Document:

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                                                                    EXHIBIT 4.19

MANAGEMENT AGREEMENT

BETWEEN

UBS MANGAKAHIA FOREST VENTURE LTD

AND

FLETCHER CHALLENGE FORESTS INDUSTRIES LIMITED

                                                         [SIMPSON GRIERSON LOGO]
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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                           <C>
1.    INTERPRETATION.......................................................    1
2.    APPOINTMENT OF MANAGER...............................................    7
3.    MANAGEMENT PLANS AND REPORTS.........................................    8
4.    MANAGEMENT OF THE PLANTATION ASSETS..................................   12
5.    COSTS AND FEES.......................................................   17
6.    TERM OF AGREEMENT AND SUSPENSION.....................................   20
7.    INSURANCE............................................................   24
8.    INDEMNITY............................................................   25
9.    REPRESENTATIONS AND WARRANTIES.......................................   27
10.   CONFLICTS OF INTEREST................................................   28
11.   HEALTH AND SAFETY IN EMPLOYMENT ACT..................................   29
12.   HISTORIC AND SACRED PLACES...........................................   30
13.   HISTORIC PLACES AND ARTEFACTS........................................   31
14.   FORCE MAJEURE........................................................   31
15.   ASSIGNMENT...........................................................   32
16.   RESOLUTION OF DISPUTES...............................................   33
17.   CONFIDENTIALITY......................................................   34
18.   SEVERABILITY.........................................................   35
19.   LIMITED RECOURSE.....................................................   35
20.   APPLICABLE LAW.......................................................   35
21.   NOTICES..............................................................   36
22.   COPIES OF NOTICES....................................................   38
23.   THIRD PARTY NOTICES..................................................   38
24.   ENTIRE AGREEMENT.....................................................   38
25.   MODIFICATION.........................................................   38
26.   WAIVER...............................................................   38
27.   COUNTERPARTS.........................................................   38
28.   FURTHER ASSURANCES...................................................   38
29.   COSTS................................................................   39
30.   NO PARTNERSHIP.......................................................   39

FIRST SCHEDULE -  Plantation Assets........................................   43
APPENDIX I - Forestry Right................................................   44
APPENDIX II - Undertaking from Fletcher Challenge Industries Limited.......   45
</TABLE>

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THIS AGREEMENT is dated the            day of             2003

BETWEEN        UBS MANGAKAHIA FOREST VENTURE LTD an incorporated company having
               its registered office at Auckland ("UBS Mangakahia")

AND            FLETCHER CHALLENGE FORESTS INDUSTRIES LIMITED an incorporated
               company having its registered office at Auckland (the "Manager")

BACKGROUND

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

B.       UBS Mangakahia will acquire the Trees and the Forestry Right. UBS
         Mangakahia is exclusively advised and managed by UBS Timber Investors
         (a division of UBS Global Asset Management (New York), Inc, a portion
         of the asset management division of UBS AG).

C.       The Manager and Teal 4 Limited have entered into a Sale and Purchase
         Agreement under which the Manager will sell the Trees to UBS Mangakahia
         (as Teal 4 Limited's nominee under the Sale and Purchase Agreement) and
         create the Forestry Right in favour of UBS Mangakahia over the Land to
         be registered pursuant to the Forestry Rights Registration Act 1983.

D.       UBS Mangakahia will be granted certain rights to the Plantation Assets
         by virtue of the Forestry Right.

E.       On settlement of the Sale and Purchase Agreement the Manager and UBS
         Mangakahia, as nominee, are required to execute and deliver a Wood
         Supply Agreement and Infrastructure Agreement, which will set out
         further arrangements between the parties in relation to the supply of
         certain Trees to the Manager and supply of certain infrastructure
         services.

F.       UBS Mangakahia wishes to retain the Manager to manage the Plantation
         Assets and the Manager wishes to manage the Plantation Assets pursuant
         to the terms and conditions set out in this agreement.

THE PARTIES AGREE:

1.       INTERPRETATION

         In this agreement unless the context indicates otherwise:

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Management Agreement                                                    Page 2

         1.1      DEFINITIONS:

                  "ACT" means the Companies Act 1993;

                  "AFFILIATE" of a person shall mean a person controlled by,
                  controlling or under common control with, such person and for
                  the purposes of this definition Forestry Corporation of New
                  Zealand Limited (In Receivership) is not an Affiliate of any
                  party;

                  "BILL RATE" means the average of the bid rates for 90- day
                  bank accepted bills of exchange, expressed as a percentage per
                  annum as quoted on Reuters page BKBM (subject to manifest
                  error) as fixed at 10.45 am on each Business Day following the
                  due date;

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

                  "CAP" means the cap as defined in clause 8.2;

                  "COMMENCEMENT DATE" means the date of "Settlement" as that
                  term is defined in the Sale and Purchase Agreement being the
                  date of this agreement;

                  "CONFIDENTIAL INFORMATION" means any information:

                  (a)      relating to the terms of this agreement;

                  (b)      relating directly or indirectly to research or
                           development by, accounting for or marketing of the
                           business of either party or its suppliers or
                           customers excluding Working Block(s), PHI, price
                           information and other information related to sales of
                           stumpage and logs from the Stands; or

                  (c)      disclosed by either party to the other party on the
                           express basis that such information is confidential;

                  provided that, where information relates exclusively to one
                  party, nothing in this agreement will require that party to
                  maintain confidentiality in respect of that information;

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

                  "ENVIRONMENTAL GUIDELINES" means codes of practice and
                  guidelines issued from time to time by any competent authority
                  (including for the avoidance of doubt any relevant District or
                  Regional Plans or resource consents) or UBS Mangakahia, which
                  address in whole or in part the protection of the environment
                  and are relevant to the management of Plantation Assets
                  pursuant to this agreement;

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

                  (a)      the environment;

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Management Agreement                                                    Page 3

                  (b)      the Plantation Assets;

                  (c)      substances which may have an adverse effect on the
                           environment; and

                  (d)      the carrying on or permitting of activities which may
                           have an adverse effect on the environment;

                  whether pursuant to the Resource Management Act 1991, any
                  other statutes, under the common law or otherwise;

                  "ENVIRONMENTAL REQUIREMENTS" means Environmental Law and
                  Environmental Guidelines;

                  "FIRE PREVENTION COSTS" means any external costs directly
                  incurred by the Manager in implementing fire prevention
                  measures or fire suppression measures;

                  "FOREST HEALTH COSTS" means any external costs directly
                  incurred by Manager in spraying or otherwise treating the
                  Stand or the immediate environment of the Stand to protect the
                  health of the Trees;

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

                  "FORESTRY RIGHT" means the forestry right to be entered into
                  between UBS Mangakahia and the Manager concurrently with this
                  agreement in accordance with the provisions of the Forestry
                  Rights Registration Act 1983 and in relation to certain
                  identified Stands and a copy of which is attached at Appendix
                  1;

                  "GST" means goods and services tax levied in accordance with
                  the GST Act and includes any tax levied in substitution for
                  such tax and excludes any penalties and interest;

                  "GST ACT" means the Goods and Services Tax Act 1985;

                  "HARVEST AREA" means those of the Working Blocks that the
                  Manager chooses to purchase in accordance with the Wood Supply
                  Agreement;

                  "HARVEST PLAN" means the harvest plan for each Year provided
                  by UBS Mangakahia to the Manager pursuant to the Wood Supply
                  Agreement;

                  "HISTORIC PLACE" has the meaning given to that term in the
                  Historic Places Act 1993;

                  "IMPROVEMENTS" means all roads, tracks, fencing, gates,
                  accessways, landings, skid sites, bridges, stream crossings,
                  culverts, drainage works and water storage on the Land;

                  "INFRASTRUCTURE AGREEMENT" means the infrastructure agreement
                  entered into between UBS Mangakahia and the Manager
                  concurrently with this agreement in relation to the provision
                  of certain services by the Manager;

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Management Agreement                                                   Page 4

                  "INSOLVENCY EVENT" means with respect to a company when:

                  (a)      an application is made to a court for an order and an
                           order is duly made appointing a liquidator,
                           provisional liquidator, interim liquidator, receiver,
                           manager, receiver and manager, administrator,
                           administrative receiver, trustee in administration,
                           statutory manager or similar officer in respect of
                           the company or one of them is appointed;

                  (b)      the members of the company pass a special resolution
                           or the board of the company resolves to appoint a
                           liquidator or formal notice of a proposed resolution
                           to do so is given or any other steps are taken
                           evidencing an intention to do so;

                  (c)      the company stops or threatens to stop payment of
                           creditors generally or is deemed to be unable to pay
                           its debts as they fall due, has a compromise proposed
                           in respect of it, commences negotiations with any one
                           or more of its creditors with a view to the general
                           readjustment or rescheduling of its indebtedness,
                           makes a general assignment for the benefit of or a
                           composition with its creditors or proposes a
                           reorganisation, moratorium or other administration
                           involving them;

                  (d)      execution issued against the company in respect of a
                           judgment debt has been returned unsatisfied in whole
                           or in part;

                  (e)      a statutory demand is served on the company for an
                           amount exceeding 1% of its gross assets as shown in
                           the accounts of the company for the most recently
                           completed financial year of the company and expires
                           unremedied unless such statutory demand relates to an
                           amount which is the subject of a bona fide dispute by
                           the company; or

                  (f)      a creditor of the company, which creditors rights are
                           intended to be subordinate to the obligations of the
                           company under this agreement attempts to exercise any
                           rights, or to gain any specific rights which would
                           impinge upon UBS Mangakahia's rights under the
                           Forestry Right;

                  other than where, in the case of any of the events referred to
                  in sub clauses (a) to (f) above, such event takes place for
                  the purposes of and is followed by a reconstruction,
                  amalgamation or reorganisation (not involving or arising out
                  of insolvency) approved in writing by UBS Mangakahia which
                  consent is not to be unreasonably or arbitrarily withheld or
                  delayed;

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

                  "LAND COSTS" means all rates, taxes, charges, assessments,
                  duties, levies, costs and expenses payable in relation to the
                  ownership of the Land and any other costs arising from such
                  ownership;

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Management Agreement                                                      Page 5

                  "LOGS" means sawlogs or pulplogs of any size or class
                  harvested from the Land;

                  "MANAGEMENT FEE" means the fee to be paid to the Manager by
                  UBS Mangakahia pursuant to clause 5 of this agreement;

                  "MANAGEMENT PLANS" means, at any time, a strategic plan and an
                  operating plan for the management of the Plantation Assets
                  approved by UBS Mangakahia in accordance with clause 3.1.2 of
                  this agreement and in force at that time, including any
                  amendments thereto approved following any Quarterly meeting in
                  accordance with clause 3.3.2 of this agreement;

                  "MARGINAL STRIPS" means any marginal strips related to the
                  Land pursuant to the provisions of part IVA of the
                  Conservation Act 1987, if any;

                  "MONTHLY OPERATIONAL PHOTOGRAPHY" means aerial photographs or
                  equivalent marked up Stand maps of the Tauhara forest taken by
                  the Manager every month;

                  "NZ$" means the lawful currency of New Zealand;

                  "OPERATING COSTS" means all costs directly incurred in the
                  management of the Plantation Assets and which have been
                  approved under the then applicable Operating Plan, or
                  otherwise approved under the terms of this agreement,
                  including, without limitation, Forest Health Costs and Fire
                  Prevention Costs. For the avoidance of doubt, this
                  specifically excludes all costs associated with the attaining
                  of, and compliance with, any regulatory consents as referred
                  to in clause 2.13.2 of the Infrastructure Agreement (including
                  any auditing of compliance with such regulatory consents);

                  "OPERATING PLAN" has the meaning set forth in clause 3.1.3(b)
                  of this agreement;

                  "PLANTATION ASSETS" means the assets described in the First
                  Schedule to this agreement including amendments to that
                  schedule made from time to time;

                  "QUARTER" means a calendar quarter ending on 31 March, 30
                  June, 30 September and 31 December in each Year;

                  "RELATED AGREEMENTS" means the Forestry Right, the
                  Infrastructure Agreement, the Sale and Purchase Agreement and
                  the Wood Supply Agreement;

                  "REMAINING STANDS" means those Stands which remain subject to
                  the Forestry Right, as determined in accordance with the
                  Forestry Right, at the end of each Quarter;

                  "RESOURCE MANAGEMENT ACT 1991" means the Resource Management
                  Act 1991 and includes all regulations, orders, notices,
                  regional plans, policy statements, district plans and resource
                  consents made, given or issued under or pursuant to that Act;

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Management Agreement                                                    Page 6

                  "SALE AND PURCHASE AGREEMENT" means the sale and purchase
                  agreement entered into between Teal 4 Limited and the Manager
                  on 15 January 2003 (as may be amended by any deed(s) of
                  amendment) pursuant to which the Manager will sell the Trees
                  to UBS Mangakahia (as Teal 4 Limited's nominee under that
                  agreement) and create the Forestry Right;

                  "SPECIAL REPORTS" shall have the meaning set forth in clause
                  3.5 of this agreement;

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

                  "STRATEGIC PLAN" has the meaning set forth in clause 3.1.3(a)
                  of this agreement;

                  "TREES" means all the Pinus radiata trees growing, standing or
                  lying on the Stands as at the date of the Sale and Purchase
                  Agreement and any logs or forest produce arising from such
                  trees and includes any trees forming part of any stand of
                  trees on any Marginal Strip;

                  "WOOD SUPPLY AGREEMENT" means the wood supply agreement to be
                  entered into between UBS Mangakahia and the Manager
                  concurrently with this agreement under which UBS Mangakahia
                  will supply certain Trees to the Manager;

                  "WORKING BLOCKS" means those Trees in a Stand (or part
                  thereof) which UBS Mangakahia proposes to harvest or is
                  harvesting in a given year in accordance with a Harvest Plan
                  as per the Wood Supply Agreement;

                  "YEAR" means a calendar year;

         1.2      PARTIES: references to parties are references to parties to
                  this agreement;

         1.3      PERSONS: references to persons shall be deemed to include
                  references to individuals, companies, corporations, firms,
                  partnerships, joint ventures, associations, organisations,
                  trusts, states or agencies of state, government departments
                  and municipal authorities or other regulatory bodies or
                  regulatory authorities in each case whether or not having
                  separate legal personality;

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

         1.5      CLAUSES, SCHEDULES AND BACKGROUND: references to clauses,
                  schedules and background are references to clauses, schedules
                  and background to this agreement unless otherwise indicated;

         1.6      HEADINGS: section, clause and other headings are for ease of
                  reference only and shall not be deemed to form any part of the
                  context or to affect the interpretation of this agreement;

         1.7      SINGULAR AND PLURAL: words importing the singular number shall
                  include the plural and vice versa;

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Management Agreement                                                    Page 7

         1.8      SCHEDULES AND APPENDICES: the schedules and appendices to this
                  agreement and the provisions and conditions contained in such
                  schedules and appendices shall have the same effect as if set
                  out in the body of this agreement;

         1.9      NEGATIVE OBLIGATIONS: any obligation not to do anything shall
                  be deemed to include an obligation not to suffer, permit or
                  cause that thing to be done;

         1.10     GENDER: words importing one gender shall include the other
                  genders;

         1.11     STATUTES AND REGULATIONS: references to a statute include
                  references to regulations, orders or notices made under or
                  pursuant to such statute or regulations made under the statute
                  and references to a statute or regulation include references
                  to all amendments to that statute or regulation whether by
                  subsequent statute or otherwise and a statute or regulation
                  passed in substitution for the statute or regulation referred
                  to as incorporating any of the provisions;

         1.12     MATERIAL ADVERSE EFFECT: references to something having a
                  "material adverse effect" on a person are references to it
                  having a material adverse effect:

                  1.12.1   FINANCES: on that person's financial condition,
                           assets, business or results of operating; or

                  1.12.2   PERFORMANCE: on its ability to perform and comply
                           with its obligations under this agreement; and

         1.13     DISPOSAL: references to disposal include sale, exchange,
                  transfer, assignment, lease or parting with possession or
                  control of, and the word "dispose" means to make a disposal;
                  and

         1.14     NEW ZEALAND DOLLARS: all monetary amounts are payable in New
                  Zealand dollars.

2.       APPOINTMENT OF MANAGER

         2.1      APPOINTMENT: appoints the Manager as its agent, with effect
                  from the Commencement Date, to manage the Plantation Assets on
                  the terms set out in this agreement and the Manager hereby
                  accepts the appointment.

         2.2      STANDARD OF PERFORMANCE: Subject to specific reasonable
                  instructions or directions given to the Manager pursuant to
                  this agreement by UBS Mangakahia, the Manager shall manage the
                  Plantation Assets in good faith employing the same degree of
                  care and skill as:

                  2.2.1    MANAGER'S AFFAIRS: the Manager employs in the conduct
                           of its own affairs; or

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Management Agreement                                                    Page 8

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

                  whichever is the higher standard. The parties acknowledge that
                  nothing in this clause 2.2 shall limit the Manager's
                  obligation to act as an adviser to UBS Mangakahia to the
                  standards required by clauses 2.2.1 and 2.2.2 (meaning, for
                  example, that in briefing or advising UBS Mangakahia, the
                  Manager must advise to the standard required, and if UBS
                  Mangakahia issued the Manager with an instruction that a
                  manager conforming with the standard of performance set out in
                  this clause would find fault with, the Manager must inform UBS
                  Mangakahia), nor shall it limit the Manager's obligation to
                  discharge any instruction or direction from UBS Mangakahia to
                  the standard of performance set out in this clause.

         2.3      ACCESS TO PLANTATION ASSETS: Notwithstanding the appointment
                  of the Manager under this agreement, UBS Mangakahia, through
                  its authorised agents, and such other persons authorised by
                  UBS Mangakahia, each with prior reasonable notice to the
                  Manager, and in each case at their individual risk and expense
                  (but with the benefit of insurance (if any) maintained by UBS
                  Mangakahia) shall have access to the Plantation Assets owned
                  by UBS Mangakahia at any reasonable time subject to compliance
                  with the Manager's reasonable requirements relating to such
                  access, including compliance with the Manager's health and
                  safety policies and procedures, any requirements under the
                  Infrastructure Agreement and otherwise in accordance with the
                  Forestry Right. For the avoidance of doubt UBS Mangakahia
                  acknowledges that the Manager may (acting reasonably) restrict
                  access to the Land for reasons of health and safety (eg, high
                  winds) or as a fire protection measure.

         2.4      PERSONNEL: For the purposes of communication between UBS
                  Mangakahia and the Manager, the Manager shall, from time to
                  time, notify UBS Mangakahia of the person or persons who are
                  authorised to accept such communications on behalf of the
                  Manager and UBS Mangakahia shall, from time to time, notify
                  the Manager of the person or persons who are authorised to
                  accept such communications on behalf of UBS Mangakahia.

3.       MANAGEMENT PLANS AND REPORTS

         3.1      MANAGEMENT PLANS: The management of the Plantation Assets
                  shall operate in accordance with the Strategic Plan and
                  Operating Plan prepared by the Manager and approved by UBS
                  Mangakahia. The parties agree that the Strategic Plan and the
                  Operating Plan will only be concerned with the duties of the
                  Manager as set out in this agreement.

                  3.1.1    CONSULTATION: Prior to the formal submission of each
                           of the Management Plans in accordance with the
                           provisions of sub clause 3.1.3, the Manager shall by
                           1 May each Year, review with UBS Mangakahia the
                           Manager's proposed strategies and assumptions and
                           receive advice on the proposed harvest intentions of
                           UBS Mangakahia for the Management Plans.

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Management Agreement                                                    Page 9

                  3.1.2    CONTENT AND APPROVAL: The Management Plans shall
                           include, among other things, a description of the
                           management activities proposed for the relevant
                           ensuing period, an estimate of Operating Costs that
                           is likely to be payable for the relevant ensuing
                           period, and include other items as specified by UBS
                           Mangakahia acting reasonably. To the extent that the
                           Management Plans incorporate any economic assumptions
                           or judgments those economic assumptions and judgments
                           will be made on a reasonable basis and in good faith
                           by the Manager. Until such Management Plans have been
                           approved by UBS Mangakahia, the most recently
                           approved Management Plans shall remain in effect.

                  3.1.3    PREPARATION OF THE MANAGEMENT PLANS:

                           (a)      STRATEGIC PLAN:

                                    (I)      PREPARATION AND SUBMISSION: By 30
                                             May each Year, the Manager shall
                                             prepare and submit to UBS
                                             Mangakahia for its approval, not to
                                             be unreasonably or arbitrarily
                                             withheld, a Strategic Plan for the
                                             management of the Plantation
                                             Assets, in which its objectives,
                                             issues and actions will be further
                                             specified. Such Strategic Plan
                                             shall present, in reasonable detail
                                             having regard to clause
                                             3.1.3(a)(ii), those matters
                                             specified in clause 3.1.2 for the
                                             ensuing period commencing at 1 July
                                             that Year and ending on the expiry
                                             of the Forestry Right. UBS
                                             Mangakahia is to advise the Manager
                                             in writing within 20 Business Days
                                             whether the Strategic Plan is
                                             approved or any reasonable
                                             amendments that it may require be
                                             made to the Strategic Plan.

                                    (II)     ACCURACY OF INFORMATION: The
                                             parties acknowledge that
                                             information provided in the
                                             Strategic Plan must necessarily be
                                             less accurate the further in time
                                             the period for which the
                                             information is provided is from the
                                             date on which that information is
                                             provided. Conversely the parties
                                             acknowledge that such information
                                             must increasingly be more precise
                                             and accurate the closer in time the
                                             period for which such information
                                             is provided is from the date on
                                             which that information is provided.

                           (b)      OPERATING PLAN: By 30 May each Year, the
                                    Manager shall prepare and submit to UBS
                                    Mangakahia for approval, not to be
                                    unreasonably or arbitrarily withheld, the
                                    Operating Plan for the period from 1 July
                                    that Year until 31 December in the following
                                    Year ("Operating Period") based upon the
                                    Strategic Plan. UBS Mangakahia is to advise
                                    the Manager
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Management Agreement                                                    Page 10

                                    in writing within 20 Business Days whether
                                    the Operating Plan is approved or any
                                    reasonable amendments that it may require be
                                    made to the Operating Plan. If the Operating
                                    Plan is approved, it shall be implemented by
                                    the Manager. The Operating Plan shall
                                    present, in reasonable detail, those matters
                                    specified in clause 3.1.2 for the ensuing
                                    year. If UBS Mangakahia does not approve the
                                    Operating Plan by the commencement of the
                                    Operating Period to which the Operating Plan
                                    pertains, then the projections set forth for
                                    the appropriate Operating Period in the most
                                    recently approved Strategic Plan shall serve
                                    as the Operating Plan until UBS Mangakahia
                                    has approved an Operating Plan for the
                                    applicable Operating Period.

                  3.1.4    MANAGEMENT PLANS OBJECTIVES: The Management Plans
                           shall be formulated to achieve the objective of
                           minimising the costs of protecting and maintaining
                           the Plantation Assets consistent with the standards
                           in clause 2.2 while protecting the investment value
                           and practising responsible environmental stewardship.

                  3.1.5    INITIAL MANAGEMENT PLANS: The initial Operating Plan
                           which will apply until 30 June 2003 will be discussed
                           with the Manager and a finalised plan provided by the
                           Manager to UBS Mangakahia within 15 Business Days
                           following the date that the Sale and Purchase
                           Agreement goes unconditional in all respects. For the
                           avoidance of doubt the Manager is not required to
                           submit a Strategic Plan for the period to 30 June
                           2003.

         3.2      MONTHLY REPORTS: Within ten (10) Business Days after the end
                  of each month, the Manager shall provide UBS Mangakahia with a
                  report showing the management operations, and the results of
                  management operations including, without limitation, Monthly
                  Operational Photography and a comparison of Operating Costs
                  against budget for the immediately preceding month.

         3.3      MEETINGS AND QUARTERLY REPORTS:

                  3.3.1    QUARTERLY MEETINGS: Once each Quarter, within twenty
                           (20) calendar days after the end of the previous
                           Quarter, the Manager shall hold a meeting, which may,
                           at the discretion of UBS Mangakahia, be in person or
                           by telephone, with representatives of UBS Mangakahia
                           to discuss the performance of the Manager and outlook
                           for the management of the Plantation Assets based on
                           the Quarterly report (including any necessary
                           amendments to the Management Plans) and technical and
                           other information relating to the operations of the
                           Plantation Assets.

                  3.3.2    QUARTERLY REPORTS: Not later than five (5) Business
                           Days prior to each Quarterly meeting the Manager
                           shall provide UBS Mangakahia with a report for
                           discussion and, showing the same information as
                           required for the monthly reports (but on a quarterly
                           basis) together with updated Operating Period end
                           estimates of the information

<PAGE>

Management Agreement                                                   Page 11

                           contained in the then current Operating Plan for
                           approval by UBS Mangakahia such approval not to be
                           unreasonably or arbitrarily withheld, not more than 5
                           Business Days later.

         3.4      ANNUAL ACTIVITIES REPORT: The Manager shall provide UBS
                  Mangakahia with an annual activities report on the principal
                  activities in respect of the Plantation Assets by the end of
                  August in each Year. It shall include, without limitation, a
                  summary of activities for the previous 12 month period ending
                  30 June, Operating Costs incurred in performing the Manager's
                  duties in this agreement, any conditions or events which
                  materially alter the value of any of the Plantation Assets in
                  the Manager's opinion and any other items reasonably requested
                  by UBS Mangakahia. The Operating Costs statements shall be
                  prepared in accordance with NZ GAAP and information shall also
                  be provided as reasonably requested by UBS Mangakahia to
                  enable UBS Mangakahia to meet US GAAP requirements and shall
                  include a comparison (and discussion of the reasons for any
                  significant changes) with the preceding 12 month period ending
                  30 June and with the Operating Plan.

         3.5      SPECIAL REPORTS: UBS Mangakahia may at any time and from time
                  to time request the Manager to provide it with a special
                  report in respect of any matter connected with the management
                  of the Plantation Assets. If the Manager does not possess the
                  expertise to provide the report or any part thereof, it shall
                  be entitled, at its discretion, to retain independent
                  advisers, acceptable to UBS Mangakahia and at UBS Mangakahia's
                  expense, to provide a report or reports satisfying part or all
                  of any such request. If in the reasonable opinion of the
                  Manager the provision of a special report will result in
                  material cost to the Manager, the Manager will advise UBS
                  Mangakahia of the time and cost required to produce such
                  report. Within 10 Business Days of receipt of such time and
                  cost estimate UBS Mangakahia will advise the Manager whether
                  it wishes for the Manager to proceed with the preparation of
                  such report. In the event that UBS Mangakahia asks the Manager
                  to proceed with the preparation of a special report, UBS
                  Mangakahia is to pay the Manager such costs as estimated by
                  the Manager and approved by UBS Mangakahia within 15 Business
                  Days after UBS Mangakahia receives the report. In all other
                  instances special reports prepared by the Manager shall be at
                  no additional fee to UBS Mangakahia, but any out of pocket
                  costs reasonably incurred by the Manager in connection with
                  such reports shall be for the account of UBS Mangakahia. The
                  Manager shall also provide UBS Mangakahia with such other
                  information about the management operations in relation to the
                  Plantation Assets as may be reasonably requested by UBS
                  Mangakahia at no additional fee.

         3.6      SIGNIFICANT EVENTS: The Manager shall promptly report to UBS
                  Mangakahia any event known to it or which becomes known to it
                  which, in the reasonable opinion of the Manager, results or
                  will result in a significant departure from the Management
                  Plans or will impact the Management Plan objectives set out in
                  clause 3.1.4 and shall consult with UBS Mangakahia with
                  respect to the effects of the foregoing and any actions to be
                  taken in respect thereof. Events generally known to the New
                  Zealand public affecting the New Zealand forestry industry
                  need to be reported only when the Manager reasonably
                  determines that UBS Mangakahia will not be aware of them.

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Management Agreement                                                   Page 12

                  Where in the reasonable opinion of the Manager, to protect the
                  value of the Plantation Assets, it is necessary to perform any
                  management tasks not specifically contemplated in any current
                  Operating Plan and before approval can be obtained from UBS
                  Mangakahia, the Manager has the authority to perform those
                  tasks and the performance of those tasks shall be deemed to
                  have received the approval of UBS Mangakahia and the Operating
                  Plan amended prior to the performance of those tasks. The
                  Manager shall promptly report to UBS Mangakahia any tasks
                  performed by the Manager which were not approved by UBS
                  Mangakahia prior to being performed but which are deemed to be
                  approved pursuant to this clause 3.6.

         3.7      SPECIAL AUDITS: UBS Mangakahia may at any time and from time
                  to time engage persons to undertake a special audit of any
                  activity undertaken or report produced by the Manager pursuant
                  to this agreement. Any such audit shall be for the account of
                  UBS Mangakahia and shall be undertaken in such a manner as
                  shall reasonably limit disruption to the operations of the
                  Manager and the operations of the Tauhara estate as a whole.
                  The Manager shall fully co-operate with the reasonable
                  requests of such persons undertaking any such audit.

         3.8      PRESENTATIONS TO INVESTORS; INVESTOR VISITS: The Manager shall
                  attend, and participate in as and if requested by UBS
                  Mangakahia, once per Year the UBS Annual Client Conference and
                  report on the affairs relating to the Plantation Assets and
                  the performance of the Manager's obligations under this
                  agreement. Each presentation will cover such details and be in
                  respect of such period as may be reasonably requested by UBS
                  Mangakahia. Each presentation will be made at the location
                  required by UBS Mangakahia without any additional fee
                  hereunder, except that if any presentation is required to be
                  made outside of New Zealand, any travel and accommodation and
                  other out of pocket travelling and associated costs reasonably
                  incurred by the Manager in connection with making such
                  presentation shall be for the account of UBS Mangakahia and
                  the Manager shall be reimbursed for any such costs by UBS
                  Mangakahia upon demand. If requested by UBS Mangakahia, the
                  Manager shall also host visits from time to time to the Land
                  by UBS Mangakahia.

         3.9      LIMITATION OF LIABILITY FOR PROJECTIONS: UBS Mangakahia
                  recognises that the Manager is not a guarantor of the results
                  of UBS Mangakahia's investment in the Plantation Assets or the
                  economic assumptions, judgments, estimates, projections and
                  other factors affecting the value or accuracy of the
                  Management Plans and any other plans, budgets, reports or
                  presentations provided or made by the Manager pursuant to this
                  agreement. The Manager shall not be liable to UBS Mangakahia
                  with respect to any such assumptions, judgments, estimates,
                  projections or other factors in any plans, budgets, reports
                  and presentations provided that, subject to any changes
                  required by UBS Mangakahia, such plans, budgets, reports and
                  presentations are prepared in accordance with the standard of
                  performance set forth in subclause 2.2.

<PAGE>

Management Agreement                                                   Page 13

4.       MANAGEMENT OF THE PLANTATION ASSETS

         4.1      PERFORMANCE OBLIGATIONS: In carrying out its obligations under
                  this agreement the Manager shall:

                  4.1.1    COMPLY WITH UBS MANGAKAHIA'S DIRECTIONS: at all times
                           comply (or require compliance by its contractors,
                           subcontractors, agents, employees, invitees, visitors
                           or licensees) with the reasonable directions of UBS
                           Mangakahia;

                  4.1.2    COMPLY WITH THE LAW ETC: at all times comply (or
                           require compliance by its contractors,
                           subcontractors, agents, employees, invitees, visitors
                           or licensees) with:

                           (a)      GENERAL: all applicable laws, rules,
                                    regulations, permits, approvals, consents,
                                    orders, judgments, decrees, injunctions or
                                    agreements of or with any governmental
                                    authority, including, without limitation
                                    those relating to forest management and
                                    forest practice; and

                           (b)      ENVIRONMENTAL: the Environmental
                                    Requirements; and

                  4.1.3    PERFORMANCE STANDARD: meet the standard of
                           performance set out in subclause 2.2.

         4.2      DUTIES: The Manager shall implement and comply with the
                  Management Plans and fully and properly manage the Plantation
                  Assets in accordance with the terms set out in this agreement.
                  For the avoidance of doubt the Manager's duties will cease in
                  respect of a Working Block or Stand when that Working Block or
                  Stand is returned to the Manager in accordance with clause 12
                  of the Forestry Right. These obligations shall include,
                  without limitation:

                  4.2.1    FOREST HEALTH CHECK: inspection activities to monitor
                           the health of the Trees, including, without
                           limitation, regular inspections and inspections
                           following adverse weather events;

                  4.2.2    FOREST HEALTH Surveys: participating in any annual
                           forest health survey conducted by the New Zealand
                           Forest Owners Association and providing UBS
                           Mangakahia with copies of any relevant reports (or
                           parts of reports);

                  4.2.3    CONTROL PESTS AND DISEASE: employing New Zealand
                           forest industry standards for the control of insect
                           and other pests and fungal and other tree diseases;

                  4.2.4    RECORDS: updating forest records including stand
                           descriptions and all mapping;

                  4.2.5    MAINTENANCE: general periodic maintenance of fences,
                           gates, roads, water tables and drainage to allow or
                           control vehicle access to the Land;

<PAGE>

Management Agreement                                                   Page 14

                  4.2.6    EROSION AND POLLUTION: use its reasonable endeavours
                           to control soil erosion and pollution of waterways;

                  4.2.7    STORAGE: store all fuels and oils brought onto the
                           Land by the Manager and those under the control of
                           the Manager safely on suitably cleared land;

                  4.2.8    DEBRIS: clear away and dispose of all debris carried
                           on to adjoining properties by the Manager and those
                           under the control of the Manager;

                  4.2.9    PUBLIC ACCESS: control public access to the Land on
                           specified terms for subsidiary land uses (such as
                           grazing, beehive siting and recreation) and taking
                           appropriate actions reasonably required to limit
                           trespass;

                  4.2.10   ILLEGALITY: notify the relevant authorities if it
                           becomes aware of any illegal behaviour on the Stands;

                  4.2.11   FIRE PROTECTION: in all respects complying with the
                           Forest and Rural Fires Act 1977 and (subject to the
                           provisions of that Act or any other statutory
                           regulation affecting the same) the Manager shall:

                           (a)      FIRE PLAN: include the Plantation Assets in
                                    the relevant annual fire plan and provide a
                                    copy of such fire plan to UBS Mangakahia;

                           (b)      FIRE PROTECTION: put in place fire
                                    appropriate protection methods and processes
                                    in relation to the Stands;

                           (c)      FIRE PREVENTION: take all reasonable
                                    measures that may be necessary to prevent
                                    the spreading of any fire on, from, to or
                                    across the Stands;

                           (d)      EQUIPMENT: have available or access to
                                    equipment which is suitable and adequate for
                                    the purpose of fighting fires and for
                                    securing the reasonable safety of lives from
                                    fire on the Stands;

                           (e)      STRUCTURES: erect structures and do all
                                    things that the Manager considers reasonably
                                    necessary for the protection of the Trees
                                    and keep its fire fighting and safety
                                    equipment in good working order and
                                    condition;

                           (f)      OTHER FIRE PROTECTION: be entitled to erect
                                    look-outs, construct fire-breaks and take
                                    such other normal fire protection measures
                                    as may from time to time be necessary;

                           (g)      NOTIFY AUTHORITIES: as soon as the Manager
                                    becomes aware ensure that the appropriate
                                    authorities and UBS

<PAGE>

Management Agreement                                                   Page 15

                                    Mangakahia are immediately notified should
                                    there be an outbreak of fire on the Land;

                           (h)      FIRE BREAKS: keep the fire breaks situated
                                    on the Stands clear of undergrowth; and

                           (i)      SPARK PREVENTION: ensure all vehicles and
                                    equipment brought onto the Land by or under
                                    the control of the Manager have a safe and
                                    efficient means of preventing the escape of
                                    dangerous sparks or flames from the exhaust
                                    and carry a fire extinguisher in working
                                    order;

                  4.2.12   OBTAIN CONSENTS ETC: use all reasonable endeavours to
                           obtain all consents, authorisations, approvals or
                           orders of any Court or governmental authority or
                           agency necessary in order to perform its obligations
                           under this agreement and the Management Plans;

                  4.2.13   FOREST STEWARDSHIP COUNCIL CERTIFICATION: for so long
                           as the parties agree, to maintain and comply with (or
                           require compliance by its contractors,
                           subcontractors, agents, employees, invitees, visitors
                           or licensees) Forest Stewardship Council
                           Certification;

                  4.2.14   ADVISE OF LEGAL ACTIONS: to the extent it has actual
                           knowledge thereof, promptly notify UBS Mangakahia of
                           any suit or proceeding threatened or commenced
                           against UBS Mangakahia or the Manager in connection
                           with the Plantation Assets or the performance of the
                           Manager's obligations under this agreement;

                  4.2.15   DEFEND LEGAL ACTIONS: at the direction of UBS
                           Mangakahia and cost in all respects of UBS Mangakahia
                           take or cause to be taken all reasonable steps to
                           defend UBS Mangakahia against legal actions or
                           initiate claims or proceedings to protect, enforce or
                           confirm the rights of UBS Mangakahia with respect to
                           the Plantation Assets or any contract or agreement
                           entered into by or on behalf of UBS Mangakahia,
                           provided that UBS Mangakahia accepts that the Manager
                           is not required to comply with the provisions of this
                           clause, except that the Manager must provide
                           reasonable co-operation to allow UBS Mangakahia to
                           defend such legal actions or initiate such claims or
                           proceedings, if in the Manager's reasonable opinion
                           the Manager and/or its business may be prejudiced in
                           complying with this clause 4.2.15 and this will not
                           be a failure by the Manager in complying with its
                           obligations under this agreement; and

                  4.2.16   ADVISING: acknowledging the Manager's position in
                           owning and managing other plantation assets in New
                           Zealand, advising UBS Mangakahia of any relevant
                           matters in the Manager's reasonable opinion impacting
                           the operations or the protection of the investment in
                           the Trees.

         4.3      CONTRACTS BY MANAGER: The Manager shall only enter into
                  contracts or agreements on behalf of UBS Mangakahia if such
                  contracts or agreements are

<PAGE>

Management Agreement                                                   Page 16

                  in accordance with the Management Plans and the terms of this
                  agreement. The Manager shall be entitled, but not required, to
                  use its own employees to perform its obligations under this
                  agreement. The Manager may also enter into contracts or other
                  agreements with independent contractors who are selected and
                  supervised by the Manager, utilising the same standard of
                  performance as that set forth in subclause 2.2. The Manager
                  shall take all reasonable steps to direct its personnel that
                  such agreements shall state that they are being executed by
                  the Manager as agent for UBS Mangakahia and not as principal,
                  except where such contract or agreement also relates to the
                  Manager's own business and/or forest estate. The Manager will
                  require such contractors carry insurance with limits,
                  insurers, endorsements, creditworthiness and coverage which
                  are determined by the Manager to be adequate under the
                  circumstances. UBS Mangakahia will not be liable in the event
                  that any such coverage is inadequate. The Manager will not be
                  liable in the event that any such coverage is inadequate
                  provided only that its determination of adequacy was made on a
                  reasonable basis and in good faith.

         4.4      PROCEDURES: In performing its obligations under this
                  agreement, the Manager shall adopt and implement such
                  supervisory, accounting, payment and control procedures as
                  shall meet the standard of performance set forth in subclause
                  2.2.

         4.5      BOOKS AND RECORDS: The Manager shall keep books and records in
                  relation to its management obligations under this agreement in
                  accordance with the following provisions.

                  4.5.1    SEPARATE BOOKS AND RECORDS: Subject to clause 4.5.2,
                           the Manager shall keep separate records and books of
                           account in relation to its management of UBS
                           Mangakahia's financial interest in and expenditure on
                           the Plantation Assets in which complete entries shall
                           be made reflecting the activities and financial
                           transactions undertaken by the Manager in performing
                           its obligations under this agreement.

                  4.5.2    COMBINED RECORDS: The parties acknowledge that it
                           will not always be practicable to keep the records
                           for the Plantation Assets separate from records for
                           the Manager's other plantation assets, and (provided
                           UBS Mangakahia is consulted in accordance with clause
                           4.5.3) UBS Mangakahia acknowledges that separate
                           records for the Plantation Assets may not be kept
                           where:

                           (a)      POLICIES: those records contain policies
                                    that are applicable for both the Plantation
                                    Assets and any other plantation assets owned
                                    or managed by the Manager; and/or

                           (b)      OTHER MATTERS: those records relate to
                                    industry or region- wide matters.

                  4.5.3    CONSULTATION: In the event that the Manager (acting
                           reasonably) believes that combined records must be
                           kept in accordance with clauses 4.5.2(a) and (b), the
                           Manager shall consult with UBS Mangakahia as to UBS
                           Mangakahia's needs in regards to such

<PAGE>

Management Agreement                                                   Page 17

                           records. In consulting with UBS Mangakahia, the
                           Manager shall act in good faith and give reasonable
                           consideration to UBS Mangakahia's requests.

                  4.5.4    IDENTIFICATION OF RELEVANT ENTRIES: Where it is not
                           possible to keep separate records in relation to the
                           Plantation Assets, any transaction entered into by
                           the Manager as agent in the performance of its
                           obligations under this agreement, or any other
                           relevant entry in a record of the Manager that
                           relates to the Plantation Assets, shall be
                           appropriately identified in the records of the
                           Manager at the time.

                  4.5.5    ACCESS: The Manager shall permit any officer,
                           employee, agent or advisor of UBS Mangakahia, at any
                           time during regular business hours and upon
                           reasonable prior notice to the Manager, to examine
                           and make copies of such records and books of account
                           and to discuss them or the performance by the Manager
                           of its obligations under this agreement with such of
                           the Manager's officers or employees as the Manager
                           advises.

                  4.5.6    AUDIT: The Manager shall co-operate with any audit of
                           the Manager's records, books of account or
                           performance under this agreement by a reputable and
                           independent auditor who shall at all times be bound
                           to the confidentiality provisions set out in clause
                           17.

                  4.5.7    EXPIRATION/TERMINATION: Subject to subclause 6.4, and
                           subject to UBS Mangakahia having paid to the Manager
                           all outstanding monies due to the Manager under this
                           agreement, on the expiration or earlier termination
                           of this agreement, the records and books of account,
                           or copies of the relevant parts of such records where
                           the records are combined records pursuant to clause
                           4.5.2, shall if requested by UBS Mangakahia be
                           delivered by the Manager to UBS Mangakahia at such
                           location as UBS Mangakahia may reasonably designate.

5.       COSTS AND FEES

         5.1      FEE:

                  5.1.1    MANAGEMENT FEE: In consideration of the Manager's
                           management obligations under this agreement, UBS
                           Mangakahia shall pay to the Manager, quarterly in
                           advance in accordance with clause 5.1.2(a) during the
                           term of this agreement, an amount equal to NZ$18 per
                           hectare of Remaining Stands plus GST.

                  5.1.2    REDUCING FEE:

                           (a)      CALCULATION OF REMAINING AREA: The parties
                                    acknowledge and agree that the area of the
                                    Stands that are subject to the Forestry
                                    Right will diminish over the term of the
                                    Forestry Right until there are no longer any
                                    Remaining Stands. Accordingly, the parties
                                    acknowledge and agree that the Management
                                    Fee will decrease at a hectare

<PAGE>

Management Agreement                                                   Page 18

                                    equivalent rate. To this end, UBS Mangakahia
                                    shall calculate the area of the Remaining
                                    Stands (which in turn will be used to
                                    calculate the Management Fee payable for the
                                    following Quarter in accordance with clause
                                    5.1.1), no later than twenty (20) Business
                                    Days prior to the end of each Quarter, by
                                    deducting from the area of the Stands at the
                                    start of the prior Quarter:

                                    (i)      SALES TO THE MANAGER: Stands that
                                             have been sold and transferred to
                                             the Manager in accordance with the
                                             Wood Supply Agreement; and

                                    (ii)     SALES TO THIRD PARTIES: Stands that
                                             have been sold to and harvested by
                                             either a third party or the Manager
                                             (as evidenced by a notice of
                                             completion of harvest issued to the
                                             Manager) in accordance with the
                                             Forestry Right.

                           (b)      NOTIFICATION OF REMAINING AREA: UBS
                                    Mangakahia shall notify the Manager of the
                                    area of the relevant Remaining Stands twenty
                                    (20) Business Days prior to the end of each
                                    Quarter.

                  5.1.3    FEE REVIEW:

                           (a)      BIENNIAL REVIEW: The Management Fee shall be
                                    reviewed biennially at the relevant April
                                    Quarterly meeting. The Management Fee is to
                                    be reviewed on the basis that any benefit or
                                    detriment to UBS Mangakahia arising from or
                                    as a consequence of the Related Agreements
                                    and/or the operations and business of the
                                    Manager is to be disregarded when
                                    determining the new Management Fee. At the
                                    time of such review the parties shall
                                    negotiate in good faith to determine the new
                                    Management Fee to apply for the next 2 Year
                                    period taking into account the then current
                                    market rates for the services being provided
                                    by the Manager under this agreement. Any
                                    disagreement over the level of the
                                    Management Fee will be resolved under clause
                                    16 of this agreement.

                           (b)      MANAGEMENT FEE TO APPLY: If the parties are
                                    unable to resolve any dispute over fees
                                    before the commencement of the next 2 Year
                                    period then the Management Fee applicable to
                                    the previous 2 year period will continue to
                                    apply and be payable by UBS Mangakahia until
                                    the dispute is resolved.

                           (c)      DISPUTE RESOLVED: Once the dispute has been
                                    resolved and:

                                    (i)      FEE INCREASE: the Management Fee
                                             has increased from the previous
                                             Management Fee, the

<PAGE>

Management Agreement                                                   Page 19

                                             Manager will be entitled to be paid
                                             the difference between the two fee
                                             levels together with any additional
                                             GST; or

                                    (ii)     FEE DECREASE: the Management Fee
                                             has decreased from the Management
                                             Fee applicable for the previous
                                             period, then UBS Mangakahia will be
                                             entitled to the difference between
                                             the two fee levels together with a
                                             credit note for any overpaid GST;

                                    and the payment will be backdated to the
                                    start of the relevant two year period such
                                    payment is payable to the other party within
                                    10 Business Days of the dispute being
                                    resolved. The party paying the difference
                                    shall forthwith pay such amount to the other
                                    party together with interest thereon at the
                                    Bill Rate calculated daily from the start of
                                    the relevant 2 year period to the day 10
                                    Business Days after the dispute has been
                                    resolved, and, if relevant, interest thereon
                                    at the Default Interest Rate calculated
                                    daily from the day 11 Business Days after
                                    the dispute has been resolved to the date of
                                    payment of the balance the other party and
                                    compounded monthly.

                  5.1.4    INVOICING AND PAYMENT OF FEES: The Manager shall
                           provide UBS Mangakahia with an invoice for all fees
                           to be paid to the Manager hereunder for each Quarter
                           (as calculated in accordance with clauses 5.1.1 and
                           5.1.2). UBS Mangakahia shall pay each invoice
                           received from the Manager within 15 Business Days of
                           receipt of such invoice.

         5.2      COSTS:

                  5.2.1    OPERATING COSTS: All Operating Costs set forth in the
                           Operating Plan, as amended from time to time, shall
                           be for the account of UBS Mangakahia. Deviations from
                           Operating Costs, as set forth in the then applicable
                           Operating Plan, which are permitted or approved
                           following any Quarterly meeting pursuant to subclause
                           3.3.2 shall be for the account of UBS Mangakahia. It
                           is agreed that any deviation in the total Operating
                           Costs from that in the Operating Plan for the
                           relevant Operating Period of less than 10% will not
                           be deemed to be an amendment to the Operating Plan
                           requiring approval following any Quarterly meeting
                           under clause 3.3.2 and shall be for the account of
                           UBS Mangakahia.

                  5.2.2    ADDITIONAL APPROVED COSTS: Subject to clause 5.2.1
                           all reasonable costs incurred by the Manager in
                           respect of items not contemplated in the then
                           applicable Operating Plan shall be Operating Costs
                           but only if and to the extent that they have been
                           approved following any Quarterly meeting and the
                           Operating Plan amended in accordance with clause
                           3.3.2 of this agreement prior to their being incurred
                           by the Manager; provided that where, in the

<PAGE>

Management Agreement                                                   Page 20

                           reasonable opinion of the Manager, to avoid UBS
                           Mangakahia suffering a material adverse effect, it is
                           necessary to incur any such costs before the approval
                           can be obtained, the Manager has the authority to
                           incur these costs and the incurrence of those costs
                           shall be deemed to have received the approval of UBS
                           Mangakahia as if approved by UBS Mangakahia following
                           a Quarterly meeting in accordance with clause 3.3.2
                           and the Operating Plan amended accordingly prior to
                           being incurred. The Manager shall promptly report to
                           UBS Mangakahia any costs incurred by the Manager
                           which were not approved by UBS Mangakahia prior to
                           being incurred but are deemed to be approved pursuant
                           to this subclause 5.2.2.

                  5.2.3    INVOICING AND PAYMENT OF COSTS: All invoices
                           submitted by the Manager to UBS Mangakahia for
                           Operating Costs incurred by the Manager under this
                           agreement will be in the following form:

                           (a)      TAX INVOICE: each invoice must be a valid
                                    "tax invoice" as required by law;

                           (b)      OPERATING COSTS: each invoice must specify
                                    the Operating Costs incurred, and the dates
                                    they were incurred;

                           (c)      EXPLANATION: Where Operating Costs deviate
                                    by more than 10% from the estimate in the
                                    Operating Plan each invoice must be
                                    accompanied with a statement explaining how
                                    such Operating Costs relate to the Operating
                                    Plan, or an explanation of why those costs
                                    should be considered additional approved
                                    costs in accordance with clause 5.2.2.

                  5.2.4    DUE DATE FOR PAYMENT: Subject to clauses 5.2.1 and
                           5.2.2, provided the Operating Costs specified in each
                           invoice received by UBS Mangakahia either comply with
                           the Operating Plan or have been approved following
                           any Quarterly meeting in accordance with clause
                           3.3.2, each such invoice will be payable on the 15th
                           Business Day after receipt by UBS Mangakahia of that
                           invoice.

         5.3      PAYMENT IN CLEARED FUNDS: Receipt of a cheque, bill of
                  exchange or other negotiable instrument will not constitute
                  payment of any amount under this agreement until the amount
                  represented by that cheque, bill of exchange or negotiable
                  instrument has been received in full, in cleared funds, by the
                  intended payee.

         5.4      DEFAULT INTEREST: If any amount falls overdue for payment
                  under this agreement, the overdue amount will (without
                  prejudice to any other right or remedy under this agreement)
                  bear default interest from the date on which payment of that
                  amount falls overdue until the date on which payment of the
                  overdue amount is made in full. Default interest will be
                  calculated daily at the Default Interest Rate and will be
                  compounded monthly.

         5.5      SETTLEMENT OF EXPENSES: Following any termination of this
                  agreement, the Manager and UBS Mangakahia shall promptly
                  settle and pay all outstanding

<PAGE>

Management Agreement                                                   Page 21

                  costs, fees and reimbursements which are due to any of the
                  parties pursuant to the terms of this agreement.

         5.6      LAND COSTS: The Manager acknowledges and agrees that as the
                  owner of the Land all Land Costs shall be for the account of
                  the Manager only and nothing express or implied in this
                  agreement will confer any liability on UBS Mangakahia in
                  relation to Land Costs.

         5.7      GST: A party must pay GST on a taxable supply made to it under
                  this agreement, in addition to any consideration (excluding
                  GST) that is payable for that taxable supply. The party making
                  the taxable supply must provide a valid tax invoice to the
                  other party at or before the time that the other party is
                  required to pay the GST. Excluding the term "GST", terms used
                  in this clause have the meaning given to them in the GST Act .

6.       TERM OF AGREEMENT AND SUSPENSION

         6.1      TERM: Unless this agreement is earlier terminated as set forth
                  in subclause 6.2, the term of this agreement shall be from the
                  Commencement Date until the termination of the Forestry Right.

         6.2      EARLY TERMINATION: This agreement may be terminated prior to
                  the expiration of the period specified in subclause 6.1 by
                  notice from UBS Mangakahia to the Manager if any of the
                  following events occur (in relation to clauses 6.2.1-6.2.5) or
                  by notice from the Manager to UBS Mangakahia (in relation to
                  clauses 6.2.1 and 6.2.3).

                  6.2.1    MATERIAL BREACH: Either party breaches, and fails to
                           properly or promptly perform, any of its material
                           obligations within twenty (20) Business Days after
                           written notice from the other party specifying the
                           breach and its intention to terminate this agreement
                           if such obligation is not properly and promptly
                           performed provided that such breach is not disputed
                           by the relevant party alleged to be in breach (in
                           which case clauses 6.3.1 to 6.3.4 shall apply).

                  6.2.2    THE MANAGER'S FAILURE TO PERFORM ITS DUTIES: If, UBS
                           Mangakahia:

                           (a)      DUTIES: notifies the Manager that it is in
                                    material breach of the performance of its
                                    duties under this agreement in any material
                                    respect; and

                           (b)      CAUSE: such failure is not caused by any
                                    specific instruction or direction given to
                                    the Manager pursuant to this agreement by
                                    UBS Mangakahia and acted on by the Manager
                                    nor is such failure caused by any failure to
                                    act by UBS Mangakahia, nor is such failure
                                    caused by the implementation of the approved
                                    Management Plans in accordance with the
                                    performance standards in clause 2.2, in each
                                    case where the Manager has met the standard
                                    of performance set out in clause 2.2.

<PAGE>

Management Agreement                                                   Page 22

                  6.2.3    EVENT OF DEFAULT: If any one or more of the following
                           events of default occur this agreement may be
                           terminated by the affected party prior to the
                           expiration of the period specified in subclause 6.1
                           by notice from the affected party to the other if any
                           of the following events occur:

                           (a)      DISTRESS: distress is levied or a judgment
                                    order or encumbrance is enforced, or becomes
                                    enforceable, or can be rendered so by the
                                    giving of notice, lapse of time or
                                    fulfilment of any condition, against
                                    substantially all of the Manager's property;

                           (b)      INSOLVENCY EVENT: an Insolvency Event occurs
                                    in respect of the Manager;

                           (c)      NOTICE FROM REGISTRAR: the Manager receives
                                    notice from the Registrar of Companies (or a
                                    Deputy Registrar) under section 30 of the
                                    Corporations (Investigation and Management)
                                    Act 1989 or the Securities Commission makes
                                    a recommendation under section 38 of that
                                    Act in respect of the Manager; or

                           (d)      OFFICIAL MANAGER: a person is appointed
                                    under either section 179 of the Act or the
                                    Corporations (Investigation and Management)
                                    Act 1989 to investigate any part of the
                                    affairs of the Manager.

                  6.2.4    DISPOSAL OF PLANTATION ASSETS: UBS Mangakahia
                           disposes of all of the Plantation Assets.

                  6.2.5    CAP EXCEEDED: If the amounts that have been
                           determined to be owed by the Manager to UBS
                           Mangakahia exceed in aggregate the Cap where such
                           amounts arise as a result of breaches of either the
                           Infrastructure Agreement or this agreement and where
                           such amounts are determined either by agreement
                           between the parties or by the award of an arbitrator
                           or by court order (all rights of appeal having either
                           expired or been exhausted), irrespective of the time
                           period over which the liability for such amounts
                           accrues.

                  An early termination of this agreement under this clause 6.2
                  shall not be effective until the date ten (10) Business Days
                  after receipt of the notice of termination by the Manager.

         6.3      TERMINATION DISPUTES:

                  6.3.1    DISPUTE OVER BREACH: In such event that UBS
                           Mangakahia has notified the Manager that it is in
                           material breach under this agreement in accordance
                           with clause 6.2.2 and the Manager disputes that
                           termination notice, or if the recipient of a
                           termination notice under

<PAGE>

Management Agreement                                                   Page 23

                           clause 6.2.1 disputes that termination notice, then
                           the dispute resolution procedure under clause 16
                           shall apply.

                  6.3.2    SUSPENSION: Pending resolution of a dispute under
                           clause 6.3.1 UBS Mangakahia may suspend this
                           agreement (or the relevant part of it where the
                           disputed breach is in relation to only part of the
                           services in this agreement and the Manager is able to
                           provide the balance of the Manager's services in this
                           agreement) on providing written notice of such
                           suspension (or partial suspension) to the Manager,
                           and appoint an interim replacement to fulfil the
                           Manager's obligations under this agreement.

                  6.3.3    MANAGEMENT FEES: Notwithstanding that the agreement
                           or part of it has been suspended as provided in
                           clause 6.3.2, the Management Fees (and the Operating
                           Costs as applicable where only part of the agreement
                           is suspended and the Manager is still incurring
                           Operating Costs) payable by UBS Mangakahia to the
                           Manager will continue to be payable in full in
                           accordance with the relevant provisions of this
                           agreement as if this agreement (or part of it) had
                           not been suspended, pending determination of the
                           dispute pursuant to clause 6.3.1.

                  6.3.4    DETERMINATION OF BREACH: If it is determined pursuant
                           to clause 6.3.1 that there is no breach then UBS
                           Mangakahia must immediately terminate the interim
                           replacement manager and reinstate the Manager. If it
                           is determined that there is a breach, UBS Mangakahia
                           may immediately terminate this agreement and will
                           notify the Manager in writing of the out of pocket
                           costs incurred by it as a result of the appointment
                           of the interim replacement manager (including a
                           statement of such costs). The Manager will pay such
                           costs to UBS Mangakahia within 5 Business Days of
                           receipt of such notification.

                  6.3.5    CURABLE BREACH: If prior to referring the issue to
                           dispute resolution in accordance with this clause UBS
                           Mangakahia and the Manager can agree on a method and
                           period within which such failure is to be cured, and
                           the Manager fails to cure such failure according to
                           the method and within the period agreed, then UBS
                           Mangakahia may terminate this agreement by notice to
                           the Manager in writing and this agreement will
                           terminate 10 Business Days from the date of such
                           notice.

         6.4      EFFECT OF TERMINATION:

                  6.4.1    SURVIVAL: The expiration or earlier termination of
                           this agreement will be without prejudice to the
                           rights and obligations of the parties prior to such
                           expiration or earlier termination becoming effective
                           and the obligations of the parties under subclause
                           4.5, subclause 5.5, clause 8, subclause 11.3 and
                           clause 17 will survive the expiration or earlier
                           termination of this agreement.

<PAGE>

Management Agreement                                                   Page 24

                  6.4.2    RELATED AGREEMENTS: The expiration or earlier
                           termination of this agreement will be without
                           prejudice to the rights and obligations of the
                           parties under the Related Agreements.

         6.5      TRANSFER:

                  6.5.1    EARLY TERMINATION: On the early termination of this
                           agreement the Manager shall at no additional fee or
                           cost to UBS Mangakahia and at all times acting in
                           good faith, promptly and efficiently take all actions
                           reasonably requested to assist its replacement in
                           assuming its responsibilities in terms of such
                           replacement manager's appointment including, without
                           limitation, the handing over of all relevant and
                           up-to-date records relating to the Trees in a form
                           that can immediately be used by UBS Mangakahia to
                           continue to manage the Trees to a standard consistent
                           with that in clause 2.2 (provided that the Manager is
                           entitled to withhold the records until all monies
                           owing to the Manager under this agreement are paid in
                           full). For the avoidance of doubt, the Manager will
                           have no obligation to transfer proprietary systems or
                           operational processes. All reasonable out of pocket
                           expenses incurred by the Manager in effecting the
                           transfer shall be to the account of UBS Mangakahia.

                  6.5.2    EXPIRATION: On the expiration of this agreement by
                           the effluxion of time the Manager shall at no
                           additional fee or cost to UBS Mangakahia and at all
                           times acting in good faith, promptly and efficiently
                           take all actions reasonably requested to assist UBS
                           Mangakahia wind up its interest in the Plantation
                           Assets, including, without limitation, the handing
                           over of all relevant records relating to the Trees,
                           provided that the Manager is entitled to withhold the
                           records until all monies owing to the Manager under
                           this agreement are paid in full. For the avoidance of
                           doubt, the Manager will have no obligation to
                           transfer proprietary systems or operational
                           processes. All reasonable out of pocket expenses
                           incurred by the Manager in effecting the transfer
                           shall be to the account of UBS Mangakahia.

         6.6      INJUNCTIVE RELIEF OR SPECIFIC PERFORMANCE: Each of the parties
                  acknowledges and agrees that in the event of a breach of this
                  agreement, damages alone will be an insufficient remedy.
                  Accordingly, each of the parties further acknowledge that the
                  other party may be entitled to equitable relief, including
                  injunctive relief or specific performance, in the event of any
                  breach, or threatened breach of this agreement, in addition to
                  any and all other remedies available to it at law.

7.       INSURANCE

         7.1      INSURANCE: The Manager shall be permitted to self- insure its
                  risks, provided that if at any time during the term of this
                  agreement, the net assets of Fletcher Challenge Industries
                  Limited fall below $200 million the Manager shall promptly
                  notify UBS Mangakahia of the same and the provisions of the
                  following clauses will apply until the net assets of Fletcher
                  Challenge Industries Limited exceed $200 million. All
                  calculations of net assets required

<PAGE>

Management Agreement                                                   Page 25

                  to be carried out pursuant to this clause must be made using
                  those accounting principles used for the preparation of the
                  financial statements of Fletcher Challenge Forests Limited.

                  7.1.1    PUBLIC LIABILITY INSURANCE: The Manager shall obtain
                           and maintain, at its expense, public liability
                           insurance coverage, with an extension for fire
                           fighting costs and levies pursuant to the Forest and
                           Rural Fires Act 1977, in respect of activities
                           undertaken by it and its subcontractors in performing
                           its obligations under this agreement in such amounts,
                           on such terms and with such insurers as a prudent
                           forestry manager of the Plantation Assets would
                           insure for based on the risks and liabilities
                           attendant on such activities and will provide UBS
                           Mangakahia with confirmation in writing of the cover
                           and that the premiums are paid.

                  7.1.2    ADDITIONAL INSURED: UBS Mangakahia shall be named as
                           an additional insured on all insurance policies
                           providing such coverage.

                  7.1.3    CHANGE IN SCOPE: Any proposed material change in the
                           scope, insurer or amount of insurance coverage
                           maintained by the Manager pursuant to this subclause
                           7.1 shall be promptly reported to UBS Mangakahia. The
                           Manager shall have no obligation to insure the
                           Plantation Assets except as specified in this
                           clause 7.

         7.2      OTHER INSURANCE: The Manager shall use reasonable endeavours
                  to obtain and maintain such insurance in respect of the
                  Plantation Assets (including, without limitation, insurance
                  against fraud or theft on the part of the Manager's employees
                  or contractors which would cause loss to UBS Mangakahia), with
                  such insurers and coverage, and for such amount, as UBS
                  Mangakahia shall request. The cost of such insurance including
                  any brokerage fees and out of pocket expenses shall be for the
                  account of UBS Mangakahia. The Manager will obtain written
                  quote(s) for such insurance including brokerage fees and out
                  of pocket costs and will not be under any obligation to place
                  such insurance until such time as it has received payment of
                  the agreed quote in full in cleared funds from UBS Mangakahia.
                  Upon request, the Manager shall furnish to UBS Mangakahia, all
                  certificates of the insurances obtained and maintained
                  pursuant to this subclause 7.2. The Manager shall have no
                  obligation to insure the Plantation Assets except as specified
                  in this subclause 7.

         7.3      UBS MANGAKAHIA INSURANCE: UBS Mangakahia may, at its sole and
                  absolute discretion and cost, obtain and maintain such other
                  insurance in respect of the Plantation Assets in addition to
                  any insurance obtained and maintained by the Manager in
                  accordance with clauses 7.1 and 7.2, but without limiting the
                  Manager's obligation to obtain and maintain insurance in
                  accordance with clauses 7.1 and 7.2.

         7.4      FCIL UNDERTAKING: In order to satisfy UBS Mangakahia of the
                  Manager's creditworthiness in respect of its self insuring for
                  the above risks, the Manager will provide UBS Mangakahia with
                  a signed undertaking from Fletcher Challenge Industries
                  Limited in the form set out in Appendix II together with a

<PAGE>

Management Agreement                                                   Page 26

                  guarantee from Fletcher Challenge Industries Limited in the
                  form attached to Appendix II on execution of this agreement.

8.       INDEMNITY

         8.1      MANAGER'S DUTY TO INDEMNIFY: The Manager shall indemnify UBS
                  Mangakahia and its respective officers, directors, employees
                  and Affiliates against any and all costs, expenses, claims,
                  damages and liabilities incurred whatsoever, including
                  reasonable legal expenses, arising as a direct result of any
                  breach by the Manager of the provisions of this agreement,
                  except if, and then only to the extent that, such breach, act
                  or omission occurs as a result of:

                  8.1.1    SPECIFIC INSTRUCTIONS: the Manager carrying out and
                           performing any specific instruction or direction
                           given to the Manager pursuant to this agreement by
                           UBS Mangakahia; or

                  8.1.2    FAILURE BY UBS MANGAKAHIA: the Manager, having met
                           the standard of performance set out in subclause 2.2,
                           being unable to comply with any of its duties under
                           this agreement caused by the failure to act by UBS
                           Mangakahia.

         8.2      LIMITATION OF LIABILITY - MANAGER: The Manager's liability
                  under clauses 8.1 and 11.3 of this agreement and clauses 4.3
                  and 7.1 of the Infrastructure Agreement cannot exceed in
                  aggregate NZ$2 million (the "Cap").

         8.3      UBS MANGAKAHIA'S DUTY TO INDEMNIFY: UBS Mangakahia hereby
                  indemnifies the Manager, its officers, directors, employees
                  and Affiliates, against any and all costs, expenses, claims,
                  damages and liabilities whatsoever, including reasonable legal
                  expenses, arising directly out of any breach by UBS Mangakahia
                  of the provisions of this agreement.

         8.4      LIMITATION OF LIABILITY - UBS MANGAKAHIA: UBS Mangakahia's
                  liability under clause 8.3 of this agreement and clause 7.3 of
                  the Infrastructure Agreement cannot exceed in aggregate NZ$2
                  million.

         8.5      LIABILITY: Nothing expressed or implied in this agreement
                  shall confer any liability on either party (referred to in
                  this clause as the "First Party") in respect of any indirect,
                  consequential or special loss, damage, cost or expense of any
                  kind including (but not limited to) loss of savings and profit
                  suffered or incurred by the other party as a direct or
                  indirect result of a breach by the First Party of any of its
                  obligations under this agreement.

         8.6      RIGHT TO DEFEND: If any action or proceeding is brought
                  against a party or parties indemnified under subclause 8.1 or
                  subclause 8.3 or subclause 11.3 (the "Indemnified Party"),
                  such Indemnified Party shall promptly notify in writing the
                  party or parties against whom such indemnity may be sought
                  (the "Indemnifying Party"). The Indemnifying Party shall then
                  be entitled to assume the defence of the action or proceeding
                  with counsel reasonably satisfactory to the Indemnified Party
                  and shall pay the fees and expenses of such counsel. If the
                  Indemnifying Party has given written notice invoking the
                  provisions of clause 16 with respect to its obligation to
                  indemnify, the

<PAGE>

Management Agreement                                                   Page 27

                  Indemnifying Party may assume such defence subject to a
                  reservation of rights against the Indemnified Party. In any
                  such action or proceeding, any Indemnified Party shall have
                  the right to retain its own counsel, but the fees and expenses
                  of such counsel shall be at the expense of such Indemnified
                  Party unless:

                  8.6.1    BY MUTUAL AGREEMENT: the Indemnifying Party and the
                           Indemnified Party shall have mutually agreed to the
                           retention of such counsel; or

                  8.6.2    DIFFERING INTERESTS: the named parties to any such
                           proceedings (including any impleaded parties) include
                           both the Indemnifying Party and the Indemnified Party
                           and representation of both parties by the same
                           counsel would be inappropriate due to an actual or
                           potential conflict of interest between them.

                  Where there is any disagreement between the parties as to
                  whether there is an actual or potential conflict of interest
                  pursuant to subclause 8.6.2 such disagreement shall be
                  referred to the President of the New Zealand Law Society whose
                  determination shall be binding and the costs of obtaining such
                  determination shall be paid equally by the Indemnifying Party
                  and the Indemnified Party. It is understood and agreed by the
                  parties that the Indemnifying Party shall not, in connection
                  with any proceeding or related proceedings in the same
                  jurisdiction, be liable for the reasonable fees and expenses
                  of more than one separate firm for the Indemnified Party. The
                  Indemnifying Party shall not be liable for any settlement of
                  any proceeding effected without its written consent, but if
                  settled with such consent or if there is a final judgment for
                  the plaintiff, the Indemnifying Party agrees to indemnify the
                  Indemnified Party from and against any loss or liability by
                  reason of such settlement or judgment. No Indemnifying Party
                  shall, without the prior written consent of the Indemnified
                  Party, effect any settlement of any pending or threatened
                  proceeding in respect of which any Indemnified Party is or
                  could have been a party and indemnity could have been sought
                  pursuant to this clause 8 by such Indemnified Party.

         8.7      NO DOUBLE CLAIMS: Neither party is entitled to claim more than
                  once in respect of any one matter giving rise to a claim under
                  this agreement or any Related Agreement.

         8.8      MITIGATION: Each party will take all reasonable steps to
                  mitigate any costs, damages, fines, penalties, loss or
                  expense, it may suffer.

9.       REPRESENTATIONS AND WARRANTIES

         9.1      MANAGER'S REPRESENTATIONS AND WARRANTIES: The Manager
                  represents and warrants as follows.

                  9.1.1    STANDING: The Manager is a company duly incorporated
                           and validly existing under the laws of New Zealand.

<PAGE>

Management Agreement                                                   Page 28

                  9.1.2    AUTHORITY TO ENTER INTO AGREEMENT: The execution,
                           delivery and performance by the Manager of this
                           agreement have been duly authorised by all necessary
                           action on its part, do not contravene any law binding
                           on the Manager, do not contravene the incorporation
                           documents of the Manager and do not contravene the
                           provisions of or constitute a default under any other
                           agreement to which the Manager may be a party or by
                           which any of its assets may be bound.

                  9.1.3    CONSENTS, APPROVALS ETC: It has obtained or made all
                           consents, approvals, authorisations or orders of any
                           court or governmental authority or agency required on
                           its behalf to be obtained or made on or prior to the
                           date of execution of this agreement in connection
                           with the execution and delivery of this agreement and
                           the performance by it of its obligation hereunder.

                  9.1.4    VALID AGREEMENT: This agreement has been duly
                           executed and delivered by the Manager and constitutes
                           the legal, valid and binding obligation of the
                           Manager, enforceable against the Manager in
                           accordance with its terms.

                  9.1.5    NO PROCEEDINGS: There is no action, suit or
                           proceeding before any court or governmental agency or
                           authority now pending or, to the knowledge of the
                           Manager, threatened against the Manager which might
                           adversely affect the ability of the Manager to
                           perform its obligations under this agreement.

         9.2      UBS MANGAKAHIA'S REPRESENTATIONS AND WARRANTIES: UBS
                  Mangakahia represents and warrants as follows.

                  9.2.1    STANDING: It is a company duly incorporated and
                           validly existing under the laws of New Zealand.

                  9.2.2    AUTHORITY TO ENTER INTO AGREEMENT: The execution,
                           delivery and performance by it of this agreement have
                           been duly authorised by all necessary action on its
                           part, do not contravene any law binding on it, do not
                           contravene its incorporation documents, and do not
                           contravene the provisions of or constitute a default
                           under any other agreement to which it is a party or
                           by which any of its assets may be bound.

                  9.2.3    CONSENTS, APPROVALS ETC: It has obtained or made all
                           consents, approvals, authorisations or orders of any
                           court or governmental authority or agency required on
                           its behalf to be obtained or made on or prior to the
                           date of execution of this agreement in connection
                           with the execution and delivery of this agreement and
                           the performance by it of its obligation hereunder.

                  9.2.4    VALID AGREEMENT: This agreement has been duly
                           executed and delivered by it and constitutes the
                           legal, valid and binding obligations of it
                           enforceable against it in accordance with its terms.

<PAGE>

Management Agreement                                                   Page 29

                  9.2.5    NO PROCEEDINGS: There is no action, suit or
                           proceeding before any court or governmental agency or
                           authority now pending or, to the knowledge of UBS
                           Mangakahia, threatened against UBS Mangakahia which
                           might adversely affect the ability of UBS Mangakahia
                           to perform its obligations under this agreement.

10.      CONFLICTS OF INTEREST

         10.1     OTHER ACTIVITIES: UBS Mangakahia acknowledges that the Manager
                  owns other plantation assets in New Zealand and is actively
                  involved in the business of managing such plantation assets
                  and harvesting and marketing forest products (as well as
                  managing plantation assets and harvesting and marketing forest
                  products owned by others) both in the domestic and export
                  markets. From time to time, the Manager's acquisition and
                  management of plantation assets and harvesting and marketing
                  of forest products for its own account, or for a third party,
                  may create a conflict of interest with respect to the
                  obligations of the Manager under this agreement.

         10.2     EFFECTS OF CONFLICT: In the event of a conflict of interest
                  (which the parties acknowledge could arise due to a change in
                  the effective control or management of the Manager) UBS
                  Mangakahia shall have the right, following consultation with
                  the Manager, to terminate this agreement without cause on 30
                  Business Days notice in writing where the conflict of interest
                  is reasonably likely to cause the Manager to:

                  10.2.1   CONFIDENTIALITY: be unable to comply in all respects
                           with its confidentiality obligations under this
                           agreement; or

                  10.2.2   MANAGEMENT OBJECTIVES: be unable to meet the
                           objectives set out in clause 3.1.4; and

                  thereby result in a material adverse effect on UBS Mangakahia.

         10.3     CONTINUING FEE: The parties acknowledge that as a result of
                  terminating this agreement under this clause 10, the Manager
                  may incur certain "winding up" costs. By way of recognition of
                  this fact, UBS Mangakahia shall continue to pay the Management
                  Fee to the Manager for a period of 90 days following the date
                  of the notice referred to in clause 10.2. For the avoidance of
                  doubt, the provisions of clause 6.5.1 shall apply in the event
                  that the agreement is terminated in accordance with this
                  clause 10.

11.      HEALTH AND SAFETY IN EMPLOYMENT ACT

         11.1     COMPLIANCE: The Manager shall take all practicable steps to
                  ensure that no act or omission by it or its employees, agents,
                  contractors, subcontractors, invitees, visitors or licensees:

                  11.1.1   HAZARD: causes a hazard, significant hazard, harm or
                           serious harm to any employee of the Manager or UBS
                           Mangakahia or any person lawfully on the Land; or

<PAGE>

Management Agreement                                                   Page 30

                  11.1.2   BREACH OF HSE ACT: is a breach of any duty or
                           obligation of the Manager under the Health and Safety
                           in Employment Act 1992 ("HSE Act") and any
                           regulations or codes of practice made pursuant to the
                           HSE Act; or

                  11.1.3   HSE ACT ENFORCEMENT: does or is likely to give rise
                           to the issue of an improvement or prohibition notice,
                           enforcement proceedings or a prosecution under the
                           HSE Act against the Manager or UBS Mangakahia,

                  provided the Manager shall only be required to take all
                  reasonably practicable steps to enforce the requirements in
                  this clause 11.1 in respect of its agents, contractors,
                  subcontractors, invitees, visitors or licensees.

         11.2     FURTHER OBLIGATIONS: Without limiting its general obligations
                  the Manager shall:

                  11.2.1   RELEVANT RULES AND REGULATIONS: obtain and shall be
                           familiar with, all relevant rules, regulations,
                           standard and industry practices;

                  11.2.2   MAINTENANCE: in relation to the Manager's duties
                           under this agreement require that all plant,
                           equipment, machinery, vehicles and tools used are in
                           a safe working condition and subject to periodic
                           checks to ensure this standard is maintained and it
                           shall require that the use of equipment that is
                           damaged or does not meet accepted safety standards is
                           not permitted;

                  11.2.3   PROTECTIVE EQUIPMENT: in relation to the Manager's
                           duties under this agreement require that appropriate
                           protective equipment and clothing is supplied to, and
                           used by, all personnel, associated with the work;

                  11.2.4   INSTRUCTIONS: in relation to the Manager's duties
                           under this agreement require the observance of any
                           instructions by any competent authority in relation
                           to the maintenance of safe working practices and
                           accident prevention;

                  11.2.5   REPORT ACCIDENTS: in relation to the Manager's duties
                           under this agreement require all accidents resulting
                           in injuries to personnel to be reported to UBS
                           Mangakahia in accordance with prescribed procedures.

         11.3     INDEMNITY: The Manager shall indemnify and keep indemnified
                  UBS Mangakahia from all costs, damages, fines, penalties, loss
                  and expense incurred or suffered by any of them in respect of
                  any breach of the HSE Act, or any conviction of or proceedings
                  instigated against any of them pursuant to the HSE Act
                  directly related to a breach by the Manager of any of the
                  provisions set out in subclause 11.1 and 11.2. Provided that
                  this indemnity will not apply where any claim under this
                  indemnity against the Manager arises as a result of any act or
                  omission by UBS Mangakahia, where the Manager was acting
                  consistently with, either any request of UBS Mangakahia, or
                  directions from

<PAGE>

Management Agreement                                                   Page 31

                  UBS Mangakahia. Each party will take all reasonable steps to
                  mitigate any costs, damages, fines, penalties, loss or expense
                  it may incur.

         11.4     NOTIFICATION OF BREACH: If the Manager becomes aware that it
                  is or may be in breach, or is likely to be in breach of any of
                  the provisions in subclause 11.1 or 11.2, the Manager shall
                  promptly notify UBS Mangakahia of such a breach or anticipated
                  breach. In relation to any breach or anticipated breach in
                  connection with any of the provisions in subclause 11.1 or
                  11.2 the Manager shall follow the reasonable directions, if
                  any, of UBS Mangakahia to avoid, remedy or mitigate such
                  breach or anticipated breach.

         11.5     INDUCTION: All of the Manager's employees, agents,
                  contractors, subcontractors, invitees, visitors or licensees
                  shall undergo a safety induction and an adequate safety
                  training programme before commencing work on the Land. The
                  Manager shall promptly advise UBS Mangakahia in writing of any
                  major changes to any of its safety policies and procedures.
                  The Manager shall be responsible for ensuring that its
                  affected employees, agents, contractors, subcontractors,
                  invitees, visitors or licensees are advised of any such
                  changes.

         11.6     FIRE TRAINING: The Manager shall procure that any contractor
                  engaged by the Manager in working in the forest shall make
                  their personnel available for fire training, suppression, and
                  standby as may be required by UBS Mangakahia, and at the cost
                  of UBS Mangakahia with such actual costs to be payable by UBS
                  Mangakahia with 15 Business Days of receipt of an appropriate
                  invoice.

12.      HISTORIC AND SACRED PLACES

         12.1     PRESERVE AND SAFEGUARD: The Manager shall preserve and
                  safeguard to the best of its ability those graves of the Maori
                  people, monuments, sacred places and places of historical
                  significance in or on the Land of which the Manager has
                  received notice.

         12.2     DISCOVERIES: If the Manager or the Manager's agents discover
                  any human bones in or on the Land such discovery shall be
                  notified to UBS Mangakahia as soon as possible and the Manager
                  may then, at its discretion, provide the Maori people an
                  opportunity for the bones to be re-interred in appropriate
                  burial grounds. Pending re-interment, or any decision not to
                  re-inter, the bones shall be regarded and treated with respect
                  and proper provisions shall be made with all due reverence for
                  their interim safety and custody.

13.      HISTORIC PLACES AND ARTEFACTS

         If any Historic Place or Maori artifact is discovered by the Manager or
         its employees, agents, contractors, subcontractors, invitees, visitors
         or licensees, then, subject to the provisions of the Historic Places
         Act 1993 and the Antiquities Act 1975, the Manager shall take all
         practicable steps to preserve, safeguard and protect the Historic Place
         or the artifact and shall inform UBS Mangakahia as soon as possible.

14.      FORCE MAJEURE

<PAGE>

Management Agreement                                                   Page 32

         14.1     DELAY OR FAILURE TO PERFORM: No party shall be liable for
                  failure to perform or delay in performing hereunder if the
                  cause of such failure or delay is outside or beyond the
                  reasonable control of the party failing to perform (including
                  but without derogating from the generality of the foregoing:
                  fire, wind, flood, earthquake, volcanic eruption, public
                  disorders, riot, war, embargoes, transport restrictions and
                  forest fire prevention restrictions. For the purposes of this
                  clause the solvency of a party shall be deemed to be within
                  that party's reasonable control. Further nothing in this
                  section shall excuse payment of any money due or which becomes
                  due under this agreement where the obligation to pay arose
                  before the occurrence of the event of force majeure.

         14.2     SUSPENSION OF PERFORMANCE LIMITED: Any suspension of
                  performance by reason of this section shall be limited to the
                  period during which the force majeure exists.

         14.3     NOTICE: The party claiming force majeure shall as soon as
                  possible and in any event no later than five (5) Business Days
                  after it becomes aware of the happening of the event causing
                  the failure give notice to the other of the happening of the
                  event causing the failure and shall furnish all reasonably
                  available information detailing the cause or event and give an
                  estimate of the period of time required to remedy the failure
                  (if such remedy is deemed practicable). Failure to give such
                  notice shall prevent the party from claiming that the event
                  gives rise to force majeure until notice has been given.

         14.4     PRIOR OBLIGATIONS: No situation of force majeure pursuant to
                  this section shall relieve either party of any duty or
                  obligation under this agreement which relates to a period
                  prior to the existence of the situation of force majeure and
                  had arisen or been incurred prior to the existence of the
                  situation of force majeure.

         14.5     SUSPENSION AND TERMINATION:

                  14.5.1   SUSPENSION: If an event beyond the Manager's
                           reasonable control prevents the Manager from carrying
                           out any obligations under this agreement, UBS
                           Mangakahia may immediately suspend this agreement (or
                           the relevant part of it), on providing written notice
                           of such suspension to the Manager, and appoint a
                           replacement manager. Such suspension shall continue
                           until UBS Mangakahia is reasonably satisfied that the
                           Manager is capable of resuming its responsibilities
                           under this agreement. Notwithstanding that the
                           agreement or part of it has been suspended, the
                           Management Fees (and the Operating Costs as
                           applicable where only part of the agreement is
                           suspended and the Manager is still incurring
                           Operating Costs) payable by UBS Mangakahia to the
                           Manager will continue to be payable in full in
                           accordance with the relevant provisions of this
                           agreement as if this agreement (or part of it) had
                           not been suspended.

                  14.5.2   TERMINATION - MANAGER: If an event beyond the
                           Manager's reasonable control prevents the Manager
                           from carrying out any obligation under this agreement
                           for a continuous period of twenty (20) Business Days,
                           then UBS Mangakahia may cancel this

<PAGE>

Management Agreement                                                   Page 33

                           agreement immediately upon providing written notice
                           to the Manager provided that prior to termination UBS
                           Mangakahia must pay to the Manager reasonable out of
                           pockets costs arising from the early termination of
                           this agreement. The Manager must take all reasonable
                           steps to minimise such costs. In that case, clauses
                           6.4 and 6.5 will apply.

                  14.5.3   TERMINATION - UBS MANGAKAHIA: If an event beyond UBS
                           Mangakahia's reasonable control prevents UBS
                           Mangakahia from carrying out any obligation under
                           this agreement for a continuous period of 40 Business
                           Days, then the Manager may cancel this agreement by
                           giving 10 Business Days written notice to UBS
                           Mangakahia. In that case clause 6.4 and 6.5 will
                           apply.

15.      ASSIGNMENT

         15.1     CONSENT: This agreement shall be binding upon and inure to the
                  benefit of the parties, their respective successors and
                  permitted assigns. The parties recognise that UBS Mangakahia
                  has contracted for the Manager's services as provided in this
                  agreement because of certain special and unique abilities of
                  the Manager and that the Manager has agreed to provide such
                  services due to special and unique characteristics of UBS
                  Mangakahia. For this reason, a party may not assign its rights
                  or transfer its obligations under this agreement to any other
                  person or entity without the prior written consent of the
                  other party. Such consent is not to be unreasonably or
                  arbitrarily withheld.

         15.2     DEED: In the case of request for assignment the assignor shall
                  obtain the execution by the proposed assignee of a deed of
                  covenant to be prepared by the other party's solicitors at the
                  assignor's costs whereby the proposed assignee covenants with
                  the other party to observe and perform all the terms of this
                  agreement to be observed and performed on the part of the
                  assignor.

         15.3     FORESTRY RIGHT CONTEMPORANEOUS: For the avoidance of doubt,
                  the parties agree that if requested by the Manager within five
                  Business Days of being notified by UBS Mangakahia of its
                  intention to transfer or assign its right or interest in the
                  Forestry Right (in part or whole), UBS Mangakahia shall use
                  its reasonable endeavours to persuade the proposed
                  assignee/transferee to allow the Manager to continue to
                  provide to the assignee/transferee management services in
                  respect of the Plantation Assets of the type set out in this
                  agreement on the terms set out in clause 9.2 of the Forestry
                  Right.

16.      RESOLUTION OF DISPUTES

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

         16.1     NEGOTIATE: A party claiming that a dispute has arisen
                  concerning this agreement must give notice to the other party
                  specifying the matter in dispute. The parties will use their
                  best endeavours to resolve the dispute by negotiation in good
                  faith. The parties will attend at least one meeting to discuss
                  and attempt to resolve the dispute as a condition precedent to
                  taking any other

<PAGE>

Management Agreement                                                   Page 34

                  steps concerning the dispute (including but not limited to
                  commencing any legal proceedings other than an application for
                  injunctive relief). The attendees at such meeting will include
                  the Managing Director of UBS Timber Investors (or nominee) and
                  the Chief Executive Officer of Fletcher Challenge Forests
                  Limited (or nominee). All discussions will be without
                  prejudice and will not be referred to in any later
                  proceedings.

         16.2     ARBITRATION: If the dispute cannot be resolved in accordance
                  with clause 16.1 within ten (10) Business Days after the date
                  of the notice referred to in clause 16.1, then any party may
                  then require (by written notice to the other party) the
                  dispute to be referred to arbitration. If this clause is
                  invoked then the following shall apply.

                  16.2.1   ARBITRATION ACT: The dispute will be referred to
                           arbitration by a sole arbitrator under the provisions
                           of the Arbitration Act 1996. The arbitrator will be
                           agreed upon between the parties within ten (10)
                           Business Days of written notice, or failing
                           agreement, by the President of the New Zealand Law
                           Society or its successor body, or any nominee of the
                           President. In either case, the arbitrator must not be
                           a person who has participated in any informal dispute
                           resolution procedure in respect of the dispute. Any
                           party may request the appointment of an expert to sit
                           with the arbitrator but any such expert shall have an
                           advisory role only and shall not have the authority
                           to make a binding decision. Each of the parties may
                           make submissions to the arbitrator as to the relevant
                           skills and expertise of an appropriate expert, but
                           the selection of an appropriate expert is ultimately
                           at the arbitrator's sole discretion.

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

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

                  16.2.4   AWARD OF INTEREST: The arbitrator may award interest
                           upon any amount due and payable under his or her
                           award at such rate and for such period as he or she
                           considers just, down to the date of the award.

         16.3     PARTIES TO CONTINUE TO PERFORM: Subject to the provisions of
                  clause 6.2, pending resolution of any dispute or difference,
                  the parties shall continue to perform their respective
                  obligations pursuant to the provisions of this agreement.

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

17.      CONFIDENTIALITY

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

<PAGE>

Management Agreement                                                   Page 35

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

         17.2     USE: use for itself; or

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

         any Confidential Information except:

         17.4     LEGAL REQUIREMENT: subject to clause 17.10, as required by law
                  or regulatory body (including any stock exchange);

         17.5     PUBLIC KNOWLEDGE: as is already or becomes public knowledge,
                  otherwise than as a result of a breach by the party disclosing
                  or using that Confidential Information of any provision of
                  this agreement;

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

         17.7     LENDERS AND UNDERWRITERS: as required to communicate and make
                  disclosure to institutional lenders to and underwriters for,
                  or potential institutional lenders to and underwriters for,
                  the Manager or UBS Mangakahia, provided that the relevant
                  party shall ensure compliance by such persons with this clause
                  17 and shall be liable for any breach of such obligations by
                  such persons and, in the case of potential institutional
                  lenders or underwriters, to procure the return of all such
                  information if the lending to or underwriting is not
                  consummated;

         17.8     AFFILIATES AND ADVISERS: as required to communicate and make
                  disclosure to Affiliates of the parties or the parties' or the
                  Affiliates' respective advisers who have a legitimate need to
                  know the information in order to perform activities connected
                  with this agreement or the Related Agreements, and provided
                  that the relevant party shall ensure compliance by such
                  persons with this clause 17 and shall be liable for any breach
                  of such obligations by such persons; or

         17.9     OTHER: to the extent reasonably required by this agreement
                  (and, without limiting the effect of this clause, a party may
                  disclose Confidential Information only to those of its
                  officers, employees or professional advisers, on a "need to
                  know" basis, as is reasonably required for the implementation
                  of this agreement).

         17.10    CONSULTATION: In the event that one party (the first party) is
                  required by law or stock exchange reporting obligations to
                  disclose Confidential Information, such disclosure may be made
                  only after the other party (the second party) has been
                  notified and, subject to timing obligations imposed by law or
                  the relevant stock exchange, has been given every reasonable
                  opportunity to consult with the first party as to timing and
                  content of any such disclosure. In consulting with the second
                  party, the first party shall act in good faith and give
                  reasonable consideration to the second party's requests.

         17.11    MANAGER'S SAFEGUARDS: If reasonably requested by UBS
                  Mangakahia, the Manager will document to the reasonable
                  satisfaction of UBS Mangakahia the

<PAGE>

Management Agreement                                                   Page 36

                  internal safeguards it will put in place to meet its
                  confidentiality obligations under this clause 17.

18.      SEVERABILITY

         Any provision of this agreement which is prohibited or unenforceable in
         any jurisdiction shall be ineffective as to such jurisdiction to the
         extent of such prohibition or unenforceability without invalidating the
         remaining provisions of this agreement or affecting the validity or
         unenforceability of such provision in any other jurisdiction.

19.      LIMITED RECOURSE

         The Manager undertakes and agrees as follows.

         19.1     UBS MANGAKAHIA'S ASSETS: The Manager will look only to the
                  assets held by UBS Mangakahia or the benefit of any insurance
                  maintained by UBS Mangakahia to satisfy the obligations or
                  liabilities of UBS Mangakahia to the Manager hereunder or
                  otherwise.

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

         19.3     NO ACTIONS OR PROCEEDINGS: The Manager shall not commence any
                  action or proceeding against any of the persons referred to in
                  sub clause 19.2 for the purpose of enforcing the obligations
                  of UBS Mangakahia.

20.      APPLICABLE LAW

         20.1     NEW ZEALAND LAW: The law applicable to this agreement
                  including all submissions to arbitration shall be the law of
                  New Zealand and the parties irrevocably and unconditionally
                  agree to submit to be and be bound by the jurisdiction of the
                  courts and tribunals of New Zealand.

         20.2     NON EXCLUSIVE JURISDICTION: The submission to jurisdiction in
                  clause 20.1 does not and is not to be construed to limit the
                  rights of a party to take proceedings against the other party
                  in another court of competent jurisdiction, nor is the taking
                  of proceedings in one or more jurisdictions to preclude the
                  taking of proceedings in another jurisdiction, whether
                  concurrently or not.

21.      NOTICES

         21.1     DELIVERY OF NOTICE: All notices and other communications
                  required or permitted under this agreement shall be in
                  writing. Any written notice required under this agreement must
                  be signed by a duly authorised senior representative of any
                  party giving the notice and will be deemed validly given if:

                  21.1.1   PERSONAL Delivery: delivered personally;

<PAGE>

Management Agreement                                                   Page 37

                  21.1.2   DOMESTIC Post: sent by prepaid post; or

                  21.1.3   FACSIMILE: sent by facsimile transmission,

                  addressed to the recipient at the address or facsimile number
                  set out below (as applicable) or to any other address or
                  facsimile number that a party may notify to the other parties
                  by like notice.

                  UBS MANGAKAHIA: if to UBS Mangakahia to:

                  UBS Mangakahia Forest Venture Ltd
                  C/- UBS Warburg NZ Equities Limited
                  P O Box 45
                  Auckland 1000
                  Level 23 Qantas Building
                  191 Queen Street
                  Auckland
                  For:       Michael Edgar
                  Facsimile: (09) 913 4751

                  With a copy to:

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

                  and:

                  Foley Hoag LLP
                  155 Seaport Blvd
                  Boston, MA 02110
                  United States of America
                  For:       Jim Smith
                  Facsimile: (001) 617 832 7000

                  THE MANAGER: if to the Manager, to:

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

<PAGE>

Management Agreement                                                   Page 38

                  With a copy to:

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

         21.2     TIME OF RECEIPT: No written communication will be effective
                  until received. Without limiting any other ways for a party to
                  prove that another party has received a notice, a notice or
                  other written communication under this agreement, will be
                  treated as received:

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

                  21.2.2   PREPAID POST: if sent by prepaid post three (3)
                           Business Days (if posted within New Zealand to an
                           address in New Zealand), or ten (10) Business Days
                           (if posted by prepaid airmail from country to
                           country) after the date of posting;

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

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

                  21.2.5   FACSIMILE: if sent by facsimile, on the sender's
                           receipt of a transmission report indicating that the
                           facsimile was sent in its entirety to the recipient's
                           facsimile number;

                  but, if the delivery or receipt is not on a Business Day or
                  after 5.00pm (local time) on any Business Day, the notice will
                  be treated as received by the recipient at 9.00am (local time)
                  on the next Business Day.

22.      COPIES OF NOTICES

         If a party is required by any term of this agreement to give a copy of
         a notice or other communication to a third party, the failure to give
         the copy of it to the third party will not affect the effectiveness of
         that notice or communication to a party.

23.      THIRD PARTY NOTICES

         Each party shall promptly provide to the other party a copy of every
         notice it receives from a third party in respect of the Plantation
         Assets to the extent that it is relevant to this agreement and/or the
         Related Agreements or any part thereof. Notwithstanding the above, the
         provisions of this clause shall not apply to any notice received by any
         party from any Affiliate of such party.

<PAGE>

Management Agreement                                                   Page 39

24.      ENTIRE AGREEMENT

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

25.      MODIFICATION

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

26.      WAIVER

         No provision of this agreement may be waived except in writing by the
         party granting the waiver and then only in the specific instance and
         for the specific purpose for which given.

27.      COUNTERPARTS

         27.1     GENERAL: This agreement may be executed in one or more
                  counterparts, each of which will be deemed to be an original,
                  but all of which together will constitute only one and the
                  same agreement.

         27.2     FACSIMILE EXCHANGE: The parties acknowledge that this
                  agreement may be executed on the basis of any exchange of
                  facsimile copies and confirm that their respective execution
                  of this agreement by such means shall be a valid and
                  sufficient execution. The parties acknowledge that any
                  execution of this agreement by facsimile will be followed by
                  execution of the engrossments of this agreement.

28.      FURTHER ASSURANCES

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

29.      COSTS

         Except as expressly provided elsewhere in this agreement, each party is
         to bear its own costs in connection with the preparation, negotiation
         and execution of this agreement and the Related Agreements and other
         documentation contemplated by this agreement.

30.      NO PARTNERSHIP

         None of the provisions of this agreement are deemed to constitute a
         partnership or joint venture between the parties and neither party has
         any authority to bind or to pledge the credit of the other party in any
         way except as expressly provided in this agreement.

                        [SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

Management Agreement                                                   Page 40

In witness of which this management agreement has been executed.

SIGNED on behalf of
FLETCHER CHALLENGE FORESTS
INDUSTRIES LIMITED
By:

<TABLE>
<S>                                          <C>
__________________________________________   __________________________________________
Full name of director/authorised signatory   Signature of director/authorised signatory

__________________________________________   __________________________________________
Full name of director/authorised signatory   Signature of director/authorised signatory
</TABLE>

WITNESS:
(if other than two directors sign)

__________________________________________
Signature of witness

__________________________________________
Full name of witness

__________________________________________
Occupation of witness

__________________________________________
Address of witness

<PAGE>
Management Agreement                                                   Page 41

SIGNED by UBS MANGAKAHIA FOREST VENTURE LTD
by:

_______________________________           _________________________________
Full name of attorney                     Signature of attorney

WITNESS:
(if other than two directors sign)

__________________________________________
Signature of witness

__________________________________________
Full name of witness

__________________________________________
Occupation of witness

__________________________________________
Address of witness

<PAGE>

                                FIRST SCHEDULE

                               PLANTATION ASSETS

A.       Trees

B.       The rights conferred to UBS Mangakahia under the Forestry Right

C.       Improvements

D.       Stands

<PAGE>

                                  APPENDIX I

                                FORESTRY RIGHT

<PAGE>

                                   APPENDIX II

            UNDERTAKING FROM FLETCHER CHALLENGE INDUSTRIES LIMITED

In consideration of UBS Mangakahia Forest Venture Ltd entering into the
Management Agreement ("the Agreement") with Fletcher Challenge Forests
Industries Limited, Fletcher Challenge Industries Limited agrees to grant a
guarantee to UBS Mangakahia Forest Venture Ltd of Fletcher Challenge Forests
Industries Limited's obligations and liability under the Agreement and the
Related Agreements in the form attached and undertakes to UBS Mangakahia Forest
Venture Ltd that during the term of the Forestry Right Fletcher Challenge
Industries Limited shall:

1.       ensure that Fletcher Challenge Industries Limited maintains net assets
         in any year of the Forestry Right in an amount not less than $200
         million;

2.       provide to UBS Mangakahia Forest Venture Ltd a copy of the audited
         financial statements of Fletcher Challenge Forests Limited and its
         group, as soon as they become available for release;

3.       provide to UBS Mangakahia Forest Venture Ltd a certificate from the
         Chief Financial Officer of Fletcher Challenge Forests Limited, issued
         no later than five months after the end of the financial year of
         Fletcher Challenge Forests Limited, confirming that as at the end of
         that financial year the net assets of Fletcher Challenge Industries
         Limited are no less than $200 million;

4.       no later than the end of December in each year provide to UBS
         Mangakahia Forest Venture Ltd a copy of the unaudited financial
         statements of Fletcher Challenge Industries Limited.

5.       Fletcher Challenge Industries Limited represents and warrants to UBS
         Mangakahia on execution and delivery of this undertaking and the
         guarantee given under this undertaking that this undertaking and the
         guarantee given under this undertaking:

         (a)      will have been validly authorised by all necessary action on
                  the part of Fletcher Challenge Industries Limited;

         (b)      will not contravene any law binding on it;

         (c)      will not contravene its incorporation documents;

         (d)      will not contravene the provisions of or constitute a default
                  under any other agreement to which it is a party;

         (e)      will constitute legal, valid and binding obligations
                  enforceable against Fletcher Challenge Industries Limited in
                  accordance with their respective terms;

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

<PAGE>

All calculations of net assets required to be carried out pursuant to this
undertaking must be made using those accounting principles used for the
preparation of the financial statements of Fletcher Challenge Forests Limited

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

EXECUTED AS A DEED by Fletcher Challenge Industries Limited by:

<TABLE>
<S>                                          <C>
__________________________________________   __________________________________________
Full name of director/authorised signatory   Signature of director/authorised signatory

__________________________________________   __________________________________________
Full name of director/authorised signatory   Signature of director/authorised signatory
</TABLE>

Witness:
(if other than two directors sign)

__________________________________________
Signature of witness

__________________________________________
Full name of witness

__________________________________________
Occupation of witness

__________________________________________
Address of witness

<PAGE>

DEED OF GUARANTEE AND INDEMNITY

BETWEEN

FLETCHER CHALLENGE INDUSTRIES LIMITED

AND

UBS MANGAKAHIA FOREST VENTURE LTD

                                                   [SIMPSON GRIERSON LOGO]

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>                                                               <C>
1.   INTERPRETATION............................................    1
2.   GUARANTEE.................................................    2
3.   LIABILITY NOT TO BE AFFECTED..............................    3
4.   PAYMENTS..................................................    4
5.   SUSPENSION OF RIGHTS......................................    5
6.   REPRESENTATIONS AND WARRANTIES............................    6
7.   UNDERTAKINGS..............................................    6
8.   COSTS.....................................................    7
9.   RELEASE...................................................    7
10.  SET-OFF...................................................    7
11.  NOTICES...................................................    7
12.  CURRENCY INDEMNITY........................................    9
13.  GENERAL...................................................   10
14.  CONFIDENTIALITY...........................................   11
</TABLE>

<PAGE>

GUARANTEE AND INDEMNITY dated the                                  2003

PARTIES

1.       FLETCHER CHALLENGE INDUSTRIES LIMITED ("Guarantor")

2.       UBS MANGAKAHIA FOREST VENTURE LTD ("Beneficiary")

THIS DEED WITNESSES:

1.       INTERPRETATION

         In this Guarantee, unless the context indicates otherwise:

         1.1      DEFINITIONS:

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

                  "CONFIDENTIAL INFORMATION" means any information disclosed by
                  the Guarantor to the Beneficiary on the express basis that
                  such information is confidential;

                  "DEBTOR" means Fletcher Challenge Forests Industries Limited;

                  "DEFAULT INTEREST RATE" means default interest rate as that
                  term is defined in clause 1 of an agreement for sale and
                  purchase of trees between the Debtor and Teal 4 Limited dated
                  15 January 2003 ("Agreement");

                  "GUARANTEE" means this guarantee and indemnity;

                  "GUARANTEED MONEY" means all money which the Debtor presently
                  is, or at any time becomes, actually or contingently liable to
                  pay to the Beneficiary under the Agreement and any of the
                  Related Agreements;

                  "GUARANTEED OBLIGATIONS" means all obligations (whether
                  present or future) of the Debtor to the Beneficiary under the
                  Agreement and any of the Related Agreements;

         1.2      GENERAL:

                  (a)      words denoting the singular include the plural and
                           vice versa;

                  (b)      words denoting any gender includes all genders;

<PAGE>

                                                                          Page 2

                  (c)      references to any document (however described) will
                           include references to that document as modified,
                           varied, novated, supplemented or replaced from time
                           to time;

                  (d)      headings and the table of contents are for
                           convenience only and will not affect interpretation;
                           and

                  (e)      capitalised terms not defined in this Guarantee shall
                           have the meaning ascribed to them in the Agreement.

2.       GUARANTEE

         2.1      GUARANTEE: The Guarantor guarantees to the Beneficiary the due
                  and punctual payment by the Debtor of the Guaranteed Money and
                  the due and punctual performance of the Guaranteed
                  Obligations.

         2.2      PAYMENT ON DEFAULT: If the Debtor defaults in the due and
                  punctual payment of any of the Guaranteed Money, the Guarantor
                  will pay that money to the Beneficiary on demand.

         2.3      PRINCIPAL DEBTOR: The Guarantor's obligations under this
                  Guarantee are:

                  (a)      principal obligations and may be enforced against the
                           Guarantor without the Beneficiary being required to
                           exhaust any remedy it may have against the Debtor or
                           to enforce any security the Beneficiary may hold with
                           respect to the Guaranteed Money; and

                  (b)      unconditional and irrevocable.

         2.4      CONTINUING GUARANTEE: This Guarantee is a continuing guarantee
                  for the Guaranteed Money. It is not discharged by any payment
                  or anything else, and remains in full force until the
                  Beneficiary has executed and delivered a release to the
                  Guarantor.

         2.5      REINSTATEMENT: If any payment received by the Beneficiary on
                  any account of the Guaranteed Money is or may be avoided by
                  law (despite a release having been executed and delivered by
                  the Beneficiary):

                  (a)      the Guarantor's obligation to have made such payment
                           will be deemed not to have been affected or
                           discharged under this Guarantee or any other security
                           given to the Beneficiary; and

                  (b)      the Beneficiary and the Guarantor will, in any such
                           case, be deemed to be restored to the position in
                           which each would have been, and will be entitled to
                           exercise the rights they respectively would have had,
                           if that payment had not been made.

<PAGE>

                                                                          Page 3

3.       LIABILITY NOT TO BE AFFECTED

         The liability of the Guarantor under this Guarantee shall not be
         abrogated, prejudiced or affected by any of the following:

         3.1      GRANTING OF TIME ETC: the granting of time, credit or any
                  indulgence or other concession to the Debtor or the Guarantor
                  or any other guarantor of the Debtor or to any other person by
                  the Beneficiary;

         3.2      FAILURE TO DEMAND: any failure by the Beneficiary to present,
                  demand or give notice in respect of any negotiable instrument;

         3.3      COMPOUNDING ETC: any compounding, compromise, release,
                  abandonment, waiver, variation, relinquishment or renewal of
                  any agreements, securities, documents of title, assets, or of
                  the rights of the Beneficiary against the Debtor or the
                  Guarantor or any other person;

         3.4      ACTS OR OMISSIONS: anything done or omitted or neglected to be
                  done by the Beneficiary in exercise of the authorities, powers
                  and discretions vested in the Beneficiary by this Deed;

         3.5      SECURITY OR LAW: any security or law or any other dealing,
                  matter or thing which but for this provision might operate to
                  abrogate, prejudice or affect the Guarantee (it being the
                  intention of the parties that the Guarantee and obligations of
                  the Guarantor shall be absolute and unconditional in any and
                  all circumstances);

         3.6      OTHER LIABILITY CEASING: the liability of any other guarantor
                  of the Debtor or any other person ceasing from any cause
                  whatsoever (including release or discharge by the
                  Beneficiary);

         3.7      JOINT OR SIMILAR GUARANTEES: any other person joining in this
                  or giving any similar Guarantee and/or indemnity;

         3.8      LIQUIDATION OF DEBTORS ETC: the liquidation or bankruptcy of
                  the Debtor or any other guarantor of the Debtor or any other
                  person;

         3.9      INCOMPETENCE OF OTHERS ETC: any other guarantor of the Debtor
                  or any other person being incompetent to give any other
                  Guarantee or any collateral security or failing to become
                  legally bound in whole or in part under any of them
                  respectively;

         3.10     SECURITIES VOID ETC: any security from time to time held or
                  taken in respect of the indebtedness or obligations of the
                  Debtor or the Guarantor or any other guarantor of the Debtor
                  or any other person to the Beneficiary being void, defective
                  or informal or being released, partially released, discharged,
                  partially discharged or varied in any way;

         3.11     FAILURE TO PROVIDE SECURITY: failure of the Debtor or the
                  Guarantor or any other guarantor of the Debtor or any other
                  person to provide any security which has been stipulated by
                  the Beneficiary;

<PAGE>

                                                                          Page 4

         3.12     VARIATIONS: any variation of this Guarantee and Indemnity
                  and/or any other Guarantee and/or indemnity given in relation
                  to any of the Guaranteed Money and/or any of the Guaranteed
                  Obligations;

         3.13     FAILURE TO GUARANTEE ETC: any person intended to Guarantee
                  payment of the Guaranteed Money and/or performance of the
                  Guaranteed Obligations failing or refusing to do so;

         3.14     CLAIMS: any claim that the Beneficiary has not fully realised
                  all securities held by it in respect of the Guaranteed Money
                  and/or the Guaranteed Obligations or has not realised any of
                  such securities in a manner so as to maximise their realisable
                  value; or

         3.15     OTHER MATTERS: any other matter or thing whatsoever.

4.       PAYMENTS

         4.1      PAYMENT: The Guarantor will make each payment to the
                  Beneficiary under this Guarantee in funds which are freely
                  transferable and immediately available for disbursement on the
                  day of payment.

         4.2      NO DEDUCTIONS: All payments by the Guarantor to the
                  Beneficiary under this Guarantee will be made free of any
                  restriction or condition and, except to the extent required by
                  law, without deduction or withholding of any nature whether by
                  way of set-off, counterclaim or otherwise.

         4.3      GROSS UP: If:

                  (a)      the Guarantor is required by law to make any
                           deduction or withholding from any amount paid or
                           payable by it to the Beneficiary under this
                           Guarantee; or

                  (b)      the Beneficiary is required by law to make any
                           deduction, withholding, or payment on, or calculated
                           by reference to, any amount received or receivable by
                           it under this Guarantee for or on account of tax
                           (except on account of tax on overall net income of
                           the Beneficiary) or otherwise,

                  then the amount payable by the Guarantor in respect of which
                  such deduction, withholding or payment is required to be made
                  will be increased to the extent necessary to ensure that,
                  after the making of such deduction, withholding or payment,
                  the Beneficiary receives and retains (free from any liability
                  in respect of any such deduction, withholding or payment) a
                  net amount equal to the amount which it would have received
                  and so retained had no such deduction, withholding or payment
                  been required to be made.

<PAGE>

                                                                          Page 5

         4.4      NOTIFY BENEFICIARY: The Guarantor will:

                  (a)      notify the Beneficiary immediately if it is required
                           to make any deduction or withholding;

                  (b)      ensure that such deduction or withholding does not
                           exceed the legal minimum; and

                  (c)      pay the amount required to be deducted or withheld to
                           the applicable taxation or other authority before the
                           date on which penalties attach.

         4.5      TAX RECEIPTS: The Guarantor will deliver to the Beneficiary
                  promptly, on receipt, a copy of the receipt issued by the
                  applicable taxation or other authority or other evidence
                  satisfactory to the Beneficiary evidencing that such deduction
                  or withholding has been made.

         4.6      INTEREST: The Guarantor will pay to the Beneficiary on demand
                  interest on all amounts payable by the Guarantor from the due
                  date to the date of actual receipt by the Beneficiary. Such
                  interest will accrue and be calculated on a daily basis (after
                  as well as before judgment) at the Default Interest Rate.
                  Interest will be compounded at monthly intervals.

5.       SUSPENSION OF RIGHTS

         5.1      Until the Guaranteed Money has been paid and discharged in
                  full, the Guarantor will not, without the consent of the
                  Beneficiary:

                  (a)      take any steps to enforce a right or claim against
                           the Debtor in respect of any money paid by the
                           Guarantor to the Beneficiary under this Guarantee; or

                  (b)      have or exercise any rights in competition with the
                           Beneficiary (including any right of subrogation or
                           indemnity).

         5.2      BENEFICIARY AUTHORISED TO PROVE: Until the Beneficiary shall
                  have received one hundred cents in the dollar in respect of
                  the indebtedness of the Debtor in relation to the Guaranteed
                  Money, the Guarantor authorises the Beneficiary to:

                  (a)      prove or claim for all money which the Guarantor has
                           paid or are otherwise owing to the Guarantor and have
                           not been repaid by the Debtor or any other guarantor
                           of the Debtor or any other person; and

                  (b)      retain and to carry to a suspense account and
                           appropriate at the discretion of the Beneficiary any
                           amount received.

         5.3      GUARANTOR'S WAIVER OF RIGHTS: So far as is necessary to give
                  effect to anything contained or implied in this Guarantee and
                  to ensure that the whole of the Guaranteed Money and
                  Guaranteed Obligations are paid or

<PAGE>

                                                                          Page 6

                  satisfied or performed in full, the Guarantor waives in favour
                  of the Beneficiary all rights whatever against the
                  Beneficiary, the Debtor, any other guarantor of the Debtor or
                  any other person or their or its estate and assets. Such
                  waiver extends to and includes rights of subrogation,
                  contribution and marshalling.

6.       REPRESENTATIONS AND WARRANTIES

         6.1      REPRESENTATIONS: The Guarantor represents and warrants to the
                  Beneficiary that:

                  (a)      the Guarantor has taken all necessary corporate
                           action to authorise the performance of, and
                           compliance with, its obligations under this
                           Guarantee; and

                  (b)      the Guarantor has not taken any security interest or
                           benefit from the Debtor for or in consideration of
                           assuming the obligations contained under this
                           Guarantee or any part of them.

                  (c)      the Guarantor is solvent and able to pay the
                           Guarantor's indebtedness as it falls due.

         6.2      NO RELIANCE: The Guarantor confirms that it has not executed
                  this Guarantee as a result of or in reliance on any promise,
                  representation, statement or information of any kind or nature
                  whatever given by the Beneficiary.

         6.3      NO DISCLOSURE: Subject to the Agreement and the Related
                  Agreements, the Guarantor confirms that the Beneficiary was
                  not, before execution of this Guarantee and is not in the
                  future, liable to do anything (including disclosing any
                  information to the Guarantor) relating to the affairs of the
                  Debtor or any transactions of the Debtor with the Beneficiary.

         6.4      CONTINUING: The representations and warranties in this clause
                  6 will be deemed to be repeated continuously at all times
                  during which this Guarantee remains in effect by reference to
                  the facts and circumstances then existing.

7.       UNDERTAKINGS

         The Guarantor will:

         7.1      INFORMATION: provide the Beneficiary within five Business Days
                  of receiving a reasonable request from the Beneficiary with
                  such information relating to its financial condition,
                  business, assets or affairs as is relevant to the performance
                  of its obligations under this Guarantee provided however that
                  the Guarantor is under no obligation to provide information
                  that it considers, in its absolute discretion, disclosure of
                  which would be a breach of any applicable Stock Exchange
                  Listing Rules; and

<PAGE>

                                                                          Page 7

         7.2      PROCEEDINGS: give the Beneficiary prompt notice of any
                  litigation, or proceedings affecting it or any of its
                  business, assets or affairs.

8.       COSTS

         The Guarantor will pay the Beneficiary on demand for all reasonable
         costs and expenses (including reasonable legal costs) in connection
         with:

         8.1      ENFORCEMENT: the enforcement of this Guarantee; and

         8.2      AMENDMENT ETC: any amendment to, or any consent, waiver or
                  release of this Guarantee requested by the Guarantor.

9.       RELEASE

         The Beneficiary will not be obliged to execute a release of this
         Guarantee unless it is satisfied that:

         9.1      Guaranteed Money Paid: all of the Guaranteed Money has been
                  paid; and

         9.2      NO PAYMENT AVOIDED: no payment affecting or relating to the
                  Guaranteed Money is or may be avoided under any law relating
                  to insolvency or otherwise.

10.      SET-OFF

         The Beneficiary is authorised to apply (without prior notice or demand)
         any credit balance of the Guarantor on any account or any money owed by
         the Beneficiary to the Guarantor towards satisfaction of the Guaranteed
         Money or any money due and unpaid by the Guarantor to the Beneficiary
         under this Guarantee.

11.      NOTICES

         11.1     DELIVERY OF NOTICE: All notices and other communications
                  required or permitted under this Guarantee shall be in
                  writing. Any written notice required under this Guarantee must
                  be signed by a duly authorised senior representative of any
                  party giving the notice and will be deemed validly given if:

                  (a)      delivered personally;

                  (b)      sent by prepaid post; or

                  (c)      sent by facsimile transmission,

                  addressed to the recipient at the address or facsimile number
                  set out below (as applicable) or to any other address or
                  facsimile number that a party may notify to the other parties
                  by like notice.

<PAGE>

                                                                          Page 8

                  BENEFICIARY:  If to the Beneficiary to:

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

                  With a copy to:

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

                  And with a copy to:

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

                  GUARANTOR: If to the Guarantor, to:

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

                  With a copy to:

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

<PAGE>

                                                                          Page 9

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

         11.2     TIME OF RECEIPT: No written communication will be effective
                  until received. Without limiting any other ways for a party to
                  prove that another party has received a notice, a notice or
                  other written communication under this Guarantee, will be
                  treated as received:

                  (a)      if delivered personally, when left with an apparently
                           responsible person at the recipient's address;

                  (b)      if sent by prepaid post three (3) Business Days (if
                           posted within New Zealand to an address in New
                           Zealand), or ten (10) Business Days (if posted by
                           prepaid airmail from country to country) after the
                           date of posting;

                  (c)      if sent by registered post, on acknowledgment of
                           receipt by or on the recipient's behalf; or

                  (d)      if sent by air courier delivery, on acknowledgment of
                           receipt by or on the recipient's behalf; or

                  (e)      if sent by facsimile, on the sender's receipt of a
                           transmission report indicating that the facsimile was
                           sent in its entirety to the recipient's facsimile
                           number;

                  but, if the delivery or receipt is not on a Business Day or
                  after 5.00pm (local time) on any Business Day, the notice will
                  be treated as received by the recipient at 9.00am (local time)
                  on the next Business Day.

         11.3     COPIES OF NOTICES: If a party is required by any term of this
                  Guarantee to give a copy of a notice or other communication to
                  a third party, the failure to give the copy of it to a third
                  party will not affect the effectiveness of that notice or
                  communication to a party.

12.      CURRENCY INDEMNITY

         If, at any time and for any reason, an amount payable by the Guarantor
         under or in respect of this Guarantee ("Relevant Amount") is converted
         into and received by the Beneficiary in a currency ("Payment Currency")
         other than the contractual currency of payment under the Agreement
         ("Contractual Currency") then the Guarantor will indemnify the
         Beneficiary and will hold the Beneficiary harmless against, and will
         pay the Beneficiary on demand the amount certified by the Beneficiary
         as being the amount required to compensate it for, the loss suffered as
         a result of any discrepancy between:

         12.1     CONTRACTUAL CURRENCY RECEIVED: the amount of the Contractual
                  Currency which the Lender receives on converting the amount it
                  receives in the Payment Currency into an amount in the
                  Contractual Currency in accordance with its usual practice;
                  and

<PAGE>

                                                                         Page 10

         12.2     RELEVANT AMOUNT: the Relevant Amount in the Contractual
                  Currency.

13.      GENERAL

         13.1     CERTIFICATE: The certificate of the Beneficiary as to any
                  amount or fact which might reasonably be expected to be within
                  the Beneficiary's knowledge will be prima facie evidence of
                  such matter or fact.

         13.2     SEVERABILITY: Any provision of this Guarantee which is
                  prohibited or unenforceable in any jurisdiction shall be
                  ineffective as to such jurisdiction to the extent of such
                  prohibition or unenforceability without invalidating the
                  remaining provisions of this Guarantee or affecting the
                  validity or unenforceability of such provision in any other
                  jurisdiction.

         13.3     DELAY: No delay, grant of time, release, compromise,
                  forbearance (whether partial or otherwise) or other indulgence
                  by the Beneficiary in exercising all or any of its rights,
                  remedies and powers or concerning any breach of any of the
                  Guarantor's obligations under this Guarantee is to:

                  (a)      operate as a waiver of or prevent the subsequent
                           enforcement of any such rights, remedies, powers or
                           obligations; or

                  (b)      be deemed a delay, grant of time, release,
                           compromise, forbearance (whether partial or
                           otherwise) or other indulgence of, or a waiver of,
                           any subsequent or other breach.

         13.4     MODIFICATION: This Guarantee may not be amended or modified
                  except by written agreement signed by the parties.

         13.5     WAIVER: Any consent, waiver or acknowledgement by the
                  Beneficiary under this Guarantee must be in writing and any
                  such consent, waiver or acknowledgment shall only be effective
                  in the specific instance and for the specific purpose given.

         13.6     ADDITIONAL TO OTHER SECURITIES: This Guarantee is in addition
                  to and not in substitution for any other security, undertaking
                  or right which the Beneficiary may now or subsequently have in
                  respect of the Guaranteed Money and/or the Guaranteed
                  Obligations. This Guarantee may be enforced against the
                  Guarantor or any other Guarantor of the Debtor without first
                  having recourse to any such securities, undertaking or rights
                  and without taking any steps or proceedings against the
                  Debtor. It may be enforced notwithstanding that any other
                  security, undertaking or right may be in whole or in part
                  unenforceable by reason of any rule of law or equity and
                  notwithstanding any laches, acts, omissions or delays on the
                  part of the Beneficiary.

         13.7     APPLICABLE LAW:

                  (a)      The law applicable to this Guarantee shall be the law
                           of New Zealand and the parties irrevocably and
                           unconditionally agree to

<PAGE>

                                                                         Page 11

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

                  (b)      The submission to jurisdiction in clause 13.7(a) does
                           not (and is not to be construed to) limit the rights
                           of the Beneficiary to take proceedings against the
                           Guarantor in another court of competent jurisdiction,
                           nor is the taking of proceedings in one or more
                           jurisdictions to preclude the taking of proceedings
                           in another jurisdiction whether concurrently or not.

14.      CONFIDENTIALITY

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

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

         14.2     USE: use for itself; or

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

         any Confidential Information except:

         14.4     LEGAL REQUIREMENT: subject to clause 14.10, as required by law
                  or regulatory body (including any stock exchange);

         14.5     PUBLIC KNOWLEDGE: as is already or becomes public knowledge,
                  otherwise than as a result of a breach by the Beneficiary of
                  any provision of this deed;

         14.6     AUTHORISED: as authorised in writing by the Guarantor;

         14.7     LENDERS AND UNDERWRITERS: as required to communicate with and
                  make disclosure to institutional lenders to and underwriters
                  for, or potential institutional lenders to and underwriters
                  for the Beneficiary provided that the Beneficiary shall ensure
                  compliance by such persons with this clause 14 and shall be
                  liable for any breach of such obligations by such persons, and
                  in the case of potential institutional lenders or
                  underwriters, to return all such information if the lending to
                  or underwriting is not consummated;

         14.8     AFFILIATES AND ADVISERS: as required to communicate with and
                  make disclosure to Affiliates of the Beneficiary or the
                  Beneficiary's or the Affiliates' respective advisers who have
                  a legitimate need to know the information in order to perform
                  activities connected with this deed, the Agreement or the
                  Related Agreements, and provided that the relevant party shall
                  ensure compliance by such persons with this clause 14 and
                  shall be liable for any breach of such obligations by such
                  persons; or

         14.9     OTHER: to the extent reasonably required by this deed (and,
                  without limiting the effect of this clause, the Beneficiary
                  may disclose<PAGE>

Execution Version Tahorakuri

                                                                   EXHIBIT 4.20

MANAGEMENT AGREEMENT

BETWEEN

CNI TIMBER OPERATING COMPANY LIMITED

AND

FLETCHER CHALLENGE FORESTS INDUSTRIES LIMITED

                                                         [SIMPSON GRIERSON LOGO]
<PAGE>

Execution Version Tahorakuri

                               TABLE OF CONTENTS

<TABLE>
<S>   <C>                                                                 <C>
1.    INTERPRETATION...................................................    1
2.    APPOINTMENT OF MANAGER...........................................    7
3.    MANAGEMENT PLANS AND REPORTS.....................................    8
4.    MANAGEMENT OF THE PLANTATION ASSETS..............................   13
5.    COSTS AND FEES...................................................   17
6.    TERM OF AGREEMENT AND SUSPENSION.................................   21
7.    INSURANCE........................................................   25
8.    INDEMNITY........................................................   26
9.    REPRESENTATIONS AND WARRANTIES...................................   28
10.   CONFLICTS OF INTEREST............................................   29
11.   HEALTH AND SAFETY IN EMPLOYMENT ACT..............................   30
12.   HISTORIC AND SACRED PLACES.......................................   31
13.   HISTORIC PLACES AND ARTEFACTS....................................   32
14.   FORCE MAJEURE....................................................   32
15.   ASSIGNMENT.......................................................   33
16.   RESOLUTION OF DISPUTES...........................................   34
17.   CONFIDENTIALITY..................................................   35
18.   SEVERABILITY.....................................................   36
19.   LIMITED RECOURSE.................................................   36
20.   APPLICABLE LAW...................................................   37
21.   NOTICES..........................................................   37
22.   COPIES OF NOTICES................................................   39
23.   THIRD PARTY NOTICES..............................................   39
24.   ENTIRE AGREEMENT.................................................   39
25.   MODIFICATION.....................................................   40
26.   WAIVER...........................................................   40
27.   COUNTERPARTS.....................................................   40
28.   FURTHER ASSURANCES...............................................   40
29.   COSTS............................................................   40
30.   NO PARTNERSHIP...................................................   40
</TABLE>

FIRST SCHEDULE -  Plantation Assets....................................   43
APPENDIX I - Forestry Right............................................   44
APPENDIX II - Undertaking from Fletcher Challenge Industries Limited...   45

<PAGE>

THIS AGREEMENT is dated the            day of            2003

BETWEEN           CNI TIMBER OPERATING COMPANY LIMITED an incorporated company
                  having its registered office at Auckland ("CNI")

AND               FLETCHER CHALLENGE FORESTS INDUSTRIES LIMITED an
                  incorporated company having its registered office at
                  Auckland (the "Manager")

BACKGROUND

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

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

C.       The Manager and Teal 3 Limited have entered into a Sale and Purchase
         Agreement under which the Manager will sell the Trees to CNI (as Teal 3
         Limited's nominee under the Sale and Purchase Agreement) and create the
         Forestry Right in favour of CNI over the Land to be registered pursuant
         to the Forestry Rights Registration Act 1983.

D.       CNI will be granted certain rights to the Plantation Assets by virtue
         of the Forestry Right.

E.       On settlement of the Sale and Purchase Agreement the Manager and CNI,
         as nominee, are required to execute and deliver a Wood Supply Agreement
         and Infrastructure Agreement, which will set out further arrangements
         between the parties in relation to the supply of certain Trees to the
         Manager and supply of certain infrastructure services.

F.       CNI wishes to retain the Manager to manage the Plantation Assets and
         the Manager wishes to manage the Plantation Assets pursuant to the
         terms and conditions set out in this agreement.

THE PARTIES AGREE:

1.       INTERPRETATION

         In this agreement unless the context indicates otherwise:

<PAGE>

Management Agreement                                                      Page 2

         1.1      DEFINITIONS:

                  "ACT" means the Companies Act 1993;

                  "AFFILIATE" of a person shall mean a person controlled by,
                  controlling or under common control with, such person and for
                  the purposes of this definition Forestry Corporation of New
                  Zealand Limited (In Receivership) is not an Affiliate of any
                  party;

                  "BILL RATE" means the average of the bid rates for 90-day bank
                  accepted bills of exchange, expressed as a percentage per
                  annum as quoted on Reuters page BKBM (subject to manifest
                  error) as fixed at 10.45 am on each Business Day following the
                  due date;

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

                  "CAP" means the cap as defined in clause 8.2;

                  "COMMENCEMENT DATE" means the date of "Settlement" as that
                  term is defined in the Sale and Purchase Agreement being the
                  date of this agreement;

                  "CONFIDENTIAL INFORMATION" means any information:

                  (a)      relating to the terms of this agreement;

                  (b)      relating directly or indirectly to research or
                  development by, accounting for or marketing of the business of
                  either party or its suppliers or customers excluding Working
                  Block(s), PHI, price information and other information related
                  to sales of stumpage and logs from the Stands; or

                  (c)      disclosed by either party to the other party on the
                  express basis that such information is confidential;

                  provided that, where information relates exclusively to one
                  party, nothing in this agreement will require that party to
                  maintain confidentiality in respect of that information;

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

                  "ENVIRONMENTAL GUIDELINES" means codes of practice and
                  guidelines issued from time to time by any competent authority
                  (including for the avoidance of doubt any relevant District or
                  Regional Plans or resource consents) or CNI, which address in
                  whole or in part the protection of the environment and are
                  relevant to the management of Plantation Assets pursuant to
                  this agreement;

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

<PAGE>

Management Agreement                                                      Page 3

                  (a)      the environment;

                  (b)      the Plantation Assets;

                  (c)      substances which may have an adverse effect on the
                           environment; and

                  (d)      the carrying on or permitting of activities which may
                           have an adverse effect on the environment;

                  whether pursuant to the Resource Management Act 1991, any
                  other statutes, under the common law or otherwise;

                  "ENVIRONMENTAL REQUIREMENTS" means Environmental Law and
                  Environmental Guidelines;

                  "FIRE PREVENTION COSTS" means any external costs directly
                  incurred by the Manager in implementing fire prevention
                  measures or fire suppression measures;

                  "FOREST HEALTH COSTS" means any external costs directly
                  incurred by Manager in spraying or otherwise treating the
                  Stand or the immediate environment of the Stand to protect the
                  health of the Trees;

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

                  "FORESTRY RIGHT" means the forestry right to be entered into
                  between CNI and the Manager concurrently with this agreement
                  in accordance with the provisions of the Forestry Rights
                  Registration Act 1983 and in relation to certain identified
                  Stands and a copy of which is attached at Appendix 1;

                  "GST" means goods and services tax levied in accordance with
                  the GST Act and includes any tax levied in substitution for
                  such tax and excludes any penalties and interest;

                  "GST ACT" means the Goods and Services Tax Act 1985;

                  "HARVEST AREA" means those of the Working Blocks that the
                  Manager chooses to purchase in accordance with the Wood Supply
                  Agreement;

                  "HARVEST PLAN" means the harvest plan for each Year provided
                  by CNI to the Manager pursuant to the Wood Supply Agreement;

                  "HISTORIC PLACE" has the meaning given to that term in the
                  Historic Places Act 1993;

                  "IMPROVEMENTS" means all roads, tracks, fencing, gates,
                  accessways, landings, skid sites, bridges, stream crossings,
                  culverts, drainage works and water storage on the Land;

<PAGE>

Management Agreement                                                      Page 4

                  "INFRASTRUCTURE AGREEMENT" means the infrastructure agreement
                  entered into between CNI and the Manager concurrently with
                  this agreement in relation to the provision of certain
                  services by the Manager;

                  "INSOLVENCY EVENT" means with respect to a company when:

                  (a)      an application is made to a court for an order and an
                           order is duly made appointing a liquidator,
                           provisional liquidator, interim liquidator, receiver,
                           manager, receiver and manager, administrator,
                           administrative receiver, trustee in administration,
                           statutory manager or similar officer in respect of
                           the company or one of them is appointed;

                  (b)      the members of the company pass a special resolution
                           or the board of the company resolves to appoint a
                           liquidator or formal notice of a proposed resolution
                           to do so is given or any other steps are taken
                           evidencing an intention to do so;

                  (c)      the company stops or threatens to stop payment of
                           creditors generally or is deemed to be unable to pay
                           its debts as they fall due, has a compromise proposed
                           in respect of it, commences negotiations with any one
                           or more of its creditors with a view to the general
                           readjustment or rescheduling of its indebtedness,
                           makes a general assignment for the benefit of or a
                           composition with its creditors or proposes a
                           reorganisation, moratorium or other administration
                           involving them;

                  (d)      execution issued against the company in respect of a
                           judgment debt has been returned unsatisfied in whole
                           or in part;

                  (e)      a statutory demand is served on the company for an
                           amount exceeding 1% of its gross assets as shown in
                           the accounts of the company for the most recently
                           completed financial year of the company and expires
                           unremedied unless such statutory demand relates to an
                           amount which is the subject of a bona fide dispute by
                           the company; or

                  (f)      a creditor of the company, which creditors rights are
                           intended to be subordinate to the obligations of the
                           company under this agreement attempts to exercise any
                           rights, or to gain any specific rights which would
                           impinge upon CNI's rights under the Forestry Right;

                  other than where, in the case of any of the events referred to
                  in sub clauses (a) to (f) above, such event takes place for
                  the purposes of and is followed by a reconstruction,
                  amalgamation or reorganisation (not involving or arising out
                  of insolvency) approved in writing by CNI which consent is not
                  to be unreasonably or arbitrarily withheld or delayed;

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

<PAGE>

Management Agreement                                                      Page 5

                  "LAND COSTS" means all rates, taxes, charges, assessments,
                  duties, levies, costs and expenses payable in relation to the
                  ownership of the Land and any other costs arising from such
                  ownership;

                  "LOGS" means sawlogs or pulplogs of any size or class
                  harvested from the Land;

                  "MANAGEMENT FEE" means the fee to be paid to the Manager by
                  CNI pursuant to clause 5 of this agreement;

                  "MANAGEMENT PLANS" means, at any time, a strategic plan and an
                  operating plan for the management of the Plantation Assets
                  approved by CNI in accordance with clause 3.1.2 of this
                  agreement and in force at that time, including any amendments
                  thereto approved following any Quarterly meeting in accordance
                  with clause 3.3.2 of this agreement;

                  "MARGINAL STRIPS" means any marginal strips related to the
                  Land pursuant to the provisions of part IVA of the
                  Conservation Act 1987, if any;

                  "MONTHLY OPERATIONAL PHOTOGRAPHY" means aerial photographs or
                  equivalent marked up Stand maps of the Tahorakuri forest taken
                  by the Manager every month;

                  "NZ$" means the lawful currency of New Zealand;

                  "OPERATING COSTS" means all costs directly incurred in the
                  management of the Plantation Assets and which have been
                  approved under the then applicable Operating Plan, or
                  otherwise approved under the terms of this agreement,
                  including, without limitation, Forest Health Costs and Fire
                  Prevention Costs. For the avoidance of doubt, this
                  specifically excludes all costs associated with the attaining
                  of, and compliance with, any regulatory consents as referred
                  to in clause 2.13.2 of the Infrastructure Agreement (including
                  any auditing of compliance with such regulatory consents).

                  "OPERATING PLAN" has the meaning set forth in clause 3.1.3(b)
                  of this agreement;

                  "PLANTATION ASSETS" means the assets described in the First
                  Schedule to this agreement including amendments to that
                  schedule made from time to time;

                  "QUARTER" means a calendar quarter ending on 31 March, 30
                  June, 30 September and 31 December in each Year;

                  "RELATED AGREEMENTS" means the Forestry Right, the
                  Infrastructure Agreement, the Sale and Purchase Agreement and
                  the Wood Supply Agreement;

                  "REMAINING STANDS" means those Stands which remain subject to
                  the Forestry Right, as determined in accordance with the
                  Forestry Right, at the end of each Quarter;

<PAGE>

Management Agreement                                                      Page 6

                  "RESOURCE MANAGEMENT ACT 1991" means the Resource Management
                  Act 1991 and includes all regulations, orders, notices,
                  regional plans, policy statements, district plans and resource
                  consents made, given or issued under or pursuant to that Act;

                  "SALE AND PURCHASE AGREEMENT" means the sale and purchase
                  agreement entered into between Teal 3 Limited and the Manager
                  on 15 January 2003 (as may be amended by any deed(s) of
                  amendment) pursuant to which the Manager will sell the Trees
                  to CNI (as Teal 3 Limited's nominee under that agreement) and
                  create the Forestry Right;

                  "SPECIAL REPORTS" shall have the meaning set forth in clause
                  3.5 of this agreement;

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

                  "STRATEGIC PLAN" has the meaning set forth in clause 3.1.3(a)
                  of this agreement;

                  "TREES" means all the Pinus radiata trees growing, standing or
                  lying on the Stands as at the date of the Sale and Purchase
                  Agreement and any logs or forest produce arising from such
                  trees and includes any trees forming part of any stand of
                  trees on any Marginal Strip;

                  "WOOD SUPPLY AGREEMENT" means the wood supply agreement to be
                  entered into between CNI and the Manager concurrently with
                  this agreement under which CNI will supply certain Trees to
                  the Manager;

                  "WORKING BLOCKS" means those Trees in a Stand (or part
                  thereof) which CNI proposes to harvest or is harvesting in a
                  given year in accordance with a Harvest Plan as per the Wood
                  Supply Agreement;

                  "YEAR" means a calendar year;

         1.2      PARTIES: references to parties are references to parties to
                  this agreement;

         1.3      PERSONS: references to persons shall be deemed to include
                  references to individuals, companies, corporations, firms,
                  partnerships, joint ventures, associations, organisations,
                  trusts, states or agencies of state, government departments
                  and municipal authorities or other regulatory bodies or
                  regulatory authorities in each case whether or not having
                  separate legal personality;

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

<PAGE>

Management Agreement                                                      Page 7

         1.5      CLAUSES, SCHEDULES AND BACKGROUND: references to clauses,
                  schedules and background are references to clauses, schedules
                  and background to this agreement unless otherwise indicated;

         1.6      HEADINGS: section, clause and other headings are for ease of
                  reference only and shall not be deemed to form any part of the
                  context or to affect the interpretation of this agreement;

         1.7      SINGULAR AND PLURAL: words importing the singular number shall
                  include the plural and vice versa;

         1.8      SCHEDULES AND APPENDICES: the schedules and appendices to this
                  agreement and the provisions and conditions contained in such
                  schedules and appendices shall have the same effect as if set
                  out in the body of this agreement;

         1.9      NEGATIVE OBLIGATIONS: any obligation not to do anything shall
                  be deemed to include an obligation not to suffer, permit or
                  cause that thing to be done;

         1.10     GENDER: words importing one gender shall include the other
                  genders;

         1.11     STATUTES AND REGULATIONS: references to a statute include
                  references to regulations, orders or notices made under or
                  pursuant to such statute or regulations made under the statute
                  and references to a statute or regulation include references
                  to all amendments to that statute or regulation whether by
                  subsequent statute or otherwise and a statute or regulation
                  passed in substitution for the statute or regulation referred
                  to as incorporating any of the provisions;

         1.12     MATERIAL ADVERSE EFFECT: references to something having a
                  "material adverse effect" on a person are references to it
                  having a material adverse effect:

                  1.12.1   FINANCES: on that person's financial condition,
                           assets, business or results of operating; or

                  1.12.2   PERFORMANCE: on its ability to perform and comply
                           with its obligations under this agreement; and

         1.13     DISPOSAL: references to disposal include sale, exchange,
                  transfer, assignment, lease or parting with possession or
                  control of, and the word "dispose" means to make a disposal;
                  and

         1.14     NEW ZEALAND DOLLARS: all monetary amounts are payable in New
                  Zealand dollars.

2.       APPOINTMENT OF MANAGER

<PAGE>

Management Agreement                                                      Page 8

         2.1      APPOINTMENT: CNI appoints the Manager as its agent, with
                  effect from the Commencement Date, to manage the Plantation
                  Assets on the terms set out in this agreement and the Manager
                  hereby accepts the appointment.

         2.2      STANDARD OF PERFORMANCE: Subject to specific reasonable
                  instructions or directions given to the Manager pursuant to
                  this agreement by CNI, the Manager shall manage the Plantation
                  Assets in good faith employing the same degree of care and
                  skill as:

                  2.2.1    MANAGER'S AFFAIRS: the Manager employs in the conduct
                           of its own affairs; or

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

                  whichever is the higher standard. The parties acknowledge that
                  nothing in this clause 2.2 shall limit the Manager's
                  obligation to act as an adviser to CNI to the standards
                  required by clauses 2.2.1 and 2.2.2 (meaning, for example,
                  that in briefing or advising CNI, the Manager must advise to
                  the standard required, and if CNI issued the Manager with an
                  instruction that a manager conforming with the standard of
                  performance set out in this clause would find fault with, the
                  Manager must inform CNI), nor shall it limit the Manager's
                  obligation to discharge any instruction or direction from CNI
                  to the standard of performance set out in this clause.

         2.3      ACCESS TO PLANTATION ASSETS: Notwithstanding the appointment
                  of the Manager under this agreement, CNI, through its
                  authorised agents, and such other persons authorised by CNI,
                  each with prior reasonable notice to the Manager, and in each
                  case at their individual risk and expense (but with the
                  benefit of insurance (if any) maintained by CNI) shall have
                  access to the Plantation Assets owned by CNI at any reasonable
                  time subject to compliance with the Manager's reasonable
                  requirements relating to such access, including compliance
                  with the Manager's health and safety policies and procedures,
                  any requirements under the Infrastructure Agreement and
                  otherwise in accordance with the Forestry Right. For the
                  avoidance of doubt CNI acknowledges that the Manager may
                  (acting reasonably) restrict access to the Land for reasons of
                  health and safety (eg, high winds) or as a fire protection
                  measure.

         2.4      PERSONNEL: For the purposes of communication between CNI and
                  the Manager, the Manager shall, from time to time, notify CNI
                  of the person or persons who are authorised to accept such
                  communications on behalf of the Manager and CNI shall, from
                  time to time, notify the Manager of the person or persons who
                  are authorised to accept such communications on behalf of CNI.

3.       MANAGEMENT PLANS AND REPORTS

<PAGE>

Management Agreement                                                      Page 9

         3.1      MANAGEMENT PLANS: The management of the Plantation Assets
                  shall operate in accordance with the Strategic Plan and
                  Operating Plan prepared by the Manager and approved by CNI.
                  The parties agree that the Strategic Plan and the Operating
                  Plan will only be concerned with the duties of the Manager as
                  set out in this agreement.

                  3.1.1    CONSULTATION: Prior to the formal submission of each
                           of the Management Plans in accordance with the
                           provisions of sub clause 3.1.3, the Manager shall by
                           1 May each Year, review with CNI the Manager's
                           proposed strategies and assumptions and receive
                           advice on the proposed harvest intentions of CNI for
                           the Management Plans.

                  3.1.2    CONTENT AND APPROVAL: The Management Plans shall
                           include, among other things, a description of the
                           management activities proposed for the relevant
                           ensuing period, an estimate of Operating Costs that
                           is likely to be payable for the relevant ensuing
                           period, and include other items as specified by CNI
                           acting reasonably. To the extent that the Management
                           Plans incorporate any economic assumptions or
                           judgments those economic assumptions and judgments
                           will be made on a reasonable basis and in good faith
                           by the Manager. Until such Management Plans have been
                           approved by CNI, the most recently approved
                           Management Plans shall remain in effect.

                  3.1.3    PREPARATION OF THE MANAGEMENT PLANS:

                           (a)      STRATEGIC PLAN

                                    (i)      PREPARATION AND SUBMISSION: By 30
                                             May each Year, the Manager shall
                                             prepare and submit to CNI for its
                                             approval, not to be unreasonably or
                                             arbitrarily withheld, a Strategic
                                             Plan for the management of the
                                             Plantation Assets, in which its
                                             objectives, issues and actions will
                                             be further specified. Such
                                             Strategic Plan shall present, in
                                             reasonable detail having regard to
                                             clause 3.1.3(a)(ii), those matters
                                             specified in clause 3.1.2 for the
                                             ensuing period commencing at 1 July
                                             that Year and ending on the expiry
                                             of the Forestry Right. CNI is to
                                             advise the Manager in writing
                                             within 20 Business Days whether the
                                             Strategic Plan is approved or any
                                             reasonable amendments that it may
                                             require be made to the Strategic
                                             Plan.

                                    (ii)     ACCURACY OF INFORMATION: The
                                             parties acknowledge that
                                             information provided in the
                                             Strategic Plan must necessarily be
                                             less accurate the further in time
                                             the period for which the
                                             information is provided is from the
                                             date on which that information is
                                             provided.
<PAGE>

Management Agreement                                                     Page 10

                                             Conversely the parties acknowledge
                                             that such information must
                                             increasingly be more precise and
                                             accurate the closer in time the
                                             period for which such information
                                             is provided is from the date on
                                             which that information is provided.

                           (b)      OPERATING PLAN: By 30 May each Year, the
                                    Manager shall prepare and submit to CNI for
                                    approval, not to be unreasonably or
                                    arbitrarily withheld, the Operating Plan for
                                    the period from 1 July that Year until 31
                                    December in the following Year ("Operating
                                    Period") based upon the Strategic Plan. CNI
                                    is to advise the Manager in writing within
                                    20 Business Days whether the Operating Plan
                                    is approved or any reasonable amendments
                                    that it may require be made to the Operating
                                    Plan. If the Operating Plan is approved, it
                                    shall be implemented by the Manager. The
                                    Operating Plan shall present, in reasonable
                                    detail, those matters specified in clause
                                    3.1.2 for the ensuing year. If CNI does not
                                    approve the Operating Plan by the
                                    commencement of the Operating Period to
                                    which the Operating Plan pertains, then the
                                    projections set forth for the appropriate
                                    Operating Period in the most recently
                                    approved Strategic Plan shall serve as the
                                    Operating Plan until CNI has approved an
                                    Operating Plan for the applicable Operating
                                    Period.

                  3.1.4    MANAGEMENT PLANS OBJECTIVES: The Management Plans
                           shall be formulated to achieve the objective of
                           minimising the costs of protecting and maintaining
                           the Plantation Assets consistent with the standards
                           in clause 2.2 while protecting the investment value
                           and practising responsible environmental stewardship.

                  3.1.5    INITIAL MANAGEMENT PLANS: The initial Operating Plan
                           which will apply until 30 June 2003 will be discussed
                           with the Manager and a finalised plan provided by the
                           Manager to CNI within 15 Business Days following the
                           date that the Sale and Purchase Agreement goes
                           unconditional in all respects. For the avoidance of
                           doubt the Manager is not required to submit a
                           Strategic Plan for the period to 30 June 2003.

         3.2      MONTHLY REPORTS: Within ten (10) Business Days after the end
                  of each month, the Manager shall provide CNI with a report
                  showing the management operations, and the results of
                  management operations including, without limitation, Monthly
                  Operational Photography and a comparison of Operating Costs
                  against budget for the immediately preceding month.

         3.3      MEETINGS AND QUARTERLY REPORTS:

                  3.3.1    QUARTERLY MEETINGS: Once each Quarter, within twenty
                           (20) calendar days after the end of the previous
                           Quarter, the Manager shall hold a

<PAGE>

Management Agreement                                                     Page 11

                           meeting, which may, at the discretion of CNI, be in
                           person or by telephone, with representatives of CNI
                           to discuss the performance of the Manager and outlook
                           for the management of the Plantation Assets based on
                           the Quarterly report (including any necessary
                           amendments to the Management Plans) and technical and
                           other information relating to the operations of the
                           Plantation Assets.

                  3.3.2    QUARTERLY REPORTS: Not later than five (5) Business
                           Days prior to each Quarterly meeting the Manager
                           shall provide CNI with a report for discussion and,
                           showing the same information as required for the
                           monthly reports (but on a quarterly basis) together
                           with updated Operating Period end estimates of the
                           information contained in the then current Operating
                           Plan for approval by CNI such approval not to be
                           unreasonably or arbitrarily withheld, not more than 5
                           Business Days later.

         3.4      ANNUAL ACTIVITIES REPORT: The Manager shall provide CNI with
                  an annual activities report on the principal activities in
                  respect of the Plantation Assets by the end of August in each
                  Year. It shall include, without limitation, a summary of
                  activities for the previous 12 month period ending 30 June,
                  Operating Costs incurred in performing the Manager's duties in
                  this agreement, any conditions or events which materially
                  alter the value of any of the Plantation Assets in the
                  Manager's opinion and any other items reasonably requested by
                  CNI. The Operating Costs statements shall be prepared in
                  accordance with NZ GAAP and information shall also be provided
                  as reasonably requested by CNI to enable CNI to meet US GAAP
                  requirements and shall include a comparison (and discussion of
                  the reasons for any significant changes) with the preceding 12
                  month period ending 30 June and with the Operating Plan.

         3.5      SPECIAL REPORTS: CNI may at any time and from time to time
                  request the Manager to provide it with a special report in
                  respect of any matter connected with the management of the
                  Plantation Assets. If the Manager does not possess the
                  expertise to provide the report or any part thereof, it shall
                  be entitled, at its discretion, to retain independent
                  advisers, acceptable to CNI and at CNI's expense, to provide a
                  report or reports satisfying part or all of any such request.
                  If in the reasonable opinion of the Manager the provision of a
                  special report will result in material cost to the Manager,
                  the Manager will advise CNI of the time and cost required to
                  produce such report. Within 10 Business Days of receipt of
                  such time and cost estimate CNI will advise the Manager
                  whether it wishes for the Manager to proceed with the
                  preparation of such report. In the event that CNI asks the
                  Manager to proceed with the preparation of a special report,
                  CNI is to pay the Manager such costs as estimated by the
                  Manager and approved by CNI within 15 Business Days after CNI
                  receives the report. In all other instances special reports
                  prepared by the Manager shall be at no additional fee to CNI,
                  but any out of pocket costs reasonably incurred by the Manager
                  in connection with such reports shall be for the account of
                  CNI. The Manager shall also provide CNI with such

<PAGE>

Management Agreement                                                     Page 12

                  other information about the management operations in relation
                  to the Plantation Assets as may be reasonably requested by CNI
                  at no additional fee.

         3.6      SIGNIFICANT EVENTS: The Manager shall promptly report to CNI
                  any event known to it or which becomes known to it which, in
                  the reasonable opinion of the Manager, results or will result
                  in a significant departure from the Management Plans or will
                  impact the Management Plan objectives set out in clause 3.1.4
                  and shall consult with CNI with respect to the effects of the
                  foregoing and any actions to be taken in respect thereof.
                  Events generally known to the New Zealand public affecting the
                  New Zealand forestry industry need to be reported only when
                  the Manager reasonably determines that CNI will not be aware
                  of them. Where in the reasonable opinion of the Manager, to
                  protect the value of the Plantation Assets, it is necessary to
                  perform any management tasks not specifically contemplated in
                  any current Operating Plan and before approval can be obtained
                  from CNI, the Manager has the authority to perform those tasks
                  and the performance of those tasks shall be deemed to have
                  received the approval of CNI and the Operating Plan amended
                  prior to the performance of those tasks. The Manager shall
                  promptly report to CNI any tasks performed by the Manager
                  which were not approved by CNI prior to being performed but
                  which are deemed to be approved pursuant to this clause 3.6.

         3.7      SPECIAL AUDITS: CNI may at any time and from time to time
                  engage persons to undertake a special audit of any activity
                  undertaken or report produced by the Manager pursuant to this
                  agreement. Any such audit shall be for the account of CNI and
                  shall be undertaken in such a manner as shall reasonably limit
                  disruption to the operations of the Manager and the operations
                  of the Tahorakuri estate as a whole. The Manager shall fully
                  co- operate with the reasonable requests of such persons
                  undertaking any such audit.

         3.8      PRESENTATIONS TO INVESTORS; INVESTOR VISITS: The Manager shall
                  attend, and participate in as and if requested by CNI, once
                  per Year the UBS Annual Client Conference and report on the
                  affairs relating to the Plantation Assets and the performance
                  of the Manager's obligations under this agreement. Each
                  presentation will cover such details and be in respect of such
                  period as may be reasonably requested by CNI. Each
                  presentation will be made at the location required by CNI
                  without any additional fee hereunder, except that if any
                  presentation is required to be made outside of New Zealand,
                  any travel and accommodation and other out of pocket
                  travelling and associated costs reasonably incurred by the
                  Manager in connection with making such presentation shall be
                  for the account of CNI and the Manager shall be reimbursed for
                  any such costs by CNI upon demand. If requested by CNI, the
                  Manager shall also host visits from time to time to the Land
                  by CNI.

         3.9      LIMITATION OF LIABILITY FOR PROJECTIONS: CNI recognises that
                  the Manager is not a guarantor of the results of CNI's
                  investment in the Plantation Assets or the economic
                  assumptions, judgments, estimates, projections and other
                  factors affecting the value or accuracy of the Management
                  Plans and any other plans,
<PAGE>

Management Agreement                                                     Page 13

                  budgets, reports or presentations provided or made by the
                  Manager pursuant to this agreement. The Manager shall not be
                  liable to CNI with respect to any such assumptions, judgments,
                  estimates, projections or other factors in any plans, budgets,
                  reports and presentations provided that, subject to any
                  changes required by CNI, such plans, budgets, reports and
                  presentations are prepared in accordance with the standard of
                  performance set forth in subclause 2.2.

4.       MANAGEMENT OF THE PLANTATION ASSETS

         4.1      PERFORMANCE OBLIGATIONS: In carrying out its obligations under
                  this agreement the Manager shall:

                  4.1.1    COMPLY WITH CNI'S DIRECTIONS: at all times comply (or
                           require compliance by its contractors,
                           subcontractors, agents, employees, invitees, visitors
                           or licensees) with the reasonable directions of CNI;

                  4.1.2    COMPLY WITH THE LAW ETC: at all times comply (or
                           require compliance by its contractors,
                           subcontractors, agents, employees, invitees, visitors
                           or licensees) with:

                           (a)      GENERAL: all applicable laws, rules,
                                    regulations, permits, approvals, consents,
                                    orders, judgments, decrees, injunctions or
                                    agreements of or with any governmental
                                    authority, including, without limitation
                                    those relating to forest management and
                                    forest practice; and

                           (b)      ENVIRONMENTAL: the Environmental
                                    Requirements; and

                  4.1.3    PERFORMANCE STANDARD: meet the standard of
                           performance set out in subclause 2.2.

         4.2      DUTIES: The Manager shall implement and comply with the
                  Management Plans and fully and properly manage the Plantation
                  Assets in accordance with the terms set out in this agreement.
                  For the avoidance of doubt the Manager's duties will cease in
                  respect of a Working Block or Stand when that Working Block or
                  Stand is returned to the Manager in accordance with clause 12
                  of the Forestry Right. These obligations shall include,
                  without limitation:

                  4.2.1    FOREST HEALTH CHECK: inspection activities to monitor
                           the health of the Trees, including, without
                           limitation, regular inspections and inspections
                           following adverse weather events;

                  4.2.2    FOREST HEALTH SURVEYS: participating in any annual
                           forest health survey conducted by the New Zealand
                           Forest Owners Association and providing CNI with
                           copies of any relevant reports (or parts of reports);

<PAGE>

Management Agreement                                                     Page 14

                  4.2.3    CONTROL PESTS AND DISEASE: employing New Zealand
                           forest industry standards for the control of insect
                           and other pests and fungal and other tree diseases;

                  4.2.4    RECORDS: updating forest records including stand
                           descriptions and all mapping;

                  4.2.5    MAINTENANCE: general periodic maintenance of fences,
                           gates, roads, water tables and drainage to allow or
                           control vehicle access to the Land;

                  4.2.6    EROSION AND POLLUTION: use its reasonable endeavours
                           to control soil erosion and pollution of waterways;

                  4.2.7    STORAGE: store all fuels and oils brought onto the
                           Land by the Manager and those under the control of
                           the Manager safely on suitably cleared land;

                  4.2.8    DEBRIS: clear away and dispose of all debris carried
                           on to adjoining properties by the Manager and those
                           under the control of the Manager;

                  4.2.9    PUBLIC ACCESS: control public access to the Land on
                           specified terms for subsidiary land uses (such as
                           grazing, beehive siting and recreation) and taking
                           appropriate actions reasonably required to limit
                           trespass;

                  4.2.10   ILLEGALITY: notify the relevant authorities if it
                           becomes aware of any illegal behaviour on the Stands;

                  4.2.11   FIRE PROTECTION: in all respects complying with the
                           Forest and Rural Fires Act 1977 and (subject to the
                           provisions of that Act or any other statutory
                           regulation affecting the same) the Manager shall:

                           (a)      FIRE PLAN: include the Plantation Assets in
                                    the relevant annual fire plan and provide a
                                    copy of such fire plan to CNI;

                           (b)      FIRE PROTECTION: put in place fire
                                    appropriate protection methods and processes
                                    in relation to the Stands;

                           (c)      FIRE PREVENTION: take all reasonable
                                    measures that may be necessary to prevent
                                    the spreading of any fire on, from, to or
                                    across the Stands;

                           (d)      EQUIPMENT: have available or access to
                                    equipment which is suitable and adequate for
                                    the purpose of fighting fires and for
                                    securing the reasonable safety of lives from
                                    fire on the Stands;

                           (e)      STRUCTURES: erect structures and do all
                                    things that the Manager considers reasonably
                                    necessary for the protection of
<PAGE>

Management Agreement                                                     Page 15

                                    the Trees and keep its fire fighting and
                                    safety equipment in good working order and
                                    condition;

                           (f)      OTHER FIRE PROTECTION: be entitled to erect
                                    look-outs, construct fire- breaks and take
                                    such other normal fire protection measures
                                    as may from time to time be necessary;

                           (g)      NOTIFY AUTHORITIES: as soon as the Manager
                                    becomes aware ensure that the appropriate
                                    authorities and CNI are immediately notified
                                    should there be an outbreak of fire on the
                                    Land;

                           (h)      FIRE BREAKS: keep the fire breaks situated
                                    on the Stands clear of undergrowth; and

                           (i)      SPARK PREVENTION: ensure all vehicles and
                                    equipment brought onto the Land by or under
                                    the control of the Manager have a safe and
                                    efficient means of preventing the escape of
                                    dangerous sparks or flames from the exhaust
                                    and carry a fire extinguisher in working
                                    order;

                  4.2.12   OBTAIN CONSENTS ETC: use all reasonable endeavours to
                           obtain all consents, authorisations, approvals or
                           orders of any Court or governmental authority or
                           agency necessary in order to perform its obligations
                           under this agreement and the Management Plans;

                  4.2.13   FOREST STEWARDSHIP COUNCIL CERTIFICATION: for so long
                           as the parties agree, to maintain and comply with (or
                           require compliance by its contractors,
                           subcontractors, agents, employees, invitees, visitors
                           or licensees) Forest Stewardship Council
                           Certification;

                  4.2.14   ADVISE OF LEGAL ACTIONS: to the extent it has actual
                           knowledge thereof, promptly notify CNI of any suit or
                           proceeding threatened or commenced against CNI or the
                           Manager in connection with the Plantation Assets or
                           the performance of the Manager's obligations under
                           this agreement;

                  4.2.15   DEFEND LEGAL ACTIONS: at the direction of CNI and
                           cost in all respects of CNI take or cause to be taken
                           all reasonable steps to defend CNI against legal
                           actions or initiate claims or proceedings to protect,
                           enforce or confirm the rights of CNI with respect to
                           the Plantation Assets or any contract or agreement
                           entered into by or on behalf of CNI, provided that
                           CNI accepts that the Manager is not required to
                           comply with the provisions of this clause, except
                           that the Manager must provide reasonable co-operation
                           to allow CNI to defend such legal actions or initiate
                           such claims or proceedings, if in the Manager's
                           reasonable opinion the Manager and/or its business
                           may be prejudiced in complying

<PAGE>

Management Agreement                                                     Page 16

                           with this clause 4.2.15 and this will not be a
                           failure by the Manager in complying with its
                           obligations under this agreement; and

                  4.2.16   ADVISING: acknowledging the Manager's position in
                           owning and managing other plantation assets in New
                           Zealand, advising CNI of any relevant matters in the
                           Manager's reasonable opinion impacting the operations
                           or the protection of the investment in the Trees.

         4.3      CONTRACTS BY MANAGER: The Manager shall only enter into
                  contracts or agreements on behalf of CNI if such contracts or
                  agreements are in accordance with the Management Plans and the
                  terms of this agreement. The Manager shall be entitled, but
                  not required, to use its own employees to perform its
                  obligations under this agreement. The Manager may also enter
                  into contracts or other agreements with independent
                  contractors who are selected and supervised by the Manager,
                  utilising the same standard of performance as that set forth
                  in subclause 2.2. The Manager shall take all reasonable steps
                  to direct its personnel that such agreements shall state that
                  they are being executed by the Manager as agent for CNI and
                  not as principal, except where such contract or agreement also
                  relates to the Manager's own business and/or forest estate.
                  The Manager will require such contractors carry insurance with
                  limits, insurers, endorsements, creditworthiness and coverage
                  which are determined by the Manager to be adequate under the
                  circumstances. CNI will not be liable in the event that any
                  such coverage is inadequate. The Manager will not be liable in
                  the event that any such coverage is inadequate provided only
                  that its determination of adequacy was made on a reasonable
                  basis and in good faith.

         4.4      PROCEDURES: In performing its obligations under this
                  agreement, the Manager shall adopt and implement such
                  supervisory, accounting, payment and control procedures as
                  shall meet the standard of performance set forth in subclause
                  2.2.

         4.5      BOOKS AND RECORDS: The Manager shall keep books and records in
                  relation to its management obligations under this agreement in
                  accordance with the following provisions.

                  4.5.1    SEPARATE BOOKS AND RECORDS: Subject to clause 4.5.2,
                           the Manager shall keep separate records and books of
                           account in relation to its management of CNI's
                           financial interest in and expenditure on the
                           Plantation Assets in which complete entries shall be
                           made reflecting the activities and financial
                           transactions undertaken by the Manager in performing
                           its obligations under this agreement.

                  4.5.2    COMBINED RECORDS: The parties acknowledge that it
                           will not always be practicable to keep the records
                           for the Plantation Assets separate from records for
                           the Manager's other plantation assets, and (provided
                           CNI is consulted in accordance with clause 4.5.3) CNI
                           acknowledges that separate records for the Plantation
                           Assets may not be kept where:

<PAGE>

Management Agreement                                                     Page 17

                           (a)      POLICIES: those records contain policies
                                    that are applicable for both the Plantation
                                    Assets and any other plantation assets owned
                                    or managed by the Manager; and/or

                           (b)      OTHER MATTERS: those records relate to
                                    industry or region-wide matters.

                  4.5.3    CONSULTATION: In the event that the Manager (acting
                           reasonably) believes that combined records must be
                           kept in accordance with clauses 4.5.2(a) and (b), the
                           Manager shall consult with CNI as to CNI's needs in
                           regards to such records. In consulting with CNI, the
                           Manager shall act in good faith and give reasonable
                           consideration to CNI's requests.

                  4.5.4    IDENTIFICATION OF RELEVANT ENTRIES: Where it is not
                           possible to keep separate records in relation to the
                           Plantation Assets, any transaction entered into by
                           the Manager as agent in the performance of its
                           obligations under this agreement, or any other
                           relevant entry in a record of the Manager that
                           relates to the Plantation Assets, shall be
                           appropriately identified in the records of the
                           Manager at the time.

                  4.5.5    ACCESS: The Manager shall permit any officer,
                           employee, agent or advisor of CNI, at any time during
                           regular business hours and upon reasonable prior
                           notice to the Manager, to examine and make copies of
                           such records and books of account and to discuss them
                           or the performance by the Manager of its obligations
                           under this agreement with such of the Manager's
                           officers or employees as the Manager advises.

                  4.5.6    AUDIT: The Manager shall co-operate with any audit of
                           the Manager's records, books of account or
                           performance under this agreement by a reputable and
                           independent auditor who shall at all times be bound
                           to the confidentiality provisions set out in clause
                           17.

                  4.5.7    EXPIRATION/TERMINATION: Subject to subclause 6.4, and
                           subject to CNI having paid to the Manager all
                           outstanding monies due to the Manager under this
                           agreement, on the expiration or earlier termination
                           of this agreement, the records and books of account,
                           or copies of the relevant parts of such records where
                           the records are combined records pursuant to clause
                           4.5.2, shall if requested by CNI be delivered by the
                           Manager to CNI at such location as CNI may reasonably
                           designate.

5.       COSTS AND FEES

         5.1      FEE:

                  5.1.1    MANAGEMENT FEE: In consideration of the Manager's
                           management obligations under this agreement, CNI
                           shall pay to the Manager, quarterly in advance in
                           accordance with clause 5.1.2(a) during the term of
                           this

<PAGE>

Management Agreement                                                     Page 18

                           agreement, an amount equal to NZ$18 per hectare of
                           Remaining Stands plus GST.

                  5.1.2    REDUCING FEE:

                           (a)      CALCULATION OF REMAINING AREA: The parties
                                    acknowledge and agree that the area of the
                                    Stands that are subject to the Forestry
                                    Right will diminish over the term of the
                                    Forestry Right until there are no longer any
                                    Remaining Stands. Accordingly, the parties
                                    acknowledge and agree that the Management
                                    Fee will decrease at a hectare equivalent
                                    rate. To this end, CNI shall calculate the
                                    area of the Remaining Stands (which in turn
                                    will be used to calculate the Management Fee
                                    payable for the following Quarter in
                                    accordance with clause 5.1.1), no later than
                                    twenty (20) Business Days prior to the end
                                    of each Quarter, by deducting from the area
                                    of the Stands at the start of the prior
                                    Quarter:

                                    (i)      SALES TO THE MANAGER: Stands that
                                             have been sold and transferred to
                                             the Manager in accordance with the
                                             Wood Supply Agreement; and

                                    (ii)     SALES TO THIRD PARTIES: Stands that
                                             have been sold to and harvested by
                                             either a third party or the Manager
                                             (as evidenced by a notice of
                                             completion of harvest issued to the
                                             Manager) in accordance with the
                                             Forestry Right.

                           (b)      NOTIFICATION OF REMAINING AREA: CNI shall
                                    notify the Manager of the area of the
                                    relevant Remaining Stands twenty (20)
                                    Business Days prior to the end of each
                                    Quarter.

                  5.1.3    FEE REVIEW:

                           (a)      BIENNIAL REVIEW: The Management Fee shall be
                                    reviewed biennially at the relevant April
                                    Quarterly meeting. The Management Fee is to
                                    be reviewed on the basis that any benefit or
                                    detriment to CNI arising from or as a
                                    consequence of the Related Agreements and/or
                                    the operations and business of the Manager
                                    is to be disregarded when determining the
                                    new Management Fee. At the time of such
                                    review the parties shall negotiate in good
                                    faith to determine the new Management Fee to
                                    apply for the next 2 Year period taking into
                                    account the then current market rates for
                                    the services being provided by the Manager
                                    under this agreement. Any disagreement over
                                    the level of the Management Fee will be
                                    resolved under clause 16 of this agreement.

<PAGE>

Management Agreement                                                     Page 19

                           (b)      MANAGEMENT FEE TO APPLY: If the parties are
                                    unable to resolve any dispute over fees
                                    before the commencement of the next 2 Year
                                    period then the Management Fee applicable to
                                    the previous 2 year period will continue to
                                    apply and be payable by CNI until the
                                    dispute is resolved.

                           (c)      DISPUTE RESOLVED: Once the dispute has been
                                    resolved and:

                                    (i)      FEE INCREASE: the Management Fee
                                             has increased from the previous
                                             Management Fee, the Manager will be
                                             entitled to be paid the difference
                                             between the two fee levels together
                                             with any additional GST; or

                                    (ii)     FEE DECREASE: the Management Fee
                                             has decreased from the Management
                                             Fee applicable for the previous
                                             period, then CNI will be entitled
                                             to the difference between the two
                                             fee levels together with a credit
                                             note for any overpaid GST;

                                    and the payment will be backdated to the
                                    start of the relevant two year period such
                                    payment is payable to the other party within
                                    10 Business Days of the dispute being
                                    resolved. The party paying the difference
                                    shall forthwith pay such amount to the other
                                    party together with interest thereon at the
                                    Bill Rate calculated daily from the start of
                                    the relevant 2 year period to the day 10
                                    Business Days after the dispute has been
                                    resolved, and, if relevant, interest thereon
                                    at the Default Interest Rate calculated
                                    daily from the day 11 Business Days after
                                    the dispute has been resolved to the date of
                                    payment of the balance the other party and
                                    compounded monthly.

                  5.1.4    INVOICING AND PAYMENT OF FEES: The Manager shall
                           provide CNI with an invoice for all fees to be paid
                           to the Manager hereunder for each Quarter (as
                           calculated in accordance with clauses 5.1.1 and
                           5.1.2). CNI shall pay each invoice received from the
                           Manager within 15 Business Days of receipt of such
                           invoice.

         5.2      COSTS:

                  5.2.1    OPERATING COSTS: All Operating Costs set forth in the
                           Operating Plan, as amended from time to time, shall
                           be for the account of CNI. Deviations from Operating
                           Costs, as set forth in the then applicable Operating
                           Plan, which are permitted or approved following any
                           Quarterly meeting pursuant to subclause 3.3.2 shall
                           be for the account of CNI. It is agreed that any
                           deviation in the total Operating Costs from that in
                           the Operating Plan for the relevant Operating Period
                           of less than 10% will

<PAGE>

Management Agreement                                                     Page 20

                           not be deemed to be an amendment to the Operating
                           Plan requiring approval following any Quarterly
                           meeting under clause 3.3.2 and shall be for the
                           account of CNI.

                  5.2.2    ADDITIONAL APPROVED COSTS: Subject to clause 5.2.1
                           all reasonable costs incurred by the Manager in
                           respect of items not contemplated in the then
                           applicable Operating Plan shall be Operating Costs
                           but only if and to the extent that they have been
                           approved following any Quarterly meeting and the
                           Operating Plan amended in accordance with clause
                           3.3.2 of this agreement prior to their being incurred
                           by the Manager; provided that where, in the
                           reasonable opinion of the Manager, to avoid CNI
                           suffering a material adverse effect, it is necessary
                           to incur any such costs before the approval can be
                           obtained, the Manager has the authority to incur
                           these costs and the incurrence of those costs shall
                           be deemed to have received the approval of CNI as if
                           approved by CNI following a Quarterly meeting in
                           accordance with clause 3.3.2 and the Operating Plan
                           amended accordingly prior to being incurred. The
                           Manager shall promptly report to CNI any costs
                           incurred by the Manager which were not approved by
                           CNI prior to being incurred but are deemed to be
                           approved pursuant to this subclause 5.2.2.

                  5.2.3    INVOICING AND PAYMENT OF COSTS: All invoices
                           submitted by the Manager to CNI for Operating Costs
                           incurred by the Manager under this agreement will be
                           in the following form:

                           (a)      TAX INVOICE: each invoice must be a valid
                                    "tax invoice" as required by law;

                           (b)      OPERATING COSTS: each invoice must specify
                                    the Operating Costs incurred, and the dates
                                    they were incurred;

                           (c)      EXPLANATION: Where Operating Costs deviate
                                    by more than 10% from the estimate in the
                                    Operating Plan each invoice must be
                                    accompanied with a statement explaining how
                                    such Operating Costs relate to the Operating
                                    Plan, or an explanation of why those costs
                                    should be considered additional approved
                                    costs in accordance with clause 5.2.2.

                  5.2.4    DUE DATE FOR PAYMENT: Subject to clauses 5.2.1 and
                           5.2.2, provided the Operating Costs specified in each
                           invoice received by CNI either comply with the
                           Operating Plan or have been approved following any
                           Quarterly meeting in accordance with clause 3.3.2,
                           each such invoice will be payable on the 15th
                           Business Day after receipt by CNI of that invoice.

         5.3      PAYMENT IN CLEARED FUNDS: Receipt of a cheque, bill of
                  exchange or other negotiable instrument will not constitute
                  payment of any amount under this

<PAGE>

Management Agreement                                                     Page 21

                  agreement until the amount represented by that cheque, bill of
                  exchange or negotiable instrument has been received in full,
                  in cleared funds, by the intended payee.

         5.4      DEFAULT INTEREST: If any amount falls overdue for payment
                  under this agreement, the overdue amount will (without
                  prejudice to any other right or remedy under this agreement)
                  bear default interest from the date on which payment of that
                  amount falls overdue until the date on which payment of the
                  overdue amount is made in full. Default interest will be
                  calculated daily at the Default Interest Rate and will be
                  compounded monthly.

         5.5      SETTLEMENT OF EXPENSES: Following any termination of this
                  agreement, the Manager and CNI shall promptly settle and pay
                  all outstanding costs, fees and reimbursements which are due
                  to any of the parties pursuant to the terms of this agreement.

         5.6      LAND COSTS: The Manager acknowledges and agrees that as the
                  owner of the Land all Land Costs shall be for the account of
                  the Manager only and nothing express or implied in this
                  agreement will confer any liability on CNI in relation to Land
                  Costs.

         5.7      GST: A party must pay GST on a taxable supply made to it under
                  this agreement, in addition to any consideration (excluding
                  GST) that is payable for that taxable supply. The party making
                  the taxable supply must provide a valid tax invoice to the
                  other party at or before the time that the other party is
                  required to pay the GST. Excluding the term "GST", terms used
                  in this clause have the meaning given to them in the GST Act.

6.       TERM OF AGREEMENT AND SUSPENSION

         6.1      TERM: Unless this agreement is earlier terminated as set forth
                  in subclause 6.2, the term of this agreement shall be from the
                  Commencement Date until the termination of the Forestry Right.

         6.2      EARLY TERMINATION: This agreement may be terminated prior to
                  the expiration of the period specified in subclause 6.1 by
                  notice from CNI to the Manager if any of the following events
                  occur (in relation to clauses 6.2.1- 6.2.5) or by notice from
                  the Manager to CNI (in relation to clauses 6.2.1 and 6.2.3).

                  6.2.1    MATERIAL BREACH: Either party breaches, and fails to
                           properly or promptly perform, any of its material
                           obligations within twenty (20) Business Days after
                           written notice from the other party specifying the
                           breach and its intention to terminate this agreement
                           if such obligation is not properly and promptly
                           performed provided that such breach is not disputed
                           by the relevant party alleged to be in breach (in
                           which case clauses 6.3.1 to 6.3.4 shall apply).

<PAGE>

Management Agreement                                                     Page 22

                  6.2.2    THE MANAGER'S FAILURE TO PERFORM ITS DUTIES: If, CNI:

                           (a)      DUTIES: notifies the Manager that it is in
                                    material breach of the performance of its
                                    duties under this agreement in any material
                                    respect; and

                           (b)      CAUSE: such failure is not caused by any
                                    specific instruction or direction given to
                                    the Manager pursuant to this agreement by
                                    CNI and acted on by the Manager nor is such
                                    failure caused by any failure to act by CNI,
                                    nor is such failure caused by the
                                    implementation of the approved Management
                                    Plans in accordance with the performance
                                    standards in clause 2.2, in each case where
                                    the Manager has met the standard of
                                    performance set out in clause 2.2.

                  6.2.3    EVENT OF DEFAULT: If any one or more of the following
                           events of default occur this agreement may be
                           terminated by the affected party prior to the
                           expiration of the period specified in subclause 6.1
                           by notice from the affected party to the other if any
                           of the following events occur:

                           (a)      DISTRESS: distress is levied or a judgment
                                    order or encumbrance is enforced, or becomes
                                    enforceable, or can be rendered so by the
                                    giving of notice, lapse of time or
                                    fulfilment of any condition, against
                                    substantially all of the Manager's property;

                           (b)      INSOLVENCY EVENT: an Insolvency Event occurs
                                    in respect of the Manager;

                           (c)      NOTICE FROM REGISTRAR: the Manager receives
                                    notice from the Registrar of Companies (or a
                                    Deputy Registrar) under section 30 of the
                                    Corporations (Investigation and Management)
                                    Act 1989 or the Securities Commission makes
                                    a recommendation under section 38 of that
                                    Act in respect of the Manager; or

                           (d)      OFFICIAL MANAGER: a person is appointed
                                    under either section 179 of the Act or the
                                    Corporations (Investigation and Management)
                                    Act 1989 to investigate any part of the
                                    affairs of the Manager.

                  6.2.4    DISPOSAL OF PLANTATION ASSETS: CNI disposes of all of
                           the Plantation Assets.

                  6.2.5    CAP EXCEEDED: If the amounts that have been
                           determined to be owed by the Manager to CNI exceed in
                           aggregate the Cap where such amounts arise as a
                           result of breaches of either the Infrastructure
                           Agreement or this

<PAGE>

Management Agreement                                                     Page 23

                           agreement and where such amounts are determined
                           either by agreement between the parties or by the
                           award of an arbitrator or by court order (all rights
                           of appeal having either expired or been exhausted),
                           irrespective of the time period over which the
                           liability for such amounts accrues.

                  An early termination of this agreement under this clause 6.2
                  shall not be effective until the date ten (10) Business Days
                  after receipt of the notice of termination by the Manager.

         6.3      TERMINATION DISPUTES:

                  6.3.1    DISPUTE OVER BREACH: In such event that CNI has
                           notified the Manager that it is in material breach
                           under this agreement in accordance with clause 6.2.2
                           and the Manager disputes that termination notice, or
                           if the recipient of a termination notice under clause
                           6.2.1 disputes that termination notice, then the
                           dispute resolution procedure under clause 16 shall
                           apply.

                  6.3.2    SUSPENSION: Pending resolution of a dispute under
                           clause 6.3.1 CNI may suspend this agreement (or the
                           relevant part of it where the disputed breach is in
                           relation to only part of the services in this
                           agreement and the Manager is able to provide the
                           balance of the Manager's services in this agreement)
                           on providing written notice of such suspension (or
                           partial suspension) to the Manager, and appoint an
                           interim replacement to fulfil the Manager's
                           obligations under this agreement.

                  6.3.3    MANAGEMENT FEES: Notwithstanding that the agreement
                           or part of it has been suspended as provided in
                           clause 6.3.2, the Management Fees (and the Operating
                           Costs as applicable where only part of the agreement
                           is suspended and the Manager is still incurring
                           Operating Costs) payable by CNI to the Manager will
                           continue to be payable in full in accordance with the
                           relevant provisions of this agreement as if this
                           agreement (or part of it) had not been suspended,
                           pending determination of the dispute pursuant to
                           clause 6.3.1.

                  6.3.4    DETERMINATION OF BREACH: If it is determined pursuant
                           to clause 6.3.1 that there is no breach then CNI must
                           immediately terminate the interim replacement manager
                           and reinstate the Manager. If it is determined that
                           there is a breach, CNI may immediately terminate this
                           agreement and will notify the Manager in writing of
                           the out of pocket costs incurred by it as a result of
                           the appointment of the interim replacement manager
                           (including a statement of such costs). The Manager
                           will pay such costs to CNI within 5 Business Days of
                           receipt of such notification.

                  6.3.5    CURABLE BREACH: If prior to referring the issue to
                           dispute resolution in accordance with this clause CNI
                           and the Manager can agree on a method and period
                           within which such failure is to be cured, and the
                           Manager fails

<PAGE>

Management Agreement                                                     Page 24

                           to cure such failure according to the method and
                           within the period agreed, then CNI may terminate this
                           agreement by notice to the Manager in writing and
                           this agreement will terminate 10 Business Days from
                           the date of such notice.

         6.4      EFFECT OF TERMINATION:

                  6.4.1    SURVIVAL: The expiration or earlier termination of
                           this agreement will be without prejudice to the
                           rights and obligations of the parties prior to such
                           expiration or earlier termination becoming effective
                           and the obligations of the parties under subclause
                           4.5, subclause 5.5, clause 8, subclause 11.3 and
                           clause 17 will survive the expiration or earlier
                           termination of this agreement.

                  6.4.2    RELATED AGREEMENTS: The expiration or earlier
                           termination of this agreement will be without
                           prejudice to the rights and obligations of the
                           parties under the Related Agreements.

         6.5      TRANSFER:

                  6.5.1    EARLY TERMINATION: On the early termination of this
                           agreement the Manager shall at no additional fee or
                           cost to CNI and at all times acting in good faith,
                           promptly and efficiently take all actions reasonably
                           requested to assist its replacement in assuming its
                           responsibilities in terms of such replacement
                           manager's appointment including, without limitation,
                           the handing over of all relevant and up-to-date
                           records relating to the Trees in a form that can
                           immediately be used by CNI to continue to manage the
                           Trees to a standard consistent with that in clause
                           2.2 (provided that the Manager is entitled to
                           withhold the records until all monies owing to the
                           Manager under this agreement are paid in full). For
                           the avoidance of doubt, the Manager will have no
                           obligation to transfer proprietary systems or
                           operational processes. All reasonable out of pocket
                           expenses incurred by the Manager in effecting the
                           transfer shall be to the account of CNI.

                  6.5.2    EXPIRATION: On the expiration of this agreement by
                           the effluxion of time the Manager shall at no
                           additional fee or cost to CNI and at all times acting
                           in good faith, promptly and efficiently take all
                           actions reasonably requested to assist CNI wind up
                           its interest in the Plantation Assets, including,
                           without limitation, the handing over of all relevant
                           records relating to the Trees, provided that the
                           Manager is entitled to withhold the records until all
                           monies owing to the Manager under this agreement are
                           paid in full. For the avoidance of doubt, the Manager
                           will have no obligation to transfer proprietary
                           systems or operational processes. All reasonable out
                           of pocket expenses incurred by the Manager in
                           effecting the transfer shall be to the account of
                           CNI.

<PAGE>

Management Agreement                                                     Page 25

         6.6      INJUNCTIVE RELIEF OR SPECIFIC PERFORMANCE: Each of the parties
                  acknowledges and agrees that in the event of a breach of this
                  agreement, damages alone will be an insufficient remedy.
                  Accordingly, each of the parties further acknowledge that the
                  other party may be entitled to equitable relief, including
                  injunctive relief or specific performance, in the event of any
                  breach, or threatened breach of this agreement, in addition to
                  any and all other remedies available to it at law.

7.       INSURANCE

         7.1      INSURANCE: The Manager shall be permitted to self-insure its
                  risks, provided that if at any time during the term of this
                  agreement, the net assets of Fletcher Challenge Industries
                  Limited fall below $200 million the Manager shall promptly
                  notify CNI of the same and the provisions of the following
                  clauses will apply until the net assets of Fletcher Challenge
                  Industries Limited exceed $200 million. All calculations of
                  net assets required to be carried out pursuant to this clause
                  must be made using those accounting principles used for the
                  preparation of the financial statements of Fletcher Challenge
                  Forests Limited.

                  7.1.1    PUBLIC LIABILITY INSURANCE: The Manager shall obtain
                           and maintain, at its expense, public liability
                           insurance coverage, with an extension for fire
                           fighting costs and levies pursuant to the Forest and
                           Rural Fires Act 1977, in respect of activities
                           undertaken by it and its subcontractors in performing
                           its obligations under this agreement in such amounts,
                           on such terms and with such insurers as a prudent
                           forestry manager of the Plantation Assets would
                           insure for based on the risks and liabilities
                           attendant on such activities and will provide CNI
                           with confirmation in writing of the cover and that
                           the premiums are paid.

                  7.1.2    ADDITIONAL INSURED: CNI shall be named as an
                           additional insured on all insurance policies
                           providing such coverage.

                  7.1.3    CHANGE IN SCOPE: Any proposed material change in the
                           scope, insurer or amount of insurance coverage
                           maintained by the Manager pursuant to this subclause
                           7.1 shall be promptly reported to CNI. The Manager
                           shall have no obligation to insure the Plantation
                           Assets except as specified in this clause 7.

         7.2      OTHER INSURANCE: The Manager shall use reasonable endeavours
                  to obtain and maintain such insurance in respect of the
                  Plantation Assets (including, without limitation, insurance
                  against fraud or theft on the part of the Manager's employees
                  or contractors which would cause loss to CNI), with such
                  insurers and coverage, and for such amount, as CNI shall
                  request. The cost of such insurance including any brokerage
                  fees and out of pocket expenses shall be for the account of
                  CNI. The Manager will obtain written quote(s) for such
                  insurance including brokerage fees and out of pocket costs and
                  will not be under any obligation to place such insurance until
                  such time as it has received payment of the agreed quote in
                  full in

<PAGE>

Management Agreement                                                     Page 26

                  cleared funds from CNI. Upon request, the Manager shall
                  furnish to CNI, all certificates of the insurances obtained
                  and maintained pursuant to this subclause 7.2. The Manager
                  shall have no obligation to insure the Plantation Assets
                  except as specified in this subclause 7.

         7.3      CNI INSURANCE: CNI may, at its sole and absolute discretion
                  and cost, obtain and maintain such other insurance in respect
                  of the Plantation Assets in addition to any insurance obtained
                  and maintained by the Manager in accordance with clauses 7.1
                  and 7.2, but without limiting the Manager's obligation to
                  obtain and maintain insurance in accordance with clauses 7.1
                  and 7.2.

         7.4      FCIL UNDERTAKING: In order to satisfy CNI of the Manager's
                  creditworthiness in respect of its self insuring for the above
                  risks, the Manager will provide CNI with a signed undertaking
                  from Fletcher Challenge Industries Limited in the form set out
                  in Appendix II together with a guarantee from Fletcher
                  Challenge Industries Limited in the form attached to Appendix
                  II on execution of this agreement.

8.       INDEMNITY

         8.1      MANAGER'S DUTY TO INDEMNIFY: The Manager shall indemnify CNI
                  and its respective officers, directors, employees and
                  Affiliates against any and all costs, expenses, claims,
                  damages and liabilities incurred whatsoever, including
                  reasonable legal expenses, arising as a direct result of any
                  breach by the Manager of the provisions of this agreement,
                  except if, and then only to the extent that, such breach, act
                  or omission occurs as a result of:

                  8.1.1    SPECIFIC INSTRUCTIONS: the Manager carrying out and
                           performing any specific instruction or direction
                           given to the Manager pursuant to this agreement by
                           CNI; or

                  8.1.2    FAILURE BY CNI: the Manager, having met the standard
                           of performance set out in subclause 2.2, being unable
                           to comply with any of its duties under this agreement
                           caused by the failure to act by CNI.

         8.2      LIMITATION OF LIABILITY - MANAGER: The Manager's liability
                  under clauses 8.1 and 11.3 of this agreement and clauses 4.3
                  and 7.1 of the Infrastructure Agreement cannot exceed in
                  aggregate NZ$2 million (the "Cap").

         8.3      CNI'S DUTY TO INDEMNIFY: CNI hereby indemnifies the Manager,
                  its officers, directors, employees and Affiliates, against any
                  and all costs, expenses, claims, damages and liabilities
                  whatsoever, including reasonable legal expenses, arising
                  directly out of any breach by CNI of the provisions of this
                  agreement.

         8.4      LIMITATION OF LIABILITY - CNI: CNI's liability under clause
                  8.3 of this agreement and clause 7.3 of the Infrastructure
                  Agreement cannot exceed in aggregate NZ$2 million.

<PAGE>

Management Agreement                                                     Page 27

         8.5      LIABILITY: Nothing expressed or implied in this agreement
                  shall confer any liability on either party (referred to in
                  this clause as the "First Party") in respect of any indirect,
                  consequential or special loss, damage, cost or expense of any
                  kind including (but not limited to) loss of savings and profit
                  suffered or incurred by the other party as a direct or
                  indirect result of a breach by the First Party of any of its
                  obligations under this agreement.

         8.6      RIGHT TO DEFEND: If any action or proceeding is brought
                  against a party or parties indemnified under subclause 8.1 or
                  subclause 8.3 or subclause 11.3 (the "Indemnified Party"),
                  such Indemnified Party shall promptly notify in writing the
                  party or parties against whom such indemnity may be sought
                  (the "Indemnifying Party"). The Indemnifying Party shall then
                  be entitled to assume the defence of the action or proceeding
                  with counsel reasonably satisfactory to the Indemnified Party
                  and shall pay the fees and expenses of such counsel. If the
                  Indemnifying Party has given written notice invoking the
                  provisions of clause 16 with respect to its obligation to
                  indemnify, the Indemnifying Party may assume such defence
                  subject to a reservation of rights against the Indemnified
                  Party. In any such action or proceeding, any Indemnified Party
                  shall have the right to retain its own counsel, but the fees
                  and expenses of such counsel shall be at the expense of such
                  Indemnified Party unless:

                  8.6.1    BY MUTUAL AGREEMENT: the Indemnifying Party and the
                           Indemnified Party shall have mutually agreed to the
                           retention of such counsel; or

                  8.6.2    DIFFERING INTERESTS: the named parties to any such
                           proceedings (including any impleaded parties) include
                           both the Indemnifying Party and the Indemnified Party
                           and representation of both parties by the same
                           counsel would be inappropriate due to an actual or
                           potential conflict of interest between them.

                  Where there is any disagreement between the parties as to
                  whether there is an actual or potential conflict of interest
                  pursuant to subclause 8.6.2 such disagreement shall be
                  referred to the President of the New Zealand Law Society whose
                  determination shall be binding and the costs of obtaining such
                  determination shall be paid equally by the Indemnifying Party
                  and the Indemnified Party. It is understood and agreed by the
                  parties that the Indemnifying Party shall not, in connection
                  with any proceeding or related proceedings in the same
                  jurisdiction, be liable for the reasonable fees and expenses
                  of more than one separate firm for the Indemnified Party. The
                  Indemnifying Party shall not be liable for any settlement of
                  any proceeding effected without its written consent, but if
                  settled with such consent or if there is a final judgment for
                  the plaintiff, the Indemnifying Party agrees to indemnify the
                  Indemnified Party from and against any loss or liability by
                  reason of such settlement or judgment. No Indemnifying Party
                  shall, without the prior written consent of the Indemnified
                  Party, effect any settlement of any pending or threatened
                  proceeding in respect of which any Indemnified Party is or
                  could have been a party and indemnity could have been sought
                  pursuant to this clause 8 by such Indemnified Party.

<PAGE>

Management Agreement                                                     Page 28

         8.7      NO DOUBLE CLAIMS: Neither party is entitled to claim more than
                  once in respect of any one matter giving rise to a claim under
                  this agreement or any Related Agreement.

         8.8      MITIGATION: Each party will take all reasonable steps to
                  mitigate any costs, damages, fines, penalties, loss or
                  expense, it may suffer.

9.       REPRESENTATIONS AND WARRANTIES

         9.1      MANAGER'S REPRESENTATIONS AND WARRANTIES: The Manager
                  represents and warrants as follows.

                  9.1.1    STANDING: The Manager is a company duly incorporated
                           and validly existing under the laws of New Zealand.

                  9.1.2    AUTHORITY TO ENTER INTO AGREEMENT: The execution,
                           delivery and performance by the Manager of this
                           agreement have been duly authorised by all necessary
                           action on its part, do not contravene any law binding
                           on the Manager, do not contravene the incorporation
                           documents of the Manager and do not contravene the
                           provisions of or constitute a default under any other
                           agreement to which the Manager may be a party or by
                           which any of its assets may be bound.

                  9.1.3    CONSENTS, APPROVALS ETC: It has obtained or made all
                           consents, approvals, authorisations or orders of any
                           court or governmental authority or agency required on
                           its behalf to be obtained or made on or prior to the
                           date of execution of this agreement in connection
                           with the execution and delivery of this agreement and
                           the performance by it of its obligation hereunder.

                  9.1.4    VALID AGREEMENT: This agreement has been duly
                           executed and delivered by the Manager and constitutes
                           the legal, valid and binding obligation of the
                           Manager, enforceable against the Manager in
                           accordance with its terms.

                  9.1.5    NO PROCEEDINGS: There is no action, suit or
                           proceeding before any court or governmental agency or
                           authority now pending or, to the knowledge of the
                           Manager, threatened against the Manager which might
                           adversely affect the ability of the Manager to
                           perform its obligations under this agreement.

         9.2      CNI'S REPRESENTATIONS AND WARRANTIES: CNI represents and
                  warrants as follows.

                  9.2.1    STANDING: It is a company duly incorporated and
                           validly existing under the laws of New Zealand.

<PAGE>

Management Agreement                                                     Page 29

                  9.2.2    AUTHORITY TO ENTER INTO AGREEMENT: The execution,
                           delivery and performance by it of this agreement have
                           been duly authorised by all necessary action on its
                           part, do not contravene any law binding on it, do not
                           contravene its incorporation documents, and do not
                           contravene the provisions of or constitute a default
                           under any other agreement to which it is a party or
                           by which any of its assets may be bound.

                  9.2.3    CONSENTS, APPROVALS ETC: It has obtained or made all
                           consents, approvals, authorisations or orders of any
                           court or governmental authority or agency required on
                           its behalf to be obtained or made on or prior to the
                           date of execution of this agreement in connection
                           with the execution and delivery of this agreement and
                           the performance by it of its obligation hereunder.

                  9.2.4    VALID AGREEMENT: This agreement has been duly
                           executed and delivered by it and constitutes the
                           legal, valid and binding obligations of it
                           enforceable against it in accordance with its terms.

                  9.2.5    NO PROCEEDINGS: There is no action, suit or
                           proceeding before any court or governmental agency or
                           authority now pending or, to the knowledge of CNI,
                           threatened against CNI which might adversely affect
                           the ability of CNI to perform its obligations under
                           this agreement.

10.      CONFLICTS OF INTEREST

         10.1     OTHER ACTIVITIES: CNI acknowledges that the Manager owns other
                  plantation assets in New Zealand and is actively involved in
                  the business of managing such plantation assets and harvesting
                  and marketing forest products (as well as managing plantation
                  assets and harvesting and marketing forest products owned by
                  others) both in the domestic and export markets. From time to
                  time, the Manager's acquisition and management of plantation
                  assets and harvesting and marketing of forest products for its
                  own account, or for a third party, may create a conflict of
                  interest with respect to the obligations of the Manager under
                  this agreement.

         10.2     EFFECTS OF CONFLICT: In the event of a conflict of interest
                  (which the parties acknowledge could arise due to a change in
                  the effective control or management of the Manager) CNI shall
                  have the right, following consultation with the Manager, to
                  terminate this agreement without cause on 30 Business Days
                  notice in writing where the conflict of interest is reasonably
                  likely to cause the Manager to:

                  10.2.1   CONFIDENTIALITY: be unable to comply in all respects
                           with its confidentiality obligations under this
                           agreement; or

                  10.2.2   MANAGEMENT OBJECTIVES: be unable to meet the
                           objectives set out in clause 3.1.4; and

<PAGE>

Management Agreement                                                     Page 30

                           thereby result in a material adverse effect on CNI.

         10.3     CONTINUING FEE: The parties acknowledge that as a result of
                  terminating this agreement under this clause 10, the Manager
                  may incur certain "winding up" costs. By way of recognition of
                  this fact, CNI shall continue to pay the Management Fee to the
                  Manager for a period of 90 days following the date of the
                  notice referred to in clause 10.2. For the avoidance of doubt,
                  the provisions of clause 6.5.1 shall apply in the event that
                  the agreement is terminated in accordance with this clause 10.

11.      HEALTH AND SAFETY IN EMPLOYMENT ACT

         11.1     COMPLIANCE: The Manager shall take all practicable steps to
                  ensure that no act or omission by it or its employees, agents,
                  contractors, subcontractors, invitees, visitors or licensees:

                  11.1.1   HAZARD: causes a hazard, significant hazard, harm or
                           serious harm to any employee of the Manager or CNI or
                           any person lawfully on the Land; or

                  11.1.2   BREACH OF HSE ACT: is a breach of any duty or
                           obligation of the Manager under the Health and Safety
                           in Employment Act 1992 ("HSE Act") and any
                           regulations or codes of practice made pursuant to the
                           HSE Act; or

                  11.1.3   HSE ACT ENFORCEMENT: does or is likely to give rise
                           to the issue of an improvement or prohibition notice,
                           enforcement proceedings or a prosecution under the
                           HSE Act against the Manager or CNI,

                  provided the Manager shall only be required to take all
                  reasonably practicable steps to enforce the requirements in
                  this clause 11.1 in respect of its agents, contractors,
                  subcontractors, invitees, visitors or licensees.

         11.2     FURTHER OBLIGATIONS: Without limiting its general obligations
                  the Manager shall:

                  11.2.1   RELEVANT RULES AND REGULATIONS: obtain and shall be
                           familiar with, all relevant rules, regulations,
                           standard and industry practices;

                  11.2.2   MAINTENANCE: in relation to the Manager's duties
                           under this agreement require that all plant,
                           equipment, machinery, vehicles and tools used are in
                           a safe working condition and subject to periodic
                           checks to ensure this standard is maintained and it
                           shall require that the use of equipment that is
                           damaged or does not meet accepted safety standards is
                           not permitted;

<PAGE>

Management Agreement                                                     Page 31

                  11.2.3   PROTECTIVE EQUIPMENT: in relation to the Manager's
                           duties under this agreement require that appropriate
                           protective equipment and clothing is supplied to, and
                           used by, all personnel, associated with the work;

                  11.2.4   INSTRUCTIONS: in relation to the Manager's duties
                           under this agreement require the observance of any
                           instructions by any competent authority in relation
                           to the maintenance of safe working practices and
                           accident prevention;

                  11.2.5   REPORT ACCIDENTS: in relation to the Manager's duties
                           under this agreement require all accidents resulting
                           in injuries to personnel to be reported to CNI in
                           accordance with prescribed procedures.

         11.3     INDEMNITY: The Manager shall indemnify and keep indemnified
                  CNI from all costs, damages, fines, penalties, loss and
                  expense incurred or suffered by any of them in respect of any
                  breach of the HSE Act, or any conviction of or proceedings
                  instigated against any of them pursuant to the HSE Act
                  directly related to a breach by the Manager of any of the
                  provisions set out in subclause 11.1 and 11.2. Provided that
                  this indemnity will not apply where any claim under this
                  indemnity against the Manager arises as a result of any act or
                  omission by CNI, where the Manager was acting consistently
                  with, either any request of CNI, or directions from CNI. Each
                  party will take all reasonable steps to mitigate any costs,
                  damages, fines, penalties, loss or expense it may incur.

         11.4     NOTIFICATION OF BREACH: If the Manager becomes aware that it
                  is or may be in breach, or is likely to be in breach of any of
                  the provisions in subclause 11.1 or 11.2, the Manager shall
                  promptly notify CNI of such a breach or anticipated breach. In
                  relation to any breach or anticipated breach in connection
                  with any of the provisions in subclause 11.1 or 11.2 the
                  Manager shall follow the reasonable directions, if any, of CNI
                  to avoid, remedy or mitigate such breach or anticipated
                  breach.

         11.5     INDUCTION: All of the Manager's employees, agents,
                  contractors, subcontractors, invitees, visitors or licensees
                  shall undergo a safety induction and an adequate safety
                  training programme before commencing work on the Land. The
                  Manager shall promptly advise CNI in writing of any major
                  changes to any of its safety policies and procedures. The
                  Manager shall be responsible for ensuring that its affected
                  employees, agents, contractors, subcontractors, invitees,
                  visitors or licensees are advised of any such changes.

         11.6     FIRE TRAINING: The Manager shall procure that any contractor
                  engaged by the Manager in working in the forest shall make
                  their personnel available for fire training, suppression, and
                  standby as may be required by CNI, and at the cost of CNI with
                  such actual costs to be payable by CNI with 15 Business Days
                  of receipt of an appropriate invoice.
<PAGE>

Management Agreement                                                     Page 32

12.      HISTORIC AND SACRED PLACES

         12.1     PRESERVE AND SAFEGUARD: The Manager shall preserve and
                  safeguard to the best of its ability those graves of the Maori
                  people, monuments, sacred places and places of historical
                  significance in or on the Land of which the Manager has
                  received notice.

         12.2     DISCOVERIES: If the Manager or the Manager's agents discover
                  any human bones in or on the Land such discovery shall be
                  notified to CNI as soon as possible and the Manager may then,
                  at its discretion, provide the Maori people an opportunity for
                  the bones to be re-interred in appropriate burial grounds.
                  Pending re-interment, or any decision not to re-inter, the
                  bones shall be regarded and treated with respect and proper
                  provisions shall be made with all due reverence for their
                  interim safety and custody.

13.      HISTORIC PLACES AND ARTEFACTS

         If any Historic Place or Maori artifact is discovered by the Manager or
         its employees, agents, contractors, subcontractors, invitees, visitors
         or licensees, then, subject to the provisions of the Historic Places
         Act 1993 and the Antiquities Act 1975, the Manager shall take all
         practicable steps to preserve, safeguard and protect the Historic Place
         or the artifact and shall inform CNI as soon as possible.

14.      FORCE MAJEURE

         14.1     DELAY OR FAILURE TO PERFORM: No party shall be liable for
                  failure to perform or delay in performing hereunder if the
                  cause of such failure or delay is outside or beyond the
                  reasonable control of the party failing to perform (including
                  but without derogating from the generality of the foregoing:
                  fire, wind, flood, earthquake, volcanic eruption, public
                  disorders, riot, war, embargoes, transport restrictions and
                  forest fire prevention restrictions. For the purposes of this
                  clause the solvency of a party shall be deemed to be within
                  that party's reasonable control. Further nothing in this
                  section shall excuse payment of any money due or which becomes
                  due under this agreement where the obligation to pay arose
                  before the occurrence of the event of force majeure.

         14.2     SUSPENSION OF PERFORMANCE LIMITED: Any suspension of
                  performance by reason of this section shall be limited to the
                  period during which the force majeure exists.

         14.3     NOTICE: The party claiming force majeure shall as soon as
                  possible and in any event no later than five (5) Business Days
                  after it becomes aware of the happening of the event causing
                  the failure give notice to the other of the happening of the
                  event causing the failure and shall furnish all reasonably
                  available information detailing the cause or event and give an
                  estimate of the period of time required to remedy the failure
                  (if such remedy is deemed practicable). Failure to give such
                  notice shall prevent the party from claiming that the event
                  gives rise to force majeure until notice has been given.
<PAGE>

Management Agreement                                                     Page 33

         14.4     PRIOR OBLIGATIONS: No situation of force majeure pursuant to
                  this section shall relieve either party of any duty or
                  obligation under this agreement which relates to a period
                  prior to the existence of the situation of force majeure and
                  had arisen or been incurred prior to the existence of the
                  situation of force majeure.

         14.5     SUSPENSION AND TERMINATION:

                  14.5.1   SUSPENSION: If an event beyond the Manager's
                           reasonable control prevents the Manager from carrying
                           out any obligations under this agreement, CNI may
                           immediately suspend this agreement (or the relevant
                           part of it), on providing written notice of such
                           suspension to the Manager, and appoint a replacement
                           manager. Such suspension shall continue until CNI is
                           reasonably satisfied that the Manager is capable of
                           resuming its responsibilities under this agreement.
                           Notwithstanding that the agreement or part of it has
                           been suspended, the Management Fees (and the
                           Operating Costs as applicable where only part of the
                           agreement is suspended and the Manager is still
                           incurring Operating Costs) payable by CNI to the
                           Manager will continue to be payable in full in
                           accordance with the relevant provisions of this
                           agreement as if this agreement (or part of it) had
                           not been suspended.

                  14.5.2   TERMINATION - MANAGER: If an event beyond the
                           Manager's reasonable control prevents the Manager
                           from carrying out any obligation under this agreement
                           for a continuous period of twenty (20) Business Days,
                           then CNI may cancel this agreement immediately upon
                           providing written notice to the Manager provided that
                           prior to termination CNI must pay to the Manager
                           reasonable out of pockets costs arising from the
                           early termination of this agreement. The Manager must
                           take all reasonable steps to minimise such costs. In
                           that case, clauses 6.4 and 6.5 will apply.

                  14.5.3   TERMINATION - CNI: If an event beyond CNI's
                           reasonable control prevents CNI from carrying out any
                           obligation under this agreement for a continuous
                           period of 40 Business Days, then the Manager may
                           cancel this agreement by giving 10 Business Days
                           written notice to CNI. In that case clause 6.4 and
                           6.5 will apply.

15.      ASSIGNMENT

         15.1     CONSENT: This agreement shall be binding upon and inure to the
                  benefit of the parties, their respective successors and
                  permitted assigns. The parties recognise that CNI has
                  contracted for the Manager's services as provided in this
                  agreement because of certain special and unique abilities of
                  the Manager and that the Manager has agreed to provide such
                  services due to special and unique characteristics of CNI. For
                  this reason, a party may not assign its rights or transfer its
                  obligations under this agreement to any other person or entity
                  without the prior

<PAGE>

Management Agreement                                                     Page 34

                  written consent of the other party. Such consent is not to be
                  unreasonably or arbitrarily withheld.

         15.2     DEED: In the case of request for assignment the assignor shall
                  obtain the execution by the proposed assignee of a deed of
                  covenant to be prepared by the other party's solicitors at the
                  assignor's costs whereby the proposed assignee covenants with
                  the other party to observe and perform all the terms of this
                  agreement to be observed and performed on the part of the
                  assignor.

         15.3     FORESTRY RIGHT CONTEMPORANEOUS: For the avoidance of doubt,
                  the parties agree that if requested by the Manager within five
                  Business Days of being notified by CNI of its intention to
                  transfer or assign its right or interest in the Forestry Right
                  (in part or whole), CNI shall use its reasonable endeavours to
                  persuade the proposed assignee/transferee to allow the Manager
                  to continue to provide to the assignee/transferee management
                  services in respect of the Plantation Assets of the type set
                  out in this agreement on the terms set out in clause 9.2 of
                  the Forestry Right.

16.      RESOLUTION OF DISPUTES

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

         16.1     NEGOTIATE: A party claiming that a dispute has arisen
                  concerning this agreement must give notice to the other party
                  specifying the matter in dispute. The parties will use their
                  best endeavours to resolve the dispute by negotiation in good
                  faith. The parties will attend at least one meeting to discuss
                  and attempt to resolve the dispute as a condition precedent to
                  taking any other steps concerning the dispute (including but
                  not limited to commencing any legal proceedings other than an
                  application for injunctive relief). The attendees at such
                  meeting will include the Managing Director of UBS Timber
                  Investors (or nominee) and the Chief Executive Officer of
                  Fletcher Challenge Forests Limited (or nominee). All
                  discussions will be without prejudice and will not be referred
                  to in any later proceedings.

         16.2     ARBITRATION: If the dispute cannot be resolved in accordance
                  with clause 16.1 within ten (10) Business Days after the date
                  of the notice referred to in clause 16.1, then any party may
                  then require (by written notice to the other party) the
                  dispute to be referred to arbitration. If this clause is
                  invoked then the following shall apply.

                  16.2.1   ARBITRATION ACT: The dispute will be referred to
                           arbitration by a sole arbitrator under the provisions
                           of the Arbitration Act 1996. The arbitrator will be
                           agreed upon between the parties within ten (10)
                           Business Days of written notice, or failing
                           agreement, by the President of the New Zealand Law
                           Society or its successor body, or any nominee of the
                           President. In either case, the arbitrator must not be
                           a person who has

<PAGE>

Management Agreement                                                     Page 35

                           participated in any informal dispute resolution
                           procedure in respect of the dispute. Any party may
                           request the appointment of an expert to sit with the
                           arbitrator but any such expert shall have an advisory
                           role only and shall not have the authority to make a
                           binding decision. Each of the parties may make
                           submissions to the arbitrator as to the relevant
                           skills and expertise of an appropriate expert, but
                           the selection of an appropriate expert is ultimately
                           at the arbitrator's sole discretion.

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

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

                  16.2.4   AWARD OF INTEREST: The arbitrator may award interest
                           upon any amount due and payable under his or her
                           award at such rate and for such period as he or she
                           considers just, down to the date of the award.

         16.3     PARTIES TO CONTINUE TO PERFORM: Subject to the provisions of
                  clause 6.2, pending resolution of any dispute or difference,
                  the parties shall continue to perform their respective
                  obligations pursuant to the provisions of this agreement.

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

17.      CONFIDENTIALITY

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

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

         17.2     USE: use for itself; or

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

         any Confidential Information except:

         17.4     LEGAL REQUIREMENT: subject to clause 17.10, as required by law
                  or regulatory body (including any stock exchange);

         17.5     PUBLIC KNOWLEDGE: as is already or becomes public knowledge,
                  otherwise than as a result of a breach by the party disclosing
                  or using that Confidential Information of any provision of
                  this agreement;

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

<PAGE>

Management Agreement                                                     Page 36

         17.7     LENDERS AND UNDERWRITERS: as required to communicate and make
                  disclosure to institutional lenders to and underwriters for,
                  or potential institutional lenders to and underwriters for,
                  the Manager or CNI, provided that the relevant party shall
                  ensure compliance by such persons with this clause 17 and
                  shall be liable for any breach of such obligations by such
                  persons and, in the case of potential institutional lenders or
                  underwriters, to procure the return of all such information if
                  the lending to or underwriting is not consummated;

         17.8     AFFILIATES AND ADVISERS: as required to communicate and make
                  disclosure to Affiliates of the parties or the parties' or the
                  Affiliates' respective advisers who have a legitimate need to
                  know the information in order to perform activities connected
                  with this agreement or the Related Agreements, and provided
                  that the relevant party shall ensure compliance by such
                  persons with this clause 17 and shall be liable for any breach
                  of such obligations by such persons; or

         17.9     OTHER: to the extent reasonably required by this agreement
                  (and, without limiting the effect of this clause, a party may
                  disclose Confidential Information only to those of its
                  officers, employees or professional advisers, on a "need to
                  know" basis, as is reasonably required for the implementation
                  of this agreement).

         17.10    CONSULTATION: In the event that one party (the first party) is
                  required by law or stock exchange reporting obligations to
                  disclose Confidential Information, such disclosure may be made
                  only after the other party (the second party) has been
                  notified and, subject to timing obligations imposed by law or
                  the relevant stock exchange, has been given every reasonable
                  opportunity to consult with the first party as to timing and
                  content of any such disclosure. In consulting with the second
                  party, the first party shall act in good faith and give
                  reasonable consideration to the second party's requests.

         17.11    MANAGER'S SAFEGUARDS: If reasonably requested by CNI, the
                  Manager will document to the reasonable satisfaction of CNI
                  the internal safeguards it will put in place to meet its
                  confidentiality obligations under this clause 17.

18.      SEVERABILITY

         Any provision of this agreement which is prohibited or unenforceable in
         any jurisdiction shall be ineffective as to such jurisdiction to the
         extent of such prohibition or unenforceability without invalidating the
         remaining provisions of this agreement or affecting the validity or
         unenforceability of such provision in any other jurisdiction.

19.      LIMITED RECOURSE

         The Manager undertakes and agrees as follows.

         19.1     CNI'S ASSETS: The Manager will look only to the assets held by
                  CNI or the benefit of any insurance maintained by CNI to
                  satisfy the obligations or liabilities of CNI to the Manager
                  hereunder or otherwise.

<PAGE>

Management Agreement                                                     Page 37

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

         19.3     NO ACTIONS OR PROCEEDINGS: The Manager shall not commence any
                  action or proceeding against any of the persons referred to in
                  sub clause 19.2 for the purpose of enforcing the obligations
                  of CNI.

20.      APPLICABLE LAW

         20.1     NEW ZEALAND LAW: The law applicable to this agreement
                  including all submissions to arbitration shall be the law of
                  New Zealand and the parties irrevocably and unconditionally
                  agree to submit to be and be bound by the jurisdiction of the
                  courts and tribunals of New Zealand.

         20.2     NON EXCLUSIVE JURISDICTION: The submission to jurisdiction in
                  clause 20.1 does not and is not to be construed to limit the
                  rights of a party to take proceedings against the other party
                  in another court of competent jurisdiction, nor is the taking
                  of proceedings in one or more jurisdictions to preclude the
                  taking of proceedings in another jurisdiction, whether
                  concurrently or not.

21.      NOTICES

         21.1     DELIVERY OF NOTICE: All notices and other communications
                  required or permitted under this agreement shall be in
                  writing. Any written notice required under this agreement must
                  be signed by a duly authorised senior representative of any
                  party giving the notice and will be deemed validly given if:

                  21.1.1   PERSONAL DELIVERY: delivered personally;

                  21.1.2   DOMESTIC POST: sent by prepaid post; or

                  21.1.3   FACSIMILE: sent by facsimile transmission,

                  addressed to the recipient at the address or facsimile number
                  set out below (as applicable) or to any other address or
                  facsimile number that a party may notify to the other parties
                  by like notice.

                  CNI:  if to CNI to:

                  CNI Timber Operating Company Limited
                  C/- UBS Warburg NZ Equities Limited
                  P O Box 45
                  Auckland 1000
                  Level 23 Qantas Building
                  191 Queen Street
                  Auckland
                  For: Michael Edgar

<PAGE>

Management Agreement                                                     Page 38

                  Facsimile: (09) 913 4751

                  With a copy to:

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

                  and:

                  Foley Hoag LLP
                  155 Seaport Blvd
                  Boston, MA 02110
                  United States of America
                  For: Jim Smith
                  Facsimile: (001) 617 832 7000

                  THE MANAGER: if to the Manager, to:

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

                  With a copy to:

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

         21.2     TIME OF RECEIPT: No written communication will be effective
                  until received. Without limiting any other ways for a party to
                  prove that another party has

<PAGE>

Management Agreement                                                     Page 39

                  received a notice, a notice or other written communication
                  under this agreement, will be treated as received:

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

                  21.2.2   PREPAID POST: if sent by prepaid post three (3)
                           Business Days (if posted within New Zealand to an
                           address in New Zealand), or ten (10) Business Days
                           (if posted by prepaid airmail from country to
                           country) after the date of posting;

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

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

                  21.2.5   FACSIMILE: if sent by facsimile, on the sender's
                           receipt of a transmission report indicating that the
                           facsimile was sent in its entirety to the recipient's
                           facsimile number;

                  but, if the delivery or receipt is not on a Business Day or
                  after 5.00pm (local time) on any Business Day, the notice will
                  be treated as received by the recipient at 9.00am (local time)
                  on the next Business Day.

22.      COPIES OF NOTICES

         If a party is required by any term of this agreement to give a copy of
         a notice or other communication to a third party, the failure to give
         the copy of it to the third party will not affect the effectiveness of
         that notice or communication to a party.

23.      THIRD PARTY NOTICES

         Each party shall promptly provide to the other party a copy of every
         notice it receives from a third party in respect of the Plantation
         Assets to the extent that it is relevant to this agreement and/or the
         Related Agreements or any part thereof. Notwithstanding the above, the
         provisions of this clause shall not apply to any notice received by any
         party from any Affiliate of such party.

24.      ENTIRE AGREEMENT

         This agreement together with the Sale and Purchase Agreement, Forestry
         Right, Infrastructure Agreement and Wood Supply Agreement contain the
         entire agreement between the parties in connection with the subject
         matter hereof and supersede and replace all prior negotiations,
         agreements or representations, whether oral or written, between them
         with respect thereto.
<PAGE>

Management Agreement                                                     Page 40

25.      MODIFICATION

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

26.      WAIVER

         No provision of this agreement may be waived except in writing by the
         party granting the waiver and then only in the specific instance and
         for the specific purpose for which given.

27.      COUNTERPARTS

         27.1     GENERAL: This agreement may be executed in one or more
                  counterparts, each of which will be deemed to be an original,
                  but all of which together will constitute only one and the
                  same agreement.

         27.2     FACSIMILE EXCHANGE: The parties acknowledge that this
                  agreement may be executed on the basis of any exchange of
                  facsimile copies and confirm that their respective execution
                  of this agreement by such means shall be a valid and
                  sufficient execution. The parties acknowledge that any
                  execution of this agreement by facsimile will be followed by
                  execution of the engrossments of this agreement.

28.      FURTHER ASSURANCES

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

29.      COSTS

         Except as expressly provided elsewhere in this agreement, each party is
         to bear its own costs in connection with the preparation, negotiation
         and execution of this agreement and the Related Agreements and other
         documentation contemplated by this agreement.

30.      NO PARTNERSHIP

         None of the provisions of this agreement are deemed to constitute a
         partnership or joint venture between the parties and neither party has
         any authority to bind or to pledge the credit of the other party in any
         way except as expressly provided in this agreement.

                        [SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

Management Agreement                                                     Page 41

In witness of which this management agreement has been executed.

SIGNED on behalf of
FLETCHER CHALLENGE FORESTS
INDUSTRIES LIMITED

By:

<TABLE>
<S>                                             <C>
__________________________________________      __________________________________________
Full name of director/authorised signatory      Signature of director/authorised signatory

__________________________________________      __________________________________________
Full name of director/authorised signatory      Signature of director/authorised signatory
</TABLE>

WITNESS:
(if other than two directors sign)

__________________________________________
Signature of witness

__________________________________________
Full name of witness

__________________________________________
Occupation of witness

___________________________________________
Address of witness
<PAGE>

Management Agreement                                                     Page 42

SIGNED by CNI TIMBER OPERATING
COMPANY LIMITED by:

_______________________________                     ____________________________
Full name of attorney                               Signature of attorney

WITNESS:
(if other than two directors sign)

__________________________________________
Signature of witness

__________________________________________
Full name of witness

__________________________________________
Occupation of witness

__________________________________________
Address of witness

<PAGE>

                                FIRST SCHEDULE

                               PLANTATION ASSETS

         A.       Trees

         B.       The rights conferred to CNI under the Forestry Right

         C.       Improvements

         D.       Stands

<PAGE>

                                  APPENDIX I

                                FORESTRY RIGHT

<PAGE>

                                  APPENDIX II

            UNDERTAKING FROM FLETCHER CHALLENGE INDUSTRIES LIMITED

In consideration of CNI Timber Operating Company Limited entering into the
Management Agreement ("the Agreement") with Fletcher Challenge Forests
Industries Limited, Fletcher Challenge Industries Limited agrees to grant a
guarantee to CNI Timber Operating Company Limited of Fletcher Challenge Forests
Industries Limited's obligations and liability under the Agreement and the
Related Agreements in the form attached and undertakes to CNI Timber Operating
Company Limited that during the term of the Forestry Right Fletcher Challenge
Industries Limited shall:

1.       ensure that Fletcher Challenge Industries Limited maintains net assets
         in any year of the Forestry Right in an amount not less than $200
         million;

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

3.       provide to CNI Timber Operating Company Limited a certificate from the
         Chief Financial Officer of Fletcher Challenge Forests Limited, issued
         no later than five months after the end of the financial year of
         Fletcher Challenge Forests Limited, confirming that as at the end of
         that financial year the net assets of Fletcher Challenge Industries
         Limited are no less than $200 million;

4.       no later than the end of December in each year provide to CNI Timber
         Operating Company Limited a copy of the unaudited financial statements
         of Fletcher Challenge Industries Limited.

5.       Fletcher Challenge Industries Limited represents and warrants to CNI on
         execution and delivery of this undertaking and the guarantee given
         under this undertaking that this undertaking and the guarantee given
         under this undertaking:

         (a)      will have been validly authorised by all necessary action on
                  the part of Fletcher Challenge Industries Limited;

         (b)      will not contravene any law binding on it;

         (c)      will not contravene its incorporation documents;

         (d)      will not contravene the provisions of or constitute a default
                  under any other agreement to which it is a party;

         (e)      will constitute legal, valid and binding obligations
                  enforceable against Fletcher Challenge Industries Limited in
                  accordance with their respective terms;

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

<PAGE>

         under this undertaking and perform its obligations under this
         undertaking and the guarantee given under this undertaking.

All calculations of net assets required to be carried out pursuant to this
undertaking must be made using those accounting principles used for the
preparation of the financial statements of Fletcher Challenge Forests Limited

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

EXECUTED AS A DEED by Fletcher Challenge Industries Limited by:

<TABLE>
<S>                                             <C>
__________________________________________      __________________________________________
Full name of director/authorised signatory      Signature of director/authorised signatory

__________________________________________      __________________________________________
Full name of director/authorised signatory      Signature of director/authorised signatory
</TABLE>

Witness:
(if other than two directors sign)

____________________________________
Signature of witness

____________________________________
Full name of witness

____________________________________
Occupation of witness

____________________________________
Address of witness

<PAGE>

DEED OF GUARANTEE AND INDEMNITY

BETWEEN

FLETCHER CHALLENGE INDUSTRIES LIMITED

AND

CNI TIMBER OPERATING COMPANY LIMITED

                                                         [SIMPSON GRIERSON LOGO]

<PAGE>

Execution Version Tahorakuri

                               TABLE OF CONTENTS

<TABLE>
<S>    <C>                                                            <C>
1.     INTERPRETATION.............................................     1
2.     GUARANTEE..................................................     2
3.     LIABILITY NOT TO BE AFFECTED...............................     3
4.     PAYMENTS...................................................     4
5.     SUSPENSION OF RIGHTS.......................................     5
6.     REPRESENTATIONS AND WARRANTIES.............................     6
7.     UNDERTAKINGS...............................................     6
8.     COSTS......................................................     7
9.     RELEASE....................................................     7
10.    SET-OFF....................................................     7
11.    NOTICES....................................................     7
12.    CURRENCY INDEMNITY.........................................     9
13.    GENERAL....................................................    10
14.    CONFIDENTIALITY............................................    11
</TABLE>

<PAGE>

Execution Version Tahorakuri

GUARANTEE AND INDEMNITY dated the                            2003

PARTIES

1.       FLETCHER CHALLENGE INDUSTRIES LIMITED ("Guarantor")

2.       CNI TIMBER OPERATING COMPANY LIMITED ("Beneficiary")

THIS DEED WITNESSES:

1.       INTERPRETATION

         In this Guarantee, unless the context indicates otherwise:

         1.1      DEFINITIONS:

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

                  "CONFIDENTIAL INFORMATION" means any information disclosed by
                  the Guarantor to the Beneficiary on the express basis that
                  such information is confidential;

                  "DEBTOR" means Fletcher Challenge Forests Industries Limited;

                  "DEFAULT INTEREST RATE" means default interest rate as that
                  term is defined in clause 1 of an agreement for sale and
                  purchase of trees between the Debtor and Teal 3 Limited dated
                  15 January 2003 ("Agreement");

                  "GUARANTEE" means this guarantee and indemnity;

                  "GUARANTEED MONEY" means all money which the Debtor presently
                  is, or at any time becomes, actually or contingently liable to
                  pay to the Beneficiary under the Agreement and any of the
                  Related Agreements;

                  "GUARANTEED OBLIGATIONS" means all obligations (whether
                  present or future) of the Debtor to the Beneficiary under the
                  Agreement and any of the Related Agreements;

         1.2      GENERAL:

                  (a)      words denoting the singular include the plural and
                           vice versa;

                  (b)      words denoting any gender includes all genders;
<PAGE>

                                                                          Page 2

                  (c)      references to any document (however described) will
                           include references to that document as modified,
                           varied, novated, supplemented or replaced from time
                           to time;

                  (d)      headings and the table of contents are for
                           convenience only and will not affect interpretation;
                           and

                  (e)      capitalised terms not defined in this Guarantee shall
                           have the meaning ascribed to them in the Agreement.

2.       GUARANTEE

         2.1      GUARANTEE: The Guarantor guarantees to the Beneficiary the due
                  and punctual payment by the Debtor of the Guaranteed Money and
                  the due and punctual performance of the Guaranteed
                  Obligations.

         2.2      PAYMENT ON DEFAULT: If the Debtor defaults in the due and
                  punctual payment of any of the Guaranteed Money, the Guarantor
                  will pay that money to the Beneficiary on demand.

         2.3      PRINCIPAL DEBTOR: The Guarantor's obligations under this
                  Guarantee are:

                  (a)      principal obligations and may be enforced against the
                           Guarantor without the Beneficiary being required to
                           exhaust any remedy it may have against the Debtor or
                           to enforce any security the Beneficiary may hold with
                           respect to the Guaranteed Money; and

                  (b)      unconditional and irrevocable.

         2.4      CONTINUING GUARANTEE: This Guarantee is a continuing guarantee
                  for the Guaranteed Money. It is not discharged by any payment
                  or anything else, and remains in full force until the
                  Beneficiary has executed and delivered a release to the
                  Guarantor.

         2.5      REINSTATEMENT: If any payment received by the Beneficiary on
                  any account of the Guaranteed Money is or may be avoided by
                  law (despite a release having been executed and delivered by
                  the Beneficiary):

                  (a)      the Guarantor's obligation to have made such payment
                           will be deemed not to have been affected or
                           discharged under this Guarantee or any other security
                           given to the Beneficiary; and

                  (b)      the Beneficiary and the Guarantor will, in any such
                           case, be deemed to be restored to the position in
                           which each would have been, and will be entitled to
                           exercise the rights they respectively would have had,
                           if that payment had not been made.

<PAGE>

                                                                          Page 3

3.       LIABILITY NOT TO BE AFFECTED

         The liability of the Guarantor under this Guarantee shall not be
         abrogated, prejudiced or affected by any of the following:

         3.1      GRANTING OF TIME ETC: the granting of time, credit or any
                  indulgence or other concession to the Debtor or the Guarantor
                  or any other guarantor of the Debtor or to any other person by
                  the Beneficiary;

         3.2      FAILURE TO DEMAND: any failure by the Beneficiary to present,
                  demand or give notice in respect of any negotiable instrument;

         3.3      COMPOUNDING ETC: any compounding, compromise, release,
                  abandonment, waiver, variation, relinquishment or renewal of
                  any agreements, securities, documents of title, assets, or of
                  the rights of the Beneficiary against the Debtor or the
                  Guarantor or any other person;

         3.4      ACTS OR OMISSIONS: anything done or omitted or neglected to be
                  done by the Beneficiary in exercise of the authorities, powers
                  and discretions vested in the Beneficiary by this Deed;

         3.5      SECURITY OR LAW: any security or law or any other dealing,
                  matter or thing which but for this provision might operate to
                  abrogate, prejudice or affect the Guarantee (it being the
                  intention of the parties that the Guarantee and obligations of
                  the Guarantor shall be absolute and unconditional in any and
                  all circumstances);

         3.6      OTHER LIABILITY CEASING: the liability of any other guarantor
                  of the Debtor or any other person ceasing from any cause
                  whatsoever (including release or discharge by the
                  Beneficiary);

         3.7      JOINT OR SIMILAR GUARANTEES: any other person joining in this
                  or giving any similar Guarantee and/or indemnity;

         3.8      LIQUIDATION OF DEBTORS ETC: the liquidation or bankruptcy of
                  the Debtor or any other guarantor of the Debtor or any other
                  person;

         3.9      INCOMPETENCE OF OTHERS ETC: any other guarantor of the Debtor
                  or any other person being incompetent to give any other
                  Guarantee or any collateral security or failing to become
                  legally bound in whole or in part under any of them
                  respectively;

         3.10     SECURITIES VOID ETC: any security from time to time held or
                  taken in respect of the indebtedness or obligations of the
                  Debtor or the Guarantor or any other guarantor of the Debtor
                  or any other person to the Beneficiary being void, defective
                  or informal or being released, partially released, discharged,
                  partially discharged or varied in any way;

         3.11     FAILURE TO PROVIDE SECURITY: failure of the Debtor or the
                  Guarantor or any other guarantor of the Debtor or any other
                  person to provide any security which has been stipulated by
                  the Beneficiary;
<PAGE>

                                                                          Page 4

         3.12     VARIATIONS: any variation of this Guarantee and Indemnity
                  and/or any other Guarantee and/or indemnity given in relation
                  to any of the Guaranteed Money and/or any of the Guaranteed
                  Obligations;

         3.13     FAILURE TO GUARANTEE ETC: any person intended to Guarantee
                  payment of the Guaranteed Money and/or performance of the
                  Guaranteed Obligations failing or refusing to do so;

         3.14     CLAIMS: any claim that the Beneficiary has not fully realised
                  all securities held by it in respect of the Guaranteed Money
                  and/or the Guaranteed Obligations or has not realised any of
                  such securities in a manner so as to maximise their realisable
                  value; or

         3.15     OTHER MATTERS: any other matter or thing whatsoever.

4.       PAYMENTS

         4.1      PAYMENT: The Guarantor will make each payment to the
                  Beneficiary under this Guarantee in funds which are freely
                  transferable and immediately available for disbursement on the
                  day of payment.

         4.2      NO DEDUCTIONS: All payments by the Guarantor to the
                  Beneficiary under this Guarantee will be made free of any
                  restriction or condition and, except to the extent required by
                  law, without deduction or withholding of any nature whether by
                  way of set-off, counterclaim or otherwise.

         4.3      GROSS UP: If:

                  (a)      the Guarantor is required by law to make any
                           deduction or withholding from any amount paid or
                           payable by it to the Beneficiary under this
                           Guarantee; or

                  (b)      the Beneficiary is required by law to make any
                           deduction, withholding, or payment on, or calculated
                           by reference to, any amount received or receivable by
                           it under this Guarantee for or on account of tax
                           (except on account of tax on overall net income of
                           the Beneficiary) or otherwise,

                  then the amount payable by the Guarantor in respect of which
                  such deduction, withholding or payment is required to be made
                  will be increased to the extent necessary to ensure that,
                  after the making of such deduction, withholding or payment,
                  the Beneficiary receives and retains (free from any liability
                  in respect of any such deduction, withholding or payment) a
                  net amount equal to the amount which it would have received
                  and so retained had no such deduction, withholding or payment
                  been required to be made.

<PAGE>

                                                                          Page 5

         4.4      NOTIFY BENEFICIARY: The Guarantor will:

                  (a)      notify the Beneficiary immediately if it is required
                           to make any deduction or withholding;

                  (b)      ensure that such deduction or withholding does not
                           exceed the legal minimum; and

                  (c)      pay the amount required to be deducted or withheld to
                           the applicable taxation or other authority before the
                           date on which penalties attach.

         4.5      TAX RECEIPTS: The Guarantor will deliver to the Beneficiary
                  promptly, on receipt, a copy of the receipt issued by the
                  applicable taxation or other authority or other evidence
                  satisfactory to the Beneficiary evidencing that such deduction
                  or withholding has been made.

         4.6      INTEREST: The Guarantor will pay to the Beneficiary on demand
                  interest on all amounts payable by the Guarantor from the due
                  date to the date of actual receipt by the Beneficiary. Such
                  interest will accrue and be calculated on a daily basis (after
                  as well as before judgment) at the Default Interest Rate.
                  Interest will be compounded at monthly intervals.

5.       SUSPENSION OF RIGHTS

         5.1      Until the Guaranteed Money has been paid and discharged in
                  full, the Guarantor will not, without the consent of the
                  Beneficiary:

                  (a)      take any steps to enforce a right or claim against
                           the Debtor in respect of any money paid by the
                           Guarantor to the Beneficiary under this Guarantee; or

                  (b)      have or exercise any rights in competition with the
                           Beneficiary (including any right of subrogation or
                           indemnity).

         5.2      BENEFICIARY AUTHORISED TO PROVE: Until the Beneficiary shall
                  have received one hundred cents in the dollar in respect of
                  the indebtedness of the Debtor in relation to the Guaranteed
                  Money, the Guarantor authorises the Beneficiary to:

                  (a)      prove or claim for all money which the Guarantor has
                           paid or are otherwise owing to the Guarantor and have
                           not been repaid by the Debtor or any other guarantor
                           of the Debtor or any other person; and

                  (b)      retain and to carry to a suspense account and
                           appropriate at the discretion of the Beneficiary any
                           amount received.

         5.3      GUARANTOR'S WAIVER OF RIGHTS: So far as is necessary to give
                  effect to anything contained or implied in this Guarantee and
                  to ensure that the whole of the Guaranteed Money and
                  Guaranteed Obligations are paid or

<PAGE>

                                                                          Page 6

                  satisfied or performed in full, the Guarantor waives in favour
                  of the Beneficiary all rights whatever against the
                  Beneficiary, the Debtor, any other guarantor of the Debtor or
                  any other person or their or its estate and assets. Such
                  waiver extends to and includes rights of subrogation,
                  contribution and marshalling.

6.       REPRESENTATIONS AND WARRANTIES

         6.1      REPRESENTATIONS: The Guarantor represents and warrants to the
                  Beneficiary that:

                  (a)      the Guarantor has taken all necessary corporate
                           action to authorise the performance of, and
                           compliance with, its obligations under this
                           Guarantee; and

                  (b)      the Guarantor has not taken any security interest or
                           benefit from the Debtor for or in consideration of
                           assuming the obligations contained under this
                           Guarantee or any part of them.

                  (c)      the Guarantor is solvent and able to pay the
                           Guarantor's indebtedness as it falls due.

         6.2      NO RELIANCE: The Guarantor confirms that it has not executed
                  this Guarantee as a result of or in reliance on any promise,
                  representation, statement or information of any kind or nature
                  whatever given by the Beneficiary.

         6.3      NO DISCLOSURE: Subject to the Agreement and the Related
                  Agreements, the Guarantor confirms that the Beneficiary was
                  not, before execution of this Guarantee and is not in the
                  future, liable to do anything (including disclosing any
                  information to the Guarantor) relating to the affairs of the
                  Debtor or any transactions of the Debtor with the Beneficiary.

         6.4      CONTINUING: The representations and warranties in this clause
                  6 will be deemed to be repeated continuously at all times
                  during which this Guarantee remains in effect by reference to
                  the facts and circumstances then existing.

7.       UNDERTAKINGS

         The Guarantor will:

         7.1      INFORMATION: provide the Beneficiary within five Business Days
                  of receiving a reasonable request from the Beneficiary with
                  such information relating to its financial condition,
                  business, assets or affairs as is relevant to the performance
                  of its obligations under this Guarantee provided however that
                  the Guarantor is under no obligation to provide information
                  that it considers, in its absolute discretion, disclosure of
                  which would be a breach of any applicable Stock Exchange
                  Listing Rules; and
<PAGE>

                                                                          Page 7

         7.2      PROCEEDINGS: give the Beneficiary prompt notice of any
                  litigation, or proceedings affecting it or any of its
                  business, assets or affairs.

8.       COSTS

         The Guarantor will pay the Beneficiary on demand for all reasonable
         costs and expenses (including reasonable legal costs) in connection
         with:

         8.1      ENFORCEMENT: the enforcement of this Guarantee; and

         8.2      AMENDMENT ETC: any amendment to, or any consent, waiver or
                  release of this Guarantee requested by the Guarantor.

9.       RELEASE

         The Beneficiary will not be obliged to execute a release of this
         Guarantee unless it is satisfied that:

         9.1      Guaranteed Money Paid: all of the Guaranteed Money has been
                  paid; and

         9.2      NO PAYMENT AVOIDED: no payment affecting or relating to the
                  Guaranteed Money is or may be avoided under any law relating
                  to insolvency or otherwise.

10.      SET-OFF

         The Beneficiary is authorised to apply (without prior notice or demand)
         any credit balance of the Guarantor on any account or any money owed by
         the Beneficiary to the Guarantor towards satisfaction of the Guaranteed
         Money or any money due and unpaid by the Guarantor to the Beneficiary
         under this Guarantee.

11.      NOTICES

         11.1     DELIVERY OF NOTICE: All notices and other communications
                  required or permitted under this Guarantee shall be in
                  writing. Any written notice required under this Guarantee must
                  be signed by a duly authorised senior representative of any
                  party giving the notice and will be deemed validly given if:

                  (a)      delivered personally;

                  (b)      sent by prepaid post; or

                  (c)      sent by facsimile transmission,

                  addressed to the recipient at the address or facsimile number
                  set out below (as applicable) or to any other address or
                  facsimile number that a party may notify to the other parties
                  by like notice.

<PAGE>

                                                                          Page 8

                           BENEFICIARY:  If to the Beneficiary to:

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

                           With a copy to:

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

                           And with a copy to:

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

                           GUARANTOR: If to the Guarantor, to:

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

                           With a copy to:

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

<PAGE>

                                                                          Page 9

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

         11.2     TIME OF RECEIPT: No written communication will be effective
                  until received. Without limiting any other ways for a party to
                  prove that another party has received a notice, a notice or
                  other written communication under this Guarantee, will be
                  treated as received:

                  (a)      if delivered personally, when left with an apparently
                           responsible person at the recipient's address;

                  (b)      if sent by prepaid post three (3) Business Days (if
                           posted within New Zealand to an address in New
                           Zealand), or ten (10) Business Days (if posted by
                           prepaid airmail from country to country) after the
                           date of posting;

                  (c)      if sent by registered post, on acknowledgment of
                           receipt by or on the recipient's behalf; or

                  (d)      if sent by air courier delivery, on acknowledgment of
                           receipt by or on the recipient's behalf; or

                  (e)      if sent by facsimile, on the sender's receipt of a
                           transmission report indicating that the facsimile was
                           sent in its entirety to the recipient's facsimile
                           number;

                  but, if the delivery or receipt is not on a Business Day or
                  after 5.00pm (local time) on any Business Day, the notice will
                  be treated as received by the recipient at 9.00am (local time)
                  on the next Business Day.

         11.3     COPIES OF NOTICES: If a party is required by any term of this
                  Guarantee to give a copy of a notice or other communication to
                  a third party, the failure to give the copy of it to a third
                  party will not affect the effectiveness of that notice or
                  communication to a party.

12.      CURRENCY INDEMNITY

         If, at any time and for any reason, an amount payable by the Guarantor
         under or in respect of this Guarantee ("Relevant Amount") is converted
         into and received by the Beneficiary in a currency ("Payment Currency")
         other than the contractual currency of payment under the Agreement
         ("Contractual Currency") then the Guarantor will indemnify the
         Beneficiary and will hold the Beneficiary harmless against, and will
         pay the Beneficiary on demand the amount certified by the Beneficiary
         as being the amount required to compensate it for, the loss suffered as
         a result of any discrepancy between:

         12.1     CONTRACTUAL CURRENCY RECEIVED: the amount of the Contractual
                  Currency which the Lender receives on converting the amount it
                  receives in the Payment Currency into an amount in the
                  Contractual Currency in accordance with its usual practice;
                  and
<PAGE>

                                                                         Page 10

         12.2     RELEVANT AMOUNT: the Relevant Amount in the Contractual
                  Currency.

13.      GENERAL

         13.1     CERTIFICATE: The certificate of the Beneficiary as to any
                  amount or fact which might reasonably be expected to be within
                  the Beneficiary's knowledge will be prima facie evidence of
                  such matter or fact.

         13.2     SEVERABILITY: Any provision of this Guarantee which is
                  prohibited or unenforceable in any jurisdiction shall be
                  ineffective as to such jurisdiction to the extent of such
                  prohibition or unenforceability without invalidating the
                  remaining provisions of this Guarantee or affecting the
                  validity or unenforceability of such provision in any other
                  jurisdiction.

         13.3     DELAY: No delay, grant of time, release, compromise,
                  forbearance (whether partial or otherwise) or other indulgence
                  by the Beneficiary in exercising all or any of its rights,
                  remedies and powers or concerning any breach of any of the
                  Guarantor's obligations under this Guarantee is to:

                  (a)      operate as a waiver of or prevent the subsequent
                           enforcement of any such rights, remedies, powers or
                           obligations; or

                  (b)      be deemed a delay, grant of time, release,
                           compromise, forbearance (whether partial or
                           otherwise) or other indulgence of, or a waiver of,
                           any subsequent or other breach.

         13.4     MODIFICATION: This Guarantee may not be amended or modified
                  except by written agreement signed by the parties.

         13.5     WAIVER: Any consent, waiver or acknowledgement by the
                  Beneficiary under this Guarantee must be in writing and any
                  such consent, waiver or acknowledgment shall only be effective
                  in the specific instance and for the specific purpose given.

         13.6     ADDITIONAL TO OTHER SECURITIES: This Guarantee is in addition
                  to and not in substitution for any other security, undertaking
                  or right which the Beneficiary may now or subsequently have in
                  respect of the Guaranteed Money and/or the Guaranteed
                  Obligations. This Guarantee may be enforced against the
                  Guarantor or any other Guarantor of the Debtor without first
                  having recourse to any such securities, undertaking or rights
                  and without taking any steps or proceedings against the
                  Debtor. It may be enforced notwithstanding that any other
                  security, undertaking or right may be in whole or in part
                  unenforceable by reason of any rule of law or equity and
                  notwithstanding any laches, acts, omissions or delays on the
                  part of the Beneficiary.

         13.7     APPLICABLE LAW:

                  (a)      The law applicable to this Guarantee shall be the law
                           of New Zealand and the parties irrevocably and
                           unconditionally agree to

<PAGE>

                                                                         Page 11

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

                  (b)      The submission to jurisdiction in clause 13.7(a) does
                           not (and is not to be construed to) limit the rights
                           of the Beneficiary to take proceedings against the
                           Guarantor in another court of competent jurisdiction,
                           nor is the taking of proceedings in one or more
                           jurisdictions to preclude the taking of proceedings
                           in another jurisdiction whether concurrently or not.

14.      CONFIDENTIALITY

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

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

         14.2     USE: use for itself; or

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

         any Confidential Information except:

         14.4     LEGAL REQUIREMENT: subject to clause 14.10, as required by law
                  or regulatory body (including any stock exchange);

         14.5     PUBLIC KNOWLEDGE: as is already or becomes public knowledge,
                  otherwise than as a result of a breach by the Beneficiary of
                  any provision of this deed;

         14.6     AUTHORISED: as authorised in writing by the Guarantor;

         14.7     LENDERS AND UNDERWRITERS: as required to communicate with and
                  make disclosure to institutional lenders to and underwriters
                  for, or potential institutional lenders to and underwriters
                  for the Beneficiary provided that the Beneficiary shall ensure
                  compliance by such persons with this clause 14 and shall be
                  liable for any breach of such obligations by such persons, and
                  in the case of potential institutional lenders or
                  underwriters, to return all such information if the lending to
                  or underwriting is not consummated;

         14.8     AFFILIATES AND ADVISERS: as required to communicate with and
                  make disclosure to Affiliates of the Beneficiary or the
                  Beneficiary's or the Affiliates' respective advisers who have
                  a legitimate need to know the information in order to perform
                  activities connected with this deed, the Agreement or the
                  Related Agreements, and provided that the relevant party shall
                  ensure compliance by such persons with this clause 14 and
                  shall be liable for any breach of such obligations by such
                  persons; or

         14.9     OTHER: to the extent reasonably required by this deed (and,
                  without limiting the effect of this clause, the Beneficiary
                  may disclose

<PAGE>

                                                                         Page 12

                  Confidential Information only to those of its officers,
                  employees or professional advisers, on a "need to know" basis,
                  as is reasonably required for the implementation of this
                  deed).

         14.10    CONSULTATION: In the event that the Beneficiary is required by
                  law or stock exchange reporting obligations to disclose
                  Confidential Information, such disclosure may be made only
                  after the Guarantor has been notified and, subject to timing
                  obligations imposed by law or the relevant stock exchange, has
                  been given every reasonable opportunity to consult with the
                  Beneficiary as to timing and the content of any such
                  disclosure. In consulting with the Guarantor, the Beneficiary
                  shall act in good faith and give reasonable consideration to
                  the Guarantor's requests.

         14.11    THE BENEFICIARY'S SAFEGUARDS: If requested, the Beneficiary
                  will document to the reasonable satisfaction of the Guarantor
                  the internal safeguards it will put in place to meet its
                  confidentiality obligations under this clause 14.

Executed as a deed.

SIGNED by FLETCHER CHALLENGE
INDUSTRIES LIMITED by:

<TABLE>
<S>                                             <C>
_________________________________________       _________________________________________
Full name of director/authorised signatory      Signature of director/authorised signatory

_________________________________________       _________________________________________
Full name of director/authorised signatory      Signature of director/authorised signatory
</TABLE>

WITNESS:
(if other than two directors sign)

_______________________________________
Signature of witness

_______________________________________
Full name of witness

_______________________________________
Occupation of witness

_______________________________________
Address of witness

<PAGE>

                                                                         Page 13

SIGNED by CNI TIMBER OPERATING
COMPANY LIMITED by:

<TABLE>
<S>                                             <C>
_________________________________________       __________________________________________
Full name of director/authorised signatory      Signature of director/authorised signatory

_________________________________________       __________________________________________
Full name of director/authorised signatory      Signature of director/authorised signatory
</TABLE>

WITNESS:
(if other than two directors sign)

_______________________________________
Signature of witness

_______________________________________
Full name of witness

_______________________________________
Occupation of witness

_______________________________________
Address of witness

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