Execution Version Tauhara
EXHIBIT 4.21
INFRASTRUCTURE AGREEMENT
BETWEEN
▇▇▇▇▇▇▇▇ CHALLENGE FORESTS INDUSTRIES LIMITED
AND
UBS MANGAKAHIA FOREST VENTURE LTD
[▇▇▇▇▇▇▇ GRIERSON LOGO]
TABLE OF CONTENTS
1. INTERPRETATION 1
2. HARVEST SCHEDULING AND FOREST ROADING 6
3. TRANSITIONAL PERIOD HARVEST SCHEDULING 17
4. HEALTH AND SAFETY, CERTIFICATION AND ENVIRONMENTAL COMPLIANCE 17
5. INSURANCE 19
6. REPRESENTATIONS, WARRANTIES AND STANDARD OF PERFORMANCE 20
7. INDEMNITY 22
8. FORCE MAJEURE 24
9. RESOLUTION OF DISPUTES 25
10. ASSIGNMENT 26
11. SEVERABILITY 27
12. APPLICABLE LAW 27
13. NOTICES 28
14. COPIES OF NOTICES 30
15. THIRD PARTY NOTICES 30
16. ENTIRE AGREEMENT 30
17. MODIFICATION 30
18. WAIVER 30
19. CONFIDENTIALITY 30
20. TERM OF AGREEMENT AND SUSPENSION 31
21. COUNTERPARTS 34
22. FURTHER ASSURANCES 35
23. LIMITED RECOURSE 35
24. DEFAULT INTEREST 35
25. COSTS 35
26. NO PARTNERSHIP 35
27. NO MERGER 35
28. NO DOUBLE CLAIMS 36
SCHEDULE ONE - FORESTRY RIGHT
SCHEDULE TWO - UNDERTAKING AND GUARANTEE
THIS AGREEMENT is dated the day of 2003
BETWEEN ▇▇▇▇▇▇▇▇ CHALLENGE FORESTS INDUSTRIES LIMITED of Auckland ("FCF")
AND UBS MANGAKAHIA FOREST VENTURE LTD an incorporated company having its
registered office at Auckland ("UBS Mangakahia")
BACKGROUND
A. FCF is the registered proprietor and owner of the Land.
B. UBS Mangakahia will acquire the Trees and the Forestry Right.
C. FCF and UBS Mangakahia wish to enter into this agreement to record the
terms and conditions by which FCF will provide certain infrastructure
services to UBS Mangakahia in relation to the Forestry Right.
THE PARTIES AGREE:
1. INTERPRETATION
In this agreement unless the context indicates otherwise:
1.1 DEFINITIONS:
"ACT" means the Companies ▇▇▇ ▇▇▇▇;
"AFFILIATE" of a person shall mean a person controlled by,
controlling or under common control with, such person and for
the purposes of this definition Forestry Corporation of New
Zealand Limited (In Receivership) is not an affiliate of any
party;
"▇▇▇▇ RATE" means the average of the bid rates for 90-day bank
accepted bills of exchange, expressed as a percentage per
annum as quoted on Reuters page BKBM (subject to manifest
error) as fixed at 10.45am on each Business Day following the
due date;
"BUSINESS DAY" means a day on which registered banks are open
for business in Auckland excluding Saturdays, Sundays and
public holidays;
"COMMENCEMENT DATE" means the date of "SETTLEMENT" as that
term is defined in the Sale and Purchase Agreement being the
date of this agreement;
"CONFIDENTIAL INFORMATION" means any information:
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(a) relating to the terms of this agreement excluding
Working Block(s), PHI, price information and other
information related to sales of stumpage and logs
from the Stands; or
(b) disclosed by either party to the other party on the
express basis that such information is confidential;
provided that where information relates exclusively to one
party, nothing in this agreement will require that party to
maintain confidentiality in respect of that information;
"DEFAULT INTEREST RATE" means interest calculated at the ▇▇▇▇
Rate plus 4% per annum;
"ENCUMBRANCE" means a mortgage, lien, charge, pledge, title
retention, caveat, option, right of pre-emption, tenancy,
third party right, or security interests of any kind;
"ENVIRONMENTAL GUIDELINES" means codes of practice and
guidelines issued from time to time by any competent authority
(including for the avoidance of doubt any relevant District or
Regional Plans or resource consents) or UBS Mangakahia, which
address in whole or in part the protection of the environment
and the Land;
"ENVIRONMENTAL LAW" means all applicable law relating to any
aspect of:
(a) the environment;
(b) the Land and Trees;
(c) substances which may have an adverse effect on the
environment; and
(d) the carrying on or permitting of activities which may
have an adverse effect on the environment;
whether pursuant to the Resource Management ▇▇▇ ▇▇▇▇, any
other statutes, under the common law or otherwise;
"ENVIRONMENTAL REQUIREMENTS" means Environmental Law and
Environmental Guidelines;
"FCF" means ▇▇▇▇▇▇▇▇ Challenge Forests Industries Limited at
Auckland together with its successors and permitted assigns;
"FOREST ROADS" means all forestry roads, road works, landings
for harvest operations, landing formation works, skid sites,
gates and bridges on the Land necessary for the purposes of
access, harvesting and extracting logs from the Working
Block(s) scheduled for harvest;
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"FORESTRY CONSULTANT" means a reputable forestry expert with
relevant experience;
"FORESTRY RIGHT" means the forestry right to be entered into
between FCF and UBS Mangakahia concurrently with this
agreement in accordance with the provisions of the Forestry
Rights Registration Act 1983 and in relation to certain
identified Stands and a copy of which is attached in Schedule
One;
"GST" means goods and services tax levied in accordance with
the GST Act and includes any tax levied in substitution for
such tax and excludes any penalties and interest;
"GST ACT" means the Goods and Services Tax ▇▇▇ ▇▇▇▇;
"HARVEST AREAS" means those of the Working Block(s) that FCF
elects to purchase from UBS Mangakahia in accordance with the
terms of the Wood Supply Agreement;
"HARVEST PERIOD" means a year commencing on 1 July and ending
on 30 June of the following year nominated as the period in
which certain Working Block(s) are designated for harvest
pursuant to the terms of this agreement;
"HARVEST PERIOD ONE" means the period commencing 1 July 2003
and ending on 30 June 2004;
"HARVEST PERIOD TWO" means the period commencing 1 July 2004
and ending on 30 June 2005;
"INSOLVENCY EVENT" means with respect to a company when:
(a) an application is made to a court for an order and an
order is duly made appointing a liquidator,
provisional liquidator, interim liquidator, receiver,
manager, receiver and manager, administrator,
administrative receiver, trustee in administration,
statutory manager or similar officer in respect of
the company or one of them is appointed;
(b) the members of the company pass a special resolution
or the board of the company resolves to appoint a
liquidator or formal notice of a proposed resolution
to do so is given or any other steps are taken
evidencing an intention to do so;
(c) the company stops or threatens to stop payment of
creditors generally or is deemed to be unable to pay
its debts as they fall due, has a compromise proposed
in respect of it, commences negotiations with any one
or more of its creditors with a view to the general
readjustment or rescheduling of its indebtedness,
makes a general assignment for the benefit of or a
composition
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with its creditors or proposes a reorganisation,
moratorium or other administration involving them;
(d) execution issued against the company in respect of a
judgment debt has been returned unsatisfied in whole
or in part;
(e) a statutory demand is served on the company for an
amount exceeding 1% of its gross assets as shown in
the accounts of the company for the most recently
completed financial year of the company and expires
unremedied unless such statutory demand relates to an
amount which is the subject of a bona fide dispute by
the company; or
(f) a creditor of the company, which creditors rights are
intended to be subordinate to the obligations of the
company to this agreement attempts to exercise any
rights, or to gain any specific rights which would
impinge upon UBS Mangakahia's rights under the
Forestry Right;
other than where in the case of any of the events referred to
in sub-clauses (a) to (f) above, such event takes place for
the purposes of and is followed by a reconstruction,
amalgamation or reorganization (not involving or arising out
of insolvency) approved in writing by UBS Mangakahia which
consent is not to be unreasonably or arbitrarily withheld or
delayed;
"LAND" means the land the subject of the Forestry Right more
particularly comprised and described in the Forestry Right;
"MANAGEMENT AGREEMENT" means the management agreement to be
entered into between UBS Mangakahia and FCF concurrently with
this agreement pursuant to which FCF will manage the Tauhara
forests;
"MONTH" means a calendar month;
"PHI" means a pre-harvest inventory, being the random sampling
of Stands using MARVL (or the equivalent) assessment
methodology to defined levels of precision using current
standard industry grades applicable to the Supply Region at
the time;
"QUARTER" means a calendar quarter ending on 30 June, 30
September, 31 December and 31 March in each Harvest Period;
"RELATED AGREEMENTS" means the Forestry Right, Management
Agreement, Sale and Purchase Agreement and the Wood Supply
Agreement;
"RELATED COMPANY" has the meaning ascribed to that term by the
Companies ▇▇▇ ▇▇▇▇;
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"SALE AND PURCHASE AGREEMENT" means the sale and purchase
agreement entered into between Teal 4 Limited and FCF on 15
January 2003 (as may be amended by any deed(s) of amendment)
pursuant to which FCF will sell the Trees to UBS Mangakahia
(as Teal 4 Limited's nominee under that agreement) and create
the Forestry Right;
"SETTLEMENT" has the meaning ascribed to that term by the Sale
and Purchase Agreement;
"STAND" means those parts of the Land comprising specific
plantation areas of the same age class, area and silvicultural
condition described in the Forestry Right;
"SUPPLY REGION" means the "SUPPLY REGION" as that term is
defined in the Wood Supply Agreement;
"TRANSITIONAL PERIOD" means the period incorporating Harvest
Period One and Harvest Period Two commencing 1 July 2003 and
ending on 30 June 2005;
"TREES" means those Pinus radiata trees growing, standing or
lying on the Stands as at the date of the Sale and Purchase
Agreement and any logs or forest produce arising from such
trees;
"UBS MANGAKAHIA" means UBS Mangakahia Forest Venture Ltd at
Auckland together with its successors and permitted assigns;
"WOOD SUPPLY AGREEMENT" means the wood supply agreement to be
entered into between UBS Mangakahia and FCF concurrently with
this agreement under which UBS Mangakahia will supply certain
of the Trees to FCF;
"WORKING BLOCK(S)" means those Trees in a Stand (or part
thereof) designated by UBS Mangakahia for harvesting pursuant
to sub-clauses 2.1.1, 2.1.2 and 3.2 of this agreement; and
"YEAR" means a calendar year.
1.2 PARTIES: references to parties are references to parties to
this agreement;
1.3 PERSONS: references to persons shall be deemed to include
references to individuals, companies, corporations, firms,
partnerships, joint ventures, associations, organisations,
trusts, states or agencies of state, government departments
and municipal authorities or other regulatory bodies in each
case whether or not having separate legal personality;
1.4 DEFINED EXPRESSIONS: expressions defined in the main body of
this agreement have the defined meaning in the whole of this
agreement including the background;
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1.5 DEFINED EXPRESSIONS: expressions defined in the main body of
this agreement bear the defined meaning in the whole of this
agreement including the recitals;
1.6 CLAUSES, SCHEDULES AND BACKGROUND: references to clauses,
schedules and background are references to clauses, schedules
and background to this agreement unless otherwise indicated;
1.7 HEADINGS: section, clause and other headings are for ease of
reference only and shall not be deemed to form any part of the
context or to affect the interpretation of this agreement;
1.8 SINGULAR AND PLURAL: words importing the singular number shall
include the plural and vice versa;
1.9 SCHEDULES: the schedules to this agreement and the provisions
and conditions contained in such schedules shall have the same
effect as if set out in the body of this agreement;
1.10 NEGATIVE OBLIGATIONS: any obligation not to do anything shall
be deemed to include an obligation not to suffer, permit or
cause that thing to be done;
1.11 GENDER: words importing one gender shall include the other
genders;
1.12 STATUTES AND REGULATIONS: references to a statute include
references to regulations, orders or notices made under or
pursuant to such statute or regulations made under the statute
and references to a statute or regulation include references
to all amendments to that statute or regulation whether by
subsequent statute or otherwise and a statute or regulation
passed in substitution for the statute or regulation referred
to as incorporating any of the provisions;
1.13 DISPOSAL: references to disposal include sale, exchange,
transfer, assignment, lease or parting with possession or
control of, and the word "dispose" means to make a disposal;
and
1.14 NEW ZEALAND DOLLARS: all monetary amounts are payable in New
Zealand dollars.
2. HARVEST SCHEDULING AND FOREST ROADING
2.1 HARVEST SCHEDULING: Subject to the specific procedures set out
in clause 3 relating to the Transitional Period, in each Year
during the term of this agreement the following provisions
will apply.
2.1.1 NOTIFICATION OF WORKING BLOCK(S): UBS Mangakahia will
give notice on 1 February to FCF designating the
Working Block(s) that UBS Mangakahia intends to
harvest in the Harvest Period commencing 1 July in
the following year ("UBS Mangakahia Notice"). (By way
of example, the first UBS
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Mangakahia Notice given for harvesting to take place
after the Transitional Period will be given on
1_February 2004 and will designate the Working
Block(s) to be harvested during the period 1 July
2005 to 30 June 2006).
2.1.2 FCF HARVEST RECOMMENDATIONS: FCF may on or before the
20th of February, make any recommendations on the
harvesting sequence or otherwise as it considers
appropriate in relation to the harvest proposals. UBS
Mangakahia will in good faith give due consideration
to such recommendations and will confirm in writing
to FCF on or before the last day of February the
changes (if any) to be made to the Working Block(s)
designated pursuant to the UBS Mangakahia Notice. For
the avoidance of doubt, if no further notice relating
to the designation of Working Block(s) is presented
by UBS Mangakahia the particulars set out in the
original UBS Mangakahia Notice will apply.
2.1.3 APPOINTMENT OF FORESTRY CONSULTANT AND PRE-HARVEST
INVENTORY: Before 1 February in each Year UBS
Mangakahia shall appoint a Forestry Consultant to
complete a PHI of the Working Block(s) notified under
the UBS Mangakahia Notice (as amended pursuant to
sub-clause 2.1.2, if appropriate). Prior to making
each such appointment UBS Mangakahia shall consult
with FCF on UBS Mangakahia's proposed PHI methodology
and the appointment of the Forestry Consultant. The
Forestry Consultant must make available to FCF the
plot data and plot locations (to ensure that the
sampled Trees can be identified and audited by FCF.
For the avoidance of doubt the parties agree that
clause 9 will not apply to the PHI information
referred to in this sub-clause) used in calculating
the PHI to enable FCF to undertake an independent
assessment of the PHI.
2.2 HARVEST PREPARATIONS: Following designation of the Working
Block(s) pursuant to sub-clauses 2.1.1 and 2.1.2, in each Year
(and pursuant to sub-clause 3.2 in relation to Harvest Period
One and Harvest Period Two) of this agreement FCF will do the
following.
2.2.1 HARVEST CONSENTS: To the extent that they are not
already held, apply for and obtain any resource
consents (required pursuant to the Resource
Management Act 1991), permits and licences that may
be necessary to harvest the Working Block(s) during
the relevant Harvest Periods ("Consents"). FCF
acknowledges that the Consents must be upon terms
such that any third party reasonably appointed by UBS
Mangakahia to harvest any of the Trees will be
legally entitled to do so under the authority of the
Consents. Where the relevant Consent is not a land
use consent FCF agrees that it will transfer and/or
assign the benefit of such Consents to any party (as
notified by UBS Mangakahia) harvesting the Trees in
the relevant Working Block(s). For the avoidance of
doubt the costs associated with
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obtaining and assigning the benefit of any Consents
is to be incorporated in the fees payable pursuant to
sub-clause 2.13.2.
2.2.2 FOREST ROADS: Undertake all works necessary,
including road line salvage to prepare, maintain
and/or develop (as the case may be) any Forest Roads
required for the harvesting and extraction of wood
from the Working Block(s) in the relevant Harvest
Periods. FCF will be required to obtain all resource
consents and other relevant authorisations as are
necessary to prepare, maintain, develop and use such
Forest Roads to harvest the Working Block(s). In
undertaking such works FCF agrees to ensure that the
Forest Roads will be:
(a) READY FOR USE: ready for use for the
harvesting of the Working Block(s) during
the relevant Harvest Period;
(b) FORESTRY STANDARDS: of a standard consistent
with good forestry practice so as to cope
with the wood volumes expected to be
extracted from the Working Block(s);
(c) CAPACITY AND SAFETY: of suitable capacity
and layout (applying good forestry
management practice) to enable safe and
efficient harvesting and extraction of wood
from the Working Block(s); and
(d) OTHER FCF USAGE: of suitable capacity and
layout (applying good forestry practice) to
handle any additional operational traffic
associated with other harvesting and
operations of FCF which FCF (and its
personnel, contractors and invitees) may use
the Forest Roads for during the period that
UBS Mangakahia will be harvesting the
relevant Working Block(s).
2.2.3 PUBLIC ROADS: Ascertain and ensure compliance with
all requirements of local or other proper authorities
for any special authority needed to exceed normal
road usage on public roads, and for other matters
within their lawful jurisdiction arising out of the
use of such roads for the harvesting of the Working
Block(s) in the relevant Harvest Period provided that
any request by UBS Mangakahia in this regard is
reasonable and accords with normal industry
standards. More particularly, the following terms
shall apply in relation to the use of, and access to,
public roads.
(a) OBTAINING AUTHORISATIONS: Except as provided
in sub-clause 2.2.3(b) FCF's obligation
under this sub-clause extends only to
identifying any relevant requirements and
using all reasonable endeavours to acquire
the necessary authority and does not extend
to
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ensuring compliance by UBS Mangakahia, its
employees, invitees, licensees and agents
with the terms and conditions of any such
authority or their actual usage of any
public road. The parties acknowledge that
this may include a requirement from any
relevant authority to provide a bond or
guarantee. If required to do so by any
relevant authority, FCF and UBS Mangakahia
will promptly put in place at their
respective costs in all respects, such bond
or guarantee as required by the relevant
authority that reflects their proportionate
use of such public roads during the relevant
Harvest Period. For the avoidance of doubt
FCF's share of costs is to be based on any
usage by FCF arising from the balance of the
Land not included in the Stands.
(b) LIMITED ACCESS ROADS: Where conditions apply
in relation to limited access road crossings
giving access and egress from the Land to
public roads, FCF must undertake such
works/steps as may be required (including
the construction of de-acceleration lanes
and road widening where necessary) to comply
with conditions imposed under the Transit
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and/or imposed by any
relevant regulatory authority. For the
avoidance of doubt FCF will be responsible
for all costs associated with complying with
such limited access conditions.
2.2.4 HARVEST PLANNING SERVICES: Regularly (and not less
than every Quarter) provide UBS Mangakahia with a
written report on the readiness for harvesting of the
Working Block(s) (which will be discussed at the
Quarterly meetings held pursuant to the terms of the
Management Agreement), in relation to UBS
Mangakahia's harvest planning arrangements including
extraction sequences for scheduled Working Block(s),
harvest resource consents, the condition and layout
of Forest Road networks and the preparation of
landings/skid sites for harvest operations.
2.3 ADDITIONAL FCF SERVICES: During the term of this agreement FCF
will at the reasonable request of UBS Mangakahia do the
following.
2.3.1 TRAINING: Provide induction training sessions for
those of UBS Mangakahia's personnel, contractors and
invitees who will be exercising access to the Land.
Such sessions are to be provided when reasonably
required and will cover applicable health and safety
work rules and procedures, any relevant Forest Road
use rules, fire prevention/safety requirements,
emergency procedures, and such other matters as
considered prudent by FCF for individuals entering
upon the Land and using the Forest Roads.
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2.3.2 RADIO COMMUNICATIONS: Provide instructions to UBS
Mangakahia's personnel, contractors and invitees as
to the appropriate radio frequencies to be used to
access FCF's radio network. UBS Mangakahia's
personnel, contractors and invitees will be entitled
to use FCF's network for communications purposes when
exercising access to the Land during the term of this
agreement.
2.3.3 CONTROL ACCESS: Control access of other users to the
relevant parts of the Land during Harvest Periods to
ensure that the Forest Roads are not used in an
unsafe manner or congested during harvesting.
2.4 FOREST ROADING MAINTENANCE: During the term of this agreement
FCF agrees to maintain the Forest Roads to a standard such
that:
2.4.1 HARVESTING ACCESS: UBS Mangakahia may harvest and
extract logs from Working Block(s) scheduled for
harvest pursuant to sub-clauses 2.1.1, 2.1.2, and
3.2; and
2.4.2 FORESTRY RIGHT ACCESS: UBS Mangakahia may enjoy full
access to the Land as contemplated by the Forestry
Right. UBS Mangakahia acknowledges and agrees that
the provisions of this sub-clause 2.4 does not
require FCF to maintain all Forest Roads at all times
throughout the term of this agreement. The relevant
Forest Roads will be maintained in accordance with
normal forestry practice where they are required for
harvesting the relevant Working Block(s), for access
to the public roads and the major access roads on the
Land.
2.5 REPAIRS AND REINSTATEMENT: Following the completion of
harvesting and extraction of wood from the relevant Working
Block(s) the parties agree that where FCF has not been
responsible for harvesting the Trees, UBS Mangakahia will be
responsible for the repairing and reinstatement of any damage
caused to the Forest Roads (excluding skids and landings for
the purposes of this sub-clause) by the harvesting and
associated use by that party, its personnel, contractors and
invitees to a standard acceptable for the establishment of a
succeeding crop or as otherwise agreed.
2.6 FOREST ROADS: In each Year of this agreement following
nomination of the Working Block(s) pursuant to sub-clauses
2.1.1, 2.1.2, and 3.2, FCF will provide UBS Mangakahia on or
before 1_March with a written infrastructure plan that will
include the following.
2.6.1 MAP: A map of the Working Block(s) and Land showing
the Forest Roads that will be used to harvest the
Trees within those Working Block(s) and for the
cartage of the harvested produce from the Working
Block(s) over the Land. Such map should also
delineate those Forest Roads that are existing and
those that
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need to be constructed and/or upgraded for the
harvesting of the Working Block(s).
2.6.2 MEASUREMENTS: Details, including the specification
and length of roading and number of landings to be
constructed and/or upgraded for the harvesting of the
Working Block(s).
2.6.3 GEOTHERMAL BORES: Geographical Information Systems
data programmed with the location of geothermal bores
plotted on the Land.
2.6.4 PHYSICAL/LEGAL ACCESS ISSUES: Details of any physical
or legal access issues which may result in UBS
Mangakahia (or any third party purchaser of Trees
from UBS Mangakahia other than FCF) being unable to
harvest or access the relevant Trees for harvesting
using the then existing most practicable and cost
effective access route.
2.7 RESPONSE TO INFRASTRUCTURE PLAN: Following receipt of the
infrastructure plan pursuant to sub-clause 2.6 the parties
will meet and discuss any issues arising from the
infrastructure plan and the parties will agree at that meeting
any changes to the plan. FCF will then provide an amended
infrastructure plan incorporating the agreed changes (if any)
within ten (10) Business Days.
2.8 FOREST ROADING COSTS: FCF acknowledges that the purchase price
under the Sale and Purchase Agreement included an amount
effectively representing a prepayment for the cost of the
provision of Forest Roads. Accordingly, for the avoidance of
doubt the parties agree that FCF will be responsible for the
costs associated with the provision of the Forest Roading
pursuant to sub-clauses 2.2.2 and 2.4, including but not
limited to provision of equipment, obtaining resource
consents, planning, labour, regulatory compliance and
materials but excluding any bond or guarantee payable under
subclause 2.2.3.
2.9 DESIGNATION AND DETERMINATION OF ROAD LINE SALVAGE: Following
finalisation of the infrastructure plan, FCF shall ▇▇▇▇ out
the area of all landings and skid sites and the centre line of
all forest roading necessary to implement the infrastructure
plan agreed by FCF and UBS Mangakahia pursuant to sub-clause
2.7. Within thirty (30) days of receipt of FCF's request (and
in any event no earlier than thirty (30) days after agreement
is reached as to the infrastructure plan pursuant to
sub-clause 2.7), UBS Mangakahia will:
2.9.1 DESIGNATION: arrange for the outer boundaries of the
Trees to remain to be physically marked or designated
by such other means of demarcation as may be agreed
by the parties; and
2.9.2 APPOINT CONSULTANT: appoint a Forestry Consultant (
at UBS Mangakahia's cost) who will undertake a road
line salvage PHI (including the area of landings,
skid sites and road strips) to
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estimate the grades and volumes of logs from the
Trees that will be extracted in order to implement
the infrastructure plan. UBS Mangakahia will consult
with FCF regarding the methodology to be applied in
undertaking the estimate. Within 3 Business Days of
completing the PHI, UBS Mangakahia must make
available to FCF the plot data and plot locations (to
ensure that the sampled Trees can be identified and
audited by FCF) used in calculating the grades and
volumes and the area calculation used in determining
the volume (as they are completed) to enable FCF to
undertake an independent assessment of the grades and
volumes. FCF must advise UBS Mangakahia and the
Forestry Consultant within 10 Business Days of
receiving that information whether it accepts or
rejects the estimate of grades and volumes. If FCF
rejects the estimate of grades and volumes, then UBS
Mangakahia and FCF will meet to agree what additional
measurements should be undertaken by the Forestry
Consultant in order for an acceptable estimate of the
grades and volumes to be determined. The Forestry
Consultant will at UBS Mangakahia's and FCF's joint
costs undertake such additional measurements and will
recalculate the grades and the volumes of logs to be
extracted from the road line salvage and advise the
parties accordingly.
2.10 INVOICING OF ROAD LINE SALVAGE: Following determination
pursuant to sub-clause 2.9, of the grades and volumes of logs
for the Trees that will be extracted to implement the
infrastructure plan, UBS Mangakahia will issue a GST tax
invoice to FCF for the road line salvage Trees using the
prices determined pursuant to sub-clause 2.11, which invoice
will be payable by FCF by the first day of the relevant
Quarter in which the relevant road line salvage Trees are to
be harvested. In respect of the Trees designated for road line
salvage the following provisions will apply.
2.10.1 RISK: Risk in each Tree will pass to FCF as from the
date on which payment of the relevant GST tax invoice
for the Trees is due.
2.10.2 TITLE: Title to a Tree will pass to FCF at the time
of payment by FCF in full of the relevant GST tax
invoice.
2.10.3 WARRANTIES AND UNDERTAKINGS: UBS Mangakahia warrants
and undertakes to FCF as follows:
(a) LEGAL OWNER: As at the date that title to a
Tree passes to FCF UBS Mangakahia is the
legal and beneficial owner of the relevant
Trees;
(b) TITLE: Title in the Trees will pass to FCF
free from any Encumbrances created by UBS
Mangakahia.
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2.11 PROCEDURE FOR CALCULATION OF ROAD LINE SALVAGE PRICES: The
price of the Trees that will be extracted for road line
salvage purposes shall be determined in accordance with the
following provisions.
2.11.1 APPOINTMENT: Within thirty (30) days of receipt of
the request under sub-clause 2.9 the parties will
jointly appoint a Forestry Consultant or, failing
agreement within ten (10) Business Days thereof, the
Chairperson of the Consultants' Committee of the New
Zealand Institute of Forestry will appoint a Forestry
Consultant to set the market stumpage price by log
grade (as set out in the PHI) for the road line
salvage Trees. The Forestry Consultant will advise
both parties in writing for each log grade, of the
details of the market mix and associated pricing and,
when applicable, costs of cartage, logging and
loading.
2.11.2 CRITERIA: In setting the market price for the road
line salvage Trees the Forestry Consultant shall have
regard to those factors set out in clause 3.1.2 of
the Wood Supply Agreement insofar as they are
applicable to road line salvage Trees.
2.11.3 BINDING DECISION: The assessments made by the
Forestry Consultant shall be final and binding on the
parties and clause 9 shall not apply to such
assessments.
2.12 CUTTING OF AGREED TREES ONLY: If FCF harvests any Trees not
designated for extraction pursuant to sub-clause 2.9.1 while
implementing the infrastructure plan agreed pursuant to
sub-clause 2.7, FCF must pay UBS Mangakahia on demand as
liquidated damages, an amount equal to:
2.12.1 VOLUME: the volume of such logs that would have been
obtained from the Trees felled as estimated by the
Forestry Consultant using procedures consistent with
sub-clause 2.11 multiplied by;
2.12.2 TWICE WEIGHTED AVERAGE: two (2) times the weighted
average road line salvage stumpage rate applicable
during the Quarter when harvested.
For the avoidance of doubt the parties record that FCF will
not be required to pay two (2) times the weighted average road
line salvage stumpage rate for Trees harvested outside the
marked road line salvage boundaries that need to be removed
for operational purposes or safety reasons consistent with
accepted forestry industry practice provided that:
2.12.3 NOTICE TO UBS MANGAKAHIA: FCF shall be required to
advise UBS Mangakahia in writing in relation to each
road line as to the additional volume of Trees that
have been harvested outside the marked road line
salvage boundaries together with
Infrastructure Agreement Page 14
details as to why such harvesting was necessitated
for operational or safety reasons;
2.12.4 MATERIAL VOLUMES: FCF shall be required to give
advance written notice to UBS Mangakahia and obtain
UBS Mangakahia's prior written consent (such consent
not to be unreasonably withheld or delayed) where the
Trees to be harvested outside the marked road line
salvage boundaries for operational or safety reasons
equates to a material increase in the PHI volumes
estimated for the relevant road line salvage;
2.12.5 INVOICING OF ADDITIONAL ROAD LINE SALVAGE: UBS
Mangakahia will issue a GST tax invoice (with
subclauses 2.10.1 to 2.10.3 applying to such invoice
and Trees) to FCF for all Trees harvested outside the
marked road line salvage boundaries for operational
purposes or safety reasons on the basis that FCF will
be invoiced for the volume of such logs that would
have been obtained from the Trees felled as estimated
by the Forestry Consultant using the procedures
consistent with sub-clause 2.11. Such invoice will be
payable within 20 Business Days of the date of that
invoice.
2.13 FEES FOR INFRASTRUCTURE SERVICES: In consideration of FCF
providing the infrastructure services other than Forest Roads
under this agreement, UBS Mangakahia shall pay FCF fees
calculated in accordance with the following:
2.13.1 FLAT FEE: $19,000 plus GST per Harvest Period with
payment due in advance on 1 July of each Harvest
Period following the issue of an appropriate GST tax
invoice by FCF. The flat fee is intended to cover
services to be provided by FCF which are intended to
be independent of the level of service provided
(eg, induction, training and access to communication
networks etc).
2.13.2 HARVEST PLANNING FEE: $35.00 plus GST per hectare
applying to the Working Block(s) to be harvested in
the relevant Harvest Period with payment due in
advance on 1 July of each Harvest Period following
the issue of an appropriate GST tax invoice by FCF.
The harvest planning fee is intended to cover the
costs of the harvest planning services provided by
FCF to enable the harvest of the relevant Working
Block(s) inclusive of all regulatory consents
including resource consents.
2.13.3 ROAD USAGE FEE: 12.5 cents plus GST per cubic metre
(excluding all road line salvage and Working Block(s)
purchased by FCF) based on the aggregate PHI volumes
from non FCF Working Block(s) harvested in the
relevant Harvest Period. Payment to be made by four
equal instalments with each instalment due on the
first day of the Quarter following the issue of an
appropriate GST tax invoice by FCF. The road usage
Infrastructure Agreement Page 15
fee is intended as a royalty payment for the use of
the existing Forest Roads on the Land where FCF has
already incurred the capital expenditure on
constructing the relevant roads.
2.13.4 FEES REVIEW:
(a) BIENNIAL REVIEW: The flat fee, harvest
planning fee and road usage fee provided for
in sub-clauses 2.13.1, 2.13.2 and 2.13.3
respectively shall be reviewed biennially at
the relevant April Quarterly meeting. At the
time of such review the parties shall
negotiate in good faith to determine the new
flat fee, harvest planning fee and road
usage fee to apply for the next two Year
period taking into account the then current
market rates for the services being provided
by FCF under this agreement. Any
disagreement over the level of such fees
will be resolved under clause 9 of this
agreement.
(b) FEES TO APPLY: If the parties are unable to
resolve any dispute over the fees before the
commencement of the next two Year period
then the relevant fees applicable to the
previous two Year period will continue to
apply and be payable by UBS Mangakahia until
the dispute is resolved.
(c) DISPUTE RESOLVED: Once the dispute has been
resolved and:
(i) FEE INCREASE: the relevant fees
have increased from the previous
fee level, FCF will be entitled to
be paid the difference between the
two fee levels together with any
additional GST; or
(ii) FEE DECREASE: the relevant fees
have decreased from the fee level
applicable for the previous period,
then UBS Mangakahia will be
entitled to the difference between
the two fee levels together with a
credit note for any overpaid GST;
and the payment will be backdated to the
start of the relevant two Year period and
such payment is payable to the other party
within ten (10) Business Days of the dispute
being resolved. The party paying the
difference shall forthwith pay such amount
to the other party together with interest
thereon at the ▇▇▇▇ Rate calculated daily
from the start of the relevant two Year
period to the day ten (10) Business Days
after the dispute has been resolved, and, if
relevant, interest
Infrastructure Agreement Page 16
thereon at the Default Interest Rate
calculated daily from the day eleven (11)
Business Days after the dispute has been
resolved to the date of payment of the
balance to the other party and compounded
monthly.
2.14 DAMAGED WOOD: If all or any part of the Land or Trees are
damaged by fire, wind, forest disease, flood or other cause
the parties agree to consult over measures to protect UBS
Mangakahia's investment in the Trees through timely salvage of
the damaged Trees. The parties agree that such measures,
without limitation, may include the following:
2.14.1 POSTPONEMENT: Postponement of road line salvage on
Working Block(s) where works have not commenced, in
which case any payment for the relevant Trees made by
FCF will at UBS Mangakahia's option either be
promptly refunded or be credited to FCF to be offset
against further road line salvage Trees. Where UBS
Mangakahia elects to offset the payment, FCF will
also be credited interest on that payment at the ▇▇▇▇
Rate from the date that the payment was made to UBS
Mangakahia until the date that payment would have
been due to UBS Mangakahia for the subsequent road
line salvage Trees but for the off set.
2.14.2 COMPLETION OF ROAD LINE SALVAGE: Completion of road
line salvage on Working Block(s) where works have
commenced.
2.14.3 REDIRECTION OF CREWS: Redirection of road line
salvage crews to Stands that include the damaged
Trees to facilitate the early salvage of such Trees
in which case FCF will provide an infrastructure plan
for the Forest Roads required for the salvage as
contemplated by sub-clause 2.6. UBS Mangakahia will
respond to such infrastructure plan pursuant to the
terms of sub-clause 2.7 and the designation and
determination of the road line salvage will be
progressed in accordance with the terms of
sub-clauses 2.9 to 2.12 (inclusive).
2.14.4 NET STUMPAGE: Payment of the net stumpage amount
between the value of road line salvage postponed and
the value of the new road line salvage by either FCF
to UBS Mangakahia or UBS Mangakahia to FCF as
appropriate.
2.14.5 ROAD LINE SALVAGE CONSENTS: FCF will be required to
obtain all necessary resource consents, permits and
licenses that may be necessary to undertake such
emergency road line salvage works, Forest Roads
development and/or upgrading and harvesting.
2.14.6 NEW HARVEST PLAN: If the parties agree, FCF will
prepare a new harvest plan and FCF shall be entitled
to be paid an additional harvest planning fee in
accordance with clause 2.13.2
Infrastructure Agreement Page 17
which additional fee will be payable by UBS
Mangakahia by the 20th of the Month following the
Month in which FCF issues an invoice for the
additional harvest planning fee.
2.15 ROAD LINE SALVAGE SAMPLE: FCF, including its permitted
assigns, shall, if requested from time to time by UBS
Mangakahia, provide UBS Mangakahia with a small non-material
quantity of logs from road line salvage harvesting for
determination by UBS Mangakahia of quality data pertaining to
the logs, including pruned log index data. Such logs shall be
paid for by UBS Mangakahia on the basis consistent with
clauses 2.10 and 2.11 (except to the extent that the invoice
shall be issued after the relevant logs have been harvested
and provided to UBS Mangakahia and such invoice shall be
payable within 20 Business Days of the date of the invoice).
3. TRANSITIONAL PERIOD HARVEST SCHEDULING
During the Transitional Period the parties agree to co-operate and
consult in good faith to ensure that the Forest Road services and other
infrastructure services referred to in this agreement are provided in a
timely and efficient manner to enable harvesting during Harvest Period
One and Harvest Period Two. In particular the parties agree to do the
following.
3.1 CONSULTATION: Within twenty (20) days of Settlement UBS
Mangakahia and FCF will consult to consider which Trees will
be ready and suitable for harvesting during Harvest Period One
and Harvest Period Two. FCF will produce for the purpose of
such consultations its most up to date pre-harvest information
in relation to the Trees being considered for harvesting.
3.2 NOMINATION OF TRANSITIONAL WORKING BLOCK(s): UBS Mangakahia
will verify the pre-harvest information provided by FCF and
will obtain its own PHI's in relation to the Trees considered
for harvesting during Harvest Period One. Within thirty five
(35) days of Settlement UBS Mangakahia will give notice to FCF
designating the Working Block(s) that UBS Mangakahia intends
to harvest during Harvest Period One and Harvest Period Two.
3.3 FOREST ROADS: Within sixty (60) days of Settlement FCF will
provide UBS Mangakahia with the infrastructure plan required
under sub-clause 2.6 for the Working Block(s) to be harvested
during Harvest Period One and Harvest Period Two. On receipt
of such information the infrastructure plan will be agreed by
the parties in accordance with the provisions of sub-clause
2.7.
3.4 HARVESTING PREPARATIONS: Following designation of the Working
Block(s) under sub-clause 3.2 FCF will provide the harvest
preparation services as contemplated by sub-clauses 2.2 to 2.5
(inclusive) for the Working Block(s) to be harvested during
Harvest Period One and Harvest Period Two.
Infrastructure Agreement Page 18
4. HEALTH AND SAFETY, CERTIFICATION AND ENVIRONMENTAL COMPLIANCE
4.1 COMPLIANCE: FCF shall take all reasonably practicable steps to
ensure that no act or omission by it or its employees, agents,
contractors, subcontractors, invitees, visitors or licensees:
4.1.1 HAZARD: causes a hazard, significant hazard, harm or
serious harm to any employee of UBS Mangakahia or any
person lawfully on the Land; or
4.1.2 BREACH OF HSE ACT: is a breach of any duty or
obligation of FCF under the Health and Safety in
Employment ▇▇▇ ▇▇▇▇ ("HSE Act") and any regulations
or codes of practice made pursuant to the HSE Act; or
4.1.3 HSE ACT ENFORCEMENT: does or is likely to give rise
to the issue of an improvement or prohibition notice,
enforcement proceedings or a prosecution under the
HSE Act against FCF or UBS Mangakahia.
Provided FCF shall only be required to take all reasonably
practicable steps to enforce the requirements in this
sub-clause 4.1 in respect of its agents, contractors,
subcontractors, invitees, visitors or licensees.
4.2 FURTHER OBLIGATIONS: Without limiting its general obligations
FCF shall:
4.2.1 RELEVANT RULES AND REGULATIONS: obtain and shall be
familiar with, all relevant rules, regulations,
standards and industry practices, applicable to the
provision of the services provided by FCF under this
agreement;
4.2.2 MAINTENANCE: in relation to FCF's duties under this
agreement, require that all plant, equipment,
machinery, vehicles and tools used are in a safe
working condition and subject to periodic checks to
ensure this standard is maintained and it shall
require that the use of equipment that is damaged or
does not meet accepted safety standards is not
permitted;
4.2.3 PROTECTIVE EQUIPMENT: in relation to FCF's duties
under this agreement, ensure that appropriate
protective equipment and clothing is supplied to, and
used by, all personnel, associated with the work;
4.2.4 INSTRUCTIONS: in relation to FCF's duties under this
agreement, observe any instructions by any competent
authority in relation to the maintenance of safe
working practices and accident prevention;
Infrastructure Agreement Page 19
4.2.5 REPORT ACCIDENTS: in relation to FCF's duties under
this agreement, report to UBS Mangakahia all
accidents resulting in injuries to personnel in
accordance with prescribed procedures.
4.3 INDEMNITY: FCF shall indemnify and keep indemnified UBS
Mangakahia from all costs, damages, fines, penalties, loss and
expense incurred or suffered by UBS Mangakahia in respect of
any breach of the HSE Act, or any conviction of or proceedings
instigated against any of them pursuant to the HSE Act
directly related to a breach by FCF of any of the provisions
set out in sub-clauses 4.1 and 4.2. Provided that this
indemnity will not apply where any claim under this indemnity
against FCF arises as a result of any act or omission by UBS
Mangakahia, or where FCF was acting consistently with any
requests of UBS Mangakahia or directions from UBS Mangakahia.
Each party will take all reasonable steps to mitigate their
costs, damages, fines, penalties, loss and expense.
4.4 NOTIFICATION OF BREACH: If FCF becomes aware that it is or may
be in breach, or is likely to be in breach of any of the
provisions in sub-clauses 4.1 or 4.2, FCF shall promptly
notify UBS Mangakahia of such a breach or anticipated breach.
In relation to any breach or anticipated breach in connection
with any of the provisions in sub-clauses 4.1 or 4.2 FCF shall
follow the reasonable directions, if any, of UBS Mangakahia to
avoid, remedy or mitigate such breach or anticipated breach.
4.5 INDUCTION: All of FCF's employees, agents, contractors,
subcontractors, invitees, visitors or licensees shall undergo
a safety induction and an adequate safety training programme
before commencing work on the Land. FCF shall promptly advise
UBS Mangakahia in writing of any major changes to any of its
safety policies and procedures. FCF shall be responsible for
ensuring that its affected employees, agents, contractors,
subcontractors, invitees, visitors or licensees are advised of
any such changes.
4.6 FIRE TRAINING: FCF shall procure that any contractor engaged
by FCF in working in the forest shall make their personnel
available for fire training, suppression, and standby as may
be required by UBS Mangakahia, and at the cost of UBS
Mangakahia with such actual costs to be payable by UBS
Mangakahia within 15 Business Days of receipt of an
appropriate invoice.
4.7 FOREST STEWARDSHIP CERTIFICATION: Unless the parties otherwise
agree, FCF will maintain and comply with (or require
compliance by its contractors, subcontractors, agents,
employees, invitees, visitors or licensees) Forest Stewardship
Council Certification in relation to the performance of its
obligations under this agreement.
4.8 ENVIRONMENTAL COMPLIANCE: In performing its obligations under
this agreement FCF will at all times require compliance (or
require compliance by its contractors, subcontractors, agents,
employees, invitees, visitors or licensees) with the
Environmental Requirements.
Infrastructure Agreement Page 20
5. INSURANCE
5.1 INSURANCE: FCF shall be permitted to self-insure its risks,
provided that if at any time during the term of this
agreement, the net assets of ▇▇▇▇▇▇▇▇ Challenge Industries
Limited fall below $200 million, FCF shall promptly notify UBS
Mangakahia of the same and the provisions of the following
clauses will apply until the net assets of ▇▇▇▇▇▇▇▇ Challenge
Industries Limited exceed $200 million. All calculations of
net assets required to be carried out pursuant to this clause
must be made using those accounting principles used for the
preparation of financial statements of ▇▇▇▇▇▇▇▇ Challenge
Forests Limited.
5.1.1 PUBLIC LIABILITY INSURANCE: FCF shall obtain and
maintain, at its expense, public liability insurance
coverage, with an extension for fire fighting costs
and levies pursuant to the Forest and Rural Fires ▇▇▇
▇▇▇▇, in respect of activities undertaken by it and
its subcontractors in performing its obligations
under this agreement in such amounts, on such terms
and with such insurers as a prudent forestry
contractor would insure for based on the risks and
liabilities attendant on the activities FCF has
contracted to provide to UBS Mangakahia with
confirmation in writing of the cover and that the
premiums are paid.
5.1.2 ADDITIONAL INSURED: UBS Mangakahia shall be named as
an additional insured on all insurance policies
providing such coverage.
5.1.3 CHANGE IN SCOPE: Any proposed material change in the
scope, insurer or amount of insurance coverage
maintained by FCF pursuant to this clause 5 shall be
promptly reported to UBS Mangakahia. FCF shall have
no obligation to insure under this agreement except
as specified in this clause 5.
5.2 OTHER INSURANCE: FCF shall use reasonable endeavours to obtain
and maintain such insurance in respect of this agreement
(including, without limitation, insurance against fraud or
theft on the part of FCF's employees or contractors which
would cause loss to UBS Mangakahia), with such insurers and
coverage, and for such amount, as UBS Mangakahia shall
request. The cost of such insurance including any brokerage
fees and out of pocket expenses shall be for the account of
UBS Mangakahia. FCF will obtain written quote(s) for such
insurance including brokerage fees and out-of-pocket costs and
will not be under any obligation to place such insurance until
such time as it has received payment of the agreed quote in
full in cleared funds from UBS Mangakahia. Upon request, FCF
shall furnish to UBS Mangakahia, all certificates of the
insurances obtained and maintained pursuant to this sub-clause
5.2.
5.3 UBS MANGAKAHIA INSURANCE: UBS Mangakahia may, at its sole and
absolute discretion and cost, obtain and maintain such other
insurances in
Infrastructure Agreement Page 21
addition to any insurance obtained and maintained by FCF in
accordance with this clause 5, but without limiting FCF's
obligation to obtain and maintain insurance in accordance with
this clause 5.
5.4 FCIL UNDERTAKING: In order to satisfy UBS Mangakahia of FCF's
credit worthiness in respect of its self insuring for the
above risks, FCF will provide UBS Mangakahia with a signed
undertaking from ▇▇▇▇▇▇▇▇ Challenge Industries Limited in the
form set out in Schedule Two together with a guarantee from
▇▇▇▇▇▇▇▇ Challenge Industries Limited in the form attached to
Schedule Two on execution of this agreement.
6. REPRESENTATIONS, WARRANTIES AND STANDARD OF PERFORMANCE
6.1 UBS MANGAKAHIA'S REPRESENTATIONS AND WARRANTIES: UBS
Mangakahia represents and warrants as follows.
6.1.1 STANDING: UBS Mangakahia is a company duly
incorporated and validly existing under the laws of
New Zealand.
6.1.2 AUTHORITY TO ENTER INTO AGREEMENT: The execution,
delivery and performance by UBS Mangakahia of this
agreement had been duly authorised by all necessary
action on its part, do not contravene any law binding
on UBS Mangakahia, do not contravene the
incorporation documents of UBS Mangakahia and do not
contravene the provisions of or constitute a default
under any other agreement to which UBS Mangakahia may
be a party or by which any of its assets may be
bound.
6.1.3 CONSENTS, APPROVALS, ETC: It has obtained or made all
consents, approvals, authorisations or orders of any
court or governmental authority or agency required on
its behalf to be obtained or made on or prior to the
date of execution of this agreement in connection
with the execution and delivery of this agreement and
the performance by it of its obligation hereunder.
6.1.4 VALID AGREEMENT: This agreement has been duly
executed and delivered by UBS Mangakahia and
constitutes the legal, valid and binding obligation
of UBS Mangakahia, enforceable against UBS Mangakahia
in accordance with its terms.
6.1.5 NO PROCEEDINGS: There is no action, suit or
proceedings before any court or governmental agency
or authority now pending or, to the knowledge of UBS
Mangakahia, threatened against UBS Mangakahia which
might adversely affect the ability of UBS Mangakahia
to perform its obligations under this agreement.
6.2 FCF'S REPRESENTATIONS AND WARRANTIES: FCF represents and
warrants as follows.
Infrastructure Agreement Page 22
6.2.1 STANDING: FCF is a company duly incorporated and
validly existing under the laws of New Zealand.
6.2.2 AUTHORITY TO ENTER INTO AGREEMENT: The execution,
delivery and performance by FCF of this agreement had
been duly authorised by all necessary action on its
part, do not contravene any law binding on FCF, do
not contravene the incorporation documents of FCF and
do not contravene the provisions of or constitute a
default under any other agreement to which FCF may be
a party or by which any of its assets may be bound.
6.2.3 CONSENTS, APPROVALS, ETC: It has obtained or made all
consents, approvals, authorisations or orders of any
court or governmental authority or agency required on
its behalf to be obtained or made on or prior to the
date of execution of this agreement in connection
with the execution and delivery of this agreement and
the performance by it of its obligation hereunder.
6.2.4 VALID AGREEMENT: This agreement has been duly
executed and delivered by FCF and constitutes the
legal, valid and binding obligation of FCF,
enforceable against FCF in accordance with its terms.
6.2.5 NO PROCEEDINGS: There is no action, suit or
proceedings before any court or governmental agency
or authority now pending or, to the knowledge of FCF,
threatened against FCF which might adversely affect
the ability of FCF to perform its obligations under
this agreement.
6.3 FCF'S STANDARD OF PERFORMANCE: Subject to the specific
reasonable instructions or directions given to FCF pursuant to
this agreement by UBS Mangakahia, FCF shall undertake FCF's
obligations under this Agreement in good faith employing the
same degree of care and skill as:
6.3.1 FCF'S AFFAIRS: FCF employs in the conduct of its own
affairs; or
6.3.2 HIGHLY COMPETENT SERVICE PROVIDER: a highly competent
service provider with expertise in the provision of
equivalent services to those provided under this
agreement for large scale commercial plantation
forestry operations;
whichever is the higher standard. The parties acknowledge that
nothing in this clause 6.3 shall limit FCF's obligation to act
as a competent service provider to the standards required by
clauses 6.3.1 and 6.3.2 (meaning, for example, that in
briefing, advising or delivering services to UBS Mangakahia,
FCF must advise and/or deliver services to the standard
required, and if UBS Mangakahia issued FCF with an instruction
that a service provider conforming with the standard of
Infrastructure Agreement Page 23
performance set out in this clause would find fault with, FCF
must inform UBS Mangakahia), nor shall it limit FCF's
obligation to discharge any instruction or direction from UBS
Mangakahia to the standard of performance set out in this
clause.
7. INDEMNITY
7.1 FCF'S DUTY TO INDEMNIFY: FCF shall indemnify UBS Mangakahia
and its respective officers, directors, employees and
Affiliates against any and all costs, expenses, claims,
damages and liabilities reasonably incurred whatsoever,
including reasonable legal expenses, arising as a direct
result of any breach by FCF of the provisions of this
agreement, except if, and only to the extent that, such
breach, act or omission, occurs as a result of:
7.1.1 SPECIFIC INSTRUCTIONS: FCF carrying out and
performing any specific instruction or direction
given to FCF pursuant to this agreement by UBS
Mangakahia; or
7.1.2 FAILURE BY UBS MANGAKAHIA: FCF, having met the
standard of a reasonable and prudent forestry
contractor, being unable to comply with any of its
duties under this agreement caused by the failure to
act by UBS Mangakahia.
7.2 LIMITATION OF LIABILITY - FCF: FCF's liability under
sub-clauses 4.3 and 7.1 of this agreement and sub-clauses 8.1
and 11.3 of the Management Agreement cannot exceed in
aggregate $2 million (the "Cap").
7.3 UBS MANGAKAHIA'S DUTY TO INDEMNIFY: UBS Mangakahia hereby
indemnifies FCF, its officers, directors, employees and
Affiliates, against any and all costs, expenses, claims,
damages and liabilities whatsoever, including reasonable legal
expenses, arising directly out of any breach by UBS Mangakahia
of the provisions of this agreement.
7.4 LIMITATION OF LIABILITY - UBS MANGAKAHIA: UBS Mangakahia's
liability under sub-clause 7.3 of this agreement and
sub-clause 8.3 of the Management Agreement cannot exceed in
aggregate $2 million.
7.5 LIABILITY: Nothing expressed or implied in this agreement
shall confer any liability on either party (referred to in
this clause as the "First Party") in respect of any indirect,
consequential or special loss, damage, cost or expense of any
kind, including (but not limited to) loss of savings and
profit, suffered or incurred by the other party as a direct or
indirect result of a breach by the First Party of any of its
obligations under this agreement.
7.6 RIGHT TO DEFEND: If any action or proceeding is brought
against a party or parties indemnified under sub-clauses 7.1.
or 7.3 (the "Indemnified Party"), such Indemnified Party shall
promptly notify in writing the party or parties against whom
such indemnity may be sought (the
Infrastructure Agreement Page 24
"Indemnifying Party"). The Indemnifying Party shall then be
entitled to assume the defence of the action or proceeding
with counsel reasonably satisfactory to the Indemnified Party
and shall pay the fees and expenses of such counsel. If the
Indemnifying Party has given written notice invoking the
provisions of clause 9 with respect to its obligation to
indemnify, the Indemnifying Party may assume such defence
subject to a reservation of rights against the Indemnified
Party in any such action or proceeding, any Indemnified Party
shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such
Indemnified Party unless:
7.6.1 BY MUTUAL AGREEMENT: the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the
retention of such counsel; or
7.6.2 DIFFERING INTERESTS: the named parties to any such
proceedings (including the impleaded parties) include
both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same
counsel would be inappropriate due to an actual or
potential conflict of interest between them.
Where there is any disagreement between the parties as to
whether there is an actual or potential conflict of interest
pursuant to sub-clause 7.6.2 such disagreement shall be
referred to the President of the New Zealand Law Society whose
determination shall be binding and the costs of obtaining such
determination shall be paid equally by the Indemnifying Party
and the Indemnified Party. It is understood and agreed by the
parties that the Indemnifying Party shall not, in connection
with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses
of more than one separate firm for the Indemnified Party. The
Indemnifying Party shall not be liable for any settlement of
any proceeding effected without its written consent, but if
settled with such consent or if there is a final judgment for
the plaintiff, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Party
shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or
could have been a party and indemnity could have been sought
pursuant to this clause 7 by such Indemnified Party.
8. FORCE MAJEURE
8.1 DELAY OR FAILURE TO PERFORM: No party shall be liable for
failure to perform or delay in performing hereunder if the
cause of such failure or delay is outside or beyond the
reasonable control of the party failing to perform (including
but without derogating from the generality of the foregoing:
fire, wind, flood, earthquake, volcanic eruption, public
disorders, riot, war, embargoes, transport restrictions and
forest fire prevention restrictions). For the purposes of this
clause the solvency of a
Infrastructure Agreement Page 25
party shall be deemed to be within that party's reasonable
control. Further nothing in this clause shall excuse payment
of any money due or which becomes due under this agreement
where the obligation to pay arose before the occurrence of the
event of force majeure.
8.2 SUSPENSION OF PERFORMANCE: Any suspension of performance by
reason of this section shall be limited to the period during
which the force majeure exists.
8.3 NOTICE: The party claiming force majeure shall as soon as
possible and in any event no later than five (5) Business Days
after it becomes aware of the happening of the event causing
the failure give notice to the other of the happening of the
event causing the failure and shall furnish all reasonably
available information detailing the cause or event and give an
estimate of the period of time required to remedy the failure
(if such remedy is deemed practicable). Failure to give such
notice shall prevent the party from claiming that the event
gives rise to force majeure until notice has been given.
8.4 PRIOR OBLIGATIONS: No situation of force majeure pursuant to
this clause shall relieve either party of any duty or
obligation under this agreement which relates to a period
prior to the existence of the situation of force majeure and
had arisen or been incurred prior to the existence of the
situation of force majeure.
8.5 SUSPENSION AND TERMINATION:
8.5.1 SUSPENSION: If any event beyond FCF's reasonable
control prevents FCF from carrying out any
obligations under this agreement, UBS Mangakahia may
immediately suspend this agreement, on providing
written notice of such suspension to FCF, and appoint
a replacement to fulfil FCF's obligations under this
agreement. Such suspension shall continue until UBS
Mangakahia is satisfied, in its absolute discretion,
that FCF is capable of resuming its responsibilities
under this agreement. Notwithstanding that the
agreement has been suspended, the flat fee under
clause 2.13.1 and the road usage fee under clause
2.13.3 payable by UBS Mangakahia to FCF will continue
to be payable in full in accordance with the relevant
provisions of this agreement as if this agreement had
not been suspended.
8.5.2 TERMINATION - FCF: If an event beyond FCF's
reasonable control prevents FCF from carrying out any
obligation under this agreement for a continuous
period of twenty (20) Business Days, then UBS
Mangakahia may cancel this agreement immediately upon
providing written notice to FCF provided that prior
to termination UBS Mangakahia must pay to FCF
reasonable out-of-pocket costs arising from the early
termination of this agreement. FCF must take all
reasonable
Infrastructure Agreement Page 26
steps to minimise such costs. In that case,
sub-clause 20.4 will apply.
8.5.3 TERMINATION - UBS MANGAKAHIA: If an event beyond UBS
Mangakahia's reasonable control prevents UBS
Mangakahia from carrying out any obligation under
this agreement for a continuous period of forty (40)
Business Days, then FCF may cancel this agreement by
giving ten (10) Business Days written notice to UBS
Mangakahia. In that case, clause 20 will apply.
9. RESOLUTION OF DISPUTES
In the event of a dispute arising between the parties in relation to
this agreement, the following provisions will apply.
9.1 NEGOTIATE: A party claiming that a dispute has arisen
concerning this agreement must give notice to the other party
specifying the matter in dispute. The parties will use their
best endeavours to resolve the dispute by negotiation and good
faith. The parties will attend at least one meeting to discuss
an attempt to resolve the dispute as a condition precedent to
taking any other steps concerning the dispute (including but
not limited to commencing any legal proceedings other than an
application for injunctive relief). The attendees at such a
meeting will include the Managing Director of UBS Timber
Investors (or nominee) and the Chief Executive Officer of
▇▇▇▇▇▇▇▇ Challenge Forests Limited (or nominee). All
discussions will be without prejudice and will not be referred
to in any later proceedings.
9.2 ARBITRATION: If the dispute cannot be resolved in accordance
with sub-clause 9.1 within ten (10) Business Days after the
date of the notice referred to in sub-clause 9.1, then either
party may then require (by written notice to the other party)
the dispute to be referred to arbitration. If this sub-clause
is invoked then the following shall apply.
9.2.1 ARBITRATION ACT: The dispute will be referred to
arbitration by a sole arbitrator under the provisions
of the Arbitration ▇▇▇ ▇▇▇▇. The arbitrator will be
agreed upon between the parties within ten (10)
Business Days of written notice, or failing
agreement, by the President of the New Zealand Law
Society or its successor body, or any nominee of the
President. In either case, the arbitrator must not be
a person who has participated in any informal dispute
resolution procedure in respect of the dispute. Any
party may request the appointment of an expert to sit
with the arbitrator but any such expert shall have an
advisory role only and shall not have the authority
to make a binding decision. Each of the parties may
make submissions to the arbitrator as to the relevant
skills and expertise of an appropriate expert, but
the selection of an appropriate expert is ultimately
at the arbitrator's sole discretion.
Infrastructure Agreement Page 27
9.2.2 ARBITRATION IN NEW ZEALAND: The arbitration will take
place in New Zealand.
9.2.3 AWARD FINAL: The award in the arbitration including
any award by the arbitrator of costs will be final
and binding on the parties.
9.2.4 AWARD OF INTEREST: The arbitrator may award interest
upon any amount due and payable under his or her
award at such rate and for such period as he or she
considers just, down to the date of the award.
9.3 PARTIES TO CONTINUE TO PERFORM: Subject to the provisions of
clause 20, pending resolution of any dispute or difference,
the parties shall continue to perform their respective
obligations pursuant to the provisions of this agreement.
9.4 INJUNCTIVE RELIEF: Nothing in this clause will prevent any
party commencing proceedings for injunctive relief.
10. ASSIGNMENT
10.1 CONSENT: This agreement shall be binding upon and inure to the
benefit of the parties, their respective successors and
permitted assigns. The parties recognise that UBS Mangakahia
has contracted for FCF's services as provided in this
agreement because of certain special and unique abilities of
FCF and that FCF has agreed to provide such services due to
special and unique characteristics of UBS Mangakahia. For this
reason, a party may not assign its rights or transfer its
obligations under this agreement to any other person or entity
without the prior written consent of the other party. Such
consent is not to be unreasonably or arbitrarily withheld.
10.2 DEED: In the case of request for assignment the assignor shall
obtain the execution by the proposed assignee of a deed of
covenant to be prepared by the other party's solicitors at the
assignor's costs whereby the proposed assignee covenants with
the other party to observe and perform all the terms of this
agreement to be observed and performed on the part of the
assignor.
10.3 OTHER ACTIVITIES: UBS Mangakahia acknowledges that FCF owns
other plantation assets in New Zealand and is actively
involved in the business of managing such plantation assets
and harvesting and marketing forest products (as well as
managing plantation assets and harvesting and market forest
products owned by others) both in the domestic and export
markets. From time to time, FCF's acquisition and management
of plantation assets and harvesting and marketing of forest
products for its own account, or for a third party, may create
a conflict of interest with respect to the obligations of FCF
under this agreement.
Infrastructure Agreement Page 28
10.4 EFFECTS OF CONFLICT: In the event of a conflict of interest
(which the parties acknowledge could arise due to a change in
the effective control or management of FCF) UBS Mangakahia
shall have the right, following consultation with FCF, to
terminate this agreement without cause on thirty (30) Business
Days' notice in writing where the conflict of interest is
reasonably likely to cause FCF to be unable to comply in all
respects with its confidentiality obligations under this
agreement and thereby result in material adverse effect to UBS
▇▇▇▇▇▇▇▇▇▇.
▇▇. SEVERABILITY
Any provision of this agreement which is prohibited or unenforceable in
any jurisdiction shall be ineffective as to such jurisdiction to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this agreement or affecting the validity or
unenforceability of such provision in any other jurisdiction.
12. APPLICABLE LAW
12.1 NEW ZEALAND LAW: The law applicable to this agreement
including all submissions to arbitration shall be the law of
New Zealand and the parties irrevocably and unconditionally
agree to submit to be and be bound by the jurisdiction of the
courts and tribunals of New Zealand.
12.2 NON EXCLUSIVE JURISDICTION: The submission to jurisdiction in
sub-clause 12.1 does not (and is not to be construed to) limit
the rights of a party to take proceedings against the other
party in another court of competent jurisdiction, nor is the
taking of proceedings in one or more jurisdiction to preclude
the taking of proceedings in another jurisdiction whether
concurrently or not.
13. NOTICES
13.1 DELIVERY OF NOTICE: All notices and other communications
required or permitted under this agreement shall be in
writing. Any written notice under this agreement must be
signed by a duly authorised senior representative of any party
giving the notice and will be deemed validly given if:
13.1.1 PERSONAL DELIVERY: delivered personally;
13.1.2 DOMESTIC POST: sent by prepaid post; or
13.1.3 FACSIMILE: sent by facsimile transmission,
addressed to the recipient at the address or facsimile number
set out below (as applicable) or to any other address or
facsimile number that a party may notify to the other parties
by like notice.
Infrastructure Agreement Page 29
UBS MANGAKAHIA: if to UBS Mangakahia to:
UBS Mangakahia Forest Venture Ltd
C/- UBS Warburg NZ Equities Limited
▇ ▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
For: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇) ▇▇▇ ▇▇▇▇
With copies to:
UBS Timber Investors
Trade Center, 4th Floor
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
For: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
For: ▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇
FCF: if to FCF, to:
▇▇▇▇▇▇▇▇ Challenge Forests Industries Limited
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Private Bag 92036
Auckland Mail Centre
Auckland
For: Chief Executive Officer
Facsimile: (▇▇) ▇▇▇ ▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ Challenge Forests Industries Limited
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Private Bag 92036
Auckland Mail Centre
Auckland
For: Company Secretary
Facsimile: (▇▇) ▇▇▇ ▇▇▇▇
Infrastructure Agreement Page 30
13.2 TIME OF RECEIPT: No written communication will be effective
until received. Without limiting any other ways for a party to
prove that another party has received a notice, a notice or
other written communication under this agreement, will be
treated as received:
13.2.1 PERSONAL DELIVERY: if delivered personally, when left
with an apparently responsible person at the
recipient's address;
13.2.2 PREPAID POST: if sent by prepaid post three (3)
Business Days (if posted within New Zealand to an
address in New Zealand), or ten (10) Business Days
(if posted by prepaid airmail from country to
country) after the date of posting;
13.2.3 REGISTERED POST: if sent by registered post, on
acknowledgment of receipt by or on the recipient's
behalf; or
13.2.4 AIR COURIER DELIVERY: if sent by air courier
delivery, on acknowledgment of receipt by or on the
recipient's behalf; or
13.2.5 FACSIMILE: if sent by facsimile, on the sender's
receipt of a transmission report indicating that the
facsimile was sent in its entirety to the recipient's
facsimile number;
but, if the delivery or receipt is not on a Business Day or
after 5.00pm (local time) on any Business Day, the notice will
be treated as received by the recipient at 9.00am (local time)
on the next Business Day.
14. COPIES OF NOTICES
If a party is required by any term of this agreement to give a copy of
a notice or other communication to a third party, the failure to give
the copy of it to the third party will not affect the effectiveness of
that notice or communication to a party.
15. THIRD PARTY NOTICES
Each party shall promptly provide to the other party a copy of every
notice it receives from a third party in respect of the use of the
Forestry Roads and/or the Land to the extent that it is relevant to the
agreement and/or the Related Agreements or any part thereof.
Notwithstanding the above, the provisions of this clause shall not
apply to any notice received by any party from any Related Company of a
party.
Infrastructure Agreement Page 31
16. ENTIRE AGREEMENT
This agreement together with the Sale and Purchase Agreement, Forestry
Right, Wood Supply Agreement and Management Agreement contain the
entire agreement between the parties in connection with the subject
matter hereof and supersedes and replaces all prior negotiations,
agreements or representations, whether oral or written, between them
with respect thereto.
17. MODIFICATION
This agreement may not be amended or modified except by written
agreement signed by the parties.
18. WAIVER
No provision of this agreement may be waived except in writing by the
party granting the waiver and then only in the specific instance and
for the specific purpose for which given.
19. CONFIDENTIALITY
Each party will maintain as confidential at all times, and will not at
any time, directly or indirectly:
19.1 DISCLOSE: disclose or permit to be disclosed to any person;
19.2 USE: use for itself; or
19.3 USE TO DETRIMENT: use to the detriment of the other party;
any Confidential Information except:
19.4 LEGAL REQUIREMENT: subject to sub-clause 19.10, as required by
law or regulatory body (including any stock exchange);
19.5 PUBLIC KNOWLEDGE: as is already or becomes public knowledge,
otherwise than as a result of a breach by the party disclosing
or using that Confidential Information of any provision of
this agreement;
19.6 AUTHORISED: as authorised in writing by the other party;
19.7 LENDERS AND UNDERWRITERS: as required to communicate and make
disclosure to institutional lenders to and underwriters for,
or potential institutional lenders to and underwriters for,
FCF or UBS Mangakahia provided that the relevant party shall
ensure compliance by such persons with this clause 19 and
shall be liable for any breach of such obligations by such
persons and, in the case of potential institutional lenders or
underwriters, to procure the return of all such information if
the lending to or underwriting is not consummated;
Infrastructure Agreement Page 32
19.8 AFFILIATES AND ADVISERS: as required to communicate and make
disclosure to Affiliates of parties or the parties' or the
Affiliates' respective advisers who have a legitimate need to
know the information in order to perform activities connected
with this agreement or the Related Agreements, and provided
that the relevant party shall ensure compliance by such
persons with this clause 20 and shall be liable for any breach
of such obligations by such persons;
19.9 OTHER: to the extent reasonably required by this agreement
(and, without limiting the effect of this clause, a party may
disclose Confidential Information only to those of its
officers, employees or professional advisers, on a "need to
know" basis, as is reasonably required for the implementation
of this agreement); or
19.10 CONSULTATION: in the event that one party (the first party) is
required by law or stock exchange reporting obligations to
disclose Confidential Information, such disclosure may be made
only after the other party (the second party) has been
notified and, subject to timing obligations imposed by law or
the relevant stock exchange, has been given every reasonable
opportunity to consult with the first party as to timing and
content of any such disclosure. In consulting with the second
party, the first party shall act in good faith and give
reasonable consideration to the second party's request.
19.11 FCF'S SAFEGUARDS: If UBS Mangakahia reasonably requests, FCF
will document to the reasonable satisfaction of UBS Mangakahia
the internal safeguards it will put in place to meet its
confidentiality obligations under this clause 19.
20. TERM OF AGREEMENT AND SUSPENSION
20.1 TERM: Unless this agreement is earlier terminated as set forth
in this clause 20, the term of this agreement shall be from
the Commencement Date until the termination of the Forestry
Right.
20.2 EARLY TERMINATION: An early termination of this agreement
under this sub-clause 20.2 shall not be effective until the
date ten (10) Business Days after receipt of the notice of
termination by FCF. This agreement may be terminated prior to
the expiration of the period specified in sub-clause 20.1
either by notice from UBS Mangakahia to FCF if any of the
following events occur (in relation to sub-clause 20.2.2 and
20.2.4), or by notice from UBS Mangakahia or FCF to the other
party (in relation to sub-clauses 20.2.1 and 20.2.3).
20.2.1 MATERIAL BREACH: Either party breaches, and fails to
properly or promptly perform, any of its material
obligations within twenty (20) Business Days after
written notice from the other party specifying the
breach and its intention to terminate this agreement
if such obligation is not properly and promptly
performed provided that such breach is not disputed
by the
Infrastructure Agreement Page 33
relevant party alleged to be in breach (in which case
sub-clauses 20.3.1 to 20.3.4 shall apply)
20.2.2 FCF'S FAILURE TO PERFORM ITS DUTIES: If, UBS
Mangakahia:
(a) DUTIES: notifies FCF that it is in material
breach of the performance of its duties
under this agreement in any material
respect; and
(b) CAUSE: such failure is not caused by any
specific instruction or direction given to
FCF pursuant to this agreement by UBS
Mangakahia and acted on by FCF nor is such
failure caused by any failure to act by UBS
Mangakahia.
20.2.3 EVENT OF DEFAULT: If any one or more of the following
events of default occur this agreement may be
terminated by the affected party prior to the
expiration of the period specified in sub-clause 20.1
by notice from the affected party to the other if any
of the following events occur:
(a) DISTRESS: distress is levied or a judgment
order or encumbrance is enforced, or becomes
enforceable, or can be rendered so by the
giving of notice, lapse of time or
fulfilment of any condition, against
substantially all of FCF's property;
(b) INSOLVENCY EVENT: an Insolvency Event occurs
in respect of FCF;
(c) NOTICE FROM REGISTRAR: FCF receives notice
from the Registrar of Companies (or a Deputy
Registrar) under section 30 of the
Corporations (Investigation and Management)
▇▇▇ ▇▇▇▇ or the Securities Commission makes
a recommendation under section 38 of that
Act in respect of FCF; or
(d) OFFICIAL MANAGER: a person is appointed
under either section 179 of the Act or the
Corporations (Investigation and Management)
▇▇▇ ▇▇▇▇ to investigate any part of the
affairs of FCF.
An early termination of this agreement under this
sub-clause 20.2 shall not be effective until the date
ten (10) Business Days after receipt of the notice of
termination by FCF.
20.2.4 CAP EXCEEDED: If the amounts that have been
determined to be owed by FCF to UBS Mangakahia exceed
in aggregate the Cap (referred to in sub-clause 7.2)
where such amounts arise as a result of breaches of
either this agreement or the Management
Infrastructure Agreement Page 34
Agreement and where such amounts are determined
either by agreement between the parties or by the
award of an arbitrator or by court order (all rights
of appeal having either expired or been exhausted),
irrespective of the time period over which the
liability for such amounts accrues.
20.3 TERMINATION DISPUTES:
20.3.1 FCF DISPUTES BREACH HAS ARISEN: In the event that UBS
Mangakahia has notified FCF that it is in material
breach under this agreement in accordance with sub-
clause 20.2.2 and FCF disputes that termination
notice, or if the recipient of a termination notice
under sub-clause 20.2.1 disputes that termination
notice, then the dispute resolution procedure under
clause 9 shall apply.
20.3.2 SUSPENSION: Pending resolution of a dispute under
sub-clause 20.2.3 UBS Mangakahia may suspend this
agreement (or the relevant part of it where the
disputed breach is in relation to only part of the
services in this agreement and FCF is able to provide
the balance of FCF's services in this agreement) on
providing written notice of suspension (or partial
suspension) to FCF, and appoint an interim
replacement to fulfil FCF's obligations under this
agreement.
20.3.3 FEES: Notwithstanding that the agreement or part of
it has been suspended as provided in sub-clause
20.3.2, the road usage fee (pursuant to sub-clause
2.13.3) payable by UBS Mangakahia to FCF will
continue to be payable in full in accordance with the
relevant provisions of this agreement as if this
agreement (or part of it) had not been suspended,
pending determination of the dispute pursuant to
sub-clause 20.3.1.
20.3.4 DETERMINATION OF BREACH: If it is determined pursuant
to sub-clause 20.3.1 that there is not breach then
UBS Mangakahia must immediately reinstate FCF. If it
is determined that there is a breach, UBS Mangakahia
may immediately terminate this agreement and will
notify FCF in writing of the out-of-pocket costs
incurred by it as a result of the appointment of the
replacement contractors (including a statement of
such costs). FCF will pay such costs to UBS
Mangakahia within five (5) Business Days of receipt
of such notification.
20.3.5 CURABLE BREACH: If prior to referring the issue to
dispute resolution in accordance with this clause,
UBS Mangakahia and FCF can agree on a method and
period within which such failure is to be cured, and
FCF fails to cure such failure according to the
method and within the period agreed, then UBS
Mangakahia may terminate this agreement by notice to
FCF in writing and this agreement will terminate ten
(10) Business Days from the date of such notice.
Infrastructure Agreement Page 35
20.4 EFFECT OF TERMINATION:
20.4.1 SURVIVAL: The expiration or earlier termination of
this agreement will be without prejudice to the
rights and obligations of the parties prior to such
expiration or earlier termination becoming effective
and the obligations of the parties under clauses 7,
19 and 20 will survive the expiration or earlier
termination of this agreement.
20.4.2 RELATED AGREEMENTS: The expiration or earlier
termination of this agreement will be without
prejudice to the rights and obligations of the
parties under the Related Agreements.
20.5 INJUNCTIVE RELIEF OR SPECIFIC PERFORMANCE: Each of the parties
acknowledges and agrees that in the event of a breach of this
agreement, damages alone will be an insufficient remedy.
Accordingly, each of the parties further acknowledge that the
other party may be entitled to equitable relief, including
injunctive relief or specific performance, in the event of any
breach, or threatened breach of this agreement, in addition to
any and all other remedies available to it at law.
21. COUNTERPARTS
21.1 GENERAL: This agreement may be executed in one or more
counterparts, each of which will be deemed to be an original,
but all of which together will constitute only one and the
same agreement.
21.2 FACSIMILE EXCHANGE: The parties acknowledge that this
agreement may be executed on the basis of any exchange of
facsimile copies and confirm that their respective execution
of this agreement by such means shall be a valid and
sufficient execution. The parties acknowledge that any
execution of this agreement by facsimile will be followed by
execution of the engrossments of this agreement.
22. FURTHER ASSURANCES
The parties shall execute and deliver such further and other documents
and instruments and do such other things as may be necessary to
implement and carry out the intent and purpose of this agreement.
23. LIMITED RECOURSE
FCF undertakes and agrees as follows.
23.1 UBS MANGAKAHIA'S ASSETS: FCF will look only to the assets held
by UBS Mangakahia or the benefit of any insurance maintained
by UBS Mangakahia to satisfy the obligations or liabilities of
UBS Mangakahia to FCF hereunder or otherwise.
Infrastructure Agreement Page 36
23.2 LIMITATION OF LIABILITY: None of the Related Companies of UBS
Mangakahia, direct or indirect holders of securities or debt
of UBS Mangakahia, nor any of their respective officers,
directors, or employees, shall be liable for the obligations
of UBS Mangakahia to FCF.
23.3 NO ACTIONS OR PROCEEDINGS: FCF shall not commence any action
or proceeding against any of the persons referred to in
sub-clause 23.2 for the purpose of enforcing the obligations
of UBS ▇▇▇▇▇▇▇▇▇▇.
▇▇. DEFAULT INTEREST
If any amount falls overdue for payment under this agreement, the
overdue amount will (without prejudice to any other right or remedy
under this agreement) bear default interest from the date on which
payment is due down to the date on which the overdue amount is paid in
full. Default interest will be calculated at the Default Interest Rate
and will be compounded monthly.
25. COSTS
Except as expressly provided elsewhere in this agreement, each party is
to bear its own costs in connection with the preparation, negotiation
and execution of this agreement and the Related Agreements and any
other documentation contemplated by this agreement.
26. NO PARTNERSHIP
None of the provisions of this agreement are deemed to constitute a
partnership or joint venture between the parties and neither party has
any authority to bind or to pledge the credit of the other party in any
way except as expressly provided in this agreement.
27. NO MERGER
The parties acknowledge that the covenants, representations,
undertakings and agreements contained herein shall not merge upon
completion of upon harvesting of the Trees and that the same shall
endure for the benefit of that party entitled thereto notwithstanding
transfer or any other act pursuant to the provisions of this agreement.
28. NO DOUBLE CLAIMS
Neither party is entitled to claim more than once in respect of any one
matter giving rise to a claim under this agreement or any Related
Agreement.
Infrastructure Agreement Page 37
Signed as an agreement.
SIGNED on behalf of
▇▇▇▇▇▇▇▇ CHALLENGE FORESTS
INDUSTRIES LIMITED
By:
____________________________________ ____________________________________
Full name of director/authorised Signature of director/authorised
signatory signatory
____________________________________ ____________________________________
Full name of director/authorised Signature of director/authorised
signatory signatory
WITNESS:
(if other than two directors sign)
____________________________________
Signature of witness
____________________________________
Full name of witness
____________________________________
Occupation of witness
____________________________________
Address of witness
Infrastructure Agreement Page 38
SIGNED by UBS MANGAKAHIA
FOREST VENTURE LTD by:
____________________________________ ____________________________________
Full name of attorney Signature of attorney
____________________________________ ____________________________________
WITNESS:
(if other than two directors sign)
____________________________________
Signature of witness
____________________________________
Full name of witness
____________________________________
Occupation of witness
____________________________________
Address of witness
SCHEDULE ONE
FORESTRY RIGHT
SCHEDULE TWO
UNDERTAKING AND GUARANTEE
In consideration of UBS Mangakahia Forest Venture Ltd entering into the
Infrastructure Agreement ("the Agreement") with ▇▇▇▇▇▇▇▇ Challenge Forests
Industries Limited, ▇▇▇▇▇▇▇▇ Challenge Industries Limited agrees to grant a
guarantee to UBS Mangakahia Forest Venture Ltd of ▇▇▇▇▇▇▇▇ Challenge Forests
Industries Limited's obligations and liability under the Agreement and the
Related Agreements in the form attached and undertakes to UBS Mangakahia Forest
Venture Ltd that during the term of the Forestry Right ▇▇▇▇▇▇▇▇ Challenge
Industries Limited shall:
1. ensure that ▇▇▇▇▇▇▇▇ Challenge Industries Limited maintains net assets
in any year of the Forestry Right in an amount not less than $200
million;
2. provide to UBS Mangakahia Forest Venture Ltd a copy of the audited
financial statements of ▇▇▇▇▇▇▇▇ Challenge Forests Limited and its
group, as soon as they become available for release;
3. provide to UBS Mangakahia Forest Venture Ltd a certificate from the
Chief Financial Officer of ▇▇▇▇▇▇▇▇ Challenge Forests Limited, issued
no later than five months after the end of the financial year of
▇▇▇▇▇▇▇▇ Challenge Forests Limited, confirming that as at the end of
that financial year the net assets of ▇▇▇▇▇▇▇▇ Challenge Industries
Limited are no less than $200 million;
4. no later than the end of December in each year provide to UBS
Mangakahia Forest Venture Ltd a copy of the unaudited financial
statements of ▇▇▇▇▇▇▇▇ Challenge Industries Limited.
5. ▇▇▇▇▇▇▇▇ Challenge Industries Limited represents and warrants to UBS
Mangakahia on execution and delivery of this undertaking and the
guarantee given under this undertaking that this undertaking and the
guarantee given under this undertaking:
(a) will have been validly authorised by all necessary action on
the part of ▇▇▇▇▇▇▇▇ Challenge Industries Limited;
(b) will not contravene any law binding on it;
(c) will not contravene its incorporation documents;
(d) will not contravene the provisions of or constitute a default
under any other agreement to which it is a party;
(e) will constitute legal, valid and binding obligations
enforceable against ▇▇▇▇▇▇▇▇ Challenge Industries Limited in
accordance with their respective terms;
and that ▇▇▇▇▇▇▇▇ Challenge Industries Limited will have and continue
to have the necessary corporate powers to enter into this undertaking
and the guarantee given
Page 3
under this undertaking and perform its obligations under this
undertaking and the guarantee given under this undertaking; and
All calculations of net assets required to be carried out pursuant to this
undertaking must be made using those accounting principles used for the
preparation of the financial statements of ▇▇▇▇▇▇▇▇ Challenge Forests Limited
Capitalised terms have the meaning ascribed to them in the Agreement.
EXECUTED AS A DEED by ▇▇▇▇▇▇▇▇ Challenge Industries Limited by:
____________________________________ ____________________________________
Full name of director/authorised Signature of director/authorised
signatory signatory
____________________________________ ____________________________________
Full name of director/authorised Signature of director/authorised
signatory signatory
Witness:
(if other than two directors sign)
____________________________________
Signature of witness
____________________________________
Full name of witness
____________________________________
Occupation of witness
____________________________________
Address of witness
DEED OF GUARANTEE AND INDEMNITY
BETWEEN
▇▇▇▇▇▇▇▇ CHALLENGE INDUSTRIES LIMITED
AND
UBS MANGAKAHIA FOREST VENTURE LTD
[▇▇▇▇▇▇▇ GRIERSON LOGO]
TABLE OF CONTENTS
1. INTERPRETATION........................................... 1
2. GUARANTEE................................................ 2
3. LIABILITY NOT TO BE AFFECTED............................. 3
4. PAYMENTS................................................. 4
5. SUSPENSION OF RIGHTS..................................... 5
6. REPRESENTATIONS AND WARRANTIES........................... 6
7. UNDERTAKINGS............................................. 6
8. COSTS.................................................... 7
9. RELEASE.................................................. 7
10. SET-OFF.................................................. 7
11. NOTICES.................................................. 7
12. CURRENCY INDEMNITY....................................... 9
13. GENERAL.................................................. 10
14. CONFIDENTIALITY.......................................... 11
GUARANTEE AND INDEMNITY dated the 2003
PARTIES
1. ▇▇▇▇▇▇▇▇ CHALLENGE INDUSTRIES LIMITED ("Guarantor")
2. UBS MANGAKAHIA FOREST VENTURE LTD ("Beneficiary")
THIS DEED WITNESSES:
1. INTERPRETATION
In this Guarantee, unless the context indicates otherwise:
1.1 DEFINITIONS:
"BUSINESS DAY" means a day on which registered banks are open
for banking business in Auckland, excluding Saturdays, Sundays
and public holidays;
"CONFIDENTIAL INFORMATION" means any information disclosed by
the Guarantor to the Beneficiary on the express basis that
such information is confidential;
"DEBTOR" means ▇▇▇▇▇▇▇▇ Challenge Forests Industries Limited;
"DEFAULT INTEREST RATE" means default interest rate as that
term is defined in clause 1 of an agreement for sale and
purchase of trees between the Debtor and Teal 4 Limited dated
15 January 2003 ("Agreement");
"GUARANTEE" means this guarantee and indemnity;
"GUARANTEED MONEY" means all money which the Debtor presently
is, or at any time becomes, actually or contingently liable to
pay to the Beneficiary under the Agreement and any of the
Related Agreements;
"GUARANTEED OBLIGATIONS" means all obligations (whether
present or future) of the Debtor to the Beneficiary under the
Agreement and any of the Related Agreements;
1.2 GENERAL:
(a) words denoting the singular include the plural and
vice versa;
(b) words denoting any gender includes all genders;
Page 2
(c) references to any document (however described) will
include references to that document as modified,
varied, novated, supplemented or replaced from time
to time;
(d) headings and the table of contents are for
convenience only and will not affect interpretation;
and
(e) capitalised terms not defined in this Guarantee shall
have the meaning ascribed to them in the Agreement.
2. GUARANTEE
2.1 GUARANTEE: The Guarantor guarantees to the Beneficiary the due
and punctual payment by the Debtor of the Guaranteed Money and
the due and punctual performance of the Guaranteed
Obligations.
2.2 PAYMENT ON DEFAULT: If the Debtor defaults in the due and
punctual payment of any of the Guaranteed Money, the Guarantor
will pay that money to the Beneficiary on demand.
2.3 PRINCIPAL DEBTOR: The Guarantor's obligations under this
Guarantee are:
(a) principal obligations and may be enforced against the
Guarantor without the Beneficiary being required to
exhaust any remedy it may have against the Debtor or
to enforce any security the Beneficiary may hold with
respect to the Guaranteed Money; and
(b) unconditional and irrevocable.
2.4 CONTINUING GUARANTEE: This Guarantee is a continuing guarantee
for the Guaranteed Money. It is not discharged by any payment
or anything else, and remains in full force until the
Beneficiary has executed and delivered a release to the
Guarantor.
2.5 REINSTATEMENT: If any payment received by the Beneficiary on
any account of the Guaranteed Money is or may be avoided by
law (despite a release having been executed and delivered by
the Beneficiary):
(a) the Guarantor's obligation to have made such payment
will be deemed not to have been affected or
discharged under this Guarantee or any other security
given to the Beneficiary; and
(b) the Beneficiary and the Guarantor will, in any such
case, be deemed to be restored to the position in
which each would have been, and will be entitled to
exercise the rights they respectively would have had,
if that payment had not been made.
Page 3
3. LIABILITY NOT TO BE AFFECTED
The liability of the Guarantor under this Guarantee shall not be
abrogated, prejudiced or affected by any of the following:
3.1 GRANTING OF TIME ETC: the granting of time, credit or any
indulgence or other concession to the Debtor or the Guarantor
or any other guarantor of the Debtor or to any other person by
the Beneficiary;
3.2 FAILURE TO DEMAND: any failure by the Beneficiary to present,
demand or give notice in respect of any negotiable instrument;
3.3 COMPOUNDING ETC: any compounding, compromise, release,
abandonment, waiver, variation, relinquishment or renewal of
any agreements, securities, documents of title, assets, or of
the rights of the Beneficiary against the Debtor or the
Guarantor or any other person;
3.4 ACTS OR OMISSIONS: anything done or omitted or neglected to be
done by the Beneficiary in exercise of the authorities, powers
and discretions vested in the Beneficiary by this Deed;
3.5 SECURITY OR LAW: any security or law or any other dealing,
matter or thing which but for this provision might operate to
abrogate, prejudice or affect the Guarantee (it being the
intention of the parties that the Guarantee and obligations of
the Guarantor shall be absolute and unconditional in any and
all circumstances);
3.6 OTHER LIABILITY CEASING: the liability of any other guarantor
of the Debtor or any other person ceasing from any cause
whatsoever (including release or discharge by the
Beneficiary);
3.7 JOINT OR SIMILAR GUARANTEES: any other person joining in this
or giving any similar Guarantee and/or indemnity;
3.8 LIQUIDATION OF DEBTORS ETC: the liquidation or bankruptcy of
the Debtor or any other guarantor of the Debtor or any other
person;
3.9 INCOMPETENCE OF OTHERS ETC: any other guarantor of the Debtor
or any other person being incompetent to give any other
Guarantee or any collateral security or failing to become
legally bound in whole or in part under any of them
respectively;
3.10 SECURITIES VOID ETC: any security from time to time held or
taken in respect of the indebtedness or obligations of the
Debtor or the Guarantor or any other guarantor of the Debtor
or any other person to the Beneficiary being void, defective
or informal or being released, partially released, discharged,
partially discharged or varied in any way;
3.11 FAILURE TO PROVIDE SECURITY: failure of the Debtor or the
Guarantor or any other guarantor of the Debtor or any other
person to provide any security which has been stipulated by
the Beneficiary;
Page 4
3.12 VARIATIONS: any variation of this Guarantee and Indemnity
and/or any other Guarantee and/or indemnity given in relation
to any of the Guaranteed Money and/or any of the Guaranteed
Obligations;
3.13 FAILURE TO GUARANTEE ETC: any person intended to Guarantee
payment of the Guaranteed Money and/or performance of the
Guaranteed Obligations failing or refusing to do so;
3.14 CLAIMS: any claim that the Beneficiary has not fully realised
all securities held by it in respect of the Guaranteed Money
and/or the Guaranteed Obligations or has not realised any of
such securities in a manner so as to maximise their realisable
value; or
3.15 OTHER MATTERS: any other matter or thing whatsoever.
4. PAYMENTS
4.1 PAYMENT: The Guarantor will make each payment to the
Beneficiary under this Guarantee in funds which are freely
transferable and immediately available for disbursement on the
day of payment.
4.2 NO DEDUCTIONS: All payments by the Guarantor to the
Beneficiary under this Guarantee will be made free of any
restriction or condition and, except to the extent required by
law, without deduction or withholding of any nature whether by
way of set-off, counterclaim or otherwise.
4.3 GROSS UP: If:
(a) the Guarantor is required by law to make any
deduction or withholding from any amount paid or
payable by it to the Beneficiary under this
Guarantee; or
(b) the Beneficiary is required by law to make any
deduction, withholding, or payment on, or calculated
by reference to, any amount received or receivable by
it under this Guarantee for or on account of tax
(except on account of tax on overall net income of
the Beneficiary) or otherwise,
then the amount payable by the Guarantor in respect of which
such deduction, withholding or payment is required to be made
will be increased to the extent necessary to ensure that,
after the making of such deduction, withholding or payment,
the Beneficiary receives and retains (free from any liability
in respect of any such deduction, withholding or payment) a
net amount equal to the amount which it would have received
and so retained had no such deduction, withholding or payment
been required to be made.
Page 5
4.4 NOTIFY BENEFICIARY: The Guarantor will:
(a) notify the Beneficiary immediately if it is required
to make any deduction or withholding;
(b) ensure that such deduction or withholding does not
exceed the legal minimum; and
(c) pay the amount required to be deducted or withheld to
the applicable taxation or other authority before the
date on which penalties attach.
4.5 TAX RECEIPTS: The Guarantor will deliver to the Beneficiary
promptly, on receipt, a copy of the receipt issued by the
applicable taxation or other authority or other evidence
satisfactory to the Beneficiary evidencing that such deduction
or withholding has been made.
4.6 INTEREST: The Guarantor will pay to the Beneficiary on demand
interest on all amounts payable by the Guarantor from the due
date to the date of actual receipt by the Beneficiary. Such
interest will accrue and be calculated on a daily basis (after
as well as before judgment) at the Default Interest Rate.
Interest will be compounded at monthly intervals.
5. SUSPENSION OF RIGHTS
5.1 Until the Guaranteed Money has been paid and discharged in
full, the Guarantor will not, without the consent of the
Beneficiary:
(a) take any steps to enforce a right or claim against
the Debtor in respect of any money paid by the
Guarantor to the Beneficiary under this Guarantee; or
(b) have or exercise any rights in competition with the
Beneficiary (including any right of subrogation or
indemnity).
5.2 BENEFICIARY AUTHORISED TO PROVE: Until the Beneficiary shall
have received one hundred cents in the dollar in respect of
the indebtedness of the Debtor in relation to the Guaranteed
Money, the Guarantor authorises the Beneficiary to:
(a) prove or claim for all money which the Guarantor has
paid or are otherwise owing to the Guarantor and have
not been repaid by the Debtor or any other guarantor
of the Debtor or any other person; and
(b) retain and to carry to a suspense account and
appropriate at the discretion of the Beneficiary any
amount received.
5.3 GUARANTOR'S WAIVER OF RIGHTS: So far as is necessary to give
effect to anything contained or implied in this Guarantee and
to ensure that the whole of the Guaranteed Money and
Guaranteed Obligations are paid or
Page 6
satisfied or performed in full, the Guarantor waives in favour
of the Beneficiary all rights whatever against the
Beneficiary, the Debtor, any other guarantor of the Debtor or
any other person or their or its estate and assets. Such
waiver extends to and includes rights of subrogation,
contribution and marshalling.
6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS: The Guarantor represents and warrants to the
Beneficiary that:
(a) the Guarantor has taken all necessary corporate
action to authorise the performance of, and
compliance with, its obligations under this
Guarantee; and
(b) the Guarantor has not taken any security interest or
benefit from the Debtor for or in consideration of
assuming the obligations contained under this
Guarantee or any part of them.
(c) the Guarantor is solvent and able to pay the
Guarantor's indebtedness as it falls due.
6.2 NO RELIANCE: The Guarantor confirms that it has not executed
this Guarantee as a result of or in reliance on any promise,
representation, statement or information of any kind or nature
whatever given by the Beneficiary.
6.3 NO DISCLOSURE: Subject to the Agreement and the Related
Agreements, the Guarantor confirms that the Beneficiary was
not, before execution of this Guarantee and is not in the
future, liable to do anything (including disclosing any
information to the Guarantor) relating to the affairs of the
Debtor or any transactions of the Debtor with the Beneficiary.
6.4 CONTINUING: The representations and warranties in this clause
6 will be deemed to be repeated continuously at all times
during which this Guarantee remains in effect by reference to
the facts and circumstances then existing.
7. UNDERTAKINGS
The Guarantor will:
7.1 INFORMATION: provide the Beneficiary within five Business Days
of receiving a reasonable request from the Beneficiary with
such information relating to its financial condition,
business, assets or affairs as is relevant to the performance
of its obligations under this Guarantee provided however that
the Guarantor is under no obligation to provide information
that it considers, in its absolute discretion, disclosure of
which would be a breach of any applicable Stock Exchange
Listing Rules; and
Page 7
7.2 PROCEEDINGS: give the Beneficiary prompt notice of any
litigation, or proceedings affecting it or any of its
business, assets or affairs.
8. COSTS
The Guarantor will pay the Beneficiary on demand for all reasonable
costs and expenses (including reasonable legal costs) in connection
with:
8.1 ENFORCEMENT: the enforcement of this Guarantee; and
8.2 AMENDMENT ETC: any amendment to, or any consent, waiver or
release of this Guarantee requested by the Guarantor.
9. RELEASE
The Beneficiary will not be obliged to execute a release of this
Guarantee unless it is satisfied that:
9.1 GUARANTEED MONEY PAID: all of the Guaranteed Money has been
paid; and
9.2 NO PAYMENT AVOIDED: no payment affecting or relating to the
Guaranteed Money is or may be avoided under any law relating
to insolvency or otherwise.
10. SET-OFF
The Beneficiary is authorised to apply (without prior notice or demand)
any credit balance of the Guarantor on any account or any money owed by
the Beneficiary to the Guarantor towards satisfaction of the Guaranteed
Money or any money due and unpaid by the Guarantor to the Beneficiary
under this Guarantee.
11. NOTICES
11.1 DELIVERY OF NOTICE: All notices and other communications
required or permitted under this Guarantee shall be in
writing. Any written notice required under this Guarantee must
be signed by a duly authorised senior representative of any
party giving the notice and will be deemed validly given if:
(a) delivered personally;
(b) sent by prepaid post; or
(c) sent by facsimile transmission,
addressed to the recipient at the address or facsimile number
set out below (as applicable) or to any other address or
facsimile number that a party may notify to the other parties
by like notice.
Page 8
BENEFICIARY: If to the Beneficiary to:
UBS Mangakahia Forest Venture Ltd
C/- UBS Warburg New Zealand Equities Limited
▇ ▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
For: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇) ▇▇▇ ▇▇▇▇
With a copy to:
UBS Timber Investors
Trade Center, 4th Floor
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
For: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇
And with a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
For: ▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇
GUARANTOR: If to the Guarantor, to:
▇▇▇▇▇▇▇▇ Challenge Industries Limited
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Private Bag 92036
Auckland Mail Centre
Auckland
For: The Chief Executive Officer
Facsimile: (▇▇) ▇▇▇ ▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ Challenge Industries Limited
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Private Bag 92036
Auckland Mail Centre
Auckland
Page 9
For: The Company Secretary
Facsimile: (▇▇) ▇▇▇ ▇▇▇▇
11.2 TIME OF RECEIPT: No written communication will be effective
until received. Without limiting any other ways for a party to
prove that another party has received a notice, a notice or
other written communication under this Guarantee, will be
treated as received:
(a) if delivered personally, when left with an apparently
responsible person at the recipient's address;
(b) if sent by prepaid post three (3) Business Days (if
posted within New Zealand to an address in New
Zealand), or ten (10) Business Days (if posted by
prepaid airmail from country to country) after the
date of posting;
(c) if sent by registered post, on acknowledgment of
receipt by or on the recipient's behalf; or
(d) if sent by air courier delivery, on acknowledgment of
receipt by or on the recipient's behalf; or
(e) if sent by facsimile, on the sender's receipt of a
transmission report indicating that the facsimile was
sent in its entirety to the recipient's facsimile
number;
but, if the delivery or receipt is not on a Business Day or
after 5.00pm (local time) on any Business Day, the notice will
be treated as received by the recipient at 9.00am (local time)
on the next Business Day.
11.3 COPIES OF NOTICES: If a party is required by any term of this
Guarantee to give a copy of a notice or other communication to
a third party, the failure to give the copy of it to a third
party will not affect the effectiveness of that notice or
communication to a party.
12. CURRENCY INDEMNITY
If, at any time and for any reason, an amount payable by the Guarantor
under or in respect of this Guarantee ("Relevant Amount") is converted
into and received by the Beneficiary in a currency ("Payment Currency")
other than the contractual currency of payment under the Agreement
("Contractual Currency") then the Guarantor will indemnify the
Beneficiary and will hold the Beneficiary harmless against, and will
pay the Beneficiary on demand the amount certified by the Beneficiary
as being the amount required to compensate it for, the loss suffered as
a result of any discrepancy between:
12.1 CONTRACTUAL CURRENCY RECEIVED: the amount of the Contractual
Currency which the Lender receives on converting the amount it
receives in the Payment Currency into an amount in the
Contractual Currency in accordance with its usual practice;
and
Page 10
12.2 RELEVANT AMOUNT: the Relevant Amount in the Contractual Currency.
13. GENERAL
13.1 CERTIFICATE: The certificate of the Beneficiary as to any
amount or fact which might reasonably be expected to be within
the Beneficiary's knowledge will be prima facie evidence of
such matter or fact.
13.2 SEVERABILITY: Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall be
ineffective as to such jurisdiction to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions of this Guarantee or affecting the
validity or unenforceability of such provision in any other
jurisdiction.
13.3 DELAY: No delay, grant of time, release, compromise,
forbearance (whether partial or otherwise) or other indulgence
by the Beneficiary in exercising all or any of its rights,
remedies and powers or concerning any breach of any of the
Guarantor's obligations under this Guarantee is to:
(a) operate as a waiver of or prevent the subsequent
enforcement of any such rights, remedies, powers or
obligations; or
(b) be deemed a delay, grant of time, release,
compromise, forbearance (whether partial or
otherwise) or other indulgence of, or a waiver of,
any subsequent or other breach.
13.4 MODIFICATION: This Guarantee may not be amended or modified
except by written agreement signed by the parties.
13.5 WAIVER: Any consent, waiver or acknowledgement by the
Beneficiary under this Guarantee must be in writing and any
such consent, waiver or acknowledgment shall only be effective
in the specific instance and for the specific purpose given.
13.6 ADDITIONAL TO OTHER SECURITIES: This Guarantee is in addition
to and not in substitution for any other security, undertaking
or right which the Beneficiary may now or subsequently have in
respect of the Guaranteed Money and/or the Guaranteed
Obligations. This Guarantee may be enforced against the
Guarantor or any other Guarantor of the Debtor without first
having recourse to any such securities, undertaking or rights
and without taking any steps or proceedings against the
Debtor. It may be enforced notwithstanding that any other
security, undertaking or right may be in whole or in part
unenforceable by reason of any rule of law or equity and
notwithstanding any laches, acts, omissions or delays on the
part of the Beneficiary.
13.7 APPLICABLE LAW:
(a) The law applicable to this Guarantee shall be the law
of New Zealand and the parties irrevocably and
unconditionally agree to
Page 11
submit to and be bound by the jurisdiction of the
courts and tribunals of New Zealand.
(b) The submission to jurisdiction in clause 13.7(a) does
not (and is not to be construed to) limit the rights
of the Beneficiary to take proceedings against the
Guarantor in another court of competent jurisdiction,
nor is the taking of proceedings in one or more
jurisdictions to preclude the taking of proceedings
in another jurisdiction whether concurrently or not.
14. CONFIDENTIALITY
The Beneficiary will maintain as confidential at all times, and will
not at any time, directly or indirectly:
14.1 DISCLOSE: disclose or permit to be disclosed to any person;
14.2 USE: use for itself; or
14.3 USE TO DETRIMENT: use to the detriment of the other party;
any Confidential Information except:
14.4 LEGAL REQUIREMENT: subject to clause 14.10, as required by law
or regulatory body (including any stock exchange);
14.5 PUBLIC KNOWLEDGE: as is already or becomes public knowledge,
otherwise than as a result of a breach by the Beneficiary of
any provision of this deed;
14.6 AUTHORISED: as authorised in writing by the Guarantor;
14.7 LENDERS AND UNDERWRITERS: as required to communicate with and
make disclosure to institutional lenders to and underwriters
for, or potential institutional lenders to and underwriters
for the Beneficiary provided that the Beneficiary shall ensure
compliance by such persons with this clause 14 and shall be
liable for any breach of such obligations by such persons, and
in the case of potential institutional lenders or
underwriters, to return all such information if the lending to
or underwriting is not consummated;
14.8 AFFILIATES AND ADVISERS: as required to communicate with and
make disclosure to Affiliates of the Beneficiary or the
Beneficiary's or the Affiliates' respective advisers who have
a legitimate need to know the information in order to perform
activities connected with this deed, the Agreement or the
Related Agreements, and provided that the relevant party shall
ensure compliance by such persons with this clause 14 and
shall be liable for any breach of such obligations by such
persons; or
14.9 OTHER: to the extent reasonably required by this deed (and,
without limiting the effect of this clause, the Beneficiary
may disclose
Page 12
Confidential Information only to those of its officers,
employees or professional advisers, on a "need to know" basis,
as is reasonably required for the implementation of this
deed).
14.10 CONSULTATION: In the event that the Beneficiary is required by
law or stock exchange reporting obligations to disclose
Confidential Information, such disclosure may be made only
after the Guarantor has been notified and, subject to timing
obligations imposed by law or the relevant stock exchange, has
been given every reasonable opportunity to consult with the
Beneficiary as to timing and the content of any such
disclosure. In consulting with the Guarantor, the Beneficiary
shall act in good faith and give reasonable consideration to
the Guarantor's requests.
14.11 THE BENEFICIARY'S SAFEGUARDS: If requested, the Beneficiary
will document to the reasonable satisfaction of the Guarantor
the internal safeguards it will put in place to meet its
confidentiality obligations under this clause 14.
Executed as a deed.
SIGNED by ▇▇▇▇▇▇▇▇ CHALLENGE
INDUSTRIES LIMITED by:
____________________________________ ____________________________________
Full name of director/authorised Signature of director/authorised
signatory signatory
____________________________________ ____________________________________
Full name of director/authorised Signature of director/authorised
signatory signatory
WITNESS:
(if other than two directors sign)
____________________________________
Signature of witness
____________________________________
Full name of witness
____________________________________
Occupation of witness
____________________________________
Address of witness
Page 13
SIGNED by UBS MANGAKAHIA
FOREST VENTURE LTD by:
____________________________________ ____________________________________
Full name of director/authorised Signature of director/authorised
signatory signatory
____________________________________ ____________________________________
Full name of director/authorised Signature of director/authorised
signatory signatory
WITNESS:
(if other than two directors sign)
____________________________________
Signature of witness
____________________________________
Full name of witness
____________________________________
Occupation of witness
____________________________________
Address of witness