deed of amendment and restatement (capital notes trust deed) · 4. confirmation 4.1 except to the...

Execution version

Deed of Amendment and

Restatement (Capital Notes

Trust Deed)

relating to Fonterra Co-operative Group Limited

Dated 1 November 2016

1459502-4 – Deed of Amendment and Restatement (Capital Notes Trust Deed)

Parties

Fonterra Co-operative Group Limited (Fonterra)

The New Zealand Guardian Trust Company Limited, as supervisor appointed under the Trust Deed

(defined below) (Supervisor)

Background

Pursuant to clause 13.1(a) of the capital notes trust deed dated 22 March 2001 (Capital Notes Trust

Deed) as supplemented by the initial supplemental deed dated 24 October 2001 (Initial

Supplemental Deed) each as modified from time to time (together, the Trust Deed), the parties to this

deed have agreed to amend and restate the terms of the Trust Deed to comply with and to reflect the

Financial Markets Conduct Act 2013 and the Financial Markets Conduct Regulations 2014 on the

terms and conditions set out in this deed.

Covenants

1. Definitions

1.1 Unless otherwise defined in this deed, capitalised terms shall have the meaning given to

those terms in the Trust Deed.

1.2 In this deed Effective Date means 30 November 2016.

2. Amendment and restatement of Capital Notes Trust Deed

2.1 The Capital Notes Trust Deed shall, with effect on and from the Effective Date, be amended

and restated in the form set out in the schedule, so that the rights and obligations assumed

by the parties shall be governed by and construed in accordance with the terms set out in

the schedule.

3. Amendments to Initial Supplemental Deed

3.1 With effect on and from the Effective Date, the provisions of the Initial Supplemental Deed

shall be amended as follows:

(a) each reference to “the Trustee” or similar shall be deleted and replaced with “the

Supervisor”;

1459502-4 – Deed of Amendment and Restatement (Capital Notes Trust Deed) 2

(b) in clause 4.6, each reference to “the Securities Act 1978” shall be deleted and

replaced with “the FMCA”;

(c) in clause 5.2, the words “or Offer Document” shall be included after the words “any

Prospectus or Investment Statement”;

(d) in clause 8:

(i) the words “or in any case by email to the relevant specified email

address” shall be included in clause 8.2(a) after the words “principal

place of business”;

(ii) the addresses of the Company and the Supervisor in clause 8.2(b) shall

be deleted and replaced with the addresses set out in clause 17.1(c) and

17.1(d) of the Capital Notes Trust Deed (as amended and restated by this

deed);

(iii) the below shall be included as a new clause 8.3(d):

“(d) in the case of electronic mail, when actually received in

readable form,”;

(iv) the below shall be included in the last paragraph of clause 8.3 after the

words “provided that”:

“any notice given by mail or email to a Holder with no registered or

notified address in New Zealand shall be deemed to have been received

by that Holder 24 hours after that notice was posted or sent and”; and

(v) the words “or electronically” shall be included in clause 8.4(a) after the

words “telephonically or mechanically”; and

(e) in clause 9:

(i) the words “10 per centum” shall be deleted and replaced with “5 per

centum”; and

(ii) the words “(with such requisition signed by, or on behalf of, those

Holders)” added after the words “for the time being outstanding”.

4. Confirmation

4.1 Except to the extent set out in this deed, the provisions of the Capital Notes Trust Deed and

the Initial Supplemental Deed, and the various covenants and obligations of each of the

parties thereunder, are hereby ratified and confirmed and shall remain in full force and

effect.


4.2 For the purposes of clause 13.1(a) of the Trust Deed, the parties are of the opinion that the

amendments contemplated by this deed are:

(a) of a formal or technical nature;

(b) necessary to ensure that the tenor or nature of the obligations imposed upon the

Company correspond with or do not conflict with the obligations imposed on the

Company under or pursuant to applicable statutory provisions;

(c) to comply with the requirements or modification of the requirements of applicable

law; and

(d) in respect of the provisions for reporting to the Supervisor under the Trust Deed.

5. General

5.1 This deed may be signed in any number of counterparts, all of which together shall

constitute one and the same instrument. Any party may enter into this deed by signing any

such counterpart.

5.2 This deed is governed by and must be construed in accordance with the laws of New

Zealand and the parties submit to the non-exclusive jurisdiction of the courts of New

Zealand.


Schedule – Amended and Restated Capital Notes Trust Deed

1413351-8 – Capital Notes Trust Deed

Date

22 March 2001 as amended and restated on 1 November 2016

Parties

FONTERRA CO-OPERATIVE GROUP LIMITED

(the “Company”)

THE NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED

(the “Supervisor”)

CAPITAL NOTES TRUST DEED


1 DEFINITIONS AND CONSTRUCTION ............................................................. 5

1.1 Location and Governing Law ................................................................................ 5

1.2 Currency ................................................................................................................. 5

1.3 Currency Conversion ............................................................................................. 5

1.4 Defined Terms ....................................................................................................... 6

1.5 Construction ......................................................................................................... 14

2 [INTENTIONALLY BLANK] ............................................................................ 15

3 APPOINTMENT OF SUPERVISOR .................................................................. 15

3.1 Appointment of Supervisor .................................................................................. 15

3.2 Enforcement of Holders’ rights ........................................................................... 15

4 CAPITAL NOTES ............................................................................................... 15

4.1 Issue of Capital Notes .......................................................................................... 15

4.2 Creation of Other Liabilities ................................................................................ 15

4.3 Additional Issues of Capital Notes ...................................................................... 15

4.4 Terms and Conditions .......................................................................................... 16

4.5 Privity ................................................................................................................... 16

4.6 Validity of Capital Notes ..................................................................................... 16

4.7 Certificates and Confirmations ............................................................................ 17

4.8 Replacement Certificates ..................................................................................... 17

4.9 Covenant to Pay ................................................................................................... 18

4.10 Covenant to Observe the Trust Deed and Conditions .......................................... 18

4.11 Satisfaction of Capital Notes ............................................................................... 18

4.12 Holders’ Right to Sue .......................................................................................... 18

4.13 Identity of Holders ............................................................................................... 18

4.14 Exclusion of Equities ........................................................................................... 19

4.15 Unclaimed Payments ........................................................................................... 19

4.16 Receipt By Holders .............................................................................................. 19

4.17 Purchase, Cancellation, Reissue .......................................................................... 20

4.18 Reissues ............................................................................................................... 20

4.19 Commissions........................................................................................................ 20

4.20 Issue at Discount or Premium .............................................................................. 20

4.21 Reinstatement ...................................................................................................... 20

4.22 Taxation Indemnity of Holder ............................................................................. 21

4.23 No Guarantee ....................................................................................................... 21

5 SUBORDINATION AND STATUS OF CAPITAL NOTES ............................. 21

5.1 Subordination ....................................................................................................... 21

5.2 Amounts Payable Prior to Commencement of Liquidation ................................. 22

5.3 No enforcement prior to Liquidation ................................................................... 22

5.4 Commencement of Liquidation ........................................................................... 22

5.5 Performance of Trust ........................................................................................... 24

5.6 Reliance on Liquidator ......................................................................................... 24

5.7 Right to Appoint Liquidator ................................................................................ 24

5.8 Production of Certificate ...................................................................................... 24

5.9 Termination of Trusts .......................................................................................... 25

5.10 No Set-Off............................................................................................................ 25


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5.11 Permitted Proceedings ......................................................................................... 25

5.12 Maintenance of Subordination ............................................................................. 27

5.13 No Subordination of Supervisor’s Entitlement .................................................... 27

5.14 Unclaimed money ................................................................................................ 27

5.15 Paramountcy ........................................................................................................ 27

5.16 Reinstatement ...................................................................................................... 28

5.17 Further Provisions ................................................................................................ 28

6 THE REGISTER .................................................................................................. 28

6.1 Obligation to Maintain Register .......................................................................... 28

6.2 Entries in Register ................................................................................................ 29

6.3 Disclosure and Inspection of Register ................................................................. 29

6.4 Closure of Register .............................................................................................. 29

6.5 Audit .................................................................................................................... 30

6.6 Register shall prevail: .......................................................................................... 30

7 TRANSFER OF CAPITAL NOTES ................................................................... 31

7.1 Transfer ................................................................................................................ 31

7.2 Death, Insanity or Bankruptcy of Holder ............................................................. 31

7.3 Terms of Capital Notes Prevail ............................................................................ 31

8 COMPANY’S REPRESENTATIONS, WARRANTIES AND

COVENANTS ..................................................................................................... 31

8.1 Company Representations and Warranties .......................................................... 31

8.2 Company Covenants ............................................................................................ 32

8.3 Reports of Directors and Financial Statements .................................................... 34

8.4 Auditors’ Report .................................................................................................. 35

8.5 Appointment of Auditors ..................................................................................... 36

9 POWERS, DUTIES AND DISCRETIONS OF SUPERVISOR ......................... 37

9.1 Powers .................................................................................................................. 37

9.2 Discretion to Consult Holders ............................................................................. 40

9.3 Supervisor’s Right to be Indemnified .................................................................. 41

9.4 Fiduciary Relationship ......................................................................................... 41

9.5 No duty to disclose .............................................................................................. 42

9.6 Restricted duties to the Company and its subsidiaries ......................................... 42

9.7 No duty in respect of Company rights under Constitution .................................. 42

9.8 Supervisor may attend meeting of shareholders of Company ............................. 42

9.9 Statutory duties of Supervisor .............................................................................. 42

9.10 Acting on Instructions .......................................................................................... 44

9.11 Representation and warranty ................................................................................ 44

10 INDEMNITY OF SUPERVISOR ....................................................................... 44

10.1 Indemnity ............................................................................................................. 44

10.2 Limitation on Indemnity ...................................................................................... 45

11 CHANGE OF SUPERVISOR ............................................................................. 45

11.1 Change of Supervisor ........................................................................................... 45

11.2 Appointment of Substitute Supervisor ................................................................. 45


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12 SUPERVISOR’S REMUNERATION................................................................. 46

12.1 Remuneration ....................................................................................................... 46

12.2 Expenses .............................................................................................................. 46

12.3 Payable on Demand ............................................................................................. 46

12.4 Additional Fees .................................................................................................... 46

13 MODIFICATIONS .............................................................................................. 47

(a) No Consent .......................................................................................................... 47

(b) Extraordinary Resolution ..................................................................................... 48

(c) All Holders ........................................................................................................... 48

13.2 Consent of Majority of Holders ........................................................................... 49

13.3 Modifications Binding ......................................................................................... 49

13.4 Notice of Modification or Amendment ............................................................... 49

14 WAIVER ............................................................................................................. 49

14.1 Temporary Variation ............................................................................................ 49

14.2 Waivers ................................................................................................................ 50

16 SUBSTITUTED OBLIGOR ................................................................................ 50

16.1 Substitution .......................................................................................................... 50

16.2 Release of Obligations ......................................................................................... 51

16.3 Amendments ........................................................................................................ 52

16.4 Solvency ............................................................................................................... 52

16.5 Interests of Holders .............................................................................................. 52

16.6 Supervisor’s Discretion........................................................................................ 52

16.7 Extraordinary Resolution Required ..................................................................... 53

17 NOTICES ............................................................................................................. 53

17.1 Notices ................................................................................................................. 53

17.2 Effectiveness ........................................................................................................ 54

17.3 Proof of Notice..................................................................................................... 54

18 MEETINGS OF HOLDERS ................................................................................ 55

18.1 Convened by the Company .................................................................................. 55

18.2 Convened by the Supervisor ................................................................................ 55

18.3 Other Rules .......................................................................................................... 55

19 DOCUMENTS .................................................................................................... 56

20 RELEASE UPON PAYMENT ............................................................................ 56

21 TERMINATION OF TRUSTS ............................................................................ 56

22 INVALIDITY ...................................................................................................... 56

23 GOVERNING LAW ............................................................................................ 57

24 COUNTERPARTS .............................................................................................. 57

SCHEDULE 1 ................................................................................................................. 58

1. Convening ............................................................................................................ 58

2. Place ..................................................................................................................... 59


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3. Notice ................................................................................................................... 59

4. Quorum ................................................................................................................ 60

5. Right to Attend and Speak ................................................................................... 61

6. Chairperson .......................................................................................................... 62

7. Adjournment ........................................................................................................ 62

8. Person on Register ............................................................................................... 62

9. Authority to Vote ................................................................................................. 62

10. Proxies ................................................................................................................. 63

11. Attorneys .............................................................................................................. 65

12. Corporate Representatives ................................................................................... 65

13. Voting .................................................................................................................. 65

14. Extraordinary Resolution ..................................................................................... 68

15. Extraordinary Resolution Binding ....................................................................... 69

16. Minutes ................................................................................................................ 70

17. Class ..................................................................................................................... 70

18. Resolutions in Writing ......................................................................................... 70

SCHEDULE 2 ................................................................................................................. 72


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THIS TRUST DEED is made as of 22 March 2001 as amended and restated on 1

November 2016.

PARTIES

(1) FONTERRA CO-OPERATIVE GROUP LIMITED a duly incorporated company

having its registered office at Auckland (the “Company”)

(2) THE NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED a company

incorporated in New Zealand and having its registered office at Auckland (the

“Supervisor”)

BACKGROUND

A The Company has issued, and may continue to issue, Capital Notes under and as

provided in this Deed.

B The Capital Notes are unsecured subordinated indebtedness of the Company as

more particularly provided for in this Deed or any Supplemental Deed.

C The Supervisor acts as Supervisor on behalf of the Holders upon and subject to the

terms and conditions of, and with the powers and authorities contained in, this

Deed.

NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED AND

DECLARED as follows:

PART I : INTERPRETATION AND APPOINTMENT OF SUPERVISOR

1 DEFINITIONS AND CONSTRUCTION

1.1 Location and Governing Law

This Deed shall be construed and take effect as a contract and declaration of trust

made in New Zealand and shall be governed by and construed in accordance with

the law of New Zealand.

1.2 Currency

All references to money in this Deed shall, unless the contrary is stated or

necessarily implied, be deemed to be references to New Zealand currency.

1.3 Currency Conversion

Where for the purposes of any Capital Notes or any provision of this Deed it is

necessary to determine the New Zealand currency equivalent of a sum expressed

in a foreign currency such sum shall for the purposes of this Deed, unless


6

otherwise agreed in writing by the Supervisor either generally or in any particular

case, be converted to New Zealand currency on the basis of conversion employed

in preparing the Latest Statement of Financial Position or such other basis as is

agreed from time to time with the Auditors, applied at or about the close of

business in New Zealand on the day on which such calculation falls to be made,

and any Capital Notes which are payable in a foreign currency shall for the

purposes of this Deed (but without affecting the nature or amount of the

indebtedness of the Company in respect of any such Capital Notes or the terms

and conditions of any Capital Notes prescribing an alternative method of

conversion) be treated as being of an amount equal to the New Zealand currency

equivalent determined as aforesaid, provided always that in determining the New

Zealand currency equivalent of any asset or liability in a foreign currency, account

may be taken of any contract or arrangement in force between the Company and

any other person for covering the risk of fluctuations between New Zealand

currency and the foreign currency of the asset or liability (as the case may be).

1.4 Defined Terms

In this Deed and the Schedules hereto unless the context otherwise requires:

Agency Agreement means the agency agreement or agency agreements, between

the Company and the person or persons the Company appoints as the initial

Paying Agent, Calculation Agent and Registrar for the Capital Notes, and includes

any other agreement at any time in force appointing any further or other Paying

Agent, Calculation Agent or Registrar for the Capital Notes or in connection with

their duties;

Agent means, depending on the context, any or all of the Paying Agent, the

Calculation Agent and the Registrar;

Amalgamation means an amalgamation under the Companies Act and

Amalgamate has a corresponding meaning;

Auditors means at any time the Person holding office as the Company’s auditor;

business day means any day on which banks are open for the transaction of

general banking business in Auckland, New Zealand and (but only as regards the

provisions of this Deed relating to the time or manner of payments required to be

made in respect of any Capital Notes) in the principal financial centre of any other

jurisdiction in which such payment is to be made pursuant to the terms of such

Capital Notes;


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Calculation Agent means:

(a) the institution initially appointed as calculation agent by the Company

pursuant to the Agency Agreement; and/or

(b) any other or further calculation agent in respect of the Capital Notes as may

from time to time be appointed by the Company, and notice of whose

appointment has been given to the Supervisor pursuant to Clause 8.2(c);

Capital Note means a Capital Note issued by the Company in accordance with

this Deed for the time being outstanding, and where the context permits or

requires, refers also to the Principal Amount represented by any such Capital

Notes;

Capital Note Obligations means all obligations of the Company to the Supervisor

on behalf of Holders, under the terms of the Capital Notes, including (without

limitation) the Principal Amount and interest thereon and the Liquidation Amount,

but does not include any liabilities of the Company to the Supervisor for the costs,

fees and expenses of the Supervisor in respect of its duties under this Deed;

Certificate means a certificate or other document (if any) issued by the Company,

recording that a Holder is entered in the Register as a Holder, generally in the

form set out in the Initial Supplemental Deed or such other form approved by the

Supervisor, and any Certificate issued in replacement thereof or substitution

therefor, in each case subject to the Conditions from time to time applicable to,

and evidencing the entitlement of the Holder of, the Capital Notes specified

therein;

Class means:

(a) in relation to Capital Notes:

(i) any Capital Notes which have attached to them identical rights,

privileges, limitations and conditions (but which may have a different

redemption date or interest rate or both); or

(ii) each category of Capital Notes which the Supervisor determines on a

reasonable basis should be treated as constituting a separate Class of

Capital Notes; and

(b) in relation to Holders, the Holders of each such separate Class of Capital

Notes;


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Commencement of Liquidation means the commencement of Liquidation of the

Company under section 241(5) of the Companies Act, or removal of the Company

from the register under Part XVII of the Companies Act or any similar legislation

in substitution thereof or as an alternative or addition thereto under which the

Company will cease to validly exist in New Zealand (including by way of

Amalgamation) and if a statutory manager of the Company is appointed under the

Corporations (Investigation and Management) Act 1989, Commencement of

Liquidation means the date of the appointment of the statutory manager;

Companies Act means the Companies Act 1993;

Co-operative Companies Act means the Co-operative Companies Act 1996;

Conditions means the terms and conditions from time to time applicable to the

Capital Notes being:

(a) in, or substantially in, the form set out in the Initial Supplemental Deed (as

modified from time to time in accordance with this Deed or those

Conditions); and

(b) as may otherwise be contained or referred to in the Prospectus, Investment

Statement or other Offer Document relating to the Capital Notes;

Constitution means the Company’s constitution as it may be amended from time

to time;

Co-operative Shares means co-operative shares issued by the Company, being

shares of the class on issue at the date of this Deed as such Co-operative Shares

may from time to time be subdivided, consolidated or reclassified after the date of

this Deed;

Director means a director of the Company for the time being, and includes an

alternate director acting as a director of the Company and Directors means the

directors (including any committee thereof) acting in accordance with the

constitution of the Company for the time being;

Distribution has the same meaning as in section 2 of the Companies Act;

Effective Date means 16 October 2001;

Election Date of a Capital Note means the date or dates referred to as such in the

Register and recorded on the face of the Certificate (if any) for the Capital Note or

any other date as may be provided in the Conditions and/or the Prospectus,

Investment Statement or Offer Document as being an Election Date;


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Extraordinary Resolution means an Extraordinary Resolution of the Holders or

any class of Holders (as the case may require) as defined in regulation 14 of

Schedule 1;

Financial Reporting Act means the Financial Reporting Act 2013;

Financial Statements has the same meaning as in section 7 of the Financial

Reporting Act;

FMA means the Financial Markets Authority;

FMCA means the Financial Markets Conduct Act 2013;

FMC Regulations means the Financial Markets Conduct Regulations 2014;

FMSA means the Financial Markets Supervisors Act 2011;

Holders means the several Persons for the time being entered in the Register as

the holders of the Capital Notes, and includes their personal representatives;

Initial Supplemental Deed means the Supplemental Deed dated 24 October 2001

between the Company and the Supervisor setting out the form of the Certificate

and the terms and conditions on which Capital Notes are to be offered by the

Company for subscription;

Interest Payment Date means any date for payment of interest on a Capital Note

as may be provided in the Conditions as recorded on the face of the Certificate (if

any) for the Capital Note;

Investment Statement means, in respect of any offer to the public of Capital Notes

under or in accordance with the Securities Act 1978, the investment statement

relating to the offer of those Capital Notes;

issuer obligations has the meaning set out in the FMCA, being an obligation

imposed on the Company under this Deed in respect of the Capital Notes, the

terms of the offer of the Capital Notes, the FMCA or any court order relating to

the Capital Notes;

in writing and written includes words written, printed, typewritten, lithographed,

telexed, cabled or otherwise represented or reproduced in visible form by any

other means;

Latest Financial Statements means, at any time and from time to time, the then

most recent periodic consolidated statement of financial position, statement of


10

financial performance and statement of cash flows for the Company and its

subsidiaries as at and for the period ending on the relevant date, that has been

prepared and presented to the Directors, whether such comprises audited accounts

or unaudited management accounts;

Latest Statement of Financial Position means at any time the then most recent

consolidated statement of financial position which has been prepared in respect of

the Company and its subsidiaries;

Liquidation means the process of liquidation provided for in Part XVI of the

Companies Act, or removal of the Company from the register under Part XVII of

the Companies Act or any other process under which the Company will cease to

validly exist including by way of Amalgamation but does not include any

reconstruction or Amalgamation of the Company, which has been approved by the

Supervisor, and under which the obligations of the Company under this Deed and

under the terms of issue of Capital Notes are substantially assumed by a successor

to the Company;

Liquidation Amount means, in respect of a Capital Note:

(a) the Principal Amount of the Capital Note plus accrued interest (as that term

is defined in the Conditions) (less any withholdings or deductions required

by law) as at the Commencement of Liquidation of the Company; and

(b) interest on the amount determined in accordance with paragraph (a) in

accordance with the Conditions (as if the full amount thereof were included

in the Principal Amount) from the date of the Commencement of

Liquidation of the Company until the date on which the Capital Note is

redeemed by payment of the amount determined in accordance with

paragraphs (a) and this paragraph in accordance with the Conditions;

Liquidator means the liquidator for the time being of the Company and in the

event of the appointment of a statutory manager of the Company under the

Corporations (Investigations and Management) Act 1989 means the statutory

manager so appointed;

Milk has the same meaning as in the Constitution;

Milksolids has the same meaning as in the Constitution;

Offer Document means, in respect of any offer of Capital Notes made under and

in accordance with the FMCA, the product disclosure statement or other

disclosure document required under clause 26 of Schedule 1 of the FMCA (as


11

applicable) or such other document required by law which may replace any of

those documents, relating to the offer of those Capital Notes;

outstanding means, in relation to Capital Notes, all the Capital Notes issued other

than:

(a) any Capital Notes which have been redeemed by the Company (including,

where permitted by the Conditions and the Constitution, by the issue of Co-

operative Shares) pursuant to their terms and conditions; or

(b) any Capital Notes in respect of which the date for redemption pursuant to

their terms and conditions has occurred and the redemption moneys for

which (including all interest accrued thereon to the date for such

redemption) have been duly paid to or to the order of the Supervisor or to

any relevant paying agent and remain available for payment against

presentation of Certificates; or

(c) any Capital Notes which have become void pursuant to their terms and

conditions; or

(d) any Capital Notes which have been purchased and cancelled pursuant to

their terms and conditions,

and (for certainty) it is declared that where any Certificate for Capital Notes has

been replaced in whole or in part by a new Certificate(s) issued in respect of such

Capital Notes then, to the extent so replaced and without prejudice to the Capital

Notes evidenced by such a new Certificate(s), the original Certificate shall not

represent outstanding Capital Notes;

Paying Agent means:

(a) the institution initially appointed as paying agent by the Company pursuant

to the Agency Agreement; and/or

(b) any other or further paying agent in respect of the Capital Notes as may from

time to time be appointed by the Company and notice of whose appointment

or nomination has been given to the Supervisor pursuant to Clause 8.2(c);

Permitted Supplier Payments means, as at any date during a Season and in

relation to Milk supplied to the Company by Shareholders to that date, amounts

paid or due and payable by the Company to Shareholders for that Milk up to a

maximum of $3.00 per kilogram of Milksolids contained in that Milk, provided

that:


12

(a) prior to the start of a Season the maximum payment for Milk supplied

during such Season for the purposes of this definition may be varied so that

it is measured against a factor other than Milksolids (or any other factor)

provided that the Supervisor is satisfied that new level of maximum

payment is not materially different to the previous level of maximum

payment; and

(b) the dollar amount of the maximum payment for the purposes of this

definition shall be adjusted with effect from the end of each Season (in

relation to payments for Milk supplied in the following Season) to reflect

any movement in the Producer’s Price Index (Inputs) (or any replacement

for that index) during the 12 month period ending on the quarterly date

immediately preceding the end of the Season;

Person includes an individual, a corporation sole, a company or any other body

corporate, any association of Persons whether corporate or unincorporate, any

state or government or department or agency thereof, and any legislative body

authority or agency whether having separate legal personality or not;

Principal Amount of a Capital Note means one dollar ($1.00);

Prospectus means, in respect of any offer to the public of Capital Notes under or

in accordance with the Securities Act 1978, the prospectus relating to the offer of

those Capital Notes;

Register means the register (or registers) of Capital Notes to be kept pursuant to

this Deed;

Registrar means:

(a) the institution initially appointed as registrar by the Company pursuant to the

Agency Agreement; and/or

(b) any other or further registrar in respect of the Capital Notes as may from

time to time be appointed by the Company and notice of whose appointment

or nomination has been given to the Supervisor pursuant to Clause 8.2(c);

Season has the same meaning as in the Constitution;

Senior Creditor means a Person to whom Senior Debt is owing;

Senior Debt means all outstanding obligations of the Company existing at the

date of this Deed or which arise or are created at any time in the future and


13

whether actual or contingent and whether liquidated or unliquidated but does not

include:

(a) any liabilities by the Company to Holders in respect of Capital Note

Obligations; and

(b) any liabilities of the Company in respect of Supply Redemption Rights;

(c) any obligations of the Company which the Company and a creditor of the

Company have agreed will rank pari passu with or subsequent in priority to

Capital Note Obligations; and

(d) any obligations to shareholders in their capacity as holders of shares in the

Company, whether such shares are Co-operative Shares, redeemable

preference shares or another class of share in the Company;

Stock Exchange means the debt market operated by NZX Limited or any

alternative or substitute market or exchange for Capital Notes or other

arrangement on or through which Capital Notes may be freely traded and which is

generally regarded as the principal exchange for Capital Notes in New Zealand,

and/or (as the case may require), but only if (and to the extent that) this Deed or

the Conditions applicable to a Capital Note expressly provides for it, any other

exchange or such other alternative or substitute market or exchange in any other

jurisdiction on or through which Capital Notes may be freely traded and which is

generally regarded as the principal market for the trading of Capital Notes in the

relevant jurisdiction;

Shareholder means a holder of Co-operative Shares in the Company;

Supervisor means The New Zealand Guardian Trust Company Limited or, if it

has retired from office or been removed from office in accordance with this Deed,

it means the Person from time to time who has been appointed Supervisor

pursuant to Clause 11.2 of this Deed;

Supplemental Deed means a Deed supplemental to this Deed;

the Trust Deed and this Deed means this Trust Deed (including the Schedules

hereto) as originally executed and as it may from time to time be supplemented,

modified or novated in accordance with the provisions of this Trust Deed, and

when the context so admits includes any Deed which is or is expressed to be

supplemental to or collateral with this Deed including, for the avoidance of doubt,

the Initial Supplemental Deed; and

working day has the meaning set out in the Interpretation Act 1999.


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1.5 Construction

In the construction of this Deed:

(a) Headings: The headings and marginal notes appear as a matter of

convenience and shall not affect the construction of this Deed;

(b) Clauses: In the absence of an express indication to the contrary, references

to Parts, Clauses, paragraphs and Schedules are to the parts, clauses, and

paragraphs of, and schedules to, this Deed;

(c) Statutes: References to any statute, statutory regulations or other statutory

instrument shall be deemed to be references to the statute, statutory

regulations or instrument as from time to time amended or re-enacted or, as

the context permits, provisions substituted therefor for the time being in

force, and in addition reference to any statute includes any statutory

regulations or instruments from time to time made and in force under that

statute;

(d) Agreements: References to any Deed agreement or other instrument shall be

read as referring to such Deed agreement or other instrument as from time to

time modified supplemented or novated;

(e) Statutory Definitions: Except where inconsistent with specific definitions

thereof contained herein, words defined in the Companies Act, the Financial

Reporting Act, the Co-operative Companies Act or the FMCA shall have the

same meanings in this Deed; and in the case of conflict, the definitions in

the FMCA shall prevail over those in the Companies Act, the Co-operative

Companies Act and/or the Financial Reporting Act, and the definitions in

the Financial Reporting Act shall prevail over those in the Companies Act;

(f) Singular: The singular includes the plural and vice versa, and words

importing any gender include the other genders;

(g) Successors and Assigns: Each reference to a party to this Deed shall be read

as a reference to that party and its successors and assigns;

(h) Definitions in Conditions: Words and expressions defined in the Conditions

and not otherwise defined in this Deed shall, unless the context otherwise

requires, have the same meanings where used in this Deed;

(i) Non-Business Days: Anything which is required by this Deed or the

Conditions to be done on, or as of, a day which is not a business day shall be

done on, or as of, the next business day.


15

2 [INTENTIONALLY BLANK]

3 APPOINTMENT OF SUPERVISOR

3.1 Appointment of Supervisor

The Company appoints the Supervisor, and the Supervisor accepts appointment as

supervisor for the Holders in respect of the Capital Notes on the terms and subject

to the provisions of this Deed and applicable law, and with the rights, powers,

duties and obligations conferred by this Deed and in the Conditions or (save to the

extent that it is affected by the express provisions of this Deed or the Conditions)

by applicable law.

3.2 Enforcement of Holders’ rights

(a) The Supervisor shall hold in trust for the benefit of the Holders the right to

enforce any obligations or duties of the Company under this Deed, the

Conditions and the FMCA in relation to the Capital Notes, including the

right to enforce the Company’s obligation to repay or pay amounts

(including interest) owing to Holders in accordance with the terms of this

Deed and the Conditions.

(b) The Company acknowledges that this Deed is made for the benefit of, and

(subject to clause 4.12) is intended to be enforceable by, any Person who is

from time to time a Holder of any Capital Note and the Supervisor.

PART II : CONSTITUTION AND TERMS OF CAPITAL NOTES

4 CAPITAL NOTES

4.1 Issue of Capital Notes

The Company may from time to time issue Capital Notes in accordance with and

subject to this Deed. The Capital Notes may be issued to such Persons, in such

amounts, in such currencies and upon such terms and conditions (not being

inconsistent with the provisions contained in this Deed) as it may from time to

time determine.

4.2 Creation of Other Liabilities

Nothing in this Deed shall prevent or restrain the Company at any time incurring,

varying or otherwise dealing with any indebtedness or other obligations of any

nature, whether contingent secured or otherwise, and whether ranking as Senior

Debt, pari passu with Capital Notes or subordinate to Capital Notes.

4.3 Additional Issues of Capital Notes

Without limiting Clause 4.1 above, the Company may, from time to time in

accordance with the provisions of this Deed and without the consent of the


16

Holders or the Supervisor, create and issue additional Capital Notes ranking pari

passu with the initial issue of Capital Notes in all respects (or in all respects

except for the Election Dates, interest rates or payment dates) so as to form a

single issue with the initial issue of Capital Notes.

4.4 Terms and Conditions

Each Capital Note shall be held by the Holders with the benefit of and subject to

the provisions of this Deed, including the Conditions. The provisions of this

Deed, including the Conditions, shall be binding upon the Company, the

Supervisor, the Holders and all Persons claiming under or through them

respectively. The Holders and all Persons claiming by or through them will be

entitled to the benefit of, will be bound by and will be deemed to have notice of

the provisions of this Deed, including the Conditions.

4.5 Privity

The undertakings and provisions of Clause 5 and any Condition expressed to be

given for the benefit of the Senior Creditors are given by the Company, the

Holders and the Supervisor for the benefit of Senior Creditors and all Senior

Creditors and any Liquidator of the Company may rely upon and enforce each of

them. The Holders and the Supervisor acknowledge that section 313(3) of the

Companies Act (agreement to accept lower priority on liquidation) applies to all

Capital Note Obligations and the Company, the Supervisor and Holders further

acknowledge that the Contracts (Privity) Act 1982 will apply to all Senior

Creditors in regard to the subordination of Capital Note Obligations to Senior

Debt and Senior Creditors may enforce Clauses 5.1 to 5.17 of this Deed and any

Condition expressed to be given for the benefit of the Senior Creditors, provided

that the parties hereto are entitled at any time to vary or discharge any of the

provisions of this Deed (including Clause 5) or the Conditions, without requiring

the consent or agreement of any of the Senior Creditors.

4.6 Validity of Capital Notes

No Holder shall be concerned or obliged to enquire whether any Capital Note has

been issued in contravention of any provision of this Deed or the Conditions.

Each Capital Note issued for valuable consideration, the Certificate for which

indicates, or the entry on the Register for which indicates, or in respect of which

other evidence indicates, that it has ostensibly been issued or was intended to be

issued as a Capital Note pursuant to the provisions of this Deed shall be validly

issued and constituted by this Deed and entitled to the benefit of the provisions of

this Deed and the Conditions, notwithstanding that the issue of such Capital Note

was in breach of any provision of this Deed or the Conditions. This Clause shall

not, however, prejudice or affect the Supervisor’s rights under or pursuant to this

Deed against the Company in relation to such breach.


17

4.7 Certificates and Confirmations

Subject to the terms and conditions of the relevant Capital Notes or if required by

applicable law, the Company will issue to the relevant Holder a confirmation or

Certificate for each Capital Note evidencing the relevant Capital Note held by the

Holder which shall include all information required under the FMCA and the

FMC Regulations (if and to the extent applicable), be provided in the manner

required by the FMCA and the FMC Regulations (if and to the extent applicable)

and otherwise be in such denominations and in such form and manner (not being

inconsistent with the provisions of this Deed or any applicable law) as shall be

determined by the Company. Any confirmation or Certificate shall contain or

have attached to it, or refer to, the Conditions applying to the Capital Note. All

Certificates when issued shall be and remain at all times subject to the Conditions

(whether or not the Conditions are endorsed thereon) and shall be issued as

registered Certificates, transferable in accordance with the Conditions. Subject to

the Conditions, the Company may, upon such terms (if any) as it may determine,

issue to a Holder:

(a) a new Certificate in substitution for one issued in an incorrect form, or for

an incorrect number of Capital Notes, or otherwise containing incorrect

terms or conditions;

(b) several new Certificates in substitution for a single Certificate and vice

versa; and

(c) a new Certificate in part substitution for a Certificate where some (but not

all) of the Capital Notes represented by the latter Certificate are redeemed,

cancelled, or transferred in accordance with this Deed.

Certificates may be executed by or on behalf of the Company (including by the

Registrar or any issuing agent on behalf of the Company) in any manner permitted

by applicable law, and in compliance with any requirements of applicable law as

regards the mode of execution. Any Certificate bearing the facsimile or electronic

signature of a Person authorised to execute it at the date of printing will be valid

notwithstanding that the signatory may have ceased to be so authorised at the date

of issue or at any time thereafter.

4.8 Replacement Certificates

With the consent, in each case, of the Holder concerned the Company may issue

replacement Certificates in substitution for lost, stolen, damaged, defaced,

destroyed or incorrect Certificates and balance Certificates where the indebtedness

liabilities or obligation evidenced by a Certificate have been discharged in part,

subject, in each case, to satisfactory indemnification and security therefor and to

the relevant terms and conditions of the Capital Notes concerned.


18

4.9 Covenant to Pay

The Company covenants with the Supervisor that it will pay the amounts payable

in respect of the Capital Notes as and when due and payable (subject to any right

of the Company, specified in the Conditions, to issue Capital Notes in lieu of the

payment of interest in certain circumstances) in accordance with the Conditions to

or to the order of the Supervisor in the currency and manner in which the same is

payable.

4.10 Covenant to Observe the Trust Deed and Conditions

(a) The Company covenants with the Supervisor that it will comply with,

perform and observe all the provisions of this Deed, the Conditions and the

other terms and conditions of the relevant Capital Notes which are expressed

to be binding on it.

(b) The Supervisor shall take and hold the benefit of the covenants given to it by

the Company under this Deed (including the right to enforce the Company’s

obligations and duties under this Deed, the Conditions and the FMCA) in

respect of the Capital Notes in trust, and for the benefit of, the Holders

generally.

4.11 Satisfaction of Capital Notes

Every payment of Capital Note Obligations duly made to the Holders, or the

Supervisor and every redemption by the Company of Capital Notes duly made in

accordance with the Conditions, shall be in satisfaction pro tanto of the relevant

obligation of the Company to the Supervisor under this Deed.

4.12 Holders’ Right to Sue

No Holder shall be entitled to proceed:

(a) directly against the Company for the enforcement, observance or

performance of any term or condition of the Capital Notes held by such

Holder or of this Deed or the Conditions unless the Supervisor has failed,

within a reasonable time, having become bound so to proceed, to take such

proceedings (as are available to the Supervisor under this Deed) against the

Company and such failure is continuing; or

(b) either against the Company or the Supervisor, for the enforcement,

observance or performance of any provision of this Deed or the Conditions

that is solely for the benefit of the Supervisor.

4.13 Identity of Holders

The Holders are to be regarded as the beneficial owners of the Capital Notes

registered in their names respectively, and are to be regarded as exclusively

entitled thereto and the Company, the Supervisor and all other Persons may act


19

accordingly. The Company shall not enter in the Register any actual or

constructive notice of any trust (express, implied or constructive) except in the

prescribed circumstances or, save as provided in the relevant Certificate or except

as ordered by a Court of competent jurisdiction, to recognise any trust or equity

affecting the ownership of any Capital Notes or the money thereby represented.

4.14 Exclusion of Equities

Every Holder will be recognised by the Company as entitled to the Capital Notes

held by it and to the Capital Note Obligations payable thereon free from any

equity set-off or cross claim between the Company and any prior holder thereof.

4.15 Unclaimed Payments

Subject to the terms and conditions of the relevant Capital Notes, any payment of

any of the Capital Note Obligations:

(a) sent or made by or on behalf of the Company to a Holder at its last address

recorded in the Register that shall be returned unclaimed; or

(b) due to a Holder whose address is unknown,

shall be either retained by the Company for such Holder or (if held by or on behalf

of the Supervisor) paid by or on behalf of the Supervisor to the Company (without

prejudice to the rights of the Person entitled thereto in priority to the Company)

and, in either case, retained by the Company for such Holder until claimed without

liability to invest the same or pay interest thereon. Any such amount for which

payment is not claimed within five years from its due date shall be forfeited by the

Directors of the Company for its benefit. After forfeiture of any such amount the

Person who would otherwise have been entitled thereto shall become entitled to

payment of a sum equal to the amount forfeited upon adducing evidence sufficient

to satisfy the Directors that such Person would have been entitled thereto had the

same not been forfeited.

4.16 Receipt By Holders

The receipt of the Holder, or in the case of joint Holders the receipt of any one of

them, for the Capital Note Obligations from time to time accruing due in respect

of any Capital Notes shall be a good discharge to the Company notwithstanding

any notice (express or implied) the Company may have of the right, title, interest

or claim of any other Person to or in such Capital Notes or the Capital Note

Obligations payable in respect thereof.


20

4.17 Purchase, Cancellation, Reissue

Subject to any provisions to the contrary in the Conditions:

(a) Purchase: any subsidiary of the Company may subscribe for Capital Notes,

and the Company or any subsidiary of the Company may purchase Capital

Notes from any Person at any time on any market at any price;

(b) Cancel or Reissue: the Company may hold or cancel any Capital Notes so

subscribed for or purchased and/or may re-issue any such Capital Notes, but

shall not be obliged to do so; and

(c) Issue of Co-operative Shares, Other Shares or Other Instruments: the

Company may redeem Capital Notes for cash or by the issue of Co-operative

Shares, any other class of shares or any other instruments in accordance with

the Constitution and the Conditions and all Capital Notes which are

redeemed by the issue of Co-operative Shares any other class of shares or

any other instrument in accordance with the Conditions and the Constitution

shall thereupon be cancelled and neither the Company nor the Supervisor

shall have any further obligations or liabilities in respect thereof.

Notwithstanding Clause 4.17(a) (but subject to the Conditions), the Company

shall not issue or sell Capital Notes to, or purchase Capital Notes from, any related

company of the Company (as defined in section 2(3) of the Companies Act) other

than for what would reasonably be considered to be fair value.

4.18 Reissues

If the Company reissues any Capital Notes in accordance with Clause 4.17(b), the

provisions of this Deed shall apply to the reissue of any such Capital Notes as if

the reissue were the issue of the Capital Notes and the allottee of the reissued

Capital Notes were the original allottee.

4.19 Commissions

The Company shall be at liberty to pay commission fees or brokerage to any

Person for subscribing, underwriting the subscription of, or obtaining

subscriptions for, any Capital Notes.

4.20 Issue at Discount or Premium

Without limiting any other provision of this Deed, the Company shall be at liberty

to issue any Capital Notes at a discount or premium to their Principal Amount.

4.21 Reinstatement

If any payment in respect of Capital Note Obligations made to the Supervisor or to

any Holder by, or on behalf of, the Company is avoided by law such payment

shall, except to the extent that the Holder obtains and retains the benefit of such


21

payment, be deemed not to have discharged or affected the liability of the

Company in respect of which that payment was made. In that event the

Supervisor, the Holders and the Company shall be restored to the position in

which each would have been, and be entitled to exercise all the rights which each

would have had, if such payment in respect of Capital Note Obligations had not

been made (to the extent that payment is so avoided).

4.22 Taxation Indemnity of Holder

Whenever, in respect of any Capital Notes, there shall by law be imposed any

liability on the Supervisor or the Company to make any payment of or on account

of tax payable by or in respect of the Holder or the Capital Notes (except as

payable by the Company pursuant to Clause 8.2(f) or where primary liability for

such payment rests with the Company), the Supervisor and the Company

respectively shall in respect of such liability be indemnified by such Holder and

the legal personal representative or successor of such Holder and in the case of the

Supervisor by the Company (in respect of which the Company shall in turn be

indemnified as aforesaid) and any moneys paid by the Supervisor or the Company

in respect of any such liability may be recovered by action from such Holder or the

legal personal representative or successor of such Holder or the Company (as the

case may be) as a debt due to the Supervisor or the Company. Nothing herein

contained shall prejudice or affect any other right or remedy of the Supervisor or

the Company.

4.23 No Guarantee

The Capital Note Obligations and the Company’s other obligations under this

Deed and in respect of the Capital Notes are not guaranteed by any of the

Company’s subsidiaries or any other Person.

PART III : SUBORDINATION AND STATUS OF CAPITAL NOTES

5 SUBORDINATION AND STATUS OF CAPITAL NOTES

5.1 Subordination

In any distribution of assets by the Company in the Liquidation or (to the fullest

extent permissible) statutory management of the Company, the rights of the

Supervisor on behalf of the Holders (and the rights of each Holder) in respect of

the Capital Note Obligations (but no other amounts owing pursuant to the Trust

Deed) shall:

(a) in point or priority and right of payment, rank behind and be subordinated to

all Senior Debt so that in any such distribution no payment shall be made on

account of the Capital Note Obligations until the Senior Debt has been paid

in full; and


22

(b) be unsecured and limited to the Liquidation Amount in respect of the

relevant Capital Notes.

5.2 Amounts Payable Prior to Commencement of Liquidation

Nothing in this Clause 5 shall restrict the payment or performance of Capital Note

Obligations in accordance with this Deed and the terms and conditions applicable

to the Capital Notes (including the applicable Conditions), prior to the

Commencement of Liquidation of the Company and the Supervisor and the

Holders (as the case may be) shall be entitled to receive and retain such amounts

paid by the Company. The payment by the Company and receipt by the

Supervisor or a Holder of any such amount shall not constitute a breach of Clause

5.1 or be subject to the trust mentioned in Clause 5.4.

5.3 No enforcement prior to Liquidation

Prior to the Commencement of Liquidation of the Company neither the Supervisor

nor any Holders may claim, demand, plead, sue, prove for, compel or seek to

enforce, directly or indirectly, including by way of set off or counterclaim, or in

any other manner, the payment by the Company of any Capital Note Obligations

in respect of the Capital Notes. Nothing in this Clause applies to the rights of the

Supervisor under Clauses 5.10 and 5.11.

5.4 Commencement of Liquidation

Upon the Commencement of Liquidation of the Company:

(a) the Supervisor shall be entitled to claim, demand, sue or prove for the

payment by the Company of:

(i) the Liquidation Amount in respect of the Capital Notes to the extent,

but only to the extent, necessary to preserve the claim thereto of any

Holder(s) (but without limiting the Supervisor’s right to claim,

demand, sue or prove for the payment of such Liquidation Amount

following repayment in full of the Senior Debt); and

(ii) any amount owing to the Supervisor but unpaid,

in any Liquidation of the Company;

(b) subject to the succeeding provisions of this Clause each Capital Note will

upon the Commencement of Liquidation of the Company be due to be

redeemed for an amount equal to the Liquidation Amount of the Capital

Note;

(c) any proof of debt or other claim (including by way of set off) made by a

Holder or the Supervisor in relation to Capital Note Obligations in respect of


23

Capital Notes shall be made subject to the Holder or the Supervisor

acknowledging the priority for payment of all Senior Debt of the Company

and shall be limited to the Liquidation Amount;

(d) no Holder nor the Supervisor shall be entitled to take or receive payment

from the Liquidator of the Company whether directly or indirectly

(including by way of set off or counterclaim) of any Capital Note

Obligations in respect of the Capital Notes then outstanding unless and until

all Senior Debt of the Company has been paid or satisfied in full. If any

such payment or benefit by way of set off is received by, or on behalf of, a

Holder or the Supervisor, the amount or benefit received shall, except to the

extent otherwise provided for in the Conditions of the Capital Notes, be held

upon trust by the Holder or the Supervisor for the Liquidator and shall be

paid by the Holder or the Supervisor (as the case may be) to the Liquidator

upon trust for the purpose of being applied as provided in paragraph (e) of

this Clause;

(e) any amounts received by the Supervisor or a Holder from the Company

under paragraph (d) above and not paid to the Liquidator shall be received

by the Supervisor or the Holder on trust to be applied:

(i) first, in or towards payment or satisfaction of the costs, charges,

expenses and liabilities incurred by the Supervisor in the execution of

the trusts of this Deed (including any unpaid remuneration);

(ii) secondly, in or towards payment of the claims of those persons who

the Liquidator of the Company determines, as at the date of the

Commencement of Liquidation of the Company, were Senior

Creditors of the Company to the extent that those claims have been

admitted to proof in such Liquidation (and have not been satisfied out

of the other resources of the Company):

(A) first, to the Senior Creditor(s) of the Company from or in respect

of whom such amount was received, rateably according to their

respective entitlements to Senior Debt, until all such Senior Debt

has been paid or satisfied in full; and

(B) secondly, to the Senior Creditor(s) of the Company, rateably

according to their respective entitlements to such Senior Debt;

(iii) thirdly (and subject, at all times, to the Conditions applicable to each

Capital Note), subject to all the Senior Debt of the Company having

been paid or satisfied in full, in or towards payment pari passu and

rateably the Liquidation Amount of all Capital Notes remaining


24

unpaid and any other obligations of the Company which rank pari

passu with the Capital Note Obligations in respect of the Capital

Notes; and

(iv) fourthly, the balance, if any, in payment to the Company, or to such

other person (including a Liquidator of the Company) as may be

lawfully entitled thereto.

5.5 Performance of Trust

The Trust mentioned in Clause 5.4 may be performed by the Holder or the

Supervisor by paying or repaying the amount so received or recovered, or so much

thereof as shall be necessary to ensure that all of the Senior Creditors are fully

paid or repaid, on trust to the Liquidator of, or other person charged with or

responsible for the making of distributions on behalf of, the Company or, where

there is no such person, the Company, for distribution to the appropriate Senior

Creditors. The receipt of the Liquidator or other such person or the Company,

shall be a good discharge to the Holder or the Supervisor (as the case may be) for

the performance by it of the trust mentioned in Clause 5.4. Any amount which

becomes subject to the trust mentioned in Clause 5.4 and which is paid or repaid

by any Holder or the Supervisor (as the case may be) pursuant to this Clause 5.5

shall thereafter be treated as between the Company and the Supervisor or the

Holder as if it had never been received or recovered in the first place.

5.6 Reliance on Liquidator

Following the Commencement of Liquidation of the Company, the Supervisor and

every Holder will be entitled and is authorised to call for and to accept, as

conclusive evidence, a certificate from the Liquidator of the Company for the time

being regarding the amount of Senior Debt of the Company which has not been

satisfied or otherwise provided for and the Supervisor shall be entitled to rely

upon a statement in writing from such Liquidator to the effect that all Senior Debt

of the Company has been satisfied or discharged and upon receipt of such

statement by the Supervisor the recipient shall no longer be bound by Clause 5.4.

5.7 Right to Appoint Liquidator

If at any time after the Commencement of Liquidation of the Company and while

the Company remains in Liquidation there is no person who holds the office of

Liquidator of the Company, the Supervisor may (without requiring an

Extraordinary Resolution) appoint a person to that office for the purpose of

complying with the requirements of this Deed.

5.8 Production of Certificate

Upon any payment by the Supervisor to a Holder of any Capital Note Obligations

in respect of the Capital Notes, the Supervisor may (but shall not be obliged to)


25

require that the relevant Certificate be produced to the Supervisor who may

endorse it with details of the payment.

5.9 Termination of Trusts

The trusts contained in this Deed and the Conditions in favour of the Senior

Creditors shall terminate on the date which is 80 years less one day after the date

of this Deed subject to Clause 21 of this Deed.

5.10 No Set-Off

To the fullest extent permitted by law, neither the Supervisor nor any Holder shall

be entitled to set off against any amounts due in respect of any Capital Notes, any

amount held by the Supervisor or the Holder to the credit of the Company,

whether in an account, in cash or otherwise, nor any advances to, or debts of, the

Company, nor any other amount owing by the Supervisor or the Holder to the

Company on any account whatsoever, nor shall the Supervisor or any Holder be

entitled to effect any reduction of the amount due to the Supervisor or that Holder

in respect of a Capital Note by merger of accounts or lien on the exercise of any

other right, in all such cases the effect of which set-off, merger, lien or exercise of

such rights is or may be to reduce the amount due in respect of that Capital Note

in breach of the subordination provisions of this Clause 5 and the Conditions.

5.11 Permitted Proceedings

Nothing in this Deed or the Conditions shall exclude, limit, defer or otherwise

prejudicially affect:

(a) the right of the Supervisor or, in the circumstances permitted by this Deed, a

Holder to take such action as is expressly permitted by this Deed or the

Conditions;

(b) the right of the Supervisor to seek directions from a court pursuant to the

FMCA or to take any other proceedings seeking the directions of or

guidance by any court, tribunal or other authority as to the performance of

its functions and duties hereunder or otherwise in relation to this Deed or the

Capital Notes;

(c) any proceedings taken by the Supervisor and/or (but subject to Clause 4.12)

any Holder(s) at any time seeking a judgment or order declaratory of the

rights or obligations of any Holder or any of the parties to, or any person

having an interest in, this Deed (other than a judgment or order directing,

requiring or compelling the payment of Capital Note Obligations in respect

of the Capital Notes or otherwise impugning or challenging the provisions

of this Clause 5 or the Conditions);


26

(d) the right of the Supervisor or, in the circumstances permitted by this Deed,

any Holder to take proceedings in respect of any contravention or threatened

contravention of, or to compel or enforce performance of, any of the

covenants, undertakings and obligations of the Company under this Deed or

the Conditions, other than (except where expressly permitted) in relation to

the payment of Capital Note Obligations in respect of the Capital Notes

prior to Commencement of Liquidation of the Company;

(e) subject to the Conditions applicable to each Capital Note, the right of the

Supervisor (if and for so long as any breach referred to below is continuing

unremedied and the Conditions so provide) to make written demand upon

the Company for immediate payment of the Capital Note Obligations if:

(i) the Company contravenes any covenant in the Conditions to pay

interest due on the Interest Payment Dates other than in the

circumstances permitted by, and where the Company is complying

with, the Conditions; or

(ii) the Company contravenes any covenant in the Conditions to redeem

the Capital Notes it has elected to redeem, other than in the

circumstances permitted by the Conditions; or

(iii) the Company contravenes any covenant in the Conditions not to make

certain Distributions or make any payment in respect of indebtedness

of the Company ranking pari passu with, or subsequent in priority to

the Capital Notes,

and, if such demand is not satisfied for 30 days after such written demand is

made upon the Company, the right of the Supervisor to take proceedings to

compel payment by the Company of the Capital Note Obligations or for the

Liquidation of the Company (provided that, unless otherwise provided in the

Conditions, the Supervisor shall not issue such proceedings for the

Liquidation of the Company without first obtaining an Extraordinary

Resolution of the Holders of all outstanding Capital Notes issued under the

Trust Deed).

(f) the right of the Supervisor to take proceedings for the Liquidation of the

Company for failure to redeem a Capital Note in any circumstances where

this Deed or the Conditions specifically give that power to the Supervisor,

(provided that, where required by this Deed or the Conditions, the

Supervisor has first obtained an Extraordinary Resolution of the Holders of

all Outstanding Capital Notes under this Deed).


27

5.12 Maintenance of Subordination

If any modification to this Deed, including the Conditions or any other

documentation, consent or acknowledgement is necessary or expedient to permit,

facilitate or give effect to the subordination and ranking of any Capital Notes, the

Supervisor is authorised and directed to concur with the Company in executing the

same and any such concurrence shall be on behalf of, and shall bind, the Holders.

5.13 No Subordination of Supervisor’s Entitlement

Nothing in this Deed including the Conditions shall:

(a) subordinate, defer in priority or point of payment, or otherwise affect or

prejudice the payment or reimbursement of the costs, charges, expenses,

liabilities, remuneration, indemnities or other moneys payable to, the

Supervisor arising out of its duties as the Supervisor under this Deed, or the

rights and remedies of the Supervisor in respect thereof all of which shall be

payable to the Supervisor at the time and in the manner herein provided, and

the payment of which may be claimed and/or enforced by the Supervisor,

free of the restrictions contained in Clause 5.1 or the Conditions; or

(b) impose upon the Supervisor or oblige the Supervisor to acknowledge any

personal liability to pay any amount which has not first been received by the

Supervisor in its capacity as Supervisor under this Deed, and any such

liability shall cease in respect of any amount so received and disbursed by

the Supervisor in good faith in the reasonable belief that the disbursement is

authorised under this Deed and, in particular, but without limiting the

generality of the foregoing, the Supervisor shall not be obliged to pay, or to

account for or incur any other liability (whether as a constructive trustee or

otherwise) in respect of, any amount which it receives and disburses to any

Holders before the Supervisor has received actual notice of the

Commencement of Liquidation of the Company.

5.14 Unclaimed money

If for any reason the Company is not able to pay to a Holder the Principal Amount

or interest thereon (other than due to the fault of the Company) the Company may

set aside in any bank account the money so owing and the Company’s obligation

to pay interest thereon shall cease, but without prejudice to the Holder’s claim to

the money so set aside.

5.15 Paramountcy

The provisions contained in this Clause 5 shall apply to the Capital Notes

notwithstanding anything to the contrary contained or implied herein or in the

Capital Notes or the Conditions.


28

5.16 Reinstatement

Notwithstanding anything elsewhere contained in this Deed or the Conditions, and

to the maximum extent permitted by law, if the Company ceases to be in

Liquidation (or in any similar process, including statutory management), then, to

the extent that all or any part of the Liquidation Amount remains outstanding and

unpaid, the Supervisor, the Holder and the Company shall be restored to the

position in which each would have been, and be entitled to exercise all the rights

which each would have had, if there had been no Commencement of Liquidation.

5.17 Further Provisions

The Capital Notes are issued on the basis that:

(a) the provisions of this Clause 5 shall apply notwithstanding any variation or

amendment to any agreement creating or evidencing any Senior Debt, and

nothing in these Conditions shall prevent the Company from increasing,

varying, or otherwise dealing with Senior Debt or creating new Senior Debt

in such manner as the Company and any Senior Creditor think fit;

(b) the provisions of the Contracts (Privity) Act 1982 shall apply to the benefits

conferred in this Clause 5 upon the Senior Creditors and each Senior

Creditor is to be considered a “beneficiary” for the purposes of such Act and

that such benefits are intended to be enforceable at the suit of any such

person; and

(c) notwithstanding Clause 5.17(b) above but subject to Clause 13, the

Company and the Supervisor shall be entitled at any time to vary or

discharge any provision of this Clause 5 without requiring the consent or

agreement of the Senior Creditors (or any of them).

PART IV : REGISTER AND TRANSFER OF CAPITAL NOTES

6 THE REGISTER

6.1 Obligation to Maintain Register

The Company shall appoint and maintain a Registrar (which may be the Company

itself (maintaining such Register among its general accounting records or

separately) or any other Person appointed by the Company as Registrar in respect

of the relevant Capital Notes) and cause the Registrar to establish and maintain the

Register in New Zealand. The Company shall comply with and shall use

reasonable endeavours to ensure that the Registrar complies with all legal

requirements and the requirements of this Deed and the Conditions relating to the

maintenance of registers of securities. Separate Registrars may be appointed in

respect of separate Classes or issues of Capital Notes.


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6.2 Entries in Register

There shall be entered in the Register the details required by any applicable law

and such other details as the Company thinks fit, including (without limitation):

(a) the number of Capital Notes and Certificates for the time being issued;

(b) the number of each Certificate;

(c) the Principal Amount, the rate of interest payable on the Principal Amount,

the Election Date(s), the payment dates and the currency of each Capital

Note;

(d) the names and addresses of the Holders;

(e) the date on which Capital Notes were issued or transferred to Holders;

(f) all transfers or changes of ownership of Capital Notes;

(g) particulars of any new or substitute Certificates issued; and

(h) all cancellations of Capital Notes.

6.3 Disclosure and Inspection of Register

The Supervisor, the Holders, the Company (and any other Person on payment of a

reasonable charge) shall, subject to applicable law, be at liberty at all reasonable

times during usual office hours:

(a) to inspect the Register; and

(b) to take copies (including electronic copies) of and extracts from the same

upon payment of a reasonable charge.

The Company shall ensure that the Registrar makes available for inspection, and

provides copies of or extracts from, the Register as required by, and in accordance

with, the FMCA.

6.4 Closure of Register

The Company may, from time to time, close the Register for the purpose of

establishing the Holders entitled to receive any payment by the Company or

Supervisor, or to vote at a meeting of Holders, or for the purpose of effecting an

election on an Election Date but any such closure shall (if the relevant Capital

Notes are quoted on any Stock Exchange) not exceed the times permitted by that

Stock Exchange for listed debt securities. The rights of the Supervisor under

Clause 6.6 shall not be prejudiced by such closure.


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6.5 Audit

The Register shall be audited annually in accordance with the FMCA and other

applicable law. Without limitation to the generality of the foregoing, the Register

must be audited (collectively or otherwise) in accordance with applicable auditing

and assurance standards by the Auditors annually within 4 months of the

Company’s balance date.

6.6 Register shall prevail:

The Supervisor and the Company shall:

(a) be entitled to rely upon the entries in the Register as constituting the sole

and conclusive record of all Capital Notes and Certificates and as to the

Persons entitled to the Capital Notes (being Holders);

(b) not be obliged or concerned to make further enquiry as to the status in

relation to this Deed, or ownership, of any claim, entitlement or interest not

so entered in the Register;

(c) not be deemed to have accepted:

(i) any liability for failure to make enquiry as is referred to in (b) above;

or

(ii) (in the case of the Supervisor only) any trusteeship for the Holders of,

or in respect of, any claim, entitlement or interest not entered in the

Register;

(d) have power, in their respective absolute discretion, to authorise the

correction of the Register upon being satisfied that the Register is incorrect,

and (in the case of the Supervisor only) to be deemed to have accepted

trusteeship in respect of Capital Notes and on behalf of the Holders thereof

as shown by the Register so corrected as from such date as the Supervisor

shall determine;

(e) in the case of the Supervisor, not be liable to the Company or any Holder or

former Holder for accepting in good faith as valid any Certificate or transfer

of a Capital Note, subsequently found to be forged, irregular or not

authentic; and

(f) in the case of the Company, not be liable to the Supervisor or any Holder or

former Holder for accepting in good faith as valid any Certificate or transfer

of a Capital Note, subsequently found to be forged, irregular or not

authentic.


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7 TRANSFER OF CAPITAL NOTES

7.1 Transfer

Capital Notes may be transferred by the Holders in accordance with such

procedures and on the production of such transfer and other documentation (if

any) as is determined by the Company to be appropriate either generally or for

particular Classes of Capital Notes. In any case, the transferor of Capital Notes

shall (notwithstanding any provisions to the contrary as contemplated in Clause

7.3) be deemed to remain the Holder until the name of the transferee has been

entered in the Register.

7.2 Death, Insanity or Bankruptcy of Holder

Any Person becoming entitled to any Capital Notes as a consequence of the death,

insanity or bankruptcy of a Holder may, upon producing such evidence as to its

right or title as the Directors shall require, be registered as the Holder or may

transfer such Capital Notes in accordance with the provisions of this Deed. The

executors or administrators of a deceased Holder (not being one of several joint

Holders) shall be the only Persons recognised by the Company and the Supervisor

as having any title to, or interest in, the Capital Notes so held by that Holder. In

the event of the death of any Holder who held any Capital Notes jointly, the

surviving joint Holder or Holders shall be the only Person or Persons recognised

by the Company and the Supervisor as having any title to or interest in such

Capital Notes. The Company may retain money which is payable upon any

Capital Notes to which this Clause 7.2 applies until a transmission or transfer of

the Capital Notes shall have been registered on such terms and conditions as it

considers reasonable.

7.3 Terms of Capital Notes Prevail

The above provisions of this Clause 7 shall (save as otherwise provided in the

second sentence in Clause 7.1) be subject to any terms and conditions of the

relevant Capital Notes which restrict or prescribe procedures for the transfer

thereof or which otherwise exclude or are inconsistent with such provisions.

PART V : REPRESENTATIONS, WARRANTIES,

COVENANTS AND REPORTS

8 COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1 Company Representations and Warranties

The Company represents and warrants to the Supervisor that:

(a) it is a company duly incorporated under the Companies Act and registered

under the Co-operative Companies Act;


32

(b) it has power to enter into this Deed, issue the Capital Notes and perform its

obligations hereunder and thereunder;

(c) it has all necessary consents and has taken all necessary corporate and other

action to authorise the execution and performance of this Deed and the

Capital Notes;

(d) its obligations under this Deed and the Capital Notes are legally binding and

(subject to the limitations on enforcement of remedies expressly provided

for in this Deed) enforceable in accordance with their respective terms,

subject to generally applicable limitations on the enforcement of remedies at

law, general equitable principles and to bankruptcy, insolvency or other laws

affecting creditors’ rights generally; and

(e) the execution and performance by it of its obligations under this Deed and

the Capital Notes do not violate in any respect any applicable provision of

any law, decree or regulation of any governmental or other authority, agency

or Court to which it is subject, or any of its constitutional documents, or any

agreement, charge or other instrument to which it is a party or which is or

may be binding on it or any of its assets.

8.2 Company Covenants

Subject to the terms and conditions (including the Conditions) of any particular

Capital Note, the Company covenants with the Supervisor that it will at all times

while any Capital Notes are outstanding:

(a) use its best endeavours to cause the Registrar to keep the Register pursuant

to the Agency Agreement;

(b) at all times maintain a Paying Agent, Calculation Agent and Registrar of

each Capital Note and a Calculation Agent of each Capital Note pursuant to

an Agency Agreement;

(c) give or procure that there is given to the Supervisor not less than 30 days’

prior notice of the appointment, variation or termination of the appointment,

of any Paying Agent, Calculation Agent or Registrar other than the

appointment of the first Agents or of any change of any of the Agent’s

specified office;

(d) comply with and perform all its obligations under the Agency Agreement

and use all reasonable endeavours to ensure that each of the Agents also

does so;


33

(e) obtain, effect and promptly renew from time to time all authorisations

required under any applicable law to enable it to perform and comply fully

with its obligations under this Deed and each Capital Note required on its

part for the validity or enforceability of this Deed and each Capital Note;

(f) duly and punctually comply with all laws (including all laws relating to the

environment and the payment of taxes) binding upon it the non-compliance

with which is likely to materially adversely affect the general interests of

Holders;

(g) if it has reasonable grounds to believe that it has contravened, may have

contravened, or is likely to contravene, any of its issuer obligations, as soon

as practicable, report the contravention, or possible contravention to the

Supervisor in writing and advise the Supervisor of the steps (if any) that it

has taken or intends to take in light of the contravention or possible

contravention, and the date by which the steps were taken or are to be taken;

(h) send copies to the Supervisor of all notices given by it to Holders generally;

(i) whenever so requested by written notice, make available or provide to the

Supervisor or any Person authorised by the Supervisor for these purposes,

all documents or records relating to the Company and any report or other

information (which may be about any matter relevant to the Supervisor’s

performance of its functions and include forward-looking reports) that the

Supervisor or its authorised person, by written notice, requires the Company

to make available or provide within the timeframe and in the manner

specified by the Supervisor or its authorised person in that notice provided

that such timeframe and manner are reasonable in the circumstances;

(j) if at any time the Capital Notes are entitled to be quoted on the Stock

Exchange, use reasonable endeavours to maintain such entitlement and

furnish to the Stock Exchange such information as it may require in

accordance with its normal requirements, or in accordance with any

arrangements for the time being made with the Stock Exchange;

(k) pay all duties, registration fees and other similar duties, or fees including

penalties (if any) payable on or in connection with the constitution and issue

of the Capital Notes, the execution and registration of this Deed and the

admissibility in evidence of each of them;

(l) carry on and conduct its business in a proper and efficient manner;

(m) within 14 days of the effective date of any amendments to, or the

replacement of, the constitutional documents of the Company, deliver to the


34

Supervisor copies of any documents amending or replacing such

constitutional documents (in each case, certified as true and up to date by an

officer of the Company);

(n) maintain its corporate existence and will not Amalgamate, merge or

consolidate with any person unless the resulting or surviving entity assumes,

to the satisfaction of the Supervisor, the obligations of the Company under

the Capital Notes;

(o) comply with the provisions of the FMCA and the FMC Regulations

applicable to the Capital Notes; and

(p) if the Company becomes aware of information on the basis of which it could

reasonably form the opinion that it is, or is likely to become, insolvent (as

defined in the FMCA), it will, as soon as practicable:

(i) disclose to the Supervisor all information relevant to that matter that is

in its possession or under its control and that was obtained in the

course of, or in connection with, the performance of its functions as

issuer; and

(ii) advise the Supervisor of the steps (if any) that it intends to take in

respect of that matter and the date by which the steps are to be taken.

8.3 Reports of Directors and Financial Statements

The Company covenants with the Supervisor that, for so long as any Capital Notes

are outstanding, the Company will deliver to the Supervisor:

(a) not later than four months after the end of the financial years and not later

than three months after the end of the financial half-years a copy of the

Latest Financial Statements for the preceding financial year or half-year (as

the case may be) audited in the case of the Latest Financial Statements for a

financial year, in each case, for the Company;

(b) not later than the times of delivery of the Latest Financial Statements for the

Company pursuant to paragraph (a) above, a report signed by two Directors

in the form set out in Schedule 2, or such other form as the Company and

the Supervisor may agree, stating the matters referred to therein as at the end

of and in respect of such year or half-year (as the case may be); and

(c) any report signed by at least 2 Directors on behalf of the board of the

Company that the Supervisor, by written notice, requires the Company to

provide within the timeframe specified by the Supervisor in that notice,

provided that such timeframe is reasonable in the circumstances.


35

8.4 Auditors’ Report

The Company shall provide to the Supervisor, at the same time as the audited

Latest Financial Statements for the Company are provided in accordance with

Clause 8.3(a), a separate report by the Auditors addressed to the Supervisor

stating:

(a) whether, in the course of performing their duties as Auditors, they have

become aware of any non-payment by the Company of any interest under

Capital Notes and if so the amount of the interest so unpaid;

(b) the aggregate Principal Amount of Capital Notes on issue and outstanding;

(c) whether the Register has been maintained;

(d) whether in the performance of their duties as Auditors they have become

aware of any matter which, in their opinion, is relevant to the exercise or

performance of the powers or duties conferred or imposed on the Supervisor

by this Deed or the FMCA, and if so giving particulars thereof;

(e) whether in their opinion there is reasonable assurance that, in all material

respects, the Register has been duly maintained in accordance with the

FMCA and the FMC Regulations and correctly contains the information

required by the FMCA and the FMC Regulations;

(f) whether their audit has disclosed any matter, and if so giving particulars

thereof calling in their opinion for further investigation by the Supervisor in

the interests of the Holders;

(g) that they have perused as part of their normal requirements for the

completion of their audit the reports of the directors of the Company under

Clause 8.3(b) given since the last report by the Auditors and whether, so far

as matters which they have observed in the performance of their duties are

concerned, anything has come to their attention which would cause them to

believe that any of the statements made in those reports are incorrect; and

(h) any other matter required by the FMCA or the FMC Regulations to be set

out in that report.

Notwithstanding the above and without limiting the other provisions of this Deed,

the Auditors’ report may be provided in such other form as may be agreed

between the Company, the Supervisor and the Auditors from time to time.


36

8.5 Appointment of Auditors

(a) For so long as any Capital Notes are outstanding, the Company must, before

recommending the appointment or reappointment of a Person as an auditor

of the Company:

(i) consult with the Supervisor on such appointment or reappointment and

the nature and scope of any assurance engagement in relation to the

Company’s compliance with this Deed;

(ii) ensure that any comments of the Supervisor concerning the proposed

Auditors are brought to the attention of the persons appointing or

reappointing the Auditors;

(iii) give the Supervisor an opportunity to be a party to the assurance

engagement for the purpose of the Supervisor obtaining assurance of

matters relevant to the exercise or performance of the Supervisor’s

powers or duties;

(iv) ensure that the terms of appointment of the Auditors, whether the

Auditors are conducting an audit, review or other engagement, include

that the Auditors will give the Supervisor an opportunity to meet with

the Auditors, without any representative of the Company being

present, to raise or discuss:

(A) at the beginning of such engagement, any issues or concerns

relevant to the exercise or performance of the Supervisor’s

powers or duties; and

(B) matters arising in the performance of such engagement and to

answer any questions the Supervisor may have concerning such

engagement.

(b) For so long as any Capital Notes are outstanding, the Company must notify

the Supervisor if the Auditors resign from appointment, or decline to accept

appointment or reappointment, and must pass on to the Supervisor any

explanation provided by the Auditors for resigning their appointment or

declining to accept appointment or reappointment. The Company must not

attempt to prevent any person who has resigned its appointment as an

auditor, or declined to accept an appointment or reappointment as an

auditor, from offering an explanation, or disclosing to the Supervisor the

reason, for resigning or declining appointment or reappointment.


37

PART VI : SUPERVISOR PROVISIONS - POWERS, DUTIES,

INDEMNITIES, REMUNERATION AND SUBSTITUTION

9 POWERS, DUTIES AND DISCRETIONS OF SUPERVISOR

9.1 Powers

In addition to the provisions of the law relating to trustees and to facilitate the

discharge of its duties hereunder it is expressly declared that:

(a) the Supervisor may, subject to the provisions of this Deed and the FMCA

(but without limiting its powers under the FMCA), without liability for loss,

obtain, accept and act on, or decline and elect not to act on:

(i) the opinion or advice of, or any information obtained from, any

barrister, solicitor, valuer, stockbroker, surveyor, auctioneer, chartered

accountant or other expert whether obtained by the Company, the

Supervisor or otherwise;

(ii) a certificate signed by any two Directors on behalf of the Directors as

to any fact or matter prima facie within their knowledge upon which

the Supervisor may in the exercise of any of the trusts powers

authorities and discretions and provisions hereof require to be

satisfied, or that any particular dealing transaction step or thing is

expedient or commercially desirable and not detrimental to the

interests of the Holders or any Class of Holders, as sufficient evidence

of such fact or matter or the expediency or desirability of such dealing

transaction step or thing;

(iii) the statements contained in any certificate or certificates or in any

report or reports given pursuant to the provisions of this Deed, as

conclusive evidence of the facts stated therein;

(b) the Supervisor shall not be responsible for acting or relying upon any

resolution purporting to have been passed at any meeting of the Holders or

any Class thereof in respect whereof a proper record has been made and

which the Supervisor believes to have been properly and regularly passed,

even though it afterwards appears that such resolution is not binding or valid

by reason of a defect in the convening of the meeting or the proceedings

thereat or otherwise howsoever;

(c) the Supervisor shall not be responsible for the money subscribed by the

applicants for or subscribers of the Capital Notes or be bound to see to the

application thereof, or for the delivery of Certificates or letters of allotment


38

or certificates representing the Capital Notes (when issued) to the Persons

entitled to them;

(d) the Supervisor will not be under any liability to the Company or the Holders

whatsoever unless the Supervisor has failed to show the degree of care and

diligence required of it or having regard to the powers, authorities,

discretions or responsibilities conferred or imposed upon it by this Deed or

by law and the limitations thereon contained in and implied by this Deed

and the Conditions;

(e) save as herein otherwise expressly provided, the Supervisor shall, as regards

all trusts, powers, authorities and discretions vested in it by this Deed have

absolute and uncontrolled discretion as to the exercise or non-exercise

thereof and as to the commencement, prosecution, variation, discontinuance,

or compromise of any action proceeding or claim and provided it shall have

acted with reasonable care and diligence it shall not be responsible for any

loss, costs, damages or expenses or inconvenience that may result from the

exercise or non-exercise thereof;

(f) the Supervisor must not delegate any of its functions under Clauses 9.9(a)(i)

to (iii) unless such delegation is expressly permitted by the FMCA or,

permitted by, and then subject to, conditions imposed under the FMSA but

may, for the avoidance of doubt, delegate its other functions. Where the

Supervisor may delegate its functions, it may, whenever it thinks it

expedient in the interests of the Holders to do so:

(i) delegate at any time or times to any Person or Persons any of the

trusts, powers, or discretions vested in the Supervisor by this Deed

which cannot conveniently be exercised by it or through its employees

upon such terms and conditions and under such regulations (including

the giving of power to sub-delegate) as the Supervisor may in the

interests of the Holders think fit and (subject to Clause 10.2) the

Supervisor shall not be responsible for any loss incurred by any

misconduct or default on the part of any such delegate or sub-delegate;

(ii) instead of acting through its permanent employees in the carrying out

of any of the trusts powers or discretions hereby vested in it employ an

agent to transact all business and do all acts required to be done under

this Deed including the receipt and payment of money; and

(iii) delegate from time to time and at any time to any of its officers any of

the trusts, powers, authorities and discretions vested in the Supervisor

by this Deed which owing to the place in which they are to be or may


39

require to be exercised cannot conveniently be exercised by the

Supervisor;

(g) without limiting Clause 9.1(a)(i), engage from time to time an expert (for

example, an auditor, investigating accountant, valuer or actuary) if it

considers, on reasonable grounds, that it requires the assistance of the expert

to:

(i) determine the financial position of the Company; or

(ii) review the business, operation, management systems or the

governance of the Company.

Where the Supervisor engages an expert pursuant to this Clause 9.1(g) the

Company shall provide reasonable assistance to the expert to allow the

expert to provide the assistance, and (without limiting Clauses 10 or 12.2)

the fees and expenses of the expert, which must be reasonable in the

circumstances, shall be paid by the Company.

(h) the Supervisor’s powers to cause the remedying of any contravention of the

provisions of this Deed shall be subject to any other provision of this Deed

which is inconsistent with the exercise of such powers;

(i) any consent given by the Supervisor for the purposes of this Deed may be

given on such terms and conditions (if any) as the Supervisor reasonably

thinks fit;

(j) the Supervisor may determine whether or not a failure by the Company to

perform any obligation under the provisions of the Conditions or this Deed

is in its opinion capable of remedy and/or is materially prejudicial to the

interests of the Holders and any such determination shall be conclusive and

binding upon the Company and the Holders;

(k) any moneys held by the Supervisor and subject to the trusts contained in this

Deed may, at the Supervisor’s discretion, be invested in the name of the

Supervisor or its nominee in any investments permitted for the investment of

trust funds as determined by the Supervisor (including, if the Company so

requests, in the purchase or subscription for Capital Notes) with power to

vary such investments and from time to time to deal with or dispose of all

such investments or any part thereof. The income arising from the

investments made by the Supervisor shall, unless and until the

Commencement of Liquidation of the Company, belong to the Company;


40

(l) any representative of the Supervisor, being a person authorised to act for the

purposes of this Clause by any director, general manager or secretary of the

Supervisor, shall be entitled to attend any general meeting of the Company,

and to be heard at any such meeting which he or she attends on any part of

the business of the meeting which concerns the Supervisor as such or the

Holders; and

(m) the Supervisor may, whenever it thinks it expedient in the interests of the

Holders to do so, apply to a Court at any time for an order:

(i) under section 208 of the FMCA, if the Supervisor is satisfied that:

(A) the Company is unlikely to be able to pay all money owing in

respect of the Capital Notes as and when due;

(B) the Company is insolvent (as defined in the FMCA) or the

security of benefits or the financial position or management of

the Company is otherwise inadequate;

(C) there is a significant risk that the interests of Holders will be

materially prejudiced for any other reason;

(D) the provisions of this Deed are no longer adequate to give proper

protection to the interests of the Holders; or

(ii) under section 210 of the FMCA and within 20 working days (or, with

leave of the court, within any longer period) after the passing of an

Extraordinary Resolution of Holders, directing it not to comply with

an Extraordinary Resolution of Holders,

and it may consent to, approve or oppose any application to a Court by the

Company or by or at the instance of any Holder or the FMA.

9.2 Discretion to Consult Holders

In the event of any breach of the provisions of this Deed on the part of the

Company or the occurrence of any circumstances which may result in such a

breach which the Supervisor is reasonably satisfied may have a material adverse

effect on the Holders, the Supervisor may, in its absolute discretion:

(a) require the Company to report the circumstances and nature of such breach

and any other information concerning the Company which the Supervisor

has received under or in relation to this Deed or the Capital Notes and which

it reasonably considers to be material to the Holders or any of them; and


41

(b) require the Company to request the Holders to indicate to the Supervisor

their preferences as to any exercise or non-exercise of the Supervisor’s

powers under this Deed or the Capital Notes or as to any action or omission

to act by the Supervisor in relation to the breach or any other matter or thing.

If the Company fails to so communicate to Holders, the Supervisor may, subject to

Clause 9.5, itself do so. Any such report shall be given in such manner as is

considered by the Supervisor to be the most practicable and expedient in all the

circumstances.

9.3 Supervisor’s Right to be Indemnified

To the extent permitted by law and subject to Clause 10.2, the Supervisor may

decline to take any action or exercise any power or discretion or comply with or

implement any direction or request given pursuant to the provisions of this Deed

whether or not it is otherwise bound to so act if in its reasonable view it and each

of its officers, employees or agents is not adequately indemnified by the Company

under this Deed or otherwise against all actions, proceedings, claims and demands

to which any of them may be rendered liable and all costs, charges, losses,

damages and expenses which it or they may incur by so doing, including in respect

of any action taken or not taken in pursuance of a request or instruction to

represent or act on behalf of Holders collectively or any of them, whether or not in

pursuance of a role or an exercise of powers expressly set out in this Deed. The

Supervisor may not, however, so decline to take any action or exercise any power

or discretion or comply with or implement any direction or request where it and

each of its officers, employees or agents is so indemnified to its satisfaction by

such person or persons as are acceptable to the Supervisor.

9.4 Fiduciary Relationship

The Supervisor shall not be entitled to be a Holder on its own account. Nothing in

this Deed prohibits the Supervisor from being a Holder in any supervisor, agency,

nominee or other representative capacity or from being a creditor or shareholder

of, or having any other interest in, the Company or of any of its subsidiaries or

from acting in any other fiduciary, contractual, agency or representative capacity

for a Holder, the Company or any of its subsidiaries without breach of any

obligations established by this Deed or otherwise imposed or implied by law

arising out of any such relationship. The Supervisor may enter into any

transactions with the Company or any of its subsidiaries in the ordinary course of

business and will not be accountable to the Holders for any profits arising from

such transactions. Nothing in this Trust Deed prohibits any holding company or

subsidiary company of the Supervisor or any employees or directors of the

Supervisor or of any of its holding companies or subsidiary companies from

holding, either absolutely as owner or in any other capacity, any Capital Notes, or

dealing in or giving advice in respect of Capital Notes.


42

9.5 No duty to disclose

The Supervisor is not (unless and to the extent ordered to do so by a court of

competent jurisdiction) required to disclose to any Holder any financial or other

information made available to the Supervisor by the Company or any adviser to

the Company, in connection with this Deed.

9.6 Restricted duties to the Company and its subsidiaries

The Supervisor has no duties under this Deed to the Company or any subsidiary or

holding company of the Company in their capacity as Holders, except the duties

arising under the Conditions.

9.7 No duty in respect of Company rights under Constitution

For the avoidance of doubt, and without limiting any provision of this Deed, the

Supervisor has no duty to make any enquiries in relation to, consent to, or exercise

any discretion in respect of, the exercise of any right or discretion of the Company

conferred by, or referred to in, the Constitution.

9.8 Supervisor may attend meeting of shareholders of Company

The Supervisor may attend, by a representative or a proxy, all meetings of

shareholders of the Company and at any such meeting may raise and speak on any

matter of concern to the Supervisor or any Holder.

9.9 Statutory duties of Supervisor

(a) In accordance with the FMCA, the Supervisor:

(i) is responsible for acting on behalf of the Holders in relation to the

Company, any matter connected with this Deed or the terms of the

offer of the Capital Notes and any contravention or alleged

contravention of the Company’s issuer obligations;

(ii) is responsible for supervising the Company’s performance:

(A) of its issuer obligations; and

(B) in order to ascertain whether or not the assets of the Company

that are or may be available, whether by way of security or

otherwise, are sufficient or likely to be sufficient to discharge the

Capital Note Obligations as they become due;

(iii) is responsible for performing and exercising any other functions,

duties and powers conferred or imposed on the Supervisor by this

Deed, the FMCA and the FMSA;


43

(iv) must:

(A) act honestly in acting as supervisor;

(B) in exercising its powers and performing its duties as supervisor,

act in the best interests of the Holders;

(C) exercise reasonable diligence in carrying out its functions as

supervisor;

(v) must do all the things it has the power to do to cause any

contravention or alleged contravention of the Company’s issuer

obligations to be remedied unless it is satisfied that the contravention

will not have a material adverse effect on the Holders of the Capital

Notes;

(vi) subject to any court order made under section 210 of the FMCA, must

act in accordance with any direction given by an Extraordinary

Resolution of Holders or an affected Class of Holders that is not

inconsistent with any enactment, rule of law or this Deed in relation

to:

(A) seeking a remedy to a contravention or alleged contravention of

the Company’s issuer obligations in respect of the Capital Notes;

and

(B) any other matter connected with the Supervisor’s functions; and

(vii) in exercising its powers and performing its duties as supervisor, must

exercise the care, diligence, and skill that a prudent person engaged in

the business of acting as a licensed supervisor (as those terms are

defined in the FMCA) would exercise in the same circumstances.

(b) The Supervisor has entered into this Deed on the basis that the duties of the

Supervisor as prescribed in the FMCA and as described in Clause 9.9(a)

shall be construed and interpreted to recognise and take into account the

following characteristics of the Capital Notes:

(i) they are debt securities which do not become due for payment, and in

relation to which no payment of interest can be compelled, except in

accordance with Clause 5.11(e) or upon the Liquidation of the

Company;


44

(ii) the Company may freely incur further indebtedness as referred to in

Clause 4.2;

(iii) the subordination and the postponement in priority of the Capital

Notes to the claims of Senior Creditors; and

(iv) the limitations on the rights of the Holders and the Supervisor on

behalf of the Holders to compel or enforce payment of any principal,

interest or other sums and the other limitations on the rights of the

Holders or the Supervisor (including in respect of any breach by the

Company) provided in this Deed (and/or the applicable Conditions),

and shall, to the maximum extent permitted by law, be limited accordingly.

All Holders shall be deemed to have knowledge of and to have accepted that the

duties and obligations of the Supervisor pursuant to the FMCA shall be construed,

interpreted and limited (to the extent permitted by law) as above provided.

9.10 Acting on Instructions

Whenever any authorisation or approval for or in respect of the taking of any

action or other matter, or any direction to take, or in respect of the taking of, any

action or other matter, may under the provisions of this Deed be given to the

Supervisor by Extraordinary Resolution, the Supervisor may act in reliance upon

such authorisation or approval or (as the case may be) shall act in accordance with

any such direction, and shall not be responsible for any loss, costs, damages,

expenses or inconvenience that may result from the actions so taken in reliance

thereon.

9.11 Representation and warranty

The Supervisor represents and warrants to the Company and the Holders that it is

licensed (as that term is defined in the FMCA) and that such licence covers the

supervision of all Capital Notes issued under this Deed. The representation and

warranty contained in this Clause 9.11 shall be deemed to be repeated for the

benefit of the Company and each Holder on each Issue Date and on each Interest

Payment Date for each Capital Note.

10 INDEMNITY OF SUPERVISOR

10.1 Indemnity

Without prejudice to the right of indemnity by law given to trustees and subject to

Clause 10.2, the Supervisor and every attorney, manager or agent or other person

appointed by the Supervisor hereunder or under any deed supplemental or

collateral hereto shall be entitled to be indemnified out of any funds held by it

pursuant to this Deed and in priority to the Holders:


45

(a) in respect of all liabilities and expenses incurred by it or any of them in the

execution or purported execution of the trusts hereof or of any powers,

authorities or discretions in it or any of them pursuant to this Deed; and

(b) against all actions, proceedings, costs, claims and demands in respect of any

matter or thing done or omitted or in any way relating to this Deed,

other than any of the foregoing which arise out of the Supervisor’s gross

negligence or wilful default or breach. The Supervisor may retain and pay out of

any moneys in its hands arising from the trusts of this Deed, all sums necessary to

effect such indemnity and also the remuneration and disbursements of the

Supervisor as herein provided.

10.2 Limitation on Indemnity

The Supervisor’s rights to be indemnified in relation to the performance of the

Supervisor’s licensee obligations (as that term is defined under section 4 of the

FMSA) under this Deed are available only in relation to the proper performance of

its duties under Clauses 9.9(a)(iv) and 9.9(a)(vii) and no other provision of this

Deed that is contrary to the foregoing shall have any effect.

11 CHANGE OF SUPERVISOR

11.1 Change of Supervisor

Subject to any limitation imposed by applicable statute and in the case of Clauses

11.1(a) to 11.1(c) to the appointment and acceptance of a successor Supervisor as

provided in Clause 11.2, the Supervisor having performed all its functions and

duties or a court consenting to such resignation or removal (as applicable):

(a) the Supervisor may retire at any time without assigning any reason therefor

upon giving ninety days’ notice in writing to the Company of its intention to

do so;

(b) the Company may, with consent of the FMA, remove the Supervisor from

office by giving not less than 30 days’ written notice to the Supervisor;

(c) the Holders may remove the Supervisor from office by passing of an

Extraordinary Resolution of each Class of Holders to that effect; or

(d) the FMA or the Company may remove the Supervisor from office in

accordance with Part 2 of the FMSA.

11.2 Appointment of Substitute Supervisor

The power of appointing a substitute supervisor in place of a supervisor which has

retired or has ceased to exist or to be qualified pursuant to applicable legislation


46

for appointment as supervisor hereunder, or which is removed from office, shall

be vested in the Company (subject to obtaining the approval of the Holders by

Extraordinary Resolution).

12 SUPERVISOR’S REMUNERATION

12.1 Remuneration

The Company shall pay to the Supervisor by way of remuneration for its services

hereunder:

(a) a periodic fee of such amount and at such times as may be agreed in writing

from time to time; and

(b) such additional fees as set out in Clause 12.4,

provided that:

(c) the Supervisor may elect payment of remuneration determined by and

commensurate with work actually required to be carried out by the

Supervisor hereunder in lieu of the above fees; and

(d) any failure to agree on any amounts payable to the Supervisor under Clauses

12.1(a) to 12.1(c) shall be referred to arbitration under the Arbitration Act

1996 or in such other manner as the Company and the Supervisor may

agree.

12.2 Expenses

The Company will also pay all expenses (including travelling expenses and

reasonable legal fees incurred on an own client basis) reasonably incurred by or on

behalf of the Supervisor in connection with the preparation and execution of this

Deed and of any deed collateral or supplemental hereto and the exercise of any

power or execution of any trust conferred on the Supervisor hereunder (including

without limitation the taking of any expert advice reasonably deemed necessary by

the Supervisor).

12.3 Payable on Demand

All expenses incurred or payments made in the lawful exercise of the powers

hereby conferred on the Supervisor shall be payable on demand.

12.4 Additional Fees

The Company will also pay on demand any reasonable charges on a full indemnity

basis made by the Supervisor for work done by it in connection with:


47

(a) any application under the trusts or provisions hereof for its consent to or

approval of any thing act or matter;

(b) the preparation, execution and variation (and release when applicable) of

this Deed (including any supplemental deed) and any registration cost in

connection with any of them;

(c) the exercise or attempted exercise by the Supervisor of any power or

discretion conferred on the Supervisor by this Deed in respect of the Capital

Notes, or the performance of its duties, including the taking of any expert

advice;

(d) any breach, default or non-compliance by the Company of or with any

obligation under this Deed or the Capital Notes;

(e) the convening and holding of any meeting of the Holders and carrying out of

any directions or resolutions of such a meeting; and

(f) any other matters dealt with in the arrangements referred to in Clause

12.1(a).

PART VII : MODIFICATION OF TRUST DEED AND SUBSTITUTION

13 MODIFICATIONS

13.1 The Supervisor may concur with the Company in making any modifications or

additions to this Deed or to the terms and conditions of any Capital Notes:

(a) No Consent

Without the consent of the Holders if the same:

(i) shall be made to correct a manifest error or is of a formal or technical

nature; or

(ii) is necessary to ensure that the tenor or nature of the obligations

imposed upon the Company hereunder correspond with or do not

conflict with the obligations imposed on the Company under or

pursuant to the FMCA, the Companies Act, the Co-operative

Companies Act, or the Financial Reporting Act or by any other

applicable statutory provision; or

(iii) shall be convenient for the purpose of obtaining or maintaining a

quotation of any Capital Notes on any Stock Exchange in New

Zealand or elsewhere; or


48

(iv) shall be made to comply with the requirements or any modification of

the requirements of any applicable law; or

(v) is in respect of any of the provisions for reporting to the Supervisor

under this Deed; or

(vi) is in respect of any modification required pursuant to Clause 5.12 or

5.17 of this Deed; or

(vii) is in the Supervisor’s reasonable opinion an appropriate and

reasonable modification in all the circumstances in so far as they relate

to this Deed and the Company (as to which modifications are

necessary or convenient for complying with any practice of the New

Zealand financial markets or for complying with banking practice, or

are necessary convenient or useful for the purpose of any financial

market, banking or business practice or technique or method adopted

by either the Company or Persons which carry on similar business to

the Company, shall be prima facie deemed reasonable and

appropriate), provided that, if Capital Notes have been issued, the

Supervisor is satisfied that any such modification or addition will not

have a material adverse effect on the ability of the Company to pay the

Capital Note Obligations due in the reasonably foreseeable future or

have a material adverse effect on the Holders,

and, in any such case, the Supervisor is satisfied that such amendment will

not have a material adverse effect on the Holders; or

(viii) the Supervisor is satisfied that such amendment will not have a

material adverse effect on the Holders.

(b) Extraordinary Resolution

If the same shall be approved by an Extraordinary Resolution of the Holders

or each class of Holders that is or may be adversely affected;

(c) All Holders

If the same shall be approved in writing by all the Holders (and such

authorisation may be given in one or more documents in similar form); or

(d) FMA

If the FMA is satisfied that the same is necessary to enable this Deed to

comply with the FMCA or any other enactment or any rule of law and

consents to the same,


49

provided that, in each case, the Supervisor must, where required by the FMCA,

provide or, where applicable, obtain the certificates required under section

108(2)(b) of the FMCA.

13.2 Consent of Majority of Holders

Where any consent, approval or direction (whether generally, in principle or

otherwise) has been given by the Holders by Extraordinary Resolution in respect

of any matter, then any further consent, approval, direction or other action by or

on behalf of the Holders and/or the Supervisor which may be necessary to give

effect to that matter, or which is otherwise permitted by the terms of such

Extraordinary Resolution, may be given or taken by or on behalf of the Holders

and/or the Supervisor by notice given (or other documentation signed) by a simple

majority of Holders.

13.3 Modifications Binding

Any such modification or addition shall be binding on all Holders.

13.4 Notice of Modification or Amendment

Notice of any modification or addition made pursuant to Clause 13.1(a), including

a description of the modification or addition, shall be provided by the Company to

the Holders within 10 working days of the modification or addition being made,

unless the Supervisor notifies the Company that such notification is not required

to be provided to the Holders or it would be appropriate to give notice of the

modification or addition in some other manner.

14 WAIVER

14.1 Temporary Variation

In addition to and not in abrogation of or substitution for Clause 13 (but subject to

any applicable law) the Supervisor may temporarily vary the provisions of this

Deed or the terms and conditions of any Capital Notes in each case for such period

and on such terms as:

(a) the Supervisor may deem appropriate provided that it is satisfied that such

variation will not have a material adverse effect on the Holders and the

Supervisor provides or, where applicable, obtains the certificates required

under section 108(2)(b) of the FMCA; or

(b) may be approved by Extraordinary Resolution of Holders, or Holders of the

relevant Class, as applicable, in accordance with section 108(3) of the

FMCA.


50

14.2 Waivers

Subject to any applicable law by notice to the Company the Supervisor may waive

any breach or anticipated breach by the Company of this Deed or of the terms and

conditions of any Capital Notes either wholly or in part for a specified period or

indefinitely and on such other terms and conditions as:

(a) it deems expedient provided that it shall be satisfied that such waiver will

not have a material adverse effect on the Holders and provided further that

no such waiver shall prejudice the rights of the Supervisor or the Holders in

respect of any other breach; or

(b) may be approved by Extraordinary Resolution.

Any waiver given by the Supervisor shall bind all Holders.

15 CONSTRUCTION BY REFERENCE TO ANALOGOUS OBLIGATIONS

AND EXEMPTIONS

The Supervisor acknowledges and the parties hereto declare that notwithstanding

the provisions of this Deed any obligation of the Company hereunder that is

materially the same as or analogous to any obligation imposed upon the Company

by or pursuant to the FMCA shall be construed subject to any relevant exemption

granted or applicable to the Company pursuant to the FMCA and to any

modifications hereafter made to such Act and shall only be enforceable against the

Company to such extent.

16 SUBSTITUTED OBLIGOR

16.1 Substitution

The Supervisor may agree, without the consent of the Holders (except in the

circumstances referred to in Clause 16.7), to the substitution in place of the

Company in respect of all or any Capital Notes (“Relevant Capital Notes”) (or of

any previous Substituted Obligor under this Clause 16), as the principal debtor

under this Deed in respect of the Relevant Capital Notes, of any other body

corporate incorporated in any country in the world (in this Clause 16 called the

“Substituted Obligor”), provided that:

(a) Trust Deed: a trust deed is executed or some other form of undertaking is

given by the Substituted Obligor to the Supervisor, in form and manner

satisfactory to the Supervisor, agreeing to be bound by the terms of this

Deed and the Relevant Capital Notes with any consequential amendments

that may be appropriate as fully as if the Substituted Obligor had been

named in this Deed and on the Relevant Capital Notes as the principal


51

debtor in place of the Company (or of any such previous Substituted

Obligor);

(b) Maintain rights: arrangements are made satisfactory to the Supervisor for

the Holders of the Relevant Capital Notes to have or be able to have the

same rights mutatis mutandis against the Substituted Obligor as they have

against the Company (or any such previous Substituted Obligor);

(c) Other requirements: the Company (or any such previous Substituted

Obligor) and the Substituted Obligor comply with such other reasonable

requirements as the Supervisor may direct in the interests of the Holders of

the Relevant Capital Notes, which may include a requirement that the

Company remains bound by all or certain of the provisions of this Deed in

respect of the Relevant Capital Notes;

(d) Approvals: the Supervisor is satisfied that:

(i) the Substituted Obligor has obtained all necessary governmental

and regulatory approvals and consents necessary for its assumption

of the obligations and liability as principal debtor under this Deed

in respect of the Relevant Capital Notes in place of the Company

(or of any such previous Substituted Obligor); and

(ii) such approvals and consents are at the time of substitution in full

force and effect; and

(e) Guarantee: if the Substituted Obligor is a subsidiary of the Company, the

Company enters into a guarantee in favour of the Supervisor on behalf of the

Holders (which, for the avoidance of doubt, will rank behind the interests of

Senior Creditors and will be subject to the same subordination provisions as

are set out in Clause 5 and the Conditions), under which the Company

guarantees the performance of the Substituted Obligor’s obligations under

the trust deed executed in accordance with Clause 16.1(a) and under this

Deed;

(f) Clause 16.7: if applicable, the requirements of Clause 16.7 are satisfied.

16.2 Release of Obligations

Any such agreement by the Supervisor pursuant to Clause 16.1 shall to the extent

so expressed in such agreement operate to release the Company or previous

Substituted Obligor (as the case may be) from any or all of its obligations under

this Deed in respect of the Relevant Capital Notes. Not later than 14 days after the

execution of any such documents as aforesaid and after compliance with the


52

Supervisor’s said requirements, the Supervisor shall give notice thereof to the

Holders in the manner provided in Clause 17.

16.3 Amendments

Upon the execution of such documents and compliance with the said requirements

the Substituted Obligor shall be deemed to be named in this Deed and on the

Relevant Capital Notes as the principal debtor in place of the Company or any

previous Substituted Obligor, and this Deed the Relevant Capital Notes shall

thereupon be deemed to be amended in such manner as shall be necessary to give

effect to the substitution and without prejudice to the generality of the foregoing

any references in this Deed, in the Relevant Capital Notes to the Company or any

previous Substituted Obligor shall be deemed to be references to the Substituted

Obligor.

16.4 Solvency

If any two directors or equivalent officers of the Substituted Obligor shall certify

to the Supervisor that the Substituted Obligor is solvent at the time at which the

said substitution is proposed to be effected the Supervisor shall not be bound to

have regard to the financial condition profits or prospects of the Substituted

Obligor or to compare the same with those of the Company or any previous

Substituted Obligor.

16.5 Interests of Holders

In connection with any substitution in accordance with this Clause 16, the

Supervisor shall not have regard and shall be released from any obligation or duty

it might otherwise have under this Deed or implied at law in relation to the

exercise of any of its discretions or powers under this Clause 16 or to advising

Holders in connection with any meeting of same, to have regard to the

consequences of such substitution for individual Holders resulting from their

being for any purpose domiciled or resident in or otherwise connected with or

subject to the jurisdiction of any particular territory and the Supervisor shall not be

entitled to require nor shall any Holder be entitled to claim from the Company or

any previous Substituted Obligor any indemnification or payment in respect of any

tax consequences of any such substitution upon individual Holders except to the

extent already provided for by the terms and conditions of the Relevant Capital

Notes, provided that the indemnity in favour of the Supervisor in Clause 9.3 shall

extend to any costs, claims, demands or losses actually suffered or incurred (as the

case may be) by the Supervisor arising out of its compliance with this Clause 16.5.

16.6 Supervisor’s Discretion

The exercise or non-exercise of the Supervisor’s rights and powers under this

Clause 16 and the terms of any such exercise, shall be at the discretion of the

Supervisor which may refuse to exercise the same without the approval of an

Extraordinary Resolution of the Holders of the Relevant Capital Notes provided


53

that where the Substituted Obligor is a Subsidiary of the Company the Supervisor

shall not refuse to exercise its powers to agree to such substitution unless there is

reasonable evidence indicating the likelihood that the Holders of the Relevant

Capital Notes will be materially prejudiced thereby.

16.7 Extraordinary Resolution Required

Notwithstanding any other provision of this Clause 16, where the Substituted

Obligor is not a Subsidiary of the Company, the Company must obtain the

approval of the Holders of the Relevant Capital Notes to the exercise of the rights

and powers under this Clause 16 (which approval shall be given by way of

Extraordinary Resolution of the Holders of the Relevant Capital Notes).

PART VIII : MISCELLANEOUS PROVISIONS

17 NOTICES

17.1 Notices

Any notice demand consent or request under this Deed shall be in writing and may

be signed or given by or on behalf of the Company, the Supervisor, or any Holder

(whichever party is the giver thereof) by such Person or by an officer employee

agent attorney or solicitor thereof and may be given:

(a) To or By Holders: to Holders of Capital Notes by prepaid letter addressed to

their relevant addresses last recorded in the Register, or in the case of a

notice to a corporation or to the Supervisor at its registered office or

principal place of business, or in any case by email to the relevant specified

email address; or

(b) Parties to this Deed: by any party to this Deed to any other party (unless

that other party has by 15 days written notice specified another address) by

making or delivering it to that other party at the address shown below:

(c) if to the Company to:

Fonterra Co-operative Group Limited

109 Fanshawe Street

Auckland Central

Auckland 1010

Fax No: (09) 379 8221

Email address: [email protected]

Attention: Fonterra Treasury


54

(d) if to the Supervisor to:

The New Zealand Guardian Trust Company Limited

Level 15

191 Queen Street

Auckland

Fax No: (09) 969 3732

Email address: [email protected]

Attention: General Manager – Corporate Trusts

17.2 Effectiveness

Notices given pursuant to this Deed shall be deemed to have been made or given:

(a) Delivery: in the case of delivery, when received;

(b) Telephone/Telex etc: in the case of facsimile and other telephone or

mechanical transmission, when despatched (and, in the case of notice by

facsimile, confirmation of transmission received);

(c) Mail: in the case of posting, on the second day following the date of

posting; and

(d) Electronic mail: in the case of electronic mail, when actually received in

readable form,

provided that:

(e) any notice given by mail or email to a Holder with no registered or notified

address in New Zealand shall be deemed to have been received by that

Holder 24 hours after that notice was posted or sent; and

(f) except in the case of notices to or by the Holders of Capital Notes, if any

notice would be deemed made or given after 4.00 pm on any business day in

the locality of the recipient (“local business day”) or on any day that is not a

local business day such notice shall be deemed made or given at 9.00 am on

the next succeeding local business day.

17.3 Proof of Notice

In proving the making or giving of any notice:

(a) Execution: it shall not be necessary to prove that any facsimile or

telephonically, mechanically or electronically transmitted notice was

manually or originally executed by the Person making or giving it;


55

(b) Addresses etc: it shall be sufficient to prove that the notice was delivered or

sent properly addressed encoded numbered and stamped or (as the case shall

require) in the customary manner of the method of notification adopted;

(c) Joint Holders: a notice to joint Holders shall be deemed to have been

properly made or served on each Holder if made or given in accordance with

this Deed to the Holder whose name stands first in the Register.

18 MEETINGS OF HOLDERS

18.1 Convened by the Company

At the request in writing of the Supervisor or of any Holder(s) holding at least 5

per centum in Principal Amount of the Capital Notes (or class of Capital Notes)

for the time being outstanding (with such requisition signed by, or on behalf of,

those Holders) the Company shall summon a meeting of the Holders or the

Holders of any Class. The Company may, having first notified the Supervisor of

its intention to summon the meeting and the time and place thereof, summon a

meeting of the Holders or any Class thereof for such purpose as the Company

considers appropriate.

18.2 Convened by the Supervisor

At any time the Supervisor may summon a meeting of Holders or any Class of

Holders to consider such business as shall be placed before such meeting.

18.3 Other Rules

Subject to compliance with any applicable laws and the listing rules of any

applicable Stock Exchange, the Supervisor may without the consent of the

Holders agree with the Company to the adoption of supplemental rules or

procedures for meetings of Holders and/or variations to the rules and procedures

applying to such meetings set out in Schedule 1. Subject to the foregoing,

meetings of Holders shall be convened and conducted in accordance with the rules

and procedures set out in Schedule 1. Regulation 78 and schedule 11 of the FMC

Regulations (other than clauses 2 and 5 of schedule 11) do not apply except to the

extent incorporated into schedule 1. For the avoidance of doubt, in respect of any

meeting involving Holders to approve an Extraordinary Resolution, to the extent

of any inconsistency, clauses 2 and 5 of schedule 11 of the FMC Regulations shall

prevail over any regulation in Schedule 1 (except to the extent clauses 2 and 5 of

schedule 11 of the FMC Regulations are expressly subject to, or allow matters to

be set by, a trust deed).


56

19 DOCUMENTS

The Company must retain, make available for inspection, provide and deliver

copies of or extracts from any document or information as required by, and in

accordance with, the FMCA for such fee as permitted by the FMCA.

20 RELEASE UPON PAYMENT

Upon being indemnified to its satisfaction pursuant to Clause 9.3 and upon proof

being given to the reasonable satisfaction of the Supervisor that all of the Capital

Note Obligations have been paid or satisfied or that provision for such payment or

satisfaction has been made in accordance with the provisions of this Deed and

upon payment or retention of all costs, charges and expenses incurred by, or

payable to, the Supervisor in relation to this Deed and the remuneration of the

Supervisor and all other money payable hereunder the Supervisor shall at the

request and cost of the Company execute a Deed of Release of this Deed and shall

thereupon retire.

21 TERMINATION OF TRUSTS

The trusts contained in this Deed and the Conditions terminate on the date which

is 80 years after the date of execution of this Deed, except to the extent that any

interests under such trusts have vested at that date and without affecting the

contractual rights and obligations of the Company and the Supervisor under this

Deed, and any amounts which would, but for this Clause, have been held on trust

for the Senior Creditors will be held on trust for the Company absolutely. Each

party to this Deed agrees that they will enter into such other deeds (in form and

substance similar to this Deed) as are necessary to ensure that the trusts intended

to be created under this Deed will continue for as long as there are Capital Note

Obligations outstanding. However, if is it not so possible to continue those trusts,

then the Company shall, on the date which is 80 years less one business day after

the date of execution of this Deed, redeem all of the Capital Notes in accordance

with the Conditions, as if that date were an Election Date. The parties to this

Deed agree that, unless such condition is contrary to any applicable rule of law,

redemption of the Capital Notes under this Clause will be made on the condition

that Noteholders will subscribe for, and reinvest in, Capital Notes on equivalent

terms to those set out in this Deed, immediately after such redemption.

22 INVALIDITY

A provision of this Deed has no effect to the extent that it contravenes, or is

inconsistent with, the FMCA, the FMC Regulations or any term implied into this

Deed by the FMCA or the FMC Regulations. If any provision of this Deed or the

Capital Notes shall be invalid, void, illegal or unenforceable, the validity,


57

existence, legality and enforceability of the remaining provisions shall not be

affected, prejudiced or impaired.

23 GOVERNING LAW

This Deed and the Conditions will be governed by and construed in accordance

with the laws of New Zealand and the Company irrevocably and unconditionally

submits to the non-exclusive jurisdiction of the courts of New Zealand.

24 COUNTERPARTS

This Deed may be executed in any number of counterparts, all of which taken

together shall constitute one and the same instrument. Any party may enter into

this Deed by executing any such counterpart.

IN WITNESS WHEREOF this Deed is executed by the parties on the date first

written above.


58

SCHEDULE 1

Meeting of Holders (Clause 18)

1. Convening

1.1 References in this Schedule 1 to “Holders” shall include only the Holders

comprising the Class or Classes for which any meeting is convened except

where the context indicates otherwise and “Capital Notes” shall be

construed accordingly. References in this Schedule 1 to “regulations” are

references to the provisions of this Schedule 1.

“Appointed Time” means the day and time at which any meeting (or

adjourned meeting) of Holders or the taking of a poll of Holders is due to be

held.

“Authorised Person” means, in respect of a meeting involving Holders, the

person authorised by the Supervisor to receive and count votes at that

meeting cast in accordance with regulation 13.9 or, if no such person is so

authorised, the Supervisor.

“Proxy Closing Time” means 48 hours before the Appointed Time of the

relevant meeting of Holders or taking of a poll of Holders.

1.2 The Supervisor or the Company may at any time convene a meeting of all or

any Class of Holders. The Company shall:

(a) whenever required to do so pursuant to Clause 18 of the Trust Deed or

by the FMCA;

(b) at the request in writing of the Supervisor; or

(c) at the request in writing of a person authorised by the FMC

Regulations to call a meeting of Holders,

convene a meeting of the Holders.

1.3 Notwithstanding the provisions of regulation 1.2 above the Supervisor shall

not be obliged to convene a meeting of Holders pursuant to such provisions

until, subject to Clause 10.2, it has been indemnified to its satisfaction

against all costs and expenses to be thereby incurred.

1.4 The Company shall, at least 10 working days (or any lesser period approved

by the Supervisor) before the Company gives notice of a meeting, advise the

Supervisor in writing of the intended place, day and hour of the meeting and


59

the nature of the business to be transacted, and it shall obtain the prior

approval of the Supervisor to the draft of the documents it proposes to send

to the Holders in respect of such meeting (such approval not to be

unreasonably withheld or delayed). If the Supervisor shall so require, the

documents shall include or be accompanied by any statement or comments

which the Supervisor requires to be made in relation to the meeting and the

matters to be dealt with at such meeting, provided that the Supervisor

provides such statement or comments in writing to the Company 5 working

days (or any lesser period approved by the Company) before the notice of

meeting is given under regulation 3.2.

2. Place

2.1 Meetings shall be held in the city or town at which the registered office of

the Company is situated or at such other place as the Supervisor approves.

3. Notice

3.1 Notice of every meeting shall be given in the manner provided in the Trust

Deed (namely in Clause 17) to the following:

(a) every person entered as a Holder in the Register as at the close of

business on a Business Day selected by the Company or the

Supervisor which is within the period of the fifteenth and tenth

Business Days prior to the date of despatch of the Notice;

(b) every personal representative or assignee in bankruptcy of any such

Holder who is deceased or insolvent;

(c) the Supervisor, if the Company has convened the relevant meeting and

vice versa; and

(d) the Auditors and every director of the Company.

3.2 Fifteen working days’ notice at least of every meeting shall be given. The

notice shall be exclusive of the day on which it is served or deemed to be

served and of the day for which it is given. The notice shall specify:

(a) the place and Appointed Time of the meeting;

(b) the nature of the business to be transacted in sufficient detail to enable

a Holder to form a reasoned judgment in relation to it;

(c) the right of a Holder to appoint a Representative; and

(d) the Authorised Person (if any) for the meeting.


60

It shall not be necessary to specify in the notice the terms of the resolution to

be proposed, except in the case of a resolution proposed to be passed as an

Extraordinary Resolution).

3.3 The accidental omission to give notice to or non-receipt of notice by any

person entitled thereto shall not invalidate the proceedings at any meeting.

3.4 Notwithstanding any other provision of this regulation 3, a meeting may be

called by shorter notice than that specified in regulation 3.2, or by notice

without compliance with the other requirements regulation 3.2 or by notice

with any other irregularity or called without any formal notice, and any such

meeting shall be deemed to have been duly called and any such irregularity

or lack of formal notice shall be waived if:

(a) all Holders entitled to attend and vote at the meeting attend the

meeting without protest as to the irregularity or lack of formal notice

or if such waiver is so agreed by all such Holders before, at or after

that meeting; or

(b) the Supervisor indicates at the meeting that it is satisfied that the

irregularity or lack of formal notice has not resulted in and is unlikely

to result in any material prejudice to the Holders.

3.5 A meeting of Holders may be held by a quorum of Holders or their

Representatives:

(a) being assembled together at the time and place appointed for the

meeting;

(b) participating in the meeting by means of audio, audio and visual, or

electronic communication provided that the Supervisor approves such

means and each Holder or its Representative complies with any

conditions imposed by the Supervisor in relation to the use of such

means; or

(c) by a combination of both of the methods described in regulations

3.5(a) and 3.5(b) above.

4. Quorum

4.1 No business shall be transacted at any meeting unless the requisite quorum

is present at the commencement of business. A Holder is present at a

meeting for the purposes of this Schedule 1 and part of the quorum if that

Holder is present in person or by Representative or is participating in that

meeting by means of audio, audio and visual or electronic communication.


61

4.2 The quorum for passing an Extraordinary Resolution of Holders shall be

Holders entitled to vote and present at the meeting or which have cast votes

under regulation 13.9 holding or representing at least 25% of the Principal

Amount of the Capital Notes for the time being outstanding or (in the case

of a meeting of any Class of Holders) of the Capital Notes of the relevant

Class.

4.3 The quorum for the transaction of any business at a meeting of Holders other

than the passing of an Extraordinary Resolution shall be at least two Holders

entitled to vote and present at the meeting holding or representing at least

10% in nominal amount of the Capital Notes or (in the case of a meeting of

any Class of Holders) of the Capital Notes of the relevant Class.

4.4 If within half an hour (or such shorter period as the chairperson of the

meeting may select and the Supervisor shall approve) from the appointed

time a quorum is not present the meeting, if convened upon the request of

Holders, shall be dissolved. In any other case, it shall stand adjourned to

such day and time that is 10 working days thereafter at the same time and

place or to such other date, time and place as may be appointed by the

chairperson or the Supervisor. At such adjourned meeting, if a quorum is not

present within 30 minutes after the Appointed Time, then the Holders

present at the adjourned meeting shall (regardless of their number or the

amount of Capital Notes held or represented by them) be a quorum for the

transaction of business including the passing of Extraordinary Resolutions.

4.5 Notice of such adjourned meeting shall be given to those Holders entitled to

receive notice of the original meeting and otherwise in the same manner as

of an original meeting and such notice shall state that, if a quorum is not

present 30 minutes after the Appointed Time, the Holders present at the

adjourned meeting whatever their number and whatever the amount of

Capital Notes held or represented by them shall form a quorum provided

that, if a meeting is adjourned for less than 30 days, it will not be necessary

to give notice of the time and place of the adjourned meeting other than by

announcement at the meeting that is adjourned.

5. Right to Attend and Speak

5.1 Any director, officer or solicitor of the Supervisor and any other person

authorised in that behalf by the Supervisor and any Director or the Secretary

or Auditors or solicitor of the Company or any other person authorised in

that behalf by the Company may attend any meeting and all such persons

shall have the right to speak at the meeting.


62

6. Chairperson

6.1 A person nominated in writing by the Supervisor shall preside as

chairperson at every meeting and if no such person is nominated or if at any

meeting the person nominated is not present within fifteen minutes after the

time appointed for holding the meeting the Holders present and eligible to

vote thereat shall choose one of their number to be chairperson.

7. Adjournment

7.1 The Chairperson may with the consent of any meeting at which a quorum is

present and shall if so directed by the meeting adjourn the meeting from

time to time and from place to place.

7.2 No business shall be transacted at any adjourned meeting except business

which might have been lawfully transacted at the meeting from which the

adjournment took place.

8. Person on Register

8.1 The persons registered as Holders in the Register at Proxy Closing Time and

no other person or persons shall be recognised and treated as the legal

holders of the Capital Notes specified in the Register whether such persons

are or are not in fact the beneficial owners of such Capital Notes.

9. Authority to Vote

9.1 The following persons shall, except as may be otherwise provided by this

Schedule 1, be exclusively entitled to vote in person or by Representative in

respect of the Capital Notes or Class thereof in respect of which the meeting

is convened, the persons registered as Holders in the Register at Proxy

Closing Time or the personal representative or assignee in bankruptcy of any

such Holder, or their respective Representatives.

9.2 For the purposes of this Schedule 1, a Representative need not be a Holder

and shall be entitled to attend and speak at meetings of Holders, be counted

in a quorum, vote, join in any demand for a poll and exercise all such other

powers in relation to the Capital Notes, in respect of which he or she has

been so appointed or nominated as though he or she were in relation thereto

the Holder present in person.

9.3 Closure of Register: For the purpose of establishing voting entitlements at a

meeting the Register shall be closed as of the close of business on the

business day immediately preceding the day on which the Proxy Closing

Time falls and shall remain closed until after the relevant meeting has been

closed or adjourned.


63

9.4 Representative: For the purpose of this Schedule 1, a “Representative” shall

be a proxy or an attorney or a corporate representative appointed in the

manner referred to in regulations 10, 11 or 12 as the case may be. The

Supervisor or any officer of the Supervisor may be appointed a

Representative of a Holder.

10. Proxies

10.1 The Holders may appoint proxies and a Holder may appoint more than one

proxy, each such proxy being authorised to act on behalf of the Holder in

respect of a specified Principal Amount of Capital Notes, provided that only

one proxy is appointed to exercise the rights relating to a particular Capital

Note held by that Holder.

10.2 An instrument of proxy shall be in the following form or a form as near

thereto as circumstances admit or in such other form as the Supervisor shall

approve and need not be witnessed:

I/We, ......................................... of

............................................... being a Holder/s of $............. in nominal

amount of Capital Notes of FONTERRA CO-OPERATIVE GROUP

LIMITED hereby appoint

........................................... of ........................................... or failing him

............................... of ............................... or failing him the Chairperson of

the meeting as my/our proxy to vote for me/us and on my/our behalf at [the

meeting of Holders of Capital Notes of FONTERRA CO-OPERATIVE

GROUP LIMITED to be held on [year], and at any

adjournment thereof][any meeting held on or before [date]].

I/We authorise my/our proxy to vote

*in favour of/against the resolution(s).

Signed this day of [year].

Signature of Holder(s)........................

*Strike out whichever is not desired. If neither “in favour of” nor “against”

is struck out, the proxy will vote as he thinks fit.


64

Note: This instrument must be deposited at the registered office of Fonterra Co-operative

Group Limited (or as otherwise directed in the notice convening the meeting) not later than

the Proxy Closing Time.

10.3 The instrument appointing a proxy shall be in writing signed, or in the case

of an electronic notice sent, by the appointer or of his attorney duly

authorised in writing or if the appointer is a company signed, or in the case

of an electronic notice sent, by an officer or attorney so authorised or by any

director, secretary, general manager, investment manager or other person

who appears to the Supervisor to have authority to sign or send (as

applicable) the instrument.

10.4 A person appointed to act as a proxy need not be a Holder and a holder of a

proxy shall have the right to attend and speak at the meeting.

10.5 The instrument appointing a proxy and the power of attorney or other

authority (if any) under which it is signed or a copy of such power or

authority certified by a Notary Public or in such other manner as the

Supervisor shall approve shall be deposited at such place as the Supervisor,

or the Company with the approval of the Supervisor, may in the notice

convening the meeting direct (or if no such place is appointed then at the

registered office of the Company) not later than Proxy Closing Time and in

default the instrument of proxy shall not be treated as valid provided that the

Supervisor or the Authorised Person for that meeting, may in its discretion

accept and treat as valid an instrument of proxy delivered late or received or

produced at a place other than that specified above.

10.6 A proxy shall unless the contrary is stated thereon be valid for the specified

term or for the meeting to which it relates as well for any adjournment of the

meeting. Notwithstanding any provision contained in an instrument of

proxy no instrument of proxy shall be valid after the expiration of twelve

months from the date of its execution but this provision shall not be

construed to apply to the appointment of an attorney or representative

otherwise than by an instrument of proxy.

10.7 An instrument of proxy in favour of the chairperson of the meeting

(howsoever expressed) shall be valid and effectual as though it were in

favour of a named person and shall constitute the person who chairs the

meeting for which the proxy is used (whether an adjournment of not) and

such person shall be the lawful proxy of the appointer.

10.8 A person appointed proxy shall have the right to demand or join in

demanding a poll and shall (except to the extent to which the proxy is


65

specially directed to vote for or against any proposal) have the power

generally to act at the meeting for the Holder concerned.

10.9 A vote made in accordance with the terms of an instrument of proxy or

power of attorney or authority as referred to in regulation 12.1 (or other form

approved by the Supervisor) shall be valid notwithstanding the previous

death or insanity or liquidation of the principal, or revocation of the proxy or

power of attorney or authority (or of the authority under which the proxy

power of attorney or authority was executed), or the transfer of the Capital

Notes in respect of which the vote is given, provided that no intimation in

writing of such death, insanity, revocation or transfer is received by the

Company or the Supervisor at its registered office before the

commencement of the meeting or adjourned meeting at which the proxy

power of attorney or authority is used.

11. Attorneys

11.1 Any holder may by power of attorney appoint an attorney (who need not be

a Holder) to vote and act on his behalf at any meeting. An attorney shall be

entitled to produce evidence of his appointment at any time before the

Appointed Time of the meeting or adjourned meeting or for the taking of a

poll at which he proposes to vote, or at such meeting or adjourned meeting.

Such Attorney as so empowered may appoint a proxy for the Holder

granting the power of attorney.

12. Corporate Representatives

12.1 A person authorised by the Holder being a company to act for it as its

representative at any meeting or any adjourned meeting shall be entitled to

exercise the same powers on behalf of that company as that company could

exercise if it were an individual Holder. A person so authorised shall be

entitled to produce evidence of his appointment at any time before the

Appointed Time of the meeting or adjourned meeting or for the taking of a

poll at which he proposes to vote, or at such meeting or adjourned meeting.

13. Voting

13.1 An Extraordinary Resolution put to the vote of a meeting will be decided by

poll. Any other resolution put to the vote of a meeting shall be decided on a

show of hands or by voice as determined by the chairperson or, in the case

of a meeting of Holders held under regulations 3.5(b) or 3.5(c), by any

method permitted by the chairperson of the meeting, unless in any case, a

poll is (before or after the vote is taken on the resolution) demanded by:

(a) the chairperson (who must in any event call for a poll on a resolution

on which the chairperson holds sufficient votes cast under regulation


66

13.9 if the chairperson believes that, if a poll is taken, the result may

differ from that obtained on a show of hands or by voice);

(b) the Supervisor or any representative of the Supervisor; or

(c) by one or more Holders present at the meeting holding or representing

not less than 5 per centum in Principal Amount of the Capital Notes

for the time being outstanding or (as the case may be) of the

appropriate Class of Capital Notes.

Unless a poll is so demanded a declaration by the chairperson that a

resolution has been carried or carried unanimously or by a particular

majority or lost shall be conclusive evidence of the fact without proof of the

number or proportion of the votes recorded in favour of or against such

resolution.

13.2 If a poll is duly demanded it shall be taken in such manner as the

chairperson may direct and the result of such poll shall be deemed to be the

resolution of the meeting at which the poll was demanded.

13.3 In case of an equality of votes whether on a show of hands or on a poll the

chairperson of the meeting at which the show of hands takes place or at

which the poll is demanded shall be entitled to a casting vote in addition to

the votes (if any) to which he may be entitled as a Holder or on behalf of

Holders.

13.4 A poll demanded on the election of a chairperson or on a question of

adjournment shall be taken forthwith. A poll demanded on any other

question shall be taken either immediately or at such time (not being more

than thirty days from the date of the meeting) and place as the chairperson

may direct. The result of such poll shall be deemed to be the resolution of

the meeting at which the poll was demanded. No notice need be given of a

poll not taken immediately.

13.5 The demand for a poll shall not prevent the continuance of a meeting for the

transaction of any business other than the question on which the poll has

been demanded.

13.6 On a poll votes may be given either personally or by Representative. On a

poll a person entitled to more than one vote need not use all his votes or cast

all the votes he uses in the same way.

13.7 On a show of hands each person present at the meeting or casting a vote

pursuant to regulation 13.9 and entitled to vote (whether personally or by


67

Representative) shall have one vote only. On a poll every Holder who is

present at the meeting or casting a vote pursuant to regulation 13.9 and

entitled to vote will have one vote for every $1.00 of Principal Amount of

Capital Notes of which he is the holder PROVIDED ALWAYS THAT any

Capital Notes for the time being held by the Company (or any related

company of the Company (as defined in section 2(3) of the Companies Act))

shall not whilst so held confer any right to vote.

13.8 In the case of joint Holders the vote of the senior who tenders a vote shall be

accepted to the exclusion of the votes of the other joint Holders and for this

purpose seniority shall be determined by the order in which the names stand

in the Register in respect of the joint holding.

13.9 Voting by other means:

(a) A Holder may exercise the right to vote at any meeting by casting a

postal vote, a vote by email or a vote using any other electronic means

permitted by the Company or the Supervisor.

(b) A Holder may cast a vote using the above means on all or any of the

matters to be voted on at a meeting by sending a notice of the manner

in which that Holder's Capital Notes are to be voted on to the

Company or the Authorised Person for that meeting. Such notice must

reach that person before the Proxy Closing Time unless the Company

or the Authorised Person (as the case may be), in its absolute

discretion, elects to accept any notice notwithstanding that that notice

is received or produced at a place other than that specified above or

out of time.

(c) The Company or the Authorised Person for that meeting (as

applicable) must:

(i) collect together all of those votes received by it;

(ii) in relation to each resolution to be voted on at that meeting,

count the number of Holders voting for and against the

resolution and the number of votes cast for and against the

resolution by each Holder;

(iii) sign a certificate that it has carried out the duties set out in

regulations 13.9(c)(i) and 13.9(c)(ii) above and that sets out the

results of the counts required by regulation 13.9(c)(ii); and


68

(iv) ensure that the certificate required by regulation 13.9(c)(iii)

above is presented to the chairperson.

14. Extraordinary Resolution

14.1 The expression “Extraordinary Resolution” when used in this Deed means a

resolution passed at a meeting of Holders duly convened and held in

accordance with the provisions herein contained, at which at least three-

fourths of the votes given on such a poll by those who are entitled to vote,

voted in favour of the resolution and the expression “Extraordinary

Resolution” referring to any Class of Holders shall have a corresponding

meaning in relation to meetings of such Class.

14.2 Without limiting the rights powers and discretions conferred on the

Supervisor by the Trust Deed and subject to regulation 15 below and in

particular to the proviso to regulation 15.1 below, a meeting of Holders shall

in addition to all other powers which by the Trust Deed are specified as

exercisable by Extraordinary Resolution have the following powers

exercisable by Extraordinary Resolution namely:

(a) power to sanction the exchange of Capital Notes for or the conversion

of Capital Notes into shares, stock debentures, debenture stock or

other obligations or securities of the Company or any other company

formed or to be formed;

(b) power to sanction any alteration, release, modification, waiver,

variation or compromise or any arrangement in respect of the rights of

the Holders against the Company howsoever such rights shall arise;

(c) power to assent to any alteration or addition to the provisions

contained in the Trust Deed or the Conditions proposed or agreed to

by the Company and to authorise the Supervisor to concur in and

execute any supplemental trust deed embodying any such alteration or

addition;

(d) power to give any sanction, assent, release or waiver of any breach or

default by the Company under any of the provisions of the Trust Deed;

(e) power to discharge, release or exonerate the Supervisor from all

liability in respect of any act of commission or omission for which the

Supervisor has or may become responsible under the Trust Deed;

(f) power to sanction any scheme for the reconstruction of the Company

or for the amalgamation of any such person with any other company

where such sanction is necessary;


69

(g) subject to the provisions of the Trust Deed, power to remove any

Supervisor and to approve the appointment of or appoint a new

Supervisor;

(h) power to authorise the Supervisor to concur in and execute any

supplemental deed or other document embodying such sanction,

authority or approval, assent, release, waiver, direction or request;

(i) power to give any consent, approval, dispensation, authorisation or

waiver, or to take any other action, able to be given or taken by the

Supervisor or the Holders under the provisions of the Trust Deed;

(j) subject to the provisions of this Deed, power to direct the Supervisor

to apply for the appointment of a Liquidator of the Company; and

(k) power to consent to, approve, authorise and direct the Supervisor in

respect of any other matters referred to in any of the preceding

paragraphs, or as to any other matter which may be necessary to carry

out and give effect to any Extraordinary Resolution.

15. Extraordinary Resolution Binding

15.1 An Extraordinary Resolution passed at a meeting of Holders duly convened

and held in accordance with the regulations contained in this Schedule 1

shall be binding upon all the Holders whether present or not present at the

meeting and each of the Holders and the Supervisor (subject to the

provisions of its indemnity contained in the Trust Deed) shall be bound to

give effect thereto accordingly and the passing of any such resolution shall

as between the Supervisor and the Holders be conclusive evidence that the

circumstances justify the passing thereof the intention being that it shall rest

with the meeting to determine without appeal whether or not the

circumstances justify the passing of such resolution PROVIDED ALWAYS

THAT a resolution which affects either a particular Holder or a particular

Class of Holders only as opposed to the rights of the Holders generally shall

not be binding on such Holder or Class of Holders (as the case may be)

unless such Holder agrees, or such Class of Holders agree as provided in

regulation 17.1 below or otherwise, to be bound by the terms of any such

resolution.

15.2 A meeting of any Class of Holders shall (without limiting the other powers

exercisable by any such meeting) have power by Extraordinary Resolution:

(a) to sanction any compromise or arrangement proposed to be made

between the Company and the relevant Class of Holders affected;


70

(b) to sanction any alteration, abrogation, modification or waiver of the

rights of the relevant Class of Holders affected against the Company.

16. Minutes

16.1 Minutes of all resolutions and proceedings at every meeting shall be made

by the Supervisor or if the Supervisor shall not be present at any meeting by

some person appointed by the chairperson of such meeting and duly entered

in books from time to time provided for that purpose by the Supervisor at

the expense of the Company and any such minutes as aforesaid if purporting

to be signed by the chairperson of the meeting at which such resolutions

were passed or proceeding had or by any persons appointed by the said

chairperson of the meeting for the purpose or by the chairperson of the next

succeeding meeting of Holders shall be prima facie evidence of the matters

therein stated and until the contrary is proved every such meeting in respect

of the proceedings of which minutes have been made shall be deemed to

have been duly held and convened and all resolutions passed or proceedings

had thereat to be duly passed and had. Copies of such minutes shall be

furnished by the Supervisor to the Company as early as possible after the

holding of the meeting to which they refer. The chairperson must ensure

that a certificate of votes under regulation 13.9 held by the chairperson is

attached to the minutes.

17. Class

17.1 A resolution which in the opinion of the Supervisor affects one Class of

Holders only (and which does not affect any other Holders) shall be deemed

to have been duly passed if passed at a separate meeting of the Holders of

Capital Notes of that Class and all the preceding provisions of this Schedule

1 shall apply to such meetings mutatis mutandis as though references therein

to Capital Notes and Holders were references to the Capital Notes of the

Class in question and to the Holders of such Capital Notes respectively.

18. Resolutions in Writing

18.1 Anything that may be done by Holders by resolution or Extraordinary

Resolution passed at a meeting of Holders, may be done by a resolution in

writing signed by not less than 75 per cent of the Holders entitled to vote on

that resolution, holding in the aggregate Capital Notes conferring the right to

cast not less than 75 per cent of the votes which could be cast on that

resolution.

18.2 Any such resolution may consist of several documents in similar form

(including letters, electronic mail or other similar means of communication),

each signed by one or more Holders.


71

18.3 Any such resolution may be signed by a Holder or an agent or attorney of the

Holder duly authorised in writing or if the Holder is a company, either

signed by an officer or attorney so authorised or by any director, secretary,

general manager, investment manager or other person who appears to the

Supervisor to have authority to sign the resolution on behalf of the company.


72

SCHEDULE 2

Form of Directors’ Reporting Certificate

1 This report is given by the undersigned Directors of Fonterra Co-operative Group

Limited (“the Company”) pursuant to Clause 8.3 of the Trust Deed dated 22

March 2001 (as amended and restated on [ ] 2016) between the Company and

The New Zealand Guardian Trust Company Limited, as supervisor (“the Trust

Deed”).

2 We, the undersigned, hereby state that as at last day of the financial [year] [half

year] ending on [ ]:

2.1 To the best of our knowledge and belief having made all due inquiries, and,

during the immediate preceding financial [year] [half-year]:

(a) [here state any matter, or state if there is no matter, which has arisen

relating to the Company which would materially and adversely affect

the ability of the Company to perform its obligations under the Trust

Deed and the Capital Notes or which adversely affects the Holders];

(b) the Company [has] [has not] observed and complied with all

provisions expressed to be binding upon it under the Trust Deed:

[if the Company has not so complied and observed the provisions of

the Trust Deed set out the particulars of the contravention and

proposals to remedy the same]

(c) the Register [has] [has not] been duly maintained in accordance with

the Trust Deed and the requirements of the FMCA and the FMC

Regulations;

[if the Register has not been duly maintained set out the particulars of

the failure to maintain]

(d) the Principal Amount of Capital Notes (if any) which have been

redeemed by the issue of Co-operative Shares of the Company

(pursuant to the Company’s Constitution) is $[ ], details of

which are set out below:

[set out details of Capital Notes which have been redeemed for Co-

operative Shares in accordance with the Company’s Constitution in

the immediately preceding financial [year] [half-year]


73

(e) the Principal Amount of Capital Notes (if any) which have been

redeemed for cash by the Company is $[ ]

[set out details of Capital Notes which have been redeemed for cash in

the immediately preceding financial [year] [half-year]]

(f) all interest due on the Capital Notes has been paid;

(g) the Company is able to pay its debts from its own moneys as those

debts fall due in the ordinary course of the Company’s business, after

taking into account, for this purpose, the Capital Notes and other

subordinated indebtedness of the Company;

(h) nothing has arisen during the immediately preceding financial year]

half-year] which causes the Directors to believe that the Company will

be unable to pay its debts from its own moneys as those debts fall due

in the ordinary course of the Company’s business, during the

immediately succeeding financial year; and

(i) the Company is in compliance with all of its issuer obligations.

[If the Company is not in compliance with all of its issuer obligations,

set out the matters required by clause 8.2(g) of the Trust Deed in

respect of such non-compliance.]

3 The aggregate Principal Amount of the Capital Notes outstanding, and the amount

of any unpaid interest at the end of the financial [year] [half-year] is $[ ].

4 The Company [is] [is not] in material default in the payment of any Senior Debt.

5 Unless the context otherwise requires, terms defined in the Trust Deed have the

same meaning herein.

This report is given on the day of 20[ ].

Director Director


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EXECUTION PAGE

[Signing block not applicable as this deed was amended and restated pursuant to a

deed of amendment and restatement.]

deed of amendment and restatement (capital notes trust deed) · 4. confirmation 4.1 except to the...

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