The lease agreements with the Elders Forestry group (formerly ITC group) include the following terms;

Rental

The rent rate payable in relation to the properties acquired up to and including 12 September 2008 equals BBSY (subject to a floor of 4%) plus the Trust’s banking syndicate finance margin above BBSY plus 0.25%. Rental income is calculated by applying the rent rate to property values (initial greenfields value plus statutory acquisition costs indexed quarterly by CPI with market reviews every 5 years but subject to ratchet provision ensuring property values cannot decrease). The rent rate payable in relation to the properties acquired subsequent to 12 September 2008 is the same as detailed above with the exception that the BBSY floor has been increased from 4% to 6%.

Lessee Obligations Include

• Comply with all approvals and laws
• Maintain and keep in good and substantial repair (excluding any repairs or works of a structural or capital nature)
• Pay all rates, taxes and utilities
• Make good the land on expiry of the lease, or compensate for the cost of restoring the land to a cleared state (excluding internal fencing, setting up for livestock watering, sewing to pasture and removal of structural improvements constructed by lessee)
• Maintain public risk policy for $20 million

Lessor’s Obligations Include

• Use best endeavours to ensure the Trust’s banking syndicate finance margin is kept as low as reasonably possible having regard to market interest rates available from major Australian trading banks for borrowings of a similar nature and quantum to the Trust’s borrowings
• Offer lessee first right of refusal to purchase the land, in event of sale

Option to Purchase

Lessee has the option to purchase the land during the period commencing 9 months before the expiry of the lease term and ending 6 months prior to the expiry of the lease term, based on a greenfields value.

Renewal Term

Generally 2 renewal periods are available to the lessee being not less than 10 years and not more than 25 years in both renewal periods.

Carbon Benefit

The lessee is the legal and beneficial owner of any carbon sequestration benefits and is responsible for any potential carbon liabilities.

Guarantor

Elders Limited