TITLE









Exhibit 10.7




 




MASTER TIMBER MANAGEMENT AGREEMENT




 




This MASTER TIMBER MANAGEMENT AGREEMENT (the

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

Resource Group, Inc. (“HNRGI” or the “Client”), and Olympic Resource Management

LLC, a Washington limited liability company (“ORM” or the “Manager”), effective

the 1st day of January, 1998.




WHEREAS, Client manages timberlands and provides

timberland portfolio investment services to its parent, John Hancock Mutual

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

separate accounts maintained by JHMLICO for the benefit of certain ultimate

clients, and for various partnerships, limited liability companies,

corporations and other entities (collectively, the “Ultimate Client

Portfolios”); and




WHEREAS, Manager is an independent contractor

engaged in the business of operating and maintaining commercial timberlands

through its employees, agents and sub contractors.




NOW,

THEREFORE, Client

agrees to hire Manager to perform, and Manager agrees to perform for Client,

non exclusive property management services, disposition and acquisition

services, on the terms and in accordance with the provisions set forth herein.




Section 1.  Definitions




1.01        “Annual Budget” means, with

respect to each Timberland, the Annual Budget for each fiscal year during the

term of this Agreement prepared by Manager pursuant to Section 2.02(a),

and delivered to and approved by Client, reflecting on an annual basis all work

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

during the fiscal year for such Timberland.




1.02        “Client” means Hancock Natural Resource

Group, Inc.




1.03        “Client’s Account” means Client’s

account with SeaFirst Bank, 705 Fifth Avenue, Seattle, Washington  98124.




1.04        “Competing Business” means any business

that acquires, owns and/or manages timberlands within the Continental United

States or Canada primarily or exclusively for the benefit of Plans and

Endowments.




1.05        “Fiscal Month” means the period

commencing on the sixteenth day of any calendar month and ending on the

fifteenth day of the immediately following calendar month, and “Fiscal

Year” means the period commencing on the sixteenth day of

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

the immediately following calendar year; provided that the initial fiscal month

hereof shall begin January 1, 1998 and end January 15, 1998 and the initial

fiscal year hereof shall begin January 1, 1998 and end December 15, 1998.




1.06        “Forest Inventory

System” means

the Forest Inventory System provided and maintained by Manager pursuant to

Section 2.02(e) of this Master Agreement, and more fully described in

Exhibit 2D.




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1.07        “Forest Mapping System” means the Forest

Mapping System provided and maintained by Manager pursuant to

Section 2.02(e) of this Master Agreement, and more fully described in

Exhibit 2E.




1.08        “Forward Look Budget(s)” means the

revised Annual Budget(s) based on actual levels of income and expenditures for

a quarter and revised forecasts of income and expenditures for the balance of

the fiscal year pursuant to Section 2.02(b) of this Master Agreement.




1.09        “Land Records System” means the Land

Records System provided and maintained by Manager pursuant to

Section 2.02(m) of this Master Agreement, and more fully described in

Exhibit 2F.




1.10        “Logs” means logs of any size or class

harvested from the Timberlands.




1.11        “Long Term Investment Analysis” means the

50 year plan which is updated each calendar year by the Manager, for each

Timberland, by running the Timber Investment Model (“TIM”) which gets populated

with Client Budget System (“CBS”) data, new economic assumptions and price

forecasts, appraisals, revised harvest schedules, etc.  The Long Term Investment Analysis” is part

of the Property Management Plan and is updated and submitted to the Client by

January 31 of each year.




1.12        “Master Agreement” means this Master

Timber Management Agreement between Hancock Natural Resource Group, Inc. and

Olympic Resource Management LLC, as may be amended from time to time.




1.13        “Manager” means Olympic Resource Management

LLC, a Washington limited liability company.




1.14        “Other Forest Products” means any products

other than timber, logs, minerals, gas, oil, rock and/or gravel removed from

the Timberlands for commercial purposes.




1.15        “Plans and Endowments” means pension fund

or retirement plans and accounts, endowments or foundations domiciled in the

United States or Canada and organized and operated pursuant to United States or

Canadian law primarily or exclusively for the benefit of persons living within

those jurisdictions.




1.16        “Property Management Plan” means a

written property management plan approved by Client, as updated from time to

time.




1.17        “Property Management Service Fees” means the

Property Management Service Fees pursuant to Section 2.07 and set forth in

Exhibit 2A to this Master Agreement.




1.18        “Property Management Services” means the

Property Management Services to be provided by Manager with respect to the

Timberlands identified in Exhibit 2A, as it may be amended from time to

time, and fully described in Section 2 of this Master Agreement.




 




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1.19        “Security Plan” means the Security

Plan for a Timberland described in Section 2.02(f) of this Master

Agreement that is usual and customary to timberland management practices for

the area in question, and which generally includes, but is not necessarily

limited to the following:  fire prevention

and suppression, aerial and ground surveillance, gate security and maintenance,

illegal dumping, trespass and protester management.




1.20        “Timber” means the timber located on or

harvested from the Timberlands, whether standing or down and irrespective of

size.




1.21        “Timberland” means a timberland

property, and Timberlands means two or more timberland properties,

identified in Exhibit 2A, as it may be amended from time to time.




1.22        “Ultimate Client Portfolios” means the

several JHMLICO separate accounts and other entities described in the first

WHEREAS clause above, for which Client provides timberland portfolio investment

services.




1.23        “Vote Package(s)” means the

information and data requested by Client and compiled for presentation to

appropriate representatives of HNRGI and/or JHMLICO for consideration and/or

approval of a particular Timberland transaction.




Section 2.  Property

Management Services:




2.01        Properties Under Management:  Client hereby hires Manager to provide

Property Management Services, the scope of which is set forth in this

Section 2, and Manager hereby agrees to provide such services with respect

to the Timberlands identified in Exhibit 2A attached hereto, as it may be

amended from time to time in accordance with the provisions of this Master

Agreement, or as otherwise mutually agreed from time to time by the

parties.  Client may, but shall have no

obligation to, employ Manager for property management services except with

respect to properties listed on Exhibit 2A, as it may be amended from time

to time.  In addition, Manager may

provide acquisition and disposition services if requested by Client pursuant to

Sections 3 and 4 of this Master Agreement for any Timberland considered for

acquisition or disposition by Client during the term of this Master

Agreement.  Exhibit 2A shall

identify the Timberlands under management pursuant to this Master Agreement,

the fees or fee schedule applicable to Property Management Services relating to

the Timberlands, any special conditions or services agreed to by the parties

with respect to any Timberland, and the expiration date of the term of this

Master Agreement with respect to each Timberland (if different from the date

specified in Section 7.01 below). 

Except as specifically set forth herein, Client shall have no obligation

to utilize Manager to provide any additional services, and Manager shall have

no obligation to provide Client with any additional services pursuant to this

Master Agreement.




2.02        Manager’s Primary Duties and Responsibilities:  With respect to any Timberland, the parties

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

Section 2, as circumstances may warrant. 

Any such exclusions shall be identified or referenced in

Exhibit 2A. Manager’s primary duties and responsibilities include:




 




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(a)           Annual

Budgets for fiscal year 1998 for each Timberland have been prepared and

approved by Client.  On or before

November 1, 1998 and each subsequent year, Manager shall prepare and submit to

Client for Client’s approval, an Annual Budget for each Timberland subject to

this Master Agreement for the forthcoming fiscal year.  The Annual Budgets shall be based upon

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

acceptable levels of income and expenditures and shall reflect on an annual

basis all work to be performed, all income to be received, and all expenses to

be incurred with respect to each Timberland during the forthcoming fiscal year.  The parties shall endeavor in good faith to

assist each other with information and services to facilitate budget

development in a timely manner. Upon approval by Client, Manager may expend the

approved budgeted amounts for each Timberland during such fiscal year without

further approval by Client.  However,

Client shall have the right to modify the Annual Budgets (other than the

management fees set forth herein, except as further provided in

Section 2.07 of this Master Agreement), and to the extent Manager has not

yet incurred expenses or obligations, Manager shall comply with such

modifications.  In addition, to

facilitate ongoing management of the Timberlands, Manager may exceed any

approved budgeted line item amount by [Confidential

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

separately with the Securities and Exchange Commission], whichever

is greater.  In the event of emergencies

or natural disasters that threaten the value or well–being of all or a

portion of any Timberland, subject to funding limitations, Manager shall

endeavor to protect the Timberland, and shall have the right to expend up to [Confidential Treatment for the omitted material has

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

Commission] per Timberland in extra–budgetary funds for such

purpose without prior approval of Client. 

Manager shall notify Client immediately of any such expenditure and the

reason therefor.  In the event of any

such emergency or natural disaster which necessitates an expenditure of funds

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

Client in a timely manner and obtain the approval of Client before expending

any such excess funds.




(b)           Within

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

and submit to Client statements setting forth actual expenditures incurred and

revenues generated during said fiscal quarter (together with a brief analysis

of the variances, if any, from the Annual Budget) for each Timberland.  Along with said statements, Manager shall

submit to Client, at Client’s request, revised Annual Budgets (the “Forward

Look Budgets”) based on actual levels of income and expenditures for said

fiscal quarter and revised forecasts of income and expenditures for the balance

of the fiscal year.  Upon approval by

Client, the Forward Look Budgets shall be used in place of the original Annual

Budgets for the remainder of the then current fiscal year. The statements and

Forward Look Budgets shall be in a form approved by Client.




(c)           By the tenth

(10th) day after the close of each fiscal month, Manager shall submit to Client

(1) a statement setting forth expenditures incurred and revenues generated

during the preceding fiscal month; and (2) an aging report of accounts

receivable for the preceding month. The statements and aging report shall be in

a form approved by Client and delivered in both electronic and paper

forms.  Manager shall also cause to be

delivered to Client all bank statements as soon as reasonably possible after

said statements have been received and reconciled by Manager.




(d)           Manager

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

Exhibit 2C.  In addition, by June 1

and December 1 of each calendar year, or from time to time




 




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

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

with Exhibit 2C, showing the acreage of land, the volume of merchantable

timber by species groups and product classes, and the premerchantable

plantation acreage by species and age class. 

Manager shall also conduct other cruising as special circumstances may

dictate, e.g., wind storm and ice storm damage, trespass, granting of rights of

way, etc.




(e)           Manager

shall provide and maintain a Forest Inventory System and a Forest Mapping

System (including GIS) for Client, which shall include the parameters set forth

in Exhibits 2D and 2E, respectively.




(f)            Manager

shall maintain regular surveillance of all Timberlands, including contracting

for aerial surveillance as conditions require, to detect weather damage, fire

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

detrimental occurrences.  On or before

May 31, 1998 for each Timberland in existence on such date and for any

Timberland added to this Master Agreement thereafter within ninety (90) days

following the addition of such new Timberland to this Master Agreement, Manager

shall develop and submit for Client’s approval a Security Plan.




(g)           Manager

shall assist, consult, and cooperate with Client, and its agents, employees

and/or attorneys, in matters affecting ownership interests in and obligations

with respect to the Timberlands, including the land, timber (whether growing or

harvested), minerals, other commercial uses, and related matters such as

unauthorized cuttings, trespass, entries, encroachments, adverse possession

claims, right of way disputes, or any disputes respecting taxes, charges, or assessments

associated with the Timberlands.




(h)           Manager

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

Timberlands.  All such sales shall be

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

the timber or log buyer on contract forms approved by Client for such

purpose.  Manager shall have the

authority to sign on Client’s behalf and without Client’s prior approval such

contracts subject to the limitations set forth in Exhibit 2B.  Except as specifically provided in

Exhibit 2B, Manager shall not enter into any timber sale contracts, log

sale contracts or Other Forest Products contracts without the prior written

approval of Client.  Client agrees that

all requests from Manager for such approval shall be responded to without

unreasonable delays.  Manager’s services

in connection with timber or log sales shall include, but not be limited to,

advertising, processing and handling bids, control of contract compliance of

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

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

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

marking roads, and obtaining necessary permits (surveying is not included in

the above definition of timber sale layout). 

Manager shall also conduct a credit check on each timber or log

purchaser and report the results of such credit check to Client before entering

into any timber or log sales contract. 

Manager shall collect and maintain (electronically, wherever feasible)

log scaling data from log grading and scaling bureaus.




 




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(i)            Manager

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

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

Other Forest Products and gravel from the Timberlands.  All such sales shall be directly between

Client and the buyer and shall be subject to the limitations and signature

requirements set forth on Exhibit 2B. 

Manager’s services in connection with the mineral, oil or gravel sales

shall include, as appropriate, but not be limited to the following

services:  obtaining valuation opinions

from appropriate consultants, advertising, processing and handling bids,

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

collection of scale tickets, and accounting for such contracted sales.




(j)            Manager

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

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

parties who have a fee, leasehold, license, mineral, or other interest in the

Timberlands.  Client shall extend to

Manager whatever reasonable aid that Manager shall reasonably request of Client

to enable it to carry out such monitoring duties.  Manager shall be responsible for processing all documentation

which is required or desirable with respect to the rights and obligations of

said third parties, including pipeline easements, conditional and other land

use permits, and rights of way necessary for oil, gas or mineral exploration,

in all cases subject to the limitations and signature requirements set forth on

Exhibit 2B.  Notwithstanding

anything herein to the contrary, all permanent easements, conservation

easements, rights of way, mineral or other conveyances must be signed by Client

(or the appropriate title holder), and Manager shall have no authority to sign

said documents on behalf of Client.




(k)           Manager

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

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

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

Exhibit 2B.




(l)            Manager

shall be responsible for performing all usual and customary timberland

management functions, including but not limited to preparing all easements,

licenses and other land use agreements on forms pre approved by Client.  Manager shall also assist Client in

obtaining semi–annual or annual appraisals of each Timberland by

providing to Client relevant data for the Timberland in a form acceptable to

Client, which data shall include the merchantable timber by species groups and

product classes, the premerchantable acreage by age class, and the number and

type of acres comprising the Timberland. 

Annually, for each Timberland, Manager shall also submit to Client a

report reconciling current appraisal volumes with the appraisal volumes for the

preceding year (where such data is available).




(m)          Manager

shall develop, implement and maintain a Land Records System as more fully

described in Exhibit 2F, which will be maintained in a convenient

electronic form, readily convertible into a standard ASCII text format suitable

for use with the Forest Mapping System, Forest Inventory System, Client’s

Timber Investment Model (“TIM”) and Client’s Client Budget System (“CBS”).  The records within the Land Records System

shall be maintained by Manager for so long as this Master Agreement shall remain

in effect.




(n)           Manager

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

Timberland and shall ensure that all taxes (excluding any taxes based on

income, but




 




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including ad valorem or other real property taxes, timber harvest

taxes, and personal property taxes) on the Timberlands are paid in a timely

manner.  Client shall provide Manager

with pertinent information regarding lease and contractual agreements on each

Timberland. Upon receipt of this information, Manager shall thereafter ensure

that all lease or other contractual payments required to be made with respect

to the Timberlands are made in a timely manner out of the funds in the Client’s

Account.  Client shall promptly provide

Manager with copies of any tax statements sent directly to Client with regard

to any Timberland.




(o)           Manager

shall provide annual updates of the Long Term Investment Analysis portion of

the Property Management Plan for each Timberland as soon as reasonably

practicable after the effective date of this Master Agreement, and thereafter

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

Agreement.  Such Long Term Investment

Analysis will incorporate as of January 1 of each year new economic assumptions

and price forecasts using the most recently approved Annual Budget (or the

forward Look Budget, if applicable) for each Timberland.  The annual updates will roll the existing

long term investment analysis forward one year.  Any additional updates requested by Client will be performed as

necessary upon mutual agreement of the parties hereto.




(p)           Manager

shall be responsible for managing and implementing stewardship projects as

provided for in Annual Budgets, or as otherwise mutually agreed.




(q)           As soon as

reasonably practicable after the effective date of this Master Agreement, and

thereafter on or before March 31 of each year, Manager shall prepare and submit

to Client an annual analysis of harvest results versus inventory estimates of

volume for each individual Timberland.




2.03        Additional Duties and Responsibilities of Manager:  Manager shall subcontract for, oversee and

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

(a) through (s) herein below. 

Manager’s responsibilities shall include soliciting, receiving and

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

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

signature requirements set forth in Exhibit 1C and in compliance with

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

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

preapproved form), and Manager will continuously monitor and oversee said

services for contractor compliance. 

Client shall be directly responsible for payments for all subcontracted

services specified below to the extent budgeted or otherwise authorized by

Client in this Master Agreement or otherwise approved in writing by

Client.  Although Manager’s

responsibility in connection herewith shall be as overseer in nature, Manager

may determine from time to time that it is more feasible or economical for

Manager’s employees or affiliates to perform said services.  In that event, and with Client’s prior

written approval, Manager shall perform said services and Client shall pay

Manager for such services at the agreed upon rates specified in such written

approval.




(a)           Site

preparation and planting.




(b)           Road,

bridge, gate and culvert construction and maintenance.




 




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(c)           Plowing and

maintenance of firebreaks.




(d)           Property

boundary line maintenance (marking) and surveys.




(e)           Vegetation

management, chemical or mechanical.




(f)            Prescribed

burning.




(g)           Hardwood

control, chemical or mechanical.




(h)           Insect and

disease control.




(i)            Aerial

surveillance.




(j)            Slash

burning and fire suppression.




(k)           Contract

logging and trucking.




(l)            Fertilization.




(m)          Stocking

control.




(n)           Animal

control.




(o)           Appraisals

of mineral, oil, rock and gravel sales.




(p)           Monitoring

of oil and gas activities.




(q)           Surveying

for threatened and endangered species; provided, however, that habitat

conservation agreements and other extensive regulatory implementation programs

are beyond the scope of Manager’s duties and responsibility, but such services

may be provided based upon the mutual agreement of the parties.  In such event, and with Client’s prior

written approval, Manger shall perform said services, and Client shall pay

Manager for such services at the agreed–upon fee or fee schedule

specified in a separate written agreement.




(r)            Archeological

or other specialized surveys outside the scope of services customarily provided

by professional timberland managers in the area in question.




(s)           All other

subcontract work incurred at Client’s request with prior written approval of

Client.




2.04        Property Management Plans on New Acquisition Properties:  If any new property is acquired by Client

(or by or on behalf of an Ultimate Client Portfolio) and added to this Master

Agreement by amendment to Exhibit 2A, Client may in its sole discretion

request that Manager prepare a post–acquisition Property Management Plan

for such new property.  Client and

Manager shall agree upon specific requirements and parameters for the Property

Management Plan.  Manager shall perform

said services, and Client shall pay Manager for such services at the agreed–upon

fee or fee schedule specified in a separate written agreement.  When a Property 




 




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Management

Plan has been prepared for a new property and approved by Client, then it shall

thereafter be updated as otherwise provided pursuant to Section 2.02(o).




2.05        Income and Expenses; Bank Accounts:  The payment of all expenditures referred to

in Section 2.03, to the extent budgeted or otherwise permitted by the

terms of this Master Agreement and/or Exhibit 2A, and any other

expenditures expressly approved in writing by Client, shall be the

responsibility of Client.  Manager, however,

shall review, approve and certify for accuracy, as appropriate, all bills,

invoices or claims for payment relating to such expenditures, and shall cause

such items to be paid from Client’s Account. 

Manager’s authority to make such payments from Client’s Account shall be

subject to the limitations and requirements set forth in Exhibit 2B to

this Master Agreement.




Manager shall provide its own hardware that is compatible with Client’s

Wide Area Network (WAN).  Each party

shall pay the costs of all hardware and software purchased and installed at its

locations for use with the WAN; provided, however, that the parties will each

pay an equal share of any charges, such as line charges and other similar

charges, relating to use of any shared hardware between Client’s and Manager’s

respective headquarters.  Manager shall

be permitted to utilize the WAN for business other than business provided to

Client hereunder.




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

the Timberlands (including but not limited to timber sales proceeds and fees

from leases, licenses, and other agreements), together with appropriate

documentation thereof, to be remitted to Client’s Account or as otherwise

directed by Client with duplicate sales documentation to Manager. Manager shall

review said documentation and certify the accuracy thereof on the monthly

statement to Client required by Section 2.02(c).




Nothing in this Master Agreement shall be deemed to authorize Manager

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

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

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

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

discretion.




2.06        Operation and Management Records:  Manager shall maintain and provide to Client

full and accurate records covering the operation and management of each

Timberland, which records shall be sufficient to satisfy ordinary and necessary

tax and accounting reporting requirements. 

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

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

Manager relating to the management and operation of each Timberland.  Upon termination of this Master Agreement

with respect to any Timberland, all records pertaining to such Timberland kept

by Manager shall become the property of Client and shall be turned over to

Client forthwith.  Client will also have

access to any of Client’s computer data, and all other information of Client

which Manager has within its control. 

Any custom investment models or other custom computer software provided

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

for the purpose of acquiring, managing, or disposing of any property that is

subject to this Master Agreement (including without limitation TIM and CBS)

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

thereof or the originals of any such items in the possession




 




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of

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

event of termination of this Master Agreement. 

Any custom computer software developed by Manager for the Land Records

System pursuant to Section 2.02(m) shall be deemed the property of

Manager, however Client is hereby granted a non-exclusive license, at no

additional cost to Client, to use such custom software with respect to

Timberlands hereunder from time to time, which license shall survive

termination of this Master Agreement with respect to Timberlands hereunder on

the date of termination.




2.07        Property Management Service Fees:  Property Management Service Fees shall be

set forth in writing and included in Exhibit 2A as described above.  Such fees may be fixed or variable, may be

indexed or may contain other “value added” compensation components, and may be

agreed to for a shorter or longer term depending upon the Timberland or

Timberlands and the understanding of the parties reached with respect

thereto.  The Annual Budget for each

Timberland, as described in Section 2.02, shall be based (in pertinent

part) on the Property Management Service Fees as so negotiated.  Client shall pay to Manager the applicable

Property Management Service Fee for each Timberland (as set forth in

Exhibit 2A) on a calendar month basis, subject to its prior receipt of

Manager’s invoice.  Payment shall be

made by the tenth day of the month following the month in which the charges

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

for the previous month, whichever is later. 

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

Timberland, or the sale of any Timberland, or portion thereof, Client shall pay

only that daily pro rata portion of the Property Management Service Fee which

has accrued to the date of termination or sale.  In the event that significant changes in management activities

alter monthly budgeted cash flows for any property by 50% or more for a period

exceeding 90 consecutive days, Property Management Service Fees for that

property will be re–examined and revised by both parties as appropriate.

Such revised fees shall only apply prospectively.




Section 3.  Disposition

Services:




3.01        Timberland(s) To Be Sold; Terms of Sale:  Client may from time to time provide

Manager, at Client’s sole discretion, with a list of properties to be sold by

Manager and guidelines as to sales prices and other matters as may be directed

by Client.  Such list, together with

said guidelines, shall hereinafter be referred to as the “List”.   Said List may be amended, from time to

time, at Client’s sole discretion. 

Unless otherwise approved by Client in writing, all sales contracts

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

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

Contract”).  A copy of a Real Estate

Sales Contract is attached hereto as Exhibit 3A and incorporated

herein.  All offers, proposed purchase

prices and terms shall in no way bind or obligate Client until and unless

expressly accepted in writing by Client.




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

unilateral right to engage and contract with brokers or agents to sell all, or

any portion of, the Timberlands and that Client has the absolute and exclusive

right to pledge, encumber, sell, transfer, or dispose of all, or any portion

of, the Timberlands without the consent of Manager, and Manager shall not

knowingly cause any lien, charge, or claim to attach to any Timberland or to

any timber or other rights located on any Timberland.  Manager represents and warrants that it will comply with all 




 




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laws and regulations associated with the sale of any Timberland for

which it provides services pursuant to this Section 3, and that Manager

will endeavor to provide information that is both adequate and accurate for its

intended purpose, including (where Manager is to provide such services)

adequate and accurate descriptions to be used by Client in drawing deeds and

easements.




Manager expressly acknowledges and agrees that Manager shall have no

authority to (i) commit Client to any sale of any Timberland or any

portion thereof; or (ii) make unsubstantiated statements or

representations about said Timberlands.




3.02        Disposition Services:  To the extent requested by Client,

Manager shall assist, cooperate and consult with Client, its appointed brokers

and agents, and shall provide the following disposition services from time to

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

Timberland for which it then serves as Manager:




(a)           Assist Client

in identifying Timberlands for inclusion on the List based on criteria

established by Client.




(b)           Arrange for

and supervise disposition cruises, internal property valuations and assist

Client in preparing Client’s Vote Packages.




(c)           Solicit and

procure purchasers for each Timberland on the List, market the Timberland, and

develop purchaser interest and a summary of prospective purchasers thereof,

which summary shall be updated as Client may reasonably request.




(d)           Assist

Client in screening prospective purchasers.




(e)           Contract for

any reasonable advertising program for the sale of the List Timberlands solely

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




(f)            Distribute

sales information approved by Client to prospective purchasers.




(g)           Receive and

answer inquiries from prospective purchasers.




(h)           Show

identified Timberlands to such prospective purchasers.




(i)            Negotiate

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

accordance with Client’s instructions.




(j)            Assist in

closing sale transactions, including assisting in the verification of legal

descriptions of Timberlands to be sold.




(k)           Assist in

preparing conveyance deeds and identifying unrecorded documents which affect

the sale of Timberlands and in the assignment of easements and other rights.




(l)            Send to

Client a closing statement showing prorations or adjustments promptly after

each closing.




 




11





























 




(m)          Perform such

other services as Client may reasonably request in writing.




The foregoing notwithstanding, Client shall not be obligated to employ,

to offer to employ or to negotiate terms of employment with Manager for any

disposition services.  However, because

Manager is the provider of Property Management Services for that Timberland,

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

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

this Master Agreement.  Whether or not

Client employs Manager to perform disposition services for any Timberland,

because Manager is the provider of Property Management Services for such

Timberland, may have access to confidential information regarding such

Timberland and will have continuing responsibilities for management of such Timberland

unless and until it is sold, Manager shall not acquire, attempt to acquire,

advise or assist any other person in its attempt to acquire any Timberland (or

any portion thereof).




Compensation for Disposition Services:   




(a)           For

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

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

Commission]




(b)           In some

instances, Client may desire to exchange a Timberland, or portions of a

Timberland, for other Timberland, rather than disposing of the same for

cash.  In such event, Manager shall

provide the same services on the same terms and conditions to Client as are

described in this Master Agreement regarding dispositions for cash.  If Manager is employed by Client to provide

both disposition and acquisition services, Manager shall document separately

the services it performs for disposition of the Timberland and the services it

performs for the acquisition of the Timberland received in the exchange.  Manager’s compensation with respect to the

Timberland disposed of shall be as described above, and Manager’s compensation

with respect to the Timberland acquired in the exchange shall be calculated

separately in accordance with Section 4.03 of this Master Agreement.




Section 4.  Acquisition

Services:




4.01        Acquisitions: 

Regardless of a Timberland’s location, Manager may but shall not be

obligated to bring any acquisition opportunity to Client’s attention.  Client may but shall not be obligated to

employ, or to offer to employ, Manager to provide acquisition services for any

acquisition, even if brought to Client’s attention by Manager.  Client shall not be obligated to pay Manager

with respect to any acquisition unless Manager actually performs acquisition

services requested by Client with respect to such Timberland. Manager may but

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

services for any acquisition, and (subject to Section 5.02 below) Manager

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

acquisition property; provided however, if Manager performs




12





























 




acquisition

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

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

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

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

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

Timberland, unless Client has discontinued its efforts to acquire such

Timberland and advise Manager that it may pursue such acquisition opportunity

either for its own account or for the account of others.  If Manager actually provides acquisition

services requested by Client pursuant to this Section 4 for any property

acquired by Client (or by an Ultimate Client Portfolio managed by Client)

during the term of this Master Agreement, the parties shall negotiate in good

faith regarding the terms on which such new acquisition would be added to

Exhibit 2A.  The parties shall

endeavor to commence any such negotiations at least 30 days prior to the

expected acquisition closing date.  Under no circumstances, however, shall either party be obligated

to continue any such negotiations past the actual closing date of such

acquisition.  Client may, but shall have

no obligation to, employ Manager for property management services except with respect

to properties listed on Exhibit 2A, as it may be amended from time to

time.




4.02        Scope of Acquisition Services: The

potential scope of acquisition services shall be as follows:




(a)           Identify,

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

by other parties, develop financial investment models and conduct or facilitate

valuations as necessary for Client’s evaluation of the property or properties.




(b)           Assist

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

party timber inventory verification, assist with valuation of the acquisition

property by parcels at the request of Client and cooperate with third party

review of the parcelization process.




(c)           Review legal

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




(d)           Assist

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

in accordance with verbal directions given by Client.




(e)           Assist

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

acquisition documents, including but not limited to acreage verification,

review of title commitments and title exception documents.




(f)            Assist

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

and the closing statement for acquisition of the property.




(g)           Conduct a

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

environmental consultant retained by Client in conducting the consultant’s

environmental review of the property.




 




13





























 




With respect to any given acquisition, however, Client shall be free to

perform any or all acquisition services itself, and may request Manager to

perform fewer services.  Any request by

Client for Manager’s acquisition services shall be in a writing which shall

reasonably describe the services requested and such other matters as the

parties deem relevant.  Manager

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

associated with the acquisition of all properties for which it provides

services pursuant to this Section 4.




Unless otherwise agreed in writing, all acquisition contracts shall be

in a form approved by Client and prepared by counsel for Client.  No offer or proposed term or condition shall

bind or obligate Client until and unless expressly accepted in writing by

Client.  Manager shall have no authority

to commit Client to any purchase of any property.




4.03        Compensation for Acquisition Services:  Client shall not be obligated to pay, and

Manager shall have no right to receive, any finder’s or other fee for bringing

acquisition opportunities to Client’s attention.  However, if Manager actually performs acquisition services

requested by Client with respect to a property, Client shall pay Manager

monthly in arrears, subject to the prior receipt of an invoice describing in

reasonable detail the services actually performed during the month and the

charges for such services, on a time and materials basis in accordance with the

fee and/or fee schedule set forth in Exhibit 4A.




Section 5.  Conflicts of

Interest, Confidentiality and Non Compete:




5.01        Confidentiality: 

The parties acknowledge that each will have access to, and from time to

time will obtain, confidential information of the other party.  The parties agree that any receipt, use, and

disclosure of confidential information shall be restricted as set forth in

Exhibit 5A to this Master Agreement.




5.02        Non Compete: 

So long as this Master Agreement shall remain in effect, Manager agrees

that neither Manager nor its affiliates will compete with Client by

(a) performing, offering to perform or soliciting timberland portfolio

investment services for Plans and Endowments investing in timberlands within

the Continental United States or Canada; (b) soliciting or attempting to

raise timberland investment capital from Plans and Endowments for timberland

investments within the Continental United States or Canada; or

(c) managing timberland properties in the Continental United States or

Canada owned or managed for Plans and Endowments.  In addition, recognizing Client’s need to protect its legitimate

business interests, and as a further inducement to Client to continue to enter

into this Master Agreement, Manager hereby covenants and agrees with Client

that during the term of this Master Agreement, Manager will not, directly or

indirectly, for itself or any other person, business or entity: (x) have

any ownership interest in any Competing Business (other than passive ownership

of publicly–traded securities constituting less than a 1% interest),

provided that Manager’s continuing ownership of any ownership interest in an

entity that was not a Competing Business when such investment was made, but

subsequently becomes a Competing Business as a result of a sale of an interest

therein to a Plan or Endowment by a person or entity not controlled by Manager,

shall not constitute a breach of this clause (x) as long as Manager

neither manages or operates such entity, nor owns more than 5% of the entity

from and after the date that it becomes a Competing Business, unless otherwise

agreed in writing by Client; or (y)




 




14





























 




attempt

to employ or recruit, or assist any other person or entity in employing or

recruiting, for or on behalf of any Competing Business, any employee who is

employed by Client.




Manager represents and warrants that neither it nor any of its

affiliates presently conducts any of the activities described in clauses (a),

(b), (c) or (x) of this Section 5.02, except insofar as the units of

interest in Pope Resources, A Delaware Limited Partnership (“Pope”) are

publicly traded Pope and Manager or its other affiliates may be deemed to

provide timberland portfolio investment services for, or to manage timberlands

beneficially owned by, Plans or Endowments that purchase such units.  Notwithstanding the foregoing, Manager

covenants and agrees that, so long as this Master Agreement shall remain in

effect, neither Manager nor any of its affiliates will issue any new interests

that are publicly traded in the United States which constitute an interest in

any entity that owns or manages timberlands located in the Continental United

States or Canada; except for the issuance of new interests in conjunction with any

option, incentive or compensation programs of Manager or its affiliates for the

benefit of its officers, directors, employees, or agents.  Nothing in this Section 5.02 shall be

deemed to apply to the issued units of Pope existing as of the effective date

of this Master Agreement.




For purposes of this Section 5.02, “affiliate” shall mean any

person or entity (whether now existing or hereafter created) that is controlled

by, in control of, or under common control with Manager, and shall in any event

include Pope.




Notwithstanding any other provision of this Section 5.02, it is

understood and agreed that nothing herein shall prohibit Manager or its

affiliates from advertising, soliciting, marketing for sale, or selling or

conveying any timberland or other property now or hereafter owned by Manager or

its affiliates to a Plan or Endowment, provided that neither Manager nor its

affiliates shall provide management services for any timberland conveyed to

such Plan or Endowment after closing. 

In conjunction with any such sale, an affiliate of Manager may create or

cause to be created a publicly traded vehicle to facilitate the sale.




The provisions of this Section 5.02 shall survive termination of

this Master Agreement for a period of (i) twenty–four calendar

months with respect to each Plan and Endowment that is invested in an Ultimate

Client Portfolio managed by Client and (ii) twelve calendar months with

respect to any other Plan or Endowment.




Manager and Client hereby expressly agree that damages may not

compensate Client adequately for a breach of this Section 5.02, and

acknowledge that absent this Section 5.02 Client would not have entered

into this Master Agreement.  Therefore,

to the maximum extent permitted by law, upon establishment of a breach of this

Section 5.02, the parties hereby specifically agree that Client shall be

entitled to specific performance of the provisions of this Section 5.02,

and in the event that Client brings any action for specific performance of this

Section 5.02 Manager waives any objection or right to object to the

suitability or availability of specific performance as a remedy for breach of

this Section 5.02, including without limitation any objection based on the

adequacy of damages or the irreparable nature of the injury claimed by Client.  The foregoing, however, shall not be deemed

to constitute a waiver by Manager of its right to participate in the

litigation, to dispute whether a breach of this Section 5.02 occurred or

whether 




 




15





























 




the scope of the equitable relief requested by Client is appropriate

and consistent with the strict enforcement of the provisions of this

Section 5.02.




5.03        Use of Name; Press Releases:  Not less than five (5) business days prior

to distributing any press release, sales or marketing literature or other

written material to unaffiliated third parties, which refers to the other party

or any of its affiliates by name, or that make reference to or representations

about the nature of the relationship in which the parties are engaged, Manager

or Client (as the case may be) shall furnish the other party with a copy of

such materials and shall refrain from distribution thereof if the other party

reasonably objects in writing within five (5) business days of its receipt

thereof.  Each party agrees to cooperate

with the other to facilitate any desired press release or other written

communication, to promptly review any suggested material (or the pertinent

provisions thereof which refer to such party), to generally permit the use of

its name by the other party in any factually accurate description of this

Master Agreement, and to not unreasonably object to the manner in which its

name may be used.  Each party also

acknowledges that communications to Plans and Endowments (and their advisors

and consultants) that are invested in Ultimate Client Portfolios will be made

periodically and will necessarily disclose the existence of this Master

Agreement, identify and refer to the parties by name, and each party agrees

that the use of its name in such communications need not be approved.  Similarly, each party acknowledges that

communications required by the Securities and Exchange Commission will be made

periodically, and may disclose the existence of this Master Agreement, identify

and refer to the parties by name, and each party agrees that the use of its

name in such communications need not be approved.




Section 6.  Insurance,

Indemnity, Status, Standard of Performance and Legal Compliance:




6.01        Insurance and Bonding:    (a)  During the

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

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

insurance with financially stable insurance carriers satisfactory to Client in

the reasonable exercise of Client’s discretion:




(i)            Manager

shall maintain a policy of commercial general liability insurance insuring

Manager and Client (and the owner of each Timberland that is subject to this

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

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

operations under this Master Agreement, in the minimum amount of $500,000 for

each occurrence, $500,000 general aggregate, plus umbrella coverage of

$7,000,000.  The premiums and other

costs of such general liability insurance shall be paid for by Manager as a

cost associated with the operations of Manager under this Master

Agreement.  All other insurance required

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

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




(ii)           Manager shall maintain a policy of

automobile liability insurance, including coverage for scheduled autos, hired

autos and non–owned autos, insuring Manager and Client (and the owner of

each Timberland, as applicable) against any liability for bodily injury or

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

Manager’s operations under this Master Agreement, in the 




 




16





























            




            minimum of $1,000,000 for bodily injury

per accident and $500,000 for property damage.




(iii)          Manager shall maintain Workers’

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

Insurance in the amount of $500,000. 

Said policies shall contain a provision under which the insurer waives

any right of subrogation as against Client, the owner of each Timberland, as

applicable, and their respective agents or employees, to the full extent

allowed by law.




(b)           Manager

shall require and verify that all contractors or subcontractors hired to

perform any work relating to the Timberlands acquire and maintain the following

insurance requirements unless otherwise approved by Client, which approval will

not be unreasonably withheld or delayed by Client; provided, that Client hereby

authorizes Manager, of its own volition, to waive such insurance requirements,

in whole or in part, in emergency situations for the period of such emergency:




(i)            Contractors

or subcontractors shall maintain a policy of commercial general liability

insurance insuring contractor or subcontractor, as the case may be, and Client

(and the owner of each applicable Timberland) against liability for bodily

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

connected with contractor’s or subcontractor’s operations under this Master

Agreement, in the minimum amount of $500,000 for each occurrence and $1,000,000

general aggregate.  The premiums and

other costs of such general liability insurance shall be paid for by the

contractor or subcontractor as a cost associated with their operations.  All other insurance required under this

Section 6.01(b) shall also be the obligation of contractor or

subcontractor and shall be paid for by contractor or subcontractor.




(ii)           Contractors or subcontractors shall

maintain a policy of automobile liability insurance, including coverage for

scheduled autos, hired autos and non-owned autos, insuring contractor or

subcontractor and Client (and the owner of each applicable Timberland) against

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

from or be in any way connected with contractor’s or subcontractor’s operations

under this Master Agreement, in the minimum of $500,000 for bodily injury per

accident and $250,000 for property damage.




(iii)          Contractors or subcontractors shall

maintain Workers’ Compensation Liability coverages as required by law and

Employer’s Liability Insurance in the amount of $500,000.  Said policies shall contain a provision

under which the insurer waives any right of subrogation as against Client, the

owner of each applicable Timberland, and their respective employees.




(c)           All

insurance coverages required hereunder shall not be subject to change or cancellation

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




(d)           Manager

shall furnish evidence satisfactory to Client that Manager is maintaining such

insurance coverage.




 




17





























 




(e)           Manager and

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

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

without expense to Client, be bonded by a fidelity bond acceptable both to

Manager and Client, in an amount of not less than [Confidential Treatment

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

the Securities and Exchange Commission] and by a company

acceptable to Manager and Client.  A

certificate verifying the existence of such a bond shall be furnished to Client

by Manager.




(f)            The

foregoing insurance and bonding coverage are minimum requirements and the

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

Master Agreement.




6.02        Indemnity — Liability:




(a)           Manager

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

indemnify and hold Client, the owner of each applicable Timberland that is

subject to this Master Agreement, and their respective agents, employees,

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

all claims, suits, actions or proceedings, whether civil or criminal, and

liabilities, losses, injuries, damages, judgments or expenses, including court

costs and reasonable attorney’s fees, arising out of Manager’s operation and

maintenance of the Timberlands caused by Manager’s breach of its duties and

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

omissions of Manager, or of contractors or subcontractors employed by Manager

pursuant to activities associated with the duties and responsibilities

described in Section 2, made or done in the performance of, or failure to

perform, its obligations under this Master Agreement, to the extent not caused

by the Client’s (or applicable Timberland owner’s) negligent or willful acts or

omissions; provided that Manager’s liability under this Master Agreement

resulting from the negligent or willful acts or omissions of any contractor or

subcontractor utilized by Manager shall be limited to [Confidential Treatment

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

the Securities and Exchange Commission]  in the aggregate for any one calendar

year.




(b)           Client

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

indemnify and hold Manager, its agents, employees, officers, directors,

affiliated companies, contractors, and subcontractors free and harmless from

and against all claims, suits, actions or proceedings (whether civil or

criminal), and all liabilities, losses, injuries, damages, judgments of

expenses, including court costs and reasonable attorneys’ fees, arising out of

Client’s breach of its duties and obligations under this Master Agreement or

Client’s negligent or willful acts or omissions, to the extent not caused by

the Manager’s, or its contractors or subcontractors, negligent or willful acts

or omissions.




6.03        Independent Contractor:  Manager’s status hereunder is that of an

independent contractor, and Manager shall not contract for or on behalf of

Client without Client’s express written consent and Manager shall not represent

to any third party that its relationship to Client is other than that of an

independent contractor. Except as otherwise provided in Exhibit 2B,

Manager shall subcontract in its own name. 

All work performed pursuant to this Master Agreement shall be by

independent contractors or by employees of Manager.  With respect to 




 




18





























 




employees,

Manager shall obtain and maintain Workers’ Compensation Insurance as required

by law and under this Master Agreement. 

With respect to contractors, Manager shall be responsible for

ascertaining that all subcontractors are in compliance with all applicable

Workers’ Compensation requirements. 

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

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

be performed shall be determined by Manager. 

All persons required to perform services in connection with the

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

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

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

contractors or subcontractors shall in no way exonerate Manager from full

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

as may be limited by Section 6.02 hereof.




6.04        Standard of Performance:  Manager shall (a) discharge its duties

with the care, skill, prudence and diligence under the circumstances then

prevailing that a prudent person acting in a like capacity and familiar with

such matters would use in the conduct of an enterprise of a like character and

with like aims, using generally accepted and proper land management and

forestry practices and procedures acceptable to Client, and (b) act in

accordance with the standards in effect from time to time under federal, state

and local laws, rules, regulations, and ordinances applicable to its forestry

and management operations.  Acting

through its qualified subsidiaries, agents and employees, Manager shall

generally manage, oversee, and supervise each Timberland listed from time to

time on Exhibit 1A and all forestry operations thereon or incident thereto

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

and services necessary to operate and maintain each Timberland, and shall

perform and carry out the duties and responsibilities as generally outlined in

this Master Agreement.  Manager agrees

to act in good faith and with due care in selecting reputable and qualified

contractors and subcontractors to be employed by Manager.  Notwithstanding anything herein to the

contrary, Manager shall expend no funds with respect to any Timberland or enter

into any contracts or other agreements affecting any Timberland in

contravention of the limitations and signature requirements set forth on

Exhibit 2B.




6.05        Governmental Compliance:  Manager hereby represents and warrants to

Client that Manager has obtained and will maintain all necessary licenses,

permits and other governmental authority required for Manager to fulfill its

obligations under this Master Agreement. 

Manager further represents and warrants that prior to conducting any

forestry activities, it will ensure that all necessary forest practice or other

applications or permits associated therewith are obtained. Manager shall take,

or timely recommend, such action as shall be necessary to comply with all

federal, state, and other governmental laws, orders or requirements applicable

to its management and forestry operations under this Master Agreement.  Whenever a report, application, notice or

other document is required to be filed or reported with any governmental agency

in connection with the Timberlands or any forestry operations being conducted

by Manager hereunder, Manager shall immediately notify Client of the same, and

the Manager where necessary will prepare initial drafts of any such report,

application, notice or other document for filing or reporting.  Manager shall ensure that any and all

contractors or subcontractors performing services on or relating to the

Timberlands comply with all applicable federal, state, and other governmental

laws, orders or requirements relating to said contractors




 




19





























 




 or subcontractors or relating to each

Timberland.  Upon request, Manager shall

provide Client with evidence satisfactory to Client of Manager’s compliance

hereunder.




Section 7.  Term and

Termination:




7.01        Term: 

The term of this Master Agreement shall commence as of January 1, 1998,

and shall continue to and including December 31, 2000.




7.02        Termination for Fraud or Failure to Perform:  Either party may terminate this Master

Agreement, in whole or in part with respect to any Timberland(s), at any time,

upon not less than 10 days’ prior written notice thereof to the other party

based on such other party’s:  (i) fraud or criminal activity; or (ii) failure to

perform its obligations under this Master Agreement; provided that, in the case

of notice of termination pursuant to clause (ii), if such other party commences

to cure such default within the above–mentioned ten (10) day period such

other party shall have thirty (30) days after notice to cure such default;

provided that if the default is susceptible of being cured but cannot

reasonably be cured within thirty (30) days, the cure period for such default

shall continue for so long as such other party is diligently attempting to

effect such cure; provided however that a party’s right to an extended cure

period, as described immediately above, shall terminate if such party shall

have received notice of three different defaults within any six (6) month

period (or six different defaults at any time during the term of this Master

Agreement) which have not been cured within thirty (30) days. Any notice given

pursuant to this Section 7.02 shall describe the reason for termination in

reasonable detail, shall stipulate the effective date of termination, and

whether such notice of termination applies to the Master Agreement in its

entirety or to specific properties which shall be identified in the notice.




7.03        Automatic Termination:  This Master Agreement shall automatically

terminate, in its entirety and with respect to all Timberlands, if:  (i) there are no Timberlands with

respect to which Manager is then providing Property Management Services

pursuant to Section 2 above; (ii) either party is adjudicated as

insolvent or to be liquidated, files or consents to the filing against it of a

petition for relief or reorganization in bankruptcy (or under any similar law),

consents to the appointment of a receiver, trustee or similar officer with

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

to dismiss within thirty (30) days any petition or order seeking to effect any

of the foregoing; or (iii) either party shall sell substantially all of

its assets, merge or consolidate with an unaffiliated third party in such a

manner that the party to this Master Agreement shall not be the survivor of

such merger or consolidation, or otherwise cease to exist.  This Master Agreement shall automatically

terminate with respect to a given Timberland (or any portion thereof) if and

when that Timberland (or portion thereof) is sold or disposed of, and no longer

owned by Client or by or for the account of any Ultimate Client Portfolio.  This Master Agreement shall automatically

terminate with respect to a given Timberland (or any portion thereof) if and

when that Timberland (or portion thereof) is sold or transferred to a publicly

traded entity notwithstanding that such entity is an Ultimate Client Portfolio.  If, at any time prior to June 30, 1999, as a

result of Timberland sales or transfers referred to in either of the two

preceding sentences, the number of acres subject to this Master Agreement (net

of any acres attributable to Timberlands added to Exhibit 2A after the effective

date of this Master Agreement) is reduced by more than thirty percent (30%)

when compared to




 




20





























 




the

number of acres subject to this Master Agreement on the effective date, then at

the election of Manager to be exercised once at any time prior to June 30,

1999, Client agrees to pay to Manager the amount determined in accordance with

Exhibit 7A.  Such payment shall be

made within thirty (30) days following written notice of Manager’s election.




7.04        Survival of Obligations:  Notwithstanding any other provision hereof,

the following obligations, as set forth in this Master Agreement, shall survive

any partial termination:  (i) the

provisions of Sections 2 and 3 (including the Exhibits thereto and all other

provisions of this Master Agreement that are incorporated by reference in

Section 2 or in Exhibit 2A) shall survive with respect to a given

Timberland so long as that property remains subject to this Master Agreement;

and (ii) the provisions of Section 5 shall continue in effect until

this Master Agreement has terminated with respect to all Timberlands and for

such additional periods of time as are specified in Section 5.




7.05        Winding Up Following Termination:  Within thirty (30) days following termination

of this Master Agreement in its entirety, Client shall pay to Manager all

amounts (if any) then due but unpaid under this Master Agreement, including

without limitation all fees prorated to the date of termination.  Within thirty (30) days following notice of

termination of this Master Agreement with respect to any Timberland, Manager

shall turn over to Client all records, photos, maps, surveys, title data,

custom computer software, documents and other property or items relating to

such Timberland, including without limitation any Confidential Information (as

defined in Exhibit 5A) relating to such Timberland, along with all copies

and abstracts of such Confidential Information.




Section 8.  Notices:    All notices

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

be effective at the earlier of the time when actually received by the other

party, regardless of the method of delivery, or one (1) day after mailing if by

reputable overnight courier or three (3) days after mailing if by certified

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

addresses as either party may designate from time to time in a writing

delivered to the other):




	

  AS TO THE CLIENT: 


  	

  [Confidential Treatment for the

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

  Securities and Exchange Commission]


  
	

   


  
	

   


  
	

   


  
	

   


  
	

   


  	

   


  	

   


  
	

  AS TO THE MANAGER: 


  	

  Olympic Resource Management LLC


  	

   


  
	

   


  	

  19245 Tenth Avenue NE


  	

   


  
	

   


  	

  P. O. Box 1780


  	

   


  
	

   


  	

  Poulsbo, Washington 98370


  	

   


  
	

   


  	

  Attention:


  	

  Mr. Thomas Gilkey


  
	

   


  	

   


  	

  Senior Vice President


  
				





 




21





























 




In the event that the

last day for giving any notice hereunder falls upon a Sunday or legal holiday,

the last day shall be deemed to be the next business day which is neither a

Sunday nor a legal holiday.




Section 9.  Title to

Timberlands and Timber:  

Manager shall not by reason of this Master

Agreement acquire title to any Timberland or any timber or other asset

associated therewith.  In addition,

Client reserves the right to designate the party or parties to whom any or all

of the timber located on the Timberlands may be sold during the term of this

Master Agreement or any extension thereof. 

The rights of Manager hereunder shall be subject and subordinate to all

liens which may now or hereafter be placed on the Timberlands.




Section 10.  Miscellaneous:




10.01      This Master

Agreement shall be governed by the laws of the Commonwealth of Massachusetts.




10.02      This Master

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

permitted assigns.




10.03      Neither party may

assign this Master Agreement or any part thereof without the express written

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

without such consent to another subsidiary or affiliate of Client.




10.04      This Master

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

writing executed by the parties hereto.




10.05      The headings in

this Master Agreement are for purposes of reference only and shall not limit or

define the meaning hereof.




10.06      If any term of this

Master Agreement shall be held to be invalid, illegal or unenforceable, the

validity of the other terms of this Master Agreement shall in no way be

affected thereby.




10.07      Client and its

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

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

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

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

rights located thereon.




10.08      This Master

Agreement constitutes the entire Agreement between the Client and Manager and

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

to the Timberlands, and (ii) all prior drafts of and negotiations relating

to this Master Agreement.  This Master

Agreement may be executed in any number of counterparts, each of which shall be

an original but all of which together shall constitute but one instrument.




10.09      In the event either

party shall commence any action to interpret or enforce the terms of this

Agreement, the prevailing party shall be entitled to recover its costs and

expenses of suit and any appeal therefrom, including reasonable attorneys’

fees.




 




22





























 




Section 11.  Non-Discrimination:   During the term of

this Master Agreement, Manager shall not unlawfully discriminate against any

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

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

(over 40), or sex.




IN WITNESS WHEREOF, the undersigned have duly executed this Agreement

as of the date first written above.




	

  CLIENT:


  	

   


  	

   


  	

  MANAGER:


  	

   


  	

   


  
	

  HANCOCK NATURAL

  RESOURCE


  	

   


  	

  OLYMPIC RESOURCE


  	

   


  
	

  GROUP, INC.


  	

   


  	

   


  	

  MANAGEMENT LLC,


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  a Washington

  limited liability company


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  By:


  	

  /s/

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

  been filed separately with the Securities and Exchange Commission]


  	

   


  	

  By:


  	

  /s/ Gary F. Tucker


  	 

	

   


  	

  [Confidential

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

  separately with the Securities and Exchange Commission]


  	

   


  	

   


  	

  Gary F. Tucker


  President and Chief Executive Officer


  	 

	

   


  	

  Managing Director


  	

   


  	

   


  	

   


  	 

										





 




23





























 




Exhibit “2A”




PROPERTY

MANAGEMENT SERVICE FEES




	

  States


  	

   


  	

  Property


  	

   


  	

  Acreage

  Forecast  (as of 12/1/97)


  	

   


  	

  Base Rate

  $/Acre Fee


  
	

   


  	

   


  	

  McCloud


  	

   


  	

  39,366


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  
	

  California


  	

   


  	

  Pondosa


  	

   


  	

  39,264


  	

   


  	

   


  
	

  California


  	

   


  	

  Trinity


  	

   


  	

  24,649


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Coates Creek


  	

   


  	

  6,358


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Deer Creek


  	

   


  	

  13,133


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Gold Beach


  	

   


  	

  29,438


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Hershey


  	

   


  	

  5,346


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Mist


  	

   


  	

  22,155


  	

   


  	

   


  





 




24





























 




	

  Oregon


  	

   


  	

  Nicolai


  	

   


  	

  5,443


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  
	

  Oregon


  	

   


  	

  Pebble Creek


  	

   


  	

  15,203


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Scappoose


  	

   


  	

  10,906


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Santiam


  	

   


  	

  5,297


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  St. Helens


  	

   


  	

  4,894


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Umpqua


  	

   


  	

  19,321


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Wilark


  	

   


  	

  7,775


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Wiley Creek


  	

   


  	

  47,120


  	

   


  	

   


  
	

  Oregon


  	

   


  	

  Wilson River


  	

   


  	

  13,372


  	

   


  	

   


  





 




25





























 




	

  Washington


  	

   


  	

  Cavanaugh


  	

   


  	

  50,799


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  
	

  Washington


  	

   


  	

  Gold Bar


  	

   


  	

  6,077


  	

   


  	

   


  
	

  Washington


  	

   


  	

  Granite Falls


  	

   


  	

  10,786


  	

   


  	

   


  
	

  Washington


  	

   


  	

  Grays River


  	

   


  	

  62,419


  	

   


  	

   


  
	

  Washington


  	

   


  	

  Johns River


  	

   


  	

  25,150


  	

   


  	

   


  
	

  Washington


  	

   


  	

  Milwaukee


  	

   


  	

  17,253


  	

   


  	

   


  
	

  Washington


  	

   


  	

  Monroe


  	

   


  	

  6,983


  	

   


  	

   


  
	

  Washington


  	

   


  	

  Skykomish


  	

   


  	

  6,328


  	

   


  	

   


  
	

  Washington


  	

   


  	

  Snohomish


  	

   


  	

  19,403


  	

   


  	

   


  





 




26





























 




	

  Washington


  	

   


  	

  Wishkah


  	

   


  	

  20,955


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  
	

   


  	

   


  	

   


  	

   


  	

  535,193


  	

   


  	

   


  





 




Contract term for these properties: three (3) years, beginning 1/1/98

and ending on 12/31/2000.




The weighted average base rate/acre of [Confidential Treatment for the omitted material has been requested and

has been filed separately with the Securities and Exchange Commission]  to

remain fixed for the three (3) year term.




 




27





























 




EXHIBIT “2B”




DECISION

MAKING AND SIGNING AUTHORITY




	

   


  	

   


  	

  CATEGORY


  	

   


  	

  Manager’s Authority


  
	

  1.


  	

   


  	

  Timber sales

  contracts


  	

   


  	

  [Confidential

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

  requested and has been filed separately with the Securities and Exchange

  Commission]


  
	

   


  	

   


  	

  stumpage & log

  sales including salvage & misc. forest products


  	

   


  	

   


  
	

  2.


  	

   


  	

  Logging &

  trucking contracts


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

  3.


  	

   


  	

  Land Use permits


  	

   


  	

   


  
	

   


  	

   


  	

  i.e. road use,

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

  & gas, etc.


  	

   


  	

   


  
	

  4.


  	

   


  	

  Budgeted Capital

  Expenses


  	

   


  	

   


  
	

   


  	

   


  	

  contracts & checks

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


  	

   


  	

   


  





 




28





























 




	

  5.


  	

   


  	

  Budgeted

  Operating Expenses checks; except management fees


  	

   


  	

  [Confidential

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

  requested and has been filed separately with the Securities and Exchange

  Commission]


  
	

  6.


  	

   


  	

  Budgeted

  Operating Expenses checks; management fees


  	

   


  	

   


  
	

  7.


  	

   


  	

  All legal

  invoices


  	

   


  	

   


  
	

  8.


  	

   


  	

  Acquisition of

  properties — with HNRIC/COF approval closing costs, expenses;


  	

   


  	

   


  
	

   


  	

   


  	

  manager’s

  compensation;


  	

   


  	

   


  
	

   


  	

   


  	

  P&S

  contracts & closing documents


  	

   


  	

   


  





 




29





























 




	

  9.


  	

   


  	

  Disposition

  of properties — with HNRIC/COF approval


  	

   


  	

   


  
	

   


  	

   


  	

  closing

  costs expenses;


  	

   


  	

  [Confidential Treatment for the omitted material contained

  in the entire column has been requested and has been filed separately with

  the Securities and Exchange Commission]


  
	

   


  	

   


  	

  manager’s

  compensation;


  	

   


  	

   


  
	

   


  	

   


  	

  P&S

  contracts & closing documents


  	

   


  	

   


  





All Hancock contracts to be signed by authorized

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

their signing authority




Manager — to provide and update list of its authorized

individuals periodically




Authorized HNRGI Associates: 

Director Acquisitions; Manager of Acquisitions; Director of Forestry

Operations & Stewardship; Regional Forestry Managers; Regional Foresters;

CalPERS Forest Operations Manager; CalPERS CIO; Managing Director




Decision making

authority:




•                                          Budget approval must be made by the HNRGI

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

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




•                                          Acquisitions and Dispositions require approval of

Hancock Natural Resource Investment Committee and JHMLICO Committee of Finance;

except that dispositions under [Confidential

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

separately with the Securities and Exchange Commission]  must

be approved by (i) a Regional Forestry Manager or Director of Forestry

Operations & Stewardship, or (ii) CalPERS Operations Manager or

CalPERS CIO;




•                                          All recorded instruments (including deeds) to be

signed by authorized officers of JHMLICO, John Hancock Timber Resource Corp.,

or other legal owner, respectively.




 




30





























 




EXHIBIT “2C”




TIMBER

INVENTORY SCHEDULE




Annual timber inventory updates will be done to

collect the following information on the following schedule:




I.              EVEN-AGED MANAGED

PROPERTIES




	

   


  	

   


  	

   


  
	

  TIME OF ENTRY


  	

   


  	

  INFORMATION  TO BE COLLECTED


  
	

   


  	

   


  	

   


  
	

  Approx. 5 years

  after planting


  	

   


  	

  Species, trees

  per acre, average stand diameter and height


  
	

   


  	

   


  	

   


  
	

  When 12 — 25

  years old


  	

   


  	

  Species, trees

  per acre, average stand diameter and height


  
	

   


  	

   


  	

   


  
	

  When over 25

  years old:  (1) approx. 10% of acres

  over 25 years old to be age inventoried annually; and  (2) following major events (e.g.,

  final harvest, commercial thinning, material storm, bug or fire damage)


  	

   


  	

  Species, trees

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


  
	

   


  	

   


  	

   


  





II.            UNEVEN-AGE MANAGED

PROPERTIES




	

   


  	

   


  	

   


  
	

  TIME

  OF ENTRY


  	

   


  	

  INFORMATION  TO BE COLLECTED


  
	

   


  	

   


  	

   


  
	

  Within one year

  following major events


  	

   


  	

  Species, trees

  per acre, DBH,  stand height by DBH

  class


  
	

   


  	

   


  	

   


  
	

  Approx. every 10

  years for stands with no major activities planned (e.g., plantations)


  	

   


  	

  Species, trees

  per acre, DBH, stand height by DBH class


  
	

   


  	

   


  	

   


  
	

  III.           ACCURACY


  	

   


  	

   


  





 




Inventory will be maintained so that the total volume will be within

10% +/- of the true volume at the 95% confidence interval.




 




31





























 




EXHIBIT “2D”




COMPUTERIZED

MAPPING SYSTEM REQUIREMENTS




The computerized mapping system shall be a system that

is reasonable and customary for the mapping and spatial analysis of large

forest land bases in the Pacific Northwest. 

Such a system will provide, but not necessarily be limited to the

following:




Collection of data using GPS units.




Downloading data from GPS units to the mapping system.




Collection of data from heads–up digitizing, digitizing pads and

scanners.




Importing map and other spatial data from external public and private

sources using common data transfer formats.




Editing and maintenance functions for the spatial databases.




Links to attribute data stored in resource attribute databases (such as

forest inventory), creating the ability to analyze data by spatial characteristics

with the capability to link to a harvest scheduling system.




Automated standard map making processes.




Processes for creating custom maps.




Processes for making standard and ad hoc queries of the spatial

databases.




Automated backups of the spatial databases.




Downloading the spatial data into one or more standard export formats.




Downloading any attribute (non–spatial) data into standard ASCII

tables.




 




32





























 




EXHIBIT “2E”




FOREST

INVENTORY SYSTEM REQUIREMENTS




The computerized inventory system shall be a system

that is reasonable and customary for the management of large forest inventories

in the Pacific Northwest.  Such a system

will provide but not necessarily be limited to the following:




Collection of data using field data recorders or cruise cards.




Downloading data from the field data recorders to the inventory system.




Entering, storing and maintaining plot data in the inventory databases.




Compilation of plot data for specified aggregations of plots.




Loading and storage of compiled cruise results into the forest

inventory databases as stand tables.




Processes for entering, storing, editing and maintaining stand level

characteristics such as site, age, gross and net volumes, avg. DBH, stems per

acres, and other pertinent data.  Such

data shall be in total by stand, by species or other aggregation as

appropriate.




Processes for updating of inventory information for annual growth by

stand and projecting such growth over time.




Processes for editing and maintenance functions for the various

inventory databases.




Obtaining stand areas from the computerized mapping system.




Processes for production of standard forest inventory reports.




Processes for development of standard and ad hoc queries of the

inventory databases.




Automated backups of the inventory databases.




Downloading the cruise and inventory data into standard ASCII tables.




 




33





























 




EXHIBIT “2F”




LAND

RECORDS SYSTEM REQUIREMENTS




Land records consist of a wide range of documents and

other information about a property including: deeds, easements, leases, other

agreements attached to the land base, legal descriptions, and property tax

information.  Some parts of this

information may be stored in a digital (computer) format while other parts are

stored in hardcopy (paper) formats.  The

goal of such a system is to facilitate forest management by providing

information concerning the landowner’s ownership rights to his property, ownership

rights (such as easements) the owner may have on other’s property, and

ownership rights that 3rd parties may have to owner’s property.  To be useful, documents need to be spatially

linked such that one can easily research ownership rights by legal description.




The land records system will provide for:




Capturing the initially available land records for a property.




Organization of the land records in a way that facilitates access.




Storage of the land records, including off site storage of duplicate

records as is appropriate.




Linkages between the land record documents and other land record data

and the appropriate spatial data.




Maintenance and updating of the land records as new information is

generated or old information becomes obsolete.




Development of property descriptions for use in the sale of portions of

or all of a property.




Transfer of the information at the end of the management contract.




 




34





























 




EXHIBIT “3A”




 




REAL

ESTATE SALES CONTRACT




 




Date:                                                                                                                                                                       RE.

No:




                                                                                                                                Contract

No.:




                                        

of                                            ,

City of

                                      ,

County of

                                  

, State of

                                      

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

HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation, hereinafter

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

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

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

terms and conditions:




1.             Purchase

Price.  BUYER hereby agrees to pay

for said Property the amount of

                                     

dollars ($               ) (“Purchase Price”), with

                                        

dollars

($                     )

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

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

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

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

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

BUYER.




2.             Closing

Costs.  SELLER shall pay the cost of

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

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

expenses of its own attorney.   BUYER

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

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




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

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

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

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

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

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

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

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

payable after the Closing contemplated herein. 

If BUYER desires an examination of title, BUYER shall pay costs

thereof.  If upon examination of title

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

writing to the SELLER before the Closing or BUYER shall be deemed to have

waived such objections.  SELLER shall

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

SELLER may elect not to cure same and return the Deposit within fifteen (15)

days of receipt of objections; and this Contract shall thereupon terminate.




 




35





























 




4.             Closing.  The Closing contemplated herein shall mean

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

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

                                      ,

unless the date of Closing is extended in writing by mutual agreement at least

ten (10) days prior to the aforesaid date. THE PARTIES AGREE THAT TIME IS OF

THE ESSENCE WITH RESPECT TO THIS CONTRACT. The Closing shall be held at the

offices of

                                                           ,

                                                          ,

unless another place is agreed upon.




5.             Deposit.  The Deposit is delivered to SELLER to

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

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

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

credited to the Purchase Price.  IN THE

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

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

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

OTHERWISE BE IMPOSSIBLE OR IMPRACTICABLE TO MEASURE THE ACTUAL DAMAGES CAUSED

TO OR SUFFERED BY THE SELLER DUE TO THE FAILURE OF THE CLOSING TO OCCUR.  THIS PROVISION SHALL IN NO WAY AFFECT

SELLER’S RIGHT TO RELY UPON AND TO EXERCISE ANY OTHER LEGAL REMEDIES OR

RECOURSE AVAILABLE TO SELLER, INCLUDING WITHOUT LIMITATION, SPECIFIC

PERFORMANCE IN THE EVENT THE CLOSING CONTEMPLATED HEREIN DOES NOT OCCUR DUE TO

ANY REASON ATTRIBUTABLE TO OR DEFAULTED BY BUYER.




6.             Possession.  BUYER shall obtain possession of the

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

described in Paragraph 3 hereof.




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

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

is not guaranteed or warranted in any way by SELLER.




8.             Assignment.  This Contract shall not be assigned or

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

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

other office where public records are maintained.




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

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

insolvency petition or action by or against BUYER.




10.           Condition

of Property.  BUYER agrees that it

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

Property in its “as is” condition. 

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

or warranties of any kind with respect to the condition of the Property or its

fitness, suitability or acceptability for any particular use or purpose; and

SELLER shall not be liable or any latent or patent defects therein.  SELLER shall have no obligation to repair or

make any improvements to the condition of the Property prior to Closing.  THE PROPERTY MAY NOT BE WITHIN A FIRE




 




36





























 




PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO

LAND USE LAWS AND REGULATIONS, WHICH MAY NOT AUTHORIZE CONSTRUCTION OR SITING

OF A RESIDENCE.  BEFORE SIGNING OR

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

SHOULD CHECK WITH THE APPROPRIATE AUTHORITIES TO VERIFY APPROVED USES AND

EXISTENCE OF FIRE PROTECTION FOR STRUCTURES. 

BUYER hereby releases SELLER and its agents, representatives and

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

to:




(a)           The

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

without limitation, the presence of any hazardous substances; and




(b)           Any other

matter pertaining to the Property.




11.           Risk

of Loss or Damage.  SELLER shall

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

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

closing.  In the event of such loss,

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

this agreement.   If BUYER does not

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

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

parties shall agree thereto.   In the

event both parties are not able to agree to close without reduction in Purchase

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

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

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

previously paid.




12.           Broker.  BUYER agrees to indemnify and hold SELLER

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

reason of action by the BUYER.




13.           Acceptance

of Deed.  The acceptance of the deed

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

agreement and obligation of SELLER herein contained and expressed.




14.           Effective

Date.  This Contract shall become

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

and delivered by the parties hereto.




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

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

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

sought.  The headings in this Contract

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

thereof.  The terms BUYER and SELLER,

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

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

so far as the context may permit or require. 

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

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




 




37





























 




THIS AGREEMENT is hereby

duly executed in triplicate by BUYER and SELLER on the date first above

written.




BUYER:                                                                                                  SELLER:




                                                                                                                JOHN

HANCOCK MUTUAL LIFE




                                                                                                                INSURANCE

COMPANY




 




 




By_____________________________________________                 By




                                ********




Deliver promptly to BUYER, either manually or by registered mail, a

copy hereof showing SELLER’s acceptance.




	

  Buyer

  acknowledges receipt of the foregoing instrument bearing his signature and

  that of the Seller showing acceptance.


  	

  Copy hereof

  showing Seller’s signed acceptance sent Buyer by registered mail to Buyer’s

  above address.


  
	

  Date  __________  ____________Buyer


  	

  (return receipt

  requested) on __________, 19


  
	

  Time

  __________  ____________Buyer


  	

  Return receipt

  card received and attached to broker’s copy __________, 19


  





 




 




38





























 




EXHIBIT “3B”




DISPOSITION

TIME AND MATERIAL FEES




	

  Base

  Rates*


  	

   


  	

  Per/hour


  
	

  Director, Planning and

  Analysis


  	

   


  	

  [Confidential

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

  requested and has been filed separately with the Securities and Exchange

  Commission]


  
	

  Regional Managers


  	

   


  	

   


  
	

  Biometrician/Analyst


  	

   


  	

   


  
	

  Foresters


  	

   


  	

   


  
	

  Cruise Technician


  	

   


  	

   


  
	

  Administrative

  Assistant


  	

   


  	

   


  
	

  Markup to Base Rates


  	

   


  	

   


  
	

  Markup to Cost of Materials and

  Services


  	

   


  	

   


  





 




39





























 




	

  (Note:  Services meaning and intending to refer to

  services contracted to others by the Manager)


  	

   


  	

   


  
	

  Mileage Charges


  	

   


  	

  [Confidential

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

  requested and has been filed separately with the Securities and Exchange

  Commission]


  























* Rates listed are for

typical classifications of positions that will be used for disposition

services.  Other job classifications may

be used with prior written agreement between Manager and Client.




 




40





























 




EXHIBIT “4A”




ACQUISITION

TIME AND MATERIAL FEES




	

  Base

  Rates*


  	

   


  	

  Per/hour


  
	

  Director, Planning and

  Analysis


  	

   


  	

  [Confidential

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

  requested and has been filed separately with the Securities and Exchange

  Commission]


  
	

  Regional Managers


  	

   


  	

   


  
	

  Acquisition Manager


  	

   


  	

   


  
	

  Biometrician/Analyst


  	

   


  	

   


  
	

  Foresters


  	

   


  	

   


  
	

  Cruise Technician


  	

   


  	

   


  
	

  Administrative

  Assistant


  	

   


  	

   


  
	

  Markup to Base Rates


  	

   


  	

   


  





 




41





























 




	

  Markup to Cost of Materials and

  Services


  	

   


  	

  [Confidential

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

  requested and has been filed separately with the Securities and Exchange

  Commission]


  
	

  (Note:  Services meaning and intending to refer to

  services contracted to others by the Manager)


  	

   


  	

   


  
	

  Mileage Charges


  	

   


  	

   


  























* Rates listed are for typical classifications of

positions that will be used for acquisition services.  Other job classifications may be used with prior written  agreement between Manager and Client.




 




42





























 




EXHIBIT “5A”




CONFIDENTIAL

INFORMATION




1.             Manager and Client acknowledge that each has invested

and will continue to invest considerable, effort and expense in developing

techniques and strategies for timberland acquisitions, investment, management,

valuation, pricing, marketing, etc., which information is proprietary and

confidential, gives competitive advantage to each and will be imparted to the

other and its employees during the course of this Master Agreement.  Manager and Client further acknowledge that

in the absence of adequate protections for each, each party would be unwilling

to enter into this Master Agreement or to share with the other and its

employees the information that provides both with its competitive

advantage.  Accordingly, the parties

agree as follows.




2.             For purposes of and as used in this Exhibit 5A, the

words and phrases below shall have the following meanings and definitions:




(a)           “Communications” shall mean

all contacts and discussions, direct or indirect, written or oral, between

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

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

incorporate or utilize Confidential Information.




(b)           “Confidential Information”

shall mean and include any information, data and know–how relating to the

business of Client that is disclosed to Manager and/or one or more of its

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

a result of Manager’s relationship with Client, and not generally within the

public domain (whether constituting a trade secret or not), including without

limitation, the following information: non–public financial information

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

profit margins, projections, budgets, tax information or other non–public

financial data; pricing and purchasing strategies; details of particular

transactions; marketing information, such as details about ongoing or proposed

marketing programs, information about pending transactions; timberland

acquisition and dispositions information, such as any compilations or lists of

past, existing or prospective purchases or 

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

purchases or sales of timberland, from or to Client (or any account or

portfolio managed by Client); operations manuals, plus any information as

marked “Confidential” by Client.




The term “Confidential Information” does not include

(i) information that has been made generally available to the public by

the act of one who has the right to disclose such information without violating

any right of Client, though to the extent Client compiles or otherwise arranges

such publicly available information in a unique and non–public manner,

such compilation or arrangement shall constitute Confidential Information

hereunder, or (ii) information substantially developed or created by

Manager.




 




43





























 




3.             Manager acknowledges that Client’s business is highly

competitive and strongly dependent upon Manager and its employees, and upon

confidential methods, techniques and strategies in which Manager and its

employees have received or will receive extensive instruction from Client.  Manager further acknowledges that

competitors are engaged in businesses similar in nature to the business of

Client.  Manager further acknowledges

that Manager’s and its employees’ services and relationship to Client are of a

special, unique and extraordinary character and place Manager and its employees

in a position of confidence and trust with access to Communications and

Confidential Information.




4.             During the term of this Master Agreement, Manager agrees

to hold in confidence and not to directly or indirectly copy, use, disseminate,

disclose or in any manner publish any Communications or Confidential

Information, except to the extent necessary for Manager to discharge

responsibilities to Client.  Notwithstanding

the foregoing, with respect to each item of Confidential Information that

constitutes a trade secret under applicable law, the obligations of

confidentiality and non–disclosure hereunder apply to the maximum extent

permitted by applicable law as long as such information continues to constitute

a trade secret.  The rights of Client

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

under civil or criminal law relating to protection of trade secrets.




5.             Manager shall return all written, printed or other

tangible Confidential Information to Client upon termination of this Master

Agreement, or upon any earlier request therefor by Client, along with all

copies and abstracts of such Confidential Information.




6.             Recognizing Client’s needs to protect its legitimate

business interests, and the dependency of Client’s business on the skills and

expertise of Manager’s employees (as enhanced by the Confidential Information

disclosed to such employees), and as further inducement to Client to enter into

this Master Agreement, Manager agrees to request each of its employees whose

duties require having access to Confidential Information, to execute agreements

with Manager, in form and substance acceptable to Client, pursuant to which

each such employee individually agrees to be bound by and comply with the

covenants set forth in paragraphs 4 and 5 above with respect to Manager with

the following modifications:




(a)           the covenants set forth in paragraph

4 shall be limited to the shorter of the term of this Master Agreement or each

employee’s employment with Manager (except with respect to trade secrets which

shall continue as set forth therein); and




(b)           each employee of Manager that has had

access to Confidential Information shall agree to return all Confidential

Information to Manager upon termination of said employee’s employment with

Manager.




7.             Manager agrees to defend, indemnify and hold harmless

Client and its directors, officers, employees, agents, affiliates, successors

and assigns, from and against any and all claims, obligations, losses, damages,

liabilities, costs and expenses of any kind or nature




44





























(including without limitation) (i) reasonable

attorneys’ fees and expenses, (ii) attorneys’ fees and expenses necessary

to enforce its right to indemnification hereunder, whether accrued, absolute,

contingent, known, unknown, or otherwise asserted against, imposed upon or

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

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

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

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

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

such employee or employees and (ii) any acts or omissions of any

employee(s) or of Manager that would constitute a violation of any agreement

described above had such been entered into between Manager and such

employee(s).




8.             It is the intention of the parties hereto that the

provisions of this Exhibit 5A shall be enforced to the fullest extent

permissible under the laws or policies of each state and jurisdiction in which

such enforcement is sought, but that the unenforceability or invalidity of any

provision hereof (or the modification thereof to conform with such laws or

public policies) shall not render unenforceable or impair the remainder of this

Exhibit 5A, which shall be deemed amended to delete or modify, as

necessary, the invalid or unenforceable provisions.  Manager hereby consent to and affirmatively requests that this

Exhibit 5A be reformed to the extent necessary to allow for its

enforcement.  This Exhibit 5A shall

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

to conflicts of law.




9.             Manager agrees and acknowledges that

the restrictions contained in this Exhibit 5A are reasonable and necessary

in order to protect valuable proprietary assets, goodwill and business of

Client and that the restrictions will not prevent or unreasonably restrict

Manager’s business activities.




10.           Manager acknowledges that any

violation or threatened violation of the restrictions contained herein would

cause irreparable harm to Client and that damages at law may be

inadequate.  Manager therefore agrees

that in the event of any breach or threatened breach of the provisions of this

Exhibit 5A by Manager, Client shall be entitled to preliminary and

permanent injunctive relief, without bond, in addition to any other remedy

which it may have at law or in equity. 

The parties hereby specifically agree that, upon establishment of a

breach or anticipatory breach of this Exhibit 5A, Client shall be entitled

to specific performance of the provisions of this Exhibit 5A, and in the

event that Client brings any action for specific performance of this

Exhibit 5A Manager waives any objection or right to object to the

suitability or availability of specific performance as a remedy for breach of

this Exhibit 5A, including without limitation any objection based on the

adequacy of damages or the irreparable nature of the injury claimed by

Client.  The foregoing, however, shall

not be deemed to constitute a waiver by Manager of its right to participate in

the litigation, to dispute whether a breach of this Exhibit 5A occurred or

whether the scope of the equitable relief requested by Client is appropriate

and consistent with the strict enforcement of the provisions of this

Exhibit 5A.




 




45





























 




Exhibit 7A




One Time Start Up Cost Reimbursement for Substantial

Net Acreage Reduction  




 




	

   


  	

   


  	

  Election

  Date Periods


  
	

  Net Acreage Reduction:


  	

   


  	

  1/1/98

  - 6/30/98


  	

   


  	

  7/1/98

  - 12/31/98


  	

   


  	

  1/1/99

  - 6/30/99


  
	

  100%


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has been

  filed separately with the Securities and Exchange Commission]


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  
	

  90% to <100%


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  80% to <90%


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  70% to <80%


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  60% to <70%


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  





 




46





























 




	

  50% to <60%


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  	

   


  	

  [Confidential Treatment for the

  omitted material contained in the entire column has been requested and has

  been filed separately with the Securities and Exchange Commission]


  
	

  40% to <50%


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  30% to <40%


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  





 




47