TIMBER SUPPLY AGREEMENT
THIS AGREEMENT is made on the day of 2003
BETWEEN TIMBERMANS GROUP PTY LIMITED (A.C.N. 100 845 476) Suite 4, 95
Salmon Street, Port Melbourne, Victoria, 3207, referred to as
"Timbermans Group"
AND INTEGRATED FOREST PRODUCTS PTY LIMITED (A.C.N. 083 521 966)
TRALEE STREET, HUME, AUSTRALIAN CAPITAL TERRITORY trading as
`IFP' and referred to as the "Company."
1. DEFINITIONS AND INTERPRETATIONS:
1.1 Definitions:
In this Agreement unless a contrary intention appears:
`Act' means the Forestry Act 1916 (NSW;
`Additional Resource' means Timber that Timbermans Group proposes to
make available for sale from the Area of Supply that are surplus to
Timbermans Group' commitments (such commitments to include the Annual
Supply);
`Additional Supplies' means that part of Additional Resource which is
to be made available to the Company;
`Agreement' means this agreement;
`Annual Delivery Plan' means the plan, prepared by Timbermans Group in
accordance with clause 9, for the supply of Timber during the Year to
which the plan applies;
`Annual Supply' for a Year means the total of the Base Quantity and the
Marginal Quantity for that Year;
`Approvals' means all planning and other governmental regulatory
approvals (including those under the Environmental Planning and
Assessment Act 1979) required to construct and operate the Mill;
`Area of Supply' means the Crown timber-lands within the Bombala
Management Area more particularly identified on the map attached as
Schedule 2;
`Base Quantity' for a Year means the Base Quantity specified in clause
6.1 for that Year as that quantity may be amended in accordance with
clause 6.2;
`Business Days' means the days Monday to Friday inclusive, but
excluding Public Holidays and days which are rostered days off at the
Mill;
`Change in Control' means change in the control of more than 50% of the
shares with the right to vote in general meetings of the Company;
`Code of Procedure' means the Code of Procedure referred to in clause
22 as amended from time to time in accordance with this Agreement;
`Commencement Date' means the date upon which the Relevant Provisions
take effect in accordance with clause 3;
`Company' includes all employees, servants and agents of the Company;
`Contract Harvesting' includes the felling, extraction, sorting,
processing, grading, loading, hauling and delivery of Timber to the
Mill and ancillary works including roading, tracking, log dump
construction and site rehabilitation by Contractors engaged by
Timbermans Group or it's supply agents;
`Contract Harvesting Agreement' means an agreement in writing between
Timbermans Group or its supply agents and a Contractor providing for
the Contractor to carry out Contract Harvesting or any part thereof;
`Contractor' means a person under contract with Timbermans Group to
conduct Contract Harvesting operations and includes employees and
agents of the Contractor;
`Cost Item' - see Schedule 4;
`Delivered Price' means the price payable by the Company per tonne of
Timber delivered to the Company under this Agreement calculated in
accordance with clauses 15 and 16;
`Delivered Price Review Mechanism' means a mechanism for the annual
review of Delivered Prices set out in Schedule 4 as amended or replaced
from time to time in accordance with this Agreement;
`Force Majeure' means an event (other than the payment of money or
failure to obtain financial accommodation) arising from an act of God,
industrial dispute, act or omission of government, war, sabotage, riot,
civil disobedience, epidemic, disease, flood, fire, explosion, failure
of power supply, accident, natural disaster, calamity, unavailability
of essential inputs to the Mill or unlawful act by other persons, or
any similar cause which prevents a party from performing its
obligations (in whole or in part) under this Agreement, or an industry
wide collapse in market demand for Products which causes the Company to
close the Mill for a period of not less than 6 weeks or (at a time
after the Company operates the Mill on double shift) to operate the
Mill on a single shift which processes less than 3,300 tonnes of Timber
supplied under this Agreement through the Mill in each week during a 3
months period;
`Half Year' means the period April to September inclusive in any
calendar year and October to March inclusive in any Year;
`Indicator' - see Schedule 4;
`Indicator rates' - see Schedule 4;
`Indicator weighting' - see Schedule 4;
`Insolvency Event' means in respect of a party:
(a) a receiver, manager, receiver and manager, trustee,
administrator, controller or similar officer being appointed
in respect of the party or any asset of the party;
(b) a liquidator or provisional liquidator being appointed in
respect of the party;
(c) a moratorium of any debts of the party or an official
assignment or a composition or an arrangement (formal or
informal) with the party's creditors or any similar proceeding
or arrangement by which the assets of the party are subjected
conditionally or unconditionally to the control of the party's
creditors being ordered, declared or agreed to;
(d) the party becoming, or admitting in writing that it is, or
being declared to be insolvent or unable to pay its debts;
(e) any writ of execution, garnishee order or similar order,
attachment, distress or other process in an amount exceeding
$10,000,000 (or its equivalent in a foreign currency) being
made, levied or issued against or in relation to any asset of
the party (which is not stayed, withdrawn or satisfied within
14 days of when it is made, levied or issued);
(f) the party suspending payments of its debts generally; or
(g) the party being, or under legislation being presumed or taken
to be, insolvent (other than as the result of a failure to pay
a debt or claim the subject of a good faith dispute);
`Marginal Quantity' for a Year means the quantity of Timber specified
in clause 6 as the Marginal Quantity for that Year or such lesser
quantity determined from time to time in accordance with that clause;
`Mill' means the sawmill proposed to be located within the Shire of
Bombala NSW capable of processing 320,000 tonnes of Timber into green
sawn timber products in a 12 month period;
`Monthly Delivery Schedule' means a schedule for the month to which it
applies, specifying information described in clause 10;
`Monthly Quantity' means the quantity specified in a Monthly Delivery
Schedule as the quantity to be delivered in the month to which the
Monthly Delivery Schedule applies;
`Products' - see Schedule 4;
`Relevant Provisions' means clauses 6 to 16, 20 to 30, and 33 to 40
inclusive;
`Salvage' means the taking of such Timber that is wind thrown, damaged,
pushed over or felled for forest management purposes other than timber
harvesting;
`Specifications' means the specifications for timber set out in
Schedule 1;
`Specified Capacity' for any Year means the capacity to process at
least 40% of the sawn timber which can be derived from the Annual
Supply for that Year, into one or more of the Products;
`Term' means the term of this Agreement;
`Timber' means timber which meets the Specifications;
`Year' means a period of twelve (12) months commencing on 1 July.
1.2 Interpretation
In this Agreement, unless the context requires otherwise:
1.2.1 a reference to the Act includes all amendments, regulations,
rules, by-laws and proclamations under the Act;
1.2.2 words and phrases defined in the Act will have the same
meanings attributed to those words and phrases in the Act
unless the word or phrase is defined in this Agreement in
which case the word or phrase will have the meaning attributed
to it in this Agreement;
1.2.3 headings are for convenience only and do not affect the
interpretation of the Agreement;
1.2.4 words importing the singular include the plural and vice
versa;
1.2.5 words importing a gender include any gender;
1.2.6 a reference to a natural person includes a Company,
partnership, joint venture, association, corporation or other
body corporate and any governmental agency;
1.2.7 a reference to any thing includes a part of that thing;
1.2.8 a reference to a clause, party, annexure, exhibit or schedule
is a reference to a clause of and a party, annexure, exhibit
and schedule to this Agreement;
1.2.9 a reference to a document includes all amendments or
supplements or replacements or notations of that document;
1.2.10 a reference to a party to a document includes that party's
successors and permitted assigns;
1.2.11 no rule of construction applies to the disadvantage of a party
because that party was responsible for the preparation of this
Agreement or any part of it;
1.2.12 a reference to dollars or $ is a reference to the lawful
currency of the Commonwealth of Australia.
1.2.13 a schedule that forms part of this agreement can be varied
with mutual consent by both parties without varying any
further condition or schedule of the contract.
1.2.14 a reference to a statute, ordinance, code or other law
includes regulations and other statutory instruments under it
and consolidations, amendments, re-enactments or replacements
of any of them (whether of the same or any other legislative
authority having jurisdiction);
2. SCOPE OF AGREEMENT
2.1 Subject to the terms and conditions set out in this Agreement:
2.1.1 Each Year Timbermans Group agrees to supply the Annual Supply
to the Company from the Area of Supply;
2.1.2 The Company agrees to purchase the Annual Supply at the prices
specified in clauses 15 and 16.
3. RELEVANT PROVISIONS SUBJECT TO CONDITIONS PRECEDENT
3.1 In this clause:
3.1.1 the performance criteria means:
(a) Within twelve (12) weeks of the date of this
Agreement, the Company demonstrating to the
reasonable satisfaction of Timbermans Group that it
has:
(i) made significant progress toward securing
the funds required to complete construction
of the Mill; and
(ii) engaged a suitable consultant or similar
individual capable of undertaking and
completing any environmental impact
assessment process that may be required to
obtain the Approvals.
(b) Within six (6) months of the date of this Agreement,
the Company demonstrating to the reasonable
satisfaction of Timbermans Group that it has:
(i) secured access to the funds required to
complete construction of the Mill
(ii) identified and secured access to the Mill
site;
(iii) identified the infrastructure requirements
for the Mill. Specifically this must include
information concerning road access to the
Mill site, the availability of sufficient
water and power to the Mill site to operate
the Mill and the provision of other site
services to the Mill site including sewer
and effluent disposal and
telecommunications.
(c) Within nine (9) months of the date of this Agreement,
the Company:
(i) providing Timbermans Group with the Mill
design and
(ii) demonstrating to the reasonable satisfaction
of Timbermans Group that it has entered a
Heads-of-Agreement or similar written
agreement with the New South Wales
Government and/or relevant Local Council
defining the role of Government and/or Local
Government in the provision of site
services.
(d) Within twelve (12) months of the date of this
Agreement, the Company demonstrating to Timbermans
Group' reasonable satisfaction that it has engaged
the builders necessary to construct Mill.
(e) Within fifteen (15) months of the date of this
Agreement, the Company demonstrating to the
reasonable satisfaction of Timbermans Group that it
has obtained the Approvals or will obtain the
Approvals within a further 3 months.
(f) Within eighteen (18) months of the date of this
Agreement, the Company demonstrating to the
reasonable satisfaction of Timbermans Group that:
(i) earthworks required to construct the Mill
have commenced; and
(ii) the Approvals have been obtained (if they
were not obtained within 15 months of the
date of this Agreement).
(g) Within twenty-one months (21) months of the date of
this Agreement, the Company demonstrating to the
reasonable satisfaction of Timbermans Group that
earthworks required to construct the Mill are
completed.
(h) Within twenty four (24) months of the date of this
Agreement, the Company demonstrating to Timbermans
Group' reasonable satisfaction that major components
of the Mill have been constructed to a stage
necessary to ensure the Mill will be constructed
before the expiration of thirty six months (36)
months from the date of this Agreement; and
(i) Within thirty six months (36) months of the date of
this Agreement, the Company has:
(i) constructed the Mill to the stage where it
capable of processing 80,000 tonnes of
Timber into sawn timber per annum;
(ii) a proprietary interest in the constructed
Mill; and
(iii) certified the occurrence of the matters set
out in clause 3.1.1(l) (i) and (ii) in
writing to Timbermans Group.
(j) Within 28 days of a request in writing from
Timbermans Group, the Company demonstrating to
Timbermans Group' reasonable satisfaction that it
continues to have secured access to the funds
required to complete construction of the Mill
provided that Timbermans Group may not make such a
request before the expiration of 9 months from the
date of this Agreement and may not make any
subsequent request within 12 weeks of an earlier
request.
3.1.2 a reference to the Company having a proprietary interest in
the Mill means the Company or its wholly owned subsidiary
either:
(a) owns the Mill; or
(b) has more than 50 percent of the shares with the right
to vote in general meeting of the corporation which
owns the Mill.
3.1.3 For the purposes of clauses 3.1.1(c)(i), (e)(i), and (j) (and
without limiting the matters required to demonstrate to
Timbermans Group reasonable satisfaction in accordance with
those clauses) in demonstrating to Timbermans Group that the
Company has secured access to the relevant funds the Company
must establish to Timbermans Group reasonable satisfaction
that the Company has obtained all financial accommodations and
entered into all financial arrangements necessary to ensure
the Company will have access to the funds when they will be
required to be applied in the construction of the Mill. Such a
demonstration may at the request of Timbermans Group involve
any relevant financing organisation verifying the availability
of relevant funds and the conditions attaching to the relevant
financial accommodation.
3.2 The Relevant Provisions will only take effect when all the
performance criteria have been completed.
3.3 This Agreement will terminate if any of the performance
criteria identified in clause 3.1.1(a) or (g) have not been
completed within the time for completion.
3.4 Subject to clause 3.3 if:
3.4.1 the Company fails to comply with any of the
performance criteria; or
3.4.2 any of the performance criteria have not been
completed within the timeframe specified for its completion;
Timbermans Group may treat the failure or non completion as a
material breach of this Agreement for the purposes of clause
31.1.
3.5 The Company must each March, June, September and December
prior to the Commencement Date, if requested by Timbermans
Group, make available its senior officers for meetings with
Timbermans Group to discuss and provide a report on its
progress in complying with the performance criteria. The
report may at Timbermans Group option be verbal or in writing
or both.
4. COMMENCEMENT AND DURATION OF AGREEMENT
This Agreement will take effect from the date of this Agreement and
operate until the expiration of twenty (20) years from the Commencement
Date unless extended or sooner terminated in accordance with this
Agreement.
5.3 If:
5.3.1 by reason of default on the part of Timbermans Group no Timber
is supplied to the Company under this Agreement; or
5.3.2 this Agreement is terminated by Timbermans Group pursuant to
clauses 3.4 and 31.1 and the Company's was prevented by Force
Majeure from:
(a) complying with the performance criteria the non
compliance of which Timbermans Group treated as the
material breach for the purposes of the termination
under clause 31.1; or
(b) completing performance criteria within the timeframe
specified for its completion the non completion of
which Timbermans Group treated as the material breach
for the purposes of the termination under clause
31.1;
and
(c) the Force Majeure was not caused by any unlawful act
or omission on the part of the Company;
(d) the Company had taken all reasonable or practicable
precautions to prevent the Force Majeure; and
(e) the Company made all reasonable efforts to contain
the effect of the Force Majeure; and
(f) the Company informed Timbermans Group of the
existence of the Force Majeure prior to Timbermans
Group terminating the Agreement; or
5.3.3 prior the completion of the Mill a Force Majeure event occurs
which would prevent Timbermans Group from substantially
complying with its obligations under this Agreement for a
period in excess of 12 months at any time during the Term if
the Mill was completed in accordance with this Agreement;
then Timbermans Group must refund any Premium paid on written demand by
the Company.
6. BASE QUANTITY
6.1 Subject to clause 6.2 the Base Quantity for a Year means:
6.1.1 for the remainder of the Year in which the Commencement Date
falls (`Period A'), the Base Quantity will be at the rate of
6,700 tonnes per month for each full calendar month in Period
A;
6.1.2 for the first Year following Period A, the Base Quantity will
be 80,000 tonnes per annum;
6.1.3 for second Year following Period A, the Base Quantity will be
145,000 tonnes per annum; and
6.1.4 for each Year of the Term thereafter the Base Quantity will be
240,000 tonnes per annum
6.2 If for reasons other than Force Majeure or default by Timbermans Group,
the Company takes less than the Base Quantity in any 2 consecutive
Years, Timbermans Group may by written notice to the Company reduce the
Base Quantity to a quantity that is not less than the Yearly average of
the quantity of Timber taken by the Company in those two Years.
7. ADDITIONAL SUPPLIES
7.1 Timbermans Group must notify the Company of any Additional Resource and
ensure the Company has an opportunity to participate on an equitable
basis in the process determined by Timbermans Group to allocate the
Additional Resource. Additional Supplies will be supplied at a price
and on terms to be agreed between the parties.
8. MARGINAL QUANTITY
8.1 Until the expiration of the first three (3) full Years after the
Commencement Date the Marginal Quantity is zero (0) tonnes per Year.
8.2 Subject to clauses 8.1 and 8.3 the Marginal Quantity is 80,000 tonnes
of Timber per Year.
8.3 For each Year of the 5 Year period after a Review Date the Marginal
Quantity shall be the lesser of:
8.3.1 80,000 tonnes; or
8.3.2 the annual average quantity of Timber taken by the Company in
excess of the Base Quantity in each of the 5 Years previous to
the Review Date.
8.4 For the purposes of this clause 8:
8.4.1 Review Dates means 1 July of Year 10 and 1 July of Year 15
where: Year 10 means the tenth full Year after the Year of the
Commencement Date; and
Year 15 means the fifteenth full Year after the Year of the
Commencement Date;
8.4.2 The Company will be deemed to have taken Timber which it
failed to take solely by reason of Timbermans Group' failure
to supply it.
8.5 Timbermans Group must advise the Company in writing within 2 months
after a Review Date of its calculation of any amended Marginal Quantity
it proposes to implement for the purposes of this Agreement.
8.6 Subject always to:
8.6.1 Timbermans Group not having allocated the forfeited Timber to
another purpose;
8.6.2 the forfeited Timber being in Timbermans Group' opinion
otherwise available; and
8.6.3 the Company demonstrating to Timbermans Group' satisfaction
that it will take the reinstated Marginal Quantity for the
balance of the Term;
Timbermans Group must give reasonable consideration to a request by the
Company for the reinstatement of the Marginal Quantity reduced in
accordance with clause 8.3.
9. SHORTFALL MANAGEMENT
9.1 The Company must advise Timbermans Group in writing of any intention to
take less than the Annual Supply in any Year (specifying the quantity
it proposes to take) as soon as practicable and in any event prior to
that Year to allow it to be incorporated into the Annual Delivery Plan
for that Year.
9.2 If the Company varies its intention advised in accordance with clause
9.1 the Company must give written notice to Timbermans Group of the
variation as soon as practicable and in any event no later than 31
March of the Year to which the notice applies.
9.3 If, for any reason other than the default of Timbermans Group, the
Company takes less than the Base Quantity in any Year, the Company will
pay to Timbermans Group an amount equivalent to 80% of the Delivered
Prices payable on the quantity of Timber being the difference between
the Base Quantity and the Timber taken by the Company in that Year. The
Delivered Price payable per tonne on that difference will be the
average Delivered Price paid by the Company in that Year calculated by
dividing the total amount paid or payable for the Timber taken by the
quantity taken by the Company in that Year.
9.4 If, in the Year following a Year in which the Company took less than
the Base Quantity (`the following Year'), the Company takes more than
the Base Quantity (`excess Timber'), the amount payable for the excess
Timber in the following Year will be reduced by up to four-fifths of
the amount paid under clause 9.3.
9.5 The parties acknowledge that the Company's obligation to pay one-fifth
of the liquidated damages under clause 9.3 which may not be reimbursed
in accordance with clause 9.4 has been inserted in this Agreement to
offset a reciprocal liability Timbermans Group may have under Contract
Harvesting Agreements. Timbermans Group will use reasonable endeavours
to limit its said reciprocal liability under the relevant Contract
Harvesting Agreements as a result of the Company's failure to take
Timber under this Agreement. Despite clause 9.3 the amount of the
Company's liability in respect of the one-fifth of the liquidated
damages may not exceed the reciprocal liability Timbermans Group has
under the relevant Contract Harvesting Agreements for the same relevant
Year. If the Company makes payment in accordance with clause 9.3
Timbermans Group must as soon as practicable ascertain whether it has
any such reciprocal liability and within 30 days of so ascertaining:
9.5.1 refund to the Company the difference if any between one-fifth
of the amount paid under clause 9.3 and the actual reciprocal
liability Timbermans Group has under the relevant Contract
Harvesting Agreements for the same relevant Year; and
9.5.2 provide the Company with evidence of its reciprocal liability.
9.6. Any sum payable by the Company under clause 9.3:
9.6.1 must be paid before 31 August in the Year following the Year
in which the liability arose;
9.6.2 is payable as pre-estimated and liquidated damages and not as
a penalty.
9.7 If for reasons other than Force Majeure or default on the part of
Timbermans Group, the Company fails to purchase Timber of a quantity
equal to or greater than:
9.7.1 60% of the Annual Supply for 2 consecutive Years; or
9.7.2 50% of the Annual Supply in any Year,
Timbermans Group:
9.7.3 must enter into discussions with the Company for a period of
not less than 45 days to determine the reasons for the failure
and, if appropriate, any measures that may be taken to prevent
a repeat occurrence; and
9.7.4 may, at the conclusion of the discussion period, if acting
reasonably it forms the view that the Company is unable or
unlikely to substantially perform their obligations under this
Agreement,
terminate this Agreement.
10. METHOD OF SUPPLY
10.1 Commencing on the Commencement Date, Timbermans Group will make
available the Annual Supply for each Year by delivering the Timber to
the Mill.
10.2 For the purposes of its compliance with its obligations to make the
Annual Supply available to the Company in any Year, Timbermans Group
will be deemed to have made available that quantity which it is ready
willing and able to deliver and not any lesser quantity which it
actually makes available at the request of the Company.
10.3 Subject always to the parties being able to reach agreement on the
conditions which would apply, Timbermans Group may make part or all of
the Annual Supply available to the Company by issuing it with licences
under the Act enabling the Company to harvest and haul Timber from the
Area of Supply. Where the Company harvests and hauls Timber under this
clause 10.3, the Company must comply with conditions of the licences
issued to it under the Act.
11. ANNUAL DELIVERY PLAN
11.1 The Annual Delivery Plan:
11.1.1 must be based on the Annual Supply, or other such lesser
quantity advised by the Company in accordance with clause 9.1;
11.1.2 must set out indicative information regarding the Monthly
Quantities during the Year to which it applies;
11.1.3 must make provision for stockpiling by the Company at the Mill
to make provision for wet weather preventing Contract
Harvesting of Timber by Timbermans Group.
11.2 Timbermans Group and the Company must as soon as practicable after the
date of this Agreement, confer and negotiate in good faith to reach
agreement on an Annual Delivery Plan for the remainder of Year after
the Commencement Date. In default of agreement, the Annual Delivery
Plan will be determined by Timbermans Group in accordance with the
matters referred to in clause 11.1 and otherwise providing for Timber
to be delivered in approximately equal monthly volumes.
11.3 Not later than 30 April in each Year, Timbermans Group and the Company
must confer and negotiate in good faith to reach agreement on an Annual
Delivery Plan for the following Year. In default of agreement, the
Annual Delivery Plan will be determined by Timbermans Group in
accordance with the matters referred to in clause 11.1 and otherwise
providing for Timber to be delivered in approximately equal monthly
volumes.
11.4 If in accordance with clause 11.2 the Company advises State Forest of
an intention to take less Timber than previously advised which requires
an amendment of the Annual Delivery Plan, Timbermans Group and the
Company must confer and negotiate in good faith to reach agreement on
an amended Annual Delivery Plan.
12. MONTHLY DELIVERY SCHEDULES
12.1 The Monthly Delivery Schedule:
12.1.1 must be based on, but not bound to, the indicative information
in the Annual Delivery Plan for the month to which it applies;
12.1.2 must state the Monthly Quantity for the month to which it
applies;
12.1.3 must take into account the need for the Company to stockpile
Timber at the Mill to make provision for wet weather
preventing Contract Harvesting, while recognising the need to
maintain log quality;
12.1.4 must include any special delivery requirements the Company may
have for that month, as agreed between the parties.
12.2 No later than seven (7) days prior to the commencement of each calendar
month the parties must confer and negotiate in good faith to reach
agreement on a Monthly Delivery Schedule for that month. In default of
agreement, the Monthly Delivery Schedule will be determined by
Timbermans Group in accordance with the matters referred to in clause
12.1 and otherwise providing for a Monthly Quantity approximately equal
to 9% (for the months of February to November inclusive) and 5% (for
the months of December and January inclusive) of the quantity of Timber
to be delivered in the relevant Year in accordance with the Annual
Delivery Plan. Timbermans Group must provide the Company with the
Monthly Delivery Schedule determined by it not less than two (2)
Business Days prior to the commencement of the month to which it
applies. Any determination by Timbermans Group must, as far as is
reasonably practicable, take into account the current market
requirements of the Company but otherwise provide for the Monthly
Quantity to be delivered in approximately equal weekly quantities apart
from periods of shut down in the Mill.
12.3 If either party wishes to vary a Monthly Delivery Schedule during the
month to which it applies, the party must notify the other as soon as
practicable and the parties must negotiate in good faith to reach
agreement on an amended Monthly Delivery Schedule. In default of
agreement the original Monthly Delivery Schedule shall apply.
13. AMENDING OF ANNUAL DELIVERY PLAN OR MONTHLY DELIVERY SCHEDULE
13.1 Where any timber in the Area of Supply has been damaged or destroyed by
fire, disease or other natural cause or access to the timber intended
to supply the Annual Supply is otherwise prevented by Force Majeure,
Timbermans Group may, after consultation and agreement with the
Company, amend any Annual Delivery Plan or Monthly Delivery Schedule as
it deems necessary to facilitate Salvage operations or to adjust to the
unavailability of timber.
13.2 Subject always to
13.2.1 the Company's right to refuse to accept delivery of timber
which does not conform to the Specifications or to take Timber
in excess of the Annual Supply; and
13.2.2 Delivered Prices for the Timber involved taking into account
any additional costs that the Company can demonstrate to
Timbermans Group' reasonable satisfaction will be incurred by
the Company in processing the Timber through the Mill solely
by reason of it being harvested in Salvage operations;
the Company must cooperate in Timbermans Group' efforts to sell Timber
arising from Salvage operations.
14. DELIVERY
14.1 The Company must accept Timber delivered to the Mill by Timbermans
Group:
14.1.1 substantially in accordance with the Monthly Delivery
Schedule; and,
14.1.2 during the delivery hours in clause 14.2.
14.2 The delivery hours on Business Days are between 0700 and 2300 hours or
as otherwise agreed by the parties, (`specified hours'). Delivery hours
on weekends, public holidays and on Business Days outside the specified
hours are to be by arrangement between Timbermans Group and the
Company.
14.3 The Company must use all reasonable endeavours to unload log trucks
within 20 minutes of their arrival at the Delivery Site.
14.4 The Company must ensure that all unloading operations are performed in
a safe manner in accordance with the NSW Occupational Health and Safety
Act and any other code issued by NSW WorkCover or other relevant agency
which replaces or exercises the functions carried out by NSW WorkCover.
14.5 Timbermans Group must ensure that all truck drivers delivering Timber
to the Mill undertake site induction training provided by the Company
at the Company's expense. Nothing in this clause 14.5 requires the
Company to pay any money to the truck drivers or their employers.
15. SPECIFICATIONS
15.1 The Company will accept any timber which, when delivered to the Mill,
conforms to the Specifications.
15.2 Timber will be deemed to conform to the Specifications once the
delivery docket has been signed by the Company and the Company does not
object under clause 15.3 to its failure to meet the Specifications.
15.3 If the Company disputes that timber delivered by Timbermans Group
conforms to the Specifications, the Company will advise Timbermans
Group of the dispute within three Business Days of delivery of the
timber and set the timber aside for inspection and adjudication by a
suitably qualified Timbermans Group officer.
15.4 Timbermans Group must arrange for the inspection and adjudication of
disputed timber within three business days after receipt of advice
referred to in clause 15.3.
15.5 Subject to clause 15.7 the Company must accept the determination of the
suitably qualified Timbermans Group officer regarding disputed timber
as final and binding.
15.6 If a Timbermans Group Officer determines that disputed timber fails to
meet the Specifications:
15.6.1 Timbermans Group may arrange for the timber to be reserviced
so that it complies with the Specifications; or
15.6.2 the Company may, at its sole discretion, elect to accept
delivery of the timber on terms and conditions (including
price) to be agreed between the parties and in such a case the
disputed timber will be deemed to be Timber made available to
the Company as part of the Annual Supply; or
15.6.3 if, for any reason, the Company does not elect to accept
delivery of the timber, Timbermans Group must remove the
timber from the Mill within 7 days at Timbermans Group'
expense
15.7 If the Company disputes a determination by a suitably qualified
Timbermans Group officer, the Company may appeal to Timbermans Group
General Manager Marketing within two Business Days of the
determination. The Company must accept the determination of Timbermans
Group General Manager Marketing or his nominee regarding disputed
timber as final and binding.
15.8 Timbermans Group recognises the importance of the size and consistency
of the delivered log mix to the operation of the Mill. The Company also
recognises the difficulties associated with supplying a delivered log
mix that does not vary to reflect the inherent variability of the
forest. Subject always to Timbermans Group' sole discretion to
determine from time to time the location and type of Contract
Harvesting operations necessary to supply Timber under this Agreement,
in accordance with Timbermans Group' opinion of good forest management,
and the limitations that flow from the exercise of that discretion,
Timbermans Group will use reasonable endeavours to meet the following
log length mix in the Annual Supply summarised below:
------------------------------------------
Nominal Log Lengths Target % of
Lengths (m) volume delivered
------------------------------------------
3.6 - 4.2 10
------------------------------------------
4.8 30
------------------------------------------
5.4 - 6.0 60
------------------------------------------
16. TITLE AND RISK
16.1 Ownership of the Timber comprising the Annual Supply will pass to the
Company on payment for the Timber by the Company to Timbermans Group.
16.2 The risks of ownership of the Timber forming part of the Annual Supply
will pass to the Company once the Timber has been delivered to the Mill
and the delivery docket has been signed.
17. DELIVERED PRICES
17.1 The prices payable by the Company for Timber delivered to it under this
Agreement will be the Delivered Prices.
17.2 The Delivered Prices for Timber at the date of this Agreement are as
specified in Schedule 3.
17.3 The parties acknowledge the Delivered Prices assume that Timber may be
delivered during the delivery hours in clause 14.2 and that any
reduction in the delivery hours may result in an increase in the costs
of delivery.
18. DELIVERED PRICE REVIEW
18.1 The Delivered Prices applicable at the Commencement Date shall be the
Delivered Prices at the date of this Agreement varied by the percentage
determined by Timbermans Group by applying the Delivered Price Review
Mechanism.
18.2 The Delivered Prices for each Half Year occurring after the
Commencement Date shall be the Delivered Prices for the previous Half
Year varied by the percentage determined by Timbermans Group by
applying the Delivered Price Review Mechanism.
18.3 As soon as practicable after the Commencement Date and the start of
each Half Year thereafter Timbermans Group must apply the Delivered
Price Review Mechanism to determine the Delivered Prices to apply until
the next Half Year. Timbermans Group must provide the Company with
details of its application of the Delivered Price Review Mechanism and
the Delivered Prices so determined shall be applied retrospectively to
the Commencement Date or the start of the Half Year as the case may be.
18.4 The parties must review the Delivered Prices and the Delivered Price
Review Mechanism on or before the anniversary of 5 years from the
Commencement Date and before the expiration of each subsequent 5 Year
period and negotiate in good faith to reach agreement on whether to:
18.4.1 amend the Delivered Prices;
18.4.2 amend the Delivered Price Review Mechanism by:
(a) adding, deleting or varying any Cost Items,
indicators, indicator rates or weightings; or
(b) by replacement with a new mechanism for calculating
annual shifts in the market value of Timber delivered
at the Mill; or
18.4.3 do any combination of (a) or (b) above,
and in default of agreement (and subject to clause 18.5)
Timbermans Group may:
18.4.4 determine whether any amendment or replacement is necessary;
18.4.5 may make such any amendment or replacement or both, as it
considers necessary; and
18.4.6 implement its determination in relation to Delivered Prices to
apply in the Year following the Year of the review.
18.5 Any agreement or determination under clause 18.4 must meet the
requirements that:
18.5.1 the Delivered Prices are fair, reasonable and competitive in
comparison to current market prices for Timber (or timber
types similar or comparable to Timber) harvested and hauled in
similar or comparable quantities, quality, distances and other
circumstances to those which apply under this Agreement; and
18.5.2 the Delivered Price Review Mechanism provides a fair and
reasonable mechanism for calculating shifts in the market
value of Timber delivered at the Mill.
18.6 If:
18.6.1 an exceptional change occurs in the Indicator Rate of an
Indicator; or
18.6.2 a factor which is not then included as an Indicator or a Cost
Item becomes apparent which may have a significant effect on
the market value of Timber delivered to the Mill;
a party may request a review of the Delivered Price Review Mechanism
and the parties must negotiate in good faith to reach agreement on
whether to amend the Delivered Price Review Mechanism by adding,
deleting or varying any Cost Item, Indicator, Indicator Rate, or
Indicator Weighting and in default of agreement (and subject to clause
18.7) Timbermans Group may:
18.6.3 determine whether any amendment is necessary;
18.6.4 make such any amendment as it considers necessary; and
18.6.5 implement its determination in relation to Delivered Prices to
apply in the Year following the Year of the review.
18.7 Any agreement or determination under clause 18.6 must meet the
requirement that the Delivered Price Review Mechanism provides a fair
and reasonably mechanism for calculating shifts in the market value of
Timber delivered at the Mill.
19. INFORMATION
19.1 The Company must throughout the Term maintain and keep all accounts and
other written information relating to its sales of Products relevant to
the review of the Delivered Prices or the Delivered Price Review
Mechanism under clause 16 together with all documentation which may
verify the accuracy of such information.
19.2 Timbermans Group may request information from the Company relating to
its sales of products relevant to the review of Delivered Prices or the
Delivered Price Review Mechanism including any documentation verifying
the accuracy of such information.
19.3 The Company must promptly provide the information, on a confidential
basis, to Timbermans Group.
19.4 If requested by Timbermans Group, the Company must provide to an
independent auditor engaged by Timbermans Group full access to all
accounts and papers and full information and assistance necessary for
the auditor to examine and verify any information which Timbermans
Group may request under clause 19.2 or is provided by the Company under
that clause.
19.5 Timbermans Group must advise the Company in writing of any variation to
Delivered Prices or the Delivered Price Review Mechanism as soon as
practicable after the variation is agreed or determined.
20. GOODS AND SERVICES TAX
20.1 Delivered Prices and any other consideration for supplies specified in
this Agreement do not, subject to the operation of this clause, include
any amount in respect of GST unless provided otherwise.
20.2 The GST may be imposed on the Delivered Price for Timber delivered
under this Agreement.
20.3 If GST is or will be imposed on a supply made under this Agreement, the
supplier may:
20.3.1 increase the consideration otherwise provided for that supply
under this Agreement by the amount of that GST; or
20.3.2 otherwise recover from the recipient the amount of that GST.
20.4 The supplier must ensure that any invoice issued under this agreement
in respect of a taxable supply is a Tax Invoice or Adjustment Note as
appropriate or, if no invoice is to be otherwise issued under this
Agreement, must issue a Tax Invoice or Adjustment Note as appropriate
within 7 days of GST being imposed on a taxable supply made under this
Agreement. Notwithstanding any other provision of this Agreement the
payment of any amount by the recipient in respect of a taxable supply
is subject to the issuing of the relevant Tax Invoice or Adjustment
Note to the recipient.
20.5 Costs required to be reimbursed or indemnified under this Agreement
must exclude any amount in respect of GST included in the costs for
which an entitlement arises to claim an input tax credit provided that
the reimbursement or indemnification does not amount to consideration
for a taxable supply.
20.6 If the consideration for a supply under this Agreement is calculated by
reference to the consideration or value of other supplies, in
performing that calculation, the consideration or value for those other
supplies excludes any amount in respect of GST payable on those
supplies.
20.7 In the calculation of Delivered Prices by reference to movements in any
index, such as the Consumer Price Index:
20.7.1 any increase in the index attributable to the introduction or
increase in the rate of GST published by the Commonwealth
Statistician or similar government body is to be excluded from
the index for the purposes of adjusting the consideration;
20.7.2 if the Commonwealth Statistician or similar government body
does not publish the increase in the index attributable to the
introduction or increase in the rate of GST, Timbermans Group
or the Company may request the president for the time being of
the Institute of Chartered Accountants in Australia or an
officer of another Australian professional association agreed
by Timbermans Group and the Company to appoint a person to
decide the increase in the index attributable to the
introduction or increase in the rate of GST for the purposes
of this clause;
20.7.3 the person appointed will act as an expert and not an
arbitrator;
20.7.4 the expert's decision is final and binding on the parties; and
20.7.5 Timbermans Group and the Company must each pay one half of the
expert's fee (including expenses) in relation to the decision.
20.8 In this clause:
20.8.1 Adjustment Note includes any document or record treated by the
Commissioner of Taxation as an adjustment note or as enabling
the claiming of an input tax credit for which an entitlement
otherwise arises;
20.8.2 GST includes any replacement or subsequent similar tax;
20.8.3 GST Act means A New Tax System (Goods and Services Tax) Act
1999 (Cth);
20.8.4 New Tax System changes has the same meaning as in the Trade
Practices Act 1974 (Cth); and
20.8.5 Tax Invoice includes any document or record treated by the
Commissioner of Taxation as a tax invoice or as enabling the
claiming of an input tax credit for which an entitlement
otherwise arises.
20.8.6 Terms defined in the GST Act have the same meaning in this
clause unless provided otherwise.
21. PAYMENT
21.1 Timbermans Group will issue monthly invoices for the Timber
delivered to the Company.
21.2 The Company must pay any amounts owing to Timbermans Group
under an invoice within 28 days of the end of month during
which the Timber referred to in the invoice was supplied.
21.3 If the Company fails to pay an invoice on the due date for
payment of that invoice, Timbermans Group may suspend the
Company's right to obtain Timber under this Agreement until
payment is made.
21.4 If the Company does not accept delivery of Timber harvested in
accordance with the Monthly Delivery Schedule or agreed
changes to the Monthly Delivery Schedule, Timbermans Group may
estimate the quantity of that Timber and issue an invoice to
the Company within 30 days of that Timber being harvested as
if the estimated quantity had been accepted by the Company.
Any such invoice will be deemed to be an invoice for Timber
delivered to the Company and the provisions of clauses 21.2
and 21.3 will apply to it. The invoice will be accepted by the
Company as pre-estimated and liquidated damages and not a
penalty.
21.5 Where the Company pays an invoice issued under clause 21.4 and
the relevant Timber are subsequently accepted by the Company,
Timbermans Group will adjust its invoices to take into account
the previous payment.
22. MEASUREMENT
22.1 The Timber delivered by Timbermans Group to the Mill must be
measured as provided under the Code of Procedure to be agreed
between the parties. The Code of Procedure must provide for
the measurement of the weight, diameter class and volume of
Timber delivered to Mill by weighbridge and electronic log
scanning. The Code of Procedure may be amended by Timbermans
Group from time to time as may be considered necessary by
Timbermans Group, acting reasonably. Timbermans Group will
consult with and take into account any comments of the Company
before any amendments are effected or implemented.
22.2 For the purpose of weight measurement for accounting purposes
the Company must install a weighbridge at the Mill which is
suitable for weighing 25 metre B double trucks in a single
weigh.
22.3 The Company must provide an electronic log scanning measuring
system to measure the number of logs and volume by diameter
class of Timber delivered by Timbermans Group to the Mill
which is acceptable to Timbermans Group and which will provide
computerised output and electronic data transfer capabilities
which are acceptable to Timbermans Group.
22.4 The Company must maintain and verify the weighbridge and the
electronic log scanning measuring system as required by the
manufacturer's specifications and otherwise in accordance with
the Code of Procedure. Timbermans Group may from time to time
undertake an independent verification of the operation and
accuracy of the weighbridge or electronic log scanning
measuring system at its sole cost.
22.5 The information produced by the weighbridge or electronic log
scanning measuring system referred to in this clause 22 must
be in any format reasonably requested by Timbermans Group in
order to facilitate the efficient preparation by Timbermans
Group of sales accounts and contractor payments providing that
compliance with Timbermans Group request does not impose an
unreasonable cost burden on the Company.
23. COMPANY'S OBLIGATIONS
23.1 The Company will maintain sufficient log stocks at the Mill to
allow the Mill to continue operating in difficult supply
conditions or where delivery is restricted due to adverse
weather conditions, within the constraints of maintaining log
quality.
23.2 The Company must comply with:
23.2.1 the provisions of the Act; and
23.2.2 the Code of Procedure.
24. TIMBERMANS GROUP OBLIGATIONS
24.1 Timbermans Group will use its best endeavours to supply Timber
substantially in accordance with the Annual Delivery Plan and
Monthly Delivery Schedules.
24.2 Nothing in clause 24.1 detracts from Timbermans Group
obligations under clause 2.1.
25. INDEMNITY AND INSURANCE
25.1 The Company indemnifies Timbermans Group against all actions,
proceedings, claims, demands and expenses by any person in
respect of or arising out of the negligent performance by the
Company of its obligations under this Agreement.
25.2 Timbermans Group indemnifies the Company against all actions,
proceedings, claims, demands and expenses by any person in
respect of or arising out of the negligent performance by
Timbermans Group of its obligations under this Agreement.
25.3 The Company will take out and maintain Public Liability
Insurance with a reputable insurance company approved by
Timbermans Group and under a policy approved by Timbermans
Group in an amount not less than $10 million for each and
every occurrence and not limited in the aggregate for any one
period of claim.
25.4 Timbermans Group will maintain Public Liability Insurance to
cover public liability under this Agreement.
26. SALE OF TIMBER TO OTHER PERSONS
26.1 Subject to its obligations under this Agreement Timbermans
Group reserves the right to and may:
26.1.1 supply timber, products and forest materials from the Area of
Supply;
26.1.2 issue licences to obtain timber, products or forest materials
within the Area of Supply;
26.1.3 sell part or all of the Annual Supply not taken or proposed to
not be taken by the Company in any Year; or,
26.1.4 sell any Timber which does not form part of the Annual Supply;
to any other person.
26.2 The Company may sell Timber supplied under this Agreement to
any other person before processing the Timber through the Mill
provided that at the conclusion of each Year the Company must
give Timbermans Group a written statement of the quantity of
any such Timber sold to during the Year.
27. SECURITY
27.1 The Company must provide and maintain security (`security')
for the performance of its obligations under this Agreement in
a sum determined by Timbermans Group from time to time. Each
Year of the Term the amount of the security determined by
Timbermans Group may not exceed the maximum amount which would
be payable by the Company for Timber delivered during any
eight (8) week period assuming that Timber was delivered in
accordance with the Annual Delivery Plan for that Year
(`secured amount').
27.2 Any determination of the secured amount by Timbermans Group
must be in accordance with its internal credit policy
applicable at the time. The Company may from time to time in
writing request Timbermans Group to re-determine the secured
amount and, provided the Company is able to demonstrate to
Timbermans Group reasonable satisfaction that a material
change in the Company's financial circumstances has occurred,
Timbermans Group must review its determination of the secured
amount.
27.3 The security must:
27.3.1 be in a form of a bank guarantee or other form approved by
Timbermans Group; and
27.3.2 be lodged within fourteen (14) days of written request by
Timbermans Group.
27.4 Timbermans Group may, after advising the Company, draw upon
the secured amount to cover any loss or damage caused by the
Company's breach of its obligations under this Agreement.
27.5 If Timbermans Group draws on the secured amount under this
Agreement but does not terminate this Agreement as a result of
the breach or if Timbermans Group gives written notice of an
increase in the secured amount, then the Company must provide
additional security on Timbermans Group written request so
that the secured amount is maintained at the level determined
under clause 27.1.
27.6 Timbermans Group may suspend the Company's rights to obtain
Timber under this Agreement if the Company fails to lodge the
security when requested to do so.
27.7 Timbermans Group must release the security to the Company
after the expiration of 6 months of the date of termination of
this Agreement if no money is due to Timbermans Group.
28. FORCE MAJEURE
28.1 If the Company is prevented from taking Timber by Force Majeure and:
28.1.1 the Force Majeure was not caused by any unlawful act or
omission on the part of the Company or any employee or agent
of the Company;
28.1.2 the Company had taken all reasonable or practicable
precautions to prevent the Force Majeure; and
28.1.3 the Company has made all reasonable efforts to contain the
effect of the Force Majeure,
then the Company may apply to Timbermans Group for suspension or
modification of its obligations under this Agreement to the extent that
its obligations have been affected by the Force Majeure.
28.2 Where the Company makes application under clause 28.1, Timbermans Group
will negotiate with the Company in good faith to review the Annual
Supply taking into account the effect of the Force Majeure event on the
productive capacity of the Company, but subject to the obligation on
the Company to do all things necessary or practicable to mitigate the
effect of the Force Majeure on the functions and obligations of
Timbermans Group under this Agreement and the Act.
28.3 Where the Company applies for suspension or modification of its
obligations under clause 28.1 and the relief granted results in the
Timber harvested being less than 50 percent of the Annual Supply in any
two consecutive Years, Timbermans Group may reduce the Annual Supply to
an amount equal to the average of the Timber taken by the Company over
those two Years. If no Timber are taken over those two Years, the
Agreement may be terminated by Timbermans Group or the Company by
notice in writing to the other party.
28.4 If Timbermans Group is prevented from performing all or any of its
obligations under this Agreement by reason of the Force Majeure and:
28.4.1 the Force Majeure was not caused by any unlawful act or
omission on the part of Timbermans Group or any employee or
agent of Timbermans Group;
28.4.2 Timbermans Group had taken all reasonable or practicable
precautions to prevent the Force Majeure; and
28.4.3 Timbermans Group has made all reasonable efforts to contain
the effect of the Force Majeure, then
28.4.4 the Company will have no claim against Timbermans Group or the
State of New South Wales for non-fulfilment of Timbermans
Group' obligations under this Agreement, to the extent that
the non-fulfilment is due to the event of Force Majeure;
28.4.5 Timbermans Group will use its best endeavours to assist the
Company to locate an alternative supply of Timber from
Crown-timber land, until Timbermans Group is able to resume
supply of the Annual Supply. To resolve any doubt Timbermans
Group will have no obligations to deliver such Timber and
Timbermans Group will not be liable to meet any costs
associated with the Company obtaining an alternative supply;
and
28.4.6 if Timbermans Group is unable to resume the performance of its
obligations within a period of 6 months from the date of the
occurrence of the Force Majeure or date when the occurrence of
the Force Majeure first became apparent (the `relevant date')
either party may terminate the Agreement by notice. The right
to give notice under this clause 28.4.3 must be exercised
within a period of 9 months from the relevant date and in this
regard time will be of the essence.
28.5 A party affected by an event of Force Majeure must give initial notice
of the existence or occurrence of the event of Force Majeure as soon as
is practicable to do so and in any case it must provide a more detailed
notice within thirty (30) days of the event of Force Majeure being
apparent which provides clear details of the event or occurrence
claimed as Force Majeure and setting out particulars of the likely
effects of the event or occurrence in question.
28.6 If the Company fails to comply with the notice requirements under
clause 28.5, Timbermans Group will be entitled to take the consequences
of this failure into account in assessing the effect and mitigation of
the Force Majeure under clause 28.2.
28.7 If Timbermans Group fails to comply with the notice requirements under
clause 28.5 the Company may require Timbermans Group to supply details
of any alternate supplies of Timber which could be made available to
the Company to mitigate the consequence of late notification.
29. PRIORITY OF SUPPLY
29.1 If an event of Force Majeure results in a reduction in the yield of
Timber within the Area of Supply then Timbermans Group must allocate
the available Timber to the Company and other persons, with contracts
with Timbermans Group for the supply of Timber from the Area of Supply,
in proportion to their respective entitlements under their contracts.
29.2 The Company will have no claim against Timbermans Group for
non-compliance with its obligations to make the Annual Supply available
if Timbermans Group, as far as is reasonably practicable, supplies
Timber in substantial compliance with clause 29.1.
30. LIMITATION OF LIABILITY
30.1 Where Timbermans Group is in breach of this Agreement by reason of any
failure to supply or deliver Timber any claim for loss suffered by the
Company will be limited to the lesser of;
30.1.1 the loss, damage or expense which would be incurred by the
Company as a direct result of obtaining the Timber (which
Timbermans Group failed to make available, supply or deliver)
from the most economic alternative source; or
30.1.2 the Company's loss of earnings after deducting operating costs
but before interest, tax, depreciation, and amortisation;
but shall not otherwise include consequential loss.
30.2 Except where this Agreement otherwise provides, if the Company is in
breach of this Agreement by reason of any failure to take timber, any
claim for loss suffered by Timbermans Group will be limited to any
loss, damage, or expense incurred by Timbermans Group as a direct
result of the failure of the Company to take the timber under this
Agreement.
31. TERMINATION OF AGREEMENT
31.1 Timbermans Group may terminate this Agreement if the Company:
31.1.1 suffers an Insolvency Event; or
31.1.2 commits a material breach of this Agreement and the default is
not remedied by the Company to the satisfaction of Timbermans
Group within a period of sixty (60) days in relation to a
material breach in terms of clause 3.4, and thirty (30) days
in relation to any other material breach, after notice of the
breach has been served on the Company. Material breaches
include without limitation:
(i) a material breach in terms of clause 3.4; (ii)
failing to comply with clause 3.5;
(iii) failing to take the quantities of Timber prescribed
in clause 9.7.1 or 9.7.2 and the procedure contained
in clause 9.7.3 and 9.7.4 has been complied with;
(iv) failing to accept Timber in breach of clauses 14.1;
(v) failing to make payments in breach of clause
21.2;
(vi) failing to provide security or to adjust or vary the
secured amount in breach of clause 27;
(vii) purporting to assign the whole or any part of this
Agreement without the consent of Timbermans Group in
breach of clause 35.
31.2 If Timbermans Group commits a material breach of this Agreement and the
default is not remedied within a reasonable period after notice to
remedy the breach has been served on Timbermans Group, then the Company
may terminate this Agreement. A material breach includes without
limitation failing to supply the Annual Supply in breach of clause
2.2.1.
31.3 The party terminating this Agreement arising from the default of the
other party may claim damages for all loss arising from the default
unless the claim for damages is excluded under this Agreement.
32. DISPUTES
The following procedures will apply to disputes under this Agreement:
32.1 If a party claims a dispute the parties must first seek resolution by
negotiation to be conducted between the Chief Executive Officers of the
respective parties and, failing resolution within 28 days, the dispute
must be referred to mediation by the Australian Commercial Disputes
Centre (`ACDC').
32.2 In the event that the dispute has not been resolved within twenty eight
(28) days after the appointment of a mediator then, unless otherwise
agreed in writing between the parties, the dispute must be submitted to
arbitration, administered by ACDC.
32.3 The arbitrator will be agreed between the parties or, failing
Agreement, shall be appointed by the Secretary-General of the ACDC or
similar body. The arbitrator must not be the same person as the
mediator.
32.4 Any mediation or arbitration proceedings must be held in Sydney. Any
arbitration must be undertaken in accordance with and subject to the
Institute of Arbitrators Rules for the conduct of Commercial
Arbitration.
32.5 The Arbitrator or some person appointed on the Arbitrator's behalf may
investigate the Company's and Timbermans Group' affairs and accounts so
far as may be necessary to assist the Arbitrator to determine any
matter referred for arbitration. The Company and Timbermans Group must
give the Arbitrator full access to all accounts and papers necessary
for that purpose and must afford the Arbitrator full information and
assistance.
32.6 The provisions of this clause 32 will not apply to clause 27.
32.7 In so far as the provisions of this clause 32 apply to clause 18 the
issue for consideration by any mediation or arbitration is to be
limited to whether the Delivered Price or the Delivered Price Review
Mechanism in dispute (the "disputed item"), was a reasonable one in
consideration of the factors set out in clause 18 to be taken into
account in determining the disputed item. To avoid any doubt any such
arbitration may not determine the Delivered Price or the Delivered
Price Review Mechanism which is to apply.
32.8 If an arbitration regarding a disputed item determines the disputed
item was unreasonable the disputed item will be void ab initio and
Timbermans Group must:
32.8.1 promptly redetermine the disputed Delivered Price or the
Delivered Price Review Mechanism which will then apply from
the first date the dispute item was originally intended
to apply;
32.8.2 refund to the Company any over payment made under the
disputed item.
33. WAIVER
33.1 Agreement by Timbermans Group to an Annual Delivery Plan or Monthly
Delivery Schedule or amendment thereto which provides for the Company
to take less than the Annual Supply in any Year will not constitute a
waiver of any obligation imposed, or right given, by this Agreement.
33.2 A party does not waive a right or power simply because it fails to
exercise or delays exercising that right or power. A single exercise of
a right or power does not prevent exercising it again or exercising any
other right or power. A right or power may only be waived in writing
signed by the party to be bound by the waiver.
34. VARIATION
34.1 This Agreement contains the total understanding of the parties.
34.2 None of the provisions of this Agreement may be varied, waived,
discharged or released either at law or in equity, unless by the
express consent of the parties in writing.
35. ASSIGNMENT
35.1 The Company may not without the prior written consent of Timbermans
Group assign its rights and responsibilities under this Agreement to
any person provided that Timbermans Group' consent will not be
unreasonably withheld. Any Change in Control of the Company will be
deemed to be an assignment of the Company's rights and entitlements
under this Agreement.
35.2 The consent given by Timbermans Group may be subject to the assignee
executing all agreements and other documents which Timbermans Group
reasonably requires.
35.3 All money due to Timbermans Group under this Agreement must be paid
before any assignment of it by the Company.
36. INTEREST
36.1 In the event that the Company fails to pay any money due to Timbermans
Group when required to do so by this Agreement, interest will accrue on
all unpaid money from the date of default until payment in full at the
rate of interest per annum for the time being payable under Schedule J
of the Supreme Court Rules (NSW).
37 NOTICE
37.1 Any notice required to be served under this Agreement may be served:
37.1.1 in the case of the Company:
Attention: Managing Director
Integrated Forest Products Pty Ltd
95 Salmon Street
Port Melbourne, VIC. 3207
Phone: 0386454300
Fax: 0386454301
37.1.2 in the case of Timbermans Group:
Attention: Managing Director
Timbermans Group Pty Ltd
11 - 12 Government Road
Eden, NSW, 2551
Phone (02) 64961222
Fax (02) 64963097
37.2 The parties may change the address for service of notice from time to
time by notice in writing to the other party.
38. GOVERNING LAW
38.1 This Agreement is governed by the laws of New South Wales and the
parties agree to the jurisdiction of the Courts of New South Wales.
39. SEVERABILITY
39.1 If any provisions of this Agreement are held to be invalid, illegal, or
unenforceable by a Court or other tribunal of competent jurisdiction,
the validity, legality, and enforceability of the remaining provisions
will not in any way be affected or impaired thereby.
40. CONFIDENTIALITY
40.1 No party will disclose the contents or terms of this Agreement or any
information or documents received by it in connection with the
negotiation of this Agreement or pursuant to the provisions of this
Agreement without the prior written consent of the other parties,
except to the extent that:
40.1.1 the information is available to the public generally;
40.1.2 that party is required to make the disclosure by law or to
make any filing, recording or registration required by law;
40.1.3 the disclosure is necessary or advisable for the purpose of
obtaining any consent, authorisation, approval or licence from
any public body or authority;
40.1.4 it is necessary that the disclosure be made to any taxation or
fiscal authority;
40.1.5 the disclosure is made on a confidential basis to the
professional advisers of that party (including any industry
association) for the purpose of obtaining advice in relation
to this Agreement or the enforcement of this Agreement or
otherwise for the purpose of consulting those professional
advisers; or
40.1.6 the disclosure is required or desirable to be made in
pursuance of any procedure for discovery of documents and any
proceedings before any court, tribunal or regulatory body.
IN WITNESS WHEREOF the parties hereto execute this Agreement as a Deed and have
signed, sealed and delivered this Agreement on the day and year hereinbefore
written.
I, Tony Esplin
have hereunto affixed the Seal of the )
TIMBERMANS GROUP PTY LTD )
in the presence of: )...............................
.........................................
THE COMMON SEAL of INTEGRATED )
FOREST PRODUCTS
affixed in accordance with its Constitution )
in the presence of: )
......................................... ........................
Secretary Director
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATIONS:..............................................................1
1.1 Definitions:.............................................................................1
1.2 Interpretation...........................................................................3
2. SCOPE OF AGREEMENT............................................................................4
3. RELEVANT PROVISIONS SUBJECT TO CONDITIONS PRECEDENT...........................................4
4. COMMENCEMENT AND DURATION OF AGREEMENT........................................................7
5. PREMIUM PAYMENT....................................................ERROR! BOOKMARK NOT DEFINED.
6. BASE QUANTITY.................................................................................8
7. ADDITIONAL SUPPLIES...........................................................................8
8. MARGINAL QUANTITY.............................................................................8
9. SHORTFALL MANAGEMENT..........................................................................9
10. METHOD OF SUPPLY..........................................................................10
11. ANNUAL DELIVERY PLAN......................................................................10
12. MONTHLY DELIVERY SCHEDULES................................................................11
13. AMENDING OF ANNUAL DELIVERY PLAN OR MONTHLY DELIVERY SCHEDULE.............................11
14. DELIVERY..................................................................................12
15. SPECIFICATIONS............................................................................12
16. TITLE AND RISK............................................................................13
17. DELIVERED PRICES..........................................................................13
18. DELIVERED PRICE REVIEW....................................................................13
19. INFORMATION...............................................................................15
20. GOODS AND SERVICES TAX....................................................................15
21. PAYMENT...................................................................................16
22. MEASUREMENT...............................................................................17
23. COMPANY'S OBLIGATIONS.....................................................................17
24. TIMBERMANS GROUP OBLIGATIONS..............................................................18
25. INDEMNITY AND INSURANCE...................................................................18
26. SALE OF TIMBER TO OTHER PERSONS...........................................................18
27. SECURITY..................................................................................18
28. FORCE MAJEURE.............................................................................19
29. PRIORITY OF SUPPLY........................................................................20
30. LIMITATION OF LIABILITY...................................................................21
31. TERMINATION OF AGREEMENT..................................................................21
32. DISPUTES..................................................................................22
33. WAIVER....................................................................................22
34. VARIATION.................................................................................23
35. ASSIGNMENT................................................................................23
36. INTEREST..................................................................................23
37 NOTICE....................................................................................23
38. GOVERNING LAW.............................................................................24
39. SEVERABILITY..............................................................................24
40. CONFIDENTIALITY...........................................................................24
Table1..................................................................Error! Bookmark not defined.
OTHER...................................................................ERROR! BOOKMARK NOT DEFINED.
SCHEDULE 1
SPECIFICATIONS
Species
Logs shall be from the species Pinus radiata.
Log length and diameter
Logs shall have a minimum small end diameter under bark (SEDUB) of 18cm and a
maximum large end diameter under bark (LEDUB) of 55cm.
Logs will be supplied in five (5) length classes unless otherwise agreed to.
Table 1 summarises the targeted log lengths;
Table1
- ------------------------------------------------------------------------
Nominal Targeted Minimum Maximum
Length Presented Length Length Length
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
3.6m 3.74m 3.69m 3.79m
- ------------------------------------------------------------------------
4.2m 4.34m 4.29m 4.39m
- ------------------------------------------------------------------------
4.8m 4.94m 4.89m 4.99m
- ------------------------------------------------------------------------
5.4m 5.54m 5.49m 5.59m
- ------------------------------------------------------------------------
6.0m 6.14m 6.09m 6.19m
- ------------------------------------------------------------------------
Length tolerance for all log lengths will be +/- 5cm. Logs with a length less
than 3.69m or greater than 6.19m are out of specification. All logs greater than
3.69m or less than 6.19m in length are within specification. The following
applies to logs between 3.69m and 6.19m:
o Logs will be sold at the Nominal Length;
o For any given Nominal Length, logs should be cut as close as
possible to the Targeted Presented Length, but in any case should be
between the Maximum and Minimum Lengths.
o If a log length is less than the Minimum Length, the saleable length
of the log will drop back to the next Nominal Length. The difference
between the actual log length and the Maximum Length of the new
Nominal Length will be converted to an approximate volume (based on
the SEDUB of the log). The value of this portion of the log will be
refunded.
o If a log length is greater than the Maximum Length, the saleable
length will remain at the same Nominal Length. The difference
between the actual log length and the Maximum Length will be
converted to an approximate volume (based on the SEDUB of the log).
The value of this portion of the log will be refunded.
Log length is defined as the shortest distance between the sawn ends measured in
a straight line. Ends to be cut square with a tolerance of ten (10) percent of
diameter.
Logs will be delivered to the Mill unsorted for diameter or length.
The Large End of logs shall all be orientated in the same direction when
delivered.
Sweep
Logs less than 28cm centre diameter under bark (CDUB) shall have a maximum sweep
of 15% of CDUB over a 3.6m section of the log. Logs greater than 28cm centre
diameter under bark (CDUB) shall have a maximum sweep of 20% of CDUB over a 3.6m
section of the log.
Double sweep (or wobble) in one plane is acceptable. The maximum allowable sweep
is as per the single sweep specification (above).
As a general rule, double sweep in two planes is not acceptable. However, slight
changes in direction do define double sweep. For a log to be rejected the sum of
deviations in all planes must exceed 15% of CDUB over the length of the log.
Sudden changes in direction are not permitted.
Knot size
Logs shall have a maximum knot size of 6cm measured across the shortest axis for
logs smaller than 28cm SEDUB and a maximum knot size of 8cm measured across the
shortest axis for logs larger than 28cm SEDUB.
Spike Knots
Spike knots are defined when the angle between a branch and the trunk is 30
degrees or less. This is evident on a knot when the long axis of the knot is
greater than twice the length of the shortest axis. Logs shall have a maximum
spike knot size of 6cm measured across the shortest axis of the knot.
OTHER
Logs shall have no more than 10 percent of the cross sectional area of any end
section of the log covered by visible blue stain at the time of delivery.
Surface mould or blue stain is permitted. Timbermans Group will use all
reasonable endeavours to minimise blue stain in logs.
Damage from harvesting operations, including log loading but not including log
unloading, that penetrates the surface of the wood by more than 10 percent of
the diameter at the point of penetration or 3cm, whichever is the lesser, is not
permitted.
Butt pull or draw wood greater than 1cm is not acceptable.
Butt swelling or flare extending more than 10cm beyond the circumference of the
log is not acceptable.
End splitting and falling shatter is not acceptable. The portion of end split
log must be at least 1cm in depth. Shatter is defined as the breakage of fibre
within the log.
Double heart is not acceptable.
The log is reasonably sound and free of rot. It must not be from a dead tree or
a dead portion of a tree.
Foreign objects, insect damage and rot are not permitted. Fire damage on the
debarked log is not permitted.
Scars which penetrate into the log more than 3cm from the log surface are not
permitted.
SCHEDULE 2
MAP OF AREA OF SUPPLY
SCHEDULE 3
DELIVERED PRICE (DOUBLE SHIFT RATE)
To apply from Commencement Date to 30 June 2007 subject to the payment of the
Premium and variation each Half Year of the Term in accordance with clause 18
---------------------------------------------
Centre Diameter Delivered Price
Overbark (CDOB) ($/tonne)
Class
(cm)
---------------------------------------------
Less than 20 31.62
20-22 31.62
22-24 32.25
24-26 33.72
26-28 35.77
28-30 40.18
30-32 45.69
32-34 51.19
34-36 55.97
36-38 60.31
38-40 64.34
40-42 66.26
42-44 68.01
44-46 69.48
46-48 70.59
48-50 72.78
50 and above 74.85
---------------------------------------------
Notes:
Assumed Weight Conversion Factor is 0.94
The Delivery destination is assumed to remain at the proposed mill location.
To apply from 1 July 2007 to 30 June 2009 subject to variation each Half Year of
the Term in accordance with clause 18
---------------------------------------------
Centre Diameter
Overbark (CDOB) Delivered Price
Class ($/tonne)
(cm)
---------------------------------------------
Less than 20 32.15
20-22 32.15
22-24 32.81
24-26 34.34
26-28 36.49
28-30 41.12
30-32 46.89
32-34 52.66
34-36 57.66
36-38 62.20
38-40 66.43
40-42 68.44
42-44 68.28
44-46 71.81
46-48 72.97
48-50 75.27
50 and above 77.44
---------------------------------------------
Notes:
Assumed Weight Conversion Factor is 0.94
The Delivery destination is assumed to remain at the proposed mill location.
To apply from 1 July 2009 subject to variation each Half Year of the Term in
accordance with clause 18
---------------------------------------------
Centre Diameter Delivered Price
Overbark (CDOB) ($/tonne)
Class
(cm)
---------------------------------------------
Less than 20 33.21
20-22 33.21
22-24 33.93
24-26 35.60
26-28 37.95
28-30 43.00
30-32 49.29
32-34 55.58
34-36 61.04
36-38 65.99
38-40 70.61
40-42 72.79
42-44 74.80
44-46 76.48
46-48 77.74
48-50 80.25
50 and above 82.61
---------------------------------------------
Notes:
Assumed Weight Conversion Factor is 0.94
The Delivery destination is assumed to remain at the proposed mill location.
SCHEDULE 4
DELIVERED PRICE REVIEW MECHANISM
Part 1: Definitions and interpretation
In this Schedule unless the context indicates to the contrary:
Estimated Market Price of a Product during a period is that fair and reasonable
market price for the Product during the period determined by Timbermans Group in
consultation with the Company after taking into account:
(i) The average of the average monthly price received by the Company for
the Product during the period (if available);
(ii) Data from the Australian Bureau of Statistics (or other relevant
independent source); and
(iii) Data obtained by Timbermans Group on the prices obtained for the
relevant end products by other NSW industry manufacturers during the
period.
Cost Item means a factor relevant to the market value of Timber delivered at the
Mill more particularly being any item set out in column 1 of Part 3;
Base Indicator Rate for a review means the Indicator Rate which was the Current
Indicator Rate for the previous review;
Current Indicator Rate means the Indicator Rate at the time a review of the
Schedule Prices is being conducted;
Indicator means an Indicator of a Cost Item more particularly being any
Indicator set out in column 2 of Part 3;
Indicator Rate means the value or status of an Indicator at a point in time;
Indicator Weighting means the weighting given to a Indicator for the purpose of
calculating the weighted movement across all Indicators during a review more
particularly being the weighting set out in column 4 of Part 3;
Products means the sawn timber products manufactured by the Company from Timber
supplied under this Agreement including those sawn timber products which are (or
potentially could be) Product A, Product B and Product C from time to time;
Product A for the purpose of a Delivered Price review means that sawn timber
product manufactured by the Company from Timber supplied under this Agreement
and sold by the Company which gave the Company the most revenue during the last
Half Year prior to the Half Year in which the review is being conducted;
Product B for the purpose of a Delivered Price review means that sawn timber
product manufactured by the Company from Timber supplied under this Agreement
and sold by the Company which, except for Product A, gave the Company the most
revenue during the last Half Year prior to the Half Year in which the review is
being conducted;
Product C for the purpose of a Delivered Price review means that sawn timber
product manufactured by the Company from Timber supplied under this Agreement
and sold by the Company which, except for Product A and Product B, gave the
Company the most revenue during the last Half Year prior to the Half Year in
which the review is being conducted;
A reference to Part 3 means a reference to Part 3 of this Schedule as amended
from time to time in accordance with this Agreement.
Part 2 : Methodology
The following describes the method of varying the Delivered Prices:
1. Ascertain the level of each Indicator in column 2 of Part 2, expressed in
dollars and cents, percentage or as an index (as the case may be) current
at the time of the review (the Current Indicator Rate).
2. Ascertain the movement in each Indicator during the relevant review period
by establishing percentage increase (or decrease) in the Indicator Rate
(by comparing the Current Indicator Rate (see clause 1) to the Base
Indicator Rate) and applying any weighting specified in column 2 to that
percentage change. An example of the methodology is shown in the example
below:
(a) assume movement in Product A Indicator Rate is from $500 (Base
Indicator Rate) to $520 (Current Indicator Rate);
(b) Product A Indicator Rate change is therefore + 4%;
(c) weighting for Product A is 100% (from column 2 of Part 3);
(d) 100% of +4% is +4.0%.
Therefore +4.0% is the movement in Product A Indicator.
3. Calculate the weighted movement across all Indicators by applying the
methodology below:
(a) multiply the movement in each Indicator (see clause 2) by the
Indicator Weighting in column 4 of Part 3 (eg the + 4.0% for Product
A from clause 2 above is multiplied by the relevant Indicator
Weighting for Product A, i.e. 8%, with the product being .32%);
(b) the sum of the products of each calculation referred to in clause
3(a) is the weighted movement across all Indicators.
5. The weighted movement across all Indicators calculated in accordance with
clause 3 is the variation in the Delivered Prices over the relevant review
period for the purposes of this Agreement. The new Delivered Prices
determined under this review mechanism are calculated by applying the
weighted movement across all indicators (from clause 4 above) to the
current Delivered Prices as per the methodology in the example below: (a)
assume the weighted movement across all Indicators is +2.5%, and the
existing Delivered Price is $50.00; (b) the new Delivered Price is $50.00
x 1.025 which equals $51.25.
6. For the purposes of the next Delivered Price review ascertain new column 4
Part 3 Indicator Weightings for each Indicator by multiplying the then
current column 4 Part 3 Indicator Weighting for each Indicator by the
period movement in the relevant Indicator (see clause 2 above) and then
dividing the result by the weighted movement across all Indicators (see
clause 3 above). This will produce a new table of weightings which sum to
80 percent. For example:
(a) assume Product A movement (see clause 2 above) is +4.0%, the
weighted movement across all cost items is +2%, and the Indicator
Weighting for Product A (from column 4 of Part 3) is 8%;
(b) then the new Indicator Weighting for Timber Product 1 is calculated
by the formula;
(c) 8% X 1.04 / 1.02 which equals 8.16%.
7. For the purposes of calculating the movement in the Estimated Market Price
for each of the Products which are the basis for the Indicators for Item 1
of the Cost Items:
(a) the Current Indicator Rate will be the Estimated Market Price during
the last Half Year prior to the Half Year in which the review is
being conducted. and
(b) in the first Delivered Price review in which those Indicators are
applied the Base Indicator Rate will be the Estimated Market Price
during the second last Half Year prior to the Half Year in which the
review is being conducted;
8. For the purposes of calculating the movement in the average wholesale
price for MGP 10 Structural Radiata Pine in NSW, Queensland, and Victoria:
(a) the Current Indicator Rate will be the average wholesale price for
MGP 10 Structural Radiata Pine in NSW Queensland, and Victoria
established by Timbermans Group in its last market survey prior to
the date of the review;
(b) in the first Price review occurring on or about the Commencement
Date the Base Indicator Rate will be the average wholesale price for
MGP 10 Structural Radiata Pine in NSW established by the Timbermans
Group in its market survey which last occurred before the date of
this Agreement;
9. For the purposes of calculating the movement in the Sydney Softwood
Producer Price Index of Materials used in House Building:
(a) the Current Indicator Rate will be the value of the Sydney Softwood
Producer Price Index of Materials used in House Building as last
published by the Australian Bureau of Statistics (ABS) prior to the
date of the review; and
(b) in the first Price review occurring on or about the Commencement
Date the Base Indicator Rate will be the value of the Sydney
Softwood Producer Price Index of Materials used in House Building as
last published by ABS before the date of this Agreement;
10. Unless otherwise agreed in each Delivered Price review until the Company
has been manufacturing and selling 3 or more Products for at least 2
consecutive Half Years, the Indicators in relation to the Products shall
be substituted by 100% of the movement in the Average wholesale price for
MGP 10 (F5) Structural Radiata Pine in NSW as measured by Timbermans Group
Timber Market Survey with an Indicator Weighting of 20% (making the total
Indicator Weighting in relation to that Indicator 35%). On introduction of
the Indicators in relation to the Products the Indicator Weighting for the
Products A B and C shall be 40%, 30% and 30% respectively of the then
applicable Indicator Weighting for the substitute Indicator (as varied
from 20%).
11. In the first Delivered Price review occurring on or about the Commencement
Date, the Base Indicator Rate for each of the Indicators (other than those
for Cost Item 1) will be the relevant rate which was applicable at the
date of this Agreement.
Part 3 : Indicators and Weightings
- ----------------------------------------------------------------------------------------------------------
Column 1 Column 2 Column 3 Column 4
- ----------------------------------------------------------------------------------------------------------
Cost Item Indicator Indicator Rate Weighting at
Commencement Date
- ----------------------------------------------------------------------------------------------------------
Item 1: Timber 100% of the movement in the Market Survey April 2003 8%
Products Estimated Market Price for
Product A
-------------------------------------------------------------------------------------
100% of the movement in the Market Survey April 2003 6%
Estimated Market Price for
Product B
-------------------------------------------------------------------------------------
100% of the movement in the Market Survey April 2003 6%
Estimated Market Price for
Product C
-------------------------------------------------------------------------------------
100% of the movement in the Market Survey April 2003 15%
Average wholesale price for MGP
10 (F5) Structural Radiata Pine
in NSW Queensland, and
Victoria, as measured by
Timbermans Group Timber Market
Survey
-------------------------------------------------------------------------------------
100% of the movement in the March Quarter 2003 5%
ABS Producer Price Index of
Materials used in House Building
- Softwood in Sydney -
(Unpublished Series
from Cat No. 6427.0)
- ----------------------------------------------------------------------------------------------------------
Item 2: Wages 100% of the movement in the ABS February Quarter 2003 30%
Average Weekly Earnings, State
and territories: Original (13)
NSW (All employees total earnings
- Cat No. 6302.0)
- ----------------------------------------------------------------------------------------------------------
Item 3: Diesel 100% of the movement in the Shell Wholesale Value for diesel 10%
in NSW (free delivery area) being movement in the Net Price
as follows in the example.
March 2003
--------------------------------------------------------------
Base Price (excluding GST) $0.4696
--------------------------------------------------------------
Plus Federal Excise $0.3864
--------------------------------------------------------------
Less 50% of the Diesel Fuel Rebate $0.1915
--------------------------------------------------------------
Less 50% of the On Road Grant $0.0926
--------------------------------------------------------------
Net Price $0.5720
- ----------------------------------------------------------------------------------------------------------