 25 North, Range 2 West, W.M., Situate

in Jefferson County, Washington.




PARCEL 2:




Government

Lots 3 and 4 and the West 1/2 of the Northwest 1/4, Section 1, TOGETHER WITH

tidelands of the second class as conveyed by the State of Washington, situate

in front of, adjacent to and abutting thereon; Government Lots 1, 3, the East

1/2 of the Northeast 1/4 of Government Lot 4, the West 1/2 of the Southwest 1/4

of the Northeast 1/4; the Northwest 1/4 of the Southwest 1/4 of the Northwest

1/4; the South 1/2 of the Northeast 1/4 of the Southwest 1/4; the Southeast 1/4

of the Southwest 1/4, the North 1/2 of the Southeast 1/4, the Southwest 1/4 of

the Southeast 1/4, and the Northwest 1/4 of the Southeast 1/4 of the Southeast

1/4, Section 2, EXCEPT Coyle County Road right of way as disclosed by Jefferson

County Engineers Resolution recorded under Auditor’s File No. 286585;




the Northwest 1/4 of the Northwest 1/4, EXCEPT the

Southwest 1/4 thereof in Section 11, EXCEPT Old Coyle County Road right of way

and New Coyle County Road right of way as disclosed by Jefferson County

Engineer Resolution recorded under Auditor’s File No. 286585;




 




76





























 




Government

Lot 3, the Northeast 1/4 of the Northeast 1/4 and the Northwest 1/4 of the

Northwest 1/4, Section 22, EXCEPT Coyle County Road right of way as disclosed

by Jefferson County Engineers Resolution recorded under Auditor’s File No.

286585, TOGETHER WITH tidelands of the second class as conveyed by the State of

Washington, situate in front of, adjacent to and abutting upon said Government

Lot 3;




Government

Lot 1, Section 23, TOGETHER WITH tidelands of the second class, as conveyed by

the State of Washington, situate in front of, adjacent to and abutting thereon;




the Northwest 1/4, Section 27;




ALSO EXCEPT the following described Tract in Section

23;




That portion of Government Lot 1 of said Section 23,

described as follows:




Commencing at the Northeast corner of Section 22,

Township 26 North, Range 1 West, W.M.;


thence South 80 rods;


thence East to the meander line of Government Lot 1;


thence in a Northeasterly direction along the meander line to the meander

corner between Sections 14 and 23;


thence West to the point of beginning, said tract being designated on the

County Assessor’s Plat and Description Book as Tax No. 1 of said Section 23;




EXCEPT Coyle County road right of way as conveyed by

deeds recorded under Auditor’s File Nos. 188592 and 212026;




All in Township 26 North,

Range 1 West, W.M., in Jefferson County, Washington.




 




77





























 




PARCEL 3:




Government

Lots 6 and 7, the Southwest 1/4, and the West 1/2 of the Southeast 1/4, Section

1;


Government Lots 3 and 4, Section 28, and those portions of the Northwest 1/4

and Northeast 1/4 of the Southwest 1/4 and the Southeast 1/4 of the Southwest

1/4 and the Southwest 1/4 of the Southeast 1/4 of Section 28, Township 26

North, Range 2 West, W.M., lying Southerly and Westerly of the Dosewallips

River;


and the South 1/2 of the Southwest 1/4 of the Northeast 1/4 and South 1/2 of

Section 29; Government Lot 2, the South 1/2 of the Southeast 1/4 of the

Northwest 1/4 and the South 1/2 of Section 30;


Government Lot 4, the North 1/2; the Southeast 1/4 and the South 1/2 of the

Southwest 1/4, Section 32;




Government

Lot 3, the Northwest 1/4 of the Northwest 1/4, the South 1/2 of the Northwest

1/4, and the South 1/2, Section 33;


Those portions of Government Lots 1 and 2, and the South 1/2 of the Northeast

1/4 of Section 33, Township 26 North, Range 2 West, W.M., lying Southerly and

Westerly of the Dosewallips River;


the Southwest 1/4 of the Southwest 1/4, and the Southwest 1/4 of the Southeast

1/4,


EXCEPT portion East of river, Section 34;




ALL in Township 26 North. Range 2 West;




EXCEPT the Dosewallips County Road as conveyed by

Auditor’s File No. 212027.




PARCEL 4:




The West 1,335 feet of that portion of H.E. Survey No.

253 in the Olympic National Forest in Section 3, unsurveyed, Township 26 North,

Range 2 West, W.M., in Jefferson County, Washington, lying South of the present

Olympic Highway, also known as Primary State Highway No. 9, the whole of said

H.E. Survey No. 253 being described as follows:




Beginning at corner No. 1, identical with the quarter

corner to Section 2 and 3, Township 26 North, Range 2 West, W.M.;


thence North 45° 06’ West 16.52 chains to corner No. 2;


thence North 89° 04’ West 22.77 chains to corner No. 3;


thence South 1° 32’ West 23.89 chains to corner No. 4;


thence North 64° 01’ East 9.45 chains to corner No. 5;


thence South 89° 56’ East 26.40 chains to corner No. 6;


thence North 38° East 7.67 chains to corner No. 1, the place of beginning;




 




78





























 




EXCEPTING from the above described tract those

portions thereof included in the Olympic Highway or deeded to the State of

Washington for the Olympic Highway, by deed dated December 21, 1937, recorded

in Volume 108 of Deeds, page 144, records of Jefferson County; said tract is

designated on the Assessor’s Plat and Description Book as Tax No. 2 in said

Section 3, Township 26 North, Range 2 West, W.M.




PARCEL 5:




The Southeast 1/4 of the Southwest 1/4 of Section 2,

Township 26 North, Range 2 West, W.M., in Jefferson County, Washington;




EXCEPTING THEREFROM the following described tract:




Commencing

at the Southwest corner of the South 1/2 of the Northeast 1/4 of the Southwest

1/4 of said Section 2;


thence South along the West line of the Southeast 1/4 of the Southwest 1/4 of

said Section 2, 348 feet;


thence Eastward 60° East of North 771 feet to the South line of said South 1/2

of the Northeast 1/4 of the Southwest 1/4;;




thence to the place of beginning;


said tract being designated on the County Assessor’s Plat and Description Book

as Tax No. 1 of said Section 2;




ALSO EXCEPTING THEREFROM the right of way of State

Road No. 9.




PARCEL 6:




Government Lot 1 and the Southeast 1/4 of the

Northeast 1/4, Section 5, lying Westerly of Secondary State Highway No. 9–E

right of way (Port Ludlow to South Point Road);




ALSO all of Government Lot 2 the Southwest 1/4 of the

Northeast 1/4, and the Southeast 1/4 of Section 5;


the West 1/2 of Section 5;


All of Sections 6, 7 and 8;




 




79





























 




The Northwest 1/4;


the Southwest 1/4, EXCEPT that portion of Government Lot 3 and the Northeast

1/4 of the Southwest 1/4 lying Southeasterly of Jefferson County Road right of

way as conveyed to Jefferson County by instrument recorded under Auditor’s file

Nos. 177018, 178775 and 179292, in Section 17;


All of Section 18, EXCEPT the West 8 feet of the Northeast 1/4 of the Southeast

1/4 of the Southwest 1/4 thereof;


EXCEPT that portion of the Southeast 1/4 of the Southeast 1/4 of said Section

8, being more particularly described as beginning at the Southwest corner of

Lot 15, Division 8, Plat of Bridgehaven, as per plat recorded in Volume 6 of

Plats, pages 53 and 54, records of Jefferson County, Washington;


thence South 0° 26’ 20” West along the Section line between said Section 8 and

Section 9, 128.0 feet to the True Point of Beginning;


thence continuing along said Section line South 0° 26’ 20” West 240.0 feet;


thence North 89° 33’ 40” West 100.00 feet;


thence North 0° 26’20” East 240.00 feet;


thence South 89° 33’ 40” East 100.00 feet to the True Point of Beginning;




All in Township 27 North, Range 1 East, W.M., in

Jefferson County, Washington.




PARCEL 7:




The Northeast 1/4, EXCEPT the North 1/2 of the

Southwest 1/4 of the Northeast 1/4;


the Northwest 1/4, EXCEPT the Northwest 1/4 of the Northwest 1/4 of the

Northwest 1/4;


EXCEPT Plat of Cedarholm Villa, as per plat recorded in Volume 2 of Plats, page

119, records of Jefferson County, Washington;




ALSO EXCEPT the East 8 feet of the Northwest Quarter

of the Southwest Quarter of the Northwest Quarter;




ALSO EXCEPT right of way of Thorndyke Road (County

Road No. 9) as conveyed to Jefferson County by instruments recorded under

Auditor’s File No. 195647, 195649 and 195650, All in Section 19, Township 27

North, Range 1 East, W.M., in Jefferson County, Washington.




PARCEL 8:




Lots 1

and 2, Lots 55, 56 and 57, EXCEPT the East 10 feet thereof;




Lot 79, EXCEPT the West 10 feet thereof; and Lots 80

through 98 inclusive, Cedarholm Villa Tracts, as per plat recorded in Volume 2

of Plats, page 119, records of Jefferson County, Washington.




 




80





























 




PARCEL 9:




All of

Section 1;


All of Section 2;


Government Lots 1, 2, the South 1/2 of the Northeast 1/4, the South 1/2, EXCEPT

Dabob–Coyle County Road right of way, Section 3;


the North 1/2 of the Northwest 1/4 (also known as Government Lots 3 and 4);


the South 1/2 of the Northwest 1/4, EXCEPT Dabob–Post Office County Road

right of way and Dabob County Road right of way and Carl Johnson County Road

right of way as conveyed by instrument recorded in Volume 1 of Road Waivers and

Auditor’s File No. 112297, ALSO EXCEPT that portion of the South 50 feet (as

measured along the East line of the Northwest 1/4) lying Easterly of Dabob Post

Office Road, Section 4;


Government Lots 2 and 3, EXCEPT Quilcene Center County Road right of way, the

East 1/2 of the Southwest 1/4, and the Southwest 1/4 of the Southeast 1/4,

Section 5;


the South 3/4 of the Southeast 1/4, Section 7;


the West 1/2 of the Southwest 1/4, Section 10;


All of Section 11;


All of Section 12;


the North 1/2, the Southwest 1/4, EXCEPT the East 20 feet of the North 3/4 of

the East 1/2 of the Southwest 1/4, Section 13;


the East 3/4;


the Northwest 1/4 of the Northwest 1/4, the South 1/2 of the Southwest 1/4 of

the Southwest 1/4, Section 14;


the West 1/2 of the Northeast 1/4, Section 15;


the North 1/2 of the Northeast 1/4, Section 18;


the Southwest 1/4 of the Northeast 1/4, the North 1/2 of the Southeast 1/4, the

Southeast 1/4 of the Southeast 1/4, Section 22;


All of Section 23, EXCEPT Dabob–Coyle County Road right of way;




the

Northeast 1/4, the Southeast 1/4 of the Northwest 1/4, the Northeast 1/4 of the

Southeast 1/4, Section 26;




the

Northeast 1/4, the Southwest 1/4, the North 1/4 of the Southeast 1/4, the South

1/4 of the Southeast 1/4; EXCEPT that portion of the West 1/2 of the Southwest

1/4 of the Northwest 1/4 of the Southwest 1/4 lying Westerly of County Road,

Section 29;




Government

Lots 1, 2 and 3, EXCEPT that portion of the North 800 feet of said Government

Lot 1 lying Westerly of County Road, Section 31;




the Northwest 1/4 of the Northeast 1/4, the Northwest

1/4, the North 1/2 of the Southwest 1/4, Section 32;




EXCEPT East Quilcene County Road, Lindsay Hill County

Road right of way in Sections 20, 29, 32, Camp Discovery County Road right of

way in Sections 22 and 23, and Wahl Lake County Road right of way in Sections 1

and 2 as disclosed by Jefferson County Engineers Resolution recorded under

Auditor’s File No. 286585;




ALSO EXCEPT that portion of Section 31 which is

delineated on Survey recorded in Volume 9 of Surveys, pages 42 and 43 and re–recorded

in Volume 9 of Surveys, pages 47 and 48;




 




81





























 




ALSO EXCEPT the following described tract:




Beginning at the Southwest corner of the Northwest 1/4

of the Southwest 1/4 of said Section 32;


thence East 2,070 feet;


thence North 300 feet;


thence West 360 feet;


thence South 270 feet;


thence West 1,710 feet to the West line of said Section 32;


thence continuing West 30 feet;


thence South 30 feet;


thence East 30 feet to said Southwest corner and point of beginning;




All in Township 27 North, Range 1 West, W.M., in Jefferson

County, Washington.




PARCEL

10:




The Southeast 1/4 of Government Lot 5 (the Southeast

1/4 of the Southwest 1/4 of the Northwest 1/4) and the Southeast 1/4 of the

Northwest 1/4 in Section 6, Township 27 North, Range 1 West, W.M., in Jefferson

County, Washington.




PARCEL

11:




The West 1/2 of the East 1/2 in Section 20, Township

27 North, Range 1 West, W.M., in Jefferson County, Washington;




EXCEPT Broad Spit County Road right of way;




ALSO

EXCEPT the North 135’ of the East 510’ of the Northwest 1/4 of the Southeast

1/4; ALSO EXCEPT that portion of the East 450’ of the Southwest 1/4 of the

Northeast 1/4 of said Section 20, lying South and Easterly of the County Road

known as Broad Spit Road;




ALSO EXCEPT that portion of the East 1/2 of the

Southwest 1/4 of the Northwest 1/4 lying North and East of Broad Spit Road and

described as follows:




Beginning

at a point 1,002.48 feet North and 1,247.31 feet East of the Southwest corner

of the Southwest 1/4 of the Northeast 1/4 of Section 20, Township 27 North,

Range 1 West, W.M., which point is Station 21+67.9 on the survey of C.R.P.#70

(Broad Spit Road);


thence along the center line of said road South 25° West a distance of 107.5

feet;




 




82





























 




thence South 40° 17’ West a distance of 198.2 feet;


thence South 55° 48’ East a distance of 57.4 feet;


thence South 32° 13’ West a distance of 141.9 feet;


thence South 30° 03’ West a distance of 70.2 feet;


thence South 53° 02’ East a distance of 109.1 feet;


thence South 8° 51’ West a distance of 51.0 feet;


thence South 21° 35’ West a distance of 62.9 feet;


thence South 44° 11’ West a distance of 205.4 feet;


thence South 81° 20’ East a distance of 74.1 feet;


thence North 50° 12’ East a distance of 461.9 feet;


thence North 77° 57’ East a distance of 10 feet, more or less, to the East line

of the said Southwest 1/4 of the Northeast 1/4;


thence Northerly along said East line a distance of 523.58 feet;


thence Westerly a distance of 72.7 feet, more or less, to the point of

beginning.




PARCEL

12:




A strip of land 100 feet in width on either side of

the North Fork of that unnamed creek which crosses Broad Spit Roat at

approximate survey station 38400 lying within the Southwest 1/4 of the

Northeast 1/4, Section 20, Township 27 North, Range 1 West, W.M., in Jefferson

County, Washington.




PARCEL

13:




Tract 28 of Seahome Addition, as per plat recorded in

Volume 2 of Plats, on page 124, records of Jefferson County, EXCEPT the West 30

feet thereof conveyed to Jefferson County for county road by deed dated August

15, 1960 and recorded under Auditor’s File No. 167973, records of said county;




TOGETHER WITH tidelands of the second class, as

conveyed by the State of Washington, situate in front of, adjacent to and

abutting upon said Tract 28 and extending to extreme low tide.




PARCEL

14:




All of Section 24, the North 900 feet of Government

Lot 1, the North 1,056 feet of Government Lot 3, as measured along the West

line thereof, All of Government Lot. 2, and the West 1/4 of Section 25;




TOGETHER WITH tidelands of the second class as

conveyed by the State of Washington, situate in front of, adjacent to, and

abutting thereon;




EXCEPT Thorndyke County Road right of way No. 9, all

in Township 27 North, Range 1 West, in Jefferson County, Washington.




 




83





























 




PARCEL 15:




Government Lots 3 and 4 and the South 1/2 of the

Northwest 1/4 and the Southwest 1/4 of Section 3;


Government Lots 1, 2 and the Southeast 1/4 of the Northeast 1/4, Section 4;


the Northeast 1/4 of the Northeast 1/4 and the West 1/2 of the Northeast 1/4,

Section 9;


the North 1/2 of the Northwest 1/4, Section 10;


the Southwest 1/4 of the Northwest 1/4, Section 14;


the Southeast 1/4 of the Northeast 1/4, Section 28;




All in Township 27 North, Range 2 West, W.M., in

Jefferson County, Washington.




PARCEL 16:




Government Lots 1, 2, 3 and 4, Section 19;


the South 1/2 of the Southwest 1/4 of the Northwest 1/4;


the North 1/2 of the Northwest 1/4, EXCEPT right of way, if any, of Teal Lake

County Road;


the Northwest 1/4 of the Northeast 1/4, Section 27;


the East 1/2 of the Northwest 1/4 of the Northeast 1/4;


the Southwest 1/4 of the Northeast 1/4;


the South 1/4 of the Southeast 1/4 of the Northeast 1/4, EXCEPT right of Teal

Lake County Road;


the Southeast 1/4, EXCEPT right of way of Teal Lake County Road, Section 28;


the Northwest 1/4, the South 1/2 of the Southwest 1/4;


the Northeast 1/4 of the Southwest 1/4;


the Southwest 1/4 of the Northeast 1/4;


the East 1/2 of the Northwest 1/4 of the Southwest 1/4;


the West 1/2 of the Southeast 1/4, Section 29;


Government Lots 1, 2, 3 and 4;


the East 1/2 of the West 1/2;


the Northeast 1/4;


the South 1/2 of the Southeast 1/4;


the Northwest 1/4 of the Southeast 1/4;


the West 1/2 of the Northeast 1/4 of the Southeast 1/4, Section 30;


the West 1/2;


the Northeast 1/4;


the West 1/2 of the Southeast 1/4;


the Northeast 1/4 of the Southeast 1/4 of Section 31;


the East 1/2 of the Northeast 1/4 and the Northwest 1/4 of the Northeast 1/4;


and that portion of the Northeast 1/4 of the Southeast 1/4 lying Northerly of

the Northerly right of way margin of State Highway 104 as conveyed to the State

of Washington by instrument recorded under Auditor’s File No. 161495;


the Northwest 1/4 and the Northwest 1/4 of the Southwest 1/4 of Section 32;




 




84





























 




EXCEPT right of way of State Highway No. 104, as

conveyed to the State of Washington by instruments recorded under Auditor’s

File Nos. 175315 and 190277;




ALSO EXCEPT County Road right of way as conveyed in

Auditor’s File No. 108201;




EXCEPT that portion thereof described as follows:




Beginning at the Northeast Section corner of said

Section 27;


thence South 89° 51’ 30” West, 1,269.11 feet to the True Point of Beginning;


thence South 0° 08’ 30” East, 405.00 feet;


thence South 89° 51’ 30” West 160.00 feet;


thence North 0° 08’ 30” West, 110.00 feet;


thence North 89° 51’ 30” East, 150.00 feet;


thence North 0° 08’ 30” West 295.00 feet;


thence North 89° 51’ 30” East 10.00 feet to the True Point of Beginning;




EXCEPT that portion thereof described as follows:




Beginning at Mile Post 8.87 on SR 104 at the

intersection of the Beaver Valley County Road;


thence North 18° 43’ 40” East a distance of 375 feet;


thence North 71° 16’ 20” West a distance of 35 feet to the True Point of

Beginning;


thence continuing North 71° 16’ 20” West a distance of 190 feet;


thence North 18° 43’ 40” East a distance of 280 feet;


thence South 71° 16’ 20” East a distance of 190 feet;


thence South 18° 43’ 40” West a distance of 280 feet along the existing county

right of way line to the Point of Beginning;




EXCEPT right of way for State Highway 104 as conveyed

to the State of Washington by instrument recorded under Auditor’s File No.

175315;




ALSO EXCEPT right of way of Beaver Valley Road as

conveyed to Jefferson County by instrument recorded under Auditor’s File No.

255052;




 




85





























 




ALSO EXCEPT that portion of Government Lot 2 said

Section 30, lying southeasterly of a line beginning at a point opposite Highway

Engineer’s Station (hereinafter referred to as HES) 493+35 on the SR 104 survey

line of SR 104, Browns Lake to South Point Road and 75 feet Northeasterly

therefrom;


thence Northeasterly to a point opposite HE5 493+79.06 and 151.63 feet

Northeasterly therefrom and the end of this line description;




All in Township 28 North, Range 1 East, W.M., in

Jefferson County, Washington.




PARCEL

17:




Government Lot 1, Government Lot 2, Government Lot 5,

Government Lot 6, the West 30 acres of Government Lot 4; the Southeast 1/4 of

the Northwest 1/4, and the West 1/2 of the Southwest 1/4, Section 15;

Government Lots 1 and 2, the West 1/2, and the Northwest 1/4 of the Southeast

1/4, Section 22; EXCEPT Ludlow Beach Tracts No. 2, as per plat recorded in

Volume 3 of Plats, page 28, TOGETHER WITH tidelands of the second class as

conveyed by the State of Washington, situate in front of, adjacent to and

abutting said Government Lot 1, Section 15;




ALSO EXCEPT Tala Shores No. 1, 2 and 3 as per plats

recorded in Volume 4 of Plats, pages 28 and 29; Volume 4 of Plats, page 49, and

Volume 5 of Plats, pages 5 and 6, respectively;




ALSO EXCEPT that portion of said Northwest 1/4 of the

Southeast 1/4, Section 22, lying Northeasterly of County Road No. 6, also known

as Magnolia Boulevard, as conveyed by deed recorded under Auditor’s File No.

173385;




ALSO EXCEPT the South 520 feet of the South 1/2 of the

Northwest 1/4 of the Southeast 1/4 of said Section 22;




ALSO EXCEPT the South 520 feet of the East 1/2 of the

Southeast 1/4 of the Northeast 1/4 of the Southwest 1/4 of said Section 22;




ALSO EXCEPT Watson County Road right of way;




ALSO EXCEPT Ludlow–Paradise County Road No. 6

right of way;




ALSO EXCEPT the following described Parcels A, B, C

and D;




 




86





























 




A.            That portion of Government Lot 1 and that portion of

Government Lot 2 said Section 15, described as follows:




Beginning at the 1/4

corner common to Sections 15 and 16, Township 28 North, Range 1 East, W.M., and

running thence along the Section line between said Sections North 0° 09’ 06”

West 824.19 feet to the meander corner between said Sections;


thence South 4° 22’ 37” East 109.82 feet;


thence North 30° 04’ 43” East 575.63 feet;


thence North 25° 53’ 53” East 205.25 feet to the Southwest corner of the tract

herein described and the True Point of Beginning;


thence South 63° 39’ 02” East 592.00 feet;


thence North 26° 21’ 45” East 400.00 feet;


thence North 63° 39’ 02” West 572.08 feet;


thence South 37° 42’ 23” West 113.19 feet;


thence South 25° 53’ 53” West 289.03 feet to the True Point of Beginning;

including intervening land, if any, between the above described tract and the

Government Meander line and bounded by the extended side lines thereof;




TOGETHER WITH tidelands

of the second class, situate in front of, adjacent to and abutting thereon.




B.            That portion of Government Lot 1 and that portion of

Government Lot 2 said Section 15, described as follows:




Beginning at the 1/4

corner common to Sections 15 and 16, Township 28 North, Range 1 East, W.M., and

running thence along the Section line between said Sections, North 0° 09’ 06”

West 824.19 feet to the meander corner between said Sections;


thence South 4° 22’ 37” East 109.82 feet;


thence North 30° 04’ 43” East 280.44 feet to the Southwest corner of the Tract

herein described and the True Point of Beginning;


thence South 63° 39’ 02” East 609.47 feet;


thence North 26° 21’ 45” East 499.81 feet;


thence North 63° 39’ 02” West 592.00 feet;


thence South 25° 53’ 53” West 205.25 feet;


thence South 30° 04” 43” West 295.19 feet to the True Point of Beginning;

including intervening land, if any, between the above described tract and the

Government Meander line;




TOGETHER WITH tidelands

of the second class, situate in front of, adjacent to and abutting thereon.




 




87





























 




C.            That portion of Government Lot 1 said Section 15,

described as follows:




Beginning at the 1/4

corner common to Sections 15 and 16, Township 28 North, Range 1 East, W.M., and

running thence along the Section line between said Section, North 0° 09’ 06”

West 824.19 feet to the Meander corner between said Sections;


thence South 4° 22’ 37” East 109.82 feet;


thence North 30° 04’ 43” East 180.23 feet to the True Point of Beginning;


thence South 63° 39’ 02” East 615.97 feet;


thence North 26° 21’ 45” East 100.00 feet;


thence North 63° 39’ 02” West 609.47 feet;


thence South 30° 04’ 43” West 100.21 feet to the True Point of Beginning;


including intervening land, if any, between the above described tract and the

Government Meander line;




TOGETHER WITH tidelands

of the second class, situate in front of, adjacent to, and abutting thereon.




D.            Beginning at a point 617.61 feet East and 637 feet South

of the Northwest 1/4 of the Northeast 1/4 of the Northwest 1/4 of said Section

22;




thence East for a distance

of 208.71 feet;




thence South, for a

distance of 208.71 feet;




thence West for a

distance of 208.71 feet; thence North for a distance of 208.71 feet to the

Point of Beginning;




All in Township 28 North, Range 1 East, W.M., in

Jefferson County, Washington.




 




 




88





























 




PARCEL 18:




 




The Southeast 1/4 of the Southwest 1/4;


the Southwest 1/4 of the Southeast 1/4;


Government Lot 1 and that portion of the Northeast 1/4 of the Southeast 1/4

lying Southerly of the Southerly right of way line of State Highway No. 9–E,

also known as State Route 104, as conveyed by deeds recorded under Auditor’s

File Nos. 161495 and 175315, All in Section 32, Township 28 North, Range 1

East, W.M., in Jefferson County, Washington;




TOGETHER WITH tidelands of the Second Class as

conveyed by the State of Washington, situate in front of, adjacent to and

abutting said Government Lot 1;




EXCEPT Secondary State Highway No. 9–E right of

way (Port Ludlow to South Point);




ALSO EXCEPT that portion of County road right of way

as conveyed by deed recorded under Auditor’s File No. 108201;




ALSO EXCEPT State Highway No. 9–E (SR 104) right

of way as conveyed by deed recorded under Auditor’s File No. 190277;




ALSO EXCEPT the following described Tract:




The South 1,200 feet of the Southeast 1/4 of the

Southeast 1/4 of Section 32, Township 28 North, Range 1 East, W.M., lying

Easterly of Secondary State Highway No. 9–E, Port Ludlow to South Point,

as conveyed by Deed filed July 21,1948 under Auditor’s File No. 114515;




TOGETHER WITH adjoining tidelands as conveyed by Deed

filed March 27, 1893 in Volume 40 of Deeds, pages 307 to 313 and by Deed filed

September 24, 1912 in Volume 79 of Deeds, pages 383 and 384, records of

Jefferson County, Washington.




PARCEL

19:




The South 1/2 of the Northeast 1/4, the North 1/2 of

the Southeast 1/4, Section 2;


Government Lots 5 and 6, Section 6 and that portion of Government Lot 7 and the

West 3/4 of the Southeast 1/4 of the Southwest 1/4 lying Southerly of S.R. 104

in Section 6;


Government Lots 1, 2, 3 and 4, the East 1/2 of the Northwest Quarter, the

Northeast Quarter, the Northeast 1/4 of the Southwest 1/4, the North 1/2 of the

Southeast 1/4 of the Southwest 1/4, the North 1/2 of the Southeast 1/4, the

North 1/2 of the Southwest 1/4 of the Southeast 1/4, and the Southeast 1/4 of

the Southeast 1/4 in Section 7;




 




89





























 




EXCEPT

that portion of the Northeast 1/4 of Section 7, lying Northerly of SR 104 right

of way as conveyed by deeds recorded under Auditor’s File No. 175315 and

185446;


All that portion of Section 8, lying Southerly of SR 104 right of way as

conveyed by deeds recorded under Auditor’s File No. 175315 and 185446;


the East 1/2 of the Northeast 1/4 of the Northeast 1/4, the Southeast 1/4 of

the Northeast 1/4, the Southeast 1/4 of the Northwest 1/4, the West 1/2 of the

Southwest 1/4, that portion of the Southwest 1/4 of the Northeast 1/4 East of

road in Section 10;


the Southeast 1/4 of the Northeast 1/4, the Northwest 1/4 of the Southwest 1/4,

the South 1/2 of the Southwest 1/4, the North 1/2 of the Southeast 1/4, the

Southwest 1/4 of the Southeast 1/4, Section 11;


the South 1/2 of the Northwest 1/4, the Southwest 1/4 and the South 25 acres of

the Northwest 1/4 of the Southeast 1/4; EXCEPT that portion, if any, lying

within the North 15 acres of said Northwest 1/4 of the Southeast 1/4, All in

Section 12;


the North 1/2 of the Northwest 1/4, the Southeast 1/4 of the Northwest 1/4,




the South 1/2, Section 13;


All of Section 14;


the East 1/4 of the Northeast 1/4, the Southeast 1/4, Section 15;


the Southwest 1/4 of the Northwest 1/4, the Northwest 1/4 of the Southwest 1/4,

the Southwest 1/4 of the Southeast 1/4, Section 17;


Government Lots 1, 2, 3 and 4 and the East 3/4, Section 18;


the Northeast 1/4; the East 1/2 of the Southwest 1/4; and the Southeast 1/4;


the South 1/2 of Government Lot 4, Section 19;


the West 1/2; the West 1/2 of the Northeast 1/4, the Northwest 1/4 of the

Southeast 1/4, Section 20;


the North 1/2 of the Southeast 1/4, the Southeast 1/4 of the Southeast 1/4, the

East 1/2 of the Southwest 1/4 of the Southeast 1/4, Section 21; the Northeast

1/4, the Southwest 1/4, the Southeast 1/4, Section 22;


All of Section 23;


All of Section 24;


All of Section 25;


All of Section  26;


the North 1/2, the West 1/2 of the Southwest 1/4, the Southeast 1/4 of the

Southwest 1/4;


the South 1/2 of the Southeast 1/4 and the South 1/2 of the Northeast 1/4 of

the Southeast 1/4, Section 27;


the East 1/2, the Northwest 1/4 of the Northwest 1/4, EXCEPT the West 542’

thereof, the Southeast 1/4 of the Northwest 1/4, the Northeast 1/4 of the

Southwest 1/4, Section 28;


the West 1/2, Section 29;




 




90





























 




the Northeast 1/4; the East 1/2 of the Northwest 1/4

and the Southeast 1/4 of the Southeast 1/4 of Section 30, Township 28 North,

Range 1 West, W.M.;


Government Lots 1 and 2, the Northwest 1/4 of the Northeast 1/4;


the East 1/2 of the Northeast 1/4;


the East 1/2 of the Northwest 1/4, Section 31;


the East 1/2 of the Southwest 1/4, Section 32;


All of Section 35;


All of Section 36;


All in Township 28 North, Range 1 West, W.M., in Jefferson County, Washington;




EXCEPT State Highway No. 104 right of way as conveyed

by deeds recorded under Auditor’s File Nos. 175315; 185446 and 339073;


ALSO EXCEPT Tarboo Lake County road right of way as conveyed by deeds recorded

under Auditor’s File Nos. 115537 and 191519;


ALSO EXCEPT Sandy Shore Lake County road right of way No. 14;


ALSO EXCEPT Lords Lake Loop County road right of way;


ALSO EXCEPT Quilcene – Chimacum County road right of way;


ALSO EXCEPT from Section 5 Eaglemount Road right of way as conveyed by

instrument recorded under Auditor’s File No. 73802;


ALSO EXCEPT county road right of way within the Southeast 1/4 of the Northwest

1/4, Section 10 as conveyed in deed recorded in Volume 1 of Road Waivers, page

114;


ALSO EXCEPT Larson Lake County Road right of way in Sections 11, 12, 13, 14,

and 15;




ALSO EXCEPTING THEREFROM said Northeast 1/4, Section

15, as follows:




Beginning at the Northeast corner of said Section 15

and running thence Southerly along the East line of said Section 15 a distance

of 30 feet, more or less, to the Southerly right of way line of Secondary State

Highway No. 9–E;


said point being the initial point of beginning;


thence Southerly along said East line of said Section 100 feet;


thence South 88° 42’ West 200 feet;


thence North 100 feet, more or less, to said Southerly right of way line;


thence Easterly along said Southerly right of way line 200 feet, more or less,

to the initial point of beginning;




ALSO EXCEPT the North 700 feet of the West 1/2 of the

Northeast 1/4 lying Easterly of County right–of–way, commonly known

as the Quilcene–Chimacum Road, said Section 20;




 




91





























 




PARCEL 20:




 




That portion of the East 1/2 of the Southeast 1/4 of

Section 9, in Township 28 North, Range 1 West, W.M., which lies East of the

Port Townsend – Quilcene County Road as originally traveled, being more

particularly bounded and described as follows:




Beginning at a point 660 feet West of the corner

common to Sections 9, 10, 15 and 16 of said Township and Range, running thence

along the County Road, North 8° 30’ West, 404 feet;


thence North 702 feet;


thence North 15° 30’ East, 473 feet;


thence North 20° 45’ East 384 feet;


thence North 6° 15’ East 693 feet;


thence North 22° 15’ East 75 feet to the North boundary line of the East 1/2 of

the Southeast 1/4 of said Section 9;


thence East, 330 feet to the quarter section corner;


thence South to the Southeast corner of said Section 9;


thence West 660 feet to the place of beginning;


said tract being designated on the County Assessor’s Plat and Description Book

as Tax No. 3 in said Section 9;




All situate in the County of Jefferson, State of

Washington.




PARCEL

21:




The East 3/4 of the South 1/2 of Section 10;





EXCEPT right of way of Snow Creek Road as conveyed to Jefferson County by

instrument recorded under Auditor’s File No. 217789;




ALSO EXCEPT that portion thereof, if any, lying within

the City of Port Townsend Water Works Pipe Line as conveyed to the City of Port

Townsend, by instrument recorded in Volume 54 of Deeds, pages 579 and 580;




The Southwest 1/4;


those portions of the South 1/2 of the North 1/2 and the Southeast 1/4, lying

Westerly of State Highway No. 101 as conveyed to the State of Washington by

instrument recorded in Volume 94 of Deeds, page 599 and under Auditor’s File

No. 153102;


Section 11;






 




92





























 




EXCEPT that portion thereof, if any, lying within the

City of Port Townsend Water Works Pipe Line as conveyed to the City of Port

Townsend, by instrument recorded in Volume 54 of Deeds, pages 579 and 580;





The Southwest 1/4 of the Northwest 1/4 and the Northwest 1/4 of the Southwest

1/4, Section 13;


the Southwest 1/4, Section 14;


the Northeast 1/4;


the Northwest 1/4 of the Southwest 1/4;


the East 1/2 of the Southeast 1/4;


the East 1/2 of the Southwest 1/4 of the Southeast 1/4;


the North 1/2 of the Northwest 1/4;


the Southwest 1/4 of the Northwest 1/4;


Section 15, EXCEPT that portion thereof conveyed to Jefferson County for Snow

Creek Road by instrument recorded under Auditor’s File No. 217790;


the Northeast 1/4 of the Southwest 1/4;


AND the West 1/2 of the Southeast 1/4 of the Southwest 1/4, Section 23;





EXCEPT Snow Creek County Road right–of–way;




The Southeast 1/4 of the Southeast 1/4 and that

portion of the West 1/2 of the Northwest 1/4, as described in Parcel 21 of

instrument recorded January 24, 1966, in Volume 169 of Deeds, page 634, records

of Jefferson County, Washington, Section 24;


the Northwest 1/4, the North 1/2 of the Southwest 1/4, the Southeast 1/4 of the

Southwest 1/4, the Southwest 1/4 of the Southeast 1/4, Section 26;


All in Township 28 North, Range 2 West, W.M., in Jefferson County, Washington;




PARCEL

22:




The Southeast 1/4 of the Northeast 1/4, the Southeast

1/4 of the Northwest 1/4, the Southeast 1/4 of the Southeast 1/4, the East 760

feet of the Southwest 1/4 of the Southwest 1/4 of Section 22, Township 28

North, Range 2 West, W.M., in Jefferson County, Washington;




TOGETHER WITH an easement as described in instrument

recorded April 20, 1962, in Volume 158 of Deeds, page 11, records of Jefferson

County, Washington.




EXCEPT Snow Creek County usage road right of way, as

disclosed by County Resolution recorded under Auditor’s File No. 286585.




 




93





























 




PARCEL 23:




 




The West 1/2 of Government Lot 1, the Northeast 1/4 of

Government Lot 1, the East 1/2 of the Northeast 1/4, the North 1/2 of the

Southwest 1/4 of the Southwest 1/4, the North 1/2 of the Southeast 1/4, Section

23, Township 28 North, Range 2 West, W.M.;




EXCEPT that portion conveyed by Quit Claim Deed from

Crown Zellerbach Corporation to Jefferson County in instrument dated October

23, 1968, and recorded under Auditor’s File No. 198129;




ALSO EXCEPT that portion described in instrument

recorded November 20, 1981, in Volume 157 of Official Records, page 135, under

Auditor’s File No. 275616, records of Jefferson County, Washington;




ALSO EXCEPT Lords Lake Leland County usage road right

of way and Snow Creek County usage road right of way, as disclosed by County

Resolution recorded under Auditor’s File No. 286585.




PARCEL

24:




The North 1/2 of the Southeast 1/4, the Southwest 1/4

of the Southeast 1/4, the Northeast 1/4 of the Southwest 1/4, that portion of

the Southeast 1/4 of the Southwest 1/4 as described in instrument recorded

January 24, 1966, in Volume 169 of Deeds, page 634, records of Jefferson

County, Washington, All in Section 25, Township 28 North, Range 2 West, W.M.;




EXCEPT that portion of the Northeast 1/4 of the

Southwest 1/4 and the North ten acres of the Southeast 1/4 of the Southwest

1/4, Section 25, Township 28 North, Range 2 West, W.M., which lies South of the

county road known as Lake Leland Cut–off Road and West of State Highway

No. 9.




PARCEL

25:




The Southwest 1/4 of the Northwest 1/4, the Southwest

1/4, the Northeast 1/4 of the Northeast 1/4, the East 760 feet of the North 1/2

of the Northwest 1/4 of the Northwest 1/4, the East 920 feet of the South 1/2

of the Northwest 1/4 of the Northwest 1/4 in Section 27, Township 28 North,

Range 2 West, W.M.




 




94





























 




PARCEL

26:




The West 1/2 of the Southwest 1/4, Section 33,

Township 28 North, Range 2 West, W.M.;





EXCEPT the West 396 feet thereof, which lies in Clallam County;





EXCEPT U.S. Forest Service usage road commonly known as Bon Jon Road.




PARCEL

27:




The South 1/2 of the Northeast 1/4;


the East 1/2 of the Southeast 1/4 of the Northwest 1/4;


the Northeast 1/4 of the Southwest 1/4;


the North 1/2 of the Southeast 1/4;


and the Southeast 1/4 of the Southeast 1/4, in Section 13;


the Northeast 1/4; and the Northeast 1/4 of the Southeast 1/4, in Section 24;




All in Township 29 North, Range 1 West, W.M., in

Jefferson County, Washington.




PARCEL

28:




The East 1/2 of Section 21;


the West 1/2 of the Northwest 1/4;


the Southwest 1/4;


the Northwest 1/4 of the Southeast 1/4 of Section 22;


the Northwest 1/4 of the Northwest 1/4;


the South 1/2 of the Southwest 1/4 of Section 26;


the North 1/2 of the North 1/2;


the South 1/2 of Section 27;


the East 1/2;


the Southeast 1/4 of the Southwest 1/4;


the East 924 feet of the Southwest 1/4 of the Southwest 1/4;


Section 28;


the East 1/2 of Section 33;


All of Section 34;


All of Section 35; EXCEPT the South 1/2 of the Southeast 1/4 of the Southeast

1/4 of the Northeast 1/4;


ALSO EXCEPT the East 1/4 of the Southeast 1/4;




All in Township 29 North, Range 2 West, W.M.




All Situate in the County of Jefferson, State of Washington.




 




95





























 




EXHIBIT A




JEFFERSON COUNTY, WASHINGTON




LEGAL

DESCRIPTIONS




Parcels 1-55 are all located in

Jefferson County, Washington:




PARCEL 1:




Those portions of

Government Lot 1, Section 4, Township 27 North, Range 1 East, W.M., Jefferson

County, Washington, lying Westerly of Secondary State Highway No. 9-E, right of

way (Port Ludlow to South Point Road).




Situate

in the County of Jefferson, State of Washington.




PARCEL 2:




The North 1/2 of the

Northeast 1/4 and the North 1/2 of the Southeast 1/4 of the Northeast 1/4 of

Section 18, Township 28 North, Range 1 East, W.M., in Jefferson County,

Washington;




TOGETHER WITH that

portion of the West 1/2 of the Northwest 1/4 of Section 17, Township 28 North,

Range 1 East, W.M., in Jefferson County, Washington, lying North of Oak Bay

Road.




Situate in the County of

Jefferson, State of Washington.




PARCEL 3:




That portion of the Southeast

1/4 of Section 18, Township 28 North, Range 1 East, W.M., Jefferson County,

Washington, lying Northerly of Oak Bay Road.




Situate

in the County of Jefferson, State of Washington.




PARCEL 4:




One square acre in the

Southwest corner of the Southwest 1/4 of the Southeast 1/4 of the Northeast 1/4

of Section 18, Township 28 North, Range 1 East, W.M., in Jefferson County,

Washington.




Situate in the County of

Jefferson, State of Washington.




PARCEL 5:




The Southwest 1/4 of the

Northeast 1/4, Section 18, Township 28 North, Range 1 East, W.M., in Jefferson

County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 6:




That portion of the South

850.00 feet of Section 18, lying Southerly of Oak Bay Road;




EXCEPT right of way for Beaver

Valley Road;




TOGETHER WITH the Northeast 1/4

of Section 19;




ALSO TOGETHER WITH the West 1/2

of the Northwest 1/4 of Section 20;




EXCEPT any portion thereof

lying within Jefferson County Tax Lot No. 2 (Port Ludlow Golf Course) if any,

as described in deed recorded September 15, 1998, under Auditor’s File

No. 414414;




All in Township 28 North, Range

1 East, W.M., Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 7:




The East 1/2 of the West 1/2 of the Southeast 1/4 of

Section 19 and in the Southeast 1/4 of Section 18, Township 28 North,

Range 1 East, W.M., in Jefferson County, Washington;




 




 




 




96





























 




EXCEPT right of way for Beaver

Valley Road.




Situate

in the County of Jefferson, State of Washington.




PARCEL 8:




The Southwest 1/4 of Section

20, Township 28 North, Range 1 East, W.M., Jefferson County, Washington;




EXCEPT the North 1/2 of the

Northeast 1/4 of the Southwest 1/4 thereof;




TOGETHER WITH the South

3/4 of the West 1/2 of the West 1/2 of the Southeast 1/4 of said Section 20.




Situate

in the County of Jefferson, State of Washington.




PARCEL 9:




The East 1/2 of the Northeast

1/4 of Section 28, Township 28 North, Range 1 East of the Willamette Meridian;




EXCEPT the South ten acres of

the Southeast 1/4 of the Northeast 1/4 of said Section 28;




AND EXCEPT the right of

way of the Teal Lake Road, as conveyed on October 9, 1909 in Volume 1 of Road

Waivers, pages 31 and 32.




Situate

in the County of Jefferson, State of Washington.




PARCEL 10:




The Southwest 1/4 of the

Northwest 1/4; the South 1/2 of the Northwest 1/4 of the Northwest 1/4; the

West 1/2 of the Southwest 1/4; the North 1/2 of the Southeast 1/4 of the

Southwest 1/4, in Section 18, Township 29 North, Range 1 East, W.M., Jefferson

County, Washington;




EXCEPT that portion of said

North 1/2 of the Southeast 1/4 of the Southwest 1/4 as conveyed to Lucille M.

Powell by instrument recorded June 2, 1995, under Auditor’s File No. 382696;




ALSO EXCEPT right of way

for Oak Bay Road.




Situate

in the County of Jefferson, State of Washington.




PARCEL 11:




Government Lots 5, 7 and 8, in Section 19, Township 29

North, Range 1 East, W.M., Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 12:




The West 1/2 of Government Lot

2, Section 30, Township 29 North, Range 1 East, W.M., Jefferson County,

Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 13:




The North 1/2 of

Government Lot 4 and the North 1/2 of the Northeast 1/4 of the Southwest 1/4,

Section 30, Township 29 North, Range 1 East, W.M., Jefferson County,

Washington.




Situate in the County of

Jefferson, State of Washington.




PARCEL 14:




The East 1/2, EXCEPT Government

Lot 1; the East 1/2 of the Northwest 1/4; the South 1/2 of Government Lot 4;

the Southeast 1/4 of the Southwest 1/4; and the South 1/2 of the Northeast 1/4

of the Southwest 1/4; all in Section 30, Township 29 North, Range 1 East, W.M.,

Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




 




97





























 




PARCEL 15:




The North 1/2 of the Northwest

1/4 of the Northeast 1/4; Government Lot 2; the West 1/2 of the Southeast 1/4

of the Northwest 1/4; the East 1/2 of the Northeast 1/4 of the Southwest 1/4;

and the Southeast 1/4 of the Southwest 1/4, in Section 31, Township 29 North,

Range 1 East, W.M., Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 16:




That portion of

Government Lot 1, Section 5, Township 27 North, Range 1 West, W.M., in

Jefferson County, Washington, lying Westerly of Quilcene-Center Road as

conveyed to Jefferson County by deed recorded August 5, 1932 under Auditor’s

File No. 68839, records of Jefferson County;




EXCEPT the North 920 feet

thereof;




Situate

in the County of Jefferson, State of Washington.




PARCEL 17:




The North 920 feet of

Government Lot 1, (Northeast 1/4 of the Northeast 1/4) of Section 5, Township

27 North, Range 1 West, W.M., in Jefferson County, Washington;




Lying West of the

Quilcene-Center County Road, as conveyed to Jefferson County by deed recorded

August 5, 1932 under Auditor’s File No. 68839, records of Jefferson County,

Washington;




EXCEPT the North 10 acres

thereof.




Situate

in the County of Jefferson, State of Washington.




PARCEL 18:




The South 1/2 of Government Lot

4; the Southwest 1/4 of the Northwest 1/4; and the Southwest 1/4; ALL in

Section 1, Township 28 North, Range 1 West, W.M., Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 19:




The South 1/2 of the Southeast

1/4 of Section 2, Township 28 North, Range 1 West, W.M., Jefferson County,

Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 20:




Those portions of the Southwest

quarter of the Southwest quarter of Section 4, the South half of the Southeast

quarter, and the South half of the Southeast quarter of the Southwest quarter

of Section 5, and of Section 8, All in Township 28 North, Range 1 West, W.M.,

described as follows:




a)             That portion of the

Southwest quarter of the Southwest quarter of said Section 4 lying Southerly

and Westerly of the centerline of Chimacum Creek;




b)            Those portions of

the South half of the Southeast quarter and the South half of the Southeast

quarter of the Southwest quarter of said Section 5 lying Southerly of the

centerline of Chimacum Creek;




c)             That portion of

said Section 8 lying Northerly of State Highway 104, less right-of-way for said

highway.




Situate

in the County of Jefferson, State of Washington.




 




98





























 




PARCEL 21:




Those portions of Section 5,

Township 28 North, Range 1 West, W.M., described as follows:




The Southeast quarter of the Northeast quarter,

Government Lot 2, the South half of the Southeast quarter of the Southeast

quarter lying Northerly of the centerline of Chimacum Creek, the Southwest of

the Southeast quarter lying Northerly of the centerline of Chimacum Creek, the

Northwest quarter of the Southeast quarter, the Northeast quarter of the

Southwest quarter, and Government Lot 2 and 4, all of said Section 5.




Less right-of-way for County

road.




Situate

in the County of Jefferson, State of Washington.




PARCEL 22:




Those portions of Section 5,

Township 28 North, Range 1 West, W.M., described as follows:




The Southwest quarter of

the Northeast quarter, that portion of the Southeast quarter of the Southwest

quarter lying Northerly of the centerline of Chimacum Creek.  The South half of the Northwest quarter, and

Government Lot 3, all of said Section 5.




Situate in the County of

Jefferson, State of Washington.




PARCEL 23:




Government Lot 4, Section

6, Township 28 North, Range 1 West, W.M., Jefferson County, Washington.




Situate in the County of

Jefferson, State of Washington.




PARCEL 24:




The West 1/2 of the

Southwest 1/4 and the West 1/2 of the East 1/2 of the Southwest 1/4 of Section

9, All in Township 28 North, Range 1 West, W.M., in Jefferson County,

Washington.




Situate in the County of

Jefferson, State of Washington.




PARCEL 25:




The North 1/2 of the

Northeast 1/4 and the Southwest 1/4 of the Northeast 1/4 of Section 11,

Township 28 North, Range 1 West, W.M., Jefferson County, Washington.




Situate in the County of

Jefferson, State of Washington.




PARCEL 26:




The North 1/2 of the Northwest 1/4 of Section 12,

Township 28 North, Range 1 West, W.M., Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 27:




Government Lots 1, 2 and 3 and

that portion of Government Lot 4 lying Easterly of the Easterly right-of-way of

State Highway No. 9,




The South 1/2 of the Northwest

1/4, the Southwest 1/4 of the Northeast 1/4, the Southwest 1/4, the North 1/2

of the Southeast 1/4, the Southwest 1/4 of the Southeast 1/4;




ALSO that portion of the

Southeast 1/4 of the Southeast 1/4 described as Blocks 6 to 15 inclusive, and

Blocks 26 to 35 inclusive of Somerville, as per plat recorded in Volume 2 of

Plats, page 63, records of Jefferson County, Washington.




EXCEPT that portion conveyed

from Crown Zellerbach Corporation, to Bruce Brown and Linda Brown in instrument

dated December 9, 1983, and recorded under Auditor’s File No.  287660;




ALSO EXCEPT that portion

conveyed to the City Port Townsend by deed dated October 13, 1993 and recorded

May 23, 1994 under Auditor’s File No. 372115.




All in Section 4,

Township 29 North, Range 1 West.




Situate

in the County of Jefferson, State of Washington.




 




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PARCEL 28:




The West 1/2 of the Northeast

1/4;




And the Northwest 1/4, Section

9, Township 29 North, Range 1 West.




Situate

in the County of Jefferson, State of Washington.




PARCEL 29:




The Northeast 1/4 of the

Northeast 1/4, all those portions of the Southwest 1/4 of the Northeast 1/4,

and Government Lots 1 and 2, lying East of the Easterly boundary of State

Highway No. 9, the Northwest 1/4 of the Southeast 1/4, that portion of the

Northeast 1/4 of the Southeast 1/4 as described in instrument recorded June 28,

1945, in Volume 117 of Deeds, page 224, records of Jefferson County,

Washington;




the Southeast 1/4 of the

Southeast 1/4, the Southeast 1/4 of the Southwest 1/4, the Southwest 1/4 of the

Southeast 1/4;




ALSO that portion of Government

Lot 3, lying Southeasterly of State Highway; the East 660 feet of Government

Lot 4 and that portion of the West 660 feet of Government Lot 4, lying

Southeasterly of the State Highway No. 9;




All in Section 17, Township 29

North, Range 1 West;




EXCEPT that portion thereof,

described in deed and easement dated December 23, 1976, and recorded under

Auditor’s File No.  239261, to Maurice

L. Plaster, et al;




EXCEPT that portion, if any, as

described in instrument recorded under Auditor’s File No.  239261, records of Jefferson County,

Washington;




EXCEPT Moon Lake and all lands

within a radius of 75 feet wide surrounding said lake;




EXCEPT State Highway No. 9,

right-of-way;




EXCEPT Railroad in

Government Lot 4 as conveyed by deeds recorded in Volume 28 of Deeds, pages 525

and 526 and in Volume 29 of Deeds, pages 127 to 129, Jefferson County,

Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 30:




That portion of Government Lot

5, Section 19, lying Southerly of State Highway No. 9, as conveyed to the State

of Washington by instrument recorded in Volume 102 of Deeds, page 207, under

Auditor’s File No. 68633;




The Southeast 1/4 of the

Southeast 1/4 of Section 19, Township 29 North, Range 1 West;




EXCEPT that portion of said

Government Lot 5, described as follows:




Beginning at the intersection

of the East line of said subdivision with the South line of State Highway No.

20 right of way;




thence South along said South

right of way line 99.0 feet;




thence South 01m 26’ 13” East 700 feet more or less to the South

line of said Government Lot 5;




thence Easterly 66 feet more or

less to the Southeast corner of said Government Lot 5;




thence North 01m 21’ 20” East along the East line of said

Government Lot 5 to the point of beginning.




Situate in the County of

Jefferson, State of Washington.




PARCEL 31:




The Southeast 1/4 of the

Southeast 1/4 in Section 19, Township 29 North, Range 1 West, W.M., Jefferson

County, Washington;




EXCEPT that portion lying

Northwesterly of the easement of Puget Sound Power & Light Company, as

recorded March 7, 1975 under Auditor’s File No. 227268.




Situate in the County of

Jefferson, State of Washington.




 




100





























 




PARCEL 32:




That portion of the Southwest

1/4 of the Southeast 1/4, lying Westerly of a line drawn from a point 200 feet

West of the Northeast corner of said subdivision to a point 200 feet East of

the Southwest corner of said subdivision;




All in Section 19, Township 29

North, Range 1 West;




EXCEPT City of Port Townsend

Pipe Line right-of-way;




ALSO EXCEPT right of way

of Primary State Highway No. 9-E.




Situate

in the County of Jefferson, State of Washington.




PARCEL 33:




The South 1/2 of the Northeast 1/4, the West 1/2 of

the Northeast 1/4 of the Northeast 1/4, the Northwest 1/4 of the Northeast 1/4,

the Northwest 1/4, the South 1/2;




All in Section 20, Township 29

North, Range 1 West;




EXCEPT that portion, if any, as

described in instrument recorded under Auditor’s File No.  239261, records of Jefferson County,

Washington;




ALSO EXCEPT Moon Lake and all

lands within a radius of 75 feet wide surrounding said lake;




ALSO EXCEPT that portion

of the Southwest 1/4 of the Northwest 1/4 lying Northwesterly of the Puget

Sound Power & Light easement recorded March 7, 1975 under Auditor’s File

No. 227268.




Situate

in the County of Jefferson, State of Washington.




PARCEL 34:




The Southwest 1/4 of the Southwest 1/4, the West 1/2

of the Northwest 1/4 of the Southwest 1/4, Section 21, Township 29 North, Range

1 West.




Situate

in the County of Jefferson, State of Washington.




PARCEL 35:




The Southeast 1/4 of Section

21, Township 29 North, Range 1 West, EXCEPT right-of-way of County Road as

conveyed to Jefferson County by instrument recorded in Volume 1 of Road

Waivers, pages 142 and 143;  ALSO EXCEPT

that portion conveyed to Gerald W. Phillips, et ux by deed recorded January 7,

1988 under Auditor’s File No. 312370, records of Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 36:




The Southwest 1/4 of the

Southwest 1/4 of Section 22, Township 29 North, Range 1 West.




Situate

in the County of Jefferson, State of Washington.




PARCEL 37:




Tracts 1 through 8 inclusive of

Stewart Garden Tracts, as per plat recorded in Volume 2 of Plats, page 90,

records of Jefferson County, Washington;




Situate

in the County of Jefferson, State of Washington.




PARCEL 38:




That portion of the South

1/4 of the Northeast 1/4 of the Southeast 1/4 of Section 25, Township 29 North,

Range 1 West, W.M., in Jefferson County, Washington, lying Easterly of the

Chimacum-Beaver Valley County Road right of way as conveyed by Deed recorded

under Auditor’s File No. 160634 records of said County;




TOGETHER WITH a permanent,

non-exclusive easement for a 60 foot easement for ingress, egress and

utilities, the centerline of which is described as follows:




 




101





























 




Beginning at the intersection

of the North line of the South 1/2 of the South 1/2 of the Southeast 1/4 of the

Southeast 1/4 of said Section 25, and the Easterly margin of the

Chimacum-Beaver Valley County Road (#12);




thence North 16m 31’ 30” East 176.21 feet;




thence North 54m 20’ 30” East 176.11 feet;




thence North 32m 58’ 30” West 268.03 feet;




thence North 13m 25’ 00” West 174.18 feet;




thence North 21m 53’ 00” East 96.59 feet;




thence North 33m 40’ 30” West 139.75 feet;




thence North 2m 22’ 00” West 130.45 feet to the South line of

the South 1/2 of the Northeast 1/4 of the Southeast 1/4 of said Section 25, and

the terminus of said line.




Situate

in the County of Jefferson, State of Washington.




PARCEL 39:




The West 1/2 of the Northwest

1/4, the West 1/2 of the Southwest 1/4 of the Southwest 1/4, Section 28,

Township 29 North, Range 1 West.




Situate in the County of Jefferson, State of

Washington.




PARCEL 40:




The East 1/2, the Northwest

1/4, the East 1/2 of the Southwest 1/4, the Southwest 1/4 of the Southwest 1/4,

Section 29, Township 29 North, Range 1 West.




Situate

in the County of Jefferson, State of Washington.




PARCEL 41:




The Northeast 1/4 of the

Northeast 1/4; the North 1/2 of the Southeast 1/4 of the Northeast 1/4, and

that portion of the Southwest 1/4 of the Southeast 1/4, as described in

instrument recorded August 10, 1955, in Volume 140 of Deeds, page 598, records

of Jefferson County, Washington;




the East 1/2 of the Southwest

1/4, the East 1/2 of the Northwest 1/4, Government Lots 2, 3, 4 and that

portion of Government Lot 1, as described in instrument recorded December 19,

1946, in Volume 119 of Deeds, page 611, records of Jefferson County,

Washington;




All in Section 30, Township 29

North, Range 1 West;




EXCEPT Old Eaglemount

County Road right-of-way.




Situate

in the County of Jefferson, State of Washington.




PARCEL 42:




The Southwest 1/4 of the Northeast 1/4, the Northeast

1/4 of the Northwest 1/4; the Northeast 1/4 of the Northeast 1/4, Section 31,

Township 29 North, Range 1 West;




EXCEPT that portion as conveyed

to Puget Southern Properties, by Crown Zellerbach Corporation, in instrument

recorded under Auditor’s File No. 

287326;




EXCEPT Old Eaglemount County

Road right of way;




ALSO EXCEPT Lind County

usage road as disclosed by Jefferson Public Works Department.




Situate

in the County of Jefferson, State of Washington.




PARCEL 43:




The Northeast 1/4, the

North 1/2 of the Southeast 1/4, the North 1/2 of the Northwest 1/4, the

Southeast 1/4 of the Northwest 1/4, and those portions of the Southwest 1/4 of

the Northwest 1/4, and the North 1/2 of the Southwest 1/4, lying Northeasterly

of State Highway No. 9;




All in Section 32, Township 29

North, Range 1 West.




 




 




102





























 




Situate

in the County of Jefferson, State of Washington.




PARCEL 44:




That portion of the Southwest

1/4 of the Southwest 1/4 of Section 32, Township 29 North, Range 1 West,

W.M., Jefferson County, Washington, lying Southerly of Old Eaglemount Road.




Situate

in the County of Jefferson, State of Washington.




PARCEL 45:




The Northeast 1/4 of the

Northeast 1/4, the East 1/2 of the Northwest 1/4 of the Northeast 1/4, the

South 1/2 of the Northeast 1/4, the South 1/2 of the Northwest 1/4, the West

1/2 of the Northwest 1/4 of the Northwest 1/4, the North 1/2 of the Southwest

1/4, the North 1/2 of the Southeast 1/4 of the Southwest 1/4, the North 1/2 of

the Southeast 1/4, the Southwest 1/4 of the Southeast 1/4;




All in Section 33, Township 29

North, Range 1 West;




EXCEPT Gibbs Lake County usage

road, as disclosed by Jefferson County Public Works Department.




ALSO EXCEPT right of way

for West Egg & I Road, as conveyed to Jefferson County by deed recorded

April 26, 1996, under Auditor’s File No. 390603.




Situate

in the County of Jefferson, State of Washington.




PARCEL 46:




That portion of the Northwest 1/4 of the Southwest

1/4, as described in instrument recorded April 19, 1960, in Volume 152 of

Deeds, page 373, records of Jefferson County, Washington;




All in Section 34, Township 29

North, Range 1 West;




EXCEPT that portion conveyed by

Quit Claim Deed to Jefferson County from Crown Zellerbach Corporation in

instrument dated June 11, 1981;




EXCEPT Gibbs Lake County Road

usage road as disclosed by Jefferson County Public Works Department;




ALSO EXCEPT therefrom

said Township 29 North, Range 1 West the Port Townsend Gravity Water Supply

Pipe Line right of way as conveyed and/or condemned by proceedings in Volume H

and K of County Commissioners meeting, pages 254 and 528, respectively, and

Volume 54 of Deeds, pages 302 and 303, records of Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 47:




The Northwest 1/4 of the

Northeast 1/4 of Section 27, Township 27 North, Range 2 West, W.M., Jefferson

County, Washington;




EXCEPTING THEREFROM all that portion

thereof described in the Deed executed by John Seaton, etux, to the United

State of America, recorded November 3, 1911, under Auditor’s File No. 34023;




AND EXCEPTING THEREFROM all

that portion thereof described in the Deed executed by Francis S. Meyer, etux,

to Charles J. Beck, etux, recorded June 11, 1932, under Auditor’s File No.

68529;




ALSO EXCEPTING THEREFROM all that portion thereof

lying within State Route 101 and that portion lying Northerly of the Big

Quilcene River.




Situate

in the County of Jefferson, State of Washington.




PARCEL 48:




That portion of Government Lots

5 and 6 and the South 1/2 of the Northwest 1/4 of the Southwest 1/4 lying

Northeasterly of Fuller County Road right-of way, the North 1/2 of the

Northwest 1/4 of the southwest 1/4 EXCEPT the West 132 feet thereof, the

Southeast 1/4 of the Northwest 1/4, the 




 




 




 




103





























 




Northeast 1/4 of the Southwest

1/4, Government Lot 3, that portion of Government Lot 4 lying Southeasterly of

Port Townsend Southern Railroad right-of-way, that portion of the North 1/2 of

the North 1/2 of the Southwest 1/4 of the Northwest 1/4 lying southeasterly of

the Port Townsend Southerly Railroad right-of-way, that portion of the

abandoned Port Townsend Southern Railroad right-of-way lying within the North

1/2 of the north 1/2 of the Southwest 1/4 of the Northwest 1/4 and within

Government Lot 4, as conveyed by deed recorded May 20, 1890 in Volume 27 of

Deeds, page 507 and 508, records of Jefferson County, Washington;




 




All in Section 1, Township 28

North, Range 2 West, W.M., in Jefferson County, Washington.




EXCEPT Olympic Highway

right-of-way;




ALSO EXCEPT State Highway No.

9, State Highway No. 9-E, and State Highway 104 rights of ways;




ALSO EXCEPT the Port

Townsend Gravity Water Supply line as conveyed by deed recorded March 16, 1905

under Auditor’s File No. 20471 (Volume 54 of Deeds, pages 579-580), records of

Jefferson County, Washington.




Situate in the County of

Jefferson, State of Washington.




PARCEL 49:




That portion of the South 1/2

of the North 1/2 of the Southwest 1/4 of the Northwest 1/4, Section 1,

Township 28 North, Range 2 West, W.M., in Jefferson County, Washington,

described as follows:




Beginning at a point on the

East line of the Southwest 1/4 of the Northwest 1/4 of said Section 1 which is

North 1m12’41” West, 669.96 feet from the Southeast

corner of said Southwest 1/4 of the Northwest 1/4;




thence continuing North 1m12’41” West, along said East line 312.18 feet to

the Northeast corner of said South 1/2 of the North 1/2 of the Southwest 1/4 of

the Northwest 1/4;




thence North 89m59’07” West, along the North line of said South

1/2 of the North 1/2 of the Southwest 1/4 of the Northwest 1/4, 493.65 feet;




thence South 1m12’41” East, 112.19 feet;




thence South 89m59’07” East, 443.65 feet;




thence South 1m12’41” East, 199.99 feet;




thence North 89m59’07” East, 50.00 feet to The Point of

Beginning.




Situate

in the County of Jefferson, State of Washington.




PARCEL 50:




That portion of the former

railway right of way of the Port Townsend Southern Railroad as conveyed by

instrument recorded in Volume 27 of Deeds, page 490, under Auditor’s File No.

4578 over and across the Northeast 1/4 of the Southeast 1/4 of Section 14,

Township 28 North, Range 2 West, W.M., in Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 51:




The Southwest 1/4 of the

Southeast 1/4; the West 1/2 of the Northwest 1/4 of the Southeast 1/4; and that

portion of the East 1/2 of the Northeast 1/4 of the Southeast 1/4 lying

Easterly of the former Port Townsend Southern Railroad Company right of way as

conveyed by instrument recorded in Volume 27 of Deeds, page 490 under Auditor’s

File No. 4578, all in Section 14, Township 28 North, Range 2 West, W.M.,

Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




104





























 




PARCEL 52:




The North 1/2 of the Northwest

1/4 of the Northeast 1/4 of Section 26, Township 28 North, Range 2 West, W.M.,

in Jefferson County, Washington.




Situate

in the County of Jefferson, State of Washington.




PARCEL 53:




Government Lots 7, 8 and

9, Section 24, Township 29 North, Range 2 West, that portion of John E. Burns

Donation Claim No. 38 and John F. Tukey Donation Land Claim No. 39, as

described in instrument recorded March 1, 1966, in Volume 170 of Deeds, page

125, and as described in instrument recorded August 10, 1955, in Volume 140 of

Deeds, pages 598 and 599, records of Jefferson County, Washington.




Situate in the County of Jefferson,

State of Washington.




PARCEL 54:




The Northwest 1/4 of the

Northeast 1/4 of the Northeast 1/4, the Southwest 1/4 of the Northeast 1/4, the

Northeast 1/4 of the Southwest 1/4, the Southeast 1/4, the Northwest 1/4 of the

Northeast 1/4, the Southeast 1/4 of the Northwest 1/4;




All in Section 36, Township 29

North, Range 2 West;




EXCEPT State Highway No. 101,

right of way;




Situate

in the County of Jefferson, State of Washington.




PARCEL 55:




That portion of the North 1/2

of the Southwest 1/4 of the Northwest 1/4 of Section 36, Township 29 North,

Range 1 West, W.M., lying West of County Road No. 34.016, more particularly

described as follows:




Beginning at the Northwest

corner of said Section 36 and running thence South 01m 20’ West, along the West line of said Section

36, a distance of 1300.0 feet, more or less, to the Northwest corner of the

Southwest 1/4 of the Northwest 1/4 of said Section 36, and the TRUE POINT OF

BEGINNING;




thence continuing South 01m 20’ West, along said West line, 520.1 feet;




thence North 29m 30’ East, 443.1 feet;




thence North 48m 30’ East, 121.0 feet;




thence South 89m 00’ East, 253.0 feet to a point in the center

line of County Road No. 34.016;




thence North 05m 00’ West, along the center line of said county

road 60.2 feet to a point in the North line of said Southwest 1/4 of the

Northwest 1/4 of Section 36;




thence North 89m 00’ West, along said North line 537.0 feet to

the TRUE POINT OF BEGINNING;




EXCEPT THEREFROM portion

lying within County Road No. 34.016.




Situate in the County of

Jefferson, State of Washington.




105





























 




KITSAP

COUNTY, WASHINGTON




SECTION

14.  LEGAL DESCRIPTIONS




Parcels

1-71 are all located in Kitsap County, Washington:




PARCEL 1:




THE NORTHEAST QUARTER OF THE

NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 12, TOWNSHIP 27 NORTH,

RANGE 1 EAST, W.M. IN KITSAP COUNTY, WASHINGTON.


ALSO RESULTANT PARCEL B OF BOUNDARY LINE ADJUSTMENT RECORDED UNDER AUDITOR’S

FILE NO. 9502210221; BEING A PORTION OF THE SOUTHEAST QUARTER OF THE NORTHEAST

QUARTER OF THE SOUTHEAST QUARTER OF SECTION 12, TOWNSHIP 27 NORTH, RANGE 1 EAST

W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 2:




THE EAST OF

THE NORTHEAST 1/4;


THE SOUTHEAST 1/4;


THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4;


EXCEPT THAT PORTION CONTAINED WITHIN THE PLAT OF HOOD CANAL ACREAGE TRACTS

BLOCK 2, DIVISION NO. 1, AS PER PLAT RECORDED IN VOLUME 5 OF PLATS, PAGE 52,

RECORDS OF KITSAP COUNTY WASHINGTON;




ALL IN SECTION 13, TOWNSHIP 27

NORTH, RANGE 1 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




ALSO TRACTS 1, 13, 15, 16, AND

17 OF HOOD CANAL ACREAGE TRACTS BLOCK 2, DIVISION 1, AS PER PLAT RECORDED IN

VOLUME 5 OF PLATS, PAGE 52, RECORDS OF KITSAP COUNTY WASHINGTON;




ALSO LOTS 12 AND 13, HOOD CANAL

ACREAGE TRACTS BLOCK 1, DIVISION 4, AS PER PLAT RECORDED IN VOLUME 5 OF PLATS,

PAGE 51, RECORDS OF KITSAP COUNTY WASHINGTON;




ALSO LOTS 10 AND 11, HOOD CANAL

ACREAGE TRACTS BLOCK 1, DIVISION 2, AS PER PLAT RECORDED IN VOLUME 5 OF PLATS,

PAGE 49, RECORDS OF KITSAP COUNTY WASHINGTON;




 




PARCEL 3:




THE EAST 8 ACRES OF THE WEST HALF

OF THE EAST HALF OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4; EXCEPT THE SOUTH 30

FEET THEREOF;


THE EAST HALF OF THE EAST HALF OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4;

EXCEPT THE SOUTH 30 FEET, AND EXCEPT THE EAST 50 FEET;




ALL IN SECTION 23,

TOWNSHIP 27 NORTH, RANGE 1 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




106





























 




PARCEL 4:




THE

NORTHEAST 1/4;




THE

EAST HALF OF THE NORTHWEST 1/4;




THE

NORTHEAST 1/4  OF THE SOUTHWEST 1/4;




THE

SOUTHWEST 1/4 OF THE SOUTHWEST 1/4;




EXCEPT

THE NORTH AND EAST 30 FEET; AND EXCEPT THE SOUTH 50 FEET OF SAID SOUTHEAST 1/4

OF THE SOUTHWEST 1/4;




ALSO

THE SOUTHEAST 1/4; 




ALL

IN SECTION 24, TOWNSHIP 27 NORTH, RANGE 1 EAST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 5:




THE NORTHEAST 1/4;




THE NORTHWEST 1/4;




EXCEPT THE NORTH HALF OF THE

NORTHWEST 1/4 OF THE NORTHWEST 1/4;




ALSO THE SOUTHEAST 1/4;




ALL IN SECTION 25, TOWNSHIP 27

NORTH, RANGE 1 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 6:




THAT PORTION OF SECTION 36.

TOWNSHIP 27 NORTH, RANGE 1 EAST, W.M., IN KITSAP COUNTY, WASHINGTON, DESCRIBED

AS FOLLOWS:




BEGINNING AT THE

NORTH QUARTER  CORNER OF SAID SECTION

36;




THENCE SOUTH

89°12’32” EAST ALONG THE NORTH LINE OF SAID SECTION 36 A DISTANCE OF 1318.83

FEET TO THE NORTHEAST CORNER OF THE WEST HALF OF THE NORTHEAST QUARTER OF SAID

SECTION 36;




THENCE SOUTH

1°24’08” WEST ALONG THE EAST LINE OF THE WEST HALF OF THE NORTHEAST QUARTER OF

SAID SECTION 36 A DISTANCE OF 2657.65 FEET TO THE SOUTHEAST CORNER OF THE WEST

HALF OF THE NORTHEAST QUARTER OF SAID SECTION 36;




THENCE NORTH

88°32’27” WEST ALONG THE SOUTH LINE OF THE WEST HALF OF THE NORTHEAST QUARTER

OF SAID SECTION 36 A DISTANCE OF 1309.44 FEET TO A D.N.R. CONCRETE MONUMENT

MARKING THE CENTER OF SAID SECTION 36;




THENCE SOUTH

1°15’42” WEST ALONG THE EAST LINE OF THE NORTHEAST QUARTER OF THE SOUTHWEST

QUARTER OF SAID SECTION 36 A DISTANCE OF 1363.60 FEET TO A D.N.R. CONCRETE

MONUMENT MARKING THE SOUTHEAST CORNER OF THE NORTHEAST QUARTER OF THE SOUTHWEST

QUARTER OF SAID SECTION 36;




THENCE NORTH 89°32’10”

WEST ALONG THE SOUTH LINE OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF

SAID SECTION 36 A DISTANCE OF 265.02 FEET TO A HALF INCH REBAR WITH A YELLOW

CAP IMPRINTED “SEO 20795” THEREINAFTER REFERRED TO AS A REBAR;




THENCE NORTH

7°02’09” WEST 205.20 FEET TO A REBAR;




THENCE NORTH

33°07’04” EAST 100.17 FEET TO A REBAR;




THENCE NORTH

10°34’20” EAST 321.37 FEET TO A REBAR;




THENCE NORTH

15°07’35” WEST 352.62 FEET TO A REBAR;




 




107





























 




THENCE NORTH

5°36’46” WEST 311.98 FEET TO A REBAR;




THENCE NORTH

6°55’30” WEST 483.78 FEET TO A REBAR;




THENCE NORTH

10°49’41” WSET 609.38 FEET TO A REBAR;




THENCE NORTH

4°12’47” WEST 157.16 FEET TO A REBAR;




THENCE NORTH

6°19’29” WEST 200.28 FEET TO A REBAR;




THENCE NORTH

37°58’38” WEST 174.02 FEET TO A REBAR;




THENCE NORTH

8°22’06” EAST 318.42 FEET TO A REBAR;




THENCE NORTH

37°05’29” EAST 1080.30 FEET TO THE POINT OF BEGINNING, IN KITSAP COUNTY,

WASHINGTON;




 




PARCEL 7:




THE NORTHEAST 1/4;




THE EAST HALF OF THE NORTHWEST

1/4;




THE NORTHEAST 1/4 OF THE

SOUTHWEST 1/4;




THE SOUTHWEST 1/4 OF THE

SOUTHWEST 1/4;




ALL IN SECTION 36, TOWNSHIP 27

NORTH, RANGE 1 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




EXCEPT THAT PORTION

CONVEYED TO GAMBLE VILLAGE WATER AND SEWER COMPANY, A WASHINGTON CORPORATION,

BY INSTRUMENT RECORDED UNDER AUDITOR’S FILE NO. 9212300192.




 




PARCEL 8:




THE NORTHWEST 1/4 OF SECTION 3,

TOWNSHIP 26 NORTH, RANGE 2 EAST, W.M., 




IN KITSAP COUNTY, WASHINGTON.




EXCEPT THE EAST

571.71 FEET THEREOF;




ALSO EXCEPT THE

SOUTHWEST 1/4 OF SAID NORTHWEST 1/4;




(ALSO KNOWN AS

PARCEL C OF 20 ACRE LAND SEGREGATION RECORDED SEPTEMBER 27, 1999 UNDER

AUDITOR’S FILE NO. 3209712.)




 




PARCEL 9:




THE NORTH HALF OF THE NORTHEAST

1/4;




AND THE SOUTHEAST 1/4 OF THE

NORTHEAST 1/4, EXCEPT THE NORTH AND EAST 30 FEET FOR ROAD PURPOSES;




ALL IN SECTION 4,

TOWNSHIP 26 NORTH, RANGE 2 EAST, IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 10:




THE EAST HALF OF

THE SOUTHEAST 1/4 OF SECTION 4, TOWNSHIP 26 NORTH, RANGE 2 EAST, W.M., IN

KITSAP




COUNTY, WASHINGTON.




 




108





























 




PARCEL 11:




THE SOUTHEAST

1/4 OF THE NORTHWEST 1/4 AND THE EAST HALF OF THE SOUTHWEST 1/4 OF SECTION 3,

TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




EXCEPT THE

SOUTH 30 FEET OF THE WEST 30 FEET OF SAID EAST HALF;




TOGETHER WITH

AN EASEMENT FOR ROAD PURPOSES OVER, ALONG AND ACROSS THE NORTH 30 FEET AND THE

SOUTH 60 FEET OF THAT PORTION OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SAID

SECTION 3, LYING EAST OF HANSVILLE COUNTY ROAD AND FOR SAID PURPOSES OVER,

ALONG AND ACROSS THE WEST 30 FEET AND THE SOUTH 30 FEET OF THAT PORTION OF SAID

SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 LYING WEST OF SAID COUNTY ROAD; AND FOR SAID

PURPOSES OVER AND ACROSS THE NORTH 60 FEET OF THE NORTHEAST 1/4 OF THE

NORTHWEST 1/4 OF SECTION 10, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M. IN KITSAP

COUNTY WASHINGTON.




 




PARCEL 12:




THE EAST HALF OF SECTION 4,

TOWNSHIP 27 NORTH, RANGE 2 EAST W.M., IN KITSAP COUNTY, WASHINGTON.




EXCEPT THE NORTHEAST 1/4 OF THE

NORTHEAST 1/4 OF SAID SECTION; AND EXCEPT COUNTY ROAD KNOWN AS HANSVILLE ROAD;




TOGETHER WITH AN

EASEMENT FOR ROAD PURPOSES OVER, ALONG AND ACROSS THE SOUTH 30 FEET OF THE

NORTHEAST 1/4 OF THE NORTHEAST 1/4; EXCEPT THE EAST 30 FEET THEREOF.




 




PARCEL 13:




THE SOUTHEAST 1/4

OF THE SOUTHWEST 1/4 OF SECTION 4, TOWNSHIP 27 NORTH, RANGE 2 EAST W.M., IN

KITSAP COUNTY, WASHINGTON.




 




PARCEL 14:




PORTIONS OF THE VACATED PLAT OF

GAMBLE VILLAGE, VACATED PURSUANT TO COMMISSIONERS JOURNAL VOLUME 15, PAGE 329,

LYING WITHIN SECTION 7, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP

COUNTY, WASHINGTON, DESCRIBED AS FOLLOWS:




BEGINNING AT THE QUARTER CORNER

COMMON TO SECTIONS 6 AND 7; THENCE SOUTH 88° 24’ 47” EAST ALONG THE LINE COMMON

TO SECTIONS 6 AND 7, 350.06 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH

16° 15’ 37” EAST 161.08 FEET; THENCE SOUTH 73° 44’ 23” EAST, 500.00 FEET;

THENCE SOUTH 16° 15’ 37” WEST, 120.00 FEET; THENCE SOUTH 73° 44’ 23” EAST,

100.00 FEET; THENCE NORTH 16° 15’ 37” EAST 120.00 FEET; THENCE SOUTH 73° 44’

23” EAST, 200.00 FEET; THENCE SOUTH 16° 15’ 37” WEST, 240.00 FEET; THENCE NORTH

73° 44’ 23” WEST, 720.00 FEET; THENCE NORTH 16°15’ 37 ‘ EAST, 10 FEET; THENCE

NORTH 73° 44’ 23” WEST, 80 FEET; THENCE NORTH 16°15’ 37 ‘ EAST, 68.92 FEET TO

THE TRUE POINT OF BEGINNING.




EXCEPT ANY PORTION IN THE

FORMER LOTS 13, 14, 15, 18 AND 20 THROUGH 24 OF SAID VACATED PLAT;




 




 













 




 




ALSO BEGINNING AT THE QUARTER

CORNER COMMON TO SAID SECTIONS 6 AND 7; THENCE SOUTH 88° 24’ 47” EAST ALONG THE

LINE COMMON TO SECTIONS 6 AND 7, 350.06 FEET; THENCE SOUTH 16° 15’ 37” WEST

258.92 FEET; THENCE SOUTH 73° 44’ 23” EAST, 800.00 FEET TO THE TRUE POINT OF

BEGINNING; THENCE NORTH 16° 15’ 37” EAST, 120.00 FEET; THENCE SOUTH 73° 44’ 23”

EAST, 60 FEET; THENCE NORTH 16° 15’ 37” EAST, 350.00 FEET; THENCE SOUTH 73° 44’

23” EAST, 177.26 FEET; THENCE SOUTH 31° 56’ 18” WEST, 109.06 FEET; THENCE SOUTH

15° 17’ 59” EAST, 99.75 FEET; SOUTH 16° 15’ 37” WEST, 280.00 FEET; THENCE NORTH

73° 44’ 23” WEST, 260.00 FEET TO THE TRUE POINT OF BEGINNING.




ALSO THE NORTHEAST

1/4 OF THE NORTHEAST 1/4 OF SECTION 7, TOWNSHIP 27 NORTH, RANGE 2 EAST W.M., IN

KITSAP COUNTY, WASHINGTON; EXCEPT THAT PORTION LYING WITHIN THE VACATED PLAT OF

GAMBLE VILLAGE.




 




109





























 




PARCEL 15:




THAT PORTION OF SECTION 7,

TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON, DESCRIBED

AS FOLLOWS:




PARCEL I:




NORTHWEST QUARTER OF THE

NORTHEAST QUARTER EXCEPT THE PLAT OF GAMBLE VILLAGE;




PARCEL II:




SOUTH HALF OF THE NORTHEAST

QUARTER




PARCEL III:




NORTHEAST QUARTER OF THE

NORTHWEST QUARTER;




PARCEL IV:




SOUTHWEST QUARTER EXCEPT THE

NORTHWEST QUARTER THEREOF;




PARCEL V:




WEST HALF OF THE SOUTHEAST

QUARTER;




PARCEL VI:




EAST HALF OF THE NORTHWEST

QUARTER OF THE SOUTHWEST QUARTER EXCEPT THAT PORTION OF THE NORTHWEST QUARTER

OF THE NORTHEAST QUARTER DESCRIBED AS FOLLOWS:




BEGINNING AT THE QUARTER CORNER

COMMON TO SECTION 6 AND 7;




THENCE SOUTH 88°24’47” EAST

350.96 FEET;




THENCE SOUTH 16°15’37” WEST

258.92 FEET TO THE TRUE POINT OF BEGINNING;




THENCE CONTINUING SOUTH

16°15’37” 380 FEET;




THENCE SOUTH 73°44’23” EAST 800

FEET;




THENCE NORTH 16°15’37” EAST 380

FEET;




THENCE NORTH 73°44’23” WEST 800

FEET TO THE TRUE POINT OF BEGINNING;




EXCEPT THAT PORTION

OF THE SOUTHEAST QUARTER AND SOUTHWEST QUARTER CONVEYED BY INSTRUMENT 




RECORDED UNDER

AUDITOR’S FILE NO. 9212300189, IN KITSAP COUNTY WASHINGTON;




 




PARCEL 16:




THE WEST HALF OF

THE NORTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 7, TOWNSHIP 27 NORTH, RANGE 2

EAST W.M., IN KITSAP COUNTY, WASHINGTON.




 




110





























 




PARCEL 17:




THAT PORTION OF THE SOUTH HALF

OF SECTION 7 AND THE NORTH HALF OF THE NORTH HALF OF SECTION 18, BOTH IN

TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON, DESCRIBED

AS FOLLOWS:




COMMENCING AT THE NORTH QUARTER

CORNER OF SAID SECTIN 7;




THENCE SOUTH 1°20’14” WEST

ALONG THE NORTH-SOUTH CENTER LINE OF SAID SECTION 7 A DISTANCE OF 2666.45 FEET

TO THE CENTER OF SAID SECTION 7 AND THE TRUE POINT OF BEGINNING;




THENCE NORTH 88°59’21” WEST

ALONG THE EAST-WEST CENTER LINE OF SAID SECTION 7 A DISTANCE OF 1338.56 FEET TO

THE NORTHWEST CORNER OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SAID

SECTION 7;




THENCE SOUTH 11°36’17” WEST

1643.39 FEET TO A HALF INCH REBAR WITH A YELLOW CAP IMPRINTED “SEO 20795”

HEREINAFTER REFERRED TO AS A REBAR;




THENCE SOUTH 0°14’46” EAST

351.75 FEET TO A REBAR;




THENCE SOUTH 8°18’05” EAST

281.72 FEET TO A REBAR;




THENCE SOUTH 25°57’05” EAST

228.36 FEET TO A REBAR;




THENCE SOUTH 27°52’59” EAST

158.84 FEET TO A REBAR;




THENCE SOUTH 50°50’55” EAST

1231.20 FEET TO A REBAR;




THENCE NORTH 81°09’44” EST

654.90 FEET TO A REBAR;




THENCE NORTH 28°18’10” EAST

504.97 FEET TO A REBAR;




THENCE NORTH 44°56’37” EAST

603.45 FEET TO A REBAR;




THENCE NORTH 4°16’22” WEST

996.96 FEET TO A REBAR;




THENCE NORTH 13°51’41” WEST

560.41 FEET TO A REBAR;




THENCE NORTH 12°24’01” EAST

209.75 FEET TO A REBAR;




THENCE NORTH 18°55’00” WEST

373.13 FEET TO A REBAR;




THENCE NORTH 2°56’28” EAST

262.07 FEET TO THE EAST-WEST CENTER LINE OF SAID SECTION 7;




THENCE NORTH 88°59’21” WEST

ALONG SAID CENTER LINE 544.13 FEET TO THE TRUE POINT OF BEGINNING;




EXCEPT ANY PORTION

LYING WITHIN SECTION 18, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP

COUNTY WASHINGTON;




 




PARCEL 18:




THE

NORTHEAST 1/4 OF THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 9, TOWNSHIP

27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 19:




THE NORTHWEST 1/4

OF THE NORTHWEST 1/4 OF THE NORTHEAST 1/4 OF SECTION 9, TOWNSHIP 27 NORTH,

RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 20:




THE WEST HALF OF THE SOUTHWEST

1/4 OF THE NORTHEAST 1/4; 


THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4 OF THE NORTHWEST 1/4; 


EXCEPT THE SOUTH 30 FEET AND THE EAST 30 FEET THEREOF;




THE EAST 3/4 OF THE NORTH HALF

OF THE SOUTHWEST 1/4;




 




 




111





























 




AND THE WEST HALF OF THE

NORTHWEST 1/4 OF THE SOUTHEAST 1/4;


EXCEPT THE NORTH 30 FEET THEREOF;




ALL IN SECTION 15, TOWNSHIP 27

NORTH, RANGE 2 EAST, W.M.,




IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 21:




THAT PORTION OF THE SOUTH HALF

OF SECTION 7 AND THE NORTH HALF OF THE NORTH HALF OF SECTION 18, BOTH IN

TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON, DESCRIBED

AS FOLLOWS:




COMMENCING AT THE NORTH QUARTER

CORNER OF SAID SECTION 7;


THENCE SOUTH 1°20’14” WEST ALONG THE NORTH-SOUTH CENTER LINE OF SAID SECTION 7

A DISTANCE OF 2666.45 FEET TO THE CENTER OF SAID SECTION 7 AND THE TRUE POINT

OF BEGINNING;


THENCE NORTH 88°59’21” WEST ALONG THE EAST-WEST CENTER LINE OF SAID SECTION 7 A

DISTANCE OF 1338.56 FEET TO THE NORTHWEST CORNER OF THE NORTHEAST QUARTER OF

THE SOUTHWEST QUARTER OF SAID SECTION 7;


THENCE SOUTH 11°36’17” WEST 1643.39 FEET TO A HALF INCH REBAR WITH A YELLOW CAP

IMPRINTED “SEO 20795” HEREINAFTER REFERRED TO AS A REBAR;


THENCE SOUTH 0°14’46” EAST 351.75 FEET TO A REBAR;


THENCE SOUTH 8°18’05” EAST 281.72 FEET TO A REBAR;


THENCE SOUTH 25°57’05” EAST 228.36 FEET TO A REBAR;


THENCE SOUTH 27°52’59” EAST 158.84 FEET TO A REBAR;


THENCE SOUTH 50°50’55” EAST 1231.20 FEET TO A REBAR;


THENCE NORTH 81°09’44” EST 654.90 FEET TO A REBAR;


THENCE NORTH 28°18’10” EAST 504.97 FEET TO A REBAR;


THENCE NORTH 44°56’37” EAST 603.45 FEET TO A REBAR;


THENCE NORTH 4°16’22” WEST 996.96 FEET TO A REBAR;


THENCE NORTH 13°51’41” WEST 560.41 FEET TO A REBAR;


THENCE NORTH 12°24’01” EAST 209.75 FEET TO A REBAR;


THENCE NORTH 18°55’00” WEST 373.13 FEET TO A REBAR;


THENCE NORTH 2°56’28” EAST 262.07 FEET TO THE EAST-WEST CENTER LINE OF SAID

SECTION 7;


THENCE NORTH 88°59’21” WEST ALONG SAID CENTER LINE 544.13 FEET TO THE TRUE

POINT OF BEGINNING;




EXCEPT ANY PORTION

LYING WITHIN SECTION 7, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY

WASHINGTON;




 




PARCEL 22:




ALL OF SECTION 18, TOWNSHIP 27

NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON;




EXCEPT STATE HIGHWAY;




EXCEPT THE FOLLOWING:




THAT PORTION OF THE SOUTH HALF

OF SECTION 7 AND THE NORTH HALF OF THE NORTH HALF OF SECTION 18, BOTH IN

TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON, DESCRIBED

AS FOLLOWS:




 




112





























 




COMMENCING AT THE NORTH QUARTER

CORNER OF SAID SECTION 7;


THENCE SOUTH 1°20’14” WEST ALONG THE NORTH-SOUTH CENTER LINE OF SAID SECTION 7

A DISTANCE OF 2666.45 FEET TO THE CENTER OF SAID SECTION 7 AND THE TRUE POINT

OF BEGINNING;


THENCE NORTH 88°59’21” WEST ALONG THE EAST-WEST CENTER LINE OF SAID SECTION 7 A

DISTANCE OF 1338.56 FEET TO THE NORTHWEST CORNER OF THE NORTHEAST QUARTER OF

THE SOUTHWEST QUARTER OF SAID SECTION 7;


THENCE SOUTH 11°36’17” WEST 1643.39 FEET TO A HALF INCH REBAR WITH A YELLOW CAP

IMPRINTED “SEO 20795” HEREINAFTER REFERRED TO AS A REBAR;


THENCE SOUTH 0°14’46” EAST 351.75 FEET TO A REBAR;


THENCE SOUTH 8°18’05” EAST 281.72 FEET TO A REBAR;


THENCE SOUTH 25°57’05” EAST 228.36 FEET TO A REBAR;


THENCE SOUTH 27°52’59” EAST 158.84 FEET TO A REBAR;


THENCE SOUTH 50°50’55” EAST 1231.20 FEET TO A REBAR;


THENCE NORTH 81°09’44” EST 654.90 FEET TO A REBAR;


THENCE NORTH 28°18’10” EAST 504.97 FEET TO A REBAR;


THENCE NORTH 44°56’37” EAST 603.45 FEET TO A REBAR;


THENCE NORTH 4°16’22” WEST 996.96 FEET TO A REBAR;


THENCE NORTH 13°51’41” WEST 560.41 FEET TO A REBAR;


THENCE NORTH 12°24’01” EAST 209.75 FEET TO A REBAR;


THENCE NORTH 18°55’00” WEST 373.13 FEET TO A REBAR;


THENCE NORTH 2°56’28” EAST 262.07 FEET TO THE EAST-WEST CENTER LINE OF SAID

SECTION 7;


THENCE NORTH 88°59’21” WEST ALONG SAID CENTER LINE 544.13 FEET TO THE TRUE

POINT OF BEGINNING;




AND EXCEPT ANY PORTION LYING

WITHIN SECTION 7, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY

WASHINGTON;




TOGETHER WITH TIDE

LANDS OF THE SECOND CLASS, AS CONVEYED BY THE STATE OF WASHINGTON, SITUATE IN

FRONT OF, ADJACENT TO AND ABUTTING UPON THE SOUTHEAST QUARTER OF THE NORTHEAST

QUARTER OF SAID SECTION 18;




 




PARCEL 23:




THE NORTHWEST 1/4 OF THE

NORTHEAST 1/4;


THE WEST HALF;


THE WEST HALF OF THE SOUTHEAST 1/4; AND 


THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4;




ALL IN SECTION 19, TOWNSHIP 27

NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 24:




THE WEST HALF OF THE EAST HALF

OF SECTION 33, TOWNSHIP 28 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY,

WASHINGTON.




ALSO THE NORTHWEST

1/4 OF THE SOUTHWEST 1/4 OF SAID SECTION;


EXCEPT PORTION CONVEYED TO KITSAP COUNTY FOR ROAD PURPOSES BY INSTRUMENT

RECORDED UNDER AUDITOR’S FEE NO. 817693.




 




113





























 




PARCEL 25:




THE

SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 28, TOWNSHIP 27 NORTH, RANGE 2

EAST, W.M., IN KITSAP COUNTY, WASHINGTON;


EXCEPT THE NORTH 140 FEET OF THE WEST 180 FEET THEREOF.




 




PARCEL 26:




THE NORTHWEST 1/4

OF THE NORTHWEST 1/4 OF SECTION 29, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN

KITSAP COUNTY, WASHINGTON, 


EXCEPT THAT PORTION LYING EASTERLY OF SUQUAMISH-PORT GAMBLE ROAD.




 




PARCEL 27:




THE EAST 53.33

ACRES OF THE SOUTHEAST 1/4; EXCEPT THE EAST 50 FEET THEREOF TO KITSAP COUNTY

PER RESOLUTION NO 087-1990 DATED 2/26/1990; ALSO EXCEPT THE NORTH 209 FEET OF

THE WEST 209 FEET OF THE EAST 53.33 ACRES OF THE SOUTHEAST 1/4 OF SECTION 29,

TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 28:




THE NORTH HALF;


THE SOUTHWEST 1/4; EXCEPT THE WEST, SOUTH, AND EAST 50 FEET THEREOF;


THE NORTH HALF OF THE SOUTHEAST 1/4;


THE SOUTHWEST 1/4 OF THE SOUTHEAST 1/4; EXCEPT THE WEST AND SOUTH 50 FEET AND

THE EAST 30 FEET THEREOF;


AND THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4; EXCEPT THAT PORTION OF THE

FOLLOWING DESCRIBED TRACT LYING SOUTHEASTERLY OF BOND ROAD, TO-WIT:




BEGINNING AT THE SOUTHEAST CORNER

OF SECTION 30;


THENCE NORTH 1° 27’ 26” WEST 485.77 FEET;


THENCE SOUTH 89° 16’ 34” WEST 481.05 FEET;


THENCE SOUTH 1° 27’ 26” EAST 485.77 FEET;


THENCE NORTH 89° 16’ 34” WEST 481.05 FEET TO THE TRUE POINT OF BEGINNING;




EXCEPT FROM THE ABOVE PORTION

THOSE PARCELS CONVEYED TO KITSAP COUNTY FOR BOND ROAD RELOCATION BY DEEDS

RECORDED UNDER AUDITOR’S FEE NO. 846386 AND 857704;




ALL IN SECTION 30,

TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 29:




THAT PORTION OF THE NORTHWEST

1/4 OF THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 LYING NORTHWESTERLY OF COUNTY

ROAD;




THE WEST HALF OF THE NORTHEAST

1/4; EXCEPT PORTION CONVEYED TO KITSAP COUNTY BY DEED RECORDED UNDER AUDITOR’S

FEE NO. 753899;




THE NORTHEAST 1/4 OF THE

NORTHWEST 1/4; EXCEPT THE NORTH 50 FEET; AND EXCEPT THE SOUTH 30 FEET;




THE NORTHWEST 1/4 OF THE

NORTHWEST 1/4; EXCEPT THE NORTH 50 FEET; AND EXCEPT THE SOUTH 50 FEET;




 




 




114





























 




THE SOUTHWEST 1/4 OF THE

NORTHWEST 1/4; EXCEPT THE WEST 50 FEET; AND EXCEPT THE NORTH, SOUTH AND EAST 30

FEET;


AND THE SOUTHEAST 1/4 OF THE NORTHWEST 1/4; EXCEPT THE WEST AND SOUTH 30 FEET;


ALL IN SECTION 31, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 30:




THE NORTHEAST 1/4 OF THE NORTHEAST

1/4; 


THE WEST HALF OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4; 


THE SOUTHWEST 1/4 OF THE NORTHEAST 1/4; 


THE SOUTHEAST 1/4 OF THE NORTHWEST 1/4; 


THE EAST HALF OF THE SOUTHWEST 1/4;


AND ALL OF THE SOUTHEAST 1/4;


ALL IN SECTION 32, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 31:




THE NORTH HALF OF THE NORTHWEST

1/4 OF THE NORTHWEST 1/4;


THE SOUTH HALF OF THE SOUTHEAST 1/4 OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4;


THE SOUTH HALF OF THE SOUTH HALF OF THE SOUTHEAST 1/4 OF THE NORTHWEST 1/4;


THE NORTH HALF OF THE SOUTHWEST 1/4;


THE WEST HALF OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4;


THE NORTHWEST 1/4 OF THE SOUTHEAST 1/4; EXCEPT THAT PORTION LYING SOUTHEASTERLY

OF THE NORTHERLY LINE OF COUNTY ROAD;


AND THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4;


ALL IN SECTION 33, TOWNSHIP 27 NORTH, RANGE 2 EAST W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 32:




THE SOUTH HALF OF

THE SOUTHWEST 1/4 OF SECTION 34, TOWNSHIP 27 NORTH, RANGE 2 EAST, W.M., IN

KITSAP COUNTY, WASHINGTON; EXCEPT THE EAST 571.71 FEET THEREOF; (ALSO KNOWN AS

PARCEL B OF 20 ACRE LAND SEGREGATION RECORDED UNDER AUDITOR’S FEE NO. 3209712.)




 




PARCEL 33:




THAT PORTION OF THE SOUTH HALF

OF THE SOUTHWEST 1/4 LYING NORTH OF THE PLATS OF SHORE WOODS, ACCORDING TO THE

PLAT RECORDED IN VOLUME 12 OF PLATS, PAGES 1 AND 2, RECORDS OF KITSAP COUNTY;

AND SHORE WOODS NO. 3, ACCORDING TO THE PLAT RECORDED IN VOLUME 12 OF PLATS,

PAGE 23, RECORDS OF KITSAP COUNTY, LYING EAST OF THE EASTERLY MARGIN OF BEAVER

ROAD EXTENDED SOUTHERLY;


ALL IN SECTION 20, TOWNSHIP 28 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




115





























 




PARCEL 34:




THAT PORTION OF THE SOUTHWEST

1/4 OF THE SOUTHEAST 1/4 OF SECTION 20, TOWNSHIP 28 NORTH, RANGE 2 EAST, W.M.,

IN KITSAP COUNTY, WASHINGTON, LYING SOUTHERLY OF THE SOUTHERLY BOUNDARY OF THE

PLAT OF SHORE WOODS, AS PER PLAT RECORDED IN VOLUME 12 OF PLATS, PAGE 1 AND 2,

RECORDS OF KITSAP COUNTY WASHINGTON;




ALSO




THAT PORTION OF THE SOUTHEAST

1/4 OF THE SOUTHEAST 1/4 OF SECTION 20, TOWNSHIP 28 NORTH, RANGE 2 EAST, W.M.,

IN KITSAP COUNTY, WASHINGTON, LYING SOUTHERLY OF THE SOUTHERLY BOUNDARY OF THE

PLAT OF SHORE WOODS NO. 2, AS PER PLAT RECORDED IN VOLUME 12 OF PLATS, PAGE 44

AND 45, RECORDS OF KITSAP COUNTY WASHINGTON;




 




PARCEL 35:




ALL OF SECTION 28, TOWNSHIP 28

NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON;




EXCEPT THE EAST

HALF OF THE SOUTHEAST 1/4 THEREOF;


AND EXCEPT THAT PORTION CONVEYED TO HANSVILLE WATER DISTRICT OF KITSAP COUNTY,

WASHINGTON, A MUNICIPAL CORPORATION, BY DEED RECORDED UNDER AUDITOR’S FEE NO.

7907310189.




 




PARCEL 36:




THAT PORTION OF THE SOUTHEAST

QUARTER OF THE SOUTHWEST QUARTER OF SECTION 20, TOWNSHIP 28 NORTH, RANGE 2

EAST, W.M., IN KITSAP COUNTY, WASHINGTON LYING SOUTHERLY AND EASTERLY OF COUNTY

ROAD KNOWN AS HOOD CANAL DRIVE AND WESTERLY OF THE WESTERLY BOUNDARY OF SHORE

WOODS, AS PER PLAT RECORDED IN VOLUME 12 OF PLATS, PAGES 1 AND 2, RECORDS OF

KITSAP COUNTY;


ALSO


THAT PORTION OF GOVERNMENT LOT 1 IN SAID SECTION 20, TOWNSHIP 28 NORTH, RANGE 2

EAST, W.M., IN KITSAP COUNTY, WASHINGTON, LYING SOUTHERLY OF SAID HOOD CANAL

DRIVE AND EASTERLY OF THE EASTERLY BOUNDARY OF HOOD CANAL SHORES, AS PER PLAT

RECORDED IN VOLUME 8 OF PLATS, PAGE 62, RECORDS OF KITSAP COUNTY;


ALSO


THAT PORTION OF GOVERNMENT LOT 4 IN SECTION 29, TOWNSHIP 28 NORTH, RANGE 2

EAST, W.M., IN KITSAP COUNTY, WASHINGTON, LYING EASTERLY OF THE EASTERLY

BOUNDARY OF HOOD CANAL SHORES, AS PER PLAT RECORDED IN VOLUME 8 OF PLATS, PAGE

62, RECORDS OF KITSAP COUNTY;


ALSO


THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION 29, TOWNSHIP 28

NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY, WASHINGTON;


EXCEPT PORTION CONTAINED IN PLAT OF SHORE WOODS, AS PER PLAT RECORDED IN VOLUME

12 OF PLATS, PAGES 1 AND 2;


ALSO


THAT PORTION OF THE SOUTHEAST QUARTER OF THE NORTHWEST QUARTER AND OF THE

NORTHEAST QUARTER 




 




 




116





























 




OF THE SOUTHWEST QUARTER AND OF

GOVERNMENT LOT 1 IN SECTION 29, TOWNSHIP 28 NORTH, RANGE 2 EAST, W.M., IN

KITSAP COUNTY, WASHINGTON, LYING EASTERLY OF THE EASTERLY BOUNDARIES OF PLATS

OF HOOD CANAL SHORES AS PER PLAT RECORDED IN VOLUME 8 OF PLATS, PAGE 62; AND

HOOD CANAL SHORES NO. 2, AS PER PLAT RECORDED IN VOLUME 9 OF PLATS, PAGE 17,

RECORDS OF KITSAP COUNTY;


EXCEPT THAT PORTION THEREOF DESCRIBED AS FOLLOWS:




 




BEGINNING AT THE SOUTHEAST

CORNER OF LOT 48 OF HOOD CANAL SHORES NO. 2, S PER PLAT RECORDED IN VOLUME 9 OF

PLATS, PAGE 17;


THENCE NORTH 8°50’36” WEST, ALONG THE EASTERLY LIMITS OF SAID LOT 48, A

DISTANCE OF 150 FEET;


THENCE NORTH 81°09’24” EAST 85 FEET;


THENCE SOUTH 8°50’36” EAST 150 FEET;


THENCE SOUTH 81°09’24” WEST 85 FEET TO THE POINFT OF BEGINNING;


AND EXCEPT THAT PORTION THEREOF DESCRIBED AS FOLLOWS:




THAT PORTION OF THE NORTHEAST

QUARTER OF THE NORTHWEST QUARTER IN SECTION 29, TOWNSHIP 28 NORTH, RANGE 2

EAST, W.M., IN KITSAP COUNTY, WASHINGTON CONVEYED TO J. ROBERT AND FRANCES B.

SULTHOFF BY INSTRUMENT RECORDED UNDER ANDITOR’S FILE NO. 9405020261;




ALSO EXCEPT THAT PORTION

DESCRIBED AS FOLLOWS:




BEGINNING AT THE NORTHEAST

CORNER OF LOT 49 OF THE SAID PLAT OF HOOD CANAL SHORES NO. 2;


THENCE NORTH 17°07’37” WEST 90 FEET;


THENCE NORTH 72°52’23” EAST 85 FEET;


THENCE SOUTH 17°07’37” EAST 90 FEET;


THENCE SOUTH 12°34’07” EAST 185 FEET, MORE OR LESS, TO A POINT WHICH BEARS

NORTH 8°50’36” WEST AND NORTH 81°09’24” EAST 85 FEET FROM THE SOUTHEAST CORNER

OF LOT 48 OF SAID HOOD CANAL SHORES NO. 2;


THENCE SOUTH 81°09’24” WEST 25 FEET;


THENCE NORTH 12°34’07” WEST 180.22 FEET;


THENCE SOUTH 72°52’23” WEST 60 FEET TO THE POINT OF BEGINNING;




AND EXCEPT THAT PORTION THEREOF

LYING WITHIN THE FOLLOWING DESCRIBED TRACT DESIGNATED AS TRACT “X”:




BEGINNING AT THE NORTHEAST

CORNER OF LOT 35 OF SAID HOOD CANAL SHORES NO. 2;


THENCE SOUTHERLY, ALONG THE EASTERLY BOUNDARY OF SAID LOT 35 TO THE SOUTHEAST

CORNER THEREOF;


THENCE NORTH 59°26’54” EAST 470.00 FEET;


THENCE NORTH 30°33’06” WEST 259.93 FEET;


THENCE SOUTH 59°26’54” WEST 454.23 FEET TO THE POINT OF BEGINNING;


ALSO


THE EAST HALF OF SECTION 29, TOWNSHIP 28 NORTH, RANGE 2 EAST, W.M., IN KITSAP

COUNTY, WASHINGTON;




 




 




117





























 




EXCEPT PORTION LYING IN PLAT OF

SHORE WOODS NO. 2, AS PER PLAT RECORDED IN VOLUME 12 OF PLATS, PAGES 44 AND 45,

RECORDS OF KITSAP COUNTY;


AND EXCEPT PORTION LYING IN SAID TRACT “X” AFORESAID;


ALSO THE NORTH 60 FEET OF LOT 50, HOOD CANAL SHORES NO. 2, ACCORDING TO PLAT

RECORDED IN VOLUME 9 OF PLATS, PAGE 17, RECORDS OF KITSAP COUNTY, WASHINGTON.




 




PARCEL 37:




THE NORTHEAST

QUARTER OF THE NORTHEAST QUARTER;




EXCEPT

THE WEST AND NORTH 30 FEET;


THE SOUTHEAST QUARTER OF THE NORTHEAST QUARTER;


THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER;




EXCEPT THE SOUTH 60 FEET

CONVEYED TO KITSAP COUNTY FOR ROAD BY INSTRUMENT RECORDED UNDER AUDITOR’S FILE

NO. 817693;




AND THE SOUTHEAST QUARTER OF

THE SOUTHEST QUARTER;




EXCEPT A PLOT OF LAND 100 FEET

BY 100 FEET STARTING AT THE NORTHWEST CORNER OF SAID SOUTHEAST QUARTER OF THE

SOUTHEAST QUARTER;


THENCE EAST 100 FEET;


THENCE SOUTH 100 FEET;


THENCE WEST 100 FEET;


THENCE NORTH 100 FEET TO THE POINT OF BEGINNING;




AND EXCEPT THAT PORTION DESCRIBED

AS FOLLOWS:




BEGINNING AT THE NORTHWEST

CORNER OF SAID SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER;


THENCE EAST 627 FEET;


THENCE SOUTH 418 FEET;


THENCE WEST 627 FEET;


THENCE NORTH 418 FEET; TO THE POINT OF BEGINNING;




EXCEPT CEMETERY;


ALL IN SECTION 32, TOWNSHIP 28 NORTH, RANGE 2 EAST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 38:




THE WEST HALF OF

THE EAST HALF OF SECTION 33, TOWNSHIP 28 NORTH, RANGE 2 EAST, W.M., IN KITSAP

COUNTY, WASHINGTON; EXCEPT PORTION CONVEYED TO KITSAP COUNTY FOR ROAD PURPOSES

BY INSTRUMENT RECORDED UNDER AUDITOR’S FEE NO. 817693.




 




PARCEL 39:




THE NORTH HALF OF THAT PART OF

THE NORTH HALF OF THE SOUTHWEST QUARTER, SECTION 3, TOWNSHIP 23 NORTH, RANGE 1

WEST, W.M., IN KITSAP COUNTY, WASHINGTON, DESCRIBED AS FOLLOWS:




BEGINNING AT A POINT ON THE

WEST LINE OF SAID SECTION 3, A DISTANCE NORTH 0°00’20” EAST 1373.15 FEET FROM

THE SOUTHWESTERLY CORNER OF SAID SECTION 3;















 




THENCE ALONG THE WEST LINE OF

SAID SECTION 3, NORTH 0°00’20” EAST 338.42 FEET;


THENCE NORTH 86°55’21” EAST 1437.08 FEET;


THENCE SOUTHERLY ALONG THE WESTERLY MARGIN OF THE OLD NAVY YARD HIGHWAY ON A

CURVE TO THE LEFT HAVING AN INITIAL COURSE OF SOUTH 11°04’23” WEST AND A RADIUS

OF 413.00 FEET, A DISTANCE OF 50.30 FEET;


THENCE SOUTH 4°04’40” WEST 283.29 FEET;


THENCE SOUTH 86°37’13” WEST 1410.61 FEET TO THE POINT OF BEGINNING;


EXCEPT ROADS;


AND EXCEPT THE SOUTH 30 FEET OF THE EAST 400 FEET OF THE ABOVE DESCRIBED

PROPERTY.




 




118





























 




PARCEL 40:




THE SOUTHEAST 1/4

OF THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 20, TOWNSHIP 24 NORTH,

RANGE 1 WEST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 41:




THE SOUTHWEST 1/4 OF THE

NORTHWEST 1/4 OF SECTION 20, TOWNSHIP 24 NORTH, RANGE 1 WEST, W.M., IN KITSAP

COUNTY, WASHINGTON;




EXCEPT ROAD.




 




PARCEL 42:




THE WEST HALF OF THE NORTHEAST

1/4;


THE NORTHWEST 1/4;


THE SOUTHWEST 1/4;


THE WEST HALF OF THE SOUTHEAST 1/4;


AND THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4;


ALL IN SECTION 28, TOWNSHIP 24 NORTH RANGE 1 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON;


EXCEPT THAT PORTION CONVEYED TO KITSAP COUNTY BY DEED RECORDED UNDER AUDITOR’S

FEE NO. 1057947;


TOGETHER WITH AN EASEMENT FOR ROAD PURPOSES OVER, ALONG AND ACROSS ALL LOGGING

ROADS CROSSING THE EAST HALF OF THE NORTHEAST 1/4 OF SAID SECTION 28, AS

RESERVED IN DEED RECORDED SEPTEMBER 1, 1972, UNDER AUDITOR’S FEE NO. 1029691.




 




PARCEL 43:




THE NORTH HALF;


THE EAST HALF OF THE SOUTHWEST 1/4;


THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4;


AND THE NORTH HALF OF THE SOUTHEAST 1/4;


ALL IN SECTION 29, TOWNSHIP 24 NORTH, RANGE 1 EAST, W.M., IN KITSAP COUNTY,

WASHINGTON;




 




 




119





























 




EXCEPT PORTIONS

CONVEYED TO KITSAP COUNTY FOR ROAD PURPOSES BY DEEDS RECORDED UNDER AUDITOR’S

FEE NOS. 750383, 924625, 981361, AND 9111150305.




 




PARCEL 44:




THE

SOUTHEAST 1/4 OF THE SOUTHEAST 1/4 OF SECTION 30, TOWNSHIP 24 NORTH, RANGE 1

WEST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 45:




THE

NORTHEAST 1/4;


THE EAST HALF OF THE NORTHWEST 1/4;


AND GOVERNMENT LOTS 1, 2, AND 3, IN SECTION 31, TOWNSHIP 24 NORTH, RANGE 1

WEST, W.M., IN KITSAP


COUNTY, WASHINGTON;


EXCEPT PANTHER LAKE COUNTY ROAD;






PARCEL 46:




THE SOUTHWEST 1/4 OF THE

NORTHWEST 1/4;


EXCEPT THAT PORTION OF THE SOUTH HALF THEREOF LYING EASTERLY OF PANTHER LAKE

NORTH TO TAHUYEH COUNTY ROAD;


THE SOUTHWEST 1/4;


EXCEPT THAT PORTION THEREOF LYING SOUTHEASTERLY OF TIGER LAKE COUNTY ROAD;


THAT PORTION OF THE WEST HALF OF THE SOUTHEAST 1/4 LYING NORTHERLY OF TIGER

LAKE COUNTY ROAD;


THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4;


AND THAT PORTION OF THE NORTHEAST 1/4 OF THE SOUTHEAST 1/4 LYING WEST OF

MISSION LAKE ROAD AND SOUTHERLY OF FEDENK COUNTY ROAD;


ALL IN SECTION 32, TOWNSHIP 24 NORTH, RANGE 1 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON;


EXCEPT THOSE PORTIONS CONVEYED TO KITSAP COUNTY FOR ROAD PURPOSES BY DEEDS

RECORDED UNDER AUDITOR’S FEE NO. 759947,767382, AND 924624.




 




PARCEL 47:




THE EAST HALF;


THE EAST HALF OF THE WEST HALF;


THE WEST HALF OF THE SOUTHWEST 1/4;


AND THE SOUTH HALF OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4;


ALL IN SECTION 33, TOWNSHIP 24 NORTH, RANGE 1 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON;


EXCEPT THAT PORTION CONVEYED TO KITSAP COUNTY FOR ROAD PURPOSES BY INSTRUMENT

RECORDED UNDER AUDITOR’S FEE NO. 1057947.




 




120





























 




PARCEL 48:




THE

EAST HALF;


THE SOUTHWEST 1/4;


AND THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4;


ALL IN SECTION 19, TOWNSHIP 24 NORTH, RANGE 2

WEST, W.M., IN KITSAP COUNTY, WASHINGTON;


EXCEPT THE NORTH HALF OF

THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 OF THE SOUTHEAST 1/4 THEREOF.




 




PARCEL 49:




THE EAST HALF;


THE SOUTHWEST 1/4;


AND THE SOUTHEAST 1/4 OF THE NORTHWEST 1/4;


ALL IN SECTION 20, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON;


EXCEPT COUNTY ROAD;


AND EXCEPT THAT PORTION OF SAID SOUTHEAST 1/4 OF THE NORTHWEST 1/4 LYING

WESTERLY OF DEWATTO ROAD.




 




PARCEL 50:




THE

NORTHEAST 1/4 OF THE NORTHWEST 1/4 OF SECTION 20, TOWNSHIP 24 NORTH, RANGE 2

WEST, W.M., IN




KITSAP

COUNTY, WASHINGTON.




 




PARCEL 51:




ALL OF SECTION 21,

TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY, WASHINGTON; 


EXCEPT THE NORTHWEST 1/4 OF THE NORTHEAST 1/4; 


AND EXCEPT THE WEST QUARTER OF THE NORTHWEST 1/4 OF THE NORTHWEST 1/4 THEREOF.




 




PARCEL 52:




THE NORTHWEST 1/4

OF THE NORTHEAST 1/4 OF SECTION 21, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN

KITSAP COUNTY, WASHINGTON.




 




PARCEL 53:




THE SOUTH HALF OF THE NORTHEAST

1/4;


THE NORTHWEST 1/4 OF THE SOUTHWEST 1/4;


THE NORTHWEST 1/4 OF THE SOUTHEAST 1/4;


AND THE SOUTH HALF OF THE SOUTHEAST 1/4;


ALL IN SECTION 22, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




121





























 




PARCEL 54:




THE NORTHEAST

1/4 OF THE NORTHEAST 1/4;


THE EAST HALF OF THE NORTHWEST 1/4 OF THE NORTHEAST 1/4;


AND THE NORTHEAST 1/4 OF THE SOUTHEAST 1/4;


ALL IN SECTION 22, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 55:




THE WEST HALF OF

THE NORTHWEST 1/4;


THE NORTHEAST 1/4 OF THE SOUTHWEST 1/4;


AND THE NORTHWEST 1/4 OF THE SOUTHEAST 1/4;


ALL IN SECTION 23, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON




 




PARCEL 56:




THE

WEST HALF OF THE SOUTHWEST 1/4 OF SECTION 23, TOWNSHIP 24 NORTH, RANGE 2 WEST,

W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 57:




THE SOUTHWEST 1/4 OF THE

SOUTHEAST 1/4 OF SECTION 24, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP

COUNTY, WASHINGTON.




 




PARCEL 58:




THE

WEST HALF;


THE WEST HALF OF THE EAST HALF;


THE NORTHEAST 1/4 OF THE NORTHEAST 1/4;


AND THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4;


ALL IN SECTION 25, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 59:




ALL OF SECTION 26,

TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY, WASHINGTON




 




PARCEL 60:




ALL OF SECTION 27,

TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 61:




ALL OF SECTION 28,

TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




122





























 




PARCEL 62:




THE EAST HALF

OF SECTION 29, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON;


EXCEPT RIGHT-OF WAY FOR COUNTY ROAD.




 




PARCEL 63:




THE EAST HALF OF THE NORTHEAST

1/4; EXCEPT COUNTY ROAD NO 102;


AND THE NORTHWEST 1/4 OF THE NORTHEAST 1/4;


ALL IN SECTION 31, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 64:




ALL OF SECTION 32, TOWNSHIP 24

NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY, WASHINGTON;




EXCEPT COUNTY ROAD.




 




PARCEL 65:




ALL

OF SECTION 33, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 66:




THE NORTHEAST 1/4; 


AND THE WEST HALF;


ALL IN SECTION 34, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 67:




THE

EAST HALF OF THE SOUTHEAST 1/4;


THE NORTHWEST 1/4 OF THE SOUTHEAST 1/4;


ALL IN SECTION 34, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 68:




ALL OF SECTION 35,

TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY, WASHINGTON.




 




PARCEL 69:




THE SOUTH HALF OF THE NORTHEAST

1/4;


THE SOUTHEAST 1/4 OF THE NORTHWEST 1/4;


THE EAST HALF OF THE SOUTHWEST 1/4;


AND THE SOUTHEAST 1/4;


ALL IN SECTION 36, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




123





























 




PARCEL 70:




THE NORTH HALF

OF THE NORTH HALF;


THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4;


AND THE WEST HALF OF THE SOUTHWEST 1/4;


ALL IN SECTION 36, TOWNSHIP 24 NORTH, RANGE 2 WEST, W.M., IN KITSAP COUNTY,

WASHINGTON.




 




PARCEL 71:




THE EAST HALF;


AND THE EAST HALF OF THE SOUTHWEST 1/4;




ALL IN SECTION 36, TOWNSHIP 24

NORTH, RANGE 3 WEST, W.M., IN KITSAP COUNTY, WASHINGTON.




PARCELS 1 THROUGH 71, INCLUSIVE ARE SITUATE IN THE COUNTY OF KITSAP,

STATE OF WASHINGTON.




 




124





























 




MASON

COUNTY, WASHINGTON


LEGAL DESCRIPTIONS




Parcels 1-22A are all located in Mason, County,

Washington:




PARCEL 1:




All that portion, if any, of a tract of tidelands conveyed by

the State of Washington to The Puget Mill Company in deed recorded August 21,

1984, in Volume V of Deeds, page 560, Auditor’s File No. 7735, AND all that

portion, if any, of a tract of tidelands conveyed by the State of

Washington to The Puget Mill Company in deed recorded June 21, 1913, in Volume

28 of Deeds, page 131, Auditor’s File No. 28335, which lie Southerly of the

North line of Section six (6), Township twenty-two (22) North, Range one (1)

West, W.M., extended Westerly, and which lie Easterly of the North and South

centerline of said Section six (6) extended Northerly;




 




EXCEPTING therefrom, all that portion thereof conveyed to Elmer Beard,

et ux, in Warranty Deed recorded March 1, 1934, Auditor’s File No. 72452 and

Correction Warranty Deed recorded April 4, 1934, Auditor’s File No. 72658;




 




EXCEPTING therefrom, all that portion thereof conveyed to C.G. Nichols,

et ux, in Warranty Deed recorded July 31, 1936, Auditor’s File No. 78820; and,




 




EXCEPTING therefrom, all that portion thereof conveyed to Sam B.

Theler, et ux, in Quit Claim Deed recorded September 7, 1939, Auditor’s File

No. 90369.




 




Parcel No. 12206 11 70430.




 




PARCEL 2:




All of Section four (4), Township twenty-three (23) North, Range one

(1) West, W.M., excepting therefrom the Southeast quarter (SE 1⁄4) of the

Southeast quarter (SE 1⁄4) of said Section four (4).




 




Parcel Nos. 12304 00 00000, 12304 41 00000, 12304 42 00000 and 12304 43

00000.




 




PARCEL 3:




All those portions of Government Lots one (1) and five (5), and of the

Southeast quarter (SE 1⁄4) of the Northeast quarter (NE 1⁄4), lying Easterly of the

Easterly right-of-way line of Tiger Mission Road, County Road No. 89870; the

East half (E 1⁄2) of the Southeast quarter (SE 1⁄4); All that portion of the West

half (W 1⁄2) of the Southeast quarter (SE 1⁄4), lying Easterly of the Easterly

right-of-way line of Tiger Mission Road, County Road No. 89870 and lying

Southerly of the Southerly right-of-way line of Bear Creek-Dewatto Road, County

Road No. 79800; all that portion of Government Lot two (2), lying Westerly of

the Westerly right-of-way line of Tiger Lake Road West, County Road No. 88910;

AND all that portion of Government Lot three (3) lying Northerly of the

Northerly right-of-way line of Tiger Lake Road West, County Road No. 88910 and

lying Easterly of the Easterly right-of-way line of Bear Creek-Dewatto Road,

County Road No. 79800, all in Section five (5), Township twenty–three

(23) North, Range one (1) West, W.M.




 




 




125





























 




Parcel Nos. 12305 11 00000, 12305 13 00000, 12305 14 00000, 12305 21

00000, 12305 22 00000, 12305 40 00000 and 12305 40 04000.




 




 




PARCEL 4:




All of Section eight (8), Township twenty-three (23) North, Range one

(1) West, W.M., excepting therefrom the West half (W 1⁄2) of the West half

(W 1⁄2) of said Section eight (8), and excepting therefrom right-of-way

for Bear Creek-Dewatto Road, County Road No. 79800.




 




Parcel No. 12308 00 00000.




 




PARCEL 4A:




TOGETHER WITH a permanent easement for the construction,

reconstruction, use and maintenance of a road or roads for access, 60 feet in

width, as granted by the State of Washington in instrument recorded April 29,

1975, Auditor’s File No. 299539.




 




PARCEL 5:




The West half (W 1⁄2) of the Northeast quarter (NE 1⁄4); the Northwest

quarter (NW 1⁄4); the Northwest quarter (NW 1⁄4) of the Southwest quarter (SW 1⁄4);

AND all that portion of the Northeast quarter (NE 1⁄4) of the Southwest quarter

(SW 1⁄4), lying Northerly of the Northerly right-of-way line of the Bear

Creek-Dewatto Road, County Road No. 79800, excepting therefrom, all that

portion thereof which lies Southerly of the Northerly line of a tract of land

sold to Charles Benson in Real Estate Contract recorded December 20, 1939,

Auditor’s File No. 91522, all in Section nine (9), Township twenty-three

(23) North, Range one (1) West, W.M., excepting therefrom right-of-way

for Bear Creek-Dewatto Road, County Road No. 79800.




 




Parcel Nos. 12309 00 01000 and 12309 31 00000.




 




PARCEL 6:




The West half (W 1⁄2) of the Northeast quarter (NE 1⁄4); the Northwest

quarter (NW 1⁄4); AND the North half (N 1⁄2) of the Southwest quarter (SW 1⁄4), all

in Section seventeen (17), Township twenty-three (23) North, Range one (1)

West, W.M.




 




Parcel Nos. 12317 20 00000 and 12317 30 01000




 




PARCEL 7:




Government Lots two (2), three (3) and four (4), Section one (1),

Township twenty-three (23) North, Range two (2) West, W.M.




Parcel Nos. 22301 12 00000 and 22301 20 00000.




 




PARCEL 8:




Government Lots one (1), two (2), three (3) and four (4); the Southwest

quarter (SW 1⁄4) of the Northwest quarter (NW 1⁄4); AND the Northwest quarter (NW

1⁄4) of the Southwest quarter (SW 1⁄4), all in Section two (2), Township

twenty-three (23) North, Range two (2) West, W.M.; excepting therefrom

right-of-way for Bear Creek-Dewatto Road, County Road No. 79800.




 




 




126





























 




Parcel Nos. 22302 11 00000, 22302 12 00000, 22302 20 00000, 22302 23

00000 and 22302 32 00000.




 




 




PARCEL 9:




Government Lots one (1) and two (2), and the South half (S 1⁄2) of the

Northeast quarter (NE 1⁄4), all in Section three (3), Township

twenty-three (23) North, Range two (2) West, W.M., excepting therefrom

right-of-way for Bear Creek-Dewatto Road, County Road No. 79800.




 




Parcel Nos. 22303 10 00000 and 22303 13 00000




 




PARCEL 10:




Government Lots three (3) and four (4); the South half (S 1⁄2) of the

Northwest quarter (NW 1⁄4); AND the West half (W 1⁄2) of the Southwest quarter (SW

1⁄4), all in Section four (4), Township twenty-three (23) North, Range two

(2) West, W.M., excepting therefrom right-of-way for Bear Creek-Dewatto

Road, County Road No. 79800, and excepting therefrom right-of-way for

Tahuya-Blacksmith Road, County Road No. 70670.




 




Parcel Nos. 22304 20 00000, 22304 20 00010 and 22304 30 00000.




 




PARCEL 11:




All of Section five (5), Township twenty-three (23) North, Range two

(2) West, W.M., excepting therefrom right-of-way for Bear Creek-Dewatto

Road, County Road No. 79800, and excepting therefrom right-of-way for

Tahuya-Blacksmith Road, County Road No. 70670.




 




Parcel Nos. 22305 11 00000, 22305 12 00000, 22305 13 00000, 22305 14

00000, 22305 21 00000, 22305 22 00000, 22305 23 00000, 22305 24 00000, 22305 31

00000, 22305 32 00000, 22305 33 00000, 22305 34 00000, 22305 41 00000, 22305 42

00000, 22305 43 00000 and 22305 44 00000.




 




PARCEL 12:




The South half (S 1⁄2) of the Northeast quarter (NE 1⁄4); Government Lots

one (1) through seven (7), both inclusive; the Southeast quarter (SE 1⁄4) of the

Northwest quarter (NW 1⁄4); the Southeast quarter (SE 1⁄4) of the Southwest quarter

(SW 1⁄4); AND the Northwest quarter (NW 1⁄4) of the Southeast quarter (SE 1⁄4), all

in Section six (6), Township twenty-three (23) North, Range two (2) West, W.M.,

excepting therefrom right-of-way for Dewatto-Holly Road, County Road No.

76690.




 




Parcel Nos. 22306 10 00000, 22306 11 00000, 22306 12 00000, 22306 21

00000, 22306 22 00000, 22306 23 00000, 22306 24 00000, 22306 32 00000, 22306 33

00000, 22306 34 00000 and 22306 42 00000.




 




PARCEL 13:




All of Section seven (7), Township twenty-three (23) North, Range two

(2) West, W.M.; excepting therefrom the Southeast quarter (SE 1⁄4) of the

Southeast quarter (SE 1⁄4) of said Section seven (7), and excepting

therefrom, those portions thereof particularly described as follows:




 




127





























 




 




1)                                             One

square acre in the Northwest corner of the Northwest quarter (NW 1⁄4) of the

Southwest quarter (SW 1⁄4), as dedicated to the public in instrument recorded

June 6, 1930, Auditor’s File No. 63808







2)             The West 84.26 feet of the

South 391.26 feet of the North 600 feet of Government Lot three (3), of said

Section seven (7)




 




EXCEPTING from all

the foregoing, right-of-way for Dewatto-Holly Road, County Road No. 76690.




 




Parcel Nos. 22307

10 00000, 22307 20 00000, 22307 22 00000, 22307 23 00000, 22307 31 00000, 22307

31 00020, 22307 32 00000, 22307 33 00000, 22307 34 00000, 22307 40 00000, and

22307 43 00000




 




PARCEL 14:




The Northeast quarter (NE 1⁄4), excepting therefrom the Southeast

quarter (SE 1⁄4) of said Northeast quarter (NE 1⁄4); the Northwest quarter (NW 1⁄4);

the Southwest quarter (SW 1⁄4); AND the West half (W 1⁄2) of the Southeast quarter

(SE 1⁄4), all in Section eight (8), Township twenty-three (23) North,

Range two (2) West, W.M.; excepting therefrom right-of-way for

Tahuya-Blacksmith Road, County Road No. 70670.




 




Parcel Nos. 22308 10 00000, 22308 20 00000, 22308 30 00000, 22308 30

00010 and 22308 40 00000.




 




PARCEL 15:




Government Lot two (2), AND the Northwest quarter (NW 1⁄4), all in

Section seventeen (17), Township twenty-three (23) North, Range two (2) West,

W.M.; excepting therefrom right-of-way for Tahuya-Blacksmith Road,

County Road No. 70670.




 




Parcel Nos. 22317 13 00000 and 22317 20 00000.




 




PARCEL 16:




The Northeast quarter (NE 1⁄4) of the Northwest quarter (NW 1⁄4), AND

Government Lot one (1), all in Section eighteen (18), Township

twenty-three (23) North, Range two (2) West, W.M.




Parcel Nos. 22318 21 00000 and 22318 22 00000.




 




PARCEL 17:




All of Section one (1), Township twenty-three (23) North, Range three

(3) West, W.M.




 




Parcel Nos. 32301 00 00000, 32301 20 00000




 




 




128





























 




PARCEL 18:




The East half (E 1⁄2) of the Southeast quarter (SE 1⁄4), AND the Southeast

quarter (SE 1⁄4) of the Northeast quarter (NE 1⁄4), all in Section two (2),

Township twenty-three (23) North, Range three (3) West, W.M.




 




Parcel No. 32302 40 00000.




 




 




PARCEL 19:




The Southeast quarter (SE 1⁄4) of the Northeast quarter (NE 1⁄4); the

Southeast quarter (SE 1⁄4) of the Southwest quarter (SW 1⁄4); the North half (N 1⁄2)

of the Southeast quarter (SE 1⁄4); AND the Southwest quarter (SW 1⁄4) of the

Southeast quarter (SE 1⁄4); all in Section eleven (11), Township

twenty-three (23) North, Range three (3) West, W.M.




 




Parcel Nos. 32311 14 00000, 32311 34 00000, 32311 40 00000 and 32311 43

00000.




 




PARCEL 20:




The North half (N 1⁄2); the North half (N 1⁄2) of the Southwest quarter (SW

1⁄4); AND the Southeast quarter (SE 1⁄4), all in Section twelve (12),

Township twenty-three (23) North, Range three (3) West, W.M.; excepting

therefrom, all that portion of the East half (E 1⁄2) of said Southeast quarter

(SE 1⁄4), particularly described as follows:




 




BEGINNING at the East quarter corner of said Section twelve (12);

thence West, along the North line of said Southeast quarter (SE 1⁄4), 710.5 feet;

thence South 550 feet; thence East 505.5 feet; thence South 95.5 feet; thence

North 55°20’ East, 80 feet; thence East 140 feet, to the East line of said

Section twelve (12); thence North, along said East line, 600 feet, to the POINT

OF BEGINNING.




 




Parcel Nos. 32312 00 01000, 32312 30 00000, 32312 40 00000, 32312 41

00000 and 32312 44 00000.




 




PARCEL 21:




The West half (W 1⁄2) of the Northeast quarter (NE 1⁄4); the Northeast

quarter (NE 1⁄4) of the Northwest quarter (NW 1⁄4); AND the South half (S 1⁄2) of the

Northwest quarter (NW 1⁄4), all in Section fourteen (14), Township

twenty-three (23) North, Range three (3) West, W.M.




 




Parcel No. 32314 00 01000.




 




PARCEL 22:




The Northwest quarter (NW 1⁄4) of the Northeast quarter (NE 1⁄4); the

Southeast quarter (SE 1⁄4) of the Northwest quarter (NW 1⁄4); the Northeast quarter

(NE 1⁄4) of the Southwest quarter (SW 1⁄4); the Northwest quarter (NW 1⁄4) of the

Southeast quarter (SE 1⁄4); AND the Southeast quarter (SE 1⁄4) of the Southeast

quarter (SE 1⁄4), all in Section twenty-two (22), Township twenty-three

(23) North, Range three (3) West, W.M.




 




Parcel Nos. 32322 00 00000 and 32322 44 00000.




 




PARCEL 22A:




TOGETHER WITH and

SUBJECT TO a perpetual, non-exclusive easement for road and utility purposes,

60 feet in width, as described in instrument recorded December 21, 1990,

Auditor’s File No. 520273.




 




 




129





























CLALLAM COUNTY, WASHINGTON




LEGAL DESCRIPTIONS




	

  Parcel A:


  
	

   


  
	

   


  	

  The west 396 feet of the Southwest Quarter of Section 33,

  Township 28 North, Range 2 West, W.M., Clallam County, Washington.


  
	

   


  	

   


  
	

  Parcel B:


  
	

   


  
	

   


  	

  The West half of the Northeast Quarter in Section 30

  Township 30 North, Range 2 West, W.M., Clallam County,

  Washington.


  
	

   


  	

   


  
	

  Parcel C:


  
	

   


  
	

   


  	

  The North half of the Southwest Quarter of the Southwest Quarter and

  the Southwest Quarter of the Southwest Quarter of the Southeast Quarter;


  
	

   


  	

   


  
	

   


  	

  EXCEPT the South 30 feet, all in Section 35,

  Township 30 North, Range 5 West, W.M., Clallam County, Washington.


  
	

   


  	

   


  
	

  Parcel D:


  
	

   


  
	

   


  	

  The Southwest Quarter of the Southwest Quarter of the Southwest

  Quarter of Section 35, Township 30 North, Range 5 West, W.M.,

  Clallam County, Washington.


  
	

   


  	

   


  
	

  Situated in the County of Clallam, State of Washington.


  





 




 




130





























 




EXHIBIT

E




TO

NOTE PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Timber

Cruise Specifications




Each Timber Cruise shall be conducted using such forest sampling methods

as are necessary to produce an estimate of timber volume on the Timberlands

aged thirty-five (35) years and older with an accuracy within a range of 7% at

the confidence level of not less than 95%. 

The Timber Cruise shall cover all Timber and Land within the Timber

Property, and the results of such Cruise shall be reported in acres, board feet

Scribner, and other units, as the case may be, for each Category of Land and

Timber set forth on Exhibit C of this Agreement.  The Cruise shall be supported by maps

showing the location of sample plots. 

The Cruise data shall be tallied separately and dated for each sample

plot and the plot location keyed on a map and flagged on the ground in a manner

which will accommodate an independent field audit of timber cruise

measurements.  The classifications,

specifications and utilization limits set forth in Section 9.6 of this

Agreement shall control for all purposes of the Timber Cruise.




Calculation of Land acreage shall be based upon:




1.             Surveys (to the extent currently

available) and aerial photographs of the Property, timber type maps and such

other available information generally utilized by professional foresters; and




2.             Standards of calculation and

measurement generally used in the commercial forestry industry.




Determination

of Pre-Merchantable Timber acreage by age classes (ages 1-29 years) shall

comply with the following guidelines:




1.             A fully stocked stand shall consist

of at least 350 well spaced stems per acre or 60 square feet of basal area per

acre, measured at DBH; and




2.             Timber volumes

shall not include any trees of merchantable size class located in stands

classified as Pre-Merchantable Timber.




Determination

of Sub-Merchantable Timber acreage by age classes (ages 30-44 years) shall

comply with the following guidelines:




1.             A fully stocked stand shall consist

of at least 350 well spaced stems per acre or 60 square feet of basal area per

acre, measured at DBH; and




2.             Timber volumes shall not include

any trees of merchantable size class located in stands classified as

Sub-Merchantable Timber.




 




131





























 




EXHIBIT

F




TO

NOTE PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Mortgages

covering the Timber Property 




 




1.     That certain Timberland Deed of Trust and Security Agreement

with Assignment of Rents by and between Borrower, as Grantor, and John Hancock

Mutual Life Insurance Company, as Beneficiary, dated April 29, 1992, and

recorded on April 29, 1992, in volume 371, pages 237–332, Jefferson

County, Washington official records, as amended by instrument recorded August

26, 1992, in Volume 385, Pages 204-206, Jefferson County, Washington official

records, as amended by instrument recorded on June 14, 1993, in Volume 417,

Pages 297-299, Jefferson County, Washington official records, as amended by

instrument recorded on December 29, 1995, in Volume 542, Pages 447 and 448,

Jefferson County, Washington official records, as amended by instrument

recorded on December 30, 1999, in Volume 666, Pages 274 and 278, Jefferson

County, Washington official records, and as amended by instrument dated of even

date herewith (such Deed of Trust, as amended previously and as may be amended

hereafter, is herein referred to as the “1992 Deed of Trust”) given to secure

that certain Promissory Note dated April 29, 1992, made by Borrower in favor of

John Hancock Mutual Life Insurance Company in the original amount of

$16,000,000, as amended by instruments dated May 25, 1993, December 19, 1995,

and December 20, 1999, and instrument dated of even date herewith (such

Promissory Note, as amended previously and as may be amended hereafter, is

herein referred to as the “1992 Note”).




2.     That certain Timberland Deed of Trust and Security Agreement

with Assignment of Rents and Fixture Filing by and between Borrower, as

Grantor, and John Hancock Life Insurance Company, as Beneficiary and agent for

itself and the Holders, recorded in the official records of Jefferson, Kitsap,

Mason and Clallam Counties, Washington, given to secure payment of certain

fixed rate senior secured notes dated of even date herewith in the aggregate

principal amount of $30,000,000.




 




132





























 




EXHIBIT

G




TO




NOTE

PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Map

of Timber Property set forth on following page.




 




133





























 




EXHIBIT

H




TO




NOTE

PURCHASE AGREEMENT




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




Intentionally

Omitted




 




134





























 




POPE

RESOURCES, A DELAWARE LIMITED PARTNERSHIP




__________________________________




NOTE PURCHASE AGREEMENT




__________________________________




Dated: March 29, 2001




$30,000,000 Fixed Rate




Senior Secured Notes




Due April 1, 2011




 




135