TITLE









EXHIBIT 10.5




 




AUDIT COMMITTEE CHARTER




 




POPE MGP, Inc.




 




September 10, 1999




 




I.                                         PURPOSE




 




The primary function

of the Audit Committee (“Committee”) is to assist the Board of Directors of

Pope MGP, Inc. in fulfilling its oversight responsibilities for Pope Resources

and its subsidiaries (the “Partnership”) with respect to the following:




 




•                  Accounting and financial reporting.




•                  Assessment and management of risk and the related internal control

environment, and




•                  Compliance with laws and regulations.




 




In fulfilling its responsibilities,

the Committee will:




 




•                  Serve as an independent and objective party to monitor the

Partnership’s financial reporting process and internal control system,




•                  Review and evaluate the audit efforts of the independent accountants

and the Partnership’s internal audit activities,




•                  Facilitate an open avenue of communication among the independent

accountants, internal audit, and the Board of Directors.




 




The Committee will have the complete and unrestricted authority

to conduct investigations into any matters within the Committee’s scope of

responsibilities.  The Committee shall

be empowered to retain independent counsel and other professionals to assist in

the conduct of any investigation.




 




The Committee will primarily fulfill these responsibilities by carrying

out the activities enumerated in Section III of this Charter.




 




II.                                     COMPOSITION, MEETINGS AND ADMINISTRATIVE MATTERS




 




Number of

Directors:  The Committee shall be comprised of three or

more directors as determined by the Board.




 




Independence of

Directors:  Each member of the Committee shall, to the

extent possible, be an independent director. 

A director shall be considered “independent” if he or she is free from

any relationship that may interfere with the exercise of his or her independence

from management and the Partnership or independent judgment as a member of the

Committee.




 





























 




Committee Member Qualifications:  All members of the Committee shall have a

working familiarity with basic finance and accounting practices.




 




Appointment of Committee Members:  The Members of the Committee shall be

elected by the Board at the annual meeting of the Board and shall serve until

their resignation, removal, or replacement. 

A Chair shall be elected by the full Board.




 




Meeting Frequency:  The Committee shall meet at least three

times annually in regularly scheduled meetings.  The Committee shall also meet at other times as necessary to

discharge its responsibilities and as circumstances dictate.  Meetings of the Committee may be in person

or telephonically.




 




Meeting Attendees:  In addition to Committee Members, the

Committee may ask that members of Partnership management or the Partnership’s

independent accountants be present at Committee meetings.  [Note: 

At present the Partnership does not have a formally established internal

audit function.  On occasion, financial

management personnel perform reviews or procedures that emulate this

function.  As such, the Committee may

ask that personnel performing such internal audit functions be present at Committee

meetings.  “Internal audit” as used

herein is understood to cover that function in broad terms, whether formally or

informally established.]




 




Private Communications:  Periodically at Committee meetings, there

will be an opportunity for Committee members to have private communications

with each of management, the financial officers, internal audit, and the

independent accountants.  As part of its

job to foster open communication, the Committee should meet at least annually

with the independent accountants in separate executive session to discuss any

matters that the Committee or the independent accountants believe should be

discussed privately.




 




Minutes:  The Committee Chair shall appoint an individual to prepare

minutes for each meeting.  Draft minutes

shall be distributed to Committee members, for approval at the next

meeting.  Approved minutes shall be

submitted to the Board of Directors for ratification and such minutes shall be

retained with the permanent corporate records of the Partnership.




 




Reporting to the Board:  The Chair or his or her designee will report

Committee actions to the Board of Directors with such recommendations, as the

Committee may deem appropriate.




 




Committee Charter:  Annually, the Committee shall review its

Charter and, if appropriate, propose revisions to the Board of Directors for

approval.




 




III.                                 DUTIES AND RESPONSIBILITIES




 




To fulfill its duties and responsibilities the Committee shall:




 




2





























 




Review of

Documents and Reports




 




1.                                       Review with

management the Partnership’s annual financial statements and the independent

accountants’ opinion with respect to such financial statements.




 




2.                                       Review with

the independent accountants the results of their audit of the annual financial

statements, including all matters required to be communicated to audit

committees under generally accepted auditing standards.  Such communications should include

significant audit adjustments, significant accounting policies and any related

changes thereto, management judgments and accounting estimates, disagreements

with management, and any other difficulties encountered during their audit.




 




3.                                       Review the

Form 10–Q prior to its filing.




 




4.                                       Review

comments provided by the independent accountants relating to the Partnerships

internal controls or other related matters, and management’s response.




 




5.                                       Review any

internal reports (if applicable) to management prepared by internal auditors

and management’s response.




 




Independent Accountants




 




6.                                       The

Committee, having the primary authority and responsibility for the appointment

and selection of the independent accountants, shall annually submit its

recommendation for the appointment of the independent accountant to the whole

Board of Directors for approval.




 




7.                                       Review the

independent accountants’ plan and scope relating to their audit of the annual

financial statements.




 




8.                                       On an annual

basis, review and discuss with the accountants all significant relationships

the accountants have with the Partnership to determine and confirm the

accountants’ independence.




 




Financial Reporting

Processes




 




9.                                       Review with

financial management the Partnership’s significant accounting and reporting

policies and any changes thereto.




 




10.                                 Review with

financial management the accounting treatment of individual events or

transactions that may have a significant impact on financial reporting.




 




11.                                 Consider,

through periodic discussions, the independent accountants’ judgments about the

quality and appropriateness of the Partnership’s accounting principles as

applied in its financial reporting.




 




3





























 




Ethical and Legal

Compliance




 




12.                                 Confirm that

management has the proper review system in place to ensure that the

Partnership’s financial statements, reports and other financial information

disseminated to governmental organizations, and the public satisfy legal

requirements.




 




13.                                 Evaluate the

need for and related activities (if applicable) of the Partnership’s internal

audit activities.  If applicable, review

such activities, organizational structure, and qualifications of internal audit

resources.




 




14.                                 Review, with

management and Partnership counsel, the Partnership’s policies and procedures

to minimize and monitor risks and exposures from noncompliance with laws and

regulations.  Specifically consider

compliance matters pertaining to corporate securities trading policies.




 




15.                                 Review, with

management and Partnership counsel, the process for determining risks and

exposures from litigation, claims and assessments, including counsel’s

assessment of specific significant matters.




 




16.                                 Perform any

other activities consistent with this Charter, the Partnership Agreement and

governing law, as the Committee or the Board deems necessary or appropriate.




 




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