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This Option has not been registered under the Securities Act of 1933, as amended, or any applicable state securities laws, and may not be sold or transferred unless such sale or transfer is in accordance with the registration requirements of such Act and applicable laws or some other exemption from the registration requirements of such Act and applicable laws is available with respect thereto.  This Option is also subject to the transfer restrictions set forth herein.

 

NON-STATUTORY STOCK OPTION AGREEMENT

 

THIS OPTION GRANT AGREEMENT (the "Agreement"), dated as of March 15, 2006 (the "Grant Date"), is entered into between RUBINCON VENTURES INC., a Delaware corporation (the "Company"), and MARTIN MOSKOVITS (the "Option-holder").

WHEREAS, the Option-holder is an independent contractor of the Company;

WHEREAS, the Company desires to afford the Option-holder an opportunity to purchase shares of common stock ("Common Stock") in the Company as provided in this Agreement, effective as of the Grant Date; and

WHEREAS, the Board of Directors of the Company has approved the issuance of this option to Option-holder.

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto have agreed, and do hereby agree, as follows:

1.Issuance.

This option is issued by the Company as of the Grant Date.

2.Grant of Option, Option Price and Term.

(a)Grant.  Subject to the terms and conditions of this Agreement, the Company hereby grants to the Option-holder, as a matter of separate agreement and not in lieu of salary or any other compensation for services, the right and option ("Option") to purchase one hundred thousand (100,000) shares of Common Stock of the Company ("Option Shares").  This Option is intended to be neither an "incentive stock option" as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), nor an option granted pursuant to an "employee stock purchase plan" as defined in Section 423 of the Code.  

(b)Option Price.  For each of the Option Shares purchased, upon purchase thereof the Option-holder shall pay to the Company one dollar ($1.00) (the "Option Price") which the parties agree represents the fair market value of the Option Shares on the Grant Date.  Accordingly, the aggregate Option Price to purchase all of the Option Shares subject to the Option granted hereunder is $100,000 (the "Aggregate Option Price"). 

(c)No Fractional Shares.  The Company shall not be required to issue any fractional Option Shares hereunder.  The fair market value of any fractional Option Shares to be issued to the Option-holder upon exercise of an Option issued under this Agreement shall be paid by the Company to the Option-holder in cash.

(d)Option Term.  The term of the Option granted hereunder shall be a period of five (5) years from the Grant Date (the "Option Period").  The termination of the Option Period shall result in the termination and cancellation of such Option.  In no event shall the Option be exercisable at any time after the expiration of the Option Period.

3.Vesting.

The Options granted herein shall vest in accordance with the Schedule attached hereto.

4.Exercise of Option.

a)Exercise for Cash

The vested portion of this Option may be exercised, in whole at any time or in part from time to time, commencing March 15, 2006, and prior to 5:00 P.M., P.S.T., on March 14, 2011, by the Option-holder by the surrender of this Option (with the subscription form at the end hereof duly executed) to the Company at its principal office, together with proper payment of the Option Price times the number of shares of Common Stock to be received.  Payment for Option Shares shall be made by certified or official bank check payable to the order of the Company or if applicable, without cash pursuant to a cashless net exercise.  If this Option is exercised in part, this Option must be exercised for a number of whole shares of the Common Stock, and the Option-holder is entitled to receive a new Option covering the Option Shares which have not been exercised.  Upon such surrender of this Option the Company will (a) issue a certificate or certificates in the name of the Option-holder for the largest number of whole shares of the Common Stock to which the Option-holder shall be entitled and, if this Option is exercised in whole, in lieu of any fractional share of the Common Stock to which the Option-holder shall be entitled, pay to the Option-holder cash in an amount equal to the fair value of such fractional share (determined in such reasonable manner as the Board of Directors of the Company shall determine), and (b) deliver the other securities and properties receivable upon the exercise of this Option, or the proportionate part thereof if this Option is exercised in part, pursuant to the provisions of this Option.

b)Cashless Net Exercise

At the Company's option, in lieu of exercising this Option in the manner set forth in paragraph 4(a) above, this Option may be exercised, in whole or in part, by surrender of the Option without payment of any other consideration, commission or remuneration, by execution of the cashless exercise subscription form (at the end hereof, duly executed).  The number of shares to be issued in exchange for the Option will be computed by subtracting the Option Exercise Price from either (i) the last sale price of the Common Stock on the date of receipt of the cashless exercise subscription form, or (ii) the most recent negotiated value used in connection with any sale of the Company's securities or in connection with any business combination involving the Company, and multiplying that amount by the number of shares represented by the Option, and dividing by the last sale price as of the same date.  If this Option is exercised in whole, in lieu of any fractional share of the Common Stock to which the Option-holder shall be entitled, the Company shall pay to the Option-holder cash in an amount equal to the fair value of such fractional share (determined in such reasonable manner as the Board of Directors of the Company shall determine).  If this Option is exercised in part, this Option must be exercised for a number of whole shares of the Common Stock, and the Option-holder is entitled to receive a new Option covering the Option Shares which have not been exercised.

5.Reservation of Option Shares.

The Company agrees that, prior to the expiration of this Option, the Company will at all times have authorized and in reserve, and will keep available, solely for issuance or delivery upon the exercise of this Option, the shares of the Common Stock and other securities and properties as from time to time shall be receivable upon the exercise of this Option, free and clear of all restrictions on sale or transfer (except for applicable state or federal securities laws restrictions) and free and clear of all pre-emptive rights.

 

6.Anti-Dilution Provisions.

a)If, at any time or from time to time after the date of this Option, the Company shall issue or distribute (for no consideration) to the holders of shares of Common Stock evidences of its indebtedness, any other securities of the Company or any cash, property or other assets (excluding a subdivision, combination or reclassification, or dividend or distribution payable in shares of Common Stock, referred to in Subsection 6(b), and also excluding cash dividends or cash distributions paid out of net profits legally available therefor if the full amount thereof, together with the value of other dividends and distributions made substantially concurrently therewith or pursuant to a plan which includes payment thereof, is equivalent to not more than 5% of the Company's net worth) (any such non-excluded event being herein called a "Special Dividend"), the Option Price shall be adjusted by multiplying the Option Price then in effect by a fraction, the numerator of which shall be the then current market price of the Common Stock (defined as the average for the ten consecutive business days immediately prior to the record date of the daily closing price of the Common Stock as reported by the principal exchange or market on which the Common Stock is listed) less the fair market value (as determined by the Company's Board of Directors) of the evidences of indebtedness, securities or property, or other assets issued or distributed in such Special Dividend applicable to one share of Common Stock and the denominator of which shall be such then current market price per share of Common Stock.  An adjustment made pursuant to this Subsection 6(a) shall become effective immediately after the record date of any such Special Dividend.

 

b)In case the Company shall hereafter (i) pay a dividend or make a distribution on its capital stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares or (iv) issue by reclassification of its Common Stock any shares of capital stock of the Company, the Option Price shall be adjusted so that the Option-holder of this Option upon the exercise hereof shall be entitled to receive the number of shares of Common Stock or other capital stock of the Company which he would have owned had he exercised his Options immediately prior thereto.  An adjustment made pursuant to this Subsection 6(b) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or recapitalization.  If, as a result of an adjustment made pursuant to this Subsection 6(b), the Option-holder of any Option thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Company, the Board of Directors (whose determination shall be conclusive and shall be described in a written notice to the Option-holder of any Option promptly after such adjustment) shall reasonably determine the allocation of the adjusted Option Price between or among shares of such classes or capital stock or shares of Common Stock and other capital stock.

	In case of any capital reorganization or reclassification, or any consolidation or merger to which the Company is a party other than a merger or consolidation in which the Company is the continuing corporation, or in case of any sale or conveyance to another entity of the property of the Company as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Company), the Option-holder of this Option shall have the right thereafter to convert such Option into the kind and amount of securities, cash or other property which he would have owned or have been entitled to receive immediately after such reorganization, reclassification, consolidation, merger, statutory exchange, sale or conveyance had this Option been converted immediately prior to the effective date of such reorganization, reclassification, consolidation, merger, statutory exchange, sale or conveyance and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Section 6 with respect to the rights and interests thereafter of the Option-holder to the end that the provisions set forth in this Section 6 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of this Option.  The above provisions of this Subsection 6(c) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, statutory exchanges, sales or conveyances.  The issuer of any shares of stock or other securities or property thereafter deliverable on the conversion of this Option shall be responsible for all of the agreements and obligations of the Company hereunder.  Notice of any such reorganization, reclassification, consolidation, merger, statutory exchange, sale or conveyance and of said provisions so proposed to be made, shall be mailed to the Option-holders of the Options not less than 10 days prior to such event.  A sale of all or substantially all of the assets of the Company for a consideration consisting primarily of securities shall be deemed a consolidation or merger for the foregoing purposes.

(d)Notwithstanding anything herein to the contrary, the Company  may, in its sole discretion, accelerate the timing of the exercise provisions of this Option in the event of (i) the adoption of a plan of merger or consolidation under which all the shares of capital stock of the Company would be eliminated, (ii) a sale of all or substantially all of the Company's assets or shares of capital stock, or (iii) a change of control wherein the stockholders of the Company immediately prior to the transaction own less than 50% of the outstanding stock of the Company immediately after the transaction.    Alternatively, the Company may, in its sole discretion, cancel all or any portion of this Option upon any of the foregoing events and provide for the payment to the Option-holder in cash of an amount equal to the difference between the Option Price and the price of a share of Common Stock, as determined in good faith by the Board of Directors of the Company, at the close of business on the date of such event, multiplied by the number of shares of Common Stock subject to this Option that are so canceled.

(e)Upon the dissolution or liquidation of the Company other than in connection with a transaction to which another provision or provisions of this Section 6 is/are applicable, this Option shall terminate and become null and void; provided, however, that if the rights of the Option-holder under this Option has not otherwise terminated and expired, the Option-holder shall have the right immediately prior to such dissolution or liquidation to exercise the vested portion of this Option to the extent that the right to purchase shares under this Option has become exercisable as of the date immediately prior to such dissolution or liquidation.

f)No adjustment in the Option Exercise Price shall be required unless such adjustment would require an increase or decrease of at least $0.05 per share of Common Stock; provided, however, that any adjustments which by reason of this Subsection 6(f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; provided further, however, that adjustments shall be required and made in accordance with the provisions of this Section 6 (other than this Subsection 6(f)) not later than such time as may be required in order to preserve the tax-free nature of the issuance to the Option-holder of this Option.  All calculations under this Section 6 shall be made to the nearest cent.  Anything in this Section 6 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Option Price, in addition to those required by this Section 6, as it in its discretion shall deem to be advisable in order that any stock dividend, subdivision of shares or distribution of rights to purchase stock or securities convertible or exchangeable for stock hereafter made by the Company to its shareholders shall not be taxable.

g)Whenever the Option Price is adjusted as provided in this Section 6 and upon any modification of the rights of the Option-holder in accordance with this Section 6, the Board of Directors of the Company shall prepare a certificate setting forth the Option Price and the number of Option Shares after such adjustment or the effect of such modification, a brief statement of the facts requiring such adjustment or modification and the manner of computing the same and cause copies of such certificate to be mailed to the Option-holder.

h)If the Board of Directors of the Company shall declare any dividend or other distribution with respect to the Common Stock, other than a cash distribution out of earned surplus, the Company shall mail notice thereof to the Option-holder not less than 10 days prior to the record date fixed for determining shareholders entitled to participate in such dividend or other distribution.

7.Fully Paid Stock, Taxes.

The Company agrees that the shares of the Common Stock represented by each and every certificate for Option Shares delivered on the exercise of this Option shall, at the time of such delivery, be validly issued and outstanding, fully paid and nonassessable, and not subject to pre-emptive rights, and the Company will take all such actions as may be necessary to assure that the par value or stated value, if any, per share of the Common Stock is at all times equal to or less than the then Option Price.  The Company further covenants and agrees that it will pay, when due and payable, any and all Federal and state stamp, original issue or similar taxes which may be payable in respect of the issue of any Option Share or certificate therefor.

8.Transferability.

Subject to compliance with federal and applicable state securities laws and the provisions of Section 14, the Option-holder may, prior to exercise or expiration thereof, surrender such Option at the principal office of the Company for transfer or exchange. Within a reasonable time after notice to the Company from a registered Option-holder of its intention to make such exchange and without expense (other than transfer taxes, if any) to such registered Option-holder, the Company shall issue in exchange therefor another Option or Options, in such denominations as requested by the registered Option-holder, for the same aggregate number of Option Shares so surrendered and containing the same provisions and subject to the same terms and conditions as the Option(s) so surrendered.  The Company may treat as the registered Option-holder of this Option as his or its name appears on the Company's books at any time as the Option-holder for all purposes.  All Options issued upon the transfer or assignment of this Option will be dated the same date as this Option, and all rights of the transferee Option-holder thereof shall be identical to those of the original Option-holder.

9.Loss, etc., of Option.

Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Option, and of indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon surrender and cancellation of this Option, if mutilated, the Company shall execute and deliver to the Option-holder a new Option of like date, tenor and denomination.

10.Option-holder Not Shareholder.

Except as otherwise provided herein, this Option does not confer upon the Option-holder any right to vote or to consent to or receive notice as a shareholder of the Company, as such, in respect of any matters whatsoever, or any other rights or liabilities as a shareholder, prior to the exercise hereof.

11.Communication.

Any notice or other communication shall be effective and shall be deemed to have been given if, the same is in writing, (i) and is personally delivered, (ii) five days after such written material is mailed by first-class mail, postage prepaid, or (iii) one day after such written material is sent by a nationally recognized overnight courier, addressed to:

a)the Company at 1313 East Maple Street, Suite 223, Bellingham, WA 98225. Attn:  President or such other address as the Company has designated in writing to the Option-holder; or

	the Option-holder at 1431 Portesuello, Santa Barbara, CA 93105, or such other address as the Option-holder has designated in writing to the Company.

12.No Disclosure Rights.

None of the Company or any of its affiliates shall have a duty or obligation to affirmatively disclose to the Option-holder or a representative of Option-holder, and the Option-holder or a representative shall have no right to be advised of, any material information regarding the Company or any of its affiliates at any time prior to, upon or in connection with the exercise of an Option or the Company's purchase of Option Shares in accordance with the terms of this Agreement.

13.Headings.

The headings of this Option have been inserted as a matter of convenience and shall not affect the construction hereof.

14.Withholding.  

The Option-holder acknowledges that, upon any exercise of this Option, the Company shall have the right to require the Option-holder to pay to the Company an amount equal to the amount the Company is required to withhold as a result of such exercise for federal and state income tax purposes.

15.Applicable Law.

This Option shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof.

16.Securities Law Compliance.

The exercise of all or any parts of this Option shall only be effective at such time as counsel to the Company shall have determined that the issuance and delivery of Common Stock pursuant to such exercise will not violate any state or federal securities or other laws.  The Option-holder may be required by the Company, as a condition of the effectiveness of any exercise of this Option, to agree in writing that all Common Stock to be acquired pursuant to such exercise shall be held, until such time that such Common Stock is registered or exempt from registration and freely tradable under applicable state and federal securities laws, for Option-holder's own account without a view to any further distribution thereof, that the certificates for such Option Shares shall bear an appropriate legend to that effect and that such Option Shares will be not transferred or disposed of except in compliance with applicable state and federal securities laws.

17.Nontransferability.  

Except as otherwise agreed to by the Company, during the lifetime of Option-holder, this Option shall be exercisable only by Option-holder or by the Option-holder's guardian or other legal representative, and shall not be assignable or transferable by Option-holder, in whole or in part, other than by will or by the laws of descent and distribution. Notwithstanding any other Section of this Agreement, any such attempted sale, assignment, conveyance, gift, pledge, hypothecation or transfer shall be null and void and shall nullify such Option immediately.  

18.  Scope of Agreement.  

This Agreement shall bind and inure to the benefit of the Company and its successors and assigns and Option-holder and any successor or successors of Option-holder permitted by Section 17 above.

19.Market-Stand-Off Agreement.

The Option-holder agrees (and the Option-holder shall cause any holder of the Option Shares who receives his or her Option Shares pursuant to a private transfer from the Option-holder to agree) that the Option-holder shall not sell or otherwise transfer or dispose of any Option Shares held by such Option-holder (other than any Option Shares concurrently being registered) for 180 days or such other period specified by the underwriters of the Option Shares, or other class of securities of the Company being registered, not to exceed twelve months following the effective date of a registration statement of the Company filed under the Securities Act, excluding Form S-8 and Form S-4 and other non-applicable forms.  The Option-holder shall enter into such written agreement(s) as shall be requested by the Company which are consistent with the foregoing or which are necessary to given effect thereto.

20.Changes in Company's Capital or Organizational Structure.

The existence of the Option shall not affect in any way the right or authority of the Company or its members to make or authorize any or all adjustments, recapitalizations, reclassifications, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any class of interests in the Company or affecting the Option Shares or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other act or proceeding, whether of a similar character or otherwise.  

21.Entire Agreement.

This Agreement constitutes the entire obligation of the parties hereto with respect to the subject matter of this Agreement and shall supersede any prior expressions of intent or understanding with respect to such subject matter.

22.Amendment.

Any amendment to this Agreement shall be in writing and signed on behalf of the Company, and if required pursuant to this Agreement, by Option-holder.

23.Waiver; Cumulative Rights.

The failure or delay of either party hereto to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing.  Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

24.Counterparts.

This Agreement may be signed in two (2) counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument. 

 
25.Headings, Gender and Number.

The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.  Common nouns and pronouns shall be deemed to refer to the masculine, feminine, neuter, singular and plural, as the context so requires.

26.Severability.

If any one or more of the provisions of this Agreement shall be held by a court or arbitration tribunal of competent jurisdiction or other authority to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby; such court, arbitration tribunal or other authority is hereby authorized and directed to modify or amend the invalid, illegal or unenforceable provision to the minimum extent necessary to render it valid and enforceable and to achieve as fully as lawful the intention of the parties in agreeing to such provision, and such provision, as so modified or amended, shall be valid and binding upon the parties.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Option-holder has hereunto set his hand, all as of the day and year first above written.

RUBINCON VENTURES INC.

a Delaware corporation

By:/s/Guy Peckham

Its:/s/President

 

OPTION-HOLDER:

 

By:/s/ Martin Moskovits

Martin Moskovits

 

VESTING

SCHEDULE

 

Option-holder's Options shall vest and become exercisable in accordance with the following terms:

25,000 of the options granted to Option-holder under this Non-Statutory Stock Option Agreement (the "Agreement") by the Company shall vest and become exercisable immediately on the Grant Date under the Agreement.

75,000 of the options granted to Option-holder under this Agreement by the Company shall vest and become exercisable upon the closing by the Company of a Nano Technology Acquisition that Option-holder was instrumental in identifying for the Company.  For purposes of this Agreement, a "Nanotechnology Acquisition" shall mean the acquisition by the Company of a company, a division or line of business of a company, the purchase of assets or intellectual property from a person or company, or the investment in a research and development project, each involving nanotechnology.EXECUTIVE RETENTION AGREEMENT

RETENTION AGREEMENT

This RETENTION AGREEMENT (this "Agreement") is made and entered into this 21st day of March, 2006 by RAYONIER INC., a North Carolina corporation having its principal office at 50 North Laura Street, Jacksonville, Florida (the "Company"), and PAUL G. BOYNTON (the "Executive").

W I T N E S S E T H

WHEREAS, the Executive has been and continues to be employed by the Company as a senior executive and has made and is expected to continue to make major contributions to the business of the Company; and

WHEREAS, in connection with the Company's conversion to a real estate investment trust as of January 1, 2004, some of the Company's business operations were transferred to one or more operating subsidiaries (as defined below, each an "Operating Subsidiary"); and

WHEREAS, the Executive would be eligible for certain payments and benefits under the Rayonier Inc.  Executive Severance Pay Plan (the "Executive Severance Plan"), in the event of certain terminations of employment in the event of a change in control of the Company which benefits would not be available to Executive were there a termination of his employment in connection with a disposition or change in control of an Operating Subsidiary; and

WHEREAS, the Company desires to encourage the Executive to remain as an employee of the Company without distraction in circumstances arising from the possibility of a Disposition (as defined below) and to establish certain minimum severance benefits in the event of a termination of his employment in connection with a Disposition in an amount measured by the payments he would have received under the Executive Severance Plan were he entitled to benefits thereunder; and

WHEREAS, the parties entered into a Retention Agreement effective as of December 31, 2003 (the "2003 Agreement") providing for such severance benefits; and 

WHEREAS, the 2003 Agreement will expire by its terms later this year and the parties now wish to extend and amend the provisions of the 2003 Agreement by replacing it with this Agreement. 

NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the Company and the Executive agree as follows:

1.Certain Defined Terms.  Capitalized terms used herein and not defined shall have the meanings set forth in the Executive Severance Plan.  The following terms shall have the following meanings when used in this Agreement with initial capital letters:

 "Board" means the Board of Directors of the Company.

"Cause" and "Good Reason" have the same meaning as in the Executive Severance Plan except that: (a) the terms shall be applied to the employer of the Executive at the time of the applicable Termination or Qualifying Post-Disposition Termination, who may be an Operating Subsidiary or a Successor; and (b) "Disposition" shall be substituted for "Change in Control" in the definition of Good Reason.

"Company Affiliate" means any person in control of or under common control with or controlled by the Company

"Disposition" means the closing during the Term of (i) a sale or other disposition of all or substantially all of the assets of an Operating Subsidiary, (ii) a sale of a controlling interest in an Operating Subsidiary, (iii) a merger or consolidation of the Company or an Operating Subsidiary after which neither the Company nor a Company Affiliate retains a majority of the voting power in the surviving corporation, or (iv) any combination, contribution, sale or other transaction following which neither the Company nor a Company Affiliate holds a controlling interest in the entity holding the assets of an Operating Subsidiary; in the case of (i) or (ii) to a person other than a Company Affiliate.  

"Operating Subsidiary" means any wholly-owned corporation, limited liability company or operating unit of the Company, whether or not organized as a separate entity under state law. 

"Qualifying Post-Disposition Termination" means a termination of the Executive's employment by the Successor as described in Section 3(c) prior to the twelve (12) month anniversary of the Disposition where there was no prior Termination.

"Successor" means, following a Disposition, the subject Operating Subsidiary or controlling owner thereof, or any person or entity having taken ownership or control of substantially all of the assets of the subject Operating Subsidiary.

"Termination" means the termination of the Executive's employment with the Company, an Operating Subsidiary or any Company Affiliate during the Term under circumstances where the Executive has not been offered a substantially similar position with the Successor.

2.Term of Agreement.  This Agreement shall commence as of March 21, 2006, and shall continue in effect until December 31, 2009 (the "Term").  Upon expiration of the Term, this Agreement shall lapse and be of no further effect; provided that, if at the expiration of the Term:  (a) the Executive shall be receiving or entitled to receive Retention Severance Benefits (as defined in Section 3(a)) as a result of a Disposition, or (b) a Disposition shall have occurred but the period of time for a Qualifying Post-Disposition Termination shall not have lapsed, or (c) negotiations are in progress that conclude with the closing of a Disposition within six (6) months of the expiration of the Term; then this Agreement, and for all purposes hereunder the Term, shall continue in effect until all payments of Retention Severance Benefits due as a result of such Disposition shall have been made.

3.Available Benefits. 

(a)Retention Severance Benefits.  In the event of a Termination in connection with a Disposition or a Qualifying Post-Disposition Termination, the Executive shall be entitled to an amount equal to the Separation Benefits and Benefits Continuation Amounts calculated in the manner provided for in the Executive Severance Plan and, except as otherwise provided in this Agreement, payable as provided therein (collectively the "Retention Severance Benefits").       

(b)Coordination with Executive Severance Plan.  Should the Executive at any time become entitled to benefits under the Executive Severance Plan, any amounts payable under Sections 3(a) or 3(c) shall reduce on a dollar-for-dollar basis the amounts to which the Executive is entitled thereunder, but shall be deemed to have been paid pursuant thereto for all purposes.  If the Executive Severance Plan terminates for any reason during the Term or otherwise while amounts are due to Executive hereunder, the terms of the Executive Severance Plan as in effect immediately prior to such termination shall be deemed incorporated herein by reference to the extent applicable hereto.

(c)Qualifying Post-Disposition Termination.  If a Termination has not taken place because the Executive has been offered employment by the Successor and Executive has accepted such employment, then if the employment of the Executive by the Successor is terminated within twelve (12) months of the date of the Disposition (by the Executive for Good Reason or by the Successor other than for Cause), the Company shall pay to the Executive the Retention Severance Benefits as if a Termination had taken place on the date of the Disposition.

(d)Qualifying Post-Disposition Payment.  If, at the request of the Company, the Executive is actively involved in completing a Disposition of an Operating Subsidiary, then upon the successful closing of such Disposition the Company shall pay to the Executive an amount, determined in the sole discretion of the Company, equal to not less than 80% nor more than 120% of the Retention Severance Benefits, calculated as if a Termination had taken place at the closing of the Disposition.

(e)No Gross-up.  Notwithstanding the provisions of any other plan or agreement of the Company, payments made pursuant to this Section 3 shall not be grossed-up for any tax or other amount, unless and to the extent the amounts paid are treated as Separation Benefits or Benefits Continuation Amounts as provided in Section 3(b) and such amounts would otherwise have been subject to gross-up under the provisions of Section 7 of the Executive Severance Plan.

(f)Time of Payment.  Notwithstanding any other provision of this Agreement or of the Executive Severance Plan, any payment due to Executive as a result of a Termination or a Qualifying Post-Disposition Termination shall not be paid prior to the time such payment can be paid to a "specified employee" under Section 409A of the Internal Revenue Code of 1986, as amended and in effect at the time and any successor thereto (together with the applicable regulations thereunder, the "Code"); provided that, under present law, this paragraph shall only apply if at such time Executive is considered a "specified employee" as such term is defined in Code Section 409A(a)(2)(B).  In such circumstance, payment would be made as soon as practicable after the first day of the seventh month following the date of Executive's termination of employment (or earlier upon the death of the Executive).

4.Impact of Disposition on Outstanding Equity Awards.  In the event a Disposition results in the Executive no longer being an employee of the Company, an Operating Subsidiary or a Company Affiliate, all of Executive's outstanding stock options under the Rayonier 1994 Incentive Stock Plan and the 2004 Rayonier Incentive Stock and Management Bonus Plan shall immediately vest and the Executive shall have a period equal to the lesser of (i) five (5) years from such vesting or (ii) as to each individual stock option grant, the remaining term of the options, in which to exercise the options.  In addition, the restrictions on vesting of any restricted stock previously granted by the Company to the Executive shall be removed and such restricted stock shall immediately vest.  The Executive shall remain eligible for awards, if any, which become payable under the Rayonier Performance Share Award Program, including the 2004, 2005 and 2006 Class Awards and any subsequent Class Awards in which the Executive may be selected to participate to the same extent as if the Executive were an active employee of the Company.  In the event of a Disposition during the Term, this Section 4 shall remain in full force and effect until the earlier of (a) Executive's having received or exercised all subject equity awards or (b) five (5) years from the date of the accelerated vesting of options under this Section 4.

5.Termination for Cause.  If prior to a Disposition the employment of the Executive is terminated (i) for Cause or otherwise by the Company or an Operating Subsidiary; or (ii) by reason of the Executive's death or Disability, this Agreement shall lapse and be of no further effect, and no benefits or other payments shall be payable hereunder.  Nothing herein shall be deemed to be a contract of employment or be deemed to entitle Executive to continued employment by the Company or any Company Affiliate.

6.Release.  No amount of the Retention Severance Benefits will be provided under this Agreement unless the Executive executes and delivers to the Company a mutual release, satisfactory to the Company, in which the Executive discharges and releases the Company and the Company's directors, officers, employees, and employee benefit plans from all claims (other than for benefits to which the Executive is entitled under this Agreement or any Company employee benefit plan) arising out of the Executive's employment or Termination and the Company discharges and releases the Executive from any and all claims arising out of the Executive's employment or termination of employment with the Company.

7.Confidentiality.  Prior to and during the Term, the Company has disclosed and will disclose to the Executive its confidential or proprietary information (as defined in this Section 7) to the extent necessary for the Executive to carry out his duties on behalf of the Company.  The Executive hereby covenants and agrees that he will not, without the prior written consent of the Board, during the Term or thereafter disclose to any person not employed by the Company (other than in the good faith performance of his duties on behalf of the Company), or use in connection with engaging in competition with the Company, any confidential or proprietary information of the Company.  For purposes of this Agreement, the term "confidential or proprietary information" will include all information of any nature and in any form that is owned by the Company and that is not publicly available or generally known to persons engaged in businesses similar or related to those of the Company.  Confidential information will include, without limitation, the Company's financial matters, customers, employees, industry contracts, and all other secrets and all other information of a confidential or proprietary nature.  The foregoing obligations imposed by this Section 7 will cease if such confidential or proprietary information will have become, through no fault of the Executive, generally known to the public or the Executive is required by law to make disclosure (after giving the Company notice and an opportunity to contest such requirement).

8.Post-termination Assistance.  The Executive agrees that after his employment with the Company has terminated, he will provide, upon reasonable notice, such information and assistance to the Company as may reasonably be requested by the Company in connection with any audit, governmental investigation or litigation in which it or any of its affiliates is or may become a party; provided, however, that (i) the Company agrees to reimburse the Executive for any related out-of-pocket expenses, including travel expenses, and to pay the Executive reasonable compensation for his time and (ii) any such assistance may not unreasonably interfere with the then-current employment of the Executive. 

9.Specific Enforceability.  The Executive acknowledges and agrees that the remedy at law available to the Company for breach of any of his post-termination obligations under Sections 7 and 8 of this Agreement would be inadequate and that damages flowing from such a breach may not readily be susceptible to being measured in monetary terms.  Accordingly, the Executive acknowledges, consents and agrees that, in addition to any other rights or remedies which the Company may have at law, in equity or under this Agreement, upon adequate proof of his violation of any such provision of this Agreement, the Company will be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual damage.

10.Taxes.  The Company may withhold from any amounts payable under this Agreement all federal, state, local or foreign taxes as the Company may be required to withhold pursuant to any law, regulation or ruling.  The Executive shall bear all expense of, and be solely responsible for, all federal, state, local or foreign taxes due with respect to any payments or benefits received pursuant to this Agreement.

11.Survival.  The provisions of Sections 7, 8 and 9 shall survive the termination of this Agreement.

12.Notices.  For all purposes of this Agreement, all communications, including, without limitation, notices, consents, requests, or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand-delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or two (2) business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or one (1) business day after having been sent by a nationally recognized overnight courier service, addressed to the Company (to the attention of the General Counsel of the Company) at its principal executive office and to the Executive at his principal residence, or to such other address as either party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.

13.Governing Law.  The validity, interpretation, construction, and performance of this Agreement shall be governed by and construed in accordance with the substantive laws of the State of Florida, without giving effect to the principles of conflict of laws of such State, to the extent not preempted by applicable federal law.

14.Arbitration.  Any controversy, dispute, or claim arising out of, in connection with, or in relation to, the interpretation, performance or breach of this Agreement, including, without limitation, the validity, scope, and enforceability of this Section, shall be settled by binding arbitration conducted in Jacksonville, Florida in accordance with the then existing rules for the arbitration of commercial disputes of the American Arbitration Association, or any successor organization.  Judgment upon any award rendered by the arbitrator(s) may be entered by the State or Federal Court having jurisdiction thereof.  Any of the parties may demand arbitration by written notice to the other and to the American Arbitration Association ("Demand for Arbitration").  Any Demand for Arbitration pursuant to this Section 14 shall be made within 180 days from the date that the dispute upon which the demand is based arose.  The arbitrators may only award compensatory damages and are specifically not empowered to award punitive damages.  The parties hereto intend that this Agreement to arbitrate be valid, enforceable and irrevocable without further consent or action by the parties.  

15.Entire Agreement.  The terms of this Agreement are intended by the parties to be the final expression of their agreement with respect to the subject matter hereof and may not be contradicted by evidence of any prior or contemporaneous agreement (including, but not limited to, the 2003 Agreement which is hereby terminated effective as of the date hereof).  Except as specifically provided for herein, any such prior or contemporaneous agreement shall be deemed superseded by this Agreement and shall be considered by the parties hereto as null and void.  Except as specifically provided in Section 3(b) hereof, nothing in this Agreement shall be interpreted to modify the rights and benefits to which Executive may be entitled under the Executive Severance Plan at any time or from time to time, without regard to the existence of this Agreement.  The parties further intend that this Agreement will constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative or other legal proceeding to vary the terms of this Agreement.  In the event of the termination of the Executive Severance Plan, the terms thereof necessary for the calculation of amounts provided for herein shall be deemed incorporated herein by reference for that sole purpose. 

16.Severability.  Any provision of this Agreement that is deemed invalid, illegal or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction.  If any covenant should be deemed invalid, illegal or unenforceable because its scope (including but not limited to term and geographic area) is considered excessive, such covenant will be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable.

17.Waiver.  Failure by either party hereto to insist upon strict adherence to any one or more of the covenants or terms contained herein, on one or more occasions, shall not be construed to be a waiver nor will it deprive such party of the right to require strict compliance with the same thereafter.

18.Amendments.  No amendments hereto, or waivers or releases of obligations or liabilities hereunder, shall be effective unless agreed to in writing by all parties hereto.

19.Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed effective as of the date first written above.

"Company"

RAYONIER INC.

By:_____________________________

      

      W. Edwin Frazier, III

      Senior Vice President, Administration

 

"Executive"

  _____________________________

  Paul G. Boynton

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