May 16, 1996
       
       Mr. David Holli, President
       Holli Forest Products, Inc.
       Post Office Box 117
       Ishpeming, Michigan 49849
       
       Dear Mr. Holli:
       
            Sawyer Lumber Company is important to the State of
       Michigan. We would very much like to see your proposed
       expansion, with an investment of $23 million, creating 87
       new jobs in the next two years, become a reality at KI
       Sawyer. The Michigan Jobs Commission has worked closely
       with you since June 1994 to permit Sawyer Lumber L.L.C.'s
       proposed sawmill to mature into a solid project. The
       agreements reached during the meeting held in the
       Michigan Jobs Commission's offices on May 7 with Chief
       Operating Officer Doug Stites will hopefully permit the
       project to proceed. I would like to take this opportunity
       to summarize the support and commitment we are willing to
       provide to Sawyer Lumber Company should you decide to
       locate your proposed expansion in Michigan.
       
       1. SITE DEVELOPMENT/PUBLIC INFRASTRUCTURE. The Michigan 
       Jobs Commission and the local community are prepared to 
       provide up to $795,000 for needed site development and 
       public infrastructure improvements through programs such as 
       the Community Development Block Grant (CDBG) program or the 
       Michigan Department of Transportation's Economic Development
       Fund (TEDF). In each instance, the funds would be in the
       form of a grant to the local unit of government or road
       commission for the purpose of providing the public
       infrastructure improvements necessary to the site.  These 
       programs require that the benefiting company and community 
       meeting program goals of job creation, private investment, 
       benefit to low and moderate income individuals, and may 
       require environmental reviews and payment of prevailing 
       wages for public infrastructure. In addition, we will work 
       with the Michigan Department of Transportation on an 
       application for up to 50 percent of the funds needed for 
       the rail siding.
       
       2. PROPERTY TAXES. The total property tax millage rate
       in Forsyth Township, is 40.99. Using the figures you
       provided of $15.6 million in equipment, and $4 million of
       building value, and assuming a full 12-year tax abatement
       is provided by the local community, your company is
       offered by the Michigan Jobs Commission, an abatement of
       the entire 6-mill state education tax, worth up to
       $503,449, over the same time period as the local
       abatement. In addition, the 50 percent local property tax
       abatement could be worth up to $1,467,972. These
       abatements, totaling up to $1,971,421 would reduce your
       total property tax liability over the period of the
       abatement to approximately $1,541,755.  It should also be
       noted that inventory, special tools, fixtures, dies and
       jigs, and most pollution abatement equipment is exempt
       from property tax. To further assist you the Michigan
       Jobs Commission has a property tax expert on staff to
       provide information and assistance regarding tax
       abatements.
       
       3. WORKFORCE RECRUITMENT. The Michigan Jobs 
       Commission will coordinate the recruitment of your new 
       employees through a number of programs, some of which will 
       be available to you through the Michigan Works! --The Job
       Force agency.  This organization will undertake an
       assessment of your employment needs and recruit, screen,
       and test potential employees who will then be referred to
       your company for a final hiring determination. In
       addition, for eligible potential workers, the local
       organization can fund job training and, in some cases,
       offset 50 percent of the employee's wages during an
       on-the-job training period for up to six months. The
       value of this recruitment and screening assistance ranges
       from $400 to $800 per placement, depending on the skill
       level required, with a total of up to $34,800 to $69,600
       committed to this process by the local agency.
       
       4. WORKFORCE TRAINING. The Michigan Jobs Commission is
       aware of the importance to Sawyer Lumber Company of
       having a well-trained and skilled workforce.  We are
       prepared to work with your company to assure development
       of a customized workforce training package which will
       allow Sawyer Lumber Company to compete on a global basis.
       Our funds will be in the form of a grant tot an eligible
       applicant, chosen by your company, which can be any of a
       number of types of educational or training institutions,
       such as the local Michigan Works! agency, Intermediate
       School Districts, proprietary schools, community
       colleges, or universities. This grant will cover actual
       training costs, exclusive of employee's wages, up to
       $1,000 per employee, or a total of up to $87,000 for 87
       employees.
       
       5. KI SAWYER PROPERTY. We have agreed to the purchase
       price of $200,000 for the 132 acres of land, buildings,
       and personal property, as is. Attached is a list of the
       personal property we are making available to Sawyer
       Lumber. As you recall, we mutually agreed to the price
       for al these assets in the meeting of May 7 in our
       offices.  More detailed documents are being prepared to
       complete this transaction.
       
            The total value of this economic development package 
       is up to $2,923,021 in federal, state, and local resources.
       This amount is based on your project meeting program
       requirements and being subject to an application review
       process.
       
            We look forward to your company's growth at KI Sawyer. 
       If you have any questions or concerns, please contact Herb
       Parsons at (906) 346-3137.
       
                                Sincerely,
       
                                (Signed) Doug Rothwell 
                                Chief Executive Officer 
                                and Department Director
                                MICHIGAN JOBS COMMISSION