Document:

Exhibit 10.38

    Exhibit
      10.38

      THIRD
        AMENDMENT TO NOTE PURCHASE AGREEMENT

       

      This
        Third Amendment to Note Purchase Agreement (the “Amendment”)
        is
        entered into by and among Pope Resources, a Delaware limited partnership
        (“Borrower”),
        John
        Hancock Life Insurance Company, a Massachusetts corporation, and John Hancock
        Variable Life Insurance Company, a Massachusetts corporation (John Hancock
        Life
        Insurance Company and John Hancock Variable Life Insurance Company are
        individually and collectively referred to herein as “Note
        Holders”).
        

       

      RECITALS

       

      Borrower
        and Note Holders entered into that certain Note Purchase Agreement dated
        March
        29, 2001, as amended by First Amendment to Note Purchase Agreement dated
        October
        24, 2001, Second Amendment to Note Purchase Agreement dated August 8, 2003,
        and
        various other letter agreements (such Note Purchase Agreement, as previously
        amended and as amended herein is referred to as the "Agreement"),
        in
        connection with the sale and purchase of certain Class A Fixed Rate Senior
        Secured Notes all dated March 29, 2001, in the aggregate principal amount
        of
        $30,000,000. Borrower and Note Holders wish to further amend the Agreement
        in
        certain respects. This Third Amendment supercedes and replaces all prior
        amendments to the Agreement. Unless otherwise indicated all capitalized terms
        in
        this Amendment shall have the meanings attributed to them in the Agreement.
        

       

      NOW,
        THEREFORE, the parties agree as follows:

       

      1.  Section
        4.7
        of the
        Agreement is hereby amended to read as follows: “4.7 Payments
        from Collateral Account.
        With
        respect to monies deposited in the Collateral Account pursuant to Section 5.5,
        Section
        5.6,
        Section
        9.3
        and
Section
        9.4
        hereof,
        such monies, including any interest or earnings thereon, on deposit in the
        Collateral Account shall be disbursed from the Collateral Account on each
        Quarterly Payment Date as a separate incremental principal prepayment to
        reduce
        the outstanding principal balance of the Notes, and shall, in Administrative
        Agent’s sole discretion, be subject to the applicable Prepayment Premium, and
        shall not be deemed part of or applied toward any required annual principal
        payment or monthly interest payment due under Section 4.3 hereof. All interest
        and earnings on such monies held in the Collateral Account shall belong to
        Borrower and shall be applied as against the Notes as set forth above unless
        notice is given to the contrary by Borrower; provided, if an event of Default
        exists, all such earnings and interest shall be disbursed and applied in
        the
        same manner as the monies otherwise deposited into the Collateral
        Account.”

       

      2.  Section
        5.2 (a)
        of
        the
        Agreement is hereby amended to read as follows: “Cutting
        Privileges.
        Subject
        to Section
        5.3
        hereof,
        Borrower shall have the privilege to cut and remove during calendar year
        2001
        and during each calendar year thereafter (each such calendar year being referred
        to herein as a “Cutting Year”) a maximum volume of Merchantable Timber as
        provided herein (the “Annual Allowable Cut”); provided,
        Borrower may cut and remove 125% of the Annual Allowable Cut in any one Cutting
        Year so long as Borrower does not cut and remove more than the applicable
        Total
        Five-Year Allowable Cut. For purposes of this Section 5.2(a), the term Total
        Five-Year Allowable Cut means the aggregate Annual Allowable Cuts for the
        Cutting Years 2001 through 2005, 2006 through 2010, 2011 through 2015, 2016
        through 2020, 2021 through 2025, and 2026 through 2031, as the case may be.
        Subject to Section
        5.3,
        the
        Annual Allowable Cut for Cutting Year 2001 shall be 27MMBF, Scribner; and
        the
        Annual Allowable Cut for the calendar years 2002, 2003, 2004, and 2005 shall
        be
        32.8MMBF, Scribner. Notwithstanding the foregoing, for the fraction of calendar
        year 2001 after the date of this Agreement and for the fraction of the calendar
        year in which the final payment of principal on the Notes is due, the permitted
        volume of cutting in any Category shall be proportionate to the number of
        days
        in such fractional calendar year (the permitted volume of cutting for such
        fractional calendar year shall be multiplied by a fraction, the numerator
        of
        which is the number of days in the fractional calendar year and the denominator
        of which is 365). For purposes of this Section
        5.2
        all
        Merchantable Timber otherwise cut, sold and conveyed by Borrower during any
        Cutting Year shall be deemed to have been cut and removed by Borrower hereunder.
        The Annual Allowable Cut shall be reduced by the excess volume of Timber
        cut or
        removed during the preceding Cutting Years pursuant to Section
        5.5
        hereof,
        unless and until Borrower deposits into the Collateral Account the amounts
        required under subsection 5.5(a) below with respect to such
        overcutting.”

       

      
        
          1-THIRD
            AMENDEMENT TO NOTE PURCHASE AGREEMENT

        

        
           

          
            

          

        

        
           

        

      

      3.  Section
        5.5(a) of
        the
        Agreement is hereby amended to read as follows: “Excess
        Cutting or Removal.
        Subject
        to the provisions of Section
        5.3
        hereof,
        Borrower may cut or remove volumes of Merchantable Timber in excess of the
        volumes permitted under Section
        5.2
        hereof
        during any Cutting Year, provided
        Borrower
        deposits into the Collateral Account, in the manner provided for hereunder,
        an
        amount equal to the sum of the products obtained by multiplying (i) the
        differences between the volumes for each Category of Merchantable Timber
        actually cut and removed during any Cutting Year and the permitted volume
        for
        each such Category established pursuant to Section
        5.2
        for such
        Cutting Year, by (ii) the Administrative Unit Values of each such Category
        set forth in the following subsection (b).”

       

      4.  Section
        5.6(a)
        of the
        Agreement is hereby amended to read as follows: “Subject to compliance with all
        provisions of this Section
        5.6,
        and
        provided (i) no Event of Default exists and is continuing hereunder, and
        (ii) the Loan to Value Ratio is fifty percent (50%) or less before such
        sale, and will continue to be fifty percent (50%) or less after such sale,
        Borrower may, from time to time, sell portions of the Land, and the Holders
        shall release in the manner hereinafter provided such portions of the Land,
        and
        any Timber thereon, from the Lien of the Financing Documents; provided, that,
        in
        each case, Borrower shall, upon request of Administrative Agent, deposit
        into
        the Collateral Account an amount equal to one hundred percent (100%) of the
        Total Administrative Value of the Land and Timber to be conveyed and released,
        as determined by Borrower as of the date of such sale and release; provided
        such
        Administrative Value shall, in Administrative Agent’s sole discretion, be
        subject to independent verification by the Forestry Consultant of the accuracy
        of the information set forth therein; and provided further, however, any
        such
        deposits into the Collateral Account shall, in Administrative Agent’s sole
        discretion, be subject to Section 4.3(e) above; and provided further, that
        such
        Total Administrative Value shall be adjusted to take into consideration the
        value of the Land and Timber being released and the impact, if any, of the
        release upon the overall security position of the Administrative Agent in
        the
        remaining encumbered Land and Timber as well as the amount of the outstanding,
        unpaid balance due under the Notes as of the date of such sale and
        release.

       

      5.  Section
        8.1(v)
        is
        hereby amended to read as follows: “Additional
        Liens.
        Place,
        incur, assume or suffer to exist, any Lien upon any of its Property, assets
        or
        revenues, whether now owned or hereafter acquired, except:
...
(v)
        Other Liens securing Debt in an aggregate principal amount not exceeding
        $2,000,000 at any time.” The definition of “Debt” in Annex
        II of
        the
        Agreement is hereby amended to include payment obligations under local
        improvement districts.

       

      
        
          2-THIRD
            AMENDMENT TO NOTE PURCHASE AGREEMENT

        

        
           

          
            

          

        

        
           

        

      

      6.  Section
        8.5
        of the
        Agreement is hereby amended to read as follows: “Distributions
        to Partners.
        Make
        any distributions of cash or other Property to any of its partners, or redeem
        any outstanding equity interest in Borrower, except in accordance with the
        provisions of this Section 8.5,
        as
        follows: So long as no Default or Event of Default shall exist hereunder
        either
        before or after such distribution, Borrower shall be permitted to distribute,
        on
        a cumulative, Calendar Year Basis, as defined below, to each of its partners,
        no
        more frequently than once per calendar quarter, fifty percent (50%) of Net
        Income, excluding distributions to pay the estimated federal and state income
        tax payable by each partner (or its constituent partners or members) on such
        partner's share of the taxable income of Borrower (as calculated for federal
        income tax purposes); provided, however, in no event shall such quarterly,
        cumulative distributions exceed seventy-five percent (75%) of Net Income
        on a
        Calendar Year Basis; and provided further, that Borrower may not purchase,
        redeem or retire any outstanding partnership units if after giving effect
        to any
        such purchase, redemption, or retirement, Borrower would be in violation
        of any
        of the terms or covenants of this Agreement or the other Financing Statements.
        Prior to any such distribution, Borrower's chief financial officer shall
        prepare
        and deliver to the Administrative Agent a sworn certificate of distribution
        and
        a brief summary of the Borrower's methodology in establishing the amount
        of the
        dividends paid. 

       

      For
        purposes of this Section
        8.5,
        for the
        calendar year 2002, the foregoing distributions test in the preceding paragraph
        will be calculated 2 ways: First, the applicable distributions will be those
        actually made during calendar year 2002. Second, the applicable distributions
        will be those made during the second, third and fourth quarters of 2002,
        and the
        first quarter of 2003. For calendar year 2003 and subsequent calendar years,
        the
        applicable distributions shall be those made during the second, third and
        fourth
        quarters of the calendar year in question, and the first quarter of the
        subsequent calendar year.

       

      7.  Section
        8.12
        of the
        Agreement is hereby amended to read as follows: “Subsidiaries;
        Collateral Ownership.
        (a)
        Except for an Affiliate or Subsidiary that does not own any Timber Property,
        create, acquire or otherwise invest in any Affiliate or Subsidiary or (b)
        otherwise move, transfer or change the ownership of any of the Timber Property
        into an Affiliate or Subsidiary, unless such Affiliate or Subsidiary is a
        domestic entity, remains wholly owned by Borrower, becomes an obligor on
        the
        Notes and agrees to be jointly and severally liable for the obligations
        thereunder prior to such action, and becomes a party to the Agreement and
        agrees
        to be bound by the obligations thereunder prior to such action. If all or
        any
        portion of the Timber Property is transferred to an Affiliate or Subsidiary,
        as
        provided above, the lien of the applicable Mortgages shall continue to be
        a lien
        on the transferred Timber Property, and all timber management, harvest and
        other
        provisions of the Agreement shall remain in effect.”

       

      8.  Section
        8.14
        of the
        Agreement is hereby amended to read as follows: “8.14 Debt
        to Total Capitalization.
        Debt to
        Total Capitalization shall not exceed fifty percent (50%).” The definition of
“Total Capitalization” in Annex
        II
        of the
        Agreement is hereby amended to read: “Total
        Capitalization
        - means
        Debt, plus the greater of: a) book value of partners’ capital, or b) Borrower’s
        closing Unit Price at the end of each quarter in question, multtiplied by
        the
        number of units outstanding, so long as Borrower is publicly traded;
provided,
        if
        Borrower is required to consolidate the debt of ORM Timber Fund I, L.P. (the
        “Timber Fund”), then Borrower may include the total capitalization of the Timber
        Fund in the calculation of Total Capitalization.”

       

      
        
          3-THIRD
            AMENDMENT TO NOTE PURCHASE AGREEMENT

        

        
           

          
            

          

        

        
           

        

      

      9.  Annex
        II of
        the
        Agreement is hereby amended to read as follows: “Borrower
        - POPE
        RESOURCES, A DELAWARE LIMITED PARTNERSHIP, a Delaware limited partnership,
        its
        permitted successors and assigns, and its Affiliates and Subsidiaries owning
        any
        portion of the Timber Property. 

       

      10.  Annex
        II of
        the
        Agreement is hereby amended to read as follows: “Cash
        Flow Coverage Ratio
        - means,
        as of any date of determination, the ratio of (a) EBITDA for the period of
        calculation minus
        operating
        capital expenditures made by Borrower and its subsidiaries during such period,
        to
        (b) the sum of (i) Interest Charges during such period plus
        (ii) all scheduled payments of principal with respect to Required Debt
        Service required to be made by Borrower and its subsidiaries during such
        period.”

       

      11.  Annex
        IV
        is
        hereby amended to read as follows: “Commercial General Liability Insurance with
        Borrower as the named insured and the Holders as additional insureds in
        commercially reasonable amounts and terms and issued by an insurer or insurers
        reasonably satisfactory to the Holders. A portion of such insurance coverage
        may
        be maintained in the form of an excess liability (umbrella) policy. Certificates
        of insurance and, if the Holders so request, certified copies of the insurance
        policies, shall be delivered to the Holders no less than 5 days prior to
        the
        expiration of the then current policies.”

       

      12.  As
        amended herein, the Agreement is hereby confirmed and reaffirmed by Borrower
        and
        Note Holders and shall remain in full force and effect.

       

      IN
        WITNESS WHEREOF, Borrower and Note Holders have executed this Amendment as
        of
        the date(s) written below.

       

      
        	
                POPE
                  RESOURCES, A DELAWARE LIMITED PARTNERSHIP,
                  a
                  Delaware limited partnership,

                 

                By: Pope
                  MGP, Inc., a Delaware corporation, its managing partner

                 

                By:_________________________________________ 

                Name:_______________________________________ 

                Title:________________________________________ 

                 

                Date:________________________,
                  2004

                 

              	
                JOHN
                  HANCOCK LIFE INSURANCE COMPANY,
                  a
                  corporation incorporated under the laws of the Commonwealth of
                  Massachusetts

                 

                By:_______________________________________ 

                Name:
                  C. Whitney Hill

                Title:
                  Director 

                 

                Date:___________________________,
                  2004

                 

              
	 	
                 

                JOHN
                  HANCOCK VARIABLE LIFE INSURANCE COMPANY,
                  a
                  corporation incorporated under the laws of the Commonwealth of
                  Massachusetts

                 

                By:________________________________________ 

                Name:
                  C. Whitney Hill

                Title:
                  Authorized Signatory

                 

                Date:_________________________,
                  2004

              

      

      

       

      
        
          4-THIRD
            AMENDMENT TO NOTE PURCHASE AGREEMENTExhibit 10.39

    Exhibit
      10.39

      FOURTH
        AMENDMENT TO NOTE PURCHASE AGREEMENT

       

      This
        Fourth Amendment to Note Purchase Agreement (the “Amendment”)
        is
        entered into by and among Pope Resources, a Delaware limited partnership
        (“Borrower”),
        John
        Hancock Life Insurance Company, a Massachusetts corporation, and John Hancock
        Variable Life Insurance Company, a Massachusetts corporation (John Hancock
        Life
        Insurance Company and John Hancock Variable Life Insurance Company are
        individually and collectively referred to herein as “Note
        Holders”).
        

       

      RECITALS

       

      Borrower
        and Note Holders entered into that certain Note Purchase Agreement dated
        March
        29, 2001, as amended by First Amendment to Note Purchase Agreement dated
        October
        24, 2001, Second Amendment to Note Purchase Agreement dated August 8, 2003,
        and
        Third Amendment to Note Purchase Agreement dated March 24, 2004, which
        superseded and replaced all prior amendments to such Note Purchase Agreement
        (such Note Purchase Agreement, as previously amended and as amended herein
        is
        referred to as the "Agreement"),
        in
        connection with the sale and purchase of certain Class A Fixed Rate Senior
        Secured Notes all dated March 29, 2001, in the aggregate principal amount
        of
        $30,000,000. Borrower and Note Holders wish to further amend the Agreement
        in
        certain respects. Unless otherwise indicated all capitalized terms in this
        Amendment shall have the meanings attributed to them in the Agreement.

       

      NOW,
        THEREFORE, the parties agree as follows:

       

      1.  Section
        8.2(ii) of
        the
        Agreement is hereby amended to read as follows: “(ii) Debt under that certain
        Loan Agreement dated as of October 26, 2004, by and between Borrower and
        Bank of
        America in connection with a $10 million line of credit facility and all
        other
        Debt outstanding as the Closing Date, and any refinancings, refundings,
        renewals, replacements or extensions thereof, provided
        that the
        amount of such Debt is not increased at the time of such refinancing, refunding,
        renewal, replacement or extension except by an amount equal to the premium
        or
        other amounts paid, and fees and expenses incurred, in connection with such
        refinancing and by an amount equal to any unutilized commitments
        thereunder;”

       

      2.  Section
        8.5 of
        the
        Agreement is hereby deleted in its entirety. 

       

      3.  The
        following Section
        8.16
        is
        hereby added to the Agreement: “8.16 Loan
        to Value Ratio.
        Notwithstanding anything herein to the contrary, permit the Loan to Value
        Ratio
        to exceed fifty percent (50%). If at any time the Loan to Value Ratio exceeds
        fifty percent (50%), Borrower shall deposit funds into the Collateral Account
        sufficient to reduce the Loan to Value Ratio to 50% or less.”

       

      4.  As
        amended herein, the Agreement is hereby confirmed and reaffirmed by Borrower
        and
        Note Holders and shall remain in full force and effect.

       

      [Remainder
        of page left intentionally blank]

       

      

      
        
          1-FOURTH
            AMENDMENT TO NOTE PURCHASE AGREEMENT

        

        
           

          
            

          

        

        
           

        

      

       

      IN
        WITNESS WHEREOF, Borrower and Note Holders have executed this Amendment as
        of
        the date(s) written below.

       

      
        	
                POPE
                  RESOURCES, A DELAWARE LIMITED PARTNERSHIP,
                  a
                  Delaware limited partnership,

                 

                By: Pope
                  MGP, Inc., a Delaware corporation, its managing partner

                 

                By:__________________________________________ 

                Name:
                  Thomas M. Ringo

                Title:
                  Vice President & CFO 

                 

                Date:________________________,
                  2005

                 

              	
                JOHN
                  HANCOCK LIFE INSURANCE COMPANY,
                  a
                  corporation incorporated under the laws of the Commonwealth of
                  Massachusetts

                 

                By:________________________________________ 

                Name:
                  C. Whitney Hill

                Title:
                  Director 

                 

                Date:___________________________,
                  2005

                 

              
	 	
                 

                 

                 

                 

                JOHN
                  HANCOCK VARIABLE LIFE INSURANCE COMPANY,
                  a
                  corporation incorporated under the laws of the Commonwealth of
                  Massachusetts

                 

                By:________________________________________ 

                Name:
                  C. Whitney Hill

                Title:
                  Authorized Signatory

                 

                Date:_________________________,
                  2005

              

      

      

      
        
           

        

        
          2-FOURTH
            AMENDEMENT TO NOTE PURCHASE AGREEMENT

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