Document:

Exhibit
10.1

Corporate Letter of Offer

“CHANNELL
BUSHMAN GROUP”

11 August 2006

 

	
  National Australia Bank Limited ABN 12 004 044

  	
  

  
	
   

  

 

 

Customers and Facility Summary

We offer to provide the facilities detailed within this Letter of
Offer to “CHANNELL BUSHMAN GROUP”. A summary of these facilities is set out below. Facilities
marked with a + (if any) are subject to the relevant Multi Option Facility set
out in Part 1 of the Letter of Offer.

 

	
  FACILITY SUMMARY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Customer:

  	
   

  	
  Channell Bushman Pty Limited

  
	
  ABN:

  	
   

  	
  ABN 99 109 821 614

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Bill - Floating Rate

  
	
  Facility Limit:

  	
   

  	
  $5,000,000

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Bill - Floating Rate

  
	
  Facility Limit:

  	
   

  	
  $2,480,000

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Bill - Floating Rate

  
	
  Facility Limit:

  	
   

  	
  $637,000

  
	
   

  	
   

  	
   

  
	
  Customer
  Total:

  	
   

  	
  $8,117,000

  
	
   

  	
   

  	
   

  
	
  Customer:

  	
   

  	
  Bushmans Group Pty Limited

  
	
  ABN:

  	
   

  	
  ABN 90 090 744 022

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Bill - Floating Rate

  
	
  Facility Limit:

  	
   

  	
  $3,200,000

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Master Asset Finance Agreement

  
	
  Facility Limit:

  	
   

  	
  $1,000,000

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Bank Guarantee

  
	
  Facility Limit:

  	
   

  	
  $50,000

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Business Credit Card

  
	
  Facility Limit:

  	
   

  	
  $300,000

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Documentary Letter of Credit

  
	
  Facility Limit:

  	
   

  	
  $50,000

  
	
   

  	
   

  	
   

  
	
  Customer
  Total:

  	
   

  	
  $4,600,000

  
	
   

  	
   

  	
   

  
	
  Customer:

  	
   

  	
  Channell Pty Limited

  
	
  ABN:

  	
   

  	
  ABN 29 002 735 622

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Master Asset Finance Agreement

  
	
  Facility Limit:

  	
   

  	
  $250,000

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Bank Guarantee

  
	
  Facility Limit:

  	
   

  	
  $375,000

  
	
   

  	
   

  	
   

  
	
  Facility Type:

  	
   

  	
  Business Credit Card

  
	
  Facility Limit:

  	
   

  	
  $100,000

  
	
   

  	
   

  	
   

  
	
  Customer
  Total:

  	
   

  	
  $725,000

  
	
   

  	
   

  	
   

  
	
  Group Total:

  	
   

  	
  $13,442,000

  

 

If there is any inconsistency between the information set out here and
that set out in the Details of Facilities sections of this Letter of
Offer, then unless specifically provided the Details of Facilities
sections prevail to the extent of that inconsistency.

 

Relationship Management 

The banking needs of “CHANNELL BUSHMAN GROUP” will be met by a
specialist team located at the National’s NAB House Sydney location.

 

Through our strong focus on actively managing our relationship with the
group we will be able to offer a number of benefits through our NAB House
Sydney location:

 

·                                          A
dedicated Relationship Manager who your team will be able to deal directly with
at times and who will be working hard to add value to your business and respond
quickly to your needs.

 

·                                          Your
dedicated Relationship Manager will be a central point of contact to access the
complete suite of the National’s specialised services including Interest Rate
Risk Management, Trade Solutions, Leasing and Fleet Services and Wealth
Creation.

 

The dedicated team at the NAB House Sydney location is led by:

 

	
  ·

  	
   

  	
  Associate Director

  	
   

  	
  Graeme L Johnson

  
	
   

  	
   

  	
  Direct Telephone Number

  	
   

  	
  02 9237-9731

  
	
   

  	
   

  	
  Facsimile Number

  	
   

  	
  02 9237-9752

  
	
   

  	
   

  	
  Email

  	
   

  	
  graeme_l_johnson@nab.com.au

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  Account Manager

  	
   

  	
  Christine Tsang

  
	
   

  	
   

  	
  Direct Telephone Number

  	
   

  	
  02 9237-1917

  
	
   

  	
   

  	
  Facsimile Number

  	
   

  	
  02 9237-9752

  
	
   

  	
   

  	
  Email

  	
   

  	
  christine.tsang@nab.com.au

  

 

This Letter of
Offer remains available for acceptance until 15th Aug 2006 after which time it will, at our option, lapse.

Thank you for the
opportunity to provide the enclosed Letter of Offer to
the group for its consideration.

Yours sincerely,

	
  /s/ Graeme L Johnson

  	
   

  	
   

  
	
  Graeme L Johnson

  	
   

  	
   

  
	
  Senior Relationship Manager

  	
   

  	
   

  
					

 

 

Table of Contents

	
  1

  	
   

  	
  DETAILS OF FACILITIES – NEW FACILITIES GENERALLY
  SUBJECT TO THIS LETTER OF OFFER

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  DETAILS OF FACILITIES – NEW FACILITIES GENERALLY
  SUBJECT TO OTHER CONTRACTUAL DOCUMENTATION

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  DETAILS OF FACILITIES – EXISTING FACILITIES
  GENERALLY SUBJECT TO OTHER CONTRACTUAL DOCUMENTATION

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  SECURITY

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  ESTABLISHMENT FEES AND CHARGES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  CONDITIONS PRECEDENT AND OTHER INFORMATION

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  COVENANTS AND UNDERTAKINGS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  GENERAL TERMS AND CONDITIONS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  SPECIFIC CONDITIONS - BILL FACILITY

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  SPECIFIC CONDITIONS – BANK GUARANTEE FACILITY

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCEPTANCE OF LETTER OF OFFER

  	
   

  	
  43

  

 

 1
 

 

1                                         Details of Facilities – New facilities generally subject to this Letter
of Offer

New
facilities are detailed below.

Customer:  Channell Bushman Pty Limited

Bill Acceptance/Discount Facility
– Floating Rate

	
  Purpose/Utilisation:

  	
   

  	
  Acquisition Finance

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $5,000,000 (five million dollars)

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  31st July 2009

  
	
   

  	
   

  	
   

  
	
  The Facility is:

  	
   

  	
  an amortising facility

  
	
   

  	
   

  	
   

  
	
  Amortisation Details of Facilities if the Facility
  is an Amortising Facility:

  	
   

  	
  $200,000 per quarter, commencing on 30th June 2006, then increasing to $400,000 per
  quarter from 30th June 2007 until expiry

  
	
   

  	
   

  	
   

  
	
  Drawdown Periods:

  	
   

  	
  Approximate period between each drawdown
  date: 90 days

  
	
   

  	
   

  	
   

  
	
  Yield Rate:

  	
   

  	
  Floating rate.

  
	
   

  	
   

  	
   

  
	
  Floating Rate:

  	
   

  	
  the rate (expressed as a percentage yield to
  maturity and rounded upwards to the nearest two decimal places) which is the
  bid rate shown at approximately 10.10 am (Sydney time) on page BBSY on the Reuters Monitor System on the day the bills are to be discounted for bills
  of like amounts and tenors. If such rate is not available or if, in our reasonable opinion, the rate becomes inappropriate,
  the floating rate will be the rate
  reasonably determined by us to be the
  appropriate equivalent rate, having regard to prevailing market conditions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The rate as a percentage per annum will be advised
  following a drawing under the facility.

  
	
   

  	
   

  	
   

  
	
  Facility Fee:

  	
   

  	
  0.50% per annum of the facility
  limit, payable by you on a half
  yearly basis in advance from the date of acceptance of the facility.

  
	
   

  	
   

  	
   

  
	
  Activation Fee:

  	
   

  	
  1.40% per annum of the face value of each bill, calculated from and including the date we accept the bill to the maturity date of the bill, payable
  by you upon acceptance of each bill.

  
	
   

  	
   

  	
   

  
	
  Bill Drawdown Fee:

  	
   

  	
  $150 payable by you each time
  we accept bills
  on a drawdown date.

  
	
   

  	
   

  	
   

  
	
  Late Presentation Fee:

  	
   

  	
  Not ascertainable - see Special Conditions - Bill
  Facility

  
	
   

  	
   

  	
   

  
	
  Default Interest Rate:

  	
   

  	
  The total of the National’s
  Base Lending Indicator Rate, currently 9.85%, plus a customer margin of 1.90%
  plus a default margin of 4.00%.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Currently 15.75% per annum

  
	
   

  	
   

  	
   

  
	
  Nominated Account: :

  	
   

  	
  Channell bushman Pty Limited

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  082-057 #57189-3025

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  for the purposes of debiting amounts under this Agreement (including the amount of each matured bill, interest, fees, charges, taxes, premiums, economic costs and enforcement expenses.)

  
	
   

  	
   

  	
   

  
	
  Securities:

  	
   

  	
  All securities
  detailed in Part 4 with the exception of the securities
  numbered 8,9&10.

  
	
   

  	
   

  	
   

  
	
  Specific Conditions:

  	
   

  	
  Specific Conditions – Bill Facility

  

 

 2
 

 

Customer:  Channell
Bushman Pty Limited

Bill Acceptance/Discount Facility
– Floating Rate

	
  Purpose/Utilisation:

  	
   

  	
  Fund ‘Earn-Out’ associated with the acquisition.

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $637,000 (six hundred and thirty seven thousand
  dollars)

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  31st July 2008

  
	
   

  	
   

  	
   

  
	
  Last Date for Drawdown:

  	
   

  	
  31st July 2006

  
	
   

  	
   

  	
   

  
	
  The Facility is:

  	
   

  	
  an amortising facility

  
	
   

  	
   

  	
   

  
	
  Amortisation Details of Facilities if the Facility
  is an Amortising Facility:

  	
   

  	
  $63,000 per quarter, commencing 30th June 2006.

  
	
   

  	
   

  	
   

  
	
  Drawdown Periods:

  	
   

  	
  Approximate period between each drawdown
  date: 90 days

  
	
   

  	
   

  	
   

  
	
  Yield Rate:

  	
   

  	
  Floating rate.

  
	
   

  	
   

  	
   

  
	
  Floating Rate:

  	
   

  	
  the rate (expressed as a percentage yield to
  maturity and rounded upwards to the nearest two decimal places) which is the
  bid rate shown at approximately 10.10 am (Sydney time) on page BBSY on the Reuters Monitor System on the day the bills are to be discounted for bills
  of like amounts and tenors. If such rate is not available or if, in our reasonable opinion, the rate becomes inappropriate,
  the floating rate will be the rate
  reasonably determined by us to be the
  appropriate equivalent rate, having regard to prevailing market conditions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The rate as a percentage per annum will be advised
  following a drawing under the facility.

  
	
   

  	
   

  	
   

  
	
  Facility Fee:

  	
   

  	
  0.50% per annum of the facility
  limit, payable by you on a half
  yearly basis in advance from the date of acceptance of the facility.

  
	
   

  	
   

  	
   

  
	
  Activation Fee:

  	
   

  	
  1.40% per annum of the face value of each bill, calculated from and including the date we accept the bill to the maturity date of the bill, payable
  by you upon acceptance of each bill.

  
	
   

  	
   

  	
   

  
	
  Bill Drawdown Fee:

  	
   

  	
  $150 payable by you each time
  we accept bills
  on a drawdown date.

  
	
   

  	
   

  	
   

  
	
  Late Presentation Fee:

  	
   

  	
  Not ascertainable - see Special Conditions - Bill Facility

  
	
   

  	
   

  	
   

  
	
  Default Interest Rate:

  	
   

  	
  The total of the National’s
  Base Lending Indicator Rate, currently 9.85%, plus a customer margin of 1.90%
  plus a default margin of 4.00%.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Currently 15.75% per annum

  
	
   

  	
   

  	
   

  
	
  Nominated Account: :

  	
   

  	
  Channell bushman Pty Limited

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  082-057 #57189-3025

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  for the purposes of debiting amounts under this Agreement (including the amount of each matured bill, interest, fees, charges, taxes, premiums, economic costs and enforcement expenses.)

  
	
   

  	
   

  	
   

  
	
  Securities:

  	
   

  	
  All securities
  detailed in Part 4 with the exception of the securities
  numbered 8,9&10.

  
	
   

  	
   

  	
   

  
	
  Specific Conditions:

  	
   

  	
  Specific Conditions – Bill Facility

  

 

 3
 

 

Customer:  Channell
Bushman Pty Limited

Bill Acceptance/Discount Facility
– Floating Rate

	
  Purpose/Utilisation:

  	
   

  	
  Capital Expenditure for the Group

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $2,480,000 (two million four hundred and eighty
  thousand dollars)

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  31st July 2009

  
	
   

  	
   

  	
   

  
	
  The Facility is:

  	
   

  	
  an amortising facility

  
	
   

  	
   

  	
   

  
	
  Amortisation Details of Facilities if the Facility
  is an Amortising Facility:

  	
   

  	
  Subject to cash flows, but with view of amortising
  each drawing over a maximum term of four years. Noting current drawing the
  facility should amortise by $20,000 per quarter commencing on 30th June 2006.

  
	
   

  	
   

  	
   

  
	
  Drawdown Periods:

  	
   

  	
  Approximate period between each drawdown
  date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  90 days

  
	
   

  	
   

  	
   

  
	
  Yield Rate:

  	
   

  	
  Floating rate.

  
	
   

  	
   

  	
   

  
	
  Floating Rate:

  	
   

  	
  the rate (expressed as a percentage yield to
  maturity and rounded upwards to the nearest two decimal places) which is the
  bid rate shown at approximately 10.10 am (Sydney time) on page BBSY on the Reuters Monitor System on the day the bills are to be discounted for bills
  of like amounts and tenors. If such rate is not available or if, in our reasonable opinion, the rate becomes inappropriate,
  the floating rate will be the rate
  reasonably determined by us to be the
  appropriate equivalent rate, having regard to prevailing market conditions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The rate as a percentage per annum will be advised
  following a drawing under the facility.

  
	
   

  	
   

  	
   

  
	
  Facility Fee:

  	
   

  	
  0.50% per annum of the facility
  limit, payable by you on a half
  yearly basis in advance from the date of acceptance of the facility.

  
	
   

  	
   

  	
   

  
	
  Activation Fee:

  	
   

  	
  1.40% per annum of the face value of each bill, calculated from and including the date we accept the bill to the maturity date of the bill, payable
  by you upon acceptance of each bill.

  
	
   

  	
   

  	
   

  
	
  Bill Drawdown Fee:

  	
   

  	
  $150 payable by you each time
  we accept bills on
  a drawdown date.

  
	
   

  	
   

  	
   

  
	
  Late Presentation Fee:

  	
   

  	
  Not ascertainable - see Special Conditions - Bill
  Facility

  
	
   

  	
   

  	
   

  
	
  Default Interest Rate:

  	
   

  	
  The total of the National’s
  Base Lending Indicator Rate, currently 9.85%, plus a customer margin of 1.90%
  plus a default margin of 4.00%.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Currently 15.75% per annum

  
	
   

  	
   

  	
   

  
	
  Nominated Account: :

  	
   

  	
  Channell bushman Pty Limited

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  082-057 #57189-3025

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  for the purposes of debiting amounts under this Agreement (including the amount of each matured bill, interest, fees, charges, taxes, premiums, economic costs and enforcement expenses.)

  
	
   

  	
   

  	
   

  
	
  Securities:

  	
   

  	
  All securities
  detailed in Part 4 with the exception of the securities
  numbered 8,9&10.

  
	
   

  	
   

  	
   

  
	
  Specific Conditions:

  	
   

  	
  Specific Conditions – Bill Facility

  

 

 4
 

 

Customer: 
Bushmans Group Pty Limited

Bill Acceptance/Discount Facility
– Floating Rate

	
  Purpose/Utilisation:

  	
   

  	
  Working Capital

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $3,200,000 (three million two hundred thousand
  dollars)

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  30th November 2006

  
	
   

  	
   

  	
   

  
	
  The Facility is:

  	
   

  	
  a non-amortising facility

  
	
   

  	
   

  	
   

  
	
  Drawdown Periods:

  	
   

  	
  Approximate period between each drawdown
  date: 30 days

  
	
   

  	
   

  	
   

  
	
  Yield Rate:

  	
   

  	
  Floating rate.

  
	
   

  	
   

  	
   

  
	
  Floating Rate:

  	
   

  	
  the rate (expressed as a percentage yield to
  maturity and rounded upwards to the nearest two decimal places) which is the
  bid rate shown at approximately 10.10 am (Sydney time) on page BBSY on the Reuters Monitor System on the day the bills are to be discounted for bills
  of like amounts and tenors. If such rate is not available or if, in our reasonable opinion, the rate becomes inappropriate,
  the floating rate will be the rate
  reasonably determined by us to be the
  appropriate equivalent rate, having regard to prevailing market conditions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The rate as a percentage per annum will be advised
  following a drawing under the facility.

  
	
   

  	
   

  	
   

  
	
  Facility Fee:

  	
   

  	
  0.50% per annum of the facility
  limit, payable by you on a half
  yearly basis in advance from the date of acceptance of the facility.

  
	
   

  	
   

  	
   

  
	
  Activation Fee:

  	
   

  	
  1.40% per annum of the face value of each bill, calculated from and including the date we accept the bill to the maturity date of the bill, payable
  by you upon acceptance of each bill.

  
	
   

  	
   

  	
   

  
	
  Bill Drawdown Fee:

  	
   

  	
  $150 payable by you each time
  we accept bills
  on a drawdown date.

  
	
   

  	
   

  	
   

  
	
  Late Presentation Fee:

  	
   

  	
  Not ascertainable - see Special Conditions - Bill
  Facility

  
	
   

  	
   

  	
   

  
	
  Default Interest Rate:

  	
   

  	
  The total of the National’s
  Base Lending Indicator Rate, currently 9.85%, plus a customer margin of 1.90%
  plus a default margin of 4.00%.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Currently 15.75% per annum

  
	
   

  	
   

  	
   

  
	
  Nominated Account: :

  	
   

  	
  Bushmans Group Pty Limited

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  082-057 #57132-0868 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  for the purposes of debiting amounts under this Agreement (including the amount of each matured bill, interest, fees, charges, taxes, premiums, economic costs and enforcement expenses.)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Securities:

  	
   

  	
  All securities
  detailed in Part 4 with the exception of the securities
  numbered 7,9&10.

  
	
   

  	
   

  	
   

  
	
  Specific Conditions:

  	
   

  	
  Specific Conditions – Bill Facility

  

 

 5
 

 

Customer:  Bushmans
Group Pty Limited

Bank
Guarantee Facility

	
  Purpose/Utilisation:

  	
   

  	
  Performance Guarantee

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $50,000 (fifty thousand dollars)

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  30th November 2006

  
	
   

  	
   

  	
   

  
	
  Issuing Fee:

  	
   

  	
  1.80% of the face value of each bank
  guarantee payable on issue

  
	
   

  	
   

  	
   

  
	
  Half Yearly Fee:

  	
   

  	
  3.60% of the face value of each bank
  guarantee, payable half yearly in arrears from issue

  
	
   

  	
   

  	
   

  
	
  Securities:

  	
   

  	
  All securities
  detailed in Part 4 with the exception of the securities
  numbered 1,3,4,5,6,7,8,9&10.

  
	
   

  	
   

  	
   

  
	
  Specific Conditions:

  	
   

  	
  Specific Conditions – Bank Guarantee Facility

  

 

Customer:  Bushmans Group Pty Limited

Letter of
Credit Facility

	
  Purpose/Utilisation:

  	
   

  	
  Importation of goods

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $50,000 (fifty thousand dollars)

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  30th November 2006

  
	
   

  	
   

  	
   

  
	
  Securities:

  	
   

  	
  All securities
  detailed in Part 4 with the exception of the securities
  numbered 1,3,4,5,6,7,8,9&10.

  

 

Customer:  Channell Pty Limited

Bank
Guarantee Facility

	
  Purpose/Utilisation:

  	
   

  	
  Performance Guarantee

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $375,000 (three hundred and seventy five thousand
  dollars)

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  30th November 2006

  
	
   

  	
   

  	
   

  
	
  Issuing Fee:

  	
   

  	
  1.80% of the face value of each bank
  guarantee payable on issue

  
	
   

  	
   

  	
   

  
	
  Half Yearly Fee:

  	
   

  	
  3.60% of the face value of each bank
  guarantee, payable half yearly in arrears from issue

  
	
   

  	
   

  	
   

  
	
  Securities:

  	
   

  	
  All securities
  detailed in Part 4 with the exception of the securities
  numbered 1,2,4,5,6,7,8,9&10.

  
	
   

  	
   

  	
   

  
	
  Specific Conditions:

  	
   

  	
  Specific Conditions – Bank Guarantee Facility

  

 

 6
 

 

2              Details
of Facilities – New facilities generally subject to other contractual
documentation

New facilities generally subject to other
contractual documentation are summarised below. Refer to Section B1 of the
General Terms and Conditions for how this Letter of Offer applies
to them.

Not Applicable

 7
 

 

3              Details of Facilities – Existing
facilities generally subject to other contractual documentation

Existing facilities generally subject to other contractual
documentation are summarised below. Refer
to Section B1 of the General Terms and Conditions for how this Letter of Offer applies to them.

Customer:
Bushmans Group Pty Limited

Master Asset Finance Agreement Facility 

	
  Purpose/Utilisation:

  	
   

  	
  Capital Expenditure – Motor Vehicles

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $1,000,000 (one million dollars)

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  30th November 2006

  
	
   

  	
   

  	
   

  
	
  Repayments:

  	
   

  	
  Subject to negotiation at time of drawing.

  
	
   

  	
   

  	
   

  
	
  Residual:

  	
   

  	
  Subject to negotiation at time of drawing.

  
	
   

  	
   

  	
   

  
	
  Securities: 

  	
   

  	
  All securities
  detailed in Part 4 with the exception of securities numbered
  1,3,4,5,6,7,8&10.

  

 

Customer:
Bushmans Group Pty Limited

Business Credit Card Facility 

	
  Purpose/Utilisation:

  	
   

  	
  Business Credit Cards

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $300,000 (three hundred thousand dollars) 

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  30th November 2006

  
	
   

  	
   

  	
   

  
	
  Repayments:

  	
   

  	
  Cleared to working account monthly.

  
	
   

  	
   

  	
   

  
	
  Securities: 

  	
   

  	
  All securities
  detailed in Part 4 with the exception of securities
  numbered 1,3,4,5,6,7,8,9&10.

  

 

Customer:
Channell Pty Limited

Master Asset Finance Agreement Facility 

	
  Purpose/Utilisation:

  	
   

  	
  Capital Expenditure

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $250,000 (two hundred and fifty thousand dollars) 

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  30th November 2006

  
	
   

  	
   

  	
   

  
	
  Repayments:

  	
   

  	
  Subject to negotiation at time of drawing.

  
	
   

  	
   

  	
   

  
	
  Residual:

  	
   

  	
  Subject to negotiation at time of drawing.

  
	
   

  	
   

  	
   

  
	
  Securities: 

  	
   

  	
  All securities
  detailed in Part 4 with the exception of securities
  numbered 1,2,4,5,6,7,8&9.

  

 

Customer:
Channell Pty Limited

Business Credit Card Facility 

	
  Purpose/Utilisation:

  	
   

  	
  Business Credit Cards

  
	
   

  	
   

  	
   

  
	
  Facility limit:

  	
   

  	
  $100,000 (one hundred thousand dollars) 

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  30th November 2006

  
	
   

  	
   

  	
   

  
	
  Repayments:

  	
   

  	
  Cleared to working account monthly.

  
	
   

  	
   

  	
   

  
	
  Securities: 

  	
   

  	
  All securities
  detailed in Part 4 with the exception of securities
  numbered 1,2,4,5,6,7,8,9&10.

  

 

 8
 

 

4              Security

The Customer
must provide, and must ensure that each security provider
provides, all the following securities in a
form and substance satisfactory to us (if the Customer or the security provider
has not already done so). The taking of any new securities
detailed below does not prejudice or waive our right to rely upon, and enforce,
earlier securities.

Registered Mortgage Debentures

Over the whole of the
company assets including goodwill and uncalled capital and called but unpaid
capital together with relative insurance policy assigned to the National
Australia Bank Limited given by.

1.               Channell
Bushman Pty Limited ABN 99 109 821 614

2.               Bushmans Group Pty
Limited ABN 90 090 744 022

3.               Channell Pty
Limited ABN 29 002 735 622

4.               Bushmans
Engineering Pty Limited ABN 49 074 185 461

5.               Polyrib
Tanks Pty Limited ABN 49 062 942 661

6.               Australian
Bushman Tanks Pty Limited ABN 21 058 504 108

Guarantees and Indemnities

7.               In support
of Channell Bushman Pty Limited for $8,850,000 and other liabilities given by:-
Bushmans Group Pty
Limited, Channell Pty Limited, Bushmans Engineering Pty Limited, Polyrib Tanks
Pty Limited and Australia Bushman Tanks Pty Limited

8.               In support
of Bushmans Group
Pty Limited for $3,200,000 and other liabilities given by:- Channell
Bushman Pty Limited, Channell Pty Limited, Bushmans Engineering Pty Limited,
Polyrib Tanks Pty Limited and Australian Bushman Tanks Pty Limited

9.               Master Asset
Finance Agreement for $1,000,000 on account of Bushmans Group Pty
Limited.

10.         Master Asset
Finance Agreement for $250,000 on account of Channell Pty Limited

 9
 

 

5                                         Establishment
Fees and Charges

The Customer
agrees to pay the following fees and charges immediately on acceptance of this Letter of Offer or as otherwise agreed in writing:

Not Applicable

Any additional cost
incurred for the use of external solicitors and consultants will be borne by
the Customer.

These fees and charges
are in addition to any fees set out in the Details of Facilities or Specific
Conditions, and any fees listed in the National’s “A
Guide to Fees and Charges” (Business) book and the National’s
“A Guide to Fees and Charges for International Trade Services” as amended from
time to time.

Other fees and charges
may be payable as set out in this Agreement.

 10

 

6                                         Conditions
Precedent and other
information

 11
 

 

7                                         Covenants
and Undertakings 

Non Standard Covenants and
Undertakings

You undertake to comply with
the following non standard covenants and undertakings at all times.

These
non standard covenants and undertakings are to be assessed and reported as
detailed below.

Specific General Undertakings

Monthly
Management Accounts (Channell Pty Ltd and Channell Bushman’s Group)
incorporating balance sheet, profit & loss and cash flow are to be provided
within 30 days of month end. Any negative variance of greater than 10% on
sales, gross profit and operating profit will trigger a full right of review
and event of default..

The
Bank reserves the right at next review to reinstate prior covenants previously
agreed .

Reporting Covenants

You undertake to
comply with the following reporting covenants at all times.

These
reporting covenants are to be assessed and reported as detailed below.

Annual Accounts (Audited - Excluding Cashflow)

Within
120 days of the close of each financial year, a copy of the audited annual
report or balance sheet and profit & loss account for Channell Bushman Pty
Ltd (Consolidated) and Channell Pty Ltd.

Interim Compliance Certificate

Within
30 days of the close of each month a compliance certificate for Channell
Bushman Pty Ltd (Consolidated) and Channell Pty Ltd signed by one or two of your directors
or authorised representatives as appropriate, detailing as at the end of each
month compliance with the covenants and undertakings detailed in this Agreement for
Channell Bushman Pty Ltd (Consolidated) and Channell Pty Ltd.

Actual to projected cash flow variance

Within
30 days of the close of each month, a copy of your monthly actual to projected
cashflow reports to be provided with commentary on all variances greater than
10% for Channell Bushman Pty Ltd (Consolidated) and Channell Pty Ltd.

Specific Reporting Covenants

Annual
three-way forecast (incorporating balance sheet, profit & loss and cash
flow) are to be provided prior to commencement of each financial year on
account of Channell Bushman Pty Ltd (Consolidated) and Channell Pty Ltd..

 12
 

 

8                                         General
Terms and Conditions

Section A: New Facilities

The following General Terms and Conditions apply to facilities detailed in Part 1 of this Letter of Offer.

A1                                Using
a facility

A1.1                      General

We
agree to make each facility
available to you in
accordance with this Agreement.

A1.2                      Conditions of use of a facility

(a)                                  You do not need to use any facility but if you wish to do so, unless we
otherwise agree, you may
only use a facility if you comply with:

(i)                                     the
conditions precedent and financial, reporting and other covenants in this Agreement which apply generally or in
relation to that facility (if
any); and

(ii)                                  any
conditions we impose on making facilities or the particular facility available.

(b)                                 In
addition, if the Specific Conditions say so, we
may approve or reject each drawing
or other use of a facility in
our discretion.

A2                                Payment
obligations

A2.1                      Your Repayments

Without limiting
clause A2.2, you must pay to us the facility
amount owing for each facility,
including, without limitation, all drawings and
any other amounts you receive
from us under a facility, and any interest charges as set
out in this Agreement, including,
without limitation:

(a)                                  any
amount drawn on a facility in
excess of its facility limit,
immediately, unless we otherwise
agree in writing; and

(b)                                 the
facility amount owing on the expiry date of that facility, unless we otherwise agree in writing; and

(ci)                               the
facility amount owing for that facility, if a facility is cancelled by you
or by us pursuant to
this Agreement, subject to the
Specific Conditions for that facility.

A2.2                      What the Customer must pay

Without limiting
clause A2.1, the Customer must
pay the total amount owing as
provided in this Agreement.

A2.3                      Fees charges and other premiums

(a)                                  The
Customer agrees to pay to us (unless we otherwise agree in writing) and in relation to third parties,
the Customer agrees to indemnify us against, all fees and charges and
premiums, set out or provided for in this Agreement
in accordance with this Agreement.

(b)                                 Fees
and charges, unless otherwise agreed, are not charged on a pro-rata basis and,
once paid, are not refundable in whole or in part.

(c)                                  Without
limiting clause A2.3(a) of these General Terms and Conditions, the Customer must (when we specify) pay us and, in relation to payments to third parties, the Customer agrees to indemnify us against:

(i)                                     an
amount equal to any Taxes and
fees (including registration fees) which becomes payable, or that we reasonably believe are payable, in
connection with, this Agreement,
(including, without limitation, on any document issued under or in connection
with this Agreement such as a bank guarantee and any securities), calculated in accordance with
the relevant legislation. These are payable whether or not the Customer is primarily liable for such Taxes and fees; and

(ii)                                  if
we are liable to pay GST on a supply (as defined in relevant
legislation) (“the supply”) made in connection with this Agreement, an additional amount equal to
the consideration payable for the supply multiplied by the prevailing GST rate; and

(iii)                               when
we ask, our costs and remuneration or any receiver’s costs and remuneration; and

(iv)                              any
reasonable costs we reasonably
incur in connection with or arising out of or contemplated by this Agreement, such as:

(A)                              preparing,
negotiating, executing, accepting, arranging, administering, enforcing or terminating
a facility or this Agreement including all costs incurred;

 13
 

 

(B)                                exercising,
enforcing or preserving rights (or considering or attempting to do so) in connection
with this Agreement or a security.

(d)                                 For
the avoidance of doubt, references to costs in
clause A2.3 of these General Terms and Conditions includes a reference to all costs incurred:

(i)                                     in
respect of all transactions (including, without limitation all payments,
receipts and the banking thereof); or

(ii)                                  in
connection with any finance under a facility
which the Customer requested
not being provided in accordance with the Customer’s
request for any reason (other than our
default); or

(iii)                               in
connection with any bank guarantee, letter
of credit or bill or
any claim by a beneficiary under a
bank guarantee or letter of credit or in connection with a bill; or

(iv)                              if
the Customer is insolvent (including
the amount of all moneys we are
liable to pay under a bank guarantee or
letter of credit); or

(v)                                 if
the Customer or a security provider is in default under a facility;

(vi)                              in
connection with any person (such as any receiver
or attorney) exercising or not exercising rights under this Agreement; or

(vii)                           under
any indemnity we give a receiver appointed under any security in relation to this Agreement; or

(viii)                        as
a result of anything that the Customer has
agreed to do or that we require
the Customer to do in relation to
a facility.

A2.4                      Default Interest and Irregular
Account Fees

If any amount is
not paid to us when it is due
(including if you overdraw a facility, with or without our prior agreement, and you do not immediately repay the amount overdrawn,
or if the Customer is in default
and the total amount owing is
immediately due and payable and the Customer
does not immediately pay that amount):

(a)                                  we may in our
absolute discretion charge the Customer
and the Customer will
be liable to pay default interest on that amount until it is paid or the amount
is otherwise no longer outstanding.

Default interest
is calculated daily at the default interest
rate (if any) and is due and payable monthly, on closure of any account relating to the facility, when the facility amount owing is paid or otherwise
on demand.

The default interest rate for a facility is a variable rate and may change
during the term of the facility.  The current default
interest rate for a facility is
detailed in Details of Facilities sections of this Agreement, or is as notified by us to the Customer from
time to time. If no such rate is detailed or notified, the Customer agrees to pay whichever is the
higher of the interest rate payable under the facility
on that amount or the interest rate or the default interest rate on the account to which that overdue amount is
debited under this Agreement.

The Customer will be notified of any changes
to the default interest rate in
accordance with clause A5.2 of these General Terms and Conditions.

(b)                                 The
Customer authorises us to, and we may either;

(i)                                     debit
any default interest payable by you or
the Customer as and when it is
due and payable to (in our discretion)
the nominated account, or another
account in the name of the Customer whether opened by you or us;
or

(ii)                                  otherwise
capitalize any default interest payable by you
or the Customer as and
when it is due and payable (in our discretion).

You
will then be liable for interest under this clause on that
debited or capitalized amount.

(c)                                  An
Irregular Account Fee may be payable as detailed in the National’s “A Guide to Fees and Charges”
(Business) book (as amended from time to time). If the fee applies, it is
payable immediately.

Nothing in this
clause A2.4 relieves the Customer of
its obligation to make payments as and when due.

A2.5                      Establishing accounts and
accounting for transactions

(a)                                  You authorise us to open any accounts as
required in connection with a facility and
debit amounts to them in accordance with this Agreement.

 14
 

 

(b)                                 Unless
otherwise specifically provided we may
debit any amounts payable in connection with this Agreement or the facilities to any account of yours we decide or apply any payment in connection with this
Agreement towards satisfying
obligations under this Agreement as
we see fit.

(c)                                  If
the Agreement states that amounts
will be debited to a nominated account or
any account you have with us, then you
irrevocably authorise us to
debit these amounts to the relevant account even
if it causes the account to become overdrawn. Alternatively, if a nominated account has insufficient cleared
funds, we may debit those amounts
to any account of yours we decide.

(d)                                 Where
we debit amounts pursuant to this
clause to an account (including a
nominated account) you have with us, opened by:

(i)                                     you, then, to the extent that account is or becomes overdrawn because of
amounts debited under this clause, you must
pay us interest (including
default interest if applicable) on the overdrawn amount in accordance with the
terms of that account; or

(ii)                                  us, you
must pay us Interest
charges on the overdrawn balance of that account
at the default interest rate or,
if there is none, the interest rate on that account.

(e)                                  We generally give you statements for each account under a facility which is an overdraft, at least every three months unless otherwise agreed. If we are not required by law or under the
Code of Banking Practice to give you a
statement, we may choose not to.

A2.6                      How to pay amounts

(a)                                  The
Customer authorises us to debit to the nominated account, or if no such account is nominated or if there are
insufficient cleared funds in the nominated
account, to debit to any other account
the Customer has with us:

(i)                                     any
fees, charges or premiums payable under this Agreement
and any other standard service fees (the amount and nature of which
are detailed in the National’s “A
Guide to Fees and Charges” (Business) book and in the National’s “A Guide to Fees and Charges
for International Trade Services” (as amended from time to time)) on or after
the date they become due; and

(ii)                                  any
amounts payable under clause A2.3(c) of these General Terms and Conditions on
or after the date we pay them or
the date they become due or payable by the Customer
or us (whichever is
earlier).

(b)                                 The
Customer undertakes that it will
pay us all amounts payable under
this Agreement in Australian dollars
and in immediately available funds unless otherwise agreed.

(c)                                  If
a payment is due on a day which is not a banking
day, the Customer may
make the payment on the next banking day,
unless the payment is due in advance in which case the Customer must make the payment on the
preceding banking day.

(d)                                 The
Customer must make all payments
without set-off or counter-claim, and be free and clear of any withholding or
deduction for taxes, levies, Imposts or government charges of any kind unless prohibited
by law. You agree that if a law
requires you to withhold or
deduct any withholding tax from a payment relating to a facility so that we would not actually receive for our own benefit on the due date the full
amount provided for under the facility,
then:

(i)                                     the
amount payable by you is
increased so that, after making that deduction and deductions applicable to
additional amounts payable under this clause, we
are entitled to receive the amount we
would have received if no deductions had been required; and

(ii)                                  you must make the deductions; and

(iii)                               you must pay the full amount deducted to
the relevant authority in accordance with applicable law and deliver the
original receipts to us.

A3                                Economic
costs

Warning:
economic costs can
be high and will increase the amount you owe
us. You can obtain an estimate of applicable economic costs at any time by contacting us.

A3.1                      When economic costs are payable

(a)                                  You must pay to us economic costs whenever an economic event occurs in relation to a facility.

(b)                                 You must pay us the amount of any economic
costs notified to you when
we specify.

 15
 

 

A3.2                      Economic events

(a)                                  An
economic event is taken to have
occurred in relation to a facility if:

(i)                                     the
facility is cancelled for any
reason, or the facility limit is
reduced for any reason other than on its expiry
date (if any); or

(ii)                                  you change the facility from a fixed interest
rate or to a variable interest
rate before the end of a fixed
rate period; or

(iii)                               you are in default, or the total amount owing becomes repayable and we elect to treat it as an economic event; or

(iv)                              the
aggregate face value of bills outstanding
under the facility at any time
for any reason is less than the facility
limit prevailing at the time; or

(v)                                 we are for any reason no longer obliged to
accept, discount or endorse bills under
the facility;

(vi)                              any
payment is made or required to be made under the facility in respect of any bill
for any reason other than on its maturity
date.

A3.3                      Calculation of economic costs

(a)                                  We determine any economic costs arising under the facility by determining our reasonable estimate of the costs and losses incurred by us (including, without limitation, loss of
profits, fees, charges and premiums) in connection with an economic event including, without
limitation, any amount determined by us to
have been suffered or incurred by us by
reason of:

(i)                                     in
relation to a facility other than
a bill facility, a loss or
reduction of profits or return or other costs,
(representing the difference between our cost
of funds at the start of the relevant fixed rate
period) and our cost
of funds at the date of the economic event over
the remainder of that period. This is then discounted back to the net present
value at the rate equivalent to our cost
of funds at that date; or

(ii)                                  in
relation to a bill facility, a
loss or reduction of profits or return or other costs associated with the difference between the rates
applicable to bills under the facility and the rates applicable to bills we would offer to enter into a
specified new transaction when the economic
event occurs. The new specified transaction is a transaction:

(A)                              with
a customer equivalent to you;

(B)                                for
an amount of approximately the same amount as you
pay, fail to pay or draw or are required to pay and;

(C)                                for
a term approximately equal to the period from when the economic event occurs to the date we assumed that amount would otherwise be
due for payment,

(assuming, where
appropriate, that replacement bills are
drawn and accepted, discounted or endorsed by us
in respect of that amount); or

(iii)                               the
liquidation of deposits or other funds, or the termination or reversing of any
swap or option agreement or other agreement or arrangement entered into by us (either generally in the course of our business or specifically in connection
with this Agreement) to fund or
maintain the facility or to
hedge, fix or limit our effective
cost of funding in relation to the facility.

A4                                Top
up security and other co-operation

The Customer must:

(a)                                  provide
us with any additional security interest we reasonably request
(including without limitation a guarantee and indemnity or a mortgage of
additional property) if we determine
that the value of the security materially
decreases (as determined by us):

(b)                                 give
us promptly any information or
documents we reasonably ask for
in connection with this Agreement (including
about the Customer’s or any security provider’s financial position) in
any form we specify;

(c)                                  do
anything (such as producing and signing documents) we reasonably require to give full effect to this Agreement and the securities; and

(d)                                 notify
us promptly if the Customer changes its address.

A5                                Variations

A5.1                      What we can change

We
can, at any time:

 16
 

 

(a)                                  introduce
a new fee, charge or premium;

(b)                                 vary
the amount of a fee, charge or premium, the way in which it is calculated or
when it is charged;

(c)                                  vary
the interest rate or the default interest
rate (except a fixed interest rate during a fixed rate period) including by changing
the relevant indicator rate, Customer Margin or Default Margin (including by making
the margin positive or negative) or by substituting a different indicator rate
for the relevant indicator rate, or by introducing or varying any conditions to
which the application of the interest rate or
the default interest rate or any
margin included in any of them is or may become subject or suspending,
withdrawing or re-introducing its application to the interest rate;

(d)                                 change
the way in which interest, or default interest, is calculated and when it is
debited; and

(e)                                  change
any of the other provisions of this Agreement
as a result of a change to any law affecting this Agreement.

A5.2                      How we will notify you of changes

We
will notify the Customer of
any changes we make under clause
A5.1 of these General Terms and Conditions as follows:

(a)                                  we will give the Customer at least 30 days’ prior written
notice if we introduce a fee,
charge (other than a government charge) or premium, vary the method by which interest
is calculated or vary the frequency with which interest is debited, unless we cannot reasonably locate the Customer;

(b)                                 we will notify the Customer of the introduction of, or any
change to, a government charge payable by writing to the Customer or by advertisement in the
national or local media, unless the government has publicised the introduction
or change;

(c)                                  rates
for bills and  trade finance facilities are
notified as a set out in the Details of Facilities for that facility.

(d)                                 we will notify the Customer of any change that relates to a
change in an interest rate that is not set by us
(such as a money market rate or some other external reference rate)
by the Customer by writing to the
Customer or by advertisement in
the national or local media within a reasonable period of the change being
made, unless another entity has publicised the change; and

(e)                                  we will notify the Customer of any other variation, by
writing to the Customer or by
advertisement in the national or local media no later than the date the
variation takes effect.

A6                                Change
of Circumstances - Illegality

If as a result of
a change in relevant regulation, we determine that it is, or has become
apparent that it will become, contrary to that relevant
regulation for:

(a)                                  us to fund, provide or maintain a facility or otherwise observe or give
effect to our obligations under a
facility; or

(b)                                 a
person from whom we have raised
or propose to raise money in connection with a facility
to fund, provide or maintain that money,

then:

(c)                                  we are no longer obliged to provide any  drawing
or other financial accommodation under a facility;

(d)                                 all
amounts payable under each facility,
including an amount equal to the total face value of all bills accepted, discounted or endorsed by us and the face value of each letter of credit issued by us which remain outstanding, are due and
payable by you to us on demand; and

(e)                                  we may debit any of your accounts (including in the case of a bill facility the nominated account) with the facility amount owing under a facility.

A7                                Change
of Circumstances – Increased Costs

(a)                                  This
clause applies if we determine
that in our opinion any order of
any court or change in relevant regulation will:

(i)                                     subject
us to any taxes or duties with
respect to any facility or any
part thereof or change the basis of taxation of us for payments hereunder (except for taxes or a change in
the rate of tax on our overall
net income imposed by any taxing authority having the power to levy taxes on us); or

(ii)                                  impose,
modify or deem applicable any reserve, capital
adequacy and/or liquidity adequacy requirements against any of our assets, deposits with us or our
account, or loans by us;
or

 17
 

 

(iii)                               impose
on us any other condition with
respect to this Agreement or the
obligations assumed by us under
it; and

as a
result there is:

(iv)                              an
increase in the cost to us of
making available or maintaining the facility;
or 

(v)                                 a
reduction in the amounts receivable or permitted to be received in respect of
any facility or any other payment
due to us in connection with any facility,

by an amount which
we consider to be material.

(b)                                 If
this clause applies:

(i)                                     we will use our best efforts to promptly notify you in writing of the happening of such
event;

(ii)                                  we will use reasonable endeavours to
eliminate or at least mitigate the foregoing adverse consequences in a manner
which does not give rise to costs or other adverse consequences for you or us;
and 

(iii)                               you will indemnify us for any loss suffered by us as a result of the increase in cost or
reduction in the amounts received or permitted to be received, and will pay to us on demand such amount as we require to compensate us in respect of such additional cost or
reduced receipts.

A8                                Events
of Default

A8.1                      When are you in default?

The Customer is in default if:

(a)                                  the
Customer does not pay on time any
amount due under this Agreement or
another financial accommodation agreement
it has with us or any other
person who provides financial accommodation to it; or

(b)                                 the
Customer does something it agrees
not to do, or does not do something it agrees to do under this Agreement or another agreement it has with
us (including if an amount is or
is to be debited under this Agreement to
an account nominated for any
purpose under this Agreement and
there are insufficient cleared funds in that nominated
account to meet that debit); or

(c)                                  an
event occurs which would allow us to
terminate any other agreement, or terminate a transaction under any other
agreement, the Customer has with us; or

(d)                                 the
Customer is in breach of a
covenant or undertaking set out in this Agreement;
or

(e)                                  the
Customer or another person gives us information, or makes a representation
or warranty, which we reasonably
believe to be incorrect or misleading in a material respect when made or deemed
to be repeated in connection with this Agreement
or another agreement it has with us,
or any of the Customer’s representations
and warranties in Part B5 of the General Terms and Conditions are not true and
correct; or

(f)                                    we reasonably believe the Customer has acted fraudulently in
connection with this Agreement or
another agreement with us; or

(g)                                 the
Customer becomes insolvent or steps are taken to make it
so; or

(h)                                 (being
an individual), the Customer no
longer has legal capacity or becomes a person protected by the State; or

(i)                                     the
Customer is in default under a security or withdraws from it or breaches
its terms, or a security is or
may be unenforceable; or

(j)                                     the
Customer stops payment or ceases
to carry on its business or threatens to cease to carry on its business; or

(k)                                  the
Customer breaches any law or
obligation by entering transactions or performing obligations under this Agreement or another agreement it has with
us; or

(l)                                     this
Agreement is, becomes, or is
claimed to be, void or unenforceable; or 

(m)                               a
change in your financial
circumstances occurs which, in our opinion,
may have a material adverse effect on the Customer’s
ability to meet its obligations under any agreement it has with us; or

(n)                                 an
order for payment is made, or a judgment is entered or signed, against the Customer, and it is not satisfied within 5
banking days after that event
unless the order or judgment is the subject of an appeal by the Customer within such period and we are satisfied that there is reasonable
likelihood of success; or

(o)                                 the
Customer is a trustee of a trust
and:

 18
 

 

(i)                                     a
new trustee is appointed or any of the trust fund is resettled or set aside, in
either case without our prior
consent; or

(ii)                                  the
Customer’s right to be
indemnified out of the trust assets is restricted in any way; or

(q)                                 the
Customer is a partnership and any
of the things in paragraphs (a) to (o) above occurs in relation to one or more
of the partners, in which case, the thing is deemed to have occurred in
relation to the Customer; or

(r)                                    any
of the things referred to in paragraphs (b) to (o) above occurs in connection
with a security provider (where
each of those paragraphs is to be interpreted as if the Customer meant the security provider and “the Customer’s” applied to the security provider).

A8.2                      What can happen then?

(a)                                  If
the Customer is in default, we may give the Customer a notice stating that the Customer is in default.

(b)                                 If
the Customer does not, or cannot,
correct the default:

(i)                                     if
a grace period is given in the default notice or required by law, within that
period, or

(ii)                                  if
no grace period is given in the default notice or required by law, immediately,

then, subject to
any applicable law, without further notice to the Customer the total amount
owing becomes immediately due for payment (to the extent it is not
already due for payment), and if the Customer
does not pay it immediately, we may
sue the Customer for that amount,
or enforce any security, or do
both.

A8.3                      How we may exercise our rights

(a)                                  We may exercise a right or remedy, or give
or refuse our consent or
agreement to any request the Customer makes,
in any way we consider
appropriate including by imposing conditions.

(b)                                 We may defer or waive any right or remedy
(including the implementation of any fee or charge) without varying this Agreement or creating a new contract.

(c)                                  If
we do not exercise a right or
remedy fully or at a given time, we can
still exercise it later.

(d)                                 Our rights and remedies under this Agreement are in addition to other rights
and remedies provided by law independently of it.

(e)                                  Our rights and remedies may be exercised
by any of our employees or any
other person we authorise.

(f)                                    We are not liable for loss caused by the
exercise or attempted exercise of, failure to exercise, or delay in exercising,
a right or remedy.

A9                                Partnerships

If the Customer is a partnership, the Agreement will continue to bind each
person who is a partner of that partnership at the date of this Agreement and each person who becomes a
partner whilst this Agreement (as
amended from time to time) remains in force and effect:

(a)                                  despite
any changes which may from time to time take place in the partners, or any
reconstitution of the partnership, whether by the death, incapacity, or
retirement of any partner or the admission of any new partner or otherwise;

(b)                                 despite
the fact that the partnership no longer carries on business; and

(c)                                  despite
the fact that the person or any of his or her partners are no longer members of
the partnership, and the Customer agrees
to procure the execution of any documents we
reasonably require to give full effect to this provision.

A10                         Appointment
of Consultants

(a)                                  We may at any reasonable time appoint
accounting, legal, financial management and other consultants to examine the
affairs of the Customer and any security provider and to make recommendations
relating to the manner in which it carries on its business.

(b)                                 The
Customer will provide (and ensure
each security provider provides)
all assistance considered necessary or desirable by the consultant to enable
the consultant to conduct a proper examination of the Customer’s and any security provider’s affairs. This
includes, without limitation, making the relevant financial records available
to the consultant.

(c)                                  The
Customer will pay the fees of the
consultant.

 19
 

 

A11                         Class
Order

(a)                                  The
Customer must notify us in writing before you seek approval by the Australian
Securities and Investments Commission (“ASIC”) of, or execute any, Deed of
Cross Guarantee.

(b)                                 We may, at our complete discretion, amend or terminate any or all of the facilities if the Customer enters into a Deed of Cross
Guarantee or amends or terminates an existing Deed of Cross Guarantee.

(c)                                  In
this clause “Deed of Cross Guarantee” refers to a deed substantially in the
form of a pro-forma deed issued or otherwise approved by ASIC in order to
satisfy ASIC class order eligibility requirements for relief from certain
Corporations Act 2001 financial reporting obligations.

A12                         Confidentiality

(a)                                  The
Customer and we agree, subject to clause A12(b) of
these General Terms and Conditions, to keep the terms of the Agreement and the securities, and any information which
either may provide to the other in relation to the Agreement or the securities,
confidential.

(b)                                 Clause
A12(a) of these General Terms and Conditions does not prevent disclosure:

(i)                                     if
allowed or required by law, or if required by the Australian Stock Exchange
Limited; or

(ii)                                  in
connection with legal proceedings relating to the Agreement or the securities;
or

(iii)                               if
the information is generally and publicly available; or

(iv)                              to
any Customer of the terms of the Agreement or the securities (as amended from time to time) as
they relate to a facility provided
to you; or

(v)                                 by
us to our subsidiaries, in which case this clause A12 of these
General Terms and Conditions, will apply to the subsidiary; or

(vi)                              by
us to an assignee of our rights under this Agreement pursuant to clause A16(a) of
these General Terms and Conditions; or

(vii)                           by
us to any of our agents, consultant or adviser engaged
by us for the purposes of this Agreement; or

(viii)                        to
any guarantor or proposed guarantor; or

(ix)                                by
the Customer to any consultant
engaged for the purposes of complying with our
requirements under the facility necessary
to enable the consultant to comply with those requirements.

A13                         Setting
off money

We
may set off against amounts the Customer owes us any
money we owe the Customer.

A14                         Code
of Banking Practice

We
have adopted the Code of Banking Practice and relevant
provisions of the Code apply to these facilities,
if the Customer is an individual
or a small business customer (as defined by the Code). The Customer can obtain from us upon request:

(a)                                  information
on our current interest rates and
standard fees and charges relating to these facilities
if any;

(b)                                 general
descriptive information concerning our banking
services including:

(i)                                     for
accounts with cheque access, general descriptive information about cheques;

(ii)                                  account
opening procedures;

(iii)                               our obligations regarding the
confidentiality of the Customer’s information;

(iv)                              complaint
handling procedures;

(v)                                 bank
cheques;

(vi)                              the
advisability of you informing us promptly when the Customer is in financial difficulty; and

(vii)                           the
advisability of the Customer reading
the terms and conditions applying to each banking service we provide to the Customer ;

(c)                                  general
descriptive information about:

(i)                                     the
identification requirements of the Financial Transactions Reports Act 1988
(Cth);

(ii)                                  the
options available to you under
the tax file number legislation; and

(d)                                 a
copy of the Code of Banking Practice.

 20

 

A15                         Our certificates

(a)                                  We may give the Customer a certificate or formal statement about a matter or
about an amount (including economic costs,
where applicable) which is payable in connection with this Agreement. This is sufficient evidence of
the matter or amount, unless it is proved to be incorrect.

(b)                                 We may rely on certificates provided by
any other person with a security as
to the amount owed to them.

A16        Assignment

(a)                                  We may assign or otherwise deal with our rights under this Agreement in any way we consider appropriate. If we do this, the Customer may not claim against any assignee (or any other
person who has an interest in a facility)
any right of set-off or other rights the Customer
may have against us.
The Customer agrees that we may disclose any information or
documents we consider desirable
to help us exercise this right.
The Customer also agrees that we may disclose information or documents
at any time to a person to whom we assign
or propose to assign our rights
under this Agreement.

(b)                                 The
Customer’s rights are specific to
you and may not be assigned.

A17        Holding
Over

If we continue to make a facility available to you after its expiry date or the end of its term, and this Agreement has not been extended, amended
or replaced, then the terms of this Agreement
will continue to apply to the facility
unless and until we otherwise
notify you. The previous sentence
if applied shall not be construed as a waiver of any event of default, or a waiver of any of our rights under this Agreement or as any agreement or
undertaking (implied or otherwise) to grant any extension.

A18        Notices,
other communications and service of documents

A18.1     Form

(a)                                  Notices,
certificates, consents, approvals and other communications in connection with
this Agreement must be in writing
or in any other form permitted by it. When they are for us, they must be in a form satisfactory to
us.

(b)                                 Communications
from us may be signed by any
employee of ours. If the Customer is a company, communications from
the Customer must be signed by a
director or secretary or an authorised representative.

A18.2     Delivery

Communications to
the Customer may be:

(a)                                  given
personally (if the Customer is a
company, to one of your directors);
or

(b)                                 left
at, or sent by post or fax to, an address notified by the Customer to us in writing; or

(c)                                  if
the Customer does not nominate an
address to us in writing, left at
or sent by post or fax to the Customer’s address
last known to us; or

(d)                                 sent
by any other electronic means of which the Customer
has given us particulars;
or

(e)                                  given
by advertising the notice in a newspaper circulating throughout the Customer’s country, state or territory; or

(f)                                    given
in any other way permitted by law.

If there is more
than one Customer, we may provide any communication under
this Agreement jointly to the Customer at the address for service set
out in the acceptance clause of this Letter
of Offer.

A18.3     Communications
for us

(a)                                  Communications
for us must be:

(i)                                     given
personally to one of our employees
at:

(A)                              our address stated in this Agreement; or

(B)                                any
other address we tell you; or

(C)                                our registered office; or

(ii)                                  sent
by prepaid post or electronically (such as by fax or telex) to any of those
places; or

(iii)                               given
in any other way permitted by law.

(b)                                 We may specify from time to time how and
in what form any notice under this Agreement
must be given to us.

 21
 

 

A18.4               Dating

A communication is
taken to be given:

(a)                                  
in the case of a communication given personally - on the date it bears or the
date it is received by the person to whom it is addressed, whichever is the
later; or

(b)                                 in
the case of a communication sent by post - on the date it bears or the date
when it would have been delivered in the ordinary course of post, whichever is
the later; or

(c)                                  in
the case of a communication sent by fax or some other form of electronic
transmission - on the date it bears or the date on which the machine from which
it was sent produces a report indicating that the communication was sent to the
fax (or other) number or other electronic address of the person to whom it is
addressed, whichever is the later; or

(d)                                 in
the case of a communication given by newspaper advertisement - the date it is
first published.

A18.5     Service

We
may serve any document in a court action (including a writ of
summons, other originating process or third or other party notice) on the Customer by delivering it to the Customer’s address last notified to us or by leaving it there. This does not
prevent any other method of service.

A19        Governing
Law and Jurisdiction

This Agreement is governed by the laws of the
state or territory where your relationship
management team is located, as set out in the Relationship Management section
preceding the Letter of Offer.
Each party submits to the jurisdiction of the laws of that state, including
appeal courts.

A20        Consents
and Conditions

The Customer must comply with all conditions
and requirements in any consent we give,
or agreement to any request the Customer makes.

A21        Telephone
recording

The Customer consents to us recording our telephone conversations with the Customer in relation to the facility and such recordings being used in
any arbitral or legal proceedings between us.
Telephone recordings remain our sole
property at all times.

A22        Valuations
are for our benefit

Any property valuation is for our use only. We accept no responsibility for any reliance on a property valuation by any other person.

A23        Time
for repayment

For the purposes
of payments under this Agreement,
a day ends at 4 pm in the State where the relationship management team is
located.

A24        Indemnities

The indemnities in
this Agreement are non-revocable
and continuing obligations, independent of the Customer’s
other obligations under this Agreement.
It is not necessary for us to
incur expense or make payment before enforcing a right of indemnity conferred
by this Agreement.

A25        Total
Amount Owing

In this Section A,
total amount owing means, at any
time, the total of every facility amount
owing in respect of the facilities
detailed in Part 1 of this Letter
of Offer and any other amounts which are then due for payment, or
which will or may become due for payment, in connection with this Agreement.

A26        Severability

If the whole or
any part of a provision of this Agreement is
void, unenforceable or illegal in a jurisdiction, it is severed for that
jurisdiction. The remainder of this Agreement
has full force and effect and the validity or enforceability of that
provision in any other jurisdiction is not affected. This clause has no effect
if the severance alters the basic nature of this Agreement or is contrary to public policy.

A27        Exclusion
of liability in relation to trade finance
facilities and bank guarantee
facilities

The Customer agrees that in connection with
our provision of services to the Customer in relation to bank guarantee facilities and trade finance facilities (including,
without limitation, the making or receiving of a payment on behalf of the Customer) (“Services”), one or more of our branches and other financial
services providers (“Other Banks”)
may be involved. Those branches and Other
Banks may in each case be local or overseas and the Other Banks may or may not be appointed by
us. The Customer agrees that, to
the maximum extent permitted by applicable law, the involvement of those
branches or Other Banks in 

 22
 

 

connection with the Services
is entirely at risk of the Customer
and that we are not liable for loss of any kind arising in
connection with the involvement of any branch or Other Bank or their acts or omissions, whether or not the Other Bank is appointed by us.

Any Service we
provide to the Customer may be
affected directly or indirectly by laws including, without limitation, any
subordinate instrument and the acts, practices and policies of local or foreign
governments and their instrumentalities (a “Regulatory
Authority”) whether or not having the force of law (“Regulations”). Regulations may be those of any place where we or any Other Bank operates, or with which the Services have some direct or indirect
connection, or to which or from which a payment or instruction is made or
received or in which some other thing is done, or may be the Regulations of or applicable to the
currency of any payment. Regulations include,
but are not limited to, those which affect, restrict, prohibit or otherwise
render unlawful transactions, payments or dealings with assets, any person, group
or entity which may or may not include those having a connection with certain
countries, areas, individuals, groups, bodies, entities, materials, items,
substances, political or religious systems, beliefs or convictions. The Services may be interrupted, prevented,
delayed or otherwise adversely affected, either in whole or in part, by reason
of a Regulation including, but
not limited to, where we consider, or any Other
Bank considers, or a Regulatory
Authority asserts, that a Regulation
may apply (each an “Adverse Effect”).
It is entirely the Customer’s risk
if any Adverse Effect occurs and
we have no obligation to contest any act of any Regulatory Authority.

To the maximum extent permitted by applicable law, we,
and any Other Banks, are not
liable for any loss of any kind arising directly or indirectly from or in
connection with any Service including,
without limitation, any Adverse Effect,
whether or not we are, or any Other Bank is,
negligent or in breach of any duty to the Customer
or to any other person.

To the maximum extent permitted by applicable law, our
liability for loss of any kind which cannot be excluded by reason of applicable
law is limited to the cost of having the services supplied again.

The Customer agrees
that we may use or disclose any information about the Customer or the Services or any person connected in any way with the Services to any Other Bank or Regulatory
Authority for any purpose which we consider, or any Other Bank considers, necessary or
desirable in connection with any Regulation or
the Services. The Customer agrees to provide any such
information to us if we ask the Customer to.

 23
 

 

Section B: All Facilities

This section B applies to all the facilities detailed in this Letter of Offer.

B1           How
this Letter of Offer applies to facilities

B1.1       Applicable provisions

The applicable
terms and conditions in relation to the facilities
are set out in the following contract documents as amended from time
to time:

(a)                                  for
new facilities detailed in Part 1
of this Letter of Offer:

(i)                                     the
applicable Details of Facilities in this Letter
of Offer;

(ii)                                  the
Specific Conditions (if any) referred to in the Details of Facilities in this Letter of Offer;

(iii)                               any
additional documentation referred to in the Details of Facilities in this Letter of Offer;

(iv)                              Parts
4 to 7 (inclusive) of this Letter of Offer;

(v)                                 the
General Terms and Conditions in this Letter
of Offer; and

(vi)                              the National’s “A Guide to Fees and Charges”
(Business) book and the National’s “A
Guide to Fees and Charges for International Trade Services” as amended from
time to time (“the Guides”),

(b)                                 for
new facilities detailed in Part 2
of this Letter of Offer:

(i)                                     the
separate contractual documentation between us
and the Customer relating
to those facilities;

(ii)                                  the
applicable Details of Facilities in this Letter
of Offer;

(iii)                               the
Specific Conditions (if any) referred to in the Details of Facilities in this Letter of Offer;

(iv)                              any
additional documentation referred to in the Details of Facilities in this Letter of Offer;

(v)                                 Parts
4 to 7 (inclusive) of this Letter of Offer;

(vi)                              Section
B of the General Terms and Conditions in this Letter
of Offer; and

(vii)                           the
Guides,

(c)                                  for
existing facilities detailed in
Part 3 of this Letter of Offer:

(i)                                     the
separate contractual documentation between us
and the Customer relating
to those facilities (the “existing contracts”);

(ii)                                  the
applicable Details of Facilities in this Letter
of Offer;

(iii)                               the
Specific Conditions (if any) referred to in the Details of Facilities in this Letter of Offer;

(iv)                              any
additional documentation referred to in the Details of Facilities;

(v)                                 Parts
4, 6 and 7 of this Letter of Offer;

(vi)                              Section
B of the General Terms and Conditions in this Letter
of Offer; and

(vii)                           the
Guides.

By signing this Letter of Offer you agree that the existing contracts are varied accordingly
and now comprise the applicable provisions.

B1.2       Applicable
provisions

If there is any
inconsistency between any applicable term or condition in different contract
documents relating to a facility (to
the extent that it is impossible to comply with both), the term or condition
prevails to the extent of that inconsistency in the order of priority set out
above. “Applicable provisions”
means for a facility the terms
and conditions applicable to each facility after
resolving any inconsistency as set out in this clause.

B1.3       Meaning
of Agreement and applicable provisions

For the purposes
of the applicable provisions, the
“Agreement” means the agreement of the parties constituted by the applicable provisions for each of the facilities detailed in Parts 1, 2 and 3 of
this Letter of Offer.

 24
 

 

B2.                             Multi
Option Facility

This clause B2
applies while you have a multi
option facility. At any time
while you have a multi option facility:

(a)                                  you may request a switch between funding
options. If your request is
approved, the switch will take effect on the date and on the terms agreed by you and us.
Switching between the facilities to
which the multi option facility applies
may result in fees, charges, premiums and costs being incurred in accordance
with the specific terms and conditions of the relevant facility;

(b)                                 the
total of all facility limits must
not, at any time, exceed the multi option facility
limit set out in the Details of Facilities or as varied from time to
time; and

(c)                                  the
aggregate amount of drawings under
the multi option facility must
not exceed the multi option facility limit set
out in the Details of Facilities or as varied from time to time, and the total
amount of drawings under a facility which is part of a multi option facility must not exceed the facility limit for that facility as set out in the Details of
Facilities or as varied from time to time.

B3                                Conditions
precedent

(a)                                  We do not need to provide any drawing under any facility unless:

(i)                                     the
Customer has accepted this Letter of Offer or has indicated that the Customer intends to be bound by it in a
manner satisfactory to us;

(ii)                                  you have accepted facilities which are subject to separate
contractual documentation as referred to in Part 2 of this Agreement (if any) in relation to which you are the Customer or have indicated that you intend to be bound by those documents in a manner
satisfactory to us;

(iii)                               the
amount of financial accommodation complies with any minimum, maximum or
multiple requirements determined by us and
advised to you from time to time
in relation to that facility;

(iv)                              we have received any valuation we require, satisfactory to us;

(v)                                 the
results of all our inquiries and
searches are satisfactory to us;

(vi)                              we have received each security, related acknowledgment or
acceptance and title documents, which are satisfactory to us;

(vii)                           any
insurance we require to be
obtained by you has been obtained,
by the Customer or the relevant security provider and we have received evidence satisfactory to us (which may include receiving the policy
document) that any such insurance is current, that the insurer, the amount
insured and the policy terms are satisfactory to us, and that our interest
is noted;

(viii)                        we have received all the documents set out
in Part 6 of this Letter of Offer and
any other document we reasonably
require by written notice to you (including
corporate or trustee authorisations), satisfactory to us;

(ix)                                each
security remains enforceable and
no-one who provides a security is
in default under or has withdrawn from or terminated that security (unless this occurs with our consent);

(x)                                   the
Customer complies, or in our opinion will be able to comply, with
all other reasonable requirements we set,
including any additional conditions, conditions precedent, and financial, reporting
or other covenants set out in Part 7 of this Letter
of Offer, the Details of Facilities, the General Terms and
Conditions or any relevant Specific Conditions, or otherwise agreed.

(b)                                 In
addition to paragraph (a), we are
not obliged to provide any financial accommodation under any facility if:

(i)                                     something
has happened since the Customer applied
for a facility which has led to a
material adverse change in the financial circumstances of the Customer or any security provider or which we
reasonably believe could lead to this; or

(ii)                                  any
insurer has refused to insure a facility for
us; or

(iii)                               the
Customer is, or in our opinion is likely to become, in
default under a facility (for
example, the Customer has not
paid all relevant fees and interest charges or the Customer has given us misleading
financial or other information).

 25
 

 

B4                                General undertakings
and covenants

B4.1       Negative
Pledge and other covenants

(a)                                  The
Customer undertakes to us that it will, and will ensure that each
security provider will, except
with our prior written consent:

(i)                                     promptly
advise us of any event of default or potential event of default or any event of default under any applicable provision however defined;

(ii)                                  maintain
all risks insurance over all its physical assets;

(iii)                               comply
with all applicable laws and pay all obligations that if unpaid might result in
a lien or claim against any of its assets;

(iv)                              maintain
its plant and machinery in a state of good repair, fair wear and tear excepted;

(v)                                 not
raise any financial accommodation from any other party, or give any security interest in relation to it;

(vi)                              not
engage in any other business other than that in which it is presently
operating;

(vii)                           not
merge with or acquire another company or entity;

(viii)                        not
dispose of any of its subsidiaries;
and

(ix)                                not
give any security interest over
its assets.

B4.2       Change
of Shareholding

(a)                                  If
the Customer or any security provider is listed on a stock
exchange the Customer will, and
will ensure that the relevant security
provider will:

(i)                                     promptly
notify us if a majority of its
shares become held by a person who did not hold a majority of the shares as at
the date of this Agreement. For
this purpose, associates shall be treated as the one person.

(ii)                                  deliver
to us a copy of all material
notices issued by it to the exchange, promptly after that notice is given to
the exchange.

(b)                                 If
the Customer or any security provider is a company which is
not listed on a stock exchange, the Customer
will ensure that no transfer of shares (or issue of shares) in the Customer or the relevant security provider is made, without our prior written consent. If the Customer consists of more than one entity,
that consent will not apply to a transfer or issue of shares in any one of
those entities or any security provider to
another of those entities or security
providers.

B4.3       Breach
of Covenants

(a)                                  For
the avoidance of doubt, a breach of any covenant or undertaking in this Agreement is an event of default, howsoever worded, for the purposes of this
Agreement, including without
limitation clause A8 of these General Terms and Conditions.

(b)                                 We may conduct a review of the facilities and the financial position of the Customer if any of the covenants or
undertakings set out in this Agreement are
not complied with to our satisfaction.

B4.4       Review
of Customer and security providers

(a)                                  We may at any reasonable time appoint
accounting, legal, financial management and other consultants to examine the
affairs of the Customer and any security provider and to make recommendations
relating to the manner in which it carries on its business.

(b)                                 The
Customer will provide (and ensure
each security provider provides)
all assistance considered necessary or desirable by the consultant to enable
the consultant to conduct a proper examination of the Customer’s and any security provider’s affairs. This
includes, without limitation, making the relevant financial records available
to the consultant.

(c)                                  The
Customer will pay the fees of the
consultant.

B5                                Representations
and warranties

B5.1       Representations
and Warranties

(a)                                  The
Customer represents and warrants
to us that as at the date of this
Agreement and at all times thereafter:

(i)                                     if
the Customer is a company, it is
duly incorporated and validly existing under the laws of its place of
incorporation;

 26
 

 

(ii)                                  the
Customer has full capacity and
power to enter into and comply with, and has taken all necessary action to
authorise the entry into and compliance with, each facility, this Agreement and
any other documentation detailing the terms of each facility, and to make a drawing
under a facility;

(iii)                               the
Customer has full power and
authority and legal right to carry on its business as presently conducted;

(iv)                              all
financial accounts, reports and factual information furnished to us at any time by the Customer or a security provider:

(A)                              are
true and accurate and not misleading in any material respect,

(B)                                are
(unless we agree otherwise)
prepared in accordance with applicable law and generally applicable Australian
Accounting Standards current at the time of preparation, and

(C)                                give
a true and fair view of your state
of affairs and the result of its operations at the date, and for the period
ending on the date, to which those statements are prepared,

and no material
change has taken place in respect to any of them since the date they were presented
to us;

(v)                                 the
Customer is not in material
default of any law or any agreement, security
or instrument with us or
any other financial institution, and it is not in default in respect of any
material monetary obligation contracted by or imposed upon it;

(vi)                              no
litigation, arbitration or administrative proceedings are current or pending
or, to the Customer’s knowledge,
threatened against it before any court or governmental agency;

(vii)                           the Customer is not insolvent;

(viii)                        no potential event of default has occurred
which by the giving of notice, lapse of time or both would constitute a default
under or in respect of this Agreement, a
security or instrument and the Customer is not in default in respect to
any material monetary obligation contracted by or imposed upon it;

(ix)                                except
as disclosed to and agreed to by us in
writing, the Customer is not
trustee of any trust;

(x)                                   the
Customer will comply with all
applicable laws and pay all obligations that if unpaid might result in a lien
or claim against any of its assets;

(xi)                                the
Customer will not breach any law
or obligation to any person by the execution and performance of this Agreement or of a drawdown notice (including a drawdown
under a facility or other use of
a facility) and the payment of
any amount due under a facility or
in respect of any bill under a bill facility or in respect of any bank guarantee or letter of credit;

(xii)                             the security is in full force and effect; and

(xiii)                          a legal,
valid and binding obligation on the Customer
enforceable in accordance with its terms and conditions arises when
the Customer enters into this Agreement or delivers a drawdown notice and whenever a drawing is made, or a bill is accepted, discounted or endorsed
by us or a bank guarantee or a letter of credit is issued.

(b)                                 The
Customer also gives the above
representations and warranties in respect of any security provider which is not the Customer.

(c)                                  These
representations and warranties are deemed to be repeated with reference to the
facts and circumstances then existing at each date of utilisation of any
financial accommodation, rollover of any bills
or notes, and at the date of execution of each new document under
which credit or financial accommodation is granted by us.

B5.2       Additional
representations and warranties from a trustee

(a)                                  This
clause applies if the Customer or
a security provider enters into
this Agreement or any security as the trustee of a trust or
settlement (the relevant party is called “the trustee” and the relevant trust
is called “the trust” in this clause).

(b)                                 If
this clause applies, the trustee (or, the Customer
where the trustee is a security
provider who is not a Customer) makes
the following representations and gives the following warranties:

(i)                                     the
trustee is the only trustee of the trust; and

(ii)                                  the
trustee will provide to us on
request with a certified copy of the deed of trust creating the trust (“the
trust deed”) and all other documents relating to the trust; and

 27
 

 

(iii)                               the
trust deed and the documents referred to in paragraph (b)(ii) disclose all the
terms of the trust; and 

(iv)                              the
trustee has the power under the trust deed to enter into and observe the
trustee’s obligations under this Letter of
Offer, this Agreement (and
any document or notice under or in connection with them (including, without
limitation, any security); and

(v)                                 the
trustee has in full force and effect the authorisation necessary to enter the
relevant documents, to perform the trustee’s obligations under the relevant
documents and allow them to be enforced (including, without limitation, under
the trust deed and the trustee’s memorandum and articles of association or
constitution (if any)); and

(vi)                              the
trustee has a right to be fully indemnified out of the property held on trust
by the trustee under the trust deed (“the trust fund”) in respect of
obligations incurred by the trustee and has a right to be indemnified out of
the trust fund; and 

(vii)                           the
trust fund is sufficient to satisfy that right of indemnity and all other
obligations in respect of which the trustee has a right to be indemnified out
of the trust fund; and

(viii)                        the
trustee is not in default under the trust deed; and

(ix)                                no
action has been taken or proposed to terminate the trust; and

(x)                                   the
trustee and the trustee’s directors and other officers (if any) have complied
with their obligations in connection with the trust; and

(xi)                                our rights under this Agreement rank in priority to the
interests of the beneficiaries of the trust.

(c)                                  If
this clause applies, the trustee (or, the Customer
where the trustee is a security
provider who is not a Customer)
undertakes that, except with our prior
written consent, none of the following will occur:

(i)                                     re-settlement,
vesting or distribution of capital of the trust; or

(ii)                                  retirement
or replacement of the trustee, or the appointment of a new trustee; or

(iii)                               amendment
of the deed establishing the trust; or

(iv)                              encumbrance
of the assets of the trust; or

(v)                                 breach
of the provisions of the deed establishing the trust.

(d)                                 In
this clause B5.2, “relevant documents” means:

(i)                                     this
Agreement;

(ii)                                  this
Letter of Offer;

(iii)                               any
security; and

(iv)                              any
document or notice required under this Agreement.

(e)                                  The
trustee enters (or, where the trustee is a security
provider who is not a Customer the
Customer will ensure that the
trustee enters) into this Agreement and
any security (and provides any
document or notice under this Agreement)
in the trustee’s personal capacity and as trustee of the trust and for the
benefit of the beneficiaries of the trust.

B6           Definitions
and interpretation

(a)                                  These
meanings apply to this Agreement,
unless otherwise stated:

account
means where relevant an account we establish or have already established in your name for recording transactions, but
does not include an internal suspense account maintained by us for the purposes of any facility.

Agreement
has the meaning described in clause B1.3 of these General
Terms and Conditions.

applicable
provisions has the meaning described in clause B1.2 of these
General Terms and Conditions.

Australian
Trade Refinance rate means the rate advised by us as such at the commencement of the relevant
term, details of which can be obtained from us.

balance
owing means, for an account,
at any time, the difference between all amounts credited and all amounts
debited to it at that time. When this amount is to be calculated for the end of
a day, it includes all debits and credits assigned to that day.

bank
guarantee means a bank guarantee provided or to be provided
by us to a beneficiary on the date issued in our standard form of bank guarantee from time to time.

 28
 

 

banking
day means a day other than a Saturday or Sunday, or a day
gazetted as a public holiday throughout Australia.

beneficiary
means, in relation to a bank
guarantee or a letter of credit,
a person to whom the bank guarantee or
letter of credit is to be, or
already has been issued.

bill
means a bill of exchange in accordance with the Bills of
Exchange Act 1909 (Cwith) (including any bill accepted or drawn by means of
facsimile signature or by electronic or other means and any equivalent
obligation which is a dematerialised security as this term is defined in the
Austraclear System Regulations (as determined by Austraclear Limited (or its
successor or assignee) from time to time) or anything we deem to be a “bill” for the purposes of
this Agreement.

bill
facility means a facility which
is described in the Details of Facilities as a Bill Facility.

capital
adequacy means tangible
net worth divided by total
tangible assets.

change
in relevant regulation means any change in any relevant regulation (including the introduction
of a new relevant regulation), or
any change in the interpretation or administration of any relevant regulation after the date of this
Letter of Offer.

costs
means any costs, charges, expenses and other outgoings
(including in connection with legal and other advisers on a full indemnity
basis), and by the use of our employees
and facilities and, in the case
of a mortgage, where applicable, in preserving and maintaining the property the
subject of the mortgage (such as by paying insurance, rates and taxes for the
property), interest, penalties and fines.

current
ratio means Current Assets divided by Current Liabilities.

Customer
means each customer named in the Details of Facilities
sections of this Letter of Offer.
If there is more than one person named as Customer,
Customer means each of them
separately and every two or more of them jointly. Customer includes the customer’s successors.

date
issued means, in relation to a bank guarantee, the date specified in the Details of
Facilities section of this Letter of Offer or
otherwise agreed as the date on or before which a bank guarantee is to be, or has already been, issued by us to the beneficiary.

default
interest rate has the meaning described in clause A2.4(a) of
these General Terms and Conditions.

Details
of Facilities means, in relation to a facility, the facility details in relation
to that facility in Part 1, 2 or
3 of this Letter of Offer.

dividend
payout amount means the amount of dividend payments plus
increased loans to shareholders, expressed as a percentage of Net Profit after
Tax.

drawdown
date means:

(a)                                  for
a facility other than a bill facility, each date on which a facility (or part thereof) is drawn; and

(b)                                 for
a bill facility, the date on
which a bill is accepted,
discounted or endorsed under a facility,
as specified in the Details of Facilities. 

drawdown notice means:

(a)                                  where
the facility is a bill facility,
a notice requesting us to accept
a bill in accordance with this Agreement in the form required by us; and

(b)                                 where
the facility is a facility other
than a bill facility, a notice in
a form acceptable to us requesting
a drawing under the facility.

drawing
means each financial accommodation actually provided under a facility (including our acceptance, discount or endorsement of
a bill drawn by you under a bill facility and the issue of bank guarantees or letters
of credit).

economic
costs and economic event each
has the meaning described in clause A3 of these General Terms and Conditions.

 29
 

 

Effective
Interest Rate means a per annum rate of interest, calculated
as at the date of this Agreement,
using the following formula:

e = [(1 + r)n - 1] x 100

where:

·                                          e is the Effective Interest Rate;

·                                          r is the relevant interest rate divided by
n, divided by 100;

·                                          n is the number of interest compounding
periods per annum (eg if interest is compounded monthly, n = 12)

In calculating the
Effective Interest Rate we have
assumed that the interest compounding periods are of equal length.

event
of default means an event so described in clause A8.1 of these
General Terms and Conditions.

expiry
date means for a facility,
the date specified as such in the Details of Facilities, or otherwise agreed
between us from time to time.

facility
means financial accommodation (including the acceptance,
discounting and endorsement of bills and
the issue of bank guarantees or a
letter of credit drawing or any drawing which refinances a letter of credit drawing) provided to you under this Agreement or as otherwise agreed.

facility
amount owing means at any time, the total of all amounts
which are then due for payment, or which will or may become due for payment to us under this Agreement in relation to a particular facility  and
which has not then been fully and finally paid, and includes, without
limitation, the face value of any bill drawn
by you under a bill facility, the guaranteed amount of
any bank guarantee issued by us and the total face value of any letter of credit.

the facility limit for a facility is at any time the amount
described as such in the Details of Facilities for that facility as reduced or increased in
accordance with this Agreement.

facility
limit deduction means the total face value of any bank guarantee or letter of credit or
similar instrument issued by us under
any other agreement with you which
have not been cancelled to our satisfaction.

finance
charges means operating lease rental expense.

financial
accommodation means any financial accommodation and includes
the acceptance, discounting and endorsement of bills
and the issue of bank guarantees.

financial
charges cover means Earnings Before Interest and Tax plus finance charges divided
by interest plus finance charges.

gearing
/ leverage ratio means Total Liabilities divided by tangible net worth.

General
Terms and Conditions, when used in other Parts of this Letter of Offer, means this Part 8 of this
Letter of Offer.

Group
Member or Group means
the Customer and each corporation
which is a related entity as that term is defined the Corporations Act 2001
(Cth).

GST
means goods and services tax or any similar tax.

guaranteed
amount means, in relation to a bank guarantee, the amount specified as the Guaranteed Amount
in the bank guarantee.

insolvent
means being an insolvent under administration, being
insolvent, having a controller appointed (each as defined in the Corporations
Act 2001 (Cth)), being in receivership, receivership and management,
liquidation, provisional liquidation, under administration, wound up, subject
to any arrangement, assignment or composition, protected from creditors under
any statute, dissolved (other than to carry out a reconstruction while solvent)
or otherwise unable to pay debts when they fall due, if a person is appointed
under legislation to investigate or manage any part of the Customer’s or any security provider’s affairs.

intangible
assets means deferred development expenses, deferred foreign
exchange gains, organisational or experimental expenses, research and
development expenses, intellectual property, future income tax benefits,
goodwill, patents, trademarks, service marks, design rights, franchises, copyrights,
licences, underwriting and formation expenses and other items of a like nature
which, according to current accounting practice, are regarded as intangible
assets. 

interest
for the purpose of financial reporting covenants means gross
interest expense (including finance lease, other external debt and subordinated
debt interest).

 30

 

interest
cover means Earnings Before Interest and Tax divided by
interest (including finance lease, other external debt and subordinated debt
interest).

Interest
Rate per Interest Period means a per annum rate of interest,
calculated as at the date of this Agreement,
using the following formula:

	
  

  	
  interest rate

  	
   

  
	
   

  	
  n

  	
   

  

 

where n is the number of interest compounding
periods per annum (eg if interest compounds monthly, n = 12)

In calculating the
Interest Rate per Interest Period we have
assumed that the interest compounding periods are of equal length.

inventory
and debtors to working capital debt ratio means inventory and
debtors divided by working capital debt.

letter
of credit means a documentary letter of credit or a standby
letter of credit issued by us pursuant
to a facility.

letter
of credit drawing means the issue of a letter of credit provided to you under this Agreement as described in Part 1 of this Agreement or as otherwise agreed.

letter
of credit documentation means any application, schedule,
letter, advice or invoice setting out or amending the terms on which any letter of credit or proposed letter of credit is to be or has been issued
or any drawing is to be or has
been made under any trade finance facility.

Letter
of Offer means this Letter of Offer executed by us.

maturing
bill means a bill maturing
on a maturity date.

maturity
date means the date on which a bill is due to mature or a lease
is due to expire.

nominated
account means:

(a)                                  for
a facility other than a bill facility, an account for debiting amounts agreed to be
debited to the nominated account;
or

(b)                                 for
a bill facility, an account for debiting and crediting any
amounts under this Agreement,
being the account specified as
such in the Details of Facilities for that facility,
or any other account which:

(i)                                     we agree is the nominated account for that facility
from time to time; or

(ii)                                  you advise us in a drawdown notice issued
either after the date of this Agreement is
to be the nominated account.

occupancy
(Accommodation) means actual level of rooms occupied of the
motel/hotel divided by the total number of rooms.

occupancy
(Commercial) means total occupied space, at any given time,
divided by the total lettable space as determined by us at our discretion.

potential event of default means
an event which, with the giving of notice, lapse of time or fulfilment of any
condition, would be likely to become an event
of default.

presales/debt cover ratio means
net acceptable presales (pre GST and selling and legal costs), as determined by
us at our discretion, divided by total level of property finance
debt limits.

property finance interest cover ratio
means net rental (total passing rental income stream (exclusive
of GST) after deduction of all outgoings and other property related
non-recoverable costs, as determined by us at
our discretion) divided by
interest expense as assessed against the tenancy schedule provided by you to us.
We reserve the right to verify,
amend and/or test the tenancy information provided.

property finance loan to value ratio means
total property finance debt limits divided by the current value we ascribe at our discretion of the freehold security.

receiver includes
any receiver, receiver and manager, controller, liquidator, provisional
liquidator, mortgagee, administrator or other like official.

relevant regulation means
any law, regulation or an official policy, directive or guideline, which has the
force of law, or compliance with which is in accordance with normal banking
practice in the jurisdiction concerned.

replacement bill means
a bill replacing a maturing bill.

 31
 

 

security means each
security interest described in
Part 4 of this Letter of Offer and
any substitute or additional security
interest applicable to this Agreement.
Security also includes any
priority agreement relating to any security.

security interest means
any security for the payment of
money or performance of obligations including a mortgage, charge, lien, pledge,
trust or power. Security interest also
includes a guarantee, indemnity or a guarantee and indemnity.

security provider means,
in relation to a facility, each
person (other than the Customer for
that facility) who gives a security.

subsidiary has the
same meaning as under the Corporations Act 2001 (Cth).

tangible net worth means
total tangible assets minus Total
Liabilities.

Taxes means taxes,
levies, imposts, charges and duties (including stamp and transaction duties) imposed
by any authority together with any related interest, penalties, fines and
expenses in connection with them, except if imposed on, or calculated having
regard to, our net income.

total amount owing means,
at any time, the total of every facility
amount owing and any other amounts which are then due for payment,
or which will or may become due for payment, in connection with this Agreement.

total tangible assets means
all assets other than intangible assets.

trade finance facility means
a documents surrendered facility, a trade refinance facility or an overseas
documents surrendered facility.

we, us, ourselves or the National means National Australia Bank
Limited ABN 12 004 044 937 and its successors and assigns.

working capital debt means
current finance facilities including an overdraft facility, trade finance facility
or bill facility.

you or your means, in relation to a facility, the person or persons named as Customer in the Details of Facilities for
that facility. If there is more
than one person named as Customer,
you means
each of them separately and every two or more of them jointly. You or your includes your successors.

(b)                                 Where
a term is defined or otherwise described in the Details of Facilities in
relation to a facility (for example,
expiry date or facility limit), a reference in the
General Terms and Conditions or Specific Conditions or other parts of this Letter of Offer to that term is a
reference to that term as so defined or described.

(c)                                  Terms
used in this Agreement have the
meaning given to them in generally accepted accounting principles and standards
in Australia unless otherwise expressly defined.

(d)                                 A
reference to:

(i)                                     a
month means a calendar month unless otherwise stated;

(ii)                                  any
thing includes the whole and each part of it;

(iii)                               a
document includes any variation or replacement of it;

(iv)                              law
means common law, principles of equity, and laws made by parliament (and laws
made by parliament include regulations and other instruments under them, and
consolidations, amendments, re-enactments or replacements of them);

(v)                                 the
words including, such as or for example when introducing an example do not
limit the meaning of the words to which the example relates to that example or
examples of a similar kind;

(vi)                              the
word person includes an individual, a partnership, a body corporate, an
unincorporated association or an authority; and

(vii)                           interest
rate means a rate per cent per annum.

(e)                                  If
something is to be “satisfactory to us”,
it must be satisfactory in both form and substance to us, and, if we require, to our legal
advisers.

(f)                                    The
singular includes the plural and vice versa.

(g)                                 Headings
are for convenience only and do not affect the interpretation of this Agreement.

 32
 

 

9                                         Specific Conditions - Bill
Facility

1                                         Application
of Part

Clauses 1 to 23
(inclusive) of these Specific Conditions - Bill Facility apply to any facility which is a bill facility.

2                                         Facility
operation

(a)                                  Provided
you have met all the conditions
precedent and all financial, reporting or other covenants applicable to the facility you may use a facility by obtaining a drawing under the facility on each drawdown date.

(b)                                 If
the Details of Facilities or these Specific Conditions specify that certain
details are to be confirmed in a Bill
Facility Record or Drawdown
Schedule and you think
that a Bill Facility Record or Drawdown Schedule contains any error, then
you must tell us within 5 banking days of you receiving
it.

3                                         Procedure
for drawdown

(a)                                  Each
time that you wish to request a drawing, you
must give to us, at
least 5 banking days prior, a duly
completed drawdown notice. You cannot revoke a drawdown notice once it is given under
this clause unless we agree.

(b)                                 If
a drawdown notice provides that we are to draw bills under a power of attorney, then you agree that the drawdown notice is the instruction to us to draw the bills and clause 6 of these Specific Conditions – Bill
Facility will apply for replacement bills.

(c)                                  If
you are to draw bills prepared by us, then you
must include with each drawdown
notice the bills referred
to in it and clause 5 of these Specific Conditions – Bill Facility will apply
for replacement bills.

(d)                                 Each
bill must be drawn:

(i)                                     in
accordance with this Agreement;
and

(ii)                                  in
accordance with the Bills of Exchange Act 1909 (Cwith) so that it is valid and
attracts the benefit of any provision of that Act in relation to that bill.

(e)                                  A
bill drawn under the facility must:

(i)                                     be
drawn no earlier than the commencement date;

(ii)                                  have
a maturity date which is no later
than the expiry date for the facility; and

(iii)                               have
a face value and maturity date which
is such that if the bill were
drawn, accepted or discounted:

(A)                              the
total facility amount owing would
not exceed the facility limit at
any time until the maturity date of
the bill; and

(B)                                if
the facility is described as a
Bill Facility - Acceptance and Discount – National Flexible Rate in the Details
of Facilities, the aggregate face value of the bills
allocated to a bill facility
component, when taking into account the maturity date of any other bills
allocated to that bill facility
component, would not be greater than the amount of the bill facility component at any time until
the maturity date of the bill; and

(C)                                if
the facility is described as a
Bill Facility - Acceptance and Discount - Flexible Drawdown Fixed Rate in the
Details of Facilities, the facility amount
owing would be at least equal to the facility floor.

(f)                                    We may, in our discretion, require that any bills drawn under the facility
have a face value of no less than a minimum amount.

4                                         Replacement bills

During the term of
the facility and subject to this Agreement, on the maturity date of each bill accepted, discounted or endorsed
under the facility you may draw a
replacement bill having a face
value specified in accordance with clause 8 of these Specific Conditions – Bill
Facility.

5                                         Replacement bills - not automatic

If you are to draw a replacement bill prepared by us (that is, bills are not drawn under a power of attorney given by you to us),
then you must deliver, except
with our consent, the drawdown notice for the replacement bill (and the replacement bill) to us at least 5 banking days prior to the drawdown
date.

6                                         Replacement bills - automatic

If we are to draw bills under a power of attorney given to us by you
then, subject to clause 7 of these Specific Conditions – Bill
Facility, on the maturity date of
each bill accepted, discounted or
endorsed under the

 33
 

 

facility,
you will be taken to have
delivered a drawdown notice to us for a replacement
bill on the same terms as the maturing
bill (including, if the facility is
described as a Bill Facility - Acceptance and Discount – National Flexible Rate
in the Details of Facilities, that the replacement
bill be allocated to the same bill
facility component as the maturing
bill), except that:

(a)                                  the
face value of the replacement bill will
be determined in accordance with clause 8 of these Specific Conditions – Bill
Facility;

(b)                                 the
maturity date of the replacement bill will be the date that
occurs at the end of a period of the same length as the period between the drawdown date and the maturity date of the maturing bill. However:

(i)                                     if
this means that a replacement bill would
have a maturity date that is not
a banking day, then the replacement bill will be drawn to have a maturity date that is the next banking day after that day. Any days that
are added to such a period because the day at the end of the period is not a banking day, will be disregarded for the
purpose of calculating the next subsequent maturity
date (For example, if a 90 day bill
would mature on a Saturday, then the maturity date for the purposes of this clause will be the
next banking day. However, a replacement bill subsequently drawn to
replace that bill will be for 90
days, again unless the maturity date for
that bill would not be a banking day, in which case it matures on
the next banking day); and

(ii)                                  if
this means that the maturity date of
the replacement bill would occur
after the expiry date, then
paragraph (i) above does not apply and the maturity
date of the replacement bill will
be:

(A)                              the
expiry date, if the expiry date is a banking day; or

(B)                                the
last banking day before the expiry date, if the expiry date is not a banking day;

(c)                                  if
the maturity date of the replacement bill determined in accordance
with (b) above may result in the facility
amount owing exceeding the facility
limit at any time until the maturity
date of the bill, then
(b) above does not apply and the maturity
date of the replacement bill will
be determined by us in our discretion to ensure that the facility limit is not so exceeded;

(d)                                 if
the facility is described as a
Bill Facility - Acceptance and Discount – National Flexible Rate in the Details
of Facilities and the maturity date of
the replacement bill determined
in accordance with (b) above may result in the aggregate face value of the bills allocated to a bill facility component being greater than
the relevant bill facility component at
any time before until the maturity date of
the bill, then paragraph (b)
above does not apply and the maturity date of
the replacement bill will be determined
by us in our discretion to ensure that the relevant
bill facility component is not so
exceeded;

(e)                                  if
this clause applies, for the avoidance of doubt you acknowledge that any action we take pursuant to your instructions
under this clause is not intended to be and should not be taken to be a waiver
of any right or remedy that we have
in connection with this Agreement.

7                                         Replacement bills - stopping automatic
replacement

If clause 6 of
these Specific Conditions – Bill Facility applies, you may subsequently notify us
that you do not want
the procedure in that clause to apply to the facility
for a specified period or until the expiry
date of the facility,
by providing us with written
notice to this effect, in a form acceptable to us.
If such notice is received by us at
least 5 banking days before the maturity date of a bill, then clause 6 of these Specific
Conditions – Bill Facility will not apply to the bill on that maturity
date.

8                                         Face
value of replacement bills

(a)                                  You may draw replacement bills on a maturity
date in accordance with clauses 4 to 7 of these Specific Conditions –
Bill Facility, which have an aggregate face value:

(i)                                     up
to the facility limit prevailing
at the time of the maturity date (after
such maturing bills mature); and

(ii)                                  if
the facility is described as a
Bill Facility - Acceptance and Discount - Flexible Drawdown Fixed Rate in the
Details of Facilities, such that the facility
amount owing would be at least equal to the facility floor.

However, if clause
6 of these Specific Conditions - Bill Facility applies:

(iii)                               the
replacement bills will have an
aggregate face value equal to the lower of the aggregate face value of the maturing bills and the amount up to the facility limit prevailing at the time of
the maturity date (after such maturing bills mature); and

(iv)                              if
the facility is described as a
Bill Facility - Acceptance and Discount – National Flexible Rate in the Details
of Facilities we will allocate
any replacement bills to the same
bill facility component as the
corresponding maturing bill. Any replacement bills allocated to a bill facility component under this clause
will have an aggregate face value equal to the lower of the aggregate face

 34
 

 

value of the maturing bills allocated to that bill facility component and the amount up
to the bill facility component amount
prevailing at the time of the maturity date (after
such maturing bills mature).

(b)                                 If
you do not draw replacement bills on the maturity date in accordance with clauses 4
to 7 of these Specific Conditions – Bill Facility, subject to this Agreement you may subsequently re-draw bills under the facility which have an aggregate face value equal to the
maximum amount possible such that the facility
limit prevailing at the time of the re-draw is not exceeded (taking
into account any other bills drawn
under the facility that do not
have a maturity date on the day
that the relevant bills are re-drawn);
or

(c)                                  If
you draw replacement bills on the maturity date and we do not accept, discount or endorse the replacement bills pursuant to clause 2 of
these Specific Conditions – Bill Facility, we
are no longer obliged to accept any bill
under the facility and
we may reduce the facility limit to zero.

9                                         Amortising
facilities

If the facility is an amortising facility then:

(a)                                  the
facility limit reduces:

(i)                                     on
the dates or per the periods, and by the amounts, specified in the amortisation schedule; and

(ii)                                  in
accordance with clauses 8(b) and (c) of these Specific Conditions – Bill
Facility; and

(b)                                 if
the facility is described as a
Bill Facility - Acceptance and Discount – National Flexible Rate in the Details
of Facilities, the fixed amount,
the floor/cap amount and the floating amount reduce in accordance with
the Details of Facilities or as otherwise provided under this Agreement;

(c)                                  if
the facility is described as a
Bill Facility - Acceptance and Discount - Flexible Drawdown Fixed Rate in the
Details of Facilities, the facility floor reduces
in accordance with the Details of Facilities or as otherwise provided under
this Agreement.

10                                  Non-amortising
facilities

If the facility is a non amortising facility then the facility limit reduces in accordance with clauses 8(b) and
(c) of these Specific Conditions – Bill Facility.

11                                  Discounting
of bills

(a)                                  Where
bills are drawn for discounting:

(i)                                     the
face value of each bill must be
acceptable to us; and

(ii)                                  the
aggregate face value of all bills in
a single drawdown must be in accordance with the Details of Facilities or
otherwise acceptable to us; and

(iii)                               the
term of each bill must be
acceptable to us and except as
otherwise agreed by us must not be
less than 30 days nor more than 180 days and must not have a maturity date later than the expiry date; and

(iv)                              each
bill must be payable on such
days, to such persons and at such places in Australia as we agree.

(b)                                 We agree to purchase bills referred to in paragraph (a) above
on the relevant drawdown date at
the yield rate prevailing on that
drawdown date. We agree to pay the proceeds of discount of such bills to the nominated account.

(c)                                  Proceeds of discount in relation to a bill discounted by us under a bill facility are the amount derived by application of the
formula:

Proceeds of discount =

(FV x 36,500) / ((DM x R) + 36,500)

where:

FV is the face
value of the bill;

DM is the number
of days to maturity of the bill (being
the number of days from and including the issue date of the bill to but excluding the maturity date of the bill); and

R is:

(a)                                  for
a bill facility other than a bill facility described as a Bill Facility
- Acceptance and Discount – National Flexible Rate Facility in the Details of
Facilities, the yield rate expressed
as a percentage per annum; or

 35
 

 

(b)                                 for
a bill facility described as a
Bill Facility - Acceptance and Discount – National Flexible Rate Facility in
the Details of Facilities, the yield rate for
the bill facility component to
which the bill is allocated.

12                                  Discounting
and replacement of bills

(a)                                  If
we have agreed in accordance with
this Agreement to accept a replacement bill, your obligation to pay us the face value of the maturing bill may be satisfied by us:

(i)                                     debiting
the face value of the maturing bill to
the nominated account; and

(ii)                                  accepting
the replacement bill; and

(iii)                               crediting
the proceeds of discount of the replacement bill to the nominated account; and

(iv)                              debiting
any applicable fees, charges or premiums payable in respect of the replacement bill under clause A2.3 of the
General Terms and Conditions to the nominated
account.

(b)                                 As
an alternative to the procedure outlined in paragraph (a) above, at our discretion, if we have agreed to accept a replacement bill your obligation to pay us the face value of the maturing bill may be satisfied by us:

(i)                                     debiting
the face value of the maturing bill to
an internal suspense account maintained by us;
and

(ii)                                  accepting
the replacement bill; and

(iii)                               crediting
the proceeds of discount of the replacement bill to an internal suspense
account maintained by us;

(iv)                              debiting
the nominated account with the
amount of the remaining balance of the suspense account maintained by us; and

(v)                                 debiting
any applicable fees, charges or premiums payable in respect of that replacement bill under clause A2.3 of the
General Terms and Conditions to the nominated
account.

13                                  Payment
of bills

(a)                                  You must pay to us the face value of a bill
accepted, discounted or endorsed by us
under the facility on
its maturity date.

(b)                                 Your obligations in relation to a bill so drawn and accepted, discounted or
endorsed continue despite the fact that we are
or become the holder of the bill in
our own right on or after its maturity date.

(c)                                  We may pay a bill on its maturity date
without enquiring as to the title of the person presenting the bill for payment.

(d)                                 You agree to indemnify us against any liability, loss or costs
(including consequential or economic loss) we
may incur on or in connection with:

(i)                                     your or a security
provider’s default under the facility;

(ii)                                  us exercising, enforcing or preserving
rights (or considering or attempting to do so) in connection with the facility or a bill.

You
agree to pay us the
amount of our liability, loss or
costs when we specify. This
indemnity is in addition to any other indemnity or obligation in our favour contained in this Agreement or given by law.

(e)                                  You may not prepay any bill accepted, discounted or endorsed by us under the facility unless we agree.

14                                  Power
of attorney

(a)                                  If
a drawdown notice in relation to
the facility provides that we are to draw bills under a power of attorney, you irrevocably appoint us
to be your attorney on
your behalf and in your name to draw, make, deliver, sign,
endorse or negotiate any bill drawn
or which may be drawn under the facility in
accordance with this clause.

(b)                                 You agree that:

(i)                                     we may act on instructions oral or in
writing (including by facsimile) received from you
concerning whether or not to draw bills
and the aggregate face value and term of bills to be drawn, but we
are not obliged to act on those instructions, and we may require your instructions to be in writing; and

(ii)                                  this
power of attorney may be exercised under hand or by facsimile signature of any
two of our officers acting
jointly who, at the time of exercise of power under this power of attorney, are
authorised by us to sign, accept
or endorse bills on our behalf; and

 36
 

 

(iii)                               this
power of attorney is granted to secure the performance of your obligations under the facility, is irrevocable and remains in
full force and effect until your obligations
under the facility and any bills are discharged; and

(iv)                              you will indemnify us and our
officers against any liability, loss or costs (including consequential or economic loss) we may incur out of the exercise of any of
the powers and authorities contained in this power of attorney; and

(v)                                 no
person dealing with us need be
concerned to see or enquire as to the propriety or expediency of anything which
we may do, purport to do or
perform in your name by virtue of
this power of attorney; and

(vi)                              you will ratify and confirm all that we lawfully do or cause to be done by
virtue of this power of attorney.

15                                  Cancellation
by you

(a)                                  You may cancel the facility, with effect on the last maturity date of the bills outstanding under the facility, by giving us at least 30 banking days’ notice before the maturity date of each of those bills. You cannot
revoke a notice once it is given under this clause unless we agree.

(b)                                 If
you give a notice under this
clause then:

(i)                                     we are no longer obliged to accept,
discount or endorse bills under
the facility; and

(ii)                                  on
the maturity date you must pay us
the face value of the maturing
bills accepted, discounted or endorsed under the facility.

16                                  Economic
costs and economic benefits

(a)                                  Economic benefits or economic costs may arise under the facility if an economic event occurs.

(b)                                 We will determine the amount of any economic benefits and notify you of that amount (if any). We will pay you the amount of any economic
benefits so notified within 7 banking
days of such notification.

(c)                                  We determine any “economic benefits” arising under the facility by determining the net amount of returns
and gains obtained by us in
connection with an economic event including,
without limitation, any amount determined by us
to have been gained by us by
reason of:

(i)                                     increases
of profits or returns or other gains associated with changes in the rates
applicable to bills under the facility and the rates applicable to bills we would offer to enter into a new transaction
when the event occurs, which transaction is with a customer equivalent to you for an amount of approximately the
same amount as you pay, fail to
pay or draw or are required to pay and for a term approximately equal to the
period from when the event occurs to the date we
assumed that amount would otherwise be due for payment (assuming,
where appropriate, that replacement bills are
drawn and accepted, discounted or endorsed by us
in respect of that amount); or

(ii)                                  the
liquidation of deposits or other funds, or the termination or reversing of any
swap or option agreement or other agreement or arrangement entered into by us (either generally in the course of our business or specifically in connection
with this Agreement) to fund or
maintain the facility or to
hedge, fix or limit our effective
cost of funding in relation to the facility.

(d)                                 Economic costs will be determined and
become payable under clause A3 of the General Terms and Conditions.

17                                  How
we assign debits

Except as
otherwise provided in these Specific Conditions, and subject to this Agreement, we may debit all amounts, fees, charges or premiums payable
by you in connection with the facility to the nominated account.

18                                  Additional
consequences if you are in default

If you are in default under this Agreement then, in addition to clause A8.2
of the General Terms and Conditions:

(a)                                  if
on the day when you make a
payment required under clause A8.2 of the General Terms and Conditions there
are any bills which have not been
presented for payment, and a portion of that payment is not yet required to
meet payment of those bills, then
we agree to deposit that portion
in an interest bearing deposit account on terms which we think fit. The deposit may be made with
any person we decide on
(including, without limitation, ourselves);
and

(b)                                 when
a bill is subsequently presented
for payment, we agree to apply
the portion referred to in paragraph (a) above towards paying the holder of
that bill. We agree to pay to you the amount which we certify to be that part of the portion,
and any interest earnings (net of our income
tax liability in

 37
 

 

connection with
those earnings) on that part of the portion, remaining after satisfaction of
all your obligations (contingent
or otherwise) under this Agreement and
any facility.

19                                  Rate
advice

(a)                                  The
yield rate applying on a drawdown date under the facility will be confirmed in the Bill Facility Record which we will forward to you within 7 banking days after the drawdown
date, except as set out in paragraph (b) below.

(b)                                 Where
the facility is described as a
Bill Facility – Acceptance/Discount – National Flexible Rate Facility in the
Details of Facilities, the weighted average of all yield rates applying to the bill
components on a drawdown date under
the facility will be confirmed in
the Bill Facility Record which we will forward to you within 7 banking days after the drawdown
date. Details of Facilities of individual yield rates are available on request.

(c)                                  If
these Specific Conditions provide that we are
to advise you of a rate applying
to your facility, you may contact us before the first drawing
is made under the facility to
ascertain the rate that will apply to your
facility. The rate we quote
will apply to your facility if you make your
first drawing by
4.30pm on the date we quote the
rate. If this condition is not satisfied, the quote lapses and the quoted rate
does not apply.

20                                  Bill
Facility - Option - Acceptance and Discount - Fixed Rate

(a)                                  You have the option to enter into a fixed rate bill facility having the
characteristics set out in the Details of Facilities.

(b)                                 To
exercise the option, you must
send us before 3.00 pm (Melbourne
time) on the exercise date a notice
in a form acceptable to us in our discretion. Once given, this notice is
irrevocable unless we in our discretion agree otherwise.

(c)                                  We are not obliged to act in accordance
with a notice given by you under
paragraph (b) above if we consider
that any of the conditions precedent set out in this Agreement are not satisfied.

(d)                                 We are not obliged to enter into a fixed rate bill facility with you on any date other than the exercise date. If you do not exercise the option on or
before 3.00 pm (Melbourne time) on the exercise
date, the option lapses. We are
not obliged to remind you or warn
you that this time is approaching
or has arrived.

(e)                                  You may give us notice offering to surrender all or part of the option.
Unless otherwise confirmed by you,
an offer to surrender will be taken as an offer to surrender the whole of the
option. We may reject an offer to
surrender in our discretion. A
surrender of the option will be effective only when the terms of the surrender
are agreed or, if an amount is payable to you
in respect of the surrender, when such amount is paid. You will then be taken to have surrendered
your rights in respect of the
option (or, if a partial surrender, the agreed part) and to have released us from any further obligation in respect
of the option (or, if a partial surrender, the agreed part). Any notice given
by us confirming a surrender of
the option will constitute conclusive evidence of the terms of the surrender
unless it is proved to be incorrect.

21                                  Bill
Facility - Acceptance and Discount – National Flexible Rate

(a)                                  Each
bill drawn under the facility must be allocated to a bill facility component either:

(i)                                     by
you in accordance with paragraphs
(b)-(c) below at the time you provide
us with a drawdown notice for that bill; or

(ii)                                  by
us in accordance with clause 8 of
these Specific Conditions – Bill Facility.

(b)                                 If
we agree that bills may be allocated to a bill facility component progressively
then, subject to this Agreement:

(i)                                     you must allocate bills in accordance with that agreement
until the aggregate face value of the bills allocated
to the relevant bill facility component is
equivalent to the amount of the bill
facility component; and

(ii)                                  you must thereafter ensure that, until the
expiry date, bills are allocated to the relevant bill facility component having an aggregate
face value equivalent to the amount of the bill
facility component.

(c)                                  If
paragraph (b) above does not apply, subject to this Agreement, on the first drawdown
date you must allocate bills to
each of the fixed amount and the floor/cap amount having an aggregate face
value equivalent to the amount of the relevant bill
facility component, and must ensure that, until the expiry date, bills are allocated to the relevant bill facility component having an
aggregate face value equivalent to the amount of the bill facility component.

 38
 

 

22                                  Bill
Facility - Acceptance / Endorsement

(a)                                  Where
bills are not to be discounted by
us, we agree to make available to you bills accepted or endorsed under the facility by the time and in the place
specified in the Details of Facilities.

(b)                                 If
we are specified as a paying
agent in the Details of Facilities, you authorise
us to pay the face value of a bill drawn under the facility in accordance with its terms and
conditions on your behalf to the person
presenting the bill for payment.

23                                  Late
Presentation Fee

A Late
Presentation Fee is payable by you when
a drawdown notice (together with
any accompanying bills as may be
required under this Agreement) is
not received by the date, or in the form, required under this Agreement. The Late Presentation Fee is an
amount we determine by reference
to any agreed rates in relation to the facility,
the aggregate face value of bills to
be drawn on the drawdown date,
the number of days between the relevant drawdown
date and the next drawdown date and
the market rates for bank accepted bills previously
on the relevant drawdown date.

24                                  Definitions

For the purposes
of these Specific Conditions and the Details of Facilities – Bill
Acceptance/Discount Facility:

amortising
facility means a bill
facility described in the Details of Facilities as an Amortising
Facility.

amortisation
schedule means, for a facility,
the Amortisation Details specified in the Details of Facilities for the facility or any amortisation schedule provided to you by us as a
replacement, in accordance with this Agreement.

bill
facility component means each of the fixed amount, the floating amount and the floor/cap amount.

Bill
Facility Record means a document by that name issued by us.

cap
rate means the rate specified as such in the Details of
Facilities for the facility, or
if the rate is not specified in the Details of Facilities, the rate advised to you as such before the first drawing under the facility and confirmed in the first Bill Facility Record we provide to you.

commencement
date means, for a bill
facility, the date specified as such in the Details of Facilities
for the facility.

conversion
rate means the rate specified as such in the Details of
Facilities for the facility, or
if the rate is not specified in the Details of Facilities, the rate advised to you as such before the first drawing under the facility and confirmed in the first Bill Facility Record we provide to you.

down
and out rate means the rate specified as such in the Details
of Facilities for the facility,
or if the rate is not specified in the Details of Facilities, the rate advised
to you as such before the first drawing under the facility and confirmed in the first Bill Facility Record we provide to you.

Drawdown
Schedule means a document by that name issued by us.

economic
benefits is the amount determined in accordance with clause
16 of these Specific Conditions – Bill Facility.

exercise
date means for a facility described
as a Bill Facility - Option - Acceptance and Discount - Fixed Rate the date
specified as such in the Details of Facilities.

facility
floor means the amount specified as such in the Details of
Facilities of the facility as
reduced or increased in accordance with this Agreement.

fixed
amount means the amount specified as such in the Details of
Facilities for the facility as
reduced or increased in accordance with this Agreement.

fixed
rate means the rate specified as such in the Details of
Facilities for the facility, or
if the rate is not specified in the Details of Facilities, the rate advised to you as such before the first drawing under the facility and confirmed in the first Bill Facility Record we provide to you.

floating
amount means the amount specified as such in the Details of
Facilities for the facility as
reduced or increased in accordance with this Agreement.

floating
rate means on a drawdown
date the rate at which we are
prepared to purchase bills accepted,
discounted or endorsed by us for
persons of similar creditworthiness for a similar amount and duration on that drawdown date. The floating rate is a rate (expressed as a
per centum per annum yield to maturity) that varies from time to time.

floor
rate means the rate specified as such in the Details of
Facilities for the facility, or
if the rate is not specified in the Details of Facilities, the rate advised to you as such before the first drawing under the facility and confirmed in the first Bill Facility Record we provide to you.

 39
 

 

floor/cap
amount means the amount specified as such in the Details of
Facilities for the facility as
reduced or increased in accordance with this Agreement.

floor/cap
rate means on a drawdown
date:

(a)                                  the
floor rate, if the floating rate on that drawdown date is less than or equal to the
floor rate;

(b)                                 the
cap rate, if the floating rate on that drawdown date is greater than or equal to
the cap rate; or

(c)                                  the
floating rate on that drawdown date, in any other case.

non
amortising facility means a bill
facility described as such in the Details of Facilities for the facility.

participation
rate means the rate specified as such in the Details of
Facilities for the facility, or
if the rate is not specified in the Details of Facilities, the rate advised to you as such before the first drawing under the facility and confirmed in the first Bill Facility Record we provide to you.

proceeds
of discount has the meaning described in these Specific
Conditions.

rebate
rate means the rate specified as such in the Details of
Facilities for the facility, or
if a rate is not specified in the Details of Facilities, the rate advised to you as such before the first drawing under the facility and confirmed in the first Bill Facility Record we provide to you.

trigger
rate means the rate specified as such in the Details of
Facilities for the facility, or
if the rate is not specified in the Details of Facilities, the rate advised to you as such before the first drawing under the facility and confirmed in the first Bill Facility Record we provide to you.

yield
rate, in relation to a facility,
has the meaning described in the Details of Facilities for that facility.

The definitions of
other terms used in these Specific Conditions may be found in clause B6 of the
General Terms and Conditions.

 40

 

10                  Specific
Conditions – Bank Guarantee Facility

1                            Application of Part

Clauses 2 to 14
(inclusive) of these Specific Conditions - Bank Guarantee Facility apply to any
bank guarantee facility.

2                            Issue of Bank Guarantees

(a)                    Provided you have met all the conditions precedent
and all financial, reporting or other covenants applicable to the facility, you
may apply for us to
issue a bank guarantee to a beneficiary on or before the date issued, but only if:

(i)                        the facility amount owing for the bank guarantee facility does not and,
after the bank guarantee is
issued, will not exceed the facility limit less
any facility limit deduction; and

(ii)                     you have submitted a complete and properly
authorised bank guarantee request
in the form required by us from
time to time.

(b)                   We may accept or reject your application for a bank guarantee in our discretion.

3                            Payment of Bank Guarantee

(a)                    In addition to
any indemnity obligations in the General Terms and Conditions, you indemnify us in respect of any amount we
pay to a beneficiary under
a bank guarantee. Any amount you must pay us under this clause is payable in Australian dollars and
becomes due and payable upon the earlier of:

(i)                        our making payment under a bank guarantee; or

(ii)                     our incurring an obligation to make payment
under a bank guarantee, or

(iii)                  your default under this Letter of Offer.

4                            We may end our obligation

 

We
may, at any time, end our obligations
under a bank guarantee by paying
to the beneficiary the guaranteed amount (or the balance of the guaranteed amount remaining after any part
payment of the guaranteed amount)
we are, or may be, liable to pay
to that beneficiary under the bank guarantee (or such lesser amount as
the beneficiary requires), even
though no demand is made on us by
that beneficiary.

5                            Partial payments

You
agree that if a demand is made by a beneficiary for a partial payment of the guaranteed amount, we may at our
discretion and without further reference to you, pay the amount demanded and issue to
the beneficiary a replacement bank guarantee for the balance of the guaranteed amount. This procedure may be repeated
at our discretion. You agree that the terms and conditions of
this Letter of Offer apply to any
replacement bank guarantee issued
under this clause as if details of that bank
guarantee were included in the Details of Facilities.

6                            No obligations to enquire

(a)                    You irrevocably authorise us to immediately pay any amount demanded
at any time under a bank guarantee.

(b)                   You agree that we:

(i)                        need not
first refer to you or obtain your authority for the payment;

(ii)                     need not
enquire into the correctness or validity of any demand made on us under a bank guarantee; and

(iii)                  may meet any
demand even though you dispute
the validity of the demand.

7                            Return of Bank Guarantees

You
are to return to us a
bank guarantee if it is ever
given to you by the beneficiary on production of a bill of lading
or otherwise.

8                            Foreign currency conversion

If we pay any amount to a beneficiary in a foreign currency, for the
purposes of calculating the amount in Australian Dollars for which you indemnify us under clause 3 of these Specific Conditions – Bank
Guarantee Facility, the foreign currency amount is to be converted to
Australian Dollars at the spot rate of exchange quoted by us on the day we make the payment to the beneficiary.

 41
 

 

9                            Additional consequences if you are in default

(a)                    If you are in default under this Letter of Offer then, in addition to
clause 8 of the General Terms and Conditions, the following provisions will
apply.

(b)                   If, on a day
when you make a payment required
under clause A8.2 of the General Terms and Conditions, there are any bank guarantees
in respect of which payment of the whole or part of the guaranteed amount has not yet been
demanded by the beneficiary, and
a portion of that payment represents those undemanded guaranteed amounts, then we agree:

(i)                        to deposit
that portion in an interest bearing deposit account on terms which we consider appropriate (which may include
making the deposit with ourselves);

(ii)                     to use the
deposited amount towards paying a beneficiary
of a bank guarantee when
the beneficiary demands payment
of moneys we are liable to pay
under the bank guarantee; and

(iii)                  to pay to you the amount which we certify is that part of the deposited
amount and the interest earned on it (net of our
income tax liability in connection with those earnings) which
remains after all of your obligations
(contingent or otherwise) under this Agreement
and any facility have been
satisfied.

10                     Indemnity by you

As a separate
obligation, you indemnify us against all actions, proceedings,
claims and demands brought or made against us
and against all losses, costs, charges, damages and expenses which we incur or sustain or for which we become liable, directly or indirectly,
because of the issue of any bank guarantee.

11                     Preservation of your liability

Your
liabilities and our rights
under these Specific Conditions are not affected by anything which might otherwise
have that effect at law or in equity including, without limitation, one or more
of the following (whether occurring with or without the consent of a person):

(a)                    any
inaccuracy, insufficiency or forgery or in any certificate or other instrument
which purports to be made, issued or delivered under this Agreement or under any bank guarantee; or

(b)                   our or another person granting time or
other indulgence (with or without the imposition of an additional burden) to,
compounding or compromising with or wholly or partially releasing you or another person in any way; or

(c)                    laches,
acquiescence, delay, acts, omissions or mistakes on our part or on that of another person; or

(d)                   any variation
or novation of a right of ours or that of another person, or alteration of a
document, in respect of you or
another person including, without limitation, an increase in the maximum
liability of or other variation in connection with a bank guarantee; or

(e)                    the invalidity
or unenforceability of an obligation or liability of a person other than you; or

(f)                      invalidity
or irregularity in the execution of this Agreement
by you or any
deficiency in your powers to enter
into or observe your obligations
under this Agreement.

12                     Late Payments

If a payment is
made under a bank guarantee and
is not promptly reimbursed to us by
you: 

(a)                    you authorise us to debit the amount of the drawing (less any reimbursements in relation to that drawing) to any account you have with us (even
if this would cause the account to
become overdrawn or for any applicable overdraft limit to be exceeded); and

(b)                   default
interest shall apply to the amount of the drawing
that is not reimbursed, in accordance with clause A2.4 of the
General Terms and Conditions.

13                     How we assign debits

We
may debit any account you have
with us, with any amount you owe us
under or in connection with the facility.

14                     Definitions

For the purposes
of these Specific Conditions and the Details of Facilities – Bank Guarantee
Facility:

bank
guarantee facility means a facility
which is described in the Details of Facilities as a Bank Guarantee Facility.

guaranteed
amount means, in relation to a bank guarantee, the amount specified as the Guaranteed Amount
in the bank guarantee. The
definitions of other terms used in these Specific Conditions may be found in
clause B6 of the General Terms and Conditions.

 42
 

 

Acceptance of Letter of Offer

To accept this Letter of Offer, each Customer must sign the duplicate and
return it to us before the lapse date set out
at the beginning of this document.

By executing this
document below, the Customer;

1.                                      accepts
the Letter of Offer;

2.                                      declares
that all the information the Customer has
given us is accurate and not misleading and it
is aware that we are relying on it; and

3.                                      acknowledges
that before indicating that the Customer
intends to be bound, the Customer has;

(i)                                     read
the Details of Facilities, Parts 4 to 7 (inclusive), any Specific Conditions
and the General Terms and Conditions; and

(ii)                                  received
and read a copy of each other contract documentation described within the Letter of Offer; and

4.                                      acknowledges
that, except to the extent that a security’s application is excluded in
relation to a facility as set out in the
Details of Facilities, every security held
by us (including the securities)
extends to the agreement between the Customer and us which results from the Customer’s
acceptance of this Letter of Offer,
in addition to all other liabilities secured by those securities;
and

5.                                      acknowledges
and agrees that any existing contractual
documentation detailed in Part 3 of this Letter of Offer is
varied as set out in that Part 3; and

6.                                      declares
that the Customer understands that any mortgaged
or secured property will be at risk if the Customer or any
security provider defaults; and

7.                                      nominates
the following address for service of notices for the purposes of the Agreement 

3/391 Park Rd, Regents Park NSW 2143; and

8.                                      acknowledges
that we may pay a commission for the
introduction of credit business where the Customer has
been introduced to us by a third
party.

 

	
  Yours sincerely,

  
	
   

  
	
   

  
	
  /s/ Graeme
  Johnson

  	
   

  
	
  Graeme Johnson

  
	
  Associate
  Director

  

 

 43
 

 

 

Incorporated Customers sign the duplicate copy of this Letter of Offer where
indicated as an acceptance of these arrangements and return to us. The
original may be retained for the Customer’s records.

Companies Executing
without using a Common Seal

Executed By

Channell Bushman Pty
Limited

By being signed by:

 

	
  /s/ Nick J. Morganti

  	
   

  	
  /s/ Amar Kulkarni

  	
   

  
	
  Signature of
  authorised person

  	
   

  	
  Signature of authorised person

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Nick J. Morganti

  	
   

  	
  Amar Kulkarni

  	
   

  
	
  Name of
  authorised person

  	
   

  	
  Name of authorised person

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
  Secretary

  	
   

  
	
  Office held

  	
   

  	
  Office held

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  11 / 08 /2006

  	
   

  	
  11 / 08 /2006

  	
   

  
	
  Date

  	
   

  	
  Date

  
											

 

 

Executed By

Bushmans Group Pty Ltd

By being signed by:

 

 

	
  /s/ Nick J. Morganti

  	
   

  	
  /s/ Amar Kulkarni

  	
   

  
	
  Signature of
  authorised person

  	
  Signature of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Nick J. Morganti

  	
   

  	
  Amar Kulkarni

  	
   

  
	
  Name of
  authorised person

  	
  Name of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  	
  Secretary

  	
   

  
	
  Office held

  	
  Office held

  
	
   

  	
   

  
	
   

  	
   

  
	
  11 / 08 /2006

  	
   

  	
  11 / 08 /2006

  	
   

  
	
  Date

  	
  Date

  
										

 

 44
 

 

Executed By

Channell Pty Limited

By being signed by:

 

 

	
  /s/ Nick J. Morganti

  	
   

  	
  /s/ Amar Kulkarni

  	
   

  
	
  Signature of
  authorised person

  	
  Signature of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Nick J. Morganti

  	
   

  	
  Amar Kulkarni

  	
   

  
	
  Name of
  authorised person

  	
  Name of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  	
  Secretary

  	
   

  
	
  Office held

  	
  Office held

  
	
   

  	
   

  
	
   

  	
   

  
	
  11 / 08 /2006

  	
   

  	
  11 / 08 /2006

  	
   

  
	
  Date

  	
  Date

  
										

 

 

Executed By

Bushmans Engineering Pty
Ltd

By being signed by:

 

 

	
  /s/ Nick J. Morganti

  	
   

  	
  /s/ Amar Kulkarni

  	
   

  
	
  Signature of
  authorised person

  	
  Signature of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Nick J. Morganti

  	
   

  	
  Amar Kulkarni

  	
   

  
	
  Name of
  authorised person

  	
  Name of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  	
  Secretary

  	
   

  
	
  Office held

  	
  Office held

  
	
   

  	
   

  
	
   

  	
   

  
	
  11 / 08 /2006

  	
   

  	
  11 / 08 /2006

  	
   

  
	
  Date

  	
  Date

  
										

 

 45
 

 

Executed By

 

Polyrib Tanks Pty Ltd

By being signed by:

 

 

	
  /s/ Nick J. Morganti

  	
   

  	
  /s/ Amar Kulkarni

  	
   

  
	
  Signature of
  authorised person

  	
  Signature of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Nick J. Morganti

  	
   

  	
  Amar Kulkarni

  	
   

  
	
  Name of
  authorised person

  	
  Name of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  	
  Secretary

  	
   

  
	
  Office held

  	
  Office held

  
	
   

  	
   

  
	
   

  	
   

  
	
  11 / 08 /2006

  	
   

  	
  11 / 08 /2006

  	
   

  
	
  Date

  	
  Date

  
										

 

 

Executed By

Australian Bushman Tanks
Pty Ltd

By being signed by:

 

 

	
  /s/ Nick J. Morganti

  	
   

  	
  /s/ Amar Kulkarni

  	
   

  
	
  Signature of
  authorised person

  	
  Signature of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Nick J. Morganti

  	
   

  	
  Amar Kulkarni

  	
   

  
	
  Name of
  authorised person

  	
  Name of authorised person

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  	
  Secretary

  	
   

  
	
  Office held

  	
  Office held

  
	
   

  	
   

  
	
   

  	
   

  
	
  11 / 08 /2006

  	
   

  	
  11 / 08 /2006

  	
   

  
	
  Date

  	
  Date

  
										

 

 46Exhibit 10.1

PURCHASE
AGREEMENT

THIS PURCHASE AGREEMENT
(this “Agreement”) is made
as of this 15th day of September, 2006 by and among Storm Cat Energy
Corporation, a company incorporated under the laws of the Province of British
Columbia, Canada (the “Company”),
and Trapeze Capital Corp., a company incorporated under the laws of Ontario,
Canada (the “Investor”).

Recitals:

A.            The Investor desires to purchase
from the Company, and the Company desires to issue and sell its common shares,
without par value per share (the “Common
Shares”), to the Investor at a per share purchase price of (1)
CDN$1.80 with respect 6,172,839 Common Shares that will qualify as flow-through
shares (the “Flow-Through Shares”),
and (2) CDN$1.58 with respect 7,594,937 Common Shares (the “Ordinary Shares” and together with the
Flow-Through Shares, the “Shares”),
together with warrants to acquire 2,126,582 Common Shares, at an exercise price
of CDN$1.90 per share (the “Warrants”),
in the form to be attached to the Subscription Agreement to be entered into
between the Company and the Investor (the “Subscription
Agreement”) preceding the closing of this offering (the “Private Placement”); and

B.            The
Company and the Investor are executing and delivering this Agreement in
connection with an offering in Canada with respect to Foreign Investor (as
defined below) in reliance upon Regulation S (“Regulation S”), as promulgated by the U.S. Securities and
Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the “1933 Act”),
and on the “accredited investor” exemption from applicable Canadian prospectus
and registration requirements contained in Section 2.3 of National Instrument
45-106 of the Canadian Securities Administrators.

NOW,
THEREFORE, in consideration of the mutual promises made
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

1.             Purchase
and Sale of the Shares and Warrants. 
Subject to the terms and conditions of this Agreement and the
Subscription Agreement, on the Closing Date (as defined below), the Investor
shall purchase, and the Company
shall sell and issue to the Investor, 6,172,839 Flow-Through Shares at an aggregate
purchase price of CDN$11,111,110, 7,594,937 Ordinary Shares at an aggregate
purchase price of CDN$12,000,000, and 2,126,582 Warrants.  The Flow-Through
Shares will be used to incur exploration and development expenses which qualify
as CEE under the Income Tax Act (Canada).

2.             Closing.  Upon the date of confirmation that the
conditions to closing specified in this Agreement or in the Subscription
Agreement have been satisfied or duly waived by the Investor or the Company, as
applicable (the “Closing Date”),
the certificates representing the Shares and the Warrants shall be released to
the Investor upon payment in full of the aggregate purchase price to the
Company (as set forth above) by the Investor (the “Closing”).  The purchase and sale of the Shares and the
Warrants in the Closing shall take place at such location and on such date as
the Company and the Investor shall mutually agree.

 

 

3.             Representations, Warranties and
Covenants.  The Company and the
Investor will each make customary representations, warranties and covenants to
the other in the Subscription Agreement.

4.             Regulation S Offering.  The Investor represents that it is (i) not a
U.S. Person as that term is defined in Regulation S, (ii) a resident of Canada
and (iii) who is acquiring the Shares and Warrants in reliance on the exemption
from the registration requirements of the 1933 Act provided by Regulation S (a “Foreign Investor”).  The Investor acknowledges that the Shares and
Warrants to be purchased by the Investor will be acquired for investment for
the Investor’s own account, or as a Distributor as that term is defined in
Regulation S, and not for the account or benefit of a U.S. Person, and not with
a view to the resale or distribution of any part thereof in the United States
and that the Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same in the United States.  The Investor hereby agrees to resell the
Shares or the Common Shares underlying the Warrants only in accordance with the
provisions of Regulation S, pursuant to registration under the 1933 Act, or
pursuant to an exemption from registration. 
It is understood that certificates evidencing the Shares and the
Warrants held by the Investor shall bear specific Regulation S legends as set
forth in the Subscription Agreement.

5.             Conditions to Closing.  The Company’s obligation to sell and issue
the Shares and the Warrants, and the Investor’s obligation to purchase the
Shares and the Warrants, at the Closing is subject to the fulfillment to the
satisfaction of the Company or the Investor (as applicable) on or prior to the
Closing Date of the conditions as set forth in the Subscription Agreement, any
of which may be waived by the Company or the Investor.  For greater certainty and without limiting
the generality of the foregoing, the herein contemplated transaction will be
subject to the prior acceptance of the Toronto Stock Exchange and the American
Stock Exchange and the parties hereto agree to amend the terms and conditions of
this Agreement to the extent required to secure such prior acceptance.

6.             Miscellaneous.

6.1.          Successors and Assigns.  This Agreement may not be assigned by a party
hereto without the prior written consent of the Company or the Investor, as
applicable; provided, however, that an Investor may assign its
rights and delegate its duties hereunder in whole or in part to an affiliate or
to a third party in compliance with rules and regulations of the SEC and
applicable securities regulatory authorities in the provinces and territories
of Canada, and that shall agree in writing to be bound by the terms and
conditions of this Agreement and Subscription Agreement.  The provisions of this Agreement shall inure
to the benefit of and be binding upon the respective permitted successors and
assigns of the parties.  Except for
provisions of this Agreement expressly to the contrary, nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement.

6.2.          Counterparts;
Faxes.  This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute

 2
 

 

 

one and the same instrument. 
This Agreement may also be executed via facsimile, which shall be deemed
an original.

6.3.          Notices.  Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given as hereinafter described on the earlier of (i) if
given by personal delivery, then such notice shall be deemed given upon such
delivery; (ii) if given by facsimile or electronic mail, then such notice shall
be deemed given upon receipt of confirmation of complete transmittal; (iii) if
given by mail, then such notice shall be deemed given upon the earlier of (A)
receipt of such notice by the recipient, or (B) three days after such notice is
deposited in first class mail, postage prepaid; (iv) if given by an
internationally recognized overnight air courier, then such notice shall be
deemed given one day after delivery to such carrier; and (v) upon actual
receipt by the party to whom the notice is required to be given.  All notices shall be addressed to the party
to be notified at the address specified on the signature page hereto, or at
such other address as such party may designate by ten days’ advance written
notice to the other party:

6.4.          Expenses.  The Company shall pay the reasonable fees and
expenses of Coker, Palmer, Phillips & Mullen, Inc. as agreed to between the
Company and Coker, Palmer, Phillips & Mullen, Inc..  The Investor shall bear its own expenses in
connection with the negotiation, preparation, execution and delivery of this
Agreement.  In the event that legal
proceedings are commenced by any party to this Agreement against another party
to this Agreement in connection with this Agreement or the Subscription Agreement,
the party or parties which do not prevail in such proceedings shall severally,
but not jointly, pay their pro rata share of the reasonable attorneys’ fees and
other reasonable out-of-pocket costs and expenses incurred by the prevailing
party in such proceedings.

6.5.          Amendments
and Waivers.  Any term of this
Agreement may be amended and the observance of any term of this Agreement shall
not be waived (either generally or in a particular instance and either
retroactively or prospectively), without the prior written consent of the
Company and the Investor.

6.6.          Publicity.  Except as set forth below, no public release
or announcement concerning the transactions contemplated hereby shall be issued
by the Company or the Investor without the prior consent of the other party,
except the Company will make such other filings and notices in the manner and
time required by the SEC and the securities regulatory authorities in the
provinces and territories of Canada in which such filings and notices are
required.

6.7.          Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.  To the extent permitted
by applicable law, the parties hereby waive any provision of law which renders
any provision hereof prohibited or unenforceable in any respect.

 3
 

 

 

6.8.          Entire
Agreement.  This Agreement, including
the Subscription Agreement and any documents related thereto, constitute the
entire agreement among the Company and the Investor with respect to the Private
Placement and the subject matter hereof and thereof and supersede all prior
agreements and understandings, both oral and written, between the Company and the
Investor with respect to the Private Placement and the subject matter hereof
and thereof; provided however, the obligations of an Investor under any
nondisclosure agreement or confidentiality letter entered into by such Investor
in connection with the offering of the Securities shall continue to apply in
accordance with the terms thereof.

6.9.          Further Assurances.  The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

6.10.        Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the internal laws of the Province of British
Columbia without regard to the choice of law principles thereof.

[Signature
Page to Follow]

 4
 

 

 

IN WITNESS WHEREOF, the
undersigned has executed this Purchase Agreement or caused its duly authorized
officers to execute this Purchase Agreement as of the date first above written.

	
  

  	
  STORM CAT ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Wiesner

  
	
   

  	
  Name:

  	
  Paul Wiesner

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
  Storm Cat Energy Corporation

  
	
   

  	
  1125 Seventeenth Street; Suite 2310

  
	
   

  	
  Denver, CO 80202

  
	
   

  	
  Attn: J. Scott Zimmerman

  
	
   

  	
  Fax: (303) 991-5075

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRAPEZE CAPITAL CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randall Abramson

  
	
   

  	
  Name:

  	
  Randall Abramson

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
  Trapeze Capital Corp.

  
	
   

  	
  22 St. Clair Avenue East, 18th Floor

  
	
   

  	
  Toronto, ON M4T 2S3

  
	
   

  	
  Attn: 

  	
   

  
	
   

  	
  Fax: (416) 867-9771

  

[Signature Page Purchase
Agreement.]

 

 5

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