Freres Lumber Co., Inc. - Page 9

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                         d.    The Walker Entities' Employees                                              
                  D.C. Walker Enterprises, Inc., employed about 40 people                                  
            before March 1, 1988.  Lyons Veneer employed 25 to 40 people                                   
            before March 1, 1988.  There was no union representation at the                                
            Walker entities before March 1, 1988.                                                          
            C.    Sale of Public Timber in the North Santiam Canyon Area                                   
                  in the Mid to Late 1980's                                                                
                  Generally, sales of public timber were advertised in                                     
            newspapers.  The Forest Service, BLM, and the State of Oregon                                  
            usually mailed prospectuses to persons and businesses in the                                   
            industry.  Timber offered for sale had a minimum bid price.                                    
            Buyers who submitted a sealed bid and submitted a bid bond or a                                
            downpayment could bid at an oral auction.  It was not necessary                                
            to own a sawmill or veneer mill to bid on public timber sales.                                 
                  The public agency offering the timber for sale conducted an                              
            oral auction.  The highest bidder from the floor won the oral                                  
            auction.  If there were no oral bids, the highest sealed bid won                               
            the auction.                                                                                   
                  The Forest Service estimated the number of board feet in a                               
            timber contract.  The winning bidder paid an amount based on the                               
            volume of timber actually harvested.  The volume of timber sold                                
            was normally measured in thousands of board feet (MBF).                                        
                  The BLM sold timber on a lump-sum basis.  Buyers bid on an                               
            MBF basis.  The winning bidder applied the BLM volume estimate                                 
            and paid a lump sum.                                                                           

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