Document:

RADIATA FORESTRY SERVICES LIMITED
                                 ACN 106 099 941
                                     ("RFS")

                                       AND

                     INTEGRATED FOREST PRODUCTS PTY LIMITED
                                 ACN 52083521966
                                  ("Purchaser")

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                                  PINE LOG SALE
                                    AGREEMENT

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<PAGE>

THIS AGREEMENT is made the             day of

BETWEEN:

RADIATA FORESTRY SERVICES LIMITED 142 Gladstone Street, Fyshwick, 2609, ("RFS")

AND:

THE PARTY NOTED IN ITEM 1 OF THE FIRST SCHEDULE ("Purchaser")

RECITAL:

WHEREAS:

A.    RFS sells Logs produced from plantations in the Australian Capital
      Territory, the State of New South Wales.

B.    The Purchaser operates the Plant.

C.    The Purchaser has agreed to purchase and RFS has agreed to supply Logs on
      the terms set out in this Agreement.

NOW THIS AGREEMENT WITNESSES AS FOLLOWS:

1.    Interpretation

1.1.  In this Agreement, unless the context otherwise requires:

      "Agreement" means this Agreement and the Schedules to it.

      "Annual Volume" means the annual volume of logs specified in Item 2 of the
      First Schedule.

      "Delivered Price Review" means the price review mechanism in the Fourth
      Schedule.

      "Log" means Pinus radiata in Log form as specified in the Second Schedule
      or such other species that the parties may from time to time agree on.

      "Timber Delivery Docket" means the sequentially numbered document issued
      by RFS to the Purchaser that identifies the contractor and logging area
      where the logs have been sourced and the weight and grade of logs and the
      date that the logs are delivered to the Plant.

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                                       3

      "Public Weighbridge Docket" means the document issued at a public
      weighbridge within the meaning of the Trade Measurement Act 1991 of the
      Australian Capital Territory and the ....... Act of NSW that specifies the
      weight of each load of Logs.

      "Mill Door Price" means specified price plus GST.

      "Month" means a calendar month except that, for the purposes of
      calculating the Monthly Volume in Clause 6, the Month of December in any
      Year and Month of January in the next succeeding Year shall be counted
      together as one Month.

      "Monthly Volume" has the meaning given in Clause 6.1.

      "Person" includes a body corporate or politic as well as an individual.

      "Plant" means the timber processing plant operated by the Purchaser and
      located at the address set out in the First Schedule.

      "Purchasers Representative" means the person or persons appointed in
      writing by the Purchaser for the purposes of clause 4 of the Agreement.

      "Schedule" means a schedule to this Agreement.

      "Specified Prices" means the price or prices specified in Third Schedule
      or calculated in accordance with the Forth Schedule and is exclusive of
      GST.

      "Term" means the Term of this Agreement set out in Item 4 of the First
      Schedule

      "Termination Date" means the date set out in Item 5 of the First Schedule

      "Year" means the period of 12 Months beginning on the first day of July.

1.2.  In this Agreement, unless the context otherwise requires, words importing
      the singular shall include the plural.

2.    Purchase and Sale of Logs

2.1.  The Purchaser shall during the Term endeavour to buy and RFS shall
      endeavour to sell the Annual Volume of Logs at the Specified Prices.

2.2.  RFS shall deliver the Logs to the Plant at its own cost and expense during
      the hours and on the days set out in the First Schedule and at the Monthly
      Volume determined under Clause 6. The parties may by agreement vary the
      hours and days for delivery.

3.    Term

3.1.  The Agreement shall commence on the date it bears and shall continue in
      force for the Term unless terminated earlier as set out in clause 14. The
      Term may be extended as contemplated in Clause 9.

4.    Specifications

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                                       4

4.1.  The Logs delivered to the Plant by RFS shall comply with the
      specifications set out in the Second Schedule. Should the Purchasers
      representative or RFS believe that a Log does not meet the specifications
      either party may institute the rejection procedures set out in the Second
      Schedule. If the rejection procedures are not instituted the Log is deemed
      to be accepted.

4.2.  Upon each delivery of a load of Logs to the Plant RFS shall deliver or
      cause to be delivered to the Purchaser a Timber Delivery Docket in
      duplicate showing the weight of the Logs contained in that load. Where the
      load is for fixed length Logs the Timber Delivery Docket shall also show
      the number of Logs in the load.

4.3.  The Purchasers representative (who shall be present at the Plant at the
      delivery times set out in the First Schedule) shall sign the duplicate of
      the Timber Delivery Docket and return it to RFS's haulage operator.

4.4.  The Purchaser may by written notice to RFS request the delivery of Logs of
      a specified length and diameter and RFS shall endeavour to comply with
      that request provided that to do so is consistent with good forest
      management.

5.    Purchase Price and Payment Terms

5.1.  The Purchaser shall pay for the Logs purchased within forty five (30) days
      of the date of the RFS's invoice.

5.2.  RFS will invoice on a 30 day cycle.

5.3.  No reasonable dispute in relation to an invoice shall affect the
      obligation of the Purchaser to pay the invoiced amount as required by
      clause 5.1.

5.4.  If the Purchaser shall fail to pay the invoiced amount by the due date RFS
      may, in addition to any other rights or remedies it has:

      (a)   charge the Purchaser interest at the rate set out in Item 9 of the
            First Schedule; and

      (b)   suspend all further deliveries of Logs to the Purchaser until all
            overdue accounts and interest thereon have been paid.

6.    Monthly Volume and Stumpage

6.1.  The Monthly Volume shall be nine per centum (9%) of the Annual Volume of
      Logs. The Purchaser may vary the Monthly Volume to a maximum of eleven per
      centum (11%) or to a minimum of seven per centum (7%) provided that it
      gives written or verbal notice to RFS specifying the variation by the
      fifteenth (15th) day of the Month preceding the Month whose Monthly Volume
      is to be varied. Subject to clause 6.6 any variation shall have no effect
      to the extent that it may cause the Annual Volume of Logs to be exceeded
      unless agreed in writing by RFS.

6.2.  At the time of giving the notice under clause 6.1 the Purchaser shall also
      give a written or verbal estimate of the Monthly Volume to be purchased in
      the two Months following the Month whose rate is to be increased or
      decreased under clause 6.1.

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                                       5

6.3.  The Purchaser may with the consent in writing of RFS increase the Monthly
      Volume above eleven per centum (11%).

6.4.  The Purchaser shall give written or verbal notice to RFS by the fifteenth
      (15th) day of the preceding Month if it expects that it will be unable to
      purchase a minimum of seven per centum (7%) of the Annual Volume of Logs
      in any Month.

6.5.  Where in any Year the parties agree that the Purchaser will purchase or
      RFS will supply less than the full Annual Volume, RFS or the Purchaser may
      require that the shortfall in volume be carried over to the following Year
      or Years whereupon the Annual Volume for the following Year or Years will
      be adjusted. Any decision by RFS or the Purchaser to carry over or deny
      the carry over of unused volume shall not be subject to the dispute
      resolution process set out in clause 11.

6.6.  If the parties agree in writing to bring forward Log volume from the next
      Year RFS or the Purchaser may require that volume brought forward under
      this clause be deducted from the Annual Volume for that next Year. Any
      such decision by RFS or the Purchaser shall not be subject to the dispute
      resolution process set out in clause 11.

7.    Suspension of Agreement

7.1.  Where a party is reasonably prevented from fulfilling its obligations,
      that is to say for RFS to make Logs available or for the Purchaser to
      purchase Logs, under this Agreement, by reason of the causes set out in
      subclauses (a) to (e) then either party may invoke the provisions of
      clause 7.2.

      (a)   damage or destruction of forests or any part thereof due to tempest,
            fire, flood, disease or other cause;

      (b)   a strike or lockout (including action in the nature of a strike or
            lockout) provided that the lockout was not caused by the Purchaser;

      (c)   damage to or major breakdown of the Purchaser's Plant;

      (d)   war or other catastrophe; or

      (e)   any other cause beyond the reasonable control of the Purchaser or of
            RFS.

7.2.  To the extent that a party is reasonably prevented from fulfilling its
      obligations under this Agreement and for so long as the cause or causes
      shall last those obligations shall:

      (a)   be suspended or;

      (b)   be continued, subject to such modification of the Terms of the
            Agreement as the parties agree in writing.

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                                       6

8.    Variation in the Specified Prices

8.1.  The Specified Prices shall on the first day of July each Year (commencing
      on the first day of July 2005) be varied in accordance with the process
      outlined in the Specified Price Review Mechanism in the Fourth Schedule.

      (a)   At any time during the Term either party may by not less than thirty
            (30) days notice in writing to the other party request a meeting to
            conduct a review of the current Specified Prices.

      (b)   The party requesting the meeting shall set out its proposed
            Specified Prices and shall set out changes (since the last review or
            the date of the Agreement if there was no earlier review) in
            relevant costs (including RFS's cost of harvesting and delivering
            Logs, and the Purchaser's costs of milling, processing and marketing
            its timber products and the sale prices of the Purchaser's timber
            products) that it has taken into account in calculating the proposed
            Specified Prices.

      (c)   The party requesting the meeting shall also deliver with the notice
            relevant data in verifiable form that it has used in establishing
            the changes in costs and prices together with any other data that is
            relevant to a review of the Specified Prices. The other party may
            deliver any relevant data in verifiable form to the party requesting
            the meeting provided it is delivered prior to the meeting.

      (d)   In the calculation of the proposed Specified Prices it is relevant
            to take into account changes in industry wide costs and prices of
            those activities and products set out in (b).

8.2.  Upon new Specified Prices being agreed to under either the annual review
      or by application of one party, the parties shall sign a memorandum
      setting out the new Specified Prices.

8.3.  All new Specified Prices shall take effect from the first day of the month
      immediately following that review or such date as otherwise agreed to, and
      payments already made (if any) shall be adjusted to take account of the
      new Specified Prices and implementation date, and the Schedule shall be
      read as referring to those new Specified Prices and date.

9.    Extension of the Agreement

      At any time during the extension review period set out in the First
      Schedule either party may give notice in writing to the other party that
      it desires the Agreement to be extended for such further period and on
      such terms and conditions (including changes in the Schedule) specified in
      the notice. The notice shall operate as an irrevocable offer capable of
      written acceptance for 3 Months after its receipt. The party receiving the
      notice has three (3) Months from the date of receiving the notice to
      accept the request for an extension by service of a written acceptance
      whereupon the Term and the Termination Date shall be extended for the
      period and the terms and conditions of this Agreement shall be varied in
      accordance with the notice as from the date of service of the acceptance.
      If the request for an extension is not accepted in writing within three
      (3) Months the request for an extension will lapse.

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                                       7

10.   Variation of the Annual Volume of Logs

      The parties acknowledge that because of many factors they may wish to vary
      the Annual Volume of Logs and such variation shall be by mutual agreement
      only and a failure to agree shall not be a dispute as contemplated in
      clause 11.

11.   Dispute Resolution

11.1. Unless a party to this Agreement has complied with sub-clauses 11.2 to
      11.4, that party may not commence court proceedings or arbitration
      relating to any dispute arising from this Agreement except where that
      party seeks urgent interlocutory relief in which case that party need not
      comply with this clause before seeking such relief.

11.2. Either party to this Agreement claiming that a dispute with the other has
      arisen under this Agreement shall give written notice to that other party
      designating as its representative in negotiations relating to the dispute
      the person with authority to settle the dispute and the other party shall
      not later than seven (7) days thereafter give notice in writing to the
      other designating as its representative in negotiations relating to the
      dispute a Person with similar authority.

11.3. The designated Persons shall within ten days of the last designation
      required by sub-clause 11.2 seek to resolve the dispute.

11.4. If the dispute is not resolved within the period specified in clause 11.3
      (or within such further period as the designated Persons may agree is
      appropriate) the parties shall within a further 10 days (or within such
      further period as the designated Persons may agree is appropriate) seek to
      agree on a process for resolving the dispute (through means other than
      litigation or arbitration) including:

      (a)   the procedure and timetable for any exchange of documents and other
            information relating to the dispute;

      (b)   procedural rules and a timetable for the conduct of the selected
            mode of proceedings;

      (c)   a procedure for selection and compensation of any neutral Person who
            may be employed by the parties; and

      (d)   whether the parties should seek the assistance of a dispute
            resolution organisation.

11.5. The parties acknowledge that the purpose of any exchange of information or
      documents or the making of any offer of settlement pursuant to this clause
      is to settle the dispute between them. Neither party may use any
      information or documents obtained through the dispute resolution process
      by this clause for any other purpose other than an attempt to settle the
      dispute between them.

11.6. After the expiration of the time established by or agreed under sub clause
      11.4 for agreement on a dispute resolution process, either party may in
      writing terminate the dispute resolution process provided in this clause
      and may then refer the dispute to arbitration or commence court
      proceedings relating to the dispute.

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                                       8

12.   RFS Default

      In the event of RFS committing an act or omission constituting a material
      breach of any obligation required on its part to be performed or observed
      under the Agreement and failing to take action to remedy such default
      within 28 days of delivery of a notice from the Purchaser requiring RFS to
      remedy the breach the Purchaser shall be entitled by notice in writing to
      terminate the Agreement forthwith but without prejudice to any right of
      action or remedy which shall have accrued or which shall accrue thereafter
      in favour of either party.

13.   Purchaser Default

      In the event of the Purchaser:

      (a)   being a company, if it

            (i)   goes into liquidation, otherwise than for the purpose of
                  reconstruction or amalgamation, or

            (ii)  has a receiver, receiver and manager, administrator or
                  provisional liquidator appointed to it or any of its assets,
                  or

            (iii) is subject to any petition presented or proceedings taken or
                  instituted in any Court (which the Purchaser does not oppose)
                  for the compulsory winding up of the Purchaser, or

            (iv)  passes a resolution for winding up; or

            (v)   is subject to the supervision of the Court either voluntarily
                  or otherwise howsoever; or

            (vi)  enters any arrangement or composition for the benefit of
                  creditors or any class of them;

      (b)   suffering any execution against an asset of the Purchaser; or

      (c)   committing any act or omission constituting a material breach of any
            obligation required on its part to be performed or observed under
            the Agreement and failing to take action to remedy such default
            within 28 days of delivery of a notice from RFS requiring the
            Purchaser to remedy the breach;

      THEN RFS shall be entitled by notice in writing to terminate the Agreement
      forthwith but without prejudice to any right of action to remedy which
      shall have accrued or which shall accrue thereafter in favour of either
      party.

14.   Notices

14.1. Any notice to be served on a party under this Agreement may be served by
      delivering it, posting it by prepaid post or transmitting it by facsimile
      to the relevant address specified in the First Schedule.

14.2. Any notice served in accordance with subclause 14.1 shall be deemed to be
      received;

      (a)   in the case of delivery by hand - on the day of delivery.

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                                       9

      (b)   In the case of posting - three days after the date of posting
            whether or not the notice is returned, or

      (c)   In the case of facsimile transmission - upon receipt by the
            transmitting machine of confirmation from the receiving machine that
            the message has been received.

15.   General

15.1. If a provision of this Agreement is void or voidable by either party or
      unenforceable or illegal that provision shall be severed from this
      Agreement and the remainder of this Agreement has full force and effect.

15.2. No amendment to this Agreement shall be effective unless and until
      embodied in writing and signed by each of the parties.

15.3. Failure or neglect by the Purchaser or RFS to enforce at any time any of
      the provisions hereof shall not be construed as nor shall be deemed to be
      a waiver by either the Purchaser or RFS of their rights hereunder nor in
      any way affect the validity of the whole or any part of this Agreement.

15.4. Neither RFS nor the Purchaser shall assign or purport to assign or
      otherwise transfer any of its rights or obligations under this Agreement
      without the prior written consent of the other party, which consent shall
      not be unreasonably withheld. RFS shall be entitled to consider the public
      interest in deciding whether to withhold its consent.

15.5. This Agreement shall be governed by and construed in accordance with the
      laws of the State of New South Wales. The parties submit to the exclusive
      jurisdiction of the Courts of that State in respect of any matters arising
      out of this Agreement.

15.6. Each provision of the Agreement, and each part thereof shall, unless the
      context otherwise necessarily requires it, be read and construed as a
      separate and severable provision, or as a separate and severable part
      thereof, so that if any provision, or part thereof, is void or otherwise
      unenforceable for any reason, then that provision, or part thereof, as the
      case may be, shall be severed and the remainder shall be read and
      construed as if the severable provision of part thereof, had never
      existed.

15.7. The Purchaser and RFS shall in carrying out the Agreement and operating
      the Plant comply with the provisions of the relevant Statues, Regulations
      and By-Laws, and the requirements of any Commonwealth, State, Territory or
      local authority.

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                                       10

EXECUTION

In witness whereof the Parties have hereunto set their hands and seals the day
and the Year first herein before written

EXECUTED by RADIATA
FORESTRY SERVICES LIMITED
ACN 106 099 941
In accordance with Section 127 of The
Corporations Act:

Director                                                    *Director/Secretary

Print Full Name                                             Print Full Name

EXECUTION BY PURCHASER

EXECUTED by INTEGRATED
FOREST PRODUCTS
PTY LIMITED ACN 52083521966
In accordance with Section 127 of The
Corporations Act:

Director                                                    *Director/Secretary

Print Full Name                                             Print Full Name

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                                       11

      FIRST SCHEDULE

1.    PURCHASER

      Name: Integrated Forest Products PTY LTD
      ABN 52083521966
      Address: P.O. Box 120 Mawson ACT 2607

2.    ANNUAL VOLUME OF LOGS

      44,000 cubic metres of sawlogs

3.    PLANT - ADDRESS

      Tralee Street Hume ACT 2620

4.    TERM

      The period commencing on the date of this Agreement and ending on the
      Termination Date

5.    TERMINATION DATE

      30/06/2008

6.    EXTENSION REVIEW PERIOD

      The period between 1st day of July 2007 and the 31st day of December 2007.

7.    DELIVERY OF THE LOGS

      Delivery hours are Monday to Friday between 6.30am and 5.30pm excluding
      public holidays and Rostered Days Off.

8.    ADDRESSES FOR NOTICES

      (a)   Notices for RFS

            Radiata Forestry Services Limited
            142-144 Gladstone Street
            Fyshwick, ACT

            Facsimile: 6280 8044
            Attention: Jim Adams

      (b)   Notice for the Purchaser

            Address: P.O. Box 120 Mawson ACT 2607

            Facsimile: 02 62852654
            Attention: IFP Wood Supply Manager

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                                       12

9.    INTEREST RATE ON OVERDUE ACCOUNTS

      The interest rate payable is two per centum per annum above the highest
      interest rate charged by the Commonwealth Bank of Australian on overdraft
      accounts under one hundred thousand dollars ($100,000.00) on the first day
      that the invoiced amount is overdue

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                                       13

                                 SECOND SCHEDULE

1.    LOG SPECIFICATIONS

(a)   Length

      (i)   Nominal lengths:- 3.95m,4.25m, 4.55m, 4.85m, 5.15m, 5.45m, 5.75m &
            6.05m

      (ii)  RFS will use reasonable endeavours to produce logs to the following
            length mix:

                  -     6.08-6.15, 5.78-5.85 and 5.48-5.55 target lengths
                        minimum 60% by log volume

                  -     4.88-4.95 and 5.18-5.35 target lengths maximum 35% by
                        log volume

                  -     3.98-4.05, 4.28-4.35 and 4.58-4.65 target lengths
                        maximum 5% by log volume.

      (iii) RFS will use reasonable endeavours to produce logs to the following
            diameter mix:

                  -     SEDUB 20-30cm maximum 25% by log volume

                  -     SEDUB 30-40cm minimum 50% by log volume

                  -     SEDUB 44-55cm maximum 25% by log volume.

      (iv)  Where a log exceeds a nominal length the log will be deemed to be
            that nominal length.

      (v)   All logs will be square cut at both ends with no significant fibre
            pull, falling splits or shatter.

(b)   Diameter

      (i)   Minimum small end diameter under bark is 20cm

      (ii)  Maximum large end diameter under bark in all cases shall be 58cm

(c)   Knots

      (i)   All knots will be flush trimmed and measured across the smallest
            diameter

      (ii)  Allowable Knot Size - Sawlog

      Single Green Knot Diameter < the lesser of 30% Mean diam of log OR 10cm

      Single Dead Knot Diameter < the lesser of 25% Mean diam of log OR 10cm

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                                       14

      Green Knot Diameter in Whorl < the lesser of 20% Mean diam of log OR 8cm

      Dead Knot Diameter in Whorl < the lesser of 15% Mean diam of log OR 6cm

(d)   Sweep

      (i)   Sweep will be allowed in one plane only and in one direction. Sweep
            should be uniform over the whole length of the log. Sweep will be
            measured as the deviation of the log from a straight edge over the
            length of the log.

      (ii)  The allowable sweep is:

            Sawlog <25% of Mean diam of log

      (iii) The maximum allowable sweep is 10cm

(e)   Other Defects

      (i)   Bluestain infection is limited to no more than 10% of either end of
            the log

      (ii)  There shall be no sudden changes in diameter

      (iii) There shall be no scaring or dead or burnt sides of a size greater
            than the maximum knot size

      (iv)  End splitting is not acceptable

      (v)   Double heart is not acceptable

      (vi)  Foreign objects, insect damage, rot and shatter are not permitted.
            Shatter is defined as the breakage of fibre within the log.

2.    LOG REJECTION PROCEDURES

(a)   If the Purchaser believes that any load of logs contains logs that do not
      meet the specifications the Purchaser may bring this to the attention of
      RFS, who will inspect the load before it is unloaded and then: -

      (i)   If RFS accepts that the load contains an unacceptable number of logs
            that do not meet the specification the load will be returned to the
            forest.

      (ii)  If the RFS believes that the load contains a smaller number of logs
            that do not meet the specifications the load will be unloaded and
            the Purchaser will accept any logs that meet specifications, but any
            logs that do not meet the specifications will be returned to the
            forest at RFS's cost.

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                                       15

      (iii) Any logs that can be modified to meet specifications may be modified
            by RFS.

      (iv)  The Purchaser will be given full credit for any logs or parts of
            logs that are returned to the forest.

      (v)   RFS and the Purchaser may agree to the downgrading of any load or
            part of a load to a lower class of log if they agree that an
            unacceptable number of the logs do not meet specifications.

(b)   The Purchaser may also bring to the attention of RFS any individual log
      that fails to meet specification and if the Purchaser can identify the
      source of the log and the contractor who delivered the log then:-

      (i)   RFS may instruct the contractor to return the log to the forest or
            to modify the log to meet specification and part of the log may be
            returned to the forest.

      (ii)  The Purchaser will be given full credit for any logs or parts of
            logs that are returned to the forest.

(c)   The Purchaser may refer any decision of RFS on log quality to the dispute
      resolution procedure in clause 14 and the Purchaser will retain any log
      referred for dispute resolution until the dispute is resolved.

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                                       16

      THIRD SCHEDULE

1.    SPECIFIED PRICE

$63.00 per tonne

<PAGE>
                                       17

      FOURTH SCHEDULE

                        Specified Price Review Mechanism

Part 1: Definitions and interpretation

In this schedule unless the context indicates to the contrary:

Estimated Market Price of a product is the average of the monthly wholesale
price received by the Purchaser net to mill of freight for MGP 10 (excluding any
future direct sales of MGP 10 to wall and truss manufacturers) over a 3 month
period prior to the annual review.

Harvest and Haulage Cost means the base cost for harvesting and hauling logs to
the Purchaser over a 3 month period prior to the annual review.

Purchaser's Wages Cost means the average dollar cost per employee (this excludes
salaried and administration staff) over a 3 month period prior to the annual
review.

Base indicator rate for a review means the indicator rate which was the current
indicator rate for the previous review;

Current indicator rate means the indicator rate at the time a review of the
Delivered Price is being conducted;

Indicator means an indicator of a cost item more particularly being an indicator
set out in column 2 of Part 3;

Indicator rate means the value or status of an indicator at a point in time;
Indicator weighting means the weighting given to an indicator for the purpose of
calculating the weighted movement across all indicators during a review more
particularly being the weighting set out in column 4 of Part 3;

Part 2: Methodology

The following describes the method of varying the Specified Prices:

      1.    Ascertain the level of each indicator in column 2 of Part 2,
            expressed as dollars and cents, percentage or as an index (as the
            case may be) current at the time of the review (the current
            indicator rate). The current indicator rate will be the base
            indicator rate for the next review.

      2.    Ascertain the movement in each indicator during the relevant review
            period by establishing percentage increase (or decrease) in the
            indicator rate (by comparing the current indicator rate (see clause
            1) to the base indicator rate) and applying any indicator weighting
            specific in column 2 to that percentage change.

      3.    Calculate the weighted movement across all the indicators by
            applying the methodology below:

            a.    Multiply the movement in each indicator (see clause 2) by the
                  weighting in column 4 of Part 3.

            b.    The sum of the products of each calculation referred to in
                  clause 3(a) is the weighted movement across all indicators.

      4.    The weighted movement across all indicators calculated in accordance
            with clause 3 is the variation in the Delivered Prices over the
            relevant review period for the purposes of this Agreement. The new
            Delivered Prices determined under this review mechanism are
            calculated by applying the weighted movement across all indicators
            (from clause 3 above) to the current Delivered Prices as per the
            methodology in the example below:

            a.    Assume the weighted movement across all indicators is +2.5%,
                  and the existing Delivered price is $50.00.

            b.    The new Delivered Price is $50.00 x 1.025 which equals $51.25.

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                                       18

Part 3: Indicators and Weightings

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Column 1                    Column 2                           Column 3              Column 4
---------------------------------------------------------------------------------------------------------
Cost Item                   Indicator                          Indicator rate        Weighting
---------------------------------------------------------------------------------------------------------
<S>                         <C>                                <C>                   <C>
Item 1 - Timber  Product -  The  movement  in the  Purchasers                        25%
MGP 10                      wholesale  price  (net to mill of
                            freight)   for  MGP10   over  the
                            previous three months.
---------------------------------------------------------------------------------------------------------
Item  2:   Harvesting  and  The  movement  in the  contracted  $                     25%
Haulage costs               base  harvesting   costs  to  RFS
                            over the previous 3 months
---------------------------------------------------------------------------------------------------------
                            The   movement   in  the  haulage  cents/km              25%
                            costs over the  previous 3 months
                            shown as cents per kilometer
---------------------------------------------------------------------------------------------------------
Item  3:  The   Purchasers  The   movement   in   the  $  per                        25%
wages costs for  employees  employee   for  wages   over  the
working  in the  log  yard  previous three months.
and  sawmill  sections  of
the    plant     (excludes
salaried               and
administration staff)
---------------------------------------------------------------------------------------------------------
Total                                                                                100%
---------------------------------------------------------------------------------------------------------
</TABLE>Exhibit 4.1

No BCPN-1 to 40                                                   $50,000

                                 BIOCORAL, INC.

                  3 Year 7 Percent Convertible Promissory Note
                              Due December 31, 2006

      BioCoral, Inc., a Delaware corporation (the <<Corporation>>), for value
received, promises to pay to [    ] or registered assigns, the sum of $50,000 on
December 31, 2006, and to pay interest at the rate of 7 percent per annum
annually on the last day of December of each year, computed from December 31,
2006 (the <<issue date>>). Payment of principal and interest shall be made at
the offices of the Corporation, either in lawful money of the United States of
America or in shares of the Corporation's common stock, at a rate determined in
accordance with Section 2(a-b) hereof, all at the Corporation's sole option.
Payment for a redeemed Note shall be mailed to the registered owner or owners
hereof at their address last appearing on the books of the Corporation.

1.    Pari Passu. All Notes of this issue rank pari passu without priority over
      one another.

2.    Conversion.

2a.   Principal Amount. The holder or holders of this Note (subject Company
      approval and consent) may at any time, convert the principal amount of the
      note hereof into shares of the Corporation's common stock ranking pari
      passu at the conversion ratio shall be obtained by utilizing the average
      closing sale price of such shares in the over-the-counter market for the
      20 trading days immediately preceding. To convert this Note, the holder or
      holders hereof must surrender the same at the office of the Corporation,
      together with a written instrument of transfer in a form satisfactory to
      the Corporation, properly completed and executed and with a written notice
      of conversion.

2b.   Interest Amount. If, at any time, the Corporation, at it sole option,
      shall seek to pay interest on this Note in shares of its common stock as
      provided in the first pre-numbered paragraph of this Note the number of
      shares of the Corporation's common stock into which such interest is to be
      converted shall be obtained by utilizing the average closing sale price of
      such shares in the over-the-counter market for the 20 trading days
      immediately preceding the date such interest is due.

2c.   Adjustments to Conversion or Redemption. If the Corporation at any time
      pays to the holders of its common stock a dividend in common stock, the
      number of shares of common stock issuable upon the conversion of
      redemption of this Note shall be proportionally increased,

Biocoral Inc. 3 years 7 percent Convertible Promissory Note
Due December 31, 2006

<PAGE>

      effective at the close of business on the record date for determination of
      the holders of the common stock entitled to the dividend.

      If the Corporation at any time subdivides or combines in a larger or
      smaller number of shares, its outstanding shares of common stock, then the
      number of shares of common stock issuable upon the conversion or
      redemption of this Note shall be proportionally increased in the case of a
      subdivision and decreased in the case of a combination, effective in
      either case at the close of business on the date that the subdivision or
      combination becomes effective.

      If the Corporation is recapitalized, consolidated with or merged into any
      other corporation, or sells or conveys to any other corporation all or
      substantially all of its property as an entity, provision shall be made as
      part of the terms of the recapitalization, consolidation, merger, sale, or
      conveyance so that the holder or holders of this Note may receive, in lieu
      of the common stock otherwise issuable to them upon conversion or
      redemption hereof, at the same conversion ratio, the same kind and amount
      of securities or assets as may be distributable upon the recapitalization,
      consolidation, merger, sale, or conveyance with respect to the common
      stock.

3.    Fractional Shares. In lieu of issuing any fraction of a share upon the
      conversion or redemption of this Note or in payment of any interest
      thereon, the Corporation shall pay to the holder hereof for any fraction
      of a share otherwise issuable a rounded-up full share.

4.    Redemption/Callability. The Corporation may, at any time, prepay in whole
      or in part the principal amount, plus accrued interest to the date of
      prepayment, of all outstanding Notes of this issue, upon 30 days' written
      notice by certified or registered mail to the registered owners of all
      outstanding Note. Such payment shall be made either in cash or in shares
      of the Corporation's common stock determined in accordance with Section 2a
      hereof for conversion of the principal amount and in accordance with
      Section 2b hereof for interest payment, in the Corporation's sole
      discretion. Such notice shall be mailed to Note holders at their addresses
      last appearing on the Corporation's books.

5.    Registered Owner. The Corporation may treat the person or persons whose
      name or names appear on this Note as the absolute owner or owners thereof
      for the purpose of receiving payment of, or on account of, the principal
      and interest due on this Note and for all other purposes.

6.    Release of Shareholders, Officers and Directors. This Note is the
      obligation of the Corporation only, and no recourse shall be had for the
      payment of any principal or interest hereon against any shareholder,
      officer or director of the Corporation, either directly or through the
      Corporation, by virtue of any statute for the enforcement of any
      assessment or otherwise. The holder or holders of this Note, by the
      acceptance hereof, and as part of the consideration for this Note, release
      all claims and waive all liabilities against the foregoing persons in
      connection with the Note.

Biocoral Inc. 3 years 7 percent Convertible Promissory Note
Due December 31, 2006

<PAGE>

7.    Restricted Securities. Neither this Note nor any shares issuable upon
      conversion, redemption or payment of interest hereon, have been registered
      under the Securities Act or other state securities laws, and are being
      sold without any such registration in reliance upon the exemption from
      registration afforded by Section 4(2) of the Securities Act and Regulation
      D promulgated thereunder. As such, there will be substantial restrictions
      on its and their transferability. Each Note holder should consult
      his/her/its own counsel regarding such transferability.

                                               BIOCORAL, INC.

                                               By:
                                                   -------------------------

Biocoral Inc. 3 years 7 percent Convertible Promissory Note
Due December 31, 2006

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