<PAGE>

                                                                     EXHIBIT 2.2

                       FLETCHER CHALLENGE FORESTS LIMITED

                                     COMPANY

                      THE BANKS AND FINANCIAL INSTITUTIONS
                             LISTED IN SCHEDULE ONE

                                     LENDERS

                               BANK OF NEW ZEALAND

                                 FACILITY AGENT

                               BANK OF NEW ZEALAND

                                 SECURITY AGENT

                               BANK OF NEW ZEALAND

                                  LEAD ARRANGER

                     NZ$300,000,000 SENIOR SECURED REVOLVING
                           CREDIT FACILITIES AGREEMENT

                                RUSSELL MCVEAGH

<PAGE>

                                                                               i

                                    CONTENTS

<TABLE>
<S>                                                                                     <C>
1.         INTERPRETATION.......................................................         3
2.         FACILITIES...........................................................        15
3.         LENDERS..............................................................        16
4.         CONDITIONS PRECEDENT.................................................        16
5.         ADVANCES.............................................................        17
6.         INTEREST.............................................................        18
7.         PREPAYMENT AND FINAL REPAYMENT.......................................        19
8.         CANCELLATION.........................................................        20
9.         REPRESENTATIONS AND WARRANTIES.......................................        20
10.        UNDERTAKINGS.........................................................        23
11.        DEFAULT..............................................................        29
12.        CHANGES IN CIRCUMSTANCES.............................................        32
13.        PAYMENTS.............................................................        33
14.        TAXES................................................................        34
15.        DEFAULT INTEREST.....................................................        36
16.        SET-OFF AND DEPOSITS.................................................        37
17.        SHARING..............................................................        37
18.        RELATIONSHIP OF LENDERS TO AGENTS....................................        39
19.        INDEMNITIES..........................................................        43
20.        ASSIGNMENT...........................................................        44
21.        NOTICES..............................................................        46
22.        FEES.................................................................        47
23.        COSTS AND EXPENSES...................................................        48
24.        EVIDENCE OF DEBT.....................................................        49
25.        MISCELLANEOUS........................................................        49
26.        GOVERNING LAW........................................................        50
27.        COUNTERPARTS.........................................................        50
SIGNATURES......................................................................        51
SCHEDULE 1......................................................................        56
           Lenders   ...........................................................        56
SCHEDULE 2......................................................................        57
           Conditions Precedent.................................................        57
SCHEDULE 3......................................................................        59
           Form of Director's Certificate.......................................        59
SCHEDULE 4......................................................................        63
           Form of Accession Agreement..........................................        63
SCHEDULE 5......................................................................        65
           Drawdown Request for an Advance denominated in NZ Dollars............        65
SCHEDULE 6......................................................................        67
           Drawdown Request for an Advance denominated in US Dollars............        67
</TABLE>

<PAGE>

                                                                              ii
<TABLE>
<S>                                                                                     <C>
SCHEDULE 7......................................................................        69
           Transfer Certificate.................................................        69
SCHEDULE 8......................................................................        73
           Form of Compliance Certificate.......................................        73
</TABLE>

<PAGE>

                                                                               3

AGREEMENT dated                    February 2003

PARTIES

         FLETCHER CHALLENGE FORESTS LIMITED ("COMPANY")

         THE BANKS AND FINANCIAL INSTITUTIONS LISTED IN SCHEDULE ONE ("LENDERS")

         BANK OF NEW ZEALAND ("FACILITY AGENT")

         BANK OF NEW ZEALAND ("SECURITY AGENT")

         BANK OF NEW ZEALAND ("LEAD ARRANGER")

AGREEMENT

1.       INTERPRETATION

1.1      DEFINITIONS: In this agreement, unless the context otherwise requires:

         "ADVANCE" means an advance made or to be made by the Lenders under a
         Facility or, as the context may require, the principal amount thereof
         for the time being outstanding.

         "AGENTS" means the Facility Agent and the Security Agent and "AGENT"
         means either of them.

         "APPROVED ISSUER LEVY" has the meaning given to that term in section 86
         F of the Stamp and Cheque Duties Act 1971.

         "AVAILABILITY PERIOD" means, in relation to a Facility, the period
         commencing on the Commencement Date and ending on the earlier of:

         (a)      the date on which the whole of that Facility is cancelled; and

         (b)      the Expiry Date of that Facility.

         "AVAILABLE FACILITY" means, at any time in relation to a Facility, the
         Facility Amount of that Facility less the aggregate of all outstanding
         Advances under that Facility at that time (taking any Advance
         denominated in US Dollars at its NZ Dollar Equivalent).

         "BID SETTLEMENT RATE" means, in relation to a particular period
         ("SPECIFIED PERIOD") and an amount denominated in NZ Dollars, either:

         (a)      the bid settlement rate (rounded upwards, if necessary, to the
                  nearest four decimal places) as displayed at or about 10.45am
                  on the first day of the specified period on the Reuters
                  Monitor Screen page BKBM (or its successor page) for bank
                  accepted Bills having a term approximately equal to the
                  specified period; or

         (b)      if there is no such rate displayed for bank accepted Bills
                  having that term, then the average of the rates quoted by each
                  of the Reference Banks as being its buy rate for such bank
                  accepted Bills at or about that time on that date.

<PAGE>

                                                                               4

         "BILL" means a bill of exchange as defined in the Bills of Exchange Act
         1908.

         "BORROWERS" means the Company and each Subsidiary of the Company which
         becomes a borrower under this agreement pursuant to clause 2.4.

         "BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
         banks are open for business in Wellington and Auckland and, for the
         purposes of payments in, and the calculation of rates for amounts
         denominated in, US Dollars:

         (a)      if a payment is to be made, New York City; and

         (b)      if a rate is to be calculated, London or, if paragraph (b)(ii)
                  of the definition of LIBOR is applicable, New York City.

         "CAPITAL EXPENDITURE" means, in respect of any period, payments for
         expenditure of the Group during that period on fixed assets (other than
         in the nature of significant improvements on those assets).

         "CASH" means all cash on hand, short term deposits and other cash
         equivalents.

         "CHIEF EXECUTIVE OFFICER" means the chief executive officer for the
         time being of the Company.

         "CNIFP" means the Central North Island Forest Partnership.

         "CNIFP MANAGEMENT AGREEMENT" means the agreement dated 27 September
         1996 between the Company and CNIFP relating to the management of CNIFP
         (as amended).

         "COLLATERAL" means the property, assets and undertaking from time to
         time subject to the Security.

         "COMMITMENT" means, in relation to a Lender and a Facility, the amount
         in respect of that Facility set out opposite that Lender's name in
         schedule 1, as varied from time to time in accordance with this
         agreement.

         "COMPANY" means Fletcher Challenge Forests Limited.

         "COMMENCEMENT DATE" means the earlier of the date on which a drawing is
         first made under the Facilities and 28 February 2003.

         "DEBT" means any indebtedness present or future, actual or contingent
         in respect of money borrowed or raised or any financial accommodation
         whatever, including indebtedness under or in respect of a negotiable or
         other financial instrument, Guarantee of Debt, interest, currency
         exchange, hedge or other arrangement of any kind (calculated on a net
         and marked to market basis), Redeemable Share, share the subject of a
         Guarantee, discounting arrangement, finance or capital Lease, hire
         purchase, deferred purchase price for more than 90 days (other than in
         the ordinary course of business) of an asset or service or an
         obligation to deliver goods or other property or provide services paid
         for in advance by a financier or in relation to another financing
         transaction and includes the Facilities. For the avoidance of doubt,
         there shall be no double counting.

         "DRAWDOWN DATE" means, in relation to an Advance, the date specified in
         the relevant Drawdown Request for the making of that Advance.

<PAGE>

                                                                               5

         "DRAWDOWN REQUEST" means:

         (a)      in relation to an Advance to be denominated in NZ Dollars, a
                  request substantially in the form set out in schedule 5; and

         (b)      in relation to an Advance to be denominated in US Dollars, a
                  request substantially in the form set out in schedule 6.

         "EBIT" means, at any date, in respect of any period ending on that
         date, the consolidated earnings of the Group for that period which
         would be disclosed by consolidated financial statements of the Group if
         they were prepared as at that date for that period:

         (a)      before any deduction of or provision for Tax;

         (b)      before any deduction of Interest Expense;

         (c)      after adjustment for unusual items as disclosed in the notes
                  to the financial statements;

         (d)      after adjustment to remove profits or losses of any Group
                  Member (other than the Company) which have been consolidated
                  within operating profit but are attributable to any third
                  party (not being a Group Member);

         (e)      after excluding unrealised profits or losses on foreign
                  currency monetary items; and

         (f)      after eliminating any unrealised revaluations.

         "EBITDA" means, at any date, in respect of any period ending on that
         date, the sum of:

         (a)      EBIT;

         (b)      depreciation on fixed assets;

         (c)      amortisation of any goodwill, any intangible assets and any
                  acquisition costs; and

         (d)      any share of retained surpluses of associated companies
                  required to be included in accordance with NZ GAAP,

         of the Group on a consolidated basis during that period which would be
         disclosed by consolidated financial statements of the Group if they
         were prepared as at that date for that period.

         "ENVIRONMENTAL LAW" means a provision of a law or a law which relates
         to any aspect of the environment, health or planning including the
         Resource Management Act 1991, the Hazardous Substances and New
         Organisms Act 1996, the Building Act 1991 and the Health and Safety in
         Employment Act 1992.

         "EVENT OF DEFAULT" means any event specified in clause 11.1 or any
         event which, with the passing of time or the giving of notice or both,
         would constitute such an event.

         "EVENT OF REVIEW" means the event or series of events specified in
         clause 11.2.

         "EXCLUDED SUBSIDIARIES" means Kaingaroa Holdings Limited, Forestry
         Corporation of New Zealand Limited and their respective Subsidiaries.

<PAGE>

                                                                               6

         "EXISTING FACILITIES AGREEMENT" means the US$200 million senior secured
         credit facilities agreement dated 2 March 2001 made between, amongst
         others, the Company and Credit Suisse First Boston as facility agent,
         security agent and lead arranger.

         "EXPIRY DATE" means:

         (a)      in relation to the Three Year Facility, the date falling three
                  years after the Commencement Date; and

         (b)      in relation to the Five Year Facility, the date falling five
                  years after the Commencement Date,

         provided that if the Expiry Date would otherwise fall on a day which is
         not a Business Day the Expiry Date will be the next Business Day.

         "FACILITIES" means the Three Year Facility and the Five Year Facility,
         and "FACILITY" means either of them.

         "FACILITY AMOUNT" means:

         (a)      in relation to the Three Year Facility, NZ$150,000,000; and

         (b)      in relation to the Five Year Facility, NZ$150,000,000,

         in each case as reduced from time to time in accordance with this
         agreement.

         "FINANCIAL MODEL" means the document entitled "Financial Model" dated
         December 2002 and posted on the Intralinks website.

         "FINANCIAL MODEL BASE CASE" means the document entitled "Financial
         Model Base Case" dated December 2002 and posted on the Intralinks
         website.

         "FIVE YEAR FACILITY" means the facility granted by the Lenders to the
         Borrower in this agreement under which the Lenders agree to make
         advances to the Borrowers on the terms applicable to that facility.

         "FREE CASH FLOW" means, at any date, in respect of the 12 month period
         ending on that date, EBITDA for that period:

         (a)      minus the amount of any increase or plus the amount of any
                  decrease in working capital for that period;

         (b)      minus Capital Expenditure during that period (such amount not
                  to exceed a maximum amount of NZ$10,000,000 or such higher
                  maximum amount as the Company and the Lenders may agree if the
                  Total Assets of the Group increase by more than 10% from the
                  date on which such maximum amount was last agreed);

         (c)      minus Tax paid or payable in respect of that period; and

         (d)      minus non cash equity earnings for that period.

<PAGE>

                                                                               7

         "GEARING RATIO" means, at any date, the ratio calculated as follows:

         Gearing Ratio = A /B, where:

         "A" =    Net Debt (excluding any interest or currency exchange and
                  hedge arrangement of any kind) of the Group Members
                  outstanding at that date less Cash at that date; and

         "B" =    EBITDA in respect of the 12 month period ending on that date.

         "GENERAL SECURITY DEED" means the general security deed dated on or
         about the date of this agreement made by the Obligors in favour of the
         Security Agent.

         "GOVERNMENT AGENCY" means any government or any governmental,
         semi-governmental or judicial agency or authority, including any
         self-regulatory organisation established under statute or any stock
         exchange.

         "GROUP" means, at any time, the Company and its Subsidiaries at that
         time.

         "GROUP MEMBER" means a member of the Group.

         "GUARANTEE" means any guarantee, indemnity, letter of credit, legally
         binding letter of comfort, suretyship or other assurance against loss.

         "INTEREST EXPENSE" means, at any date, in respect of the 12 month
         period ending on that date, the aggregate net amount (taking into
         account amounts payable or receivable under any hedge agreement
         relating to interest rate exposure) of all interest and amounts in the
         nature of interest or of similar effect to interest paid or payable by
         the Group on a consolidated basis during that period and which would be
         disclosed by consolidated financial statements of the Group if they
         were prepared as at that date for that period including:

         (a)      any dividend or distribution paid or payable on any Redeemable
                  Shares included as Debt (for the avoidance of doubt this
                  excludes any dividend or distribution on any such Redeemable
                  Share issued on terms approved by the Lenders and in relation
                  to which dividends or distributions may accrue but are not
                  required to be paid in cash);

         (b)      the interest portion of rentals in respect of finance Lease
                  obligations;

         (c)      the face amount of bills of exchange or other financial
                  instruments drawn, issued, endorsed or accepted by a Group
                  Member less their net proceeds after discount or issue and
                  payment of any acceptance, endorsement, underwriting or
                  similar fee apportioned as appropriate between financial
                  periods;

         (d)      all line, facility, letter of credit, guarantee and similar
                  fees and all fees and other amounts of a regular or recurring
                  nature payable in relation to Debt but not:

                  (i)      unused line fees; and

                  (ii)     establishment arrangement and other fees payable once
                           only on the initial provision of financial
                           accommodation and agency fees;

         (e)      all other expenses and amounts that are required by NZ GAAP to
                  be treated as interest or financing costs.

<PAGE>

                                                                               8

         "INTEREST PAYMENT DATE" means, in relation to an Interest Period, the
         last day of that Interest Period and, in addition, in relation to an
         Interest Period of longer than three months, each day falling at three
         monthly intervals during that Interest Period.

         "INTEREST PERIOD" means, in relation to an Advance, a period selected
         in accordance with clause 6.1.

         "LEASE" means any lease, charter, hire purchase or hiring arrangement
         of any property or transaction having a similar effect.

         "LIQUIDATION" includes liquidation, receivership, compromise,
         arrangement, amalgamation, administration, statutory management,
         reconstruction, winding up, dissolution, assignment for the benefit of
         creditors or bankruptcy.

         "LIBOR" means, in relation to a particular period ("SPECIFIED PERIOD"):

         (a)      the rate displayed on the Telerate Page 3750 (or any
                  equivalent or successor page) as the London interbank offered
                  rate for deposits in US Dollars at or about 11am (London time)
                  two Business Days prior to the commencement of the specified
                  period for a period comparable to the specified period; or

         (b)      if US Dollars is not on any relevant date quoted on the
                  Telerate Page 3750 (or any such equivalent or successor page),
                  the rate per annum determined by the Facility Agent to be
                  equal to the arithmetic mean (rounded upwards, if necessary,
                  to the nearest four decimal places) of the rates notified to
                  the Facility Agent by each of the Reference Banks as the rate
                  at which it is offering deposits in US Dollars in the London
                  interbank market at or about 11am (London time) two Business
                  Days prior to the commencement of the specified period for a
                  period comparable to the specified period, provided that if on
                  any date for the determination of LIBOR:

                  (i)      less than all but not less than two such Reference
                           Banks provide the Facility Agent with such
                           quotations, the Facility Agent shall calculate LIBOR
                           in accordance with the foregoing provisions on the
                           basis of the quotations of those banks providing such
                           quotations; or

                  (ii)     less than two Reference Banks provide such
                           quotations, LIBOR means the rate per annum determined
                           by the Facility Agent to be the arithmetic mean of
                           the offered quotations for deposits in US Dollars for
                           the specified period which three leading banks in New
                           York City selected by the Facility Agent are quoting
                           in the New York interbank market to leading European
                           banks at or about 11am (New York City time) on that
                           date.

         "MAJORITY LENDERS" means a group of Lenders whose aggregate Commitments
         under the Facilities amount in aggregate to more than 65% of the Total
         Commitments under the Facilities.

         "MARGIN" means:

         (a)      in relation to an Advance made prior to the date of the first
                  compliance certificate delivered to the Lenders pursuant to
                  clause 10.1(a)(iv), the percentage rate per annum set out
                  below applicable to the Facility under which that Advance is
                  made:

<PAGE>

                                                                               9

<TABLE>
<CAPTION>
              MARGIN % PER ANNUM
---------------------------------------------
THREE YEAR FACILITY        FIVE YEAR FACILITY
---------------------------------------------
<S>                        <C>
       0.90                       1.00
---------------------------------------------
</TABLE>

         (b)      in relation to an Advance made at any time thereafter, the
                  percentage rate per annum applicable to the Facility under
                  which that Advance is made as set out below opposite the
                  Gearing Ratio which was reported by the Company in the most
                  recent compliance certificate delivered to the Lenders under
                  clause 10.1(a)(iv) prior to the Drawdown Date for that
                  Advance:

<TABLE>
<CAPTION>
                                                        MARGIN % PER ANNUM
                                                   ---------------------------
                                                   THREE YEAR        FIVE YEAR
GEARING RATIO                                       FACILITY          FACILITY
------------------------------------------------------------------------------
<S>                                                <C>               <C>
Greater than 3.25 times                               0.90              1.00
------------------------------------------------------------------------------
Less than or equal to 3.25 times but greater          0.75              0.85
than 2.50 times
------------------------------------------------------------------------------
Less than or equal to 2.50 times but greater          0.60              0.70
than 1.75 times
------------------------------------------------------------------------------
Less than or equal to 1.75 times                      0.50              0.50
------------------------------------------------------------------------------
</TABLE>

         "MATERIAL ADVERSE EFFECT" means a material adverse effect (a) on the
         financial condition or business or assets of the Group as a whole and
         (b) on the Borrowers' ability to perform and comply with their
         obligations under any Transaction Document.

         "MATERIAL CONTRACTS" means:

         (a)      the amended and restated deed relating to assets and
                  liabilities dated 3 April 2000 between Fletcher Challenge
                  Limited and Fletcher Challenge Paper Limited;

         (b)      the inter-division agreement dated 5 October 1999 between the
                  Company and Tasman Pulp and Paper Company Limited (now Norske
                  Skog Tasman Limited), as amended;

         (c)      the fibre supply agreement dated 28 July 2000 between the
                  Company, Fletcher Challenge Forests (Manufacturing) Limited
                  and Norske Skog Tasman Limited as amended;

         (d)      the supply agreement dated 28 February 2001 between Fletcher
                  Challenge Forests Industries Limited and Fletcher Building
                  Products Limited;

         (e)      the supply agreement dated 1 February 1988 between Fletcher
                  Challenge Forests Industries Limited and Carter Holt Harvey
                  Limited trading as Packaging New Zealand;

         (f)      the supply agreement dated 28 July 2000 between Fletcher
                  Challenge Forests Industries Limited and Fletcher Merchants
                  Limited;

         (g)      the agreement relating to the supply of lumber and plywood
                  dated 25 July 2001 between Tasman KB Pty Limited and Fletcher
                  Challenge Forests Industries Limited; and

<PAGE>

                                                                              10

         (h)      the Tasman supply contracts dated 18 November 1963 and 27
                  October 1966 and the implementation agreement dated 19
                  December 1995 between Citic New Zealand Limited (BVI) (In
                  Receivership), Forestry Corporation of New Zealand Limited (In
                  Receivership), Fletcher Challenge Forests Industries Limited
                  and Fletcher Challenge Forests (Manufacturing) Limited,

         each as modified, novated, supplemented, varied or replaced from time
         to time.

         "MINIMUM NET TANGIBLE ASSETS" means, at any date, Total Tangible Assets
         of the Group less Total Liabilities of the Group as at that date.

         "MORTGAGES" means the mortgages made or, as the context may require, to
         be made by certain of the Obligors in favour of the Security Agent in
         respect of the properties listed in schedule 4 to the General Security
         Deed.

         "NET DEBT" means, at any time, Debt less Cash at that time.

         "NON-RECOURSE LOAN" means Debt which is incurred by any Obligor for the
         purpose of, and applied in, making an On-Loan and which gives rise to
         no obligation on the part of such Obligor (or any other Obligor) other
         than the obligation to pay to the creditor in respect thereof any
         moneys actually received or recovered by that Obligor in respect of the
         On-Loan.

         "NZ DOLLAR EQUIVALENT" means, in relation to an amount of NZ Dollars,
         that amount, and, in relation to an amount of US Dollars, the amount of
         NZ Dollars which the Facility Agent could purchase with that amount of
         US Dollars at the Facility Agent's spot rate of exchange for purchasing
         NZ Dollars with US Dollars in the New Zealand interbank market at 11am
         (local time) two Business Days prior to the day on which the
         calculation is required to be made.

         "NZ DOLLARS" and "NZ$" means the lawful currency of New Zealand.

         "NZ GAAP" means generally accepted accounting practice as defined in
         section 3 of the Financial Reporting Act 1993.

         "OBLIGORS" means the Borrowers and the Restricted Subsidiaries.

         "OBLIGORS' GUARANTEE" means the guarantee and indemnity dated on or
         about the date of this agreement made by the Obligors in favour of the
         Security Agent.

         "ON-LOAN" means Debt advanced by an Obligor to an Other Subsidiary out
         of the proceeds of a Non-Recourse Loan.

         "ON-LOAN ASSIGNMENT" means a Security Interest created by an Obligor
         over its rights in relation to an On-Loan as security for its
         obligations in respect of the Non-Recourse Loan out of which such
         On-Loan was made.

         "ORIGINAL DOLLAR AMOUNT" means, in relation to an Advance denominated
         in NZ Dollars, the amount thereof, and in relation to an Advance
         denominated in US Dollars, the amount of NZ Dollars which was the basis
         for the making of that Advance, in each case as reduced by prepayment.

         "OTHER SUBSIDIARY" means a Group Member which is not an Obligor.

<PAGE>

                                                                              11

         "OUTSTANDING MONEY" means, at any time in relation to a Facility, the
         aggregate amount of all Advances, interest (including default
         interest), fees, costs and all other amounts payable by the Borrowers
         in relation to that Facility under this agreement and outstanding at
         that time.

         "PERMITTED DISPOSALS" means:

         (a)      a disposal in the ordinary course of business;

         (b)      a disposal by one Restricted Subsidiary to any other
                  Restricted Subsidiary;

         (c)      the creation of a Permitted Security Interest;

         (d)      the payment of cash; and

         (e)      the allotment or issue of share capital (or equivalent).

         "PERMITTED SECURITY INTEREST" means:

         (a)      the Security;

         (b)      a Security Interest arising by operation of law in the
                  ordinary course of day-to-day trading and not securing Debt in
                  respect of which the debtor duly pays the indebtedness secured
                  by that Security Interest within the customary time for
                  payment other than indebtedness contested in good faith;

         (c)      a right of set-off included in a commercial contract in the
                  ordinary course of business;

         (d)      a netting or set-off right relating to any bank accounts
                  maintained by a Group Member or Group Members in the ordinary
                  course of business (but not including any such right relating
                  to a dedicated cash collateral account or other arrangement
                  having similar effect) or included in the terms of any master
                  agreement relating to derivative transactions entered into by
                  any Obligor;

         (e)      a Security Interest on any asset acquired after the
                  Commencement Date which secures the purchase price of the
                  asset so long as there is no increase in the amount secured
                  and the secured Debt is retired and the Security Interest is
                  released within 12 months of the relevant acquisition;

         (f)      a Security Interest granted by a Subsidiary acquired after the
                  Commencement Date created prior to (and not in contemplation
                  of) the acquisition securing Debt of that Subsidiary so long
                  as there is no increase in the amount secured and the secured
                  Debt is retired and the Security Interest is released within
                  12 months of the acquisition;

         (g)      a Security Interest approved by all of the Lenders;

         (h)      any On-Loan Assignment; or

         (i)      any other Security Interest or Security Interests which in
                  aggregate secure Debt of an amount not exceeding
                  NZ$10,000,000.

<PAGE>

                                                                              12

         "PRO RATA SHARE" means, at any time in relation to a Lender, the
         proportion which that Lender's aggregate Commitments bears to the
         aggregate Facility Amounts under both Facilities at that time.

         "REDEEMABLE SHARES" means:

         (a)      shares which are redeemable in cash, or by the issue of other
                  redeemable shares, either compulsorily, or at the option of
                  the holder or issuer of such shares; and

         (b)      units in any trust which are analogous in nature to the shares
                  referred to in paragraph (a), if that unit trust is a Group
                  Member, or if a Group Member is responsible for the redemption
                  of those units.

         "REFERENCE BANKS" means, for the purposes of the definition of "Bid
         Settlement Rate", Bank of New Zealand, ANZ Banking Group (New Zealand)
         Limited, Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. acting
         through its Rabobank New Zealand Branch and The National Bank of New
         Zealand Limited, and, for the purposes of the definition of "LIBOR",
         three leading banks offering US Dollars in London in the London
         interbank market, as selected by the Facility Agent, or any substitute
         or other banks agreed in writing by the Lenders and the Borrowers from
         time to time as being Reference Banks for the purposes of this
         agreement.

         "RELATED ENTITY" means an entity which is related within the meaning of
         section 2(3) of the Companies Act, but as if company includes any
         entity.

         "REPAYMENT DATE" means, in relation to an Advance, the date specified
         as such in the Drawdown Request applicable to that Advance.

         "RESTRICTED SUBSIDIARY" means:

         (a)      any wholly-owned Subsidiary of the Company whose Total
                  Tangible Assets (disregarding any investments in Subsidiaries
                  and inter-company loans) are 5% or more of Total Tangible
                  Assets of the Group (based on the last audited consolidated
                  financial statements); and

         (b)      any other person to the extent necessary to ensure that at all
                  times the Total Tangible Assets (disregarding any investments
                  in Subsidiaries and inter-company loans) of the Obligors are
                  not less than 95% of Total Tangible Assets of the Group,

         but always excluding the Excluded Subsidiaries and Tarawera for the
         purposes of these calculations.

         "SECURITY" means:

         (a)      the General Security Deed;

         (b)      the Obligors' Guarantee;

         (c)      the Mortgages; and

         (d)      the Specific Security Agreement,

         and any other Security Interest or Guarantee accepted by the Lenders
         and/or the Security Agent in their absolute discretion as security for,
         amongst other things, the performance of the Borrowers' obligations
         under this agreement.

<PAGE>

                                                                              13

         "SECURITY INTEREST" includes any mortgage, pledge, lien, charge,
         finance lease, sale and leaseback or any security interest or
         arrangement of any kind the effect of which is to give one creditor
         priority over another or other creditors with respect to any asset. It
         includes contractual set-off, retention of title other than in the
         ordinary course of day-to-day trading and a deposit of money by way of
         security but it excludes a charge or lien arising in favour of a
         Government Agency by operation of statute unless there is default for
         more than 30 days in payment of moneys secured by that charge or lien.

         "SPECIFIC SECURITY AGREEMENT" means the specific security agreement
         over investment securities dated on or about the date of this agreement
         granted by Fletcher Challenge Forests (Manufacturing) Limited in favour
         of the Security Agent.

         "SPECIFIED RATE" means:

         (a)      in relation to an Advance denominated in NZ Dollars, the Bid
                  Settlement Rate; and

         (b)      in relation to an Advance denominated in US Dollars, LIBOR.

         "SUBSIDIARY" has the meaning given in section 5 of the Companies Act
         1993, but as if company includes an in-substance subsidiary in
         accordance with any approved financial reporting standard.

         "TARAWERA" means Tarawera Forests Limited.

         "TAX" means Income Tax as defined under SSAP 12.

         "TEST DATE" is defined in clause 10.4.

         "THREE YEAR FACILITY" means the facility granted by the Lenders to the
         Borrower in this agreement under which the Lenders agree to make
         advances to the Borrowers on the terms applicable to that facility.

         "TOTAL ASSETS" means, on any date in relation to a Subsidiary, the
         Obligors or the Group, the aggregate amount on a consolidated basis of
         all assets of that Subsidiary, the Obligors or the Group (as
         applicable) which would be disclosed by consolidated financial
         statements of the Group if they were prepared as at that date.

         "TOTAL COMMITMENTS" means, in relation to a Facility, at any time, the
         aggregate of the Commitments under that Facility at that time.

         "TOTAL LIABILITIES" means, on any date in relation to the Group, the
         aggregate amount on a consolidated basis of all liabilities of the
         Group which would be disclosed by consolidated financial statements of
         the Group if they were prepared as at that date.

         "TOTAL TANGIBLE ASSETS" means, on any date in relation to a Subsidiary,
         the Obligors or the Group, the Total Assets of that Subsidiary, the
         Obligors or the Group (as applicable) as at that date less assets which
         in accordance with NZ GAAP are classified as intangible assets.

         "TRANSACTION DOCUMENTS" means this agreement and the Security or any
         one or more of them.

         "US DOLLARS" and "US$" means the lawful currency of the United States
         of America.

<PAGE>

                                                                              14

         "US DOLLAR EQUIVALENT" means, in relation to an amount of NZ Dollars,
         the amount of US Dollars which the Facility Agent could purchase with
         that amount of NZ Dollars at the Facility Agent's spot rate of exchange
         for purchasing US Dollars with NZ Dollars in the New York City
         interbank market at 11am (local time) two Business Days prior to the
         day on which that calculation is required to be made.

1.2      REFERENCES: Except to the extent that the context otherwise requires,
         any reference in this agreement to:

         "CONTROL" has the meaning given in NZ GAAP and "CONTROLLED" shall be
         construed accordingly.

         a "DIRECTIVE" includes any present or future directive, regulation,
         request, requirement, voluntary credit restraint programme or
         notification by any means or a change in interpretation or application
         of any law by any Government Agency (in each case, whether or not
         having the force of law but, if not having the force of law, compliance
         with which is in accordance with the general practice of persons to
         whom the directive is addressed).

         "DISPOSAL" includes any sale, assignment, exchange, transfer,
         concession, loan, lease, surrender, licence, reservation, waiver,
         compromise, release, dealing, parting with possession, or the granting
         of any option, right or interest whatever, or any agreement for any of
         the same, and "DISPOSE" means to make a disposal, and "ACQUISITION" and
         "ACQUIRE" shall be construed accordingly.

         the "DISSOLUTION" of a person includes the liquidation or bankruptcy of
         that person, or (where the person is a company) its removal from the
         register, and any equivalent or analogous procedure under the laws of
         any relevant jurisdiction.

         "FINANCIAL STATEMENTS" include statements of financial position,
         financial performance, movements in equity and cash flows, together
         with any statements, reports (including, without limitation, any
         directors' and auditors' reports) and notes attached to or intended to
         be read with any of them and "CONSOLIDATED FINANCIAL STATEMENTS" has a
         corresponding meaning.

         "INDEBTEDNESS" includes any obligation (whether present or future,
         actual or contingent, secured or unsecured, as principal or surety or
         otherwise) for the payment or repayment of money.

         a "LAW" includes common or customary law and any constitution, decree,
         judgment, legislation, order, ordinance, regulation, by-law, statute,
         treaty or other legislative measure.

         a "PERSON" includes an individual, firm, company, corporation,
         unincorporated body of persons, organisation or trust, and any
         government, government agency or authority, in each case whether or not
         having separate legal personality.

         "TAX" includes any tax, levy, impost, deduction, charge, rate, duty,
         compulsory loan or withholding which is levied or imposed by a
         Government Agency, and any related interest, penalty, charge, fee or
         other amount, and "TAXATION" shall be construed accordingly.

         "TAX ON OVERALL NET INCOME" of a person shall be construed as a
         reference to tax imposed by any jurisdiction on all or part of the net
         income, profits or gains of that person (whether worldwide, or only
         insofar as such net income, profits or gains are considered to arise in
         or relate to a particular jurisdiction, or otherwise).

<PAGE>

                                                                              15

         "WRITTEN" and "IN WRITING" include all means of reproducing words in a
         tangible and permanently visible form.

1.3      MISCELLANEOUS:

         (a)      Headings are inserted for convenience only and do not affect
                  interpretation of this agreement.

         (b)      Unless the context otherwise requires the singular includes
                  the plural and vice versa and words denoting individuals
                  include other persons and vice versa.

         (c)      A reference to any legislation includes any statutory
                  regulations, rules, orders or instruments made or issued
                  pursuant to that legislation and any amendment to, or
                  re-enactment or replacement of, that legislation.

         (d)      A reference to any document includes reference to that
                  document as modified, novated, supplemented, varied or
                  replaced from time to time.

         (e)      A reference to any party to a Transaction Document or any
                  other document includes its successors and permitted assigns.

         (f)      A reference to a time of day is a reference to New Zealand
                  time unless otherwise stated.

         (g)      Except where inconsistent with the context, the expression "at
                  any time" also means from time to time.

2.       FACILITIES

2.1      GRANT OF FACILITIES: The Lenders agree to make each Facility available
         to the Borrowers upon the terms and conditions contained in this
         agreement.

2.2      MAXIMUM AMOUNT OF FACILITIES: The Original Dollar Amount outstanding in
         respect of a Facility may not at any time exceed the Facility Amount of
         that Facility at that time.

2.3      PURPOSE: The Borrowers shall apply the proceeds of the Facilities in
         and towards refinancing the Group's indebtedness under the Existing
         Facilities Agreement and for general corporate purposes, including
         funding the working capital and capital expenditure requirements of the
         Group.

2.4      FURTHER BORROWERS:

         (a)      The Company may at any time procure any of its wholly-owned
                  Subsidiaries to become a Borrower under this agreement by:

                  (i)      executing an accession agreement substantially in the
                           form set out in schedule 4; and

                  (ii)     delivering to the Facility Agent a director's
                           certificate in the form set out in schedule 3 in
                           respect of the new Borrower and, unless the new
                           Borrower is incorporated in New Zealand, a legal
                           opinion from counsel acceptable to the Facility Agent
                           in the new Borrower's jurisdiction of incorporation
                           in a form satisfactory to the Facility Agent.

         (b)      On receipt of an accession agreement the Facility Agent shall
                  notify the Lenders and the Facility Agent shall:

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                                                                              16

                  (i)      countersign the counterparts of the accession
                           agreement on behalf of all other parties to this
                           agreement;

                  (ii)     enter the accession agreement in a register kept by
                           it (which shall be conclusive); and

                  (iii)    retain one counterpart and deliver the others to the
                           Company and the new Borrower.

         (c)      On an accession agreement being countersigned by the Facility
                  Agent the new Borrower shall be bound by the Transaction
                  Documents as stated in the accession agreement as if it were a
                  party and named as a Borrower.

         (d)      Each other party to this agreement irrevocably authorises the
                  Facility Agent to sign each accession agreement on its behalf.

3.       LENDERS

3.1      PARTICIPATION: Subject to the terms of this agreement, each Lender
         shall participate in each Advance under a Facility in the proportion
         which its Commitment under that Facility at the relevant Drawdown Date
         bears to the Total Commitments under that Facility on that date.

3.2      OBLIGATIONS SEVERAL: The obligations of each Lender under this
         agreement are several. No party to this agreement shall be responsible
         for the obligations of any other party except as expressly provided in
         this agreement. The failure of a Lender to perform its obligations
         under this agreement shall not release any other party from its
         obligations under this agreement.

3.3      RIGHTS SEVERAL: The rights of the Lenders are several. The amount at
         any time owing by the Borrowers to any party under this agreement shall
         be a separate and independent debt from the amount owing to any other
         party.

4.       CONDITIONS PRECEDENT

4.1      CONDITIONS PRECEDENT TO FACILITIES: No drawing may be made under the
         Facilities until the Facility Agent has confirmed to the Company that
         it has received, and found to be satisfactory to it in form and
         substance, the documents and evidence specified in schedule 2.

4.2      CONDITIONS PRECEDENT TO EACH ADVANCE: The obligations of the Facility
         Agent and the Lenders in relation to each Advance are conditional upon:

         (a)      DRAWDOWN DATE: the Drawdown Date being a Business Day during
                  the relevant Availability Period;

         (b)      ORIGINAL DOLLAR AMOUNT: the Original Dollar Amount of the
                  Advance being an integral multiple of NZ$1,000,000 and not
                  less than NZ$2,000,000;

         (c)      LESS THAN AVAILABLE FACILITY: the Original Dollar Amount of
                  the Advance, when aggregated with all (if any) other Advances
                  intended to be made on the same day under the relevant
                  Facility (taking each Advance at its Original Dollar Amount),
                  not exceeding the relevant Available Facility;

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                                                                              17

         (d)      LIMIT ON ADVANCES: no more than one Advance under any Facility
                  being made on any Business Day and no more than ten Advances
                  being outstanding at any one time;

         (e)      REPRESENTATIONS AND WARRANTIES TRUE: the representations and
                  warranties set out in clause 9.1 (other than paragraphs (h),
                  (i), (o), (p) and (q) thereof) being true and accurate in all
                  respects as of the date of the Drawdown Request and the
                  Drawdown Date by reference to the facts and circumstances
                  existing on those dates;

         (f)      NO GUARANTOR RELEASED: no guarantor having been released from,
                  or having discontinued any liability under, any Guarantee,
                  except:

                  (i)      in the case of an Obligor under the Obligors'
                           Guarantee, in accordance with the applicable
                           provisions of the Obligors' Guarantee and so long as
                           no Event of Default or Event of Review has occurred
                           and is continuing unremedied and no Event of Default
                           or Event of Review has resulted, or will result, from
                           such release or discontinuance of liability; and

                  (ii)     in any other case, with the prior written consent of
                           the Security Agent;

         (g)      NO EVENT OF DEFAULT: no Event of Default having occurred and
                  remaining unremedied;

         (h)      NO MARKET DISRUPTION: in the case of an Advance denominated in
                  US Dollars, none of the circumstances described in clause 4.3
                  existing;

         (i)      NO VIOLATION OF LAW: the giving effect to the Drawdown Request
                  and the making of the Advance requested therein not violating
                  any applicable law; and

         (j)      EVENT OF REVIEW: other than for a rollover of an existing
                  Advance, no Event of Review having occurred and remaining
                  unremedied.

4.3      DISRUPTED MARKET: An Advance denominated in US Dollars will not be made
         if, by reason of any change in national or international financial,
         political or economic conditions or currency exchange rates or exchange
         controls, it would in the reasonable opinion of the Facility Agent be
         impracticable for that Advance to be made in US Dollars.

5.       ADVANCES

5.1      AVAILABILITY: Subject to compliance with clause 4, the Lenders shall
         make an Advance available to a Borrower if no later than:

         (a)      if the Advance is to be denominated in NZ Dollars, 9.30am on
                  the Business Day before the relevant Drawdown Date; and

         (b)      if the Advance is to be denominated in US Dollars, 10.30am on
                  the third Business Day before the relevant Drawdown Date,

         the Facility Agent has received from that Borrower a duly completed
         Drawdown Request (which shall be irrevocable) for that Advance.

5.2      NOTIFICATION TO LENDERS: On receipt of a Drawdown Request for an
         Advance, the Facility Agent shall promptly, and in any event:

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                                                                              18

         (a)      if the Advance is to be denominated in NZ Dollars, not later
                  than 2pm on the Business Day before the relevant Drawdown
                  Date; and

         (b)      if the Advance is to be denominated in US Dollars, not later
                  than 2pm on the third Business Day before the relevant
                  Drawdown Date,

         notify each Lender of:

         (c)      the relevant Drawdown Date;

         (d)      the currency and amount of the Advance and that Lender's
                  participation;

         (e)      the duration of the first Interest Period; and

         (f)      the Repayment Date.

5.3      PARTICIPATION: Subject to the provisions of this agreement, each Lender
         shall on the Drawdown Date for an Advance make available to the
         Facility Agent for the account of the relevant Borrower the amount of
         that Lender's participation in the Advance in accordance with clause
         13.

5.4      FIRST ADVANCES: The first Advance or Advances drawn under the
         Facilities shall be applied in the repayment in full of all amounts
         outstanding under the Existing Facilities Agreement.

5.5      REPAYMENT:

         (a)      A Borrower to whom an Advance is advanced shall repay that
                  Advance in full on the relevant Repayment Date.

         (b)      Amounts so repaid will, subject to compliance with the
                  provisions of this agreement, be available for redrawing.

6.       INTEREST

6.1      INTEREST PERIOD: Each Interest Period in relation to an
                  Advance shall be a period of one, two, three or six months'
                  duration or any other duration agreed between the Lenders and
                  the relevant Borrower, and:

         (a)      the duration of the first Interest Period shall be as selected
                  by the relevant Borrower in the Drawdown Request;

         (b)      the duration of each subsequent Interest Period shall be as
                  selected by the relevant Borrower giving notice to the
                  Facility Agent:

                  (i)      in the case of an Advance denominated in NZ Dollars,
                           not later than 9.30am on the Business Day prior to
                           the commencement of that Interest Period; and

                  (ii)     in the case of an Advance denominated in US Dollars,
                           not later than 10.30am on the third Business Day
                           before the commencement of that Interest Period,

                  provided that if the relevant Borrower fails to give such
                  notice the Interest Period shall be of three months' duration;

<PAGE>

                                                                              19

         (c)      the first Interest Period shall begin on the Drawdown Date
                  applicable to that Advance and each subsequent Interest Period
                  shall commence on the last day of the previous Interest Period
                  applicable to that Advance;

         (d)      if an Interest Period would otherwise end on a day which is
                  not a Business Day it shall be extended to the next Business
                  Day unless the result of that extension would be to carry the
                  Interest Period over into another calendar month, in which
                  event the Interest Period shall end on the immediately
                  preceding Business Day;

         (e)      where an Interest Period commences on the last day of a
                  calendar month or on a day for which there is no numerically
                  corresponding day in the month in which that Interest Period
                  would otherwise end, that Interest Period shall, (subject to
                  paragraphs (d) and (f)) end on the last day of that last
                  mentioned month;

         (f)      no Interest Period may extend beyond the Repayment Date for
                  that Advance.

6.2      INTEREST RATE: Each Borrower shall pay interest on each Advance made to
         it, for each Interest Period, at the rate per annum determined by the
         Facility Agent to be the aggregate of the Margin applicable to the
         relevant Advance on the first day of that Interest Period and the
         Specified Rate for that Advance for that Interest Period.

6.3      NOTIFICATION OF THE SPECIFIED RATE: The Facility Agent shall promptly
         (and in any event not later than 2pm on the first day of the relevant
         Interest Period) notify the relevant Borrower and the Lenders of the
         Margin and the Specified Rate for each Advance for each Interest Period
         and the amount of interest payable in respect of that Interest Period.

6.4      PAYMENT: Interest on each Advance at the rate determined in accordance
         with clause 6.2 shall be calculated on the basis of the actual number
         of days elapsed and a 360 or 365 day year (as customary market practice
         requires), shall accrue from day to day and shall be paid in arrears on
         the Interest Payment Date(s) for the relevant Interest Period unless
         otherwise provided in this agreement.

7.       PREPAYMENT AND FINAL REPAYMENT

7.1      VOLUNTARY PREPAYMENT: A Borrower may, by giving the Facility Agent no
         less than five Business Days' prior written notice (which shall be
         irrevocable), prepay the whole or any part of an Advance. Any such
         prepayment must be in a minimum amount of NZ$2,000,000 (or the US
         Dollar Equivalent thereof on the date of prepayment) and in integral
         multiples equal to NZ$1,000,000 (or the US Dollar Equivalent thereof on
         the date of prepayment), or such other amount as the Facility Agent may
         agree. Amounts so prepaid shall, subject to compliance with the
         provisions of this agreement, be available for redrawing.

7.2      EXCHANGE RATE FLUCTUATIONS: If, at any time, the NZ Dollar Equivalent
         of all outstanding Advances under a Facility exceeds 105% of the
         Facility Amount of that Facility, the Borrowers shall, on the next
         Interest Payment Date to occur under that Facility, prepay such part of
         the outstanding Advances under that Facility as is equal to that excess
         amount.

7.3      AMOUNTS PREPAID UNDER CLAUSE 10.1(h): Any amount prepaid under clause
         10.1(h):

         (a)      shall be applied in and towards prepayment of outstanding
                  Advances under the Facilities rateably; and

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                                                                              20

         (b)      may not be redrawn.

7.4      OTHER PAYMENTS ON PREPAYMENT: Where:

         (a)      the whole or any part of an Advance is prepaid under clauses
                  7, 10.1(h), 11, 12, or 14.2(f), the Borrowers shall pay to the
                  Facility Agent for the account of the Lenders:

                  (i)      simultaneously with that prepayment, accrued interest
                           on that Advance to the date of actual payment; and

                  (ii)     (if the prepayment is made on a day other than the
                           last day of an Interest Period for the relevant
                           Advance) upon demand, any amount specified by the
                           Facility Agent to be necessary to compensate any
                           Lender for any loss incurred by it (including any
                           loss incurred in liquidating or redeploying deposits
                           from third parties acquired, arranged or utilised to
                           make or maintain that Lender's participation in that
                           Advance, and any loss of margin); and

         (b)      all Advances under a Facility are to be prepaid under clauses
                  7, 10.1(h), 11, 12, or 14.2(f) the Borrowers shall pay to the
                  Facility Agent for the account of the Lenders, in addition to
                  any amounts payable under clause 7.4(a), all other Outstanding
                  Money under that Facility to the date of actual payment.

7.5      FINAL REPAYMENT: The Borrowers shall pay all Outstanding Money under a
         Facility on the Expiry Date of that Facility.

8.       CANCELLATION

8.1      AT END OF AVAILABILITY PERIOD: Any part of a Facility which remains
         undrawn at the end of the Availability Period of that Facility shall be
         cancelled and the relevant Facility Amount shall be reduced by the
         undrawn amount.

8.2      DURING AVAILABILITY PERIOD: The Company may at any time on giving not
         less than five Business Days' irrevocable notice to the Facility Agent
         cancel a Facility in whole or in part (and if in part in an integral
         multiple equal to the Original Dollar Amount of NZ$1,000,000) and the
         Facility Amount of that Facility shall be reduced accordingly at the
         end of that five Business Day period. During that five Business Day
         period no Borrower may give a Drawdown Request purporting to draw all
         or any part of the Facility Amount which is subject to that notice of
         cancellation.

8.3      PRO RATA REDUCTION: Any cancellation under clause 8.1 or clause 8.2
         shall reduce the Commitments under the relevant Facility rateably. The
         Facility Agent shall promptly notify each Lender of any cancellation
         under clause 8.1 or any notice received under clause 8.2 and the amount
         of that Lender's Commitment which is, or is to be, cancelled.

8.4      ON PREPAYMENT: If any Advance or any part thereof is prepaid pursuant
         to clause 10.1(h), the relevant Facility Amount shall be reduced by the
         amount of that prepayment (taking any Advance denominated in US Dollars
         at its Original Dollar Amount).

9.       REPRESENTATIONS AND WARRANTIES

9.1      REPRESENTATIONS AND WARRANTIES: Each Borrower represents and warrants
         in relation to itself and the Company represents and warrants in
         relation to itself and each of the other Obligors that:

<PAGE>

                                                                              21

         (a)      STATUS: it is a company duly incorporated and validly existing
                  under the laws of its jurisdiction of incorporation;

         (b)      POWER AND AUTHORITY: it has:

                  (i)      the power and authority to own its assets and to
                           carry on its business as, and in such place or places
                           as, it is now being conducted;

                  (ii)     the power to enter into, and exercise its rights and
                           perform and comply with its obligations under, each
                           Transaction Document to which it is a party; and

                  (iii)    taken all necessary action to authorise the entry
                           into each Transaction Document to which it is a party
                           and the performance of all its obligations
                           thereunder;

         (c)      OBLIGATIONS: each Transaction Document to which it is a party,
                  constitutes its legal, valid and binding obligations,
                  enforceable in accordance with its terms subject to insolvency
                  laws affecting creditors' rights generally and to equitable
                  principles of general application;

         (d)      NO LAWS VIOLATED: neither its entry into the Transaction
                  Documents, nor the exercise of any right or the performance or
                  observance of any obligation under the Transaction Documents,
                  nor any transaction contemplated thereby, will:

                  (i)      violate or contravene any law to which it is subject;
                           or

                  (ii)     conflict with, or result in a breach of, any
                           agreement, document, arrangement, obligation or duty
                           to which it is a party, or by which it or any of its
                           assets may be bound; or

                  (iii)    violate any of the documents constituting it or cause
                           any limitation on, or breach of, any of its powers,
                           or the right or ability of its directors to exercise
                           those powers;

         (e)      CONSENTS AND OTHER AUTHORISATIONS: all consents and other
                  authorisations required by it, or otherwise appropriate for it
                  to obtain, in connection with each Transaction Document to
                  which it is a party, and the transactions contemplated by such
                  documents and which may be necessary for it to conduct its
                  business properly, have been obtained or effected and are in
                  full force and effect, and there are no qualifications or
                  limitations affecting such consents or other authorisations
                  which have not been notified to the Lenders and which have or
                  will be likely to have a Material Adverse Effect;

         (f)      NO DEFAULT: no Event of Default has occurred and remains
                  unremedied or will result from its entry into the Transaction
                  Documents;

         (g)      FULL DISCLOSURE: the information provided by it to the Lenders
                  at any time in connection with the Facilities or the
                  Transaction Documents was true and accurate in all material
                  respects and not misleading in any material respect as at the
                  date on which it was provided (whether by the omission of
                  facts known to it or otherwise);

         (h)      MATERIAL ADVERSE EFFECT: it does not know of any fact, other
                  than matters of a general economic nature and matters relating
                  to CNIFP, which has a Material Adverse Effect or, so far as it
                  now reasonably foresees, will be likely to have a Material
                  Adverse Effect;

<PAGE>

                                                                              22

         (i)      TAXES: under applicable law and regulations currently in
                  effect, there are no taxes (other than withholding taxes and
                  Approved Issuer Levy) payable in any jurisdiction in which it
                  is incorporated or carries on business or in respect of the
                  signing, delivery, registration or performance of the
                  Transaction Documents or the transactions contemplated
                  thereunder;

         (j)      FINANCIAL STATEMENTS: the most recent consolidated financial
                  statements of the Group comply with the requirements of clause
                  10.1(b)(i) and (ii), and there has been no change in the
                  respective assets, indebtedness, conditions or operations of
                  the companies to which those financial statements relate
                  (taken as a whole) since the date at which those financial
                  statements were prepared which has had, or would be likely to
                  have, a Material Adverse Effect;

         (k)      RANKING OF OBLIGATIONS: its liabilities under each Transaction
                  Document to which it is a party rank and will at all times
                  rank senior to all other indebtedness (actual or contingent)
                  except indebtedness preferred solely by operation of law;

         (l)      OWNERSHIP OF ASSETS: it owns its assets free and clear of all
                  Security Interests except Permitted Security Interests;

         (m)      SECURITY: the Security is effective to create in favour of the
                  Security Agent, legal, valid and enforceable Security
                  Interests in the Collateral and, when the Security Agent and
                  the relevant Obligor take all action specified in the Security
                  for the perfection of the Security Interests created by the
                  Security, the Security will constitute fully perfected
                  Security Interests in the Collateral ranking in priority to
                  the claims of any other person except for Permitted Security
                  Interests;

         (n)      NO IMMUNITY: it is not, under the laws of its jurisdiction of
                  incorporation, immune from suit with respect to its
                  obligations under the Transaction Documents and the entry into
                  and performance by it of its obligations under the Transaction
                  Documents constitute private and commercial activities; it
                  does not, nor does any of its property, assets or revenues,
                  have any right of immunity from suit, jurisdiction, attachment
                  (whether before or after judgment), set-off or execution;

         (o)      SOLVENCY: it is not insolvent and will not be insolvent
                  immediately following entry into this agreement;

         (p)      LITIGATION: other than as previously disclosed to the Lenders
                  in writing (including the claim brought by Citic New Zealand
                  Limited (BVI) (In Receivership) against the Company and
                  certain of its Subsidiaries in the High Court of New Zealand
                  in CP283-SW/99 (Auckland Registry)), it is not party to any
                  litigation, tax claim or administrative or arbitration
                  proceedings before or of any court, tribunal, arbitrator or
                  Government Agency, or to any dispute with any Government
                  Agency, which, if adversely determined, would have a Material
                  Adverse Effect; and

         (q)      EMPLOYMENT DISPUTES: there are no disputes pending or, to the
                  best of its knowledge after due enquiry, threatened, between
                  it and any of its senior officers or executives, other than
                  individual employee grievances or lawsuits arising in the
                  ordinary course of business which could not reasonably be
                  expected to have a Material Adverse Effect.

<PAGE>

                                                                              23

9.2      REPETITION: The representations and warranties contained in clause 9.1
         (other than paragraphs (h), (i), (o), (p) and (q) thereof) will be
         deemed to be repeated on the date of each Drawdown Request and on each
         Drawdown Date by reference to the facts and circumstances then
         existing.

10.      UNDERTAKINGS

10.1     POSITIVE UNDERTAKINGS: The Company shall:

         (a)      FINANCIAL INFORMATION: deliver to the Lenders:

                  (i)      as soon as practicable (and in any event within 90
                           days) after the last day of each of its financial
                           years, the consolidated financial statements of the
                           Group in respect of that financial year each duly
                           audited;

                  (ii)     as soon as practicable (and in any event within 75
                           days) after the last day of the first half of each of
                           its financial years, the unaudited consolidated
                           financial statements of the Group, in respect of that
                           financial half year;

                  (iii)    as soon as practicable (and in any event within 30
                           days) after the last day of each of its financial
                           quarters, the management accounts of the Group, in
                           respect of that financial quarter;

                  (iv)     at the same time as the quarterly management accounts
                           referred to in paragraph (iii) above are delivered to
                           the Lenders, a compliance certificate from a director
                           substantially in the form set out in schedule 8;

                  (v)      from time to time, within seven days after request by
                           the Facility Agent or any Lender, such information
                           about the business, assets and financial condition of
                           the Group, as the Facility Agent or that Lender may
                           reasonably require; and

                  (vi)     promptly, copies of all notices and related documents
                           issued by the Company to its shareholders;

         (b)      ACCOUNTING PRACTICE: ensure that all financial statements
                  delivered to the Lenders under clause 10.1(a):

                  (i)      with the exception of the quarterly management
                           accounts delivered to the Lenders under paragraph
                           (a)(iii) above, are prepared in accordance with NZ
                           GAAP, consistently applied, except to the extent
                           disclosed in those financial statements;

                  (ii)     give a true and fair view of the financial position
                           and performance of the Group and the results of
                           operations of the Group as at the date, and for the
                           period ending on the date, to which the financial
                           statements are made up; and

                  (iii)    in the case of the quarterly management accounts
                           delivered to the Lenders under paragraph (a)(iii)
                           above, are signed by the Chief Financial Officer of
                           the Company, and otherwise, are signed by two
                           directors of the Company and are accompanied by all
                           documents and reports required by law to be annexed
                           to or to accompany them;

<PAGE>

                                                                              24

         (c)      ENVIRONMENTAL COMPLIANCE: develop, implement and maintain
                  procedures to ensure compliance in all material respects with
                  Environmental Laws and equivalent legislation elsewhere;

         (d)      ADDITIONAL REPORTING REQUIREMENTS: deliver to the Facility
                  Agent (with sufficient copies for each of the Lenders):

                  (i)      as soon as possible, and in any event within five
                           days after becoming aware of the occurrence of an
                           Event of Default or an Event of Review, a statement
                           of a senior officer setting forth the details of such
                           Event of Default or Event of Review and the action
                           which it proposes to take or has taken with respect
                           thereto;

                  (ii)     copies of all material special audits, opinions or
                           other material reports relating to accounting
                           matters, if any, submitted to it by its auditors;

                  (iii)    promptly upon the issuance thereof, copies of all
                           notices, reports, press releases, circulars, offering
                           documents and other continuous disclosure documents
                           filed with, or delivered to, any stock exchange or to
                           any securities commission or similar Government
                           Agency in any other jurisdiction;

                  (iv)     promptly upon any change in its auditors, notice of
                           any change in its auditors;

                  (v)      promptly, and, in any event within ten days, after it
                           or any Restricted Subsidiary receives notice of any
                           suit, proceeding or similar action commenced by any
                           Government Agency or any other person which has a
                           Material Adverse Effect, copies of such notice of
                           suit, proceedings or similar action;

                  (vi)     promptly upon obtaining an initial credit rating or
                           upon any change in its credit rating from any credit
                           rating agency, copies of such rating or change in
                           rating; and

                  (vii)    such other information respecting the condition or
                           operations, financial or otherwise, of its business
                           and the business of the Restricted Subsidiaries as
                           the Facility Agent, on behalf of the Lenders, may
                           from time to time reasonably request;

         (e)      CORPORATE EXISTENCE: preserve and maintain, and cause each of
                  its Restricted Subsidiaries to preserve and maintain, its
                  corporate existence, except (i) to the extent expressly
                  permitted by this agreement or (ii) to the extent that the
                  failure to comply with this provision will not, and will not
                  be likely to, have a Material Adverse Effect;

         (f)      COMPLIANCE WITH LAWS: comply, and cause each of its Restricted
                  Subsidiaries to comply, with the requirements of all
                  applicable laws (including Environmental laws) and orders of
                  any Government Agency, the non-compliance with which could
                  have a Material Adverse Effect;

         (g)      CONDUCT OF BUSINESS: carry on, and cause each of its
                  Restricted Subsidiaries to carry on, business in a proper,
                  efficient and business-like manner and diligently maintain,
                  use and operate its assets where the failure to do so has a
                  Material Adverse Effect;

<PAGE>

                                                                            25

         (h)      PROCEEDS OF ASSET DISPOSITIONS: if in any financial year it or
                  any Restricted Subsidiary disposes of an asset or series of
                  assets as permitted by clause 10.2(c) (other than a Permitted
                  Disposal or under the transaction involving the sale of
                  cutting rights in respect of the Tahorakuri Forest and the
                  Tauhara Forest to entities managed by UBS Timber Investors for
                  an amount equal to US$65,000,000 entered into by the Company
                  and UBS Timber Investors on or about the date of this
                  agreement) and the net proceeds of such disposal or disposals
                  exceeds NZ$10,000,000 in aggregate, prepay such part of the
                  outstanding Advances under the Facilities on the next Interest
                  Payment Date to occur after the expiry of that financial year,
                  of an amount equal to the product of:

                           CR  x  NP ,

                  where "CR" = the current ratio of Net Debt to Total Tangible
                  Assets applicable at the time of the prepayment; and

                  "NP" = the net proceeds of such asset dispositions during that
                  financial year less NZ$10,000,000;

         (i)      AUDITORS: appoint and maintain as its auditors a firm of
                  accountants nationally recognised in New Zealand;

         (j)      MAINTENANCE OF BOOKS: keep, and cause each of its Restricted
                  Subsidiaries to keep, full, proper and accurate books of
                  record and account in accordance with NZ GAAP or the relevant
                  jurisdiction of their incorporation, except for immaterial
                  inaccuracies or discrepancies of any kind which may be
                  contained or reflected therein;

         (k)      INSURANCE COVENANTS: maintain, in respect of itself and each
                  of its Restricted Subsidiaries, insurance at all times with
                  responsible insurance carriers or on a self-insurance basis in
                  such amounts and covering such risks as have been approved by
                  the Chief Executive Officer and disclosed to the Facility
                  Agent as prudent for companies engaged in similar businesses
                  and owning similar properties in the same general areas as the
                  Company or any such Restricted Subsidiary, as the case may be;

         (l)      AUTHORISATIONS: obtain, and cause each of its Restricted
                  Subsidiaries to obtain, (to the extent not in existence on the
                  date hereof) and maintain, and cause each of its Restricted
                  Subsidiaries to maintain (by the observance and performance of
                  all obligations thereunder and conditions thereof), all
                  authorisations, consents, permits and licences required to
                  carry on their respective businesses where the failure to do
                  so has a Material Adverse Effect and in any event any material
                  Crown Forestry licences;

         (m)      LINE OF BUSINESS: continue, and cause each of its Restricted
                  Subsidiaries to continue, to conduct and operate businesses
                  primarily of the same nature as the core business carried on
                  at the date of this agreement;

         (n)      ANNUAL BUDGET: provide an annual budget to the Facility Agent
                  (with sufficient copies for each of the Lenders) in respect of
                  each financial year on the earlier of (i) the date which is 30
                  days from the date of final review thereof by its Board of
                  Directors and (ii) July 31st of such financial year;

<PAGE>

                                                                              26

         (o)      FURTHER ASSURANCES: at its cost and expense, upon request of
                  the Facility Agent, duly execute and deliver or cause to be
                  duly executed and delivered to the Facility Agent such further
                  instruments and do and cause to be done such further acts as
                  may be necessary or proper in the reasonable opinion of the
                  Facility Agent to carry out more effectually the provisions
                  and purposes of this agreement;

         (p)      COLLATERAL: promptly notify the Agents:

                  (i)      of any change in the name of any Obligor (and in any
                           event not to make or permit any such change unless
                           all filings are made to ensure the Security Interests
                           created by the Security remain perfected); and

                  (ii)     if any material part of the Collateral is damaged or
                           destroyed or requisitioned or compulsorily purchased
                           by any Government Agency;

         (q)      MATERIAL CONTRACTS AND THE CNIFP MANAGEMENT AGREEMENT: will,
                  and will ensure that its Subsidiaries will: (i) comply with
                  its obligations under each Material Contract and the CNIFP
                  Management Agreement where non-compliance would or would be
                  likely to have a Material Adverse Effect; (ii) exercise its
                  rights under, and enforce, each Material Contract and the
                  CNIFP Management Agreement prudently; and (iii) use all
                  reasonable endeavours to keep the Material Contracts and the
                  CNIFP Management Agreement valid and enforceable, provided
                  that this covenant will cease to apply to the CNIFP Management
                  Agreement if the Company ceases to be the manager under that
                  agreement or if that agreement is terminated;

         (r)      INSPECTION: permit the Agents or any Lender or any agent of
                  the Agents or any Lender on reasonable notice to inspect its
                  and each of its Subsidiary's premises and records (including
                  all accounting records and other documents relating in any way
                  to their respective businesses) and to take such copies or
                  record such details thereof as they reasonably request; and

         (s)      HEDGING POLICY: will promptly advise the Lenders of any change
                  to the Group's hedging policy as adopted by the Board of
                  Directors of the Company and which was disclosed to the
                  Lenders on or before the Commencement Date.

10.2     NEGATIVE UNDERTAKINGS: The Company:

         (a)      LIMITATION ON SECURITY INTERESTS: will not, and it will
                  procure that no Restricted Subsidiary will, create or permit
                  to arise or exist any Security Interest over its assets to
                  secure any Debt or any indebtedness under any Guarantee of
                  Debt, other than a Permitted Security Interest;

         (b)      LIMITATION ON DEBT SECURED BY PERMITTED SECURITY INTERESTS:
                  will not permit the aggregate principal amount of Debt of the
                  Group (but excluding Tarawera for these purposes) at any time
                  which is secured by Permitted Security Interests (other than
                  the Security), on a consolidated basis, to exceed 2.5% of the
                  Total Assets of the Obligors at that time;

         (c)      LIMITATION ON ASSET DISPOSITIONS: will not, and it will
                  procure that no Restricted Subsidiary will, whether by one
                  transaction or by a number of transactions taking place in any
                  financial year (excluding Permitted Disposals), dispose of
                  assets the book values of which at the time of disposal and
                  taken together amount to more than 10% of the Total Assets of
                  the Group at the beginning of that financial year;

<PAGE>

                                                                              27

         (d)      LIMITATION ON AFFILIATE TRANSACTIONS: will not, and it will
                  procure that none of the Restricted Subsidiaries will:

                  (i)      dispose of any asset to any Other Subsidiary except
                           in a bona fide transaction on an arm's length basis,
                           and for fair market value;

                  (ii)     provide any services to, or be provided with any
                           services by, or surrender the benefit of any
                           deduction or credit for taxation purposes to, or
                           engage in any other transaction with or involving or
                           for the benefit of, any Other Subsidiary, other than
                           in a bona fide transaction on an arm's length basis,
                           evidenced in writing and for a consideration which it
                           reasonably considers as fair; or

                  (iii)    make any loan or provide any other financial
                           accommodation to, or give any Guarantee of any of the
                           indebtedness of, any Other Subsidiary if the
                           aggregate of the principal amount of all such loans
                           and the maximum principal amount payable under all
                           such Guarantees would exceed 2.5% of the Total Assets
                           of the Obligors (except where such indebtedness
                           arises under a Guarantee given by any Other
                           Subsidiary of indebtedness of the Company or of a
                           Restricted Subsidiary);

                  provided that nothing in this paragraph shall prohibit:

                           (aa)     anything which is permitted by clause
                                    10.2(e); or

                           (bb)     performance in the ordinary course of
                                    business of certain joint venture and
                                    partnership arrangements (being Tarawera,
                                    American Wood Moulding L.L.C., Inc. and The
                                    Empire Company Inc.) and any similar
                                    arrangements entered into from time to time
                                    in the ordinary course of business of the
                                    Group; or

                           (cc)     financial accommodation of up to
                                    US$2,000,000 in total in relation to
                                    American Wood Moulding L.L.C., Inc. and/or
                                    The Empire Company, Inc.; or

                           (dd)     performance by the Company of its
                                    obligations to manage the business of CNIFP
                                    pursuant to the CNIFP Management Agreement;

         (e)      LIMITATIONS ON DIVIDENDS, CAPITAL DISTRIBUTIONS AND SHARE
                  BUY-BACKS: will not, and it will procure that none of the
                  Restricted Subsidiaries will (without the prior consent of the
                  Majority Lenders):

                  (i)      make any Distributions (as defined in section 2 of
                           the Companies Act); or

                  (ii)     acquire any of its own shares (unless it is required
                           to do so by law) or redeem any of its own shares
                           which are redeemable at its option or take any other
                           action to reduce its capital; or

                  (iii)    give financial assistance, directly or indirectly, to
                           any person for the purpose of, or in connection with,
                           the purchase of any of its shares or shares in its
                           holding company, provided that nothing in this clause
                           shall prohibit any Restricted Subsidiary from
                           providing such financial assistance to any other
                           Restricted Subsidiary or to the Company,

<PAGE>

                                                                              28

                  if an Event of Default or an Event of Review has occurred and
                  is continuing or would occur as a result thereof;

         (f)      RESTRICTION ON DEBT OF SUBSIDIARIES: will not permit the
                  aggregate amount at any time being outstanding of all Debt of
                  its Subsidiaries to at any time exceed NZ$50,000,000, other
                  than:

                  (i)      Debt under the Facilities; or

                  (ii)     Debt of the Excluded Subsidiaries subsisting at the
                           date of this agreement,

                  and will not take any step which results in the Excluded
                  Subsidiaries incurring any additional Debt;

         (g)      LIMITATION ON MERGERS AND ASSET SALES: will not, and it will
                  procure that none of the Restricted Subsidiaries will,
                  amalgamate, consolidate or merge (including by means of the
                  sale of all or substantially all of its assets having an
                  effect equivalent to that of a merger) with or liquidate,
                  wind-up or dissolve into any other successor person except if:

                  (i)      (1)      the successor person executes, prior to or
                                    contemporaneously with the consummation of
                                    such transaction, such agreements together
                                    with such other instruments as are
                                    satisfactory to the Facility Agent acting
                                    reasonably and in the opinion of the
                                    Facility Agent's counsel necessary or
                                    advisable to evidence the assumption by the
                                    successor person of its obligations under
                                    this agreement and to observe and perform
                                    all of its covenants and obligations under
                                    this agreement; and

                           (2)      no Event of Default or Event of Review has
                                    occurred and is continuing or would occur as
                                    a result thereof; and

                           (3)      there is no breach of clause 10.1(m); and

                           (4)      the successor person is incorporated in New
                                    Zealand or any other jurisdiction approved
                                    by the Majority Lenders; and

                           (5)      there is not, and is not likely to be, any
                                    material adverse variance to the Financial
                                    Model as a result thereof; or

                  (ii)     the amalgamation or merger is a solvent amalgamation
                           or merger between two or more Obligors; and

         (h)      MATERIAL CONTRACTS: will not, and it will ensure that none of
                  its Subsidiaries will: (i) amend or vary in a respect or to an
                  extent which is material in the context of the Facilities, or
                  consent to any amendment to or variation of, any Material
                  Contract in a respect or to an extent which is material in the
                  context of the Facilities; or (ii) avoid, release, surrender,
                  terminate, rescind, discharge (other than by performance) or
                  accept the repudiation of any Material Contract, where this
                  has, or is likely to have, a Material Adverse Effect.

10.3     FINANCIAL COVENANTS: The Company undertakes that so long as any
         Facility remains outstanding:

<PAGE>

                                                                              29

         (a)      GEARING RATIO: on each Test Date which falls during a period
                  set out below, the Gearing Ratio shall not exceed the ratio
                  set out opposite that period:

<TABLE>
<CAPTION>
                 PERIOD                      RATIO
--------------------------------------     ----------
<S>                                        <C>
The date of this agreement to 30/06/05     3.50 times
-----------------------------------------------------
01/07/05 and thereafter                    3.25 times
-----------------------------------------------------
</TABLE>

         (b)      CASH COVER RATIO: the ratio of Free Cash Flow to Interest
                  Expense shall not be less than 2.75 times on any Test Date;

         (c)      NET DEBT TO TOTAL TANGIBLE ASSETS RATIO: the percentage of Net
                  Debt of the Group to Total Tangible Assets of the Group shall
                  not at any time exceed 30%;

         (d)      MINIMUM NET TANGIBLE ASSETS: at all times Minimum Net Tangible
                  Assets shall not be less than NZ$800,000,000;

         (e)      TOTAL TANGIBLE ASSETS: at all times Total Tangible Assets
                  (disregarding any investments in Subsidiaries and
                  inter-company loans) of the Obligors shall be not less than
                  95% of Total Tangible Assets of the Group.

10.4     TESTING OF FINANCIAL COVENANTS: The financial covenants in clause 10.3
         will be tested against the consolidated financial information of the
         Company as at the end of each financial quarter of the Company (each a
         "TEST DATE") (with covenants (a) and (b) tested on a rolling 12 month
         basis) with a first test date of 31 March 2003.

11.      DEFAULT

11.1     EVENTS OF DEFAULT: If any of the following occurs, whether or not
         within the control of any Obligor:

         (a)      PAYMENT OF PRINCIPAL: default shall occur in the due and
                  punctual payment of all or any part an Advance when and as the
                  same shall become due and payable, whether at stated maturity,
                  by acceleration, by mandatory prepayment, by notice of
                  prepayment or otherwise; or

         (b)      PAYMENT OF INTEREST: default shall occur in the due and
                  punctual payment of any interest or fees or other amounts
                  payable when and as such interest or fees or other amounts
                  payable shall become due and payable, and such default shall
                  have continued for a period of three Business Days; or

         (c)      BREACH OF COVENANTS:

                  (i)      default shall occur in the performance or observance
                           of any of the covenants in clause 10.3;

                  (ii)     default shall occur in the performance or observance
                           of any other of the covenants, conditions or
                           agreements contained in this agreement or any of the
                           Security and, if such default is capable of remedy,
                           such default shall have continued for a period of 30
                           days after the earlier of the date on which the
                           Company shall have actual knowledge of such default
                           or notice shall have been given by the Facility Agent
                           to the Company requiring that such default be cured;
                           or

<PAGE>

                                                                            30

         (d)      CROSS DEFAULT:

                  (i)      any principal amount of any Debt of any Obligor
                           becomes due and payable prior to its stated maturity
                           by reason of the occurrence of a default or event of
                           default however described (provided, however, that in
                           any such case such amount is at least NZ$5,000,000 or
                           its equivalent in any other currency) or any
                           principal amount of any such Debt is not paid when
                           due, or as the case may be, within any applicable
                           grace period (provided, however, that in any such
                           case such amount is at least NZ$1,000,000 or its
                           equivalent in any other currency); or any Obligor
                           fails to pay when due any principal amount payable by
                           it under any Guarantee of Debt (provided however,
                           that in any such case such amount is at least
                           NZ$1,000,000 or its equivalent in any other
                           currency);

                  (ii)     any amount of interest on any Debt of any Obligor is
                           not paid when due or, as the case may be, within any
                           applicable grace period and such default shall have
                           continued for a period of 30 days thereafter; or any
                           Obligor fails to pay when due any amount of interest
                           payable by it under any Guarantee of Debt and such
                           default shall have continued for a period of 30 days
                           thereafter (provided, however, that in any such case
                           the aggregate of all amounts specified in this clause
                           (ii) is at least NZ$1,000,000 (or its equivalent in
                           any other currency); or

         (e)      CESSATION OF BUSINESS OR DISSOLUTION: any Obligor ceases or
                  threatens to cease to carry on all or substantially all of its
                  business or operations, or an application or an order is made,
                  or a resolution is passed or proposed, for the dissolution of
                  the relevant Obligor except, in each case for the purpose of,
                  and followed by, an amalgamation or solvent reconstruction on
                  terms previously approved in writing by the Majority Lenders;
                  or

         (f)      RECEIVER, ETC: an encumbrancer takes possession, or a trustee,
                  receiver, receiver and manager, administrator, inspector under
                  any companies or securities legislation, or similar official,
                  is appointed in respect of any Obligor or the whole or any
                  part of its assets; or

         (g)      STATUTORY MANAGEMENT: any step is taken to appoint, or with a
                  view to appointing, a statutory manager (including the making
                  of any recommendation in that regard by the Securities
                  Commission) under the Corporations (Investigation and
                  Management) Act 1989 in respect of any Obligor, or any Obligor
                  or any associated person (as that term is defined in that Act)
                  of any of them is declared at risk pursuant to the provisions
                  of that Act; or

         (h)      DISTRESS OR JUDGMENT: a distress, attachment or other
                  execution for a sum exceeding NZ$10,000,000 (or its equivalent
                  in other currencies) is levied or enforced upon, or commenced
                  against, any assets of any Obligor and is not discharged or
                  stayed within 30 days, or a judgment for a sum exceeding
                  NZ$10,000,000 (or its equivalent in other currencies) is
                  obtained against the relevant Obligor and is not satisfied,
                  stayed or discharged within 30 days except, in each case,
                  where the Facility Agent is satisfied that the relevant
                  Obligor is contesting the same in good faith by appropriate
                  proceedings; or

         (i)      INSOLVENCY: any Obligor is declared or becomes bankrupt or
                  insolvent, is unable to pay its debts when they fall due, or
                  is presumed unable to pay its debts in accordance with section
                  287 of the Companies Act 1993, or enters into dealings with or
                  for the benefit of any of its creditors with a view to

<PAGE>

                                                                              31

                  avoiding, or in expectation of, insolvency, or makes a general
                  assignment or an arrangement, compromise or composition with
                  or for the benefit of any of its creditors, or stops or
                  threatens to stop payments generally; or

         (j)      INVALIDITY OF TRANSACTION DOCUMENTS: any provision of any
                  Transaction Document:

                  (i)      ceases to have effect in whole or in part, other than
                           by performance or as permitted by its terms; or

                  (ii)     becomes wholly or partly void, voidable, illegal,
                           invalid or unenforceable (other than by reason only
                           of a party waiving any of its rights), or the
                           performance of any such provision becomes illegal,

                  or any Obligor or any person on its behalf, makes any
                  allegation or claim to that effect; or

         (k)      REPRESENTATIONS AND WARRANTIES: any representation or warranty
                  made by or on behalf of an Obligor herein or in any
                  certificate, agreement, instrument or statement contemplated
                  by or made or delivered pursuant hereto, as the case may be,
                  or in connection herewith, as the case may be, shall prove to
                  have been false or incorrect or breached in any material
                  respect on the date as of which made; or

         (l)      GOVERNMENT ACTIONS: any Government Agency shall declare a
                  moratorium on the payment of any class of indebtedness, or any
                  Government Agency shall take any action to condemn, seize,
                  nationalize, assume the management of or appropriate any
                  material portion of the property, assets or revenues of any
                  Obligor (either with or without payment or compensation) or
                  take any other similar action and, in any such case such
                  action, in the reasonable opinion of the Majority Lenders,
                  materially adversely affects the ability of the Obligors to
                  perform their obligations under the Transaction Documents; or

         (m)      CHANGE OF CONTROL: if any person or group of persons acting
                  together shall acquire control of the Company unless the
                  Majority Lenders consent in writing to that acquisition; or

         (n)      QUALIFIED AUDIT: any qualification of the audited consolidated
                  financial statements of the Company by the Company's
                  independent auditors which the Majority Lenders, acting
                  reasonably, consider is material; or

         (o)      WITHDRAWAL OF LICENCES: any consent, licence or authorisation
                  of any Government Agency or any other person which is required
                  to make the Transaction Documents valid, binding and
                  enforceable or is required in order to enable any Obligor or
                  any other party thereto to perform its obligations hereunder
                  or thereunder shall be withdrawn or ceases to be in full force
                  and effect; or

         (p)      RESOLUTION FOR MERGER: if any Obligor shall effect or pass an
                  effective resolution authorising its consolidation, merger or
                  amalgamation with any person other than as permitted by clause
                  10.2(g); or

         (q)      LITIGATION: any litigation, tax claim or administrative or
                  arbitration proceedings before or of any court, tribunal,
                  arbitrator or Government Agency, or any dispute with any
                  Government Agency is adversely determined (with no further
                  rights of appeal or which was not appealed within the
                  prescribed timeframe) which has, or will have, a Material
                  Adverse Effect,

<PAGE>

                                                                              32

         then at any time thereafter, without prejudice to any other remedies
         which the Lenders may have, the Facility Agent may (and shall if so
         directed by the Majority Lenders) by notice to the Borrowers cancel the
         Facilities whereupon the Facility Amounts shall be reduced to zero and
         the Borrowers shall prepay each outstanding Advance immediately (or
         within any period specified by the Facility Agent).

11.2     EVENT OF REVIEW: If at any time after the first drawing of a Facility,
         any event or series of events (other than any event or series of events
         which constitutes an Event of Default, or a variation or termination of
         the CNIFP Management Agreement or any wood supply contract which any
         Obligor and CNIFP are party to as at the date of this agreement),
         whether related or not, occurs or any circumstance arises or exists,
         which has or would be likely to have, a Material Adverse Effect, the
         Majority Lenders may, by notice in writing to the Borrowers, require
         that the parties enter into negotiations in good faith with a view to
         agreeing terms on which the Lenders are willing to continue making the
         Facilities available to the Borrowers. If after 30 days from the date
         of the notice the parties have not agreed upon such terms, the Majority
         Lenders may, at any time by not less than 60 days' notice to the
         Borrowers, cancel the Facilities whereupon the Facility Amounts under
         the Facilities shall be reduced to zero and the Borrowers shall prepay
         each outstanding Advance immediately (or within any period specified by
         the Facility Agent).

11.3     REPATRIATION: If any sum due under any Transaction Document is not paid
         when due and the amount concerned is at that time denominated in a
         currency other than NZ Dollars, the relevant Lender may by notice to
         the Borrowers require the sum to be converted into NZ Dollars. The
         relevant Lender may immediately or at any time thereafter liquidate or
         redeploy any deposits or funds fixed or acquired in such other currency
         in order to fund the sum concerned in NZ Dollars. If a Lender gives
         such a notice, the sum concerned shall be immediately due and payable
         in NZ Dollars in an amount certified by that Lender to be the NZ Dollar
         Equivalent of that sum, together with any penalties, losses, costs or
         expenses incurred in the liquidation or redeployment of any deposits or
         funds previously fixed (converted into NZ Dollars in the same manner).

12.      CHANGES IN CIRCUMSTANCES

12.1     INCREASED COSTS: If by reason of the introduction of, or any change in,
         any law, or any change in the interpretation or application thereof by
         any Government Agency, after the date of this agreement, or by reason
         of compliance by any Lender with any directive (other than a directive
         which is applicable to that Lender at the date of this agreement):

         (a)      the cost to any Lender of making available, maintaining or
                  funding, the Facilities or any part of any Facility, or of
                  otherwise giving effect to this agreement, is increased; or

         (b)      any amount received or receivable by any Lender, or the
                  effective return to any Lender, under or in connection with
                  any Transaction Document is reduced; or

         (c)      any Lender makes any payment or foregoes any interest, fees or
                  other return on or calculated by reference to any sum received
                  or receivable by it under or in connection with any
                  Transaction Document; or

         (d)      any Lender is unable to obtain the rate of return on capital
                  in respect of this agreement which might reasonably have been
                  expected at the date hereof but for its entering into and/or
                  performing its obligations under this agreement,

         then and in any such case:

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                                                                              33

         (e)      the relevant Lender shall promptly notify the Borrowers of the
                  occurrence of the relevant event;

         (f)      the Borrowers shall from time to time pay to the relevant
                  Lender on demand the amount which that Lender specifies to be
                  necessary to compensate it for that increased cost, reduction,
                  payment, foregone interest, fees or other return or reduced
                  rate of return on capital; and

         (g)      the Borrowers shall be entitled at any time after the receipt
                  of any such demand, so long as the circumstances giving rise
                  to that increased cost, reduction, payment, foregone interest,
                  fees or other return or reduced rate of return on capital
                  continue, on giving not less than 15 Business Days' notice to
                  the Facility Agent and the relevant Lender (which notice shall
                  be irrevocable), to elect that the relevant Lender's
                  participation in the Facilities be cancelled whereupon the
                  Facility Amounts under the Facilities shall be reduced by the
                  amount of that Lender's respective Commitments and the
                  Borrowers shall prepay the relevant Lender's participation in
                  each outstanding Advance immediately (or within any period
                  specified by the relevant Lender).

12.2     ILLEGALITY AND MARKET CHANGE: If by reason of:

         (a)      the introduction of or any change in any law or any change in
                  the interpretation or application thereof by any Government
                  Agency; or

         (b)      compliance by any Lender with any directive; or

         (c)      (in relation to any Advance denominated in NZ Dollars) any
                  other circumstances affecting the New Zealand domestic funding
                  market or the availability of finance to lending institutions
                  in New Zealand; or

         (d)      (in relation to any Advance denominated in US Dollars) any
                  other circumstances affecting the London Interbank Market or
                  the ability of lending institutions in New Zealand to borrow
                  money in the London Interbank Market in US Dollars,

         it becomes impracticable, impossible or illegal for any Lender, to make
         available or maintain or fund any Facility or any part of any Facility,
         or otherwise to give effect to this agreement:

         (e)      the relevant Lender may, by notice to the Borrowers, cancel
                  each affected Facility;

         (f)      if it becomes unlawful for the relevant Lender to maintain its
                  participation in any Advance to maturity the relevant Borrower
                  shall prepay that participation in that Advance immediately
                  or, if permitted by the law, directive or circumstances, on
                  the last day of the current Interest Period for that Advance
                  (or otherwise within any period specified by the relevant
                  Lender).

13.      PAYMENTS

13.1     CURRENCY OF ACCOUNT: The NZ Dollar is the currency of account and
         payment for each amount at any time payable by the Borrowers under this
         agreement, provided that the repayment of each Advance denominated in
         US Dollars and the payment of interest thereon shall be made in US
         Dollars.

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                                                                              34

13.2     PAYMENTS BY LENDERS: All payments to be made by a Lender to a Borrower
         under this agreement shall be made in the relevant currency for value
         in the place of payment on the due date to the account of the Facility
         Agent previously notified by the Facility Agent to each Lender,
         provided that where a Lender is due to receive any funds from a
         Borrower under this agreement on the same day and in the same currency
         as that on and in which it is to make a payment to that Borrower, it
         may (having given notice to the Facility Agent and the relevant
         Borrower no later than the second Business Day before the date of
         payment) apply the payment to be made by it in or towards satisfaction
         of the payment to be made to it.

13.3     DISTRIBUTION TO BORROWERS: The Facility Agent shall pay to the relevant
         Borrower before the close of business in the place of payment on the
         due date any amount so paid to the Facility Agent by the Lenders. Such
         payment shall be made in the same currency as received by the Facility
         Agent to the account in the place of payment specified in the relevant
         Drawdown Request.

13.4     PAYMENTS BY BORROWERS: All payments to be made by the Borrowers under
         this agreement shall be made for value in the place of payment on the
         due date to the accounts of the Lenders (or, where specified, the
         Facility Agent) previously notified by the Lenders or the Facility
         Agent to the Borrowers.

13.5     DISTRIBUTION TO LENDERS: Each Agent shall pay to each Lender, promptly
         upon receipt, each Lender's proportionate share of any amount paid to
         the relevant Agent for the account of the Lenders. Such payment shall
         be made in the same currency as received by the relevant Agent to the
         account specified by the relevant Lender.

13.6     REFUNDING OF PAYMENTS: Where an amount is to be paid to an Agent for
         the account of another person, the relevant Agent shall not be obliged
         to pay that amount to that other person until it has been able to
         establish that it has actually received that amount. If the relevant
         Agent does pay that amount and it proves to be the case that it had not
         actually received the amount paid out, then the person to whom that
         amount was paid shall immediately on request refund it to the relevant
         Agent, together with an amount sufficient to indemnify the relevant
         Agent against any funding or other cost, loss, expense or liability
         sustained or incurred by it as a result of paying out that amount
         before receiving it.

13.7     BUSINESS DAYS: If any amount becomes due for payment under this
         agreement on a day which is not a Business Day, it shall be paid on the
         next following Business Day and any interest shall be adjusted
         accordingly (unless customary market practice requires otherwise).

14.      TAXES

14.1     PAYMENTS TO BE FREE AND CLEAR: All amounts payable by each Borrower
         under this agreement shall be paid:

         (a)      free and clear of any restriction or condition;

         (b)      free and clear of and (except to the extent required by law)
                  without any deduction or withholding on account of any tax;
                  and

         (c)      without any deduction or withholding on account of any other
                  amount, whether by way of set-off, counterclaim or otherwise.

<PAGE>

                                                                              35

14.2     GROSS-UP: If:

         (a)      any Borrower is required by law to make any deduction or
                  withholding from any amount paid or payable by it under this
                  agreement; or

         (b)      any Lender is required by law to make any payment on account
                  of tax (other than tax on overall net income of the relevant
                  Lender) or otherwise on or in relation to any amount received
                  or receivable by it under this agreement,

         then:

         (c)      the relevant Borrower shall ensure that any such deduction or
                  withholding does not exceed the legal minimum and shall pay
                  the amount required to be deducted, withheld or paid to the
                  relevant authority before the date on which penalties attach
                  thereto;

         (d)      unless the requirement is a result of a Lender breaching its
                  undertaking contained in clause 14.4(a)(ii), the amount
                  payable by the relevant Borrower in respect of which that
                  deduction, withholding or payment is required to be made shall
                  be increased to the extent necessary to ensure that, after
                  that deduction, withholding or payment is made, the relevant
                  Lender 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
                  made;

         (e)      the relevant Borrower shall promptly deliver to the relevant
                  Lender the receipt issued by the applicable authority
                  evidencing that such deduction or withholding has been made;
                  and

         (f)      the Borrowers may at any time subsequently, so long as a
                  requirement to pay any additional amount under this clause
                  14.2 continues and subject to the relevant Lender having
                  received not less than 15 Business Days' notice of the
                  Borrowers' intention to do so (which notice shall be
                  irrevocable), elect that Lender's participation in the
                  Facilities be cancelled whereupon the Facility Amounts under
                  the Facilities shall be reduced by the amount of that Lender's
                  respective Commitments and the Borrowers shall prepay that
                  Lender's participation in each outstanding Advance, such
                  prepayment to be effected immediately (or within any period
                  specified by the relevant Lender).

14.3     TAX CREDIT: Any tax credit or refund received by any Lender in relation
         to an additional amount paid by a Borrower to that Lender under clause
         14.2 of this agreement shall, immediately on receipt thereof, be
         refunded to the relevant Borrower unless the relevant Lender determines
         that it would be prejudiced as a result of such payment. Nothing in
         this clause, however, shall interfere with any Lender's right to
         arrange its taxation affairs in whatever manner it deems fit and, in
         particular, no Lender shall, whether by virtue of this clause or
         otherwise, be under any obligation to claim relief from its
         corporation, profits or similar tax liability in respect of any
         deduction, withholding or payment referable to this agreement, in
         priority to any other reliefs, claims, credits or deductions available
         to it. The certificate of the relevant Lender as to any such tax credit
         or refund shall be conclusive and binding on the Borrowers.

<PAGE>

                                                                              36

14.4     RESIDENT WITHHOLDING TAX:

         (a)      Each Lender which is resident, or has a fixed establishment,
                  in New Zealand:

                  (i)      represents and warrants to the Borrowers that it
                           holds a valid certificate of exemption ("CERTIFICATE
                           OF EXEMPTION") issued pursuant to section NF 9 of the
                           Income Tax Act 1994 ("ACT");

                  (ii)     undertakes to maintain a certificate of exemption
                           during the continuance of the Facilities provided it
                           is lawfully able to do so.

         (b)      If, at any time, any such Lender ceases to be entitled
                  lawfully to hold a certificate of exemption and, as a result,
                  a Borrower is required to make an additional payment under
                  clause 14.2, the Borrowers and the relevant Lender shall
                  negotiate in good faith for a period not exceeding 30 days
                  with a view to agreeing upon an arrangement which will ensure,
                  so far as possible, that the Borrowers are not disadvantaged
                  and that the Lender is not advantaged by reason of the loss of
                  the certificate of exemption. If no such arrangement is agreed
                  within the 30 day period, clause 14.2 will continue to apply.

14.5     APPROVED ISSUER STATUS: Each Borrower shall:

         (a)      maintain its status as an "approved issuer" as defined in
                  section OB 1 of the Income Tax Act 1994 and ensure the
                  Facilities are registered with the Commissioner of Inland
                  Revenue under section 86H of the Stamp and Cheque Duties Act
                  1971; and

         (b)      make all payments of Approved Issuer Levy in respect of all
                  interest paid to the Lenders under this agreement in
                  accordance with section 86K of that Act.

15.      DEFAULT INTEREST

15.1     DEFAULT INTEREST PAYABLE: If any Borrower fails to pay any amount
         payable under this agreement when due (an "OVERDUE AMOUNT"), that
         Borrower shall pay interest ("DEFAULT INTEREST") on that overdue amount
         from its due date until it is paid in full (both before and after any
         judgment).

15.2     RATE OF DEFAULT INTEREST: Default interest shall be calculated and
         payable by reference to successive periods, each of which (other than
         the first, which shall begin on and include the due date) shall begin
         on the last day of the previous period. Each such period shall be of a
         duration selected by the Facility Agent or the relevant Lender from
         time to time and the rate of default interest applicable to a
         particular period shall be the rate per annum determined by the
         Facility Agent or the relevant Lender to be equal to the aggregate of
         2% per annum, the greatest Margin applicable at that time and the cost
         to the Facility Agent or that Lender of funding the overdue amount.

15.3     PAYMENT OF DEFAULT INTEREST: Default interest shall be payable on the
         last day of each period in respect of which it is calculated and on the
         date of payment of each overdue amount. Any default interest which is
         not paid when due shall be added to the overdue amount in respect of
         which it is payable and shall itself bear interest in accordance with
         this section 15.

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                                                                              37

16.      SET-OFF AND DEPOSITS

16.1     Without prejudice, and in addition, to any right of set-off,
         combination of accounts, lien or other right to which an Agent or any
         Lender is at any time entitled (whether by law, contract or otherwise),
         each Agent (on behalf of itself and each Lender) and each Lender may at
         any time after the occurrence of an Event of Default, without prior
         notice or demand, apply any amount owed or to become owing to any
         Borrower in or towards satisfaction of any amount payable by any
         Borrower under any Transaction Document and, for such purpose, is
         authorised to accelerate the date for payment of any amount owing by
         the relevant Agent or the relevant Lender to any Borrower,
         notwithstanding the terms upon which such amount is so owing. The
         relevant Agent or the relevant Lender may exercise such rights
         notwithstanding that such liabilities may not be expressed in the same
         currency, and the relevant Agent or the relevant Lender is authorised
         to effect any necessary conversion at the market rate of exchange then
         prevailing.

16.2     DEPOSITS WITH FACILITY AGENT: Any amounts which, under this agreement,
         are to be deposited at any time by a Borrower with the Facility Agent
         shall, unless otherwise provided, be held by the Facility Agent so
         that:

         (a)      the deposit and all rights of the relevant Borrower relating
                  to it shall be incapable of assignment by that Borrower, or of
                  being the subject of any security created by that Borrower
                  except pursuant to the Security; and

         (b)      the relevant Borrower shall have no entitlement to withdraw
                  any moneys from the deposit until all obligations of that
                  Borrower to the Lenders (present or future, direct or
                  contingent) have been satisfied and discharged, except:

                  (i)      as expressly permitted by the terms of this
                           agreement; or

                  (ii)     as permitted by the Facility Agent for the purpose of
                           meeting the obligations of that Borrower under this
                           agreement; or

                  (iii)    with the prior consent of the Facility Agent.

16.3     INTEREST: Each amount deposited with the Facility Agent as referred to
         in clause 16.2 shall (unless otherwise agreed or provided) bear
         interest calculated by reference to successive deposit periods of the
         duration agreed between the Facility Agent and the Borrowers (or, in
         the absence of agreement, nominated by the Facility Agent). The rate of
         interest applicable to a deposit period shall be as agreed by the
         Facility Agent and the Borrowers (or, in the absence of agreement, the
         rate certified by the Facility Agent as applicable to deposits of
         comparable size and maturity placed with it by customers of comparable
         standing). Provided that no Event of Default or Event of Review has
         occurred (in which case interest shall be added to the deposit) any
         such interest shall be paid to the relevant Borrower or as it may
         direct (subject to clause 16.1).

16.4     BROKEN DEPOSIT: If the Facility Agent applies any moneys deposited with
         it otherwise than on the last day of an applicable deposit period, it
         may deduct (for its own account) such amount as in its opinion will
         compensate it for breaking that deposit.

17.      SHARING

17.1     PRO RATA UTILISATION OF COMMITMENTS:

         (a)      If, on the date of any distribution under the Security, the
                  proportion that the amount of a Lender's participation in all
                  outstanding Advances bears to the aggregate amount of all
                  outstanding Advances is less than that Lender's Pro

<PAGE>

                                                                              38

                  Rata Share then, prior to any such distribution being made,
                  that Lender must pay to the Facility Agent such amount (which
                  the parties acknowledge will be an Advance) as will result in
                  the amount of that Lender's participation in all outstanding
                  Advances being equal to that Lender's Pro Rata Share.

         (b)      Any amount paid to the Facility Agent under clause 17.1(a)
                  shall be immediately distributed by the Facility Agent to the
                  Lenders rateably in accordance with their Pro Rata Shares and
                  shall be applied by each Lender in reduction of the amount of
                  all outstanding Advances owing to that Lender.

17.2     PROPORTIONATE SHARING: Whenever any Lender receives or recovers
         (whether by way of set-off, banker's lien or otherwise) all or part of
         any amount due from any Borrower under any Transaction Document
         otherwise than by way of a distribution by the Facility Agent under
         this agreement or by the Security Agent under the Security, then:

         (a)      that Lender shall promptly pay the amount received or
                  recovered to the Facility Agent; and

         (b)      that amount shall be deemed to have been a payment to the
                  Facility Agent for the account of all the Lenders and not a
                  payment to that Lender for its own account, and to that extent
                  the liability of the relevant Borrower to that Lender shall
                  not be reduced by that amount, other than to the extent of any
                  distribution received by that Lender under this agreement.

17.3     REPAYMENT: If all or part of the amount received or recovered by the
         relevant Lender is subsequently rescinded or shall otherwise be
         restored to any Borrower, the Lenders shall repay to the Facility Agent
         for the account of the relevant Lender the amount necessary to ensure
         that all the Lenders share rateably (in accordance with their
         Commitments) in the amount received or recovery retained by the
         relevant Lender and clause 17.2(b) shall apply only to the retained
         amount.

17.4     REFUSAL TO JOIN IN ACTION: If any Lender fails or refuses to join in
         any action with the other Lenders against the Borrowers, or does not
         pay its share of the costs of any such action, in each case having been
         given a reasonable opportunity and being legally entitled to do so, its
         failure shall be taken into account when determining its rateable
         sharing and that Lender shall not be entitled to share in any amount
         recovered as a result of any such action.

17.5     SECURITY SHARING: Notwithstanding:

         (a)      the respective dates of execution of any Transaction Document
                  or the order of registration of any Security; or

         (b)      the respective dates of advance of any moneys under any
                  Transaction Document; or

         (c)      the respective dates upon which any moneys may be or become
                  owing under any Transaction Document; or

         (d)      the repayment of any of the moneys secured by any Security; or

         (e)      anything contained in any Transaction Document; or

         (f)      any rule of law or equity or any other matter or thing
                  whatever,

<PAGE>

                                                                              39

         the Security shall be held by the Security Agent for the benefit of the
         Agents and the Lenders without any preference or priority amongst
         themselves as continuing security for the payment by the Borrowers of
         all moneys owing under the Transaction Documents (including interest
         thereon and all other moneys payable to the Agents or the Lenders or
         any of them in relation thereto).

18.      RELATIONSHIP OF LENDERS TO AGENTS

18.1     AUTHORITY:

         (a)      Each Lender irrevocably appoints and authorises the Facility
                  Agent to act as its administrative agent and the Security
                  Agent to act as its security representative under the
                  Transaction Documents with the powers expressly given to each
                  of them under the Transaction Documents together with any
                  other powers which are reasonably incidental to those powers.

         (b)      Without limiting the generality of clause 18.1(a) each of the
                  Agents shall, subject to the Transaction Documents, act as
                  agent for the Lenders in:

                  (i)      receiving payments from and making payments to the
                           Borrowers;

                  (ii)     making demand or claim for any moneys payable under
                           any Transaction Document;

                  (iii)    enforcing or attempting to enforce the Security or
                           any part of it;

                  (iv)     exercising the rights, powers and remedies of the
                           Lenders against the Obligors under the Transaction
                           Documents; and

                  (v)      issuing and receiving notices under the Transaction
                           Documents on behalf of the Lenders.

         (c)      Any action taken by an Agent in accordance with this clause
                  18.1 shall bind all the Lenders.

         (d)      The Agents shall have no duties or responsibilities except
                  those expressly set out in the Transaction Documents.

18.2     INSTRUCTIONS; EXTENT OF DISCRETION:

         (a)      In the exercise of any of its rights, powers and discretions
                  under the Transaction Documents, each of the Agents shall act
                  in accordance with the instructions (if any) of the Majority
                  Lenders or (where specified) of all the Lenders. The Agents
                  shall not be obliged to seek instructions except where
                  expressly required by any Transaction Document.

         (b)      In the absence of any such instructions, each of the Agents
                  may act as it thinks fit in the best interests of the Lenders
                  as a whole or may, notwithstanding clause 18.1(b), refrain
                  from acting until receipt of instructions.

         (c)      Except where this agreement otherwise expressly provides,
                  neither of the Agents shall be obliged to consult with the
                  Lenders before giving any consent, approval or agreement or
                  making any determination under the Transaction Documents
                  unless it is practicable to do so and shall not, in the
                  opinion of the relevant Agent, prejudice the interests of the
                  Lenders as a whole.

<PAGE>

                                                                              40

         (d)      Each of the Agents may refrain from doing anything which would
                  or might in its opinion be contrary to any law or official
                  directive, or render it liable to any person.

         (e)      Notwithstanding any other provision in this clause 18.2,
                  neither of the Agents shall be obliged to take any action
                  under any Transaction Document until it is first secured to
                  its satisfaction in accordance with clause 18.11(c).

18.3     NO OBLIGATION TO INVESTIGATE:

         (a)      No Borrower shall be concerned to enquire as to whether any
                  instructions have been given to an Agent as required by this
                  agreement or as to the terms of any such instructions.

         (b)      As between the Borrowers on the one hand and each of the
                  Agents and the Lenders on the other hand, all actions taken by
                  an Agent under the Transaction Documents shall be deemed to be
                  authorised.

18.4     AGENT NOT A TRUSTEE: Neither of the Agents shall be deemed to be the
         trustee for the benefit of any Lender (except, in the case of the
         Security Agent, to the minimum extent, if any, required by law to
         ensure that the Security secures the Lenders) or the Borrowers or to
         have any fiduciary duty other than as expressly provided in any
         Transaction Document. Neither of the Agents shall in any respect be the
         agent of any Borrower by virtue of any Transaction Document.

18.5     EXONERATION: Neither of the Agents nor any of its directors, officers,
         employees, agents, attorneys, subsidiaries or successors shall be
         responsible to any Lender or any Borrower for:

         (a)      any statement, representation or warranty provided to it in
                  any Transaction Document, or in any document or agreement
                  referred to or provided for in or received under any
                  Transaction Document; or

         (b)      the value, validity, effectiveness, genuineness,
                  enforceability or sufficiency of any Transaction Document or
                  any other such document or agreement; or

         (c)      any failure by any Borrower or any Lender to perform its
                  obligations; or

         (d)      any action taken or omitted to be taken by it under any
                  Transaction Document except in the case of its own wilful
                  misconduct, gross negligence or fraud; or

         (e)      any action taken or omitted to be taken by it under any
                  Transaction Document acting on instructions from all the
                  Lenders or the Majority Lenders.

18.6     DELEGATION: Each of the Agents may delegate to any person any of the
         rights, powers and discretions vested in it by the Transaction
         Documents which cannot conveniently be exercised by it or through its
         employees, and may appoint attorneys, upon such terms and conditions as
         it thinks fit.

18.7     RELIANCE ON DOCUMENTS AND EXPERTS: Each of the Agents may rely on:

         (a)      any communication or document (including any facsimile
                  transmission, telegram or telex) reasonably believed by it to
                  be genuine and correct; and

         (b)      advice and statements of lawyers, accountants and other
                  experts selected by it.

<PAGE>

                                                                              41

18.8     NOTICE OF TRANSFER: Each of the Agents may treat each Lender as the
         holder of the benefit of that Lender's rights under the Transaction
         Documents unless and until the relevant Agent has received a transfer
         certificate substantially in the form of schedule 7 or a notice of
         assignment of that Lender's rights in a form satisfactory to the
         relevant Agent.

18.9     KNOWLEDGE OF DEFAULT:

         (a)      Neither of the Agents shall be required to keep itself
                  informed as to the observance or performance by the Borrowers
                  of any of their obligations under any Transaction Document or
                  any other document or agreement, or to inspect the assets or
                  records of any Borrower or any of that Borrower's
                  Subsidiaries, or to investigate whether or not any Event of
                  Default or an Event of Review has occurred or might occur.

         (b)      Each of the Agents may assume that the Borrowers are observing
                  and performing their obligations, and shall be deemed not to
                  have knowledge of the occurrence of any Event of Default or an
                  Event of Review or similar event (whatever called) under any
                  Transaction Document unless they have received notice from a
                  Lender or a Borrower stating that an Event of Default or an
                  Event of Review or similar event has occurred and describing
                  it, or the officers of the relevant Agent having
                  responsibility at that time for the administration of the
                  Facilities actually become aware that an Event of Default or
                  an Event of Review or similar event has occurred (in which
                  event the relevant Agent shall, subject to clause 18.13(c),
                  promptly notify the Lenders).

18.10    AGENT AS LENDER AND BANKER:

         (a)      Each of the Agents, if a Lender, shall have the same rights
                  and powers under the Transaction Documents as the other
                  Lenders and may exercise those rights and powers as if it were
                  not acting as an Agent.

         (b)      Each of the Agents may (without having to account to any
                  Lender) engage in any kind of business with any Borrower and
                  its Subsidiaries as if it were not an Agent and may accept
                  fees or other consideration for services without having to
                  account to the Lenders.

18.11    INDEMNITY TO EACH OF THE AGENTS:

         (a)      The Lenders indemnify each of the Agents (to the extent not
                  reimbursed by the Borrowers) rateably in accordance with their
                  respective Commitments against all costs, losses, expenses and
                  liabilities of any kind which may be sustained or incurred by
                  or asserted against the relevant Agent in its capacity as such
                  relating to or arising out of the Transaction Documents other
                  than the normal costs incurred by the Agent in the ordinary
                  course of administration of the Facilities. Each Lender shall,
                  upon demand, pay to the relevant Agent its proportionate share
                  of all amounts payable under this indemnity.

         (b)      No Lender shall be liable under this clause 18.11 for any of
                  the foregoing to the extent that they arise from the relevant
                  Agent's wilful misconduct, gross negligence or fraud.

         (c)      If the Majority Lenders request an Agent to take any
                  enforcement action the Lenders shall be obliged to pay to the
                  relevant Agent, within three Business Days of request, each
                  amount reasonably estimated by the relevant Agent and its
                  legal advisers as necessary to meet the expenses of legal
                  proceedings or otherwise in connection with such enforcement.
                  Each Lender shall be obliged

<PAGE>

                                                                              42

                  to pay its respective proportion of those amounts. If the
                  estimated amount exceeds the amount actually required, the
                  relevant Agent shall repay each Lender's proportion of the
                  excess.

18.12    INDEPENDENT INVESTIGATION: Each Lender agrees that it has made and
         shall continue to make, independently and without reliance on either of
         the Agents or any other Lender and based on such documents and
         agreements and information as it considers appropriate:

         (a)      its own investigation into the financial condition and affairs
                  of each Borrower and its Subsidiaries; and

         (b)      its own analyses and decisions as to whether or not to take
                  action under any Transaction Document.

18.13    INFORMATION:

         (a)      Each of the Agents shall provide to the Lenders as soon as
                  practicable copies of all notices, reports and other documents
                  provided to it under the Transaction Documents and copies of
                  all documents comprising the conditions precedent to this
                  agreement.

         (b)      Neither of the Agents shall have any duty or responsibility
                  (but is authorised by each Borrower) to provide any Lender
                  with any information concerning the affairs, financial
                  condition or business of that Borrower or its Subsidiaries
                  which may otherwise come into the possession of the relevant
                  Agent.

         (c)      Nothing in any Transaction Document shall oblige an Agent to
                  disclose any information relating to any Borrower if that
                  disclosure would or might in the opinion of the relevant Agent
                  on the basis of the advice of its legal advisers constitute a
                  breach of any law or duty of secrecy or confidence.

18.14    REPLACEMENT OF AN AGENT:

         (a)      Subject to the appointment and acceptance of a successor Agent
                  as provided in this clause 18.14:

                  (i)      each Agent may resign at any time by giving not less
                           than 30 days' notice to the Lenders, the other Agent
                           and the Borrowers; or

                  (ii)     the Majority Lenders may, by giving not less than 30
                           days' notice to the Borrowers and the Agents, remove
                           an Agent from office.

         (b)      Upon any notice of resignation or removal being given the
                  Majority Lenders shall have the right to appoint a successor
                  Agent approved by the Borrowers provided that:

                  (i)      the Borrowers may not unreasonably withhold their
                           consent; and

                  (ii)     no consent shall be required where the proposed
                           successor Agent is a Lender or an associated company
                           of a Lender.

         (c)      If no successor Agent has been appointed by the Lenders or has
                  accepted an appointment within 30 days after any such notice,
                  the retiring Agent may on behalf of the Lenders appoint a
                  successor Agent.

<PAGE>

                                                                              43

         (d)      Upon the acceptance of any appointment under this clause 18.14
                  by a successor Agent, the successor Agent shall succeed to and
                  become vested with all the rights, powers and obligations of
                  the retiring Agent under the Transaction Documents including,
                  in the case of the Security Agent, as security representative)
                  and as from that time the retiring Agent shall be discharged
                  from its rights, powers and obligations.

         (e)      After any retiring Agent's resignation or removal, the
                  provisions of this clause 18.4 shall continue in effect in
                  respect of any actions taken or omitted to be taken by it
                  while it was acting as an Agent.

18.15    AMENDMENT TO TRANSACTION DOCUMENTS: Each Lender authorises the Security
         Agent, in respect of any Security, and the Facility Agent, in respect
         of any other Transaction Document, to agree with the other parties to
         the relevant Security or Transaction Document to any amendment to that
         Security or, as the case may be, Transaction Document if:

         (a)      that Lender has notified the Agents in writing of its
                  agreement to the amendment; or

         (b)      the amendment will not increase the Commitments or other
                  obligations of the Lenders, vary the Security, change the
                  times or amounts of payment of any moneys payable under any
                  Transaction Document, or amend this clause 18.15 or any
                  provision under which the agreement or instructions of all
                  Lenders or the Majority Lenders are required and:

                  (i)      the relevant Agent is satisfied that the amendment is
                           made to correct a manifest error or is of a minor,
                           formal or technical nature only; or

                  (ii)     the Majority Lenders have, at the request of the
                           relevant Agent, notified the relevant Agent of their
                           agreement to the amendment.

         Each Lender shall be bound by any such amendment so agreed to by the
         relevant Agent as if it were party to the relevant amendment agreement.

18.16    WAIVERS: With the exception of any agreement requiring (or
         incorporating a requirement for) either the consent of, or the Facility
         Agent to act on the instructions of, all Lenders, which may only be
         waived by the Facility Agent acting on instructions of all Lenders, any
         other provision of this agreement may be waived by the Facility Agent
         acting on the instructions of the Majority Lenders.

19.      INDEMNITIES

19.1     MISCELLANEOUS INDEMNITIES: Each Borrower indemnifies each Agent and
         each Lender against any costs, losses, expenses or liabilities
         sustained or incurred by the relevant Agent or the relevant Lender as a
         result of:

         (a)      all or any part of any Advance not being made for any reason,
                  including by reason of non-fulfilment of any of the conditions
                  precedent in clause 4 or any other condition precedent to an
                  Advance but excluding by reason of the default of the Facility
                  Agent or a Lender; or

         (b)      any amount payable by that Borrower under this agreement not
                  being paid when due (but, so far as appropriate, credit will
                  be given for any interest received by the Facility Agent or
                  the relevant Lender under clause 15); or

<PAGE>

                                                                              44

         (c)      the occurrence or continuance of any other Event of Default or
                  an Event of Review; or

         (d)      the receipt or recovery by an Agent or any Lender of all or
                  any part of any amount payable under this agreement (by
                  prepayment or acceleration or otherwise) otherwise than on the
                  due date relating to such amount (but, so far as appropriate,
                  credit will be given for any amount paid under clause
                  7.4(a)(ii)); or

         (e)      any environmental liability, or non-compliance by that
                  Borrower or any of its Subsidiaries or any other Obligor with
                  any requirement or obligation of any nature in respect of any
                  activity or undertaking carried out or performed on or from
                  any land owned or occupied by any of those persons,

         including but not limited to any costs, losses (including loss of
         margin), expenses or liabilities on account of funds borrowed,
         contracted for or utilised to fund any amount payable hereunder and any
         foreign exchange transactions entered into in anticipation of an
         Advance being made.

19.2     CURRENCY INDEMNITY:

         (a)      If any Outstanding Money is received by an Agent or by any
                  Lender in a currency ("FIRST CURRENCY") other than the
                  currency ("SECOND CURRENCY") in which it is payable (whether
                  as a result of obtaining or enforcing an order or judgment,
                  Liquidation of any person or otherwise), the amount received
                  shall only satisfy the relevant Borrower's obligation to pay
                  the Outstanding Money to the extent of the amount of the
                  second currency which the relevant Agent or that Lender is
                  able, in accordance with its usual practice, to purchase with
                  the amount received in the first currency on the date of that
                  receipt (or, if it is not practicable to make that purchase on
                  that date, on the first day upon which it is practicable to do
                  so).

         (b)      Each Borrower indemnifies each Agent and the Lenders against:

                  (i)      any loss sustained by the relevant Agent or by the
                           relevant Lender as a result of the amount purchased
                           by it in the second currency pursuant to clause
                           19.2(a) being less than the amount due; and

                  (ii)     all costs and expenses incurred by the relevant Agent
                           or the relevant Lender in purchasing the second
                           currency.

19.3     PAYMENT: Each Borrower shall pay to the relevant Agent or the relevant
         Lender, upon demand, in the currency stipulated by the relevant Agent
         or that Lender, all amounts payable pursuant to the indemnities in
         clauses 19.1 and 19.2(b).

20.      ASSIGNMENT

20.1     AGREEMENT BINDING: This agreement is binding on, and is for the benefit
         of, the parties and their respective successors, permitted assigns and
         transferees.

20.2     BORROWERS MAY NOT ASSIGN: No Borrower may assign or transfer any of its
         rights or obligations under this agreement or any other Transaction
         Document.

20.3     LENDERS MAY ASSIGN AND TRANSFER: Each Lender may assign or transfer all
         or part of its rights or obligations, under the Transaction Documents
         or any of them to any one or more banks or financial institutions (each
         a "TRANSFEREE") subject to:

<PAGE>

                                                                              45

         (a)      the prior written consent of the Company (which consent will
                  not be unreasonably withheld and shall not be required if:

                  (i)      the proposed Transferee is associated with or
                           affiliated to the relevant Lender; or

                  (ii)     an Event of Default or an Event of Review has
                           occurred and remains unremedied); and

         (b)      in the case of a transfer of obligations, the prior consent of
                  the Facility Agent acting on the instructions of the Majority
                  Lenders (for which purpose the Lender wishing to transfer, and
                  relevant Commitment, shall be excluded in determining the
                  Majority Lenders), which consents:

                  (i)      may not be unreasonably withheld;

                  (ii)     shall not be required in relation to an assignment to
                           an existing Lender;

                  (iii)    shall not be required in relation to an assignment by
                           a Lender to its wholly owned subsidiary or its
                           parent; and

         (c)      in the case of a transfer of obligations, the transfer being
                  effected in the manner specified in clause 20.4;

         (d)      any necessary prior authorisation being obtained;

         (e)      no assignment or transfer taking effect during the three
                  Business Days prior to the commencement of any Interest Period
                  applicable to the relevant Commitment; and

         (f)      the provisions of clause 20.7.

20.4     TRANSFER CERTIFICATE:

         (a)      If a Lender wishes to transfer all or part of its obligations
                  under the Transaction Documents, it and the transferee shall
                  execute and deliver to the Facility Agent 4 counterparts of a
                  transfer certificate substantially in the form set out in
                  schedule 7 and shall pay to the Facility Agent the
                  registration fee referred to therein.

         (b)      On receipt of a transfer certificate the Facility Agent shall
                  notify the Borrowers and the other Lenders and, subject to the
                  prior receipt by it of any consent required under clause
                  20.3(a), the Facility Agent shall:

                  (i)      countersign the counterparts of the transfer
                           certificate on behalf of all other parties to this
                           agreement;

                  (ii)     enter the transfer in a register kept by it (which
                           shall be conclusive) and notify the other parties to
                           this agreement of the transfer and the amended
                           relevant Commitments, if applicable; and

                  (iii)    retain one counterpart and deliver the others to each
                           Borrower, the transferring Lender and the transferee.

         (c)      On a transfer certificate being countersigned by the Facility
                  Agent:

<PAGE>

                                                                              46

                  (i)      the transferring Lender shall be relieved of its
                           obligations arising after the date of the transfer to
                           the extent specified in the transfer certificate;

                  (ii)     the Transferee shall be bound by the Transaction
                           Documents as stated in the transfer certificate as if
                           it were a party and named as a Lender; and

                  (iii)    the transferring Lender's relevant Commitment shall
                           be reduced or eliminated (as the case may be) and the
                           Transferee shall assume a Commitment under the
                           relevant Facility equal to the reduction or
                           elimination.

         (d)      Each other party to this agreement irrevocably authorises the
                  Facility Agent to sign each transfer certificate on its behalf
                  provided that the provisions of clauses 20.3 and 20.4 have
                  been complied with.

20.5     TRANSFEREE TREATED AS LENDER: Any Transferee referred to in clause 20.3
         shall be treated as a Lender for all purposes of the Transaction
         Documents, and will be bound thereby to the same extent as if it were
         an original party in respect of the rights and obligations assigned and
         transferred to it.

20.6     LENDING BRANCH: Any Lender may change its lending branch from time to
         time in relation to all or any part of a Facility Amount or a Facility
         on giving prior written notice to the Company.

20.7     DISCLOSURE: Any Lender may disclose to a potential Transferee or any
         other person with whom it wishes to enter into contractual relations in
         connection with the Transaction Documents all information held by it
         about the Borrowers and their Subsidiaries with the consent of the
         Company which consent may not be unreasonably withheld or delayed and
         shall not be required where the disclosure is in connection with any
         assignment or transfer where the Company's consent is not necessary
         under clause 20.3. Any such disclosure requiring consent may be subject
         to any confidentiality requirements reasonably requested by the
         Company.

20.8     SECURITISATION: In addition to their rights under clause 20.3, each
         Lender may, without the consent of the Borrower, assign, transfer,
         sub-participate or otherwise deal with all or any part of its rights
         and benefits under the Transaction Documents to a trustee, company, or
         other entity which in each case is established for the purpose of
         securitisation.

20.9     NO INCREASED COSTS: Notwithstanding anything to the contrary in any
         Transaction Document, if (other than at the request of any Borrower)
         any Lender (or any assignee or transferee from the Lender or any
         subsequent assignee or transferee) assigns or transfers any of its
         rights or obligations under the Transaction Documents or any of them
         the Borrowers shall not be under any greater monetary obligation under
         the Transaction Documents, as a direct consequence of that assignment
         or transfer, than they would have been but for that assignment or
         transfer.

21.      NOTICES

21.1     WRITING: Each notice or other communication to be given or made by a
         party under this agreement shall:

         (a)      WRITING: be given or made in writing by facsimile or letter
                  and be signed by the sender or an authorised officer of the
                  sender;

<PAGE>

                                                                              47

         (b)      ADDRESS: be given or made to that party at the address or
                  facsimile number, and marked for the attention of the person
                  (if any), from time to time designated by that party to the
                  other for the purposes of this agreement;

         (c)      DEEMED DELIVERY: not be effective until received by that
                  party, and any such notice or communication shall be deemed to
                  be received by that party:

                  (i)      (if given or made by letter) when left at the address
                           of that party or five Business Days after being put
                           in the post (by airmail if to another country),
                           postage prepaid, and addressed to that party at that
                           address; or

                  (ii)     (if given or made by facsimile) upon production of a
                           transmission report by the machine from which the
                           facsimile was sent which indicates that the facsimile
                           was sent in its entirety to the facsimile number of
                           the recipient,

                  provided that any notice or communication received or deemed
                  received after 5 pm on a working day in the place to which it
                  is sent, or on a day which is not a Business Day in that
                  place, will be deemed not to have been received until the next
                  Business Day in that place.

21.2     INITIAL ADDRESS AND NUMBERS: The initial address, facsimile number and
         person (if any) so designated by each party, are set out under the name
         of that party at the end of this agreement.

22.      FEES

22.1       ARRANGEMENT FEES: The Company shall pay to the Lead Arranger the
           arrangement fees specified in the letter dated on or about the date
           of this agreement from the Lead Arranger to the Company.

22.2     COMMITMENT FEES:

         (a)      The Borrowers shall pay to the Facility Agent for the account
                  of the Lenders a non-refundable commitment fee on each
                  Facility:

                  (i)      for the period prior to the date of the first
                           compliance certificate delivered to the Lenders
                           pursuant to clause 10.1(a)(iv), at the percentage
                           rate per annum set out below applicable to the
                           Facility on which the fee is payable:

<TABLE>
<CAPTION>
         COMMITMENT FEE % PER ANNUM
-------------------------------------------
THREE YEAR FACILITY      FIVE YEAR FACILITY
-------------------------------------------
<S>                      <C>
       0.60                     0.65
-------------------------------------------
</TABLE>

                  (ii)     thereafter, at the percentage rate per annum
                           applicable to the relevant Facility set out below
                           opposite the Gearing Ratio which was reported by the
                           Company in the most recent compliance certificate
                           delivered to the Lenders pursuant to clause
                           10.1(a)(iv) prior to the date on which the fee is
                           due:

<PAGE>

                                                                              48

<TABLE>
<CAPTION>
                                                                 COMMITMENT FEE % PER
                                                                         ANNUM
                                                             ----------------------------
                                                             THREE YEAR         FIVE YEAR
                      GEARING RATIO                           FACILITY          FACILITY
-----------------------------------------------------------------------------------------
<S>                                                          <C>                <C>
Greater than 3.25 times                                         0.60              0.65
-----------------------------------------------------------------------------------------
Less than or equal to 3.25 times but greater than 2.50          0.50              0.55
times
-----------------------------------------------------------------------------------------
Less than or equal to 2.50 times but greater than 1.75          0.40              0.45
times
-----------------------------------------------------------------------------------------
Less than or equal to 1.75 times                                0.40              0.40
-----------------------------------------------------------------------------------------
</TABLE>

         (b)      The commitment fee shall, in relation to each Facility, be
                  payable on the relevant Facility Amount from day to day during
                  the period beginning on the date of this agreement and ending
                  on the later of the Expiry Date of the relevant Facility and
                  the day on which the last of the Outstanding Money under the
                  relevant Facility is received by the Lenders.

         (c)      The commitment fee shall, in relation to each Facility, be
                  payable quarterly in advance commencing on the Commencement
                  Date, and thereafter on each Test Date, and shall be divided
                  amongst the Lenders in proportion to their Commitments under
                  the relevant Facility.

22.3     ESTABLISHMENT FEE: The Borrowers shall pay to the Facility Agent for
         the account of the Lenders, a non-refundable establishment fee in the
         amount specified in the letter dated on or about the date of this
         agreement from the Lead Arranger to the Company.

22.4     AGENCY FEES: The Borrowers shall pay to each of the Agents for its own
         account the fees specified in the letters dated on or about the date of
         this agreement from each of the Agents to the Company.

23.      COSTS AND EXPENSES

23.1     COSTS AND EXPENSES: The Borrowers shall pay to the Facility Agent or,
         as the case may be, the Security Agent upon demand an amount equal to
         all costs, losses, expenses and other liabilities on a full indemnity
         basis (including legal expenses on a full indemnity basis and goods and
         services and similar taxes thereon) incurred or sustained by the
         Facility Agent, the Security Agent or the Lenders in connection with:

         (a)      the negotiation, preparation, signing, delivery and
                  administration of the Transaction Documents and the
                  syndication of the Facilities;

         (b)      the exercise, enforcement or preservation, or the attempted
                  exercise, enforcement or preservation, of any right under any
                  Transaction Document, or in suing for or recovering any sum
                  due under any Transaction Document; and

         (c)      the granting of any waiver or consent under, or the giving of
                  any variation or release of any Transaction Document.

23.2     STAMP DUTY AND TAXES: The Borrowers shall pay all stamp, documentary,
         transaction, registration and other like duties and taxes (including
         fines, interest and penalties), if any, which may be payable or
         determined to be payable in connection with the signing, delivery,
         registration, performance, exercise of any right under, or enforcement
         or variation of, any Transaction Document, and shall indemnify each
         Agent and each

<PAGE>

                                                                              49

         Lender against all liabilities in relation to, or resulting from, any
         delay or omission to pay any such duties or taxes.

23.3     GST INCLUSIVE: If any supply by an Agent or by any Lender to any
         Borrower shall, at the time of supply, be subject to goods and services
         tax, that Borrower shall pay to the relevant Agent or the relevant
         Lender an amount equal to the applicable goods and services tax in
         addition to the consideration for that supply.

24.      EVIDENCE OF DEBT

24.1     LENDERS TO MAINTAIN ACCOUNTS: Each Lender shall maintain, in accordance
         with its usual practice, accounts evidencing the amounts from time to
         time lent by and/or owing to each Agent and each Lender under this
         agreement.

24.2     ACCOUNTS PRIMA FACIE EVIDENCE: In any legal action or proceedings
         arising out of or in connection with any Transaction Document, the
         entries made in the accounts maintained pursuant to clause 24.1 shall
         be prima facie evidence of the existence and amounts of the obligations
         of the Borrowers recorded therein.

24.3     CERTIFICATE OF AGENT/LENDER: A certificate of any officer of an Agent
         or of any Lender as to any amount or fact which might reasonably be
         expected to be within the knowledge of the relevant Agent or that
         Lender shall be prima facie evidence of such amount or fact.

24.4     DETERMINATION OF INTEREST RATES: The determination by the Facility
         Agent of the Specified Rate, from time to time for the purposes of this
         agreement shall, in the absence of manifest error, be conclusive and
         binding upon the Borrowers.

25.      MISCELLANEOUS

25.1     PARTIAL INVALIDITY: If at any time any provision of any Transaction
         Document is or becomes illegal, invalid or unenforceable in any respect
         under the law of any relevant jurisdiction, that illegality, invalidity
         or unenforceability shall not affect the enforceability of the
         provisions, or (as the case may be) the remaining provisions, of this
         agreement, nor shall the legality, validity or enforceability of any of
         those provisions under the law of any other jurisdiction be in any way
         affected or impaired thereby.

25.2     NO IMPLIED WAIVERS: Time shall be of the essence in respect of
         performance by each Borrower of its obligations under any Transaction
         Document but no failure on the part of an Agent or any Lender to
         exercise, and no delay on any of their parts in exercising, any right,
         power or remedy under any Transaction Document shall operate as a
         waiver thereof, nor shall any single or partial exercise of any right,
         power or remedy preclude any other or further exercise thereof or the
         exercise of any other right, power or remedy.

25.3     REMEDIES CUMULATIVE: The rights, powers and remedies provided in this
         agreement are in addition to, and not exclusive of, any rights, powers
         or remedies provided by law.

25.4     OBLIGATIONS INDEPENDENT: Each of the obligations of the Borrowers under
         clauses 14.2, 19.1 and 19.2 and section 23 shall constitute a
         continuing obligation, separate and independent from their other
         obligations under any Transaction Document and shall survive payment of
         the Outstanding Money and release of the security.

25.5     ENFORCEMENT: It shall not be necessary for an Agent or for any Lender
         to incur any expense or make any payment before enforcing any of its
         rights in respect of any obligation of any Borrower referred to in
         clause 25.4.

<PAGE>

                                                                              50

25.6     PAYMENTS: The obligation of each Borrower to pay any money under this
         agreement shall only be discharged when the relevant Agent or the
         relevant Lender is satisfied that the relevant Borrower or any other
         person or persons making any payment of that money was solvent at the
         time of making that payment or after the elapse of the period during
         which any such payment may become or be deemed to be avoided or
         voidable.

25.7     CONSENTS: The Agents or the Lenders may, unless specifically provided
         otherwise in this agreement, give or withhold any approval or consent
         in its or their absolute discretion, and either conditionally or
         unconditionally.

26.      GOVERNING LAW

26.1     This agreement shall be governed by, and construed in accordance with,
         the laws of New Zealand, and the parties hereby submit to the
         jurisdiction of the courts of New Zealand.

27.      COUNTERPARTS

27.1     This agreement may be signed in any number of counterparts, all of
         which will together constitute one and the same instrument, and any of
         the parties may execute this agreement by signing any such counterpart.
<PAGE>

                                                                              51

SIGNATURES

BORROWER

FLETCHER CHALLENGE FORESTS
LIMITED by:

_____________________________________      _____________________________________
Signature of director                       Signature of director

_____________________________________      _____________________________________
Name of director                           Name of director

________________________________________________________________________________
ADDRESS FOR NOTICES

8 Rockridge Avenue
Penrose
Auckland
Facsimile No: 64 9 571 9970
Telephone No: 64 9 571 9724
Attention: Chief Financial Officer

FACILITY AGENT

SIGNED by BANK OF NEW ZEALAND by
its attorneys in the presence of:
                                           _____________________________________
                                           Signature of Attorney

_____________________________________      _____________________________________
Signature of witness                       Name of Attorney

_____________________________________      _____________________________________
Name of witness                            Signature of Attorney

_____________________________________      _____________________________________
Occupation                                 Name of Attorney

_____________________________________
City/town of residence

________________________________________________________________________________
ADDRESS FOR NOTICES
Level 13, BNZ Tower
125 Queen Street
Auckland
Facsimile No: 64 9 375 1285
Telephone No: 64 9 375 1230
Attention: Manager - Facility Management Unit - Corporate and Institutional
Banking

<PAGE>

                                                                              52

SECURITY AGENT

SIGNED by BANK OF NEW ZEALAND by
its attorneys in the presence of:
                                           _____________________________________
                                           Signature of Attorney

_____________________________________      _____________________________________
Signature of witness                       Name of Attorney

_____________________________________      _____________________________________
Name of witness                            Signature of Attorney

_____________________________________      _____________________________________
Occupation                                 Name of Attorney

_____________________________________
City/town of residence

________________________________________________________________________________
ADDRESS FOR NOTICES

Level 13, BNZ Tower
125 Queen Street
Auckland
Facsimile No: 64 9 375 1285
Telephone No: 64 9 375 1230
Attention:  Manager - Facility Management Unit - Corporate and Institutional
Banking

LENDERS

SIGNED by BANK OF NEW ZEALAND by
its attorneys in the presence of:
                                           _____________________________________
                                           Signature Attorney

_____________________________________      _____________________________________
Signature of witness                       Name of Attorney

_____________________________________      _____________________________________
Name of witness                            Signature of Attorney

_____________________________________      _____________________________________
Occupation                                 Name of Attorney

_____________________________________
City/town of residence

________________________________________________________________________________
ADDRESS FOR NOTICES

Level 13, BNZ Tower
125 Queen Street
Auckland
Facsimile No: 64 9 375 1200
Telephone No: 64 9 375 1259
Attention: Doug Dallimore

<PAGE>

                                                                              53

SIGNED by ANZ BANKING GROUP (NEW
ZEALAND) LIMITED by its attorney in the
presence of:
                                           _____________________________________
                                           Signature of Attorney

_____________________________________      _____________________________________
Signature of witness                       Name of Attorney

_____________________________________
Name of witness

_____________________________________
Occupation

_____________________________________
City/town of residence

________________________________________________________________________________
ADDRESS FOR NOTICES
Level 28, ANZ Centre
23-29 Albert Street
Auckland
Facsimile No: 64 9 375 3043
Telephone No: 64 9 374 4920
Attention: Grant Campbell

<PAGE>

                                                                              54

SIGNED by COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.
acting through its RABOBANK, NEW
ZEALAND BRANCH by its attorneys in the
presence of:
                                           _____________________________________
                                           Signature of Attorney

_____________________________________      _____________________________________
Signature of witness                       Name of Attorney

_____________________________________      _____________________________________
Name of witness                            Signature of Attorney

_____________________________________      _____________________________________
Occupation                                 Name of Attorney

_____________________________________
City/town of residence

________________________________________________________________________________
ADDRESS FOR NOTICES
Rabobank Australia Limited
Level 6, 115 Pitt Street
Sydney, NSW 2000
Australia

Facsimile No: 61 2 9233 1191
Telephone No: 61 2 9234 4307
Attention: Rod Butler, Corporate Loans Administration

WITH A COPY TO:
Rabobank New Zealand Branch
Level 8, Tower 2,
55-65 Shortland Street
Auckland

Facsimile No: 64 9 375 3710
Telephone No: 64 9 375 3701
Attention: Murray Crisford, Senior Manager, Corporate

<PAGE>

                                                                              55

SIGNED by THE NATIONAL BANK OF
NEW ZEALAND LIMITED by its attorney in
the presence of:
                                           _____________________________________
                                           Signature of Attorney

_____________________________________      _____________________________________
Signature of witness                       Name of Attorney

_____________________________________
Name of witness

_____________________________________
Occupation

_____________________________________
City/town of residence

________________________________________________________________________________
ADDRESS FOR NOTICES
Level 5, 280 Queen Street
PO Box 788
Auckland
Facsimile No: 64 9 356 9086
Telephone No: 64 9 356 9084
Attention: Relationship Manager, Corporate
and Commercial Banking

<PAGE>

                                                                              56

                                   SCHEDULE 1
                                     LENDERS

<TABLE>
<CAPTION>
                                                                   COMMITMENTS
                                                                      (NZ$)
                                     ----------------------------------------------------------------------
            LENDER                   THREE YEAR FACILITY           FIVE YEAR FACILITY              TOTAL
-----------------------------------------------------------------------------------------------------------
<S>                                  <C>                           <C>                          <C>
BANK OF NEW ZEALAND                       50,000,000                   50,000,000               100,000,000
-----------------------------------------------------------------------------------------------------------
ANZ BANKING GROUP                         45,000,000                   45,000,000                90,000,000
(NEW ZEALAND) LIMITED
-----------------------------------------------------------------------------------------------------------
COOPERATIEVE CENTRALE                     32,500,000                   32,500,000                65,000,000
RAIFFEISEN-BOERENLEENBANK
B.A. (RABOBANK), NEW ZEALAND
BRANCH
-----------------------------------------------------------------------------------------------------------
THE NATIONAL BANK OF NEW                  22,500,000                   22,500,000                45,000,000
ZEALAND LIMITED
-----------------------------------------------------------------------------------------------------------
TOTAL                                    150,000,000                  150,000,000               300,000,000
-----------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                                              57

                                   SCHEDULE 2

                              CONDITIONS PRECEDENT

                                  (CLAUSE 4.1)

1.       TRANSACTION DOCUMENTS: duly executed copies of each Transaction
         Document;

2.       DIRECTOR'S CERTIFICATE: a certificate by a director of each Obligor in
         the form set out in schedule 3 attaching the documents (if any)
         referred to in that certificate;

3.       REGISTRATION OF SECURITIES: evidence that each Security that is
         registerable under the Personal Property Securities Act 1999 has been
         duly registered and that each other Security is in a form able to be
         registered at the relevant New Zealand or, if applicable, relevant
         overseas registries, in each case free from all prior Security
         Interests and third party rights and interests other than:

         (i)      Permitted Security Interests;

         (ii)     other interests disclosed to, and agreed to in writing by, the
                  Lenders;

4.       STAMPING: if applicable, evidence that any Transaction Document on
         which stamp duty is payable has been lodged for stamping in all
         relevant jurisdictions with a cheque for the appropriate stamp duty,
         and all declarations and other documents required for the purposes of
         stamping any such Transaction Documents have been provided to the
         Security Agent;

5.       CERTIFICATE OF SIGNATORIES: a certificate of a director or the
         secretary of each Obligor certifying the names and true signatures of
         its officers authorised to sign the Transaction Documents;

6.       CERTIFICATE OF INSURANCE: a certificate of the Chief Executive Officer,
         certifying the maintenance of insurance with responsible insurance
         carriers or on a self-insurance basis in such amounts and covering such
         risks as have been recommended by the Chief Executive Officer as
         prudent for companies engaged in similar businesses and owning similar
         properties in the same general areas in which the Group operates;

7.       NO MATERIAL ADVERSE EFFECT: a certificate of the Chief Executive
         Officer that from the date of the 30 June 2002 consolidated financial
         statements of the Group to the Commencement Date, there has been no
         change, condition, event or occurrence which has had or will be likely
         to have a Material Adverse Effect;

8.       LITIGATION: a certificate from the Chief Executive Officer that, except
         as disclosed in writing to the Lenders, there are no material actions,
         suits or arbitration proceedings pending or threatened involving any
         Obligor nor any litigation or administrative proceedings, governmental
         investigations or other legal or regulatory developments, actual or
         threatened, that, singly or in the aggregate, would, if adversely
         determined, have a Material Adverse Effect;

9.       CANCELLATION NOTICE: a copy of a cancellation notice cancelling the
         whole of the facilities under the Existing Facilities Agreement with
         effect from the date of the proposed date of the first drawdown under
         the Facilities;

10.      RELEASE OF EXISTING SECURITIES AND GUARANTEES: evidence that all
         Security Interests and Guarantees, if any, in support of the Group's
         indebtedness under the Existing Facilities Agreement have been
         discharged and released or, in either case, arrangements satisfactory
         to the Facility Agent (acting reasonably) have been made for the
         repayment, termination, discharge and release;

<PAGE>

                                                                              58

11.      ENVIRONMENTAL: a certificate from the Chief Executive Officer
         confirming that there are no environmental and employee health and
         safety exposures to which the Group may be subject which have or will
         be likely to have a Material Adverse Effect;

12.      FINANCIAL MODEL: the Financial Model, and an audit thereof by
         PricewaterhouseCoopers;

13.      OBLIGORS' LEGAL OPINIONS: favourable legal opinions of the respective
         counsel to the Obligors in the jurisdictions in which the Obligors or
         any of their assets are located (other than Japan and Australia);

14.      LENDERS' LEGAL OPINION: a favourable legal opinion of the counsel to
         the Lenders;

15.      FEES AND EXPENSES: evidence that all fees, expenses and other amounts
         then due and payable under the Transaction Documents and the mandate
         letter dated 5 December 2002 from the Lead Arranger to the Company
         shall have been paid in full;

16.      APPROVED ISSUER STATUS: evidence that each Borrower has registered as
         an approved issuer (as defined in section OB 1 of the Income Tax Act
         1994) and that the Facilities are registered under section 86 H of the
         Stamp and Cheque Duties Act 1971;

17.      HEDGING: written confirmation from the Chief Financial Officer of the
         Company that the Borrowers are in compliance with the hedging policy of
         the Group as adopted by the Board of Directors of the Company and that
         as at the Commencement Date all of the Group's hedging is executed with
         the Lenders and secured by the Security;

18.      AUTHORISATIONS: a certificate from the Chief Executive Officer that all
         material authorisations or waivers (including, if required, a waiver
         from the New Zealand Stock Exchange of Listing Rule 9.2 in respect of
         cross-directorships), consents, permits and licences (including all
         crown forestry licences) required by the Group in relation to the
         businesses of the Group have been obtained and are in full force and
         effect (other than as disclosed to, and agreed to in writing by, the
         Lenders);

19,      INDEPENDENT REVIEW: an independent review of the valuation of the
         forest assets owned by the Group;

20.      TAX LOSSES: confirmation from the Group's auditors that under the
         Financial Model Base Case there are sufficient tax losses available to
         the Group (excluding Tarawera for this purpose) so that under that
         Financial Model Base Case no New Zealand Tax will be payable in cash
         during the term of the Facility;

21.      LOG PRICES: confirmation from a forestry consultant acceptable to the
         Lenders that the log prices assumed in the Financial Model are
         reasonable; and

22.      MISCELLANEOUS: such other certificates and documentation as the
         Facility Agent may reasonably request.

<PAGE>

                                                                              59

                                   SCHEDULE 3
                         FORM OF DIRECTOR'S CERTIFICATE

TO:      {NAME AND ADDRESS OF FACILITY AGENT}

I, {  }, a director  of {  } ("COMPANY"), certify as follows:

1.       BOARD RESOLUTIONS

1.1      The board of directors of the Company ("BOARD") has passed all
         necessary resolutions to:

         (a)      approve the transactions ("TRANSACTIONS") contemplated by the
                  document{s} listed in the schedule ("DOCUMENT{S}"), and the
                  Document{s} {themselves} {itself};

         (b)      authorise signing of the Document{s} by or on behalf of the
                  Company in the manner in which {they have} {it has} actually
                  been signed{; and

         (c)      authorise the persons specified in paragraph 10 to give any
                  notices and other communications, and take any other action
                  required, under or in connection with the Document{s} on
                  behalf of the Company}.

1.2      The resolutions were duly passed {OPTION 1: #<in writing signed by [all
         of] the directors of the Company [entitled to receive notice of a
         meeting of the Board]. ># OPTION 2: #<The resolutions were duly passed
         at a meeting of the Board which was properly convened and in respect of
         which all quorum requirements were duly observed. >#}

1.3      The resolutions remain in full force and effect.

2.       DIRECTORS' SELF INTERESTED TRANSACTIONS

2.1      {OPTION 1: #<To the best of my knowledge and belief after making due
         enquiry [of each other director (as that term is defined in section 126
         of the Companies Act 1993 ("ACT")) of the Company], none of the
         directors (as so defined) of the Company has an interest (as that term
         is defined in section 139 of the Act) in the Transactions. >#

2.2      OPTION 2: #<After making due enquiry, it has been determined that one
         or more of the Company's directors (as that term is defined in section
         126 of the Companies Act 1993 ("ACT")) is, or may be, interested (as
         that term is defined in section 139 of the Act) in the Transactions and
         such interests have been entered in the interests register accordingly.
         The Transactions have been disclosed to all shareholders of the
         Company. >#}

2.3      All of the Company's entitled persons have agreed in writing (pursuant
         to section 107(3) of the Act) to the Company's entry into and
         performance of the Document{s} and the Transactions (so that nothing in
         sections 140 and 141 of the Act will apply to the Transactions.

2.4      In approving the Document{s} and the Transactions, the Board, after
         taking into account all relevant factors, is of the view that the
         Company is receiving or will receive fair value under them.

<PAGE>

                                                                              60

3.       CORPORATE BENEFIT

3.1      In approving the Document{s} and the Transactions, the Board, after
         taking into account all relevant factors, is of the view {OPTION 1:
         #<that the Company's entry into and performance of the Document[s] and
         the Transactions is in the best interests of the Company. ># OPTION 2:
         #<(pursuant to an express provision in the constitution of the Company)
         that the Company's entry into and performance of the Document[s] and
         the Transactions is in the best interests of the Company's holding
         company [and as the Company is not a wholly owned subsidiary of the
         Company's holding company the prior agreement to the Company's entry
         into and performance of the Document{s} and the Transactions has been
         obtained from all of the Company's shareholders, other than that
         holding company]. >#}

4.       SHAREHOLDER RESOLUTIONS

4.1      {IF THE FIRST OPTION FOR PARAGRAPH 4.1 IS INCLUDED, CLAUSE 4.3 MAY BE
         DELETED OPTION 1: #<It has been determined that the Transactions are a
         "Major Transaction" for the purposes of section 129 of the Act.
         Accordingly [all of] the shareholders of the Company have by special
         resolution:

         (a)      approved the Document[s] and the Transactions; and

         (b)      confirmed, approved and ratified the resolutions of the Board
                  referred to above.

         [It may be that this approval is not unanimous. If so, the following
         issues may arise:]

         (c)      [a potential corporate benefit issue;

         (d)      the potential for a minority buy-out.] >#

4.2      OPTION 2: #<It has been determined that the Transactions do not
         constitute a "Major Transaction" for the purpose of section 129 of the
         Act. >#}

4.3      {The shareholders of the Company have {unanimously} confirmed, approved
         and ratified the resolutions of the Board. {Obviously shareholder
         ratification may only be practical in the case of a closely held
         company. It is, however, desirable where a corporate benefit issue
         arises - for example giving a guarantee, even where the giving of the
         guarantee does not involve a major transaction.}

5.       }DUE EXECUTION

5.1      {Each of the}{The} Document{s} has been properly signed by the Company.

6.       SOLVENCY

6.1      I am not aware of any liquidation proceedings which have been commenced
         against the Company by any person, or which are intended or anticipated
         by the Company.

6.2      {THE FIRST ALTERNATIVE IS PREFERABLE TO THE SECOND ALTERNATIVE, AS A
         CREDITOR HAVING ACCESS TO FINANCIAL INFORMATION IS LIKELY TO BE ABLE TO
         FORM ITS OWN OPINIONS AS TO THE MATTERS STATED IN THE SECOND
         ALTERNATIVE OPTION 1: #<Having taken into account all relevant factors
         [(including in the case of a guarantee all rights of contribution and
         subrogation to which the Company would be entitled if called upon to
         perform its obligations and the solvency of the guaranteed and
         guaranteeing parties)] the Board is of the view that the value of the
         consideration or benefit received, or to be received, by

<PAGE>

                                                                              61

         the Company under the Transactions is not less than the value of the
         consideration provided, or to be provided, by the Company. >#

6.3      OPTION 2: #<After making due enquiry, the Board is of the view that the
         Company:

         (a)      is able to pay its due debts;

         (b)      is not engaged, or about to engage, in business for which its
                  financial resources are unreasonably small;

         (c)      will be able to perform its obligations under the Document[s]
                  and the Transactions when required to do so; and

         (d)      will not become unable to pay its due debts as a result of the
                  Document[s] and the Transactions. >#}

7.       FINANCIAL ASSISTANCE

7.1      The Transactions do not include or involve any provision by the Company
         (directly or indirectly) of financial assistance in connection with the
         acquisition of a share issued or to be issued by the Company or its
         holding company.

8.       CONSTITUTION

8.1      {OPTION 1: #<The Company does not have a constitution. ># OPTION 2:
         #<The copy of the constitution of the Company held on its records as
         maintained at the office of the Registrar of Companies at [place] as at
         [date] is complete and includes all alterations to date. >#}

9.       AUTHORISATIONS

9.1      {CONSIDER CAREFULLY WHETHER OR NOT EITHER OF THE OPTIONS FOR PARAGRAPH
         9 SHOULD BE INCLUDED. THEY SHOULD NOT USUALLY BE INCLUDED OPTION 1:
         #<All consents and other authorisations required by the Company in
         connection with the entry into, execution and performance of the
         Documents and the Transactions have been obtained on an unconditional
         and unqualified basis and remain in full force and effect. >#

9.2      {OPTION 2: #<No consents or other authorisations are required by the
         Company in connection with the entry into, execution and performance of
         the Documents or the Transactions. >#}

10.      {AUTHORISED SIGNATORIES

10.1     The following are the true signatures of the persons who have been
         authorised ({any one of them acting alone/any two of them acting
         together}) to give any notices and other communications, and to take
         any other action required, under or in connection with the Document{s}
         on behalf of the Company.

         NAME                   POSITION                 SIGNATURE
         ____________________   _____________________    _______________________
         ____________________   _____________________    _______________________
         ____________________   _____________________    _______________________

<PAGE>

                                                                              62

SIGNED by {    } in the presence of:                   _________________________
                                                       {   }
___________________________________________
Signature of witness

___________________________________________
Name of witness

___________________________________________
Occupation

___________________________________________
City/town of residence

                             {SCHEDULE OF DOCUMENTS}

<PAGE>

                                                                              63

                                   SCHEDULE 4
                           FORM OF ACCESSION AGREEMENT

PARTIES

1.       [           ] ("NEW BORROWER")

2.       FLETCHER CHALLENGE FORESTS LIMITED ("COMPANY")

3.       [           ] ("FACILITY AGENT") for itself and on behalf of the other
         parties to the Agreement.

AGREEMENT

1.       INTERPRETATION

1.1      In this agreement, "AGREEMENT" means the NZ$300,000,000 Senior Secured
         Revolving Credit Facilities Agreement dated [   ] February 2003 between
         the Company, the banks and financial institutions listed in schedule 1
         thereof as Lenders, and Bank of New Zealand as Facility Agent, Security
         Agent and Lead Arranger.

1.2      Terms defined in the Agreement have the same meaning in this agreement.

2.       ACCESSION

2.1      With effect from the date of this agreement:

         (a)      the Company designates the New Borrower as a Borrower under
                  the Agreement; and

         (b)      the New Borrower agrees to be bound by all the terms and
                  conditions of the Agreement as if it were a party to the
                  Agreement with the rights and obligations of a Borrower under
                  the Agreement.

3.       GOVERNING LAW

         This agreement will be governed by and construed in accordance with the
         laws of New Zealand.

Signed by the authorised representatives of the parties.

NEW BORROWER

[        ]

by:

_____________________________________      _____________________________________
Authorised Signatory                       Authorised Signatory

COMPANY

Fletcher Challenge Forests Limited

by:

_____________________________________      _____________________________________
Authorised Signatory                       Authorised Signatory

<PAGE>

                                                                              64

FACILITY AGENT

[        ]

by:

<PAGE>

                                                                              65

                                   SCHEDULE 5
            DRAWDOWN REQUEST FOR AN ADVANCE DENOMINATED IN NZ DOLLARS

TO:      Level 13, BNZ Tower
         125 Queen Street
         Auckland
         Facsimile No: 64 9 375 1285
         Attention: Manager - Facility Management Unit - Corporate and
         Institutional Banking

NZ$300,000,000 SENIOR SECURED REVOLVING CREDIT FACILITIES AGREEMENT DATED
[              ] FEBRUARY 2003 ("AGREEMENT")

1.       Terms defined in the Agreement have the same meaning in this notice.

2.       We request you to make us an Advance denominated in NZ Dollars of
         NZ$[amount] under the [Three/Five] Year Facility on [Drawdown Date] and
         to credit the proceeds of the Advance to our account with [name of bank
         and branch] numbered [account number].

3.       We select [period(s)] as the duration of the [first] Interest Period in
         relation to the Advance[s] and select [date] as the Repayment Date for
         the Advance.

4.       We confirm that:

         (a)      the borrowing to be effected is within our powers, has been
                  validly authorised by appropriate action and will not cause
                  any limit on our borrowing or other powers (whether imposed by
                  statute, regulation, agreement or otherwise) to be exceeded;

         (b)      no Event of Default [or Event of Review(1)] has occurred and
                  remains unremedied;

         (c)      the representations and warranties contained in clause 9.1
                  (other than paragraphs (h), (i), (o), (p) and (q) thereof) of
                  the Agreement, if repeated on today's date with reference to
                  the circumstances existing on today's date, would be true and
                  accurate in all respects; and

         (d)      there is no subsisting breach of any of the undertakings
                  contained in clause 10 of the Agreement.

----------
(1) Not required for rollovers of existing Advances.

<PAGE>

                                                                              66

DATED

SIGNED by [     ] in the presence of:      _____________________________________

_____________________________________
Signature of witness

_____________________________________
Name of witness

_____________________________________
Occupation

_____________________________________
City/town of residence

<PAGE>

                                                                              67

                                   SCHEDULE 6
            DRAWDOWN REQUEST FOR AN ADVANCE DENOMINATED IN US DOLLARS

TO:      Level 13, BNZ Tower
         125 Queen Street
         Auckland
         Facsimile No:  64 9 375 1285
         Attention:   Manager - Facility Management Unit - Corporate and
         Institutional Banking

NZ$300,000,000 SENIOR SECURED REVOLVING CREDIT FACILITIES AGREEMENT DATED
[             ] FEBRUARY 2003 ("AGREEMENT")

1.       Terms defined in the Agreement have the same meaning in this notice.

2.       We request you to make us an Advance denominated in US Dollars of the
         US Dollar Equivalent of NZ$[amount] under the [Three/Five] Year
         Facility on [Drawdown Date] and to credit the proceeds of the Advance
         to our account with [name of bank and branch] numbered [account
         number].

3.       We select [period(s)] as the duration of the first Interest Period in
         relation to the Advance[s] and select [date] as the Repayment Date for
         the Advance.

4.       We confirm that:

         (a)      the borrowing to be effected is within our powers, has been
                  validly authorised by appropriate action and will not cause
                  any limit on our borrowing or other powers (whether imposed by
                  statute, regulation, agreement or otherwise) to be exceeded;

         (b)      no Event of Default [or Event of Review(2)] has occurred and
                  remains unremedied;

         (c)      the representations and warranties contained in clause 9.1
                  (other than paragraphs (h), (i), (o), (p) and (q) thereof) of
                  the Agreement, if repeated on today's date with reference to
                  the circumstances existing on today's date, would be true and
                  accurate in all respects; and

         (d)      there is no subsisting breach of any of the undertakings
                  contained in clause 10 of the Agreement.

----------
(2) Not required for rollovers of existing Advances.

<PAGE>

                                                                              68

DATED

SIGNED by [      ] in the presence of:     _____________________________________

_____________________________________
Signature of witness

_____________________________________
Name of witness

_____________________________________
Occupation

_____________________________________
City/town of residence

<PAGE>

                                                                              69

                                   SCHEDULE 7
                              TRANSFER CERTIFICATE

Transfer Certificate relating to a NZ$300,000,000 Senior Secured Revolving
Credit Facilities Agreement dated [   ] February 2003 between Fletcher Challenge
Forests Limited as Borrower, the banks and financial institutions named in such
agreement as Lenders, Bank of New Zealand as Facility Agent, Security Agent and
as Lead Arranger ("AGREEMENT").

PARTIES

1.       [     ] ("TRANSFEREE") whose address, facsimile number and designated
         person are set out below;

2.       [     ] ("TRANSFERRING LENDER") being a Lender for the purposes of the
         Agreement; and

3.       [     ] ("FACILITY AGENT") for itself and on behalf of the other
         parties to the Agreement.

IT IS AGREED

1.       DEFINITIONS

1.1      Terms defined in the Agreement have the same meaning in this
         certificate.

1.2      In this certificate:

         "TRANSFERRED RIGHTS AND OBLIGATIONS" means the rights of, and the
         obligations to be performed by, the Transferring Lender in its capacity
         as a Lender under the Transaction Documents, which rights and
         obligations cease under clause 2.1 of this certificate and are to be
         assumed by the Transferee.

         "TRANSFERRED COMMITMENTS" means [that part of] the Commitments of the
         Transferring Lender as shall be assumed by the Transferee hereunder,
         namely[specify Commitments to be transferred under each Facility].

         "TRANSFER DATE" means the date of countersignature of this certificate
         by the Facility Agent.

2.       TRANSFER

2.1      The Transferring Lender shall cease to be entitled to its rights and to
         be bound by its obligations relating to the Transferred Commitments
         with effect from the Transfer Date, but shall remain entitled to those
         rights and bound by those obligations which have accrued up to the
         Transfer Date.

2.2      With effect from the Transfer Date:

         (a)      the Transferee and each of the parties to the Agreement shall
                  assume obligations towards each other and acquire rights
                  against each other which are identical to the Transferred
                  Rights and Obligations except in so far as the obligations so
                  assumed and rights so acquired relate to the identity of or
                  location of the Transferee and not to the identity of or
                  location of the Transferring Lender;

<PAGE>

                                                                              70

         (b)      the Transferee shall be deemed to be a party to the
                  Transaction Documents, which shall apply as if it were a
                  Lender, with Commitments equal to the Transferred Commitments;
                  and

         (c)      schedule 1 of the Agreement shall be deemed to be amended
                  accordingly.

3.       INDEPENDENT INVESTIGATION

3.1      The Transferee acknowledges that:

         (a)      it has received a copy of the Agreement together with such
                  other documents and information as it has required in
                  connection with this transaction;

         (b)      it has not relied and shall not in the future rely on the
                  Transferring Lender or any other party to the Agreement to
                  check or enquire on its behalf into the legality, validity,
                  effectiveness, adequacy, accuracy or completeness of any such
                  documents or information; and

         (c)      it has not relied and shall not rely on the Transferring
                  Lender or any other party to the Agreement to assess or keep
                  under review on its behalf the financial condition,
                  creditworthiness, condition, affairs, status or nature of any
                  Borrower or of any other party to the Transaction Documents.

3.2      The Transferring Lender makes no representation or warranty and assumes
         no responsibility with respect to the legality, validity,
         effectiveness, adequacy or enforceability of the Transaction Documents
         or any document relating thereto and assumes no responsibility for the
         financial condition of any Borrower or any other party to the
         Transaction Documents or for the performance and observance by any
         Borrower or any other such party of any of their respective obligations
         under the Transaction Documents or any document relating thereto and
         any and all such representations and warranties, and all conditions,
         whether express or implied by law or otherwise, are expressly excluded.

4.       PAYMENTS

4.1      The Transferring Lender and the Transferee acknowledge and confirm that
         they shall make directly between themselves such payments and
         adjustments agreed amongst themselves with respect to accrued interest,
         costs and other amounts attributable to the Transferred Commitments
         prior to the Transfer Date.

5.       NOTICES

5.1      The Transferee's initial address, facsimile number and designated
         person for notices under the Agreement are as follows:

         Address: [    ]

         Facsimile No: [    ]

         Attention:    [    ]

6.       REGISTRATION AND PROCESSING FEE

6.1      A registration and processing fee of NZ$1,000 shall be payable by the
         Transferring Lender to the Facility Agent on delivery of this
         certificate to the Facility Agent.

<PAGE>

                                                                              71

7.       GOVERNING LAW

7.1      This certificate shall be governed by and construed in accordance with
         the laws of New Zealand.

         Signed by the authorised representatives of the parties.

         SIGNED by [TRANSFERRING LENDER] in
         the presence of:                     __________________________________

         __________________________________
         Signature of witness

         __________________________________
         Name of witness

         __________________________________
         Occupation

         __________________________________
         City/town of residence

         SIGNED by [TRANSFEREE] in the
         presence of:                         __________________________________

         __________________________________
         Signature of witness

         __________________________________
         Name of witness

         __________________________________
         Occupation

         __________________________________
         City/town of residence

<PAGE>

                                                                              72

Countersigned by the Facility Agent for itself and on behalf of the other
parties to the Agreement (but without any responsibility or liability except as
expressly provided in clause 20.4 of the Agreement).

         SIGNED by [-] in the presence of:    __________________________________

         __________________________________
         Signature of witness

         __________________________________
         Name of witness

         __________________________________
         Occupation

         __________________________________
         City/town of residence

DATED

<PAGE>

                                                                              73

                                   SCHEDULE 8
                         FORM OF COMPLIANCE CERTIFICATE
                              (Clause 10.1(a)((iv))

TO: The Lenders under a NZ$300,000,000 Senior Secured Revolving Credit
Facilities Agreement dated [    ] February 2003 between Fletcher Challenge
Forests Limited, the banks and financial institutions named in such agreement as
Lenders, Bank of New Zealand as Facility Agent, Security Agent and Lead Arranger
("AGREEMENT").

This certificate is given to you pursuant to clause 10.1(a)(iv) of the
Agreement. All terms used in this certificate which are defined in the Agreement
have the same meanings in this certificate.

We certify as at [                       ] (the "REPORTING DATE") that to the
best of our knowledge and belief, having made due enquiry:

1.       The Gearing Ratio for the Group is [        ] times, which is less than
         [3.50/3.25] times.

2.       The ratio of Free Cash Flow to Interest Expense for the Group is
         [               ] times, which is greater than 2.75 times.

3.       The percentage of Net Debt to Total Tangible Assets of the Group is
         [                   ]%, which is less than 30%.

4.       The Minimum Net Tangible Assets of the Group are NZ$[                 ]
         , which is greater than NZ$800,000,000.

5.       Total Tangible Assets (disregarding any investments in Subsidiaries and
         inter-company loans) of the Obligors are NZ$[ ], which is not less than
         95% of Total Tangible Assets of the Group.

DATED

___________________________________________
Signature of director

___________________________________________
Name of director