<PAGE>

Execution Version Tahorakuri

                                                                    EXHIBIT 4.27

AGREEMENT FOR SALE AND PURCHASE OF TREES

BETWEEN

FLETCHER CHALLENGE FORESTS INDUSTRIES LIMITED

AND

TEAL 3 LIMITED

                                                         [SIMPSON GRIERSON LOGO]
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Execution Version Tahorakuri

                                TABLE OF CONTENTS

<TABLE>
<S>    <C>                                                             <C>
1.     INTERPRETATION........................................           1
2.     CONDITIONS............................................           6
3.     NON-COMPLETION FEE....................................           9
4.     SALE AND PURCHASE.....................................           9
5.     PURCHASE PRICE AND PAYMENT............................           9
6.     PENDING SETTLEMENT....................................          10
7.     SETTLEMENT............................................          11
8.     DUE DILIGENCE MATTERS.................................          12
9.     RISK..................................................          14
10.    GOODS AND SERVICES TAX................................          16
11.    WARRANTIES............................................          16
12.    COSTS.................................................          22
13.    DELAY.................................................          22
14.    ASSIGNMENT............................................          22
15.    RESOLUTION OF DISPUTES................................          23
16.    CONFIDENTIALITY.......................................          24
17.    SEVERABILITY..........................................          25
18.    LIMITED RECOURSE......................................          25
19.    NOTICES...............................................          26
20.    ENTIRE AGREEMENT......................................          28
21.    MODIFICATION..........................................          28
22.    WAIVER................................................          28
23.    COUNTERPARTS..........................................          28
24.    FURTHER ASSURANCES....................................          28
25.    NO MERGER.............................................          28
26.    APPLICABLE LAW........................................          29
27.    NO PARTNERSHIP........................................          29
</TABLE>

SCHEDULE ONE: WARRANTIES
ANNEXURE ONE: FORESTRY RIGHT
ANNEXURE TWO: INFRASTRUCTURE AGREEMENT
ANNEXURE THREE: MANAGEMENT AGREEMENT
ANNEXURE FOUR: WOOD SUPPLY AGREEMENT
ANNEXURE FIVE: DEED OF ASSIGNMENT
ANNEXURE SIX: DUE DILIGENCE INFORMATION REQUESTED BY TEAL
ANNEXURE SEVEN: UNDERTAKING FROM FLETCHER CHALLENGE INDUSTRIES LIMITED

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THIS AGREEMENT is dated the             day of                              2003

BETWEEN  FLETCHER CHALLENGE FORESTS INDUSTRIES LIMITED an incorporated company
         having its registered office in Auckland ("FCF")

AND      TEAL 3 LIMITED, an incorporated company having its registered office in
         Auckland ("Teal")

BACKGROUND

A.       FCF is a New Zealand registered company holding a leadership position
         in New Zealand's forest industries.

B.       Teal has been established as a special purpose vehicle to acquire the
         Trees and the Forestry Right. Teal is exclusively advised and managed
         by UBS Timber Investors, a division of UBS Global Asset Management (New
         York), Inc., a portion of the asset management division of UBS AG.

C.       FCF and Teal wish to undertake a transaction under which FCF will sell
         the Trees to Teal, and create a Forestry Right over the Land in favour
         of Teal, to be registered pursuant to the Forestry Rights Registration
         Act 1983.

D.       Teal will be granted certain rights to the Trees pursuant to the
         Forestry Right.

E.       On settlement of this agreement, FCF and Teal will be required to
         execute and deliver an Infrastructure Agreement, a Management Agreement
         and a Wood Supply Agreement which will set out arrangements between the
         parties in relation to access to the Land and management of the Trees,
         and in relation to the supply of certain Trees to FCF.

F.       FCF agrees to sell and Teal agrees to purchase the Trees on the terms
         of this agreement.

THE PARTIES AGREE:

1.       INTERPRETATION

         In this agreement unless the context indicates otherwise:

         1.1      DEFINITIONS:

                  "ADDITIONAL DUE DILIGENCE INFORMATION" means

                  (a)      the due diligence information within the scope of the
                           Due Diligence Information Request that is not
                           included in the Disclosure Letter and that FCF
                           supplies to Teal under clause 8.4

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Agreement for Sale and Purchase of Trees                                  Page 2

                           in the period following delivery of the Disclosure
                           Letter up to 19 February 2003 in response to the Due
                           Diligence Information Request; and

                  (b)      any additional information reasonably requested by
                           Teal to clarify any of the due diligence information
                           previously supplied by FCF in response to the Due
                           Diligence Information Request;

                  but, unless otherwise agreed in writing by the parties,
                  excludes any information requested by Teal that is not within
                  the scope of the Due Diligence Information Request;

                  "AFFECTED TREES" means Trees destroyed or materially damaged
                  by fire, windthrow or any other cause howsoever for the
                  purposes of clause 9;

                  "AFFILIATES" 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;

                  "BILL 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 10.45 am on each Business Day following the
                  due date;

                  "BUSINESS DAY" means a day on which registered banks are open
                  for banking business in Auckland, excluding Saturdays, Sundays
                  and public holidays;

                  "CONDITIONS" means the conditions set out in clause 2;

                  "CONFIDENTIAL INFORMATION" means any information:

                  (a)      relating to the terms of this agreement and the
                           Related Agreements;

                  (b)      disclosed by either party to the other party on the
                           express basis that such information is confidential
                           including any information disclosed by FCF to Teal
                           under clause 8;

                  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;

                  "DEED OF ASSIGNMENT" means the deed of assignment relating to
                  the assignment of GST input credits attached to this agreement
                  in Annexure Five;

                  "DEFAULT INTEREST RATE" means interest calculated daily at the
                  Bill Rate plus 4% per annum;

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Agreement for Sale and Purchase of Trees                                  Page 3

                  "DISCLOSURE LETTER" means the letter in the form agreed by the
                  parties written by FCF qualifying certain Warranties, which
                  will be delivered as a separate document, dated and signed, to
                  Teal prior to execution of this agreement;

                  "DUE DILIGENCE INFORMATION REQUEST" means the list of due
                  diligence information that Teal requires FCF to provide during
                  the course of the due diligence review contemplated in clause
                  2.1.3 and that is listed in Annexure Six;

                  "ENCUMBRANCE" means mortgage, lien, charge, pledge, title
                  retention, caveat, option, right of pre-emption, tenancy,
                  third party right, or security interest of any kind (including
                  but not limited to a security interest as defined in the
                  Personal Property Securities Act 1999) but excludes the
                  interests created under the Geothermal Development Deed, and
                  any document, caveat, transfer or encumbrance, whether
                  lawfully and properly registered against the Land or not,
                  which is intended to protect interests created under the terms
                  of the Geothermal Development Deed or the Geothermal Sale
                  Agreement;

                  "ENVIRONMENTAL LAW" means all applicable law relating to any
                  aspect of:

                  (a)      the environment;

                  (b)      the Trees and the Land;

                  (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 Act 1991, any
                  other statutes, under the common law or otherwise;

                  "FCF'S SOLICITORS" means Phillips Fox, Barristers and
                  Solicitors, at Auckland;

                  "FORESTRY CONSULTANT" means a reputable forestry expert with
                  relevant experience;

                  "FORESTRY RIGHT" means the forestry right to be entered into
                  between Teal and FCF in accordance with the provisions of the
                  Forestry Rights Registration Act 1983 and in relation to
                  certain identified Stands and which is attached to this
                  agreement in Annexure One;

                  "GEOTHERMAL ARRANGEMENTS" has the meaning ascribed to it in
                  the Forestry Right;

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Agreement for Sale and Purchase of Trees                                  Page 4

                  "GEOTHERMAL DEVELOPMENT DEED" means the geothermal development
                  deed between Fletcher Challenge Energy Power Generation
                  Limited (now Shell Exploration NZ Limited) and Fletcher
                  Challenge Forests Limited (now Fletcher Challenge Forests
                  Industries Limited) dated 18 July 1997 to the extent that it
                  applies to the Land;

                  "GEOTHERMAL SALE AGREEMENT" means the agreement for sale and
                  purchase of geothermal exploitation rights dated 8 June 2000
                  between Fletcher Challenge Energy Power Generation Limited
                  (now Shell Exploration NZ Limited), Mighty River Power
                  Investments Limited and Tauhara Development Limited;

                  "GOODS AND SERVICES TAX" or "GST" means 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 Act 1985;

                  "GST AMOUNT" is defined in clause 10.1 of this agreement;

                  "INFRASTRUCTURE AGREEMENT" means the infrastructure agreement
                  to be entered into between Teal and FCF for the provision of
                  certain services by FCF and attached to this agreement in
                  Annexure Two;

                  "LAND" means the land the subject of the Forestry Right and
                  more particularly comprised and described in the Forestry
                  Right;

                  "MANAGEMENT AGREEMENT" means the management agreement to be
                  entered into between Teal and FCF pursuant to which FCF will
                  manage the Tahorakuri forest and attached to this agreement in
                  Annexure Three;

                  "MANAGEMENT PLANS" means management plans as that term is
                  defined in the Management Agreement;

                  "PURCHASE PRICE" means US$45 million excluding GST;

                  "PURPOSE" means purpose as that term is defined in the
                  Forestry Right.

                  "RECORDS" means all documents, photographs, maps and any other
                  records, including but not limited to stand records, (stored
                  or documented in whatever form) held by FCF in relation to
                  FCF's ownership and management of the Trees but excludes any
                  records that FCF is required by any law to retain but includes
                  copies of them;

                  "RELATED AGREEMENTS" means the Forestry Right, Infrastructure
                  Agreement, Management Agreement, Wood Supply Agreement and
                  Deed of Assignment as amended by agreement between the parties
                  prior to the Settlement Date;

                  "SCHEDULE" means a schedule to this agreement, unless this
                  agreement expressly provides otherwise;

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Agreement for Sale and Purchase of Trees                                  Page 5

                  "SETTLEMENT" means the performance by FCF of FCF's obligations
                  under clause 7 and the performance by Teal of Teal's
                  obligations under clause 7;

                  "SETTLEMENT DATE" means the date 10 Business Days immediately
                  following the date on which the Conditions are satisfied or
                  waived pursuant to clause 2 or if such date does not meet the
                  requirements of the last sentence of clause 5.2, the first
                  Business Day following which does or, as the parties may
                  agree, any other date on which Settlement is to take place;

                  "SPECIFIED PERSONS" for the purposes of clause 1.5.3 of
                  Warranty means Kevin Cooney, Bill McCallum, Ian Jenkin, Mike
                  Bartells, Ian Piebenger, Gavin Williamson, Dean Neilson, Doug
                  McNab, Spencer Hill, Terry McFadgen, Ian Boyd, John Dell, Paul
                  Gillard, Richard Parker, Clement Chia and Brian Johnson;

                  "STAND" means those parts of the Land comprising specific
                  plantation areas of the age class, area and silvicultural
                  condition described in Schedule Two of the Forestry Right;

                  "SUM" has the meaning ascribed to it in clause 2.6;

                  "TREES" means those Pinus radiata trees growing, standing or
                  lying on the Stands as at the date of this agreement and any
                  logs or forest produce arising from such trees and, unless the
                  context otherwise requires, includes the Records;

                  "TEAL'S SOLICITORS" means Simpson Grierson, Barristers and
                  Solicitors, at Auckland;

                  "WARRANTIES" means the warranties contained in Schedule One;

                  "WOOD SUPPLY AGREEMENT" means the wood supply agreement to be
                  entered into between Teal and FCF pursuant to which Teal will
                  supply wood to FCF and attached to this agreement in Annexure
                  Four;

         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 or
                  regulatory authorities in each case whether or not having
                  separate legal personality;

         1.4      DEFINED EXPRESSIONS: expressions defined in the main body of
                  this agreement bear the defined meaning in the whole of this
                  agreement including the recitals;

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Agreement for Sale and Purchase of Trees                                  Page 6

         1.5      DOLLARS: references to dollars or $ are references to NZ
                  dollars except in relation to the Purchase Price and the Sum
                  payable under clause 2.6, which are references to US dollars;

         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 AND ANNEXURES: the schedules and annexures to this
                  agreement and the provisions and conditions contained in such
                  schedules and annexures 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; and

         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.

2        CONDITIONS

         2.1      CONDITIONS: This agreement is subject to the following
                  conditions:

                  2.1.1    STATUTORY CONSENTS: receipt by Teal, on terms
                           acceptable to Teal, of all requisite statutory
                           consents, clearances and authorisations (if any)
                           necessary or desirable for Teal's acquisition of the
                           Trees, including the consent of the Overseas
                           Investment Commission to the transaction contemplated
                           by this agreement;

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Agreement for Sale and Purchase of Trees                                  Page 7

                  2.1.2    BANKS CONSENTS: receipt by FCF, on terms acceptable
                           to FCF, of all consents required from FCF's bankers
                           to the transaction contemplated by this agreement;

                  2.1.3    DUE DILIGENCE: Teal, in Teal's sole discretion and
                           judgment, being satisfied with Teal's due diligence
                           review of the Trees, the Land and any matter which in
                           Teal's discretion is relevant to its decision whether
                           or not to purchase the Trees.

         2.2      FULFILMENT OF CONDITIONS: The parties will each make all
                  appropriate applications, diligently pursue those
                  applications, do all other acts, matters and things within
                  their power and control and supply all such information
                  reasonably required to satisfy the Conditions. For the
                  avoidance of doubt, FCF shall provide all assistance,
                  information and documents reasonably required by Teal to
                  enable Teal to satisfy the condition in clause 2.1.1.

         2.3      BENEFIT OF CONDITIONS: Conditions 2.1.1 and 2.1.3 are inserted
                  solely for the benefit of Teal who may waive them at Teal's
                  discretion. Condition 2.1.2 is inserted solely for the benefit
                  of FCF who may waive it at FCF's discretion.

         2.4      NON-FULFILMENT OF CONDITIONS: If all the Conditions in:

                  2.4.1    CLAUSES 2.1.1 AND 2.1.2: Clauses 2.1.1 and 2.1.2 have
                           not been fulfilled or waived in accordance with this
                           agreement by 5.00pm on 28 February 2003 or such later
                           date as may be agreed in writing by the parties;

                  2.4.2    CLAUSE 2.1.3: Clause 2.1.3 has not been fulfilled or
                           waived in accordance with this agreement by the later
                           of 5.00pm on 12 March 2003, the date 10 Business Days
                           after FCF receives bank consent pursuant to clause
                           2.1.2 or the date 8 Business Days after FCF receives
                           bank confirmation pursuant to clause 2.5, or such
                           later date as may be agreed in writing by the
                           parties;

                  then either party may terminate this agreement by notice to
                  the other of them in which case this agreement (other than
                  clauses 3 (but only if this agreement is terminated by FCF due
                  to the Condition in clause 2.1.2 not being satisfied) and 16,
                  which will survive termination) will end and no party will
                  have any claim against any other party arising under or in
                  connection with termination.

         2.5      BANK CONFIRMATION: Within 2 Business Days of the Condition in
                  clause 2.1.2 being satisfied or waived in accordance with this
                  agreement, FCF will procure that any lender holding an
                  Encumbrance over the Land and the Trees provides confirmation
                  of its consent, on usual terms for such consents, to provide
                  at Settlement the unconditional release of each Encumbrance
                  over the Trees and the unconditional consent to the creation
                  and registration of the Forestry Right. If FCF is unable to

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Agreement for Sale and Purchase of Trees                                  Page 8

                  provide such confirmation by 4 March 2003, FCF shall before
                  4.30_pm on that day pay to Teal's Solicitors in immediately
                  available cleared funds a bond of NZ$692,307.69 to be held on
                  the following terms:

                  2.5.1    BOND HELD ON TRUST: Teal's Solicitors must hold the
                           bond as stakeholder on trust in an interest bearing
                           account in the names of both parties until Settlement
                           or termination of this agreement;

                  2.5.2    RISK OF LOSS OF BOND: The risk of loss of the bond
                           rests with the party who has the right to payment of
                           the bond on Settlement or termination of this
                           agreement;

                  2.5.3    ENTITLEMENT TO BOND: The bond is to be paid by Teal's
                           Solicitors as follows:

                           (a)      If Settlement takes place, or this agreement
                                    is terminated other than due to the default
                                    of FCF, it is to be refunded forthwith to
                                    FCF;

                           (b)      If this agreement is terminated due to the
                                    default of FCF, it becomes the property of
                                    Teal, and shall be paid forthwith to it
                                    accordingly, provided that Teal cannot
                                    receive payment under this clause and under
                                    clause 3.

                  2.5.4    ENTITLEMENT TO INTEREST ON BOND: The interest earned
                           on the bond must be paid by Teal's Solicitors to the
                           party entitled to be paid the bond under clause
                           2.5.3.

                  2.5.5    SOLICITORS' LETTER ABOUT BOND: Teal will procure
                           Teal's Solicitors to provide a letter addressed to
                           both parties confirming the terms on which the bond
                           will be held pursuant to this clause 2.5.

         2.6      PAYMENT OF SUM: One (1) Business Day after the Condition in
                  clause 2.1.3 is satisfied or waived in accordance with this
                  agreement, Teal must pay the sum of US$346,153.84 ("Sum") to
                  Teal's Solicitors, which is to be held on the following terms:

                  2.6.1    SUM HELD ON TRUST: Teal's Solicitors must hold the
                           Sum as stakeholder on trust in an interest bearing
                           account in the names of both parties until Settlement
                           or termination of this agreement;

                  2.6.2    RISK OF LOSS OF SUM: The risk of loss of the Sum
                           rests with the party who has the right to payment of
                           the Sum on Settlement or termination of this
                           agreement;

                  2.6.3    ENTITLEMENT TO SUM: The Sum is to be paid by Teal's
                           Solicitors as follows:

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Agreement for Sale and Purchase of Trees                                  Page 9

                           (a)      SETTLEMENT: If Settlement takes place, it is
                                    to be paid to FCF in part payment of the
                                    Purchase Price;

                           (b)      TERMINATION DUE TO FCF'S DEFAULT: If this
                                    agreement is terminated under clauses
                                    9.2.1(a) or 11.16, or otherwise because of
                                    FCF's default, it is to be paid to Teal; and

                           (c)      TERMINATION DUE TO TEAL'S DEFAULT: If this
                                    agreement is terminated because of the
                                    default of Teal, it becomes the property of
                                    FCF and is to be paid to FCF.

                  2.6.4    ENTITLEMENT TO INTEREST ON SUM: The interest earned
                           on the Sum must be paid by Teal's Solicitors to the
                           party entitled to be paid the Sum under clause 2.6.3.

                  2.6.5    SOLICITORS' LETTER ABOUT SUM: Teal will procure
                           Teal's Solicitors to provide a letter addressed to
                           both parties confirming the terms on which the Sum
                           will be held pursuant to this clause 2.6.

3        NON-COMPLETION FEE

         If either FCF or Teal terminates this agreement under clause 2.4
         because the Condition in clause 2.1.2 is not satisfied, then FCF shall
         pay to Teal a non completion fee of NZ$692,307.69, such fee to be paid
         to Teal in a lump sum in immediately available cleared funds within 14
         days of either party serving written notice on the other party of the
         termination of this agreement. If FCF is required to pay any amount
         under this clause 3, the parties must procure that any amount held by
         Teal's Solicitors under clause 2.5 is paid to FCF. FCF will not be
         required to pay any amount under this clause 3 where either party is
         entitled to terminate this agreement under clause 2.4 because the
         Condition in clause 2.1.1 is not satisfied.

4        SALE AND PURCHASE

         FCF agrees to sell and Teal agrees to purchase the Trees on the terms
         and conditions contained in this agreement. The parties further agree
         to prepare and execute the Related Agreements with the intent that the
         parties will be able to comply with their respective obligations under
         clause 7 of this agreement on the Settlement Date.

5        PURCHASE PRICE AND PAYMENT

         5.1      PRICE FOR TREES: The consideration for the purchase of the
                  Trees is the Purchase Price excluding GST.

         5.2      PAYMENT OF PURCHASE PRICE FOR TREES: The Purchase Price shall
                  be paid or satisfied in US dollars, by the payment of the
                  Purchase Price, less the Sum, by electronic transfer of
                  immediately available cleared funds to

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Agreement for Sale and Purchase of Trees                                 Page 10

                  a bank account nominated by FCF, such transfer of funds to be
                  received by FCF's bank at the earliest practicable time on the
                  Settlement Date (FCF to supply details of its bank account in
                  writing to Teal no later than five Business Days prior to the
                  Settlement Date). The parties acknowledge that Settlement can
                  only take place at a time when banks in both New Zealand and
                  the United States of America are open for business.

         5.3      PURCHASE PRICE LOWEST PRICE: The Parties agree that the
                  Purchase Price plus the GST amount for the Trees is the lowest
                  price within the meaning of section EH 48(3)(a) of the Income
                  Tax Act 1994 that the Parties would have agreed upon as at the
                  date of this agreement for this sale by FCF of the Trees upon
                  the basis of payment in full on the Settlement Date. The
                  parties agree that they will compute their taxable income for
                  the relevant period on the basis that the Purchase Price
                  includes no capitalised interest and they will file their tax
                  returns in respect to the Purchase Price accordingly.

         5.4      DEFAULT INTEREST PAID BY TEAL: If from any cause whatever
                  (save FCF's default) any portion of the Purchase Price or the
                  GST Amount (if payable under clause 10.1.2(a)) is not paid on
                  the due date Teal will without prejudice to any of FCF's
                  rights or remedies under this agreement pay to FCF interest at
                  the Default Interest Rate to be calculated daily and
                  compounded monthly on the unpaid portion of the Purchase Price
                  or the GST Amount (if payable under clause 10.1.2(a)) from the
                  due date until payment in full.

         5.5      DEFAULT INTEREST PAID BY FCF: If FCF fails to refund to Teal
                  any part of the Purchase Price and any part of the GST Amount
                  when due, FCF will pay to Teal interest at the Default
                  Interest Rate to be calculated daily and compounded monthly on
                  the amount to be refunded from the due date until payment in
                  full.

6        PENDING SETTLEMENT

         In respect of the period from execution of this agreement until
         Settlement ("Period") unless the prior written consent of Teal is given
         to act otherwise:

         6.1      HARVESTING: FCF will ensure that no harvesting or other
                  removal of Trees is carried out in the Stands;

         6.2      MANAGE TREES: FCF shall manage the Trees in good faith
                  employing the same degree of care and skill as:

                  6.2.1    CONDUCT OF OUR AFFAIRS: FCF employs in the conduct of
                           its own affairs; or

                  6.2.2    HIGHLY COMPETENT MANAGER: a highly competent manager
                           with expertise in large scale commercial plantation
                           forestry management would use in carrying out
                           equivalent obligations;

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Agreement for Sale and Purchase of Trees                                 Page 11

                  whichever is the higher standard;

         6.3      NO DISPOSAL OR ENCUMBRANCE: FCF will ensure that no Trees are
                  disposed of and that no new Encumbrance is created over the
                  Trees (or any of them); and

         6.4      INITIAL MANAGEMENT PLANS: the parties shall undertake
                  negotiations in good faith to agree during the Period on the
                  initial Management Plans.

         6.5      BENEFIT OF ACCESS ARRANGEMENTS: Teal may in the course of due
                  diligence identify access arrangements, rights of way or other
                  easements in the name of FCF or its Affiliates which are
                  appurtenant to the Land, or which are held by FCF or its
                  Affiliates in gross, whether registered or unregistered
                  ("Access Arrangements"), which in Teal's reasonable opinion
                  are desirable to meet the Purpose. The parties shall then use
                  their best endeavours to agree prior to Settlement the basis
                  upon which the benefit of the Access Arrangements will be made
                  available to Teal. Where such agreement has been reached, at
                  Settlement FCF shall deliver documents reasonably acceptable
                  to Teal recording the basis upon which Teal will obtain the
                  benefit of the Access Arrangements.

7        SETTLEMENT

         7.1      TIME AND PLACE: Settlement will take place at the earliest
                  practicable time on the Settlement Date at the offices of
                  FCF's Solicitors or at another place agreed on by FCF and
                  Teal.

         7.2      POSSESSION AND TITLE: Possession of, and title to, the Trees
                  will be given and taken on Settlement. Subject to Settlement,
                  the benefit of the Trees will accrue to Teal from 2.00pm on
                  the Settlement Date.

         7.3      DELIVERY OF RECORDS ON SETTLEMENT DATE: On Settlement FCF will
                  deliver and make available to Teal, at FCF's offices,
                  possession and control of the Records with the intent that the
                  unencumbered right and interest therein shall pass by
                  delivery.

         7.4      DELIVERY BY FCF: On Settlement, FCF will deliver the following
                  complete and executed documents:

                  7.4.1    FORESTRY RIGHT: the Forestry Right in registrable
                           form;

                  7.4.2    ENCUMBRANCE: unconditional releases from the holders
                           of each Encumbrance over the Trees together with
                           unconditional consent to the creation and
                           registration of the Forestry Right in registrable
                           form;

                  7.4.3    RELATED AGREEMENTS: counterpart copies of the Related
                           Agreements other than the Forestry Right, together
                           with any undertakings or other documents that are
                           required to be delivered as a term of this agreement
                           or which are annexed to,

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Agreement for Sale and Purchase of Trees                                 Page 12

                           or are required to be provided by FCF or its
                           Affiliates under, the Related Agreements;

                  7.4.4    MANAGEMENT PLANS: copies of the initial Management
                           Plans;

                  7.4.5    TAX INVOICE: a tax invoice in a form which complies
                           with the GST Act in respect of the supply of the
                           Trees;

                  7.4.6    CAVEATORS' CONSENTS: such caveators' consents in
                           registrable form (if any) as may be necessary to
                           enable the Forestry Right to be registered;

                  7.4.7    UNDERTAKING FROM FLETCHER CHALLENGE INDUSTRIES
                           LIMITED: an undertaking from Fletcher Challenge
                           Industries Limited in the form set out in Annexure
                           Seven together with a guarantee from Fletcher
                           Challenge Industries Limited in the form attached to
                           Annexure Seven;

                  7.4.8    BENEFIT OF ACCESS ARRANGEMENTS: any documents the
                           parties agree FCF is required to deliver to Teal
                           pursuant to clause 6.5, such documents to be
                           delivered in registrable form if that is agreed by
                           the parties under that clause;

                  7.4.9    MATERIAL DOCUMENTS: such other documents material to
                           the transfer of the Trees as may reasonably be
                           required by Teal (and to be notified to FCF, at least
                           10 Business Days prior to the Settlement Date) and as
                           are reasonably required to be produced on the
                           Settlement Date to complete the sale and purchase of
                           the Trees and registration of the Forestry Right; and

                  7.4.10   OTHER EVIDENCE: such other evidence as Teal may
                           reasonably require (and to be notified to FCF, at
                           least 10 Business Days prior to the Settlement Date)
                           to satisfy Teal that the right and interest to be
                           transferred pursuant to this agreement in the Trees
                           will vest in Teal free from any Encumbrances.

         7.5      TEAL'S OBLIGATIONS: At Settlement Teal shall:

                  7.5.1    PAYMENT: pay FCF the Purchase Price less the Sum; and

                  7.5.2    RELATED AGREEMENTS: deliver to FCF duly executed
                           counterpart copies of the Related Agreements.

8        DUE DILIGENCE MATTERS

         8.1      ACCESS TO PERSONNEL AND PREMISES: Between the date of this
                  agreement and the Settlement Date FCF will allow Teal and any
                  persons authorised by Teal reasonable access during normal
                  business hours to:

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Agreement for Sale and Purchase of Trees                                 Page 13

                  8.1.1    PERSONNEL ACCESS: the most senior employees of FCF
                           and such other personnel and advisers as may be
                           reasonably nominated by Teal and approved by FCF; and

                  8.1.2    LAND: the Land;

                  for the purpose of carrying out Teal's due diligence review,
                  which may include but shall not be limited to inspecting the
                  Trees and the Land.

         8.2      FULL CO-OPERATION: FCF will cause FCF's officers, employees
                  and professional advisers to co-operate reasonably with Teal.

         8.3      NO INTERFERENCE: In exercising its rights under this clause 8
                  for the purposes of conducting Teal's due diligence review
                  Teal will ensure that Teal and any person authorised by Teal:

                  8.3.1    INTERFERENCE OR DISRUPTION: ensures the least
                           possible interference or disruption is caused to
                           FCF's operations; and

                  8.3.2    REASONABLE REQUIREMENTS: complies with all reasonable
                           requirements (including any health and safety
                           requirements) of FCF when accessing the Land or any
                           of FCF's premises.

         8.4      PROVISION OF DUE DILIGENCE INFORMATION: From the date of this
                  agreement, FCF will use its reasonable endeavours to supply
                  all information requested in the Due Diligence Information
                  Request to Teal as soon as possible and in any event no later
                  than 20 January 2003 unless the parties agree otherwise in
                  writing. All such information is to be provided on the
                  following terms:

                  8.4.1    INFORMATION IN WRITING: all information is to be
                           distributed in writing to Teal by Richard Parker of
                           FCF;

                  8.4.2    REQUESTS IN WRITING: Any requests by Teal for:

                           (a)      INFORMATION NOT PROVIDED: information not
                                    yet provided by FCF in response to the Due
                                    Diligence Information Request;

                           (b)      CLARIFICATION: clarification of information
                                    previously provided by FCF; or

                           (c)      INFORMATION NOT WITHIN SCOPE: information
                                    that is not within the scope of the Due
                                    Diligence Information Request;

                           must be sent in writing to Richard Parker or Kevin
                           Cooney of FCF;

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Agreement for Sale and Purchase of Trees                                 Page 14

                  8.4.3    NO REQUESTS AFTER 17 FEBRUARY 2003: Teal agrees that
                           it shall not request information for the purposes of
                           clause 2.1.3 after the close of business on 17
                           February 2003; and

                  8.4.4    NO RESPONSES AFTER 19 FEBRUARY 2003: FCF undertakes
                           to use its reasonable endeavours to respond to all
                           requests for information made by Teal under clause
                           8.4.2 within 5 Business Days of receiving such
                           requests, and for the avoidance of doubt, all such
                           responses must be given by FCF to Teal by the close
                           of business on 19 February 2003.

         8.5      LIST OF ADDITIONAL DUE DILIGENCE INFORMATION: By no later than
                  the close of business on 19 February 2003, the parties must
                  agree in writing on the list of documents included in the
                  Additional Due Diligence Information and on the application of
                  Warranty 1.5.1 or 1.5.2 to the Additional Due Diligence
                  Information, and FCF shall thereafter provide Teal with the
                  agreed list by the close of business on 21 February 2003. If
                  the parties cannot agree on the list, it will be determined
                  under clause 15.

         8.6      COPIES OF MATERIALS: If Settlement does not occur under this
                  agreement, Teal will either, at FCF's option, return to FCF
                  copies of any documents provided by FCF to Teal or destroy the
                  same (and certify to FCF that such has occurred), without
                  taking any further copies of those materials.

9        RISK

         9.1      RISK: The Trees will be at FCF's sole risk until Settlement
                  and thereafter will be at Teal's sole risk subject to the
                  provisions of any of the Related Agreements providing
                  otherwise.

         9.2      DAMAGE OR DESTRUCTION: In the event that the Trees, or any of
                  the Trees, are damaged or destroyed prior to Settlement, the
                  following provisions shall apply.

                  9.2.1    MORE THAN 10% OF PLANTED AREA: Should, prior to
                           Settlement, the Trees or any Trees (being more than
                           10% of the Trees by planted area) be materially
                           damaged or destroyed by fire, windthrow or otherwise,
                           then Teal may at its sole discretion either:

                           (a)      TERMINATION: terminate this agreement; or

                           (b)      REPLACEMENT TREES: agree with FCF on
                                    alternative replacement trees of equal value
                                    to be provided by FCF which shall be of no
                                    lesser quality, age class and silvicultural
                                    condition than the Affected Trees.

                           Where FCF is unable to provide a sufficient quantity
                           of replacement trees of equal value which are of no
                           lesser quality,

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Agreement for Sale and Purchase of Trees                                 Page 15

                           age class and silvicultural condition than the
                           Affected Trees, Teal in its sole discretion may agree
                           to accept replacement trees which are of a quality,
                           age class and silvicultural condition which differs
                           from the Affected Trees.

                  9.2.2    LESS THAN 10% OF PLANTED AREA: Should, prior to
                           Settlement, 10% or less by planted area of the Trees
                           be materially damaged or destroyed by fire, windthrow
                           or otherwise, then FCF and Teal shall agree on
                           alternative replacement trees of equal value to be
                           provided by FCF which shall be of no lesser quality,
                           age class and silvicultural condition than the
                           Affected Trees.

                  9.2.3    FAILURE TO AGREE ON REPLACEMENT TREES: Any such
                           replacement trees under clause 9.2.1(b) or 9.2.2 are
                           to comprise stands or part stands situated on the
                           Land and shall be agreed by the parties or, failing
                           agreement within 7 days of a dispute arising, shall
                           be selected by a Forestry Consultant to be selected
                           by agreement between the parties, or failing
                           agreement, by an independent Forestry Consultant to
                           be appointed by the chairman of the Consultants
                           Committee of the New Zealand Institute of Forestry.
                           That Forestry Consultant must provide written
                           undertakings of confidentiality prior to commencement
                           of his or her selection process and must resolve the
                           dispute as an expert and not as an arbitrator. The
                           Forestry Consultant's selection shall be final and
                           binding on FCF and Teal. The costs of the Forestry
                           Consultant must be shared equally by FCF and Teal.

                  9.2.4    CONSEQUENTIAL AMENDMENT TO RELATED AGREEMENTS: Where
                           any agreement or selection pursuant to clauses 9.2.1,
                           9.2.2 or 9.2.3 requires the Related Agreements to be
                           amended to give effect to such agreement or
                           selection, the Related Agreements shall be amended by
                           the parties and the cost of such amendments shall be
                           borne equally, unless the agreement or selection was
                           necessitated by an act or omission of FCF or Teal, in
                           which case the cost of amending the Related
                           Agreements shall be borne by the party at fault.

                  9.2.5    CONSEQUENCES OF TERMINATION: If this agreement is
                           terminated by Teal under clause 9.2.1(a), this
                           agreement (other than clause 16 and clause 3 (but
                           only where the event leading to the termination
                           contemplated in clause 3 precedes the event
                           triggering clause 9.2.1(a)), which will survive
                           termination) will end and no party will have any
                           claim against any other party arising under or in
                           connection with termination.

                  9.2.6    SATISFACTION OF CLAIMS: The provision of any
                           replacement trees under this clause 9 will be in full
                           and final satisfaction of any claims Teal will have
                           arising from the damage or destruction of any Trees.

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Agreement for Sale and Purchase of Trees                                 Page 16

10       GOODS AND SERVICES TAX

         10.1     GST: In addition to the Purchase Price, Teal shall pay to FCF
                  an amount equal to the GST charged on the supply of the Trees
                  under this agreement ("the GST Amount") by either:

                  10.1.1   SET OFF: obtaining written acceptance from the Inland
                           Revenue Department that FCF's liability to account
                           for GST to the Inland Revenue Department on the
                           supply of the Trees is satisfied by Teal assigning to
                           FCF the benefit of Teal's input tax credit in respect
                           of that supply ("Set Off") as contemplated by the
                           Deed of Assignment; or

                  10.1.2   PAYMENT: if the Set Off is not implemented by the
                           Inland Revenue Department on or before the seventh
                           Business Day of the month following the month in
                           which Settlement occurs, or on any other date as
                           agreed by the parties in writing ("Set Off Date")
                           upon Teal receiving a refund from the Inland Revenue
                           Department in respect of the GST charged on the
                           supply of the Trees under this agreement, immediately
                           paying:

                           (a)      GST AMOUNT: the GST Amount to FCF; and

                           (b)      INTEREST: any interest (net of tax) that
                                    Teal receives from the Inland Revenue
                                    Department in respect of that refund to FCF.

         10.2     GST RETURN: Teal will:

                  10.2.1   RETURN: ensure that the GST return for the taxable
                           period in which Settlement occurs is filed on or
                           before the third Business Day of the month following
                           the month in which Settlement occurs;

                  10.2.2   DEDUCTION: claim a GST input tax deduction equal to
                           the GST charged on the supply of Trees under this
                           agreement in that GST return; and

                  10.2.3   RESPOND TO QUERIES: promptly respond to any queries
                           raised by the Inland Revenue Department in respect of
                           that GST input tax deduction.

         10.3     CO-OPERATION: FCF and Teal will co-operate in good faith to
                  ensure that the Set Off is implemented by the Inland Revenue
                  Department before the Set Off Date.

11       WARRANTIES

         11.1     FCF'S REPRESENTATIONS: FCF represents and warrants to Teal in
                  the terms of the Warranties with the intent that Teal does, in
                  entering into

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Agreement for Sale and Purchase of Trees                                 Page 17

                  this agreement, rely on the truth of the statements contained
                  in the Warranties.

         11.2     SEPARATE WARRANTIES: Each Warranty is given as a separate and
                  independent Warranty and except as otherwise expressly
                  provided will not be limited by reference to any other
                  Warranty or by anything in this agreement.

         11.3     WARRANTIES REPEATED: Each Warranty will be deemed to have been
                  repeated and re-affirmed by FCF on Settlement, as if it had
                  been made on and effective as at that time.

         11.4     WARRANTY CLAIMS: If Teal becomes aware of a matter which could
                  give rise to a Warranty claim (which for the avoidance of
                  doubt, requires actual knowledge by Teal of such a matter),
                  FCF is not liable in respect of it unless written notice of
                  the relevant facts is given by Teal to FCF's Solicitors as
                  soon as reasonably practicable and in any event within 40
                  Business Days of Teal becoming aware of those facts.

         11.5     COMMENCEMENT OF PROCEEDINGS: The liability of FCF in respect
                  of any Warranty claim will absolutely terminate if dispute
                  resolution measures in respect of it have not been commenced
                  within six months of service of written notice of the Warranty
                  claim. This does not apply if FCF has assumed conduct of the
                  Warranty claim in question in accordance with clause 11.18.2.

         11.6     MAXIMUM LIABILITY: FCF's maximum aggregate liability in
                  respect of all breaches of this agreement including, but
                  without limitation, any breach of the Warranties, cannot
                  exceed the Purchase Price plus any GST. Teal's maximum
                  aggregate liability in respect of all breaches of this
                  agreement cannot exceed the Purchase Price plus any GST and
                  any default interest payable under clause 5.4.

         11.7     WARRANTY CLAIM THRESHOLD: No Warranty claim may be made by
                  Teal unless the total of all Warranty claims to be made or
                  which have been made exceed in aggregate NZ$300,000, in which
                  event all Warranty claims individually or in series may be
                  made, but any claim so made will be for all amounts claimed
                  and not just for the amount in excess of NZ$300,000. No
                  individual Warranty claim may be made for an amount less than
                  NZ$30,000.

         11.8     PERIOD FOR WARRANTY CLAIMS: In relation to all Warranties
                  other than Warranties 4, 5, 7, 10.2, 10.3 and 15, Teal may not
                  make any Warranty claims after 24 months following the
                  Settlement Date. In relation to Warranties 4, 5, 7, 10.2, 10.3
                  and 15, Teal may make Warranty claims at any time up to the
                  expiry or earlier termination of the Forestry Right.

         11.9     WARRANTIES QUALIFIED: Each Warranty is given subject to:

                  11.9.1   DISCLOSURE LETTER: the matters fairly disclosed in
                           the Disclosure Letter;

<PAGE>

Agreement for Sale and Purchase of Trees                                 Page 18

                  11.9.2   AGREEMENT: any matter expressly provided for under
                           this agreement or any Related Agreement or done or
                           omitted to be done after the date of this agreement
                           with Teal's prior written consent;

                  11.9.3   PUBLIC REGISTERS: any matter recorded in any public
                           register in New Zealand and capable of being searched
                           by Teal, whether or not searches of the registers
                           have been made; and

                  11.9.4   INSPECTION: all information that would be reasonably
                           evident on a proper visual inspection of Trees
                           (accepted by FCF as not requiring a tree by tree
                           inspection) whether or not inspections have been made

                  but is otherwise subject to no qualification whatsoever.

         11.10    DISCLOSURE LETTER EXHAUSTIVE:

                  11.10.1  EXPRESS DISCLOSURE: No letter, document or other
                           communication constitutes a disclosure for the
                           purposes of clause 11.9.1, unless it is expressly set
                           down in, or annexed to, the Disclosure Letter.

                  11.10.2  QUALIFICATION OF WARRANTIES: The Disclosure Letter
                           will only be effective to qualify any of the
                           Warranties to the extent it makes fair disclosures of
                           fact relating to identified Warranty section
                           headings.

                  11.10.3  NO PREJUDICE TO CLAIMS: Subject to clauses 11.9 and
                           11.11.5:

                           (a)      INFORMATION REGARDING TREES: no information
                                    about the Trees of which Teal has knowledge
                                    (actual or constructive) will prejudice any
                                    claim which Teal will be entitled to bring
                                    or will operate to reduce any amount
                                    recoverable by Teal; and

                           (b)      NO MODIFICATION OR DISCHARGE DEEMED: none of
                                    the Warranties will be deemed in any way
                                    modified or discharged by reason of
                                    investigation or inquiry made or to be made
                                    by or on behalf of Teal.

         11.11    ACKNOWLEDGMENT: Teal acknowledges and agrees to each of the
                  following:

                  11.11.1  ONLY REPRESENTATIONS ETC: the Warranties are the only
                           representations, warranties or other assurances of
                           any kind given by or on behalf of FCF and on which
                           Teal may rely in entering into this agreement;

<PAGE>

Agreement for Sale and Purchase of Trees                                 Page 19

                  11.11.2  NO OTHER BASIS: no verbal statement, promise or
                           forecast made by or on behalf of FCF may form the
                           basis of, or be pleaded in connection with, any claim
                           by Teal under or in connection with this agreement;

                  11.11.3  FUTURE VALUE: no representation or warranty is given
                           by or on behalf of FCF regarding the future value or
                           financial performance of the Trees;

                  11.11.4  NO IMPLIED WARRANTIES: all representations or
                           warranties implied by any law are expressly excluded
                           to the maximum extent permitted by law; and

                  11.11.5  NO BREACH: as at the date on which the Condition in
                           clause 2.1.3 is satisfied, it has no actual knowledge
                           of any matter or thing which constitutes a breach of
                           any of the Warranties.

         11.12    DUE INQUIRY: Where in Schedule One a Warranty is given "so far
                  as FCF is aware" or "to the best of FCF's knowledge and
                  belief", it is deemed to be given after due and careful
                  inquiries have been made by FCF.

         11.13    BENEFIT: If FCF makes any payment by way of damages for breach
                  of the Warranties and Teal receives any benefit in connection
                  with the circumstances giving rise to the claim in respect of
                  which the payment was made, Teal must, once it has received
                  such benefit, immediately repay to FCF an amount equal to the
                  lesser of the amount of such benefit and the payment.

         11.14    MITIGATION: Teal must not do any act or thing (other than in
                  the ordinary course of business) which may give rise to a
                  Warranty claim which would not otherwise arise.

         11.15    PENDING SETTLEMENT: FCF further undertakes with Teal that:

                  11.15.1  DISCLOSURE: FCF will immediately disclose in writing
                           to Teal any matter or circumstance which may arise or
                           become known to FCF after the date of this agreement
                           and before Settlement which does or may constitute a
                           material breach of, or is materially inconsistent
                           with, any of the Warranties; and

                  11.15.2  NO BREACH OF WARRANTIES: pending Settlement FCF will
                           not do or omit to do or suffer to be done anything
                           whereby any Warranty will or may be materially
                           untrue, misleading or inaccurate as at Settlement.

         11.16    CANCELLATION OF AGREEMENT: If, pending Settlement:

                  11.16.1  FCF BREACH: FCF materially breaches any Warranty or
                           any of FCF's obligations under this agreement; or

<PAGE>

Agreement for Sale and Purchase of Trees                                 Page 20

                  11.16.2  NEW CIRCUMSTANCES: any circumstances arise which have
                           the effect of making any of the Warranties materially
                           incorrect or untrue;

                  Teal will be entitled at Teal's absolute discretion to give
                  FCF notice cancelling this agreement at any time before
                  Settlement. This right of cancellation is separate from and
                  additional to any rights conferred on Teal by law or otherwise
                  under this agreement and shall be without prejudice to any
                  claim relating to any cause of action accrued or accruing
                  prior to or in relation to such cancellation.

         11.17    NOTICE OF CANCELLATION: Any notice given under clause 11.16
                  will be effective as against FCF if given to FCF's Solicitors.

         11.18    THIRD PARTY CLAIMS: If any Warranty claim arises as a result
                  of or in connection with a liability or alleged liability to a
                  third party, then the following applies:

                  11.18.1  AVOIDANCE ETC: Teal must take such action at FCF's
                           cost in all things to avoid, dispute, appeal or
                           compromise the liability as may be requested by FCF;

                  11.18.2  CONDUCT OF APPEALS ETC: FCF is entitled to conduct
                           any appeal, dispute, compromise or defence of the
                           dispute and of any incidental negotiations at FCF's
                           costs in all things;

                  11.18.3  PERSONS AND INFORMATION: Teal must make available to
                           FCF at FCF's costs in all things the persons and all
                           information as FCF may reasonably require for
                           avoiding, disputing, appealing, or compromising any
                           such liability.

         11.19    INDEMNITY BY FCF: FCF shall indemnify Teal and its respective
                  officers, directors, employees and Affiliates against all
                  losses, liabilities, costs, claims, charges, expenses, actions
                  and demands which Teal may incur as a direct result of a
                  breach by FCF of any of the Warranties listed in Schedule One
                  and the reasonable solicitors' costs incurred by Teal in
                  respect of any breach by FCF of any of the Warranties listed
                  in Schedule One including (but without limiting the generality
                  of this clause):

                  11.19.1  RESTORATION COSTS: any cost of correction or
                           restoration to the warranted or covenanted state or
                           condition; and

                  11.19.2  VALUE DIFFERENCE: any difference in value caused by
                           any such breach;

                  provided that nothing expressed or implied in this agreement
                  shall confer any liability on FCF 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 Teal as a direct or indirect result of
                  a breach by FCF of any of the Warranties.
<PAGE>

Agreement For Sale and Purchase of Trees                                 Page 21

11.20    PURCHASE PRICE REDUCTION: Any payment FCF is required to make in
         relation to any breach of Warranty is to be made to Teal in reduction
         and refund of the Purchase Price and the GST Amount and FCF will issue
         a credit note as required under section 25 of the GST Act at the time
         of the payment.

11.21    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 of the Related Agreements.

11.22    ACCESS: If Teal makes a Warranty claim against FCF, Teal will make
         available to FCF on a confidential basis, all information, books and
         records of Teal as FCF may reasonably require for the purposes of
         answering or defending such Warranty claim. Teal must preserve all
         documents, books and records and any other information relevant to the
         matter which may give rise to the Warranty claim.

11.23    TEAL'S WARRANTIES ON EXECUTION: Teal warrants and represents to FCF
         that on execution each of this agreement and the Related Agreements
         will constitute legal, valid and binding obligations enforceable
         against Teal in accordance with their respective terms.

11.24    TEAL'S WARRANTIES ON SETTLEMENT: On Settlement Teal warrants and
         represents to FCF that the Settlement, execution and delivery of this
         agreement and the Related Agreements and the performance by Teal of its
         obligations under this agreement and the Related Agreements;

         11.24.1  VALID AUTHORISATION: will have been validly authorised by all
                  necessary action on the part of Teal;

         11.24.2  LAW: will not contravene any law binding on it;

         11.24.3  INCORPORATION DOCUMENTS: will not contravene its incorporation
                  documents.

11.25    TEAL'S CORPORATE POWERS: Teal warrants and represents to FCF that Teal
         has and will continue to have the necessary corporate powers to enter
         into this agreement and the Related Agreements and to perform its
         obligations under it and the Related Agreements.

11.26    TEAL'S GST WARRANTIES: Teal warrants and represents that:

         11.26.1  REGISTERED PERSON: it will be a registered person under the
                  GST Act at Settlement;

         11.26.2  GROUP COMPANIES: it will not apply to be and will not at any
                  time have applied to be a member of a group of companies for
                  the purposes of subsections 55(2) to 55(7) of the GST Act;

         11.26.3  CONSOLIDATED GROUP OF COMPANIES: it will not be and will not
                  at any time have been a member of a consolidated

<PAGE>

Agreement For Sale and Purchase of Trees                                 Page 22

                  group of companies for the purposes of the Income Tax Act
                  1994.

12.      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 other
         documentation contemplated by this agreement.

13.      DELAY

         No delay, grant of time, release, compromise, forbearance (whether
         partial or otherwise) or other indulgence by one party concerning any
         breach of any other party's obligations under this agreement is to:

         13.1     NO WAIVER: operate as a waiver of or prevent the subsequent
                  enforcement of that obligation; or

         13.2     NO DEEMED WAIVER: 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.

14.      ASSIGNMENT

         14.1     CONSENT: Subject to clause 14.2, this agreement shall be
                  binding upon and inure to the benefit of the parties, their
                  respective successors and permitted assigns. 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 (which consent shall not be
                  unreasonably withheld).

         14.2     NOMINATION: Prior to Settlement, Teal may nominate a suitable
                  person or entity to acquire as beneficial owner the Trees and
                  to hold the Forestry Right. Subject to clauses 14.3 and 14.4
                  of this agreement, from and after such nomination, the person
                  or entity so nominated shall take over all rights, privileges
                  and obligations conferred on or undertaken by Teal under this
                  agreement and the Related Agreements as if such nominated
                  person or entity was Teal. Any nomination must be for this
                  agreement and all the Related Agreements.

         14.3     LIABILITY: Any nomination made pursuant to clause 14.2 of this
                  agreement shall release Teal from its liability under this
                  agreement as principal obligor to FCF for the performance of
                  its obligations under this agreement.

         14.4     DEED: In the case of a request for assignment the assignor
                  shall obtain the execution by the proposed transferee 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 and the Related Agreements. In
                  the case

<PAGE>

Agreement For Sale and Purchase of Trees                                 Page 23

                  of a nomination made pursuant to clause 14.2, Teal shall
                  obtain the execution by the proposed nominee of a deed of
                  covenant to be prepared by Teal's solicitors at Teal's costs
                  whereby the proposed nominee covenants with FCF to observe and
                  perform all the terms of this agreement and the Related
                  Agreements.

15.      RESOLUTION OF DISPUTES

         In the event of a dispute arising between the parties in relation to
         this agreement the following provisions will apply.

         15.1     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 in good
                  faith. The parties will attend at least one meeting to discuss
                  and 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
                  meeting will include the Managing Director of UBS Timber
                  Investors (or nominee) and the Chief Executive Officer of
                  Fletcher Challenge Forests Limited (or nominee). All
                  discussions will be without prejudice and will not be referred
                  to in any later proceedings.

         15.2     ARBITRATION: If the dispute cannot be resolved in accordance
                  with clause 15.1 within ten (10) Business Days after the date
                  of the notice referred to in clause 15.1, then any party may
                  then require (by written notice to the other party) the
                  dispute to be referred to arbitration. If this clause is
                  invoked then the following shall apply.

                  15.2.1   ARBITRATION ACT: The dispute will be referred to
                           arbitration by a sole arbitrator under the provisions
                           of the Arbitration Act 1996. 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.

                  15.2.2   ARBITRATION IN NEW ZEALAND: The arbitration will take
                           place in New Zealand.

<PAGE>

Agreement For Sale and Purchase of Trees                                 Page 24

                  15.2.3   AWARD FINAL: The award in the arbitration including
                           any award by the arbitrator of costs will be final
                           and binding on the parties.

                  15.2.4   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.

         15.3     PARTIES TO CONTINUE TO PERFORM: Subject to the provisions of
                  clauses_15.1 and 15.2, pending resolution of any dispute or
                  difference, the parties shall continue to perform their
                  respective obligations pursuant to the provisions of this
                  agreement.

         15.4     INJUNCTIVE RELIEF: Nothing in this clause will prevent any
                  party commencing any legal proceedings for injunctive relief.

16.      CONFIDENTIALITY

         Each party will maintain as confidential at all times, and will not at
         any time, directly or indirectly:

         16.1     DISCLOSE: disclose or permit to be disclosed to any person;

         16.2     USE: use for itself; or

         16.3     USE TO DETRIMENT: use to the detriment of the other party;

         any Confidential Information except:

         16.4     LEGAL REQUIREMENT: subject to clause 16.10, as required by law
                  or regulatory body (including any stock exchange);

         16.5     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;

         16.6     AUTHORISED: as authorised in writing by the other party;

         16.7     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, FCF or Teal, provided that the relevant party shall
                  ensure compliance by such persons with this clause 16 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;

         16.8     AFFILIATES AND ADVISERS: as required to communicate with and
                  make disclosure to Affiliates of the parties or the parties'
                  or the Affiliates' respective advisers who have a legitimate
                  need to know the information

<PAGE>

Agreement For Sale and Purchase of Trees                                 Page 25

                  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
                  16 and shall be liable for any breach of such obligations by
                  such persons; or

         16.9     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).

         16.10    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
                  the 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 requests.

         16.11    FCF'S SAFEGUARDS: If requested, FCF will document to the
                  reasonable satisfaction of Teal the internal safeguards it
                  will put in place to meet its confidentiality obligations
                  under this clause 16.

17.      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.

18.      LIMITED RECOURSE

         FCF undertakes and agrees as follows.

         18.1     TEAL'S ASSETS: FCF will look only to the assets held by Teal
                  or the benefit of any insurance maintained by Teal to satisfy
                  the obligations or liabilities of Teal to FCF hereunder or
                  otherwise.

         18.2     LIMITATION OF LIABILITY: None of the Affiliates of Teal,
                  direct or indirect holders of securities or debt of Teal, nor
                  any of their respective officers, directors, or employees,
                  shall be liable for the obligations of Teal to FCF.

         18.3     NO ACTIONS OR PROCEEDINGS: FCF shall not commence any action
                  or proceeding against any of the persons referred to in
                  subclause 18.2 for the purpose of enforcing the obligations of
                  Teal.

<PAGE>

Agreement For Sale and Purchase of Trees                                 Page 26

19.      NOTICES

         19.1     DELIVERY OF NOTICE: All notices and other communications
                  required or permitted under this agreement shall be in
                  writing. Any written notice required 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:

                  19.1.1   PERSONAL DELIVERY: delivered personally;

                  19.1.2   DOMESTIC POST: sent by prepaid post; or

                  19.1.3   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.

                  TEAL: if to Teal to:

                  Teal 3 Limited
                  C/- UBS Warburg New Zealand Equities Limited
                  P O Box 45
                  Auckland 1000
                  Level 23 Qantas Building
                  191 Queen Street
                  Auckland
                  For:           Michael Edgar
                  Facsimile:     (09) 913 4751

                  With a copy to:

                  UBS Timber Investors
                  Trade Center, 4th Floor
                  24 Airport Road
                  West Lebanon
                  NH 03784
                  United States of America
                  For:           Peter Mertz
                  Facsimile:     (001) 603 298 7620

                  And with a copy to:

                  Foley Hoag LLP
                  155 Seaport Blvd
                  Boston, MA 02210
                  United States of America
                  For:           Jim Smith
                  Facsimile:     (001) 617 832 7000

<PAGE>

Agreement For Sale and Purchase of Trees                                 Page 27

                  FCF:  if to FCF, to:

                  Fletcher Challenge Forests Industries Limited
                  8 Rockridge Avenue
                  Penrose
                  Private Bag 92036
                  Auckland Mail Centre
                  Auckland
                  For:                 The Chief Executive Officer
                  Facsimile:           (09) 571 9870

                  With a copy to:

                  Fletcher Challenge Forests Industries Limited
                  8 Rockridge Avenue
                  Penrose
                  Private Bag 92036
                  Auckland Mail Centre
                  Auckland
                  For:                 The Company Secretary
                  Facsimile:           (09) 571 9872

         19.2     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:

                  19.2.1   PERSONAL DELIVERY: if delivered personally, when left
                           with an apparently responsible person at the
                           recipient's address;

                  19.2.2   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;

                  19.2.3   REGISTERED POST: if sent by registered post, on
                           acknowledgment of receipt by or on the recipient's
                           behalf;

                  19.2.4   AIR COURIER DELIVERY: if sent by air courier
                           delivery, on acknowledgment of receipt by or on the
                           recipient's behalf; or

                  19.2.5   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.

         19.3     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

<PAGE>

Agreement For Sale and Purchase of Trees                                 Page 28

                  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.

20.      ENTIRE AGREEMENT

         20.1     SUPERSEDES AND REPLACES: This agreement together with the
                  Management Agreement, Forestry Right, Infrastructure Agreement
                  and Wood Supply Agreement contain the entire agreement between
                  the parties in connection with the subject matter hereof and
                  supersede and replace all prior negotiations, agreements or
                  representations, whether oral or written, between them with
                  respect thereto.

         20.2     INCONSISTENCY: Except as expressly provided in this agreement,
                  if there is any inconsistency between this agreement and the
                  Related Agreements, this agreement will prevail.

21.      MODIFICATION

         This agreement may not be amended or modified except by written
         agreement signed by the parties.

22.      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.

23.      COUNTERPARTS

         23.1     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.

         23.2     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.

24.      FURTHER ASSURANCES

         The parties shall execute and deliver such further and other documents
         and instruments and do such other things as may be reasonably necessary
         to implement and carry out the intent and purpose of this agreement.

25.      NO MERGER

         The parties acknowledge that the covenants, representations,
         undertakings and agreements contained herein shall not merge upon
         Settlement and that the same shall endure for the benefit of the party
         entitled thereto notwithstanding Settlement pursuant to the provisions
         of this agreement.
<PAGE>

Agreement for Sale and Purchase of Trees                                 Page 29

26.      APPLICABLE LAW

         26.1     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 and be bound by the jurisdiction of the
                  courts and tribunals of New Zealand.

         26.2     NON EXCLUSIVE JURISDICTION: The submission to jurisdiction in
                  clause 26.1 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 jurisdictions to preclude the
                  taking of proceedings in another jurisdiction whether
                  concurrently or not.

27.      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.

In witness of which this agreement has been executed.

SIGNED by FLETCHER CHALLENGE
FORESTS INDUSTRIES LIMITED by:

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

WITNESS:
(if other than two directors sign)

__________________________________
Signature of witness

__________________________________
Full name of witness

__________________________________
Occupation of witness

__________________________________
Address of witness

<PAGE>

Agreement for Sale and Purchase of Trees                                 Page 30

SIGNED by TEAL 3 LIMITED 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

<PAGE>

                                  SCHEDULE ONE

                                   WARRANTIES

This schedule contains the representations and warranties given under clause 11
of the Agreement.

1.       ALL INFORMATION TRUE: So far as FCF is aware, all information
         (excluding any financial budgets, financial forecasts or financial
         projections):

         1.1      THIS AGREEMENT: contained in this agreement is complete and
                  accurate in all respects;

         1.2      DISCLOSURE LETTER: contained in the Disclosure Letter is
                  complete and accurate in all material respects;

         1.3      OTHER INFORMATION: provided in the Additional Due Diligence
                  Information was complete and accurate in all material respects
                  when given.

         In this Warranty 1:

         1.4      COMPLETE: "complete" means that all material information in
                  the possession of FCF in relation to the relevant item of
                  information has been supplied to Teal; and

         1.5      ACCURATE: "accurate" means:

                  1.5.1    DERIVED FROM SAMPLING ETC: where in accordance with
                           industry practice the relevant information is derived
                           from sampling, statistical analysis, estimation or
                           other similar methods and tools, that in deriving the
                           information, FCF has applied accepted industry
                           practice and standards; or

                  1.5.2    NO MATERIAL ERRORS: in every other case where clause
                           1.5.1 does not apply, does not contain any material
                           errors; and

                  1.5.3    NOT MISLEADING: is not, to FCF's actual knowledge
                           (which for the purposes of this clause shall include
                           the knowledge of the Specified Persons), misleading
                           in any material respect.

2.       STANDING: FCF is a company registered pursuant to the Companies Act
         1993.

3.       POWER OF ENTERING INTO AGREEMENT

         3.1      ON SETTLEMENT: On Settlement, execution and delivery of this
                  agreement and the Related Agreements and the performance by
                  FCF of its obligations under this agreement and the Related
                  Agreements:

<PAGE>

Agreement for Sale and Purchase of Trees                                 Page ii

                  3.1.1    VALID AUTHORISATION: will have been validly
                           authorised by all necessary action on the part of
                           FCF;

                  3.1.2    LAW: will not contravene any law binding on it;

                  3.1.3    INCORPORATION DOCUMENTS: will not contravene its
                           incorporation documents;

                  3.1.4    OTHER AGREEMENTS: will not contravene the provisions
                           of or constitute a default under any other agreement
                           to which it is a party or by which any of its Trees
                           are bound; and

                  3.1.5    CORPORATE POWERS: FCF will have and continue to have
                           the necessary corporate powers to enter into this
                           agreement and the Related Agreements and perform its
                           obligations under it and the Related Agreements.

         3.2      ON EXECUTION: On execution each of this agreement and the
                  Related Agreements will constitute legal, valid and binding
                  obligations enforceable against FCF in accordance with their
                  respective terms.

4.       NO ENCUMBRANCES: FCF:

         4.1      NOT CREATED: has not created or agreed to create or suffered
                  to arise any Encumbrance over any of the Trees and is not
                  aware of the existence or likelihood of any such Encumbrance
                  arising; and

         4.2      CLEAR TITLE: will at Settlement have, full legal and
                  beneficial interest in and title, free from Encumbrance, to
                  all the Trees.

5.       INSOLVENCY:

         5.1      RECEIVERS: No receiver or manager of all or part of the Land
                  or the Trees has been appointed or is threatened or expected
                  to be appointed.

         5.2      LAND AND TREES: There is no unsatisfied judgment or award
                  outstanding against FCF concerning any of the Land or the
                  Trees and no execution or process of any court or authority
                  has been issued against or levied or enforced on FCF
                  concerning any of the Land or the Trees.

6.       NO BREACH OF AGREEMENTS: So far as FCF is aware, no agreement to which
         FCF is a party concerning the Trees will be determined or adversely
         affected by reason of the Trees' transfer to Teal.

7.       NO LITIGATION:

         7.1      PROCEEDINGS: FCF is not involved in any litigation,
                  arbitration, prosecution or other legal proceedings involving
                  the Land or the Trees ("Proceedings"), whether as plaintiff,
                  defendant or otherwise, and, so far as FCF is aware, there are
                  no Proceedings pending or threatened.

<PAGE>

Agreement for Sale and Purchase of Trees                                Page iii

         7.2      CLAIMS: So far as FCF is aware, there are no claims, facts or
                  events which are likely to give rise to any Proceedings.

         7.3      INQUIRIES: FCF is not, concerning the Trees, involved in (and,
                  so far as FCF is aware, no facts or events exist which are
                  likely to cause FCF to be involved in or come before) any
                  inquiry, whether convened by a governmental, regulatory or
                  territorial board of inquiry or commission or any other
                  administrative body or organisation (whether judicial or
                  quasi-judicial).

8.       NO BREACH OF STATUTES: So far as FCF is aware, it has not done or
         omitted to do any act or thing which is or could be in contravention of
         the provisions of any statute or statutory regulations applicable to
         the Land or the Trees, and all statutory, territorial and other
         mandatory requirements applicable to the Land have been complied with
         and there are no such requirements which have not been complied with.

9.       ENVIRONMENTAL MATTERS:

         9.1      WARRANTY: In this warranty:

                  9.1.1    ENVIRONMENT: "Environment" means the environment or
                           surroundings including (without limitation) air
                           (including, without limitation, that within natural
                           or man-made structures, whether above or below
                           ground), water (including, without limitation,
                           territorial and inland waters, natural water, drains
                           and sewers) and land (including, without limitation,
                           river bed under any water as described above, surface
                           land and sub-surface land);

                  9.1.2    ENVIRONMENTAL LAW: "Environmental Law" means
                           environmental law as defined in clause 1 of this
                           agreement; and

                  9.1.3    SUBSTANCE: "Substance" includes (without limitation)
                           any solid, liquid, gas, noise, or electro-magnetic or
                           other radiation.

         9.2      LAND AND TREES: In respect of the Land and the Trees:

                  9.2.1    CONSENTS: FCF has obtained and complied with all
                           consents necessary under Environmental Law and so far
                           as FCF is aware, no notification or indication
                           (formal or informal) has been received that further
                           consents or remedial action may be required, or that
                           any existing consent may be withdrawn, restricted,
                           amended, not renewed, not renewed in full, or
                           otherwise affected;

                  9.2.2    OTHER CIRCUMSTANCES: so far as FCF is aware, no
                           circumstances exist that may lead to, or be included
                           in, any investigation, inquiry, order, decree,
                           judgment, notice or other communication nor to the
                           withdrawal, limitation, restriction, amendment,
                           non-renewal or non-renewal in full of any consent.

<PAGE>

Agreement for Sale and Purchase of Trees                                 Page iv

10.      TREES

         10.1     MANAGEMENT OF TREES: Prior to date of execution of this
                  agreement, FCF has managed the Trees in good faith employing
                  the same degree of care and skill as FCF employs in the
                  conduct of its own affairs.

         10.2     EXCLUSIVE OCCUPATION: Other than is disclosed in the
                  Disclosure Letter, FCF has exclusive occupation and quiet
                  enjoyment of the Land as at the date of this agreement.

         10.3     BEST OF KNOWLEDGE AND BELIEF: In respect of the Trees, to the
                  best of the knowledge and belief of FCF:

                  10.3.1   LEGAL BOUNDARIES: all of the Trees are situated
                           within the legal boundaries of the Land; and

                  10.3.2   MATERIAL DISPUTES: there are no material disputes
                           with any adjoining or neighbouring owner with respect
                           to any such Trees or the use of the Land and there
                           are no facts or circumstances which are likely to
                           give rise to any such dispute.

11.      FOREST STEWARDSHIP COUNCIL CERTIFICATION

         FCF has Forest Stewardship Council Certification in relation to its
         management of the Trees and the Land at the date of this agreement,
         and, subject to the parties agreeing otherwise, will up to the
         Settlement Date, use its reasonable endeavours to ensure that it
         maintains such certification.

12.      NO RIGHTS AT SETTLEMENT

         On Settlement, there will be no forestry rights other than the Forestry
         Right or other matters materially affecting the rights of FCF or its
         successors and assigns in respect of the Trees.

13.      NO FENCING ACT 1978 CLAIM

         So far as FCF is aware, FCF has not received any written notice nor
         does it have any knowledge of a claim or claims by owners or occupiers
         of any land contiguous to the Land pursuant to the Fencing Act 1978
         which could require it to erect or repair a fence between the Land and
         any contiguous land.

14.      TREATY OF WAITANGI CLAIMS

         To the best of FCF's knowledge no claims have been made in respect of
         the Land under the Treaty of Waitangi Act 1975 and there are no ongoing
         disputes or discussions with Tangata Whenua concerning sites of
         cultural, spiritual or historical significance to Tangata Whenua, other
         than those set forth in the Disclosure Letter.

<PAGE>

Agreement for Sale and Purchase of Trees                                  Page v

15.      RATES ETC

         There will be no arrears of general rates or water rates or charges
         levies and other outgoings charged or assessed in respect of the Land
         and FCF will not be in arrears with respect to rates or other charges,
         levies and other outgoings which have been lawfully imposed on FCF as
         occupier of the Land.

16.      GEOTHERMAL ARRANGEMENTS

         The Geothermal Arrangements represent the only agreements and
         arrangements concerning or touching upon geothermal exploration or
         development activities or rights in relation to the Land.

<PAGE>

                                  ANNEXURE ONE

                                 FORESTRY RIGHT

<PAGE>

                                  ANNEXURE TWO

                            INFRASTRUCTURE AGREEMENT

<PAGE>

                                 ANNEXURE THREE

                              MANAGEMENT AGREEMENT

<PAGE>

                                  ANNEXURE FOUR

                              WOOD SUPPLY AGREEMENT

<PAGE>

                                  ANNEXURE FIVE

                     DEED OF ASSIGNMENT OF GST INPUT CREDIT

This DEED is made on

BETWEEN           Teal 3 Limited (TEAL)

AND               Fletcher Challenge Forest Industries Limited (FCF)

BACKGROUND

A.       Teal will carry on a forestry business upon completion of the
         Agreement.

B.       Teal is GST registered.

C.       FCF is GST registered.

D.       FCF has entered into an agreement selling certain parts of its forestry
         business to Teal.

E.       The Inland Revenue Department will be asked to allow the GST liability
         payable by FCF to the Inland Revenue Department and the corresponding
         and equivalent GST input tax credit available to Teal to be offset.

F.       The parties have agreed as set out below.

IT IS AGREED:

1.       INTERPRETATION

         In this deed unless the context indicates otherwise:

         1.1      DEFINITIONS:

         "AGREEMENT" means the Agreement for Sale and Purchase of Trees between
         Teal and FCF dated [ ].

         "ASSIGNED TAX CREDIT" means any GST input tax credit (which includes
         any GST refund or reduction in a GST liability otherwise due to the
         Inland Revenue Department) that Teal is to claim in respect of its
         acquisition of the Trees.

         "GST" means tax as defined in the Goods and Services Tax Act 1985.

         "TREES" means the Trees as defined in the Agreement which are supplied
         by FCF to Teal.

<PAGE>

                                                                         Page ii

         1.2      Words which are capitalised and which are not otherwise
                  defined in this Deed shall have the meaning of those words as
                  they are defined in the Agreement.

         1.3      If there is any inconsistency between this Deed and the
                  Agreement, this Deed is to prevail.

2.       THE ASSIGNMENT

         2.1      Teal hereby assigns absolutely to FCF the Assigned Tax Credit
                  in payment of an equal amount in respect of Teal's obligation
                  to pay GST to FCF. FCF accepts such payment.

         2.2      Teal will do all things reasonably necessary for FCF to obtain
                  the full benefit of the Assigned Tax Credit, including
                  executing any further documents or instruments necessary to
                  vest the full benefit of the Assigned Tax Credit in FCF.

         2.3      Any amount received by Teal in respect of the Assigned Tax
                  Credit (including any interest (net of tax) that Teal receives
                  from the Inland Revenue Department in respect of that amount)
                  is to be held by Teal on trust for FCF and paid to FCF under
                  clause 3. Teal's obligation to pay any amount under clause 3
                  will not be limited in any way by the extent of any amount
                  held by Teal on trust for FCF under this clause 2.3.

3.       PAYMENT OF GST SHORTFALL

         To the extent (if any) that, notwithstanding the assignment of the
         Assigned Tax Credit, the Agreement requires Teal to pay an amount to
         FCF in respect of the GST on the supply of the Trees, Teal will pay in
         cash any such amount to FCF in accordance with the terms of the
         Agreement.

<PAGE>

                                                                        Page iii

EXECUTION

EXECUTED as a deed

SIGNED by TEAL 3 LIMITED 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

SIGNED by FLETCHER CHALLENGE
FORESTS INDUSTRIES LIMITED by:

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

WITNESS:

(if other than two directors sign)

__________________________________
Signature of witness

__________________________________
Full name of witness

__________________________________
Occupation of witness

__________________________________
Address of witness

<PAGE>

                                  ANNEXURE SIX

                   DUE DILIGENCE INFORMATION REQUESTED BY TEAL

STAND RECORDS

Forest description by stand including the year of establishment, area, GF
rating, harvesting classification, current stocking, tending history and lead
distances to Taupo, Kinleith, Mt Maunganui, Rotorua and Kawerau

List of stands and their associated yield tables

MAPPING INFORMATION

MAPPING INFORMATION

Location map of each forest showing for all stands within the age class range,
defined as 1988 and earlier for Teal 3.

     -    Latest orthophoto or digital aerial photography

          Maps showing

     -    Stand boundaries

     -    River/water courses

     -    Native vegetation (including Tasman and New Zealand Accord areas)

     -    Any Wahi Tapu sites, and other sites of cultural significance.

     -    Roads

     -    Plot locations of latest PHI and MRI as well as PSPs.

AUDIT REQUIREMENTS

UBS through CFK will select a sample of stands and the appropriate GIS layers.
FCF are to firstly provide a listing of all available GIS layers from which CFK
will select their information requirements. CFK will require as a minimum for
the information to be provided in Arc View shape files, the following:

     -    Stand Boundaries and stocked areas

     -    Relevant Orthophoto or digital photography (and control points).

     -    Roads and Landing information

     -    Areas (ha)

     -    Native vegetation, and river/water courses

RESOURCE DESCRIPTION

STAND INFORMATION

Stand information, showing for the

     -    Pruned logs PLI, checking classification and information on resin
          pockets.

     -    Structural classification for each stand.

     -    Other log quality investigations that have been carried out including
          any customer feedback.

     -    Information relating actual sale grades to the SOP family grades used
          in the yield tables that relates to Teal 3

<PAGE>

                                                                         Page ii

INVENTORY

     -    One liner individual plot summaries for the latest MRI or PHI
          undertaken.

     -    Individual plot information for PHI undertaken to enable existing
          inventory to be "grown on"

GROWTH AND YIELD

     -    Harvest Reconciliation Information

          All clear fell harvest reconciliations from 1st January 2001 that have
          been done, comparing actual outturn to PHI/ Yield table projections.

     -    PSP Data

          Data from PSP measurements from age 15 through until age 30

     -    Growth Models

          Copies of all relevant growth models

ENVIRONMENTAL

COPIES OF RESOURCE CONSENTS

Copies of all current resource consents, their date of expiry, as well as any
reviews and special conditions including all supporting material. All relevant
information in relation to any breaches of consent together with details of the
relevant local authority's enforcement actions.

All relevant information in relation to other resource consents obtained in the
past 2 years but no longer current

NATIVE VEGETATION

All relevant information in relation to of any native vegetation, and in
particular areas protected under the Tasman or New Zealand accord, or that for
part of the reserve cover for FSC accreditation. All relevant information in
relation to any special management requirements.

CULTURAL SITES

     -    All relevant information in relation to any Wahi Tapu sites. This will
          include their location, any Historic Places requirements, and
          management implications

     -    All relevant information in relation to any other sites of cultural or
          historical significance to Maori or Pakeha, whether registered or not.
          This will include their location, any Historic Places requirements,
          and management implications

     -    All relevant information in relation to any contaminated sites whether
          registered or not

COMPLIANCE

All relevant information in relation to any notice or demand received and any
knowledge of any requisition or outstanding requirement:

     -    imposed by any local or government authority; and/or

     -    given by any person under the Resource Management Act 1991.

All relevant information in relation to any consent or waiver in relation to any
application under the Resource Management Act 1991 which directly or indirectly
affects the affected land.

<PAGE>

                                                                        Page iii

FOREST HEALTH

     -    From 1 January 1998 details of the annual New Zealand Forest Owners
          forest health surveys and details of Dothistroma surveys and control.

     -    Details of any other material forest health issues, including
          nutrients, previous or current disease or pest occurrences

     -    History of fire/ wind damage in the forests, including major events as
          well as smaller more localised events

ACCESS

ROADS

For roads on the Land and adjoining land

     -    Map showing access roads available to access the stands

     -    Map showing roads including off highway roads where access by UBS may
          be restricted by FCF for commercial reasons together with supporting
          documentation

     -    Map showing roads where access is restricted for legal reasons
          together with the supporting documentation

     -    Map showing where roads are not available because upgrading is
          required.

OTHER ACCESS

All relevant information in relation to, together with location maps or sketches
of any non-registered (formal or informal):

     -    Access arrangements either across the Land or adjoining land or to it;

     -    Agreements or other arrangements either indirectly or directly
          affecting the Land or adjoining land whether a burden or benefit
          (including site protection and access to individuals or groups for the
          purposes of food gathering, native vegetation harvesting, hunting,
          etc)

RESTRICTED ACCESS

All relevant information in relation to any restricted areas (eg. research
areas, research plots) within the stands allocated to Teal 3.

FOREST COSTS

Provide for the last two years operations on a unit cost basis details of the
actual:

     -    Harvesting costs, by compartment/stand

     -    Transport costs by destination

     -    Road line salvage costs by compartment/stand

     -    Road and landing construction

     -    Maintenance costs

PRICES

Details for the last two years by month of actual prices to an identified price
point received by log grade broken down into internal and external domestic
markets, and Log prices by grade on an FOB basis for export markets.

<PAGE>

                                                                         Page iv

GEOTHERMAL RIGHTS

All relevant information concerning any geothermal energy rights in relation to
the Land (whether registered or not) granted to third parties.

<PAGE>

                                 ANNEXURE SEVEN

             UNDERTAKING FROM FLETCHER CHALLENGE INDUSTRIES LIMITED

In consideration of Teal 3 Limited entering into the Agreement for Sale and
Purchase of Trees ("the Agreement") with Fletcher Challenge Forests Industries
Limited, Fletcher Challenge Industries Limited agrees to grant a guarantee to
Teal 3 Limited of Fletcher Challenge Forests Industries Limited's obligations
and liability under the Agreement and the Related Agreements in the form
attached and undertakes to Teal 3 Limited that during the term of the Forestry
Right Fletcher Challenge Industries Limited shall:

1.       ensure that Fletcher Challenge Industries Limited maintains net assets
         in any year of the Forestry Right in an amount not less than the
         Purchase Price;

2.       provide to Teal 3 Limited a copy of the audited financial statements of
         Fletcher Challenge Forests Limited and its group, as soon as they
         become available for release;

3.       provide to Teal 3 Limited a certificate from the Chief Financial
         Officer of Fletcher Challenge Forests Limited, issued no later than
         five months after the end of the financial year of Fletcher Challenge
         Forests Limited, confirming that as at the end of that financial year
         the net assets of Fletcher Challenge Industries Limited are no less
         than the Purchase Price;

4.       no later than the end of December in each year provide to Teal 3
         Limited a copy of the unaudited financial statements of Fletcher
         Challenge Industries Limited.

5.       Fletcher Challenge Industries Limited represents and warrants to Teal 3
         Limited 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 Fletcher 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 Fletcher Challenge Industries Limited in
                  accordance with their respective terms;

         and that Fletcher Challenge Industries Limited will have and continue
         to have the necessary corporate powers to enter into this undertaking
         and the guarantee given under this undertaking and perform its
         obligations under this undertaking and the guarantee given under this
         undertaking.

<PAGE>

                                                                         Page ii

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 Fletcher Challenge Forests Limited

Capitalised terms have the meaning ascribed to them in the Agreement.

EXECUTED AS A DEED by Fletcher Challenge Industries Limited by:

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

Witness:
(if other than two directors sign)

__________________________________
Signature of witness

__________________________________
Full name of witness

__________________________________
Occupation of witness

__________________________________
Address of witness

<PAGE>

DEED OF GUARANTEE AND INDEMNITY

BETWEEN

FLETCHER CHALLENGE INDUSTRIES LIMITED

AND

TEAL 3 LIMITED (OR NOMINEE)

                                                         [SIMPSON GRIERSON LOGO]

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                  <C>
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
</TABLE>

<PAGE>

GUARANTEE AND INDEMNITY dated the                                           2003

PARTIES

1.       FLETCHER CHALLENGE INDUSTRIES LIMITED ("Guarantor")

2.       TEAL 3 LIMITED (OR NOMINEE) ("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 Fletcher 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 the Beneficiary dated
                  [  ] ("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>

Guarantee and Indemnity                                                   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>

Guarantee and Indemnity                                                   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>

Guarantee and Indemnity                                                   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>

Guarantee and Indemnity                                                   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>

Guarantee and Indemnity                                                   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>

Guarantee and Indemnity                                                   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>

Guarantee and Indemnity                                                   Page 8

                  BENEFICIARY: If to the Beneficiary to:

                  Teal 3 Limited
                  C/- UBS Warburg New Zealand Equities Limited
                  P O Box 45
                  Auckland 1000
                  Level 23 Qantas Building
                  191 Queen Street
                  Auckland
                  For: Michael Edgar
                  Facsimile: (09) 913 4751

                  With a copy to:

                  UBS Timber Investors
                  Trade Center, 4th Floor
                  24 Airport Road
                  West Lebanon
                  NH 03784
                  United States of America
                  For: Peter Mertz
                  Facsimile: (001) 603 298 7620

                  And with a copy to:

                  Foley Hoag LLP
                  155 Seaport Blvd
                  Boston, MA 02210
                  United States of America
                  For: Jim Smith
                  Facsimile: (001) 617 832 7000

                  GUARANTOR: If to the Guarantor, to:

                  Fletcher Challenge Industries Limited
                  8 Rockridge Avenue
                  Penrose
                  Private Bag 92036
                  Auckland Mail Centre
                  Auckland
                  For: The Chief Executive Officer
                  Facsimile: (09) 571 9870

                  With a copy to:

                  Fletcher Challenge Industries Limited
                  8 Rockridge Avenue
                  Penrose
                  Private Bag 92036
                  Auckland Mail Centre
                  Auckland

<PAGE>

Guarantee and Indemnity                                                   Page 9

                  For: The Company Secretary
                  Facsimile: (09) 571 9872

         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>

Guarantee and Indemnity                                                  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

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Guarantee and Indemnity                                                  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

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Guarantee and Indemnity                                                  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 FLETCHER CHALLENGE
INDUSTRIES LIMITED by:

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

WITNESS:

(if other than two directors sign)

__________________________________
Signature of witness

__________________________________
Full name of witness

__________________________________
Occupation of witness

__________________________________
Address of witness

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Guarantee and Indemnity                                                  Page 13

SIGNED by TEAL 3 LIMITED (OR
NOMINEE) by:

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

____________________________________________    ________________________________
Full name of director/authorised signatory      Signature of director/authorised
                                                signatory

WITNESS:

(if other than two directors sign)

__________________________________
Signature of witness

__________________________________
Full name of witness

__________________________________
Occupation of witness

__________________________________
Address of witness