Herbert C. Haynes, Inc. - Page 7

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                    a.   Fixed-Price Arrangements                                     
               In a fixed-price or a lump-sum arrangement, petitioner paid            
          a fixed price or a lump sum to cut timber for a fixed period.               
          Petitioner assumed the risk of loss if the land produced an                 
          insufficient yield of timber.                                               
                    b.   “Pay-as-Cut” Arrangements                                    
               In a pay-as-cut or stumpage permit arrangement, petitioner             
          paid the landowner for the timber as it was cut.  Foresters                 
          identified the timber to cut, and petitioner’s foresters oversaw            
          the cutting crews.                                                          
               Although petitioner’s contractual arrangements for                     
          purchasing timber varied, petitioner’s typical stumpage permit              
          granted petitioner the right to cut timber on a designated parcel           
          of land.  Petitioner paid the landowner for the logs at the time            
          of cutting.  The stumpage permit granted petitioner the right to            
          enter the property with labor and equipment to cut and remove the           
          timber.  Petitioner indemnified and held harmless the landowner             
          from all liabilities, claims, judgments, or liens associated with           
          its work on the premises.  Petitioner also covenanted to observe            
          all Federal, State, and local laws, ordinances, and regulations             
          relating to the cutting of forest products and the removal of all           
          products and related waste from the premises.                               
               Petitioner obtained stumpage permits from major timber                 
          landowners such as J.M. Huber Corp., Great Northern Paper Co.,              






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Last modified: May 25, 2011