6.1 DEFINITIONS

In this Section and its Attachments:

Adjustment means, in respect of certain Potential Farms, the adjustment process to be carried out and completed in accordance with paragraph 10 of the Valuation Methodology, commencing on the Adjustment Date;

Adjustment Date means the next Business Day after the expiration of the period of 175 Business Days commencing on the Legislation Date;

Asset Definition Date means the later of the next Business Day after:

(a) the expiration of the period of 5 Business Days commencing on the Legislation Date; or

(b) the expiration of the period of 10 Business Days commencing on the date all inspections under paragraph 4 of the Valuation Methodology have been carried out;

Business Day means a day (other than Saturday or Sunday) on which registered banks are open for normal banking business in Wellington and Christchurch but shall exclude any day in the period commencing 25 December in any year and ending on 5 January in the following year, inclusive, and shall be deemed to commence at 9.00 am and to terminate at 5.00 pm;

Capital Expenditure means the cost to Landcorp in effecting improvements as defined in the Valuation of Land Act 1951 and carrying out the work referred to in the second proviso to that definition;

Completion Date means the next Business Day after the expiration of the period of 309 Business Days commencing on the Legislation Date;

Crown means Her Majesty the Queen in right of New Zealand;

Farm means any farm described in Attachment 6.1 and, where relevant, in the Deed Maps referred to in Attachment 6.1. The last column in Attachment 6.1 indicates groupings of parcels of land which, together, comprise a single Farm;

Farm Management Regime means the regime contained in Attachment 6.2 for;

(a) initial disclosure for Valuation;

(b) disclosure of Landcorp's Capital Expenditure plans;

(c) production of farm management plans; and

(d) Landcorp's continued farming operations;

Final Selection Date means the next Business Day after the expiration of the period of 247 Business Days commencing on the Legislation Date;

Financial Trading Results means, in respect of each Farm and for the three most recent financial years of Landcorp as at the date of this Deed, a statement of the annual gross income by stock type and a statement of the net operating surplus after deducting operating expenses;

Initial Selection Date means the next Business Day after the date of expiration of the period of 41 business Days commencing on the Legislation Date;

Landcorp means Landcorp Farming Limited;

Landcorp's Valuer means any Registered Valuer appointed by Landcorp to participate in Valuation and Adjustment in accordance with the Valuation Methodology;

Legislation Date means the date on which this Deed becomes unconditional;

Plant means the plant, machinery, vehicles and other chattels owned and used by Landcorp in its management and operation of the Settlement Farms to be valued and transferred in accordance with the Stock and Plant Terms of Transfer;

Potential Farms means those Farms that Te Runanga, on an indicative non-binding basis, notifies the Crown it is interested in acquiring in accordance with clause 6.5;

Registered Valuer means a person registered under the Valuers Act 1948 and who holds a current annual practising certificate;

RFR means the right of first refusal provided by the Crown to Te Runanga and set out in Attachment 10.1;

Settlement Farm means any Potential Settlement Farm that Te Runanga selects to acquire as part of the Settlement in accordance with clause 6.6;

Settlement Legislation means the bill to give effect to the Settlement referred to in clause 17.3 and, when the bill has become law, means, if the context requires, the Act resulting from the passing of such bill;

Stock means the farm livestock to be valued and transferred in accordance with the Stock and Plant Terms of Transfer;

Stock and Plant Terms of Transfer means the agreement to sell and purchase Stock and Plant set out in Attachment 6.5;

Te Runanga's Valuer means any Registered Valuer appointed by Te Runanga to participate in Valuation and Adjustment in accordance with the Valuation Methodology;

Terms of Transfer means the agreement for sale and purchase, in respect of each Settlement Farm, set out in Attachment 6.4;

Timeline means the illustration of the timeline for the various processes specified in the Valuation Methodology, set out in Attachment 6.6

Transfer Value means, in respect of each Settlement Farm and subject to the Terms of Transfer, the purchase price to be paid by Te Runanga to the Crown, as determined by the methodology and process, including Valuation and Adjustment, set out in the Valuation Methodology;

Valuation means, in respect of each Potential Farm, the valuation process to be carried out and completed in accordance with the Valuation Methodology;

Valuation Date means the date of this Deed; and

Valuation Methodology means the methodology and process set out in Attachment 6.3.

6.2 BACKGROUND

6.2.1 Pool of Farms to be selected

Te Runanga and the Crown have, prior to the date of this Deed, identified a pool of Farms from which Te Runanga may select Potential Farms and Settlement Farms.

6.2.2 How Farms are initially selected and valued

Te Runanga and the Crown have agreed on a five stage process for the determination of the Transfer Value of each Settlement Farm, as follows:

(a) Stage 1: Landcorp will disclose to Te Runanga relevant information about all Farms;

(b) Stage 2: Landcorp's Valuer and Te Runanga's Valuer shall jointly inspect the Farms, Te Runanga may identify combinations of Farms to be valued and, if necessary, subject to Adjustment, selected and transferred as a group in accordance with this Section 6 and Landcorp's Valuer shall provide to Te Runanga a valuation report for each Farm or each combination of Farms so selected;

(c) Stage 3: Te Runanga shall select Potential Farms (which shall then become subject to Valuation);

(d) Stage 4: Valuation of each Potential Farm shall then be carried out in accordance with the Valuation Methodology; and

(e) Stage 5: the value of Potential Farms will be subject to Adjustment in accordance with the Valuation Methodology.

6.2.3 Final selection

Te Runanga and the Crown have agreed the process by which Te Runanga shall then select Settlement Farms following Valuation and Adjustment and the treatment of Farms and Potential Farms which are not finally selected by Te Runanga.

6.2.4 Terms of Transfer

Te Runanga and the Crown have agreed how Settlement Farms and Stock and Plant shall then be transferred from Landcorp to Te Runanga (which shall be done in accordance with the Terms of Transfer and the Stock and Plant Terms of Transfer respectively).

6.2.5 Farm Management Regime

Te Runanga and the Crown have agreed the Farm Management Regime which, aside from disclosure for Valuation, shall also apply to:

(a) Capital Expenditure in respect of each Farm;

(b) the production of Landcorp's farm management plans for each Farm; and

(c) the manner by which Landcorp shall continue to carry out its farming operations on each Farm.

6.3 TRANSFER VALUE AND SELECTION - THE PROCESS STAGE BY STAGE

6.3.1 Disclosure, initial selection and Transfer Value

Te Runanga and the Crown agree that:

(a) disclosure shall be made to Te Runanga in accordance with paragraph 1 of the Farm Management Regime;

(b) each Farm shall be jointly inspected by Landcorp's Valuer and Te Runanga's Valuer and Landcorp's Valuer shall provide Te Runanga with a valuation report for each Farm or group of Farms (if applicable because of any notice given by Te Runanga under clause 6.4) in accordance with the Valuation Methodology;

(c) selection of the Potential Farms shall take place in accordance with clause 6.5;

(d) Valuation and Adjustment (if applicable) shall be carried out and completed in accordance with the Valuation Methodology; and

(e) selection of the Settlement Farms shall take place in accordance with clause 6.6.

Clauses 6.3.2 and 6.3.3 set out the first stage of that process and clauses 6.3.4 to 6.3.9 are a summary of the other stages of that process.

6.3.2 Stage 1 - General Disclosure

No later than the next Business Day after the expiration of the period of 10 Business Days commencing on the date of this Deed the Crown will deliver to Te Runanga the information set out in paragraphs 1.1 and 2.1 of the Farm Management Regime. When providing the information the Crown shall, where relevant, specify the date as at which the information is current. Unless otherwise stated, the information shall be as at the date of this Deed.

6.3.3 Stage 1 - Disclosure of Financial Trading Results

The Crown shall disclose Financial Trading Results if required in accordance with paragraph 1.2 of the Farm Management Regime.

6.3.4 Stage 2 - Joint Inspection And Valuation Reports For Farms and Asset Definition

In accordance with the Valuation Methodology:

(a) Landcorp's Valuer and Te Runanga's Valuer shall complete within 62 Business Days from the date of this Deed the joint inspection of all Farms;

(b) Landcorp's Valuer and Te Runanga's Valuer shall disclose in writing to each other all relevant comparable sales evidence in respect of all Farms;

(c) Te Runanga may identify combinations of Farms which are to be valued, subject to Adjustment, (if necessary), selected and transferred as a group and have a single Transfer Value attributed to them and which may only be selected as a group and not individually; and

(d) Landcorp's Valuer shall provide to Te Runanga full valuation reports confirming its assessment of the current market value of each Farm as at Valuation Date. This valuation report shall comply with the requirements of paragraph 6 of the Valuation Methodology and shall be delivered no later than the next Business Day after the expiration of the period of 21 Business Days commencing on the Legislation Date or the next Business Day after the expiration of the period of 21 Business Days commencing on the completion of joint inspections, whichever is the later.

6.3.5 Stage 3 - Selection of Potential Farms

After Te Runanga's receipt of Landcorp's Valuer's valuation reports in respect of each Farm and no later than the Initial Selection Date, Te Runanga shall:

(a) select the Potential Farms, on an indicative and non-binding basis in accordance with clause 6.5; and

(b) provide to Landcorp and the Crown, in respect of each Potential Farm, either:

(i) confirmation that Te Runanga accepts Landcorp's Valuer's valuation report (in which case the current market value of the Potential Farm as set out in that valuation report shall, subject to Adjustment and the Terms of Transfer, be the Transfer Value of the Potential Farm); or

(ii) a notice rejecting that report which shall be accompanied by a full valuation report confirming its assessment of the current market value of each Potential Farm in respect of which Te Runanga disagrees with Landcorp's Valuer's valuation report. This valuation report shall comply with the requirements of paragraph 7 of the Valuation Methodology.

6.3.6 Stage 4 - Valuation of Potential Farms

As soon as possible, following the receipt by the Crown of Te Runanga's notice of selection of the Potential Farms, but no later than the Adjustment Date, Te Runanga and the Crown shall carry out the Valuation of the Potential Farms referred to in clause 6.3.5(b)(ii) in accordance with paragraphs 7, 8 and 9 of the Valuation Methodology, to determine the current market value of those Potential Farms as at the Valuation Date.

6.3.7 Stage 5 - Adjustment

Following the Adjustment Date, Te Runanga and the Crown shall carry out Adjustment in respect of certain Potential Farms in accordance with paragraph 10 of the Valuation Methodology, to determine changes, if any, to the Transfer Value attributable to the circumstances specified in that paragraph.

6.4 ASSET DEFINITION

6.4.1 Notice of asset definition

No later than the Asset Definition Date Te Runanga may give written notice to OTS and Landcorp describing combinations of single Farms, by reference to the details set out in Attachment 6.1, which are to be treated as one Farm for the purposes specified in clause 6.4.2(a) and as a group of Farms for the purpose specified in clause 6.4.2(b).

6.4.2 Effect of asset definition notice

If Te Runanga gives a notice under clause 6.4.1:

(a) each combination of Farms will be treated as a single Farm for the purposes of clause 6.5, clause 6.6, and the Terms of Transfer; and

(b) each combination of Farms will be valued as a group of Farms for the purpose of the Valuation Methodology.

6.4.3 Basis for asset definition

Any combination of Farms specified in a notice under clause 6.4.1 shall include, in any one combination, only Farms which:

(a) fall in the same category of land use such as dairying, deer farming, sheep, cattle, cropping or other recognised farming type; or

(b) are reasonably proximate.

6.5 SELECTION OF POTENTIAL FARMS

6.5.1 Notice of initial selection

No later than Initial Selection Date, Te Runanga shall notify the Crown and Landcorp, by reference to the details set out in Attachment 6.1, of each Farm which it has selected to have its Transfer Value agreed or determined in accordance with the Valuation Methodology.

6.5.2 Consequence of failure to give that notice

If Te Runanga fails to give that notice by Initial Selection Date, all Farms shall be deemed to be Potential Farms.

6.5.3 Treatment of Farm not specified

Immediately upon receipt by the Crown of that notice, this section and its Attachments (except clause 6.6.3 and clause 6.7.1) shall cease to apply to any Farms not specified in that notice.

6.6 SELECTION OF SETTLEMENT FARMS

6.6.1 Notice of final selection

No later than Final Selection Date, Te Runanga shall notify the Crown, by reference to the details set out in Attachment 6.1, of each Potential Farm which it has selected as a Settlement Farm.

6.6.2 Consequence of failure to give notice

If Te Runanga fails to give that notice by Final Selection Date, this section and its Attachments (except clause 6.6.3 and clause 6.7.1) shall cease to apply to Potential Farms.

6.6.3 Certain provisions continue to apply

All Farms, including Potential Farms which are not acquired by Te Runanga as Settlement Farms shall still come within the category of assets that are subject to the RFR and shall still be subject to clause 8.4.

6.7 FARM MANAGEMENT REGIME

6.7.1 Operative clause

Te Runanga and the Crown agree that paragraphs 2, 3 and 4 of the Farm Management Regime apply to the continued operation by Landcorp of the Farms. The Farm Management Regime shall continue to apply to each Farm or Potential Farm which does not become a Settlement Farm but, in respect of any Farm that Landcorp may sell without Te Runanga's consent in accordance with Section 8, the Farm Management Regime shall not apply with effect from the date on which the Farm is transferred by Landcorp as a result of such sale.

6.7.2 Summary of Farm Management Regime

Aside from the rules set out in the Farm Management Regime for disclosure for the purposes of Valuation, the Farm Management Regime contains three major sections, being:

(a) Capital Expenditure restrictions: Landcorp may not spend more than $3,800,000 in aggregate for all Farms for each of the 12 month periods from 1  July 1997 and 1  July 1998. This regime sets certain limits on the level of, and variations to, individual Capital Expenditure for each of the Farms and procedures by which Te Runanga may agree to Landcorp incurring further Capital Expenditure. Capital Expenditure properly incurred by Landcorp in compliance with the Farm Management Regime shall be relevant to Adjustment.

(b) Production of Farm Management plans: Landcorp shall be required to provide Te Runanga with its current farm management plans for each Farm. Te Runanga's consent shall be required for certain departures from these farm management plans.

(c) Continued farming operations: Landcorp shall be required to manage each Farm generally in accordance with those farm management plans and, from Adjustment Date, in accordance with good husbandry practices.

6.8 TRANSFER OF SETTLEMENT FARMS AND STOCK AND PLANT

6.8.1 Transfer and payment - Farms

On the Completion Date, the Crown shall transfer each Settlement Farm to Te Runanga in return for and in consideration of payment by Te Runanga to the Crown of the Transfer Value agreed or determined for each Settlement Farm (which shall be the current market value of each Settlement Farm as at the Valuation Date as agreed or determined by Valuation and subject to Adjustment and the Terms of Transfer.)

6.8.2 Terms of Transfer - Farms

The terms and conditions on which each Settlement Farm shall be transferred by the Crown to Te Runanga shall be those specified in the Terms of Transfer, which are deemed to be a separate agreement in respect of each Farm.

6.8.3 Valuation and transfer - Stock and plant

Stock and Plant shall be valued as at Completion Date in accordance with the Stock and Plant Terms of Transfer. Stock and Plant shall also be transferred from the Crown to Te Runanga on Completion Date in accordance with the Stock and Plant Terms of Transfer.

6.8.4 Summary - Stock and plant

By way of summary, those provisions:

(a) require Landcorp to stock each Settlement Farm at Completion Date with Stock (to the extent Landcorp already owns and keeps Stock on the Farms as a whole) of the type, age structure and condition which could be expected to be found on a similar farm run by an average efficient farmer;

(b) set out a process for agreeing or determining the market value of that Stock on each Settlement Farm as at Completion Date;

(c) require sale and purchase of the Stock to take place on Completion Date;

(d) require Landcorp to provide Te Runanga with a list of Plant on each Settlement Farm which Te Runanga may then select to acquire;

(e) set out a process for agreeing or determining the market value of Plant selected by Te Runanga as at Completion Date; and

(f) require sale and purchase of the Plant to take place on the Completion Date.

The market value of Stock and Plant to be determined in accordance with this clause and the price at which Stock and Plant is transferred from the Crown to Te Runanga shall be irrelevant to, and fall outside, the requirements of clause 8.3.

6.9 FURTHER PROVISIONS

6.9.1 Requests for further information

At any time before Completion Date (or later if the Crown has not complied with its obligations under this Section in respect of Settlement Farms), Te Runanga may require from the Crown or Landcorp any information concerning the Farms, that is additional to that already provided and not available to the public and which Te Runanga reasonably requires for it to make the decisions or selections contemplated by this section. If the Crown or Landcorp possesses or can reasonable procure such additional information then the Crown shall provide to Te Runanga, or allow Te Runanga to inspect, such additional information in a timely manner.

6.9.2 Use of information

All information provided by the Crown or Landcorp to Te Runanga at any time under this Section shall be used by Te Runanga and its advisers only for the purposes contemplated by this Deed of Settlement and for no other purpose.

6.9.3 Confidentiality

Where the Crown or Landcorp is unable to provide to Te Runanga information under this Section without any further reasonable assurances of confidentiality in favour of the Crown or Landcorp or any other third parties, then Te Runanga and its advisers shall provide the required reasonable assurances. Such assurances shall not preclude disclosure by Te Runanga of such information to any other person which has itself given assurances to the same effect as Te Runanga's assurances, unless the Crown reasonably objects to such person and the Crown has given notice to that effect to Te Runanga.

6.9.4 Crown's covenant regarding information

The Crown covenants and warrants to Te Runanga that all details, forecasts, projections, estimates, opinions and other information to be provided by the Crown to Te Runanga pursuant to clause 6.3.2 or clause 6.9.1 shall:

(a) be the best information available to the Crown or the relevant Vendor Agency at the time of provision; and

(b) genuinely represent the views of the Crown or the relevant Vendor Agency and be reasonably arrived at on the basis of the best information available to them at the relevant date.

6.9.5 Disclaimer

Te Runanga acknowledges and agrees that:

(a) other than those set out in clause 6.9.4, no representation or warranty is given, whether expressed or implied, nor is any responsibility accepted by, the Crown or the relevant Vendor Agency with respect to the completeness or accuracy of the information to be provided by the Crown to Te Runanga pursuant to clause 6.3.2 or clause 6.9.1; and

(b) other than those set out in clause 6.9.4, no representation or warranty is given, whether expressed or implied, nor is any responsibility accepted by, the Crown or the relevant Vendor Agency with respect to Te Runanga's reliance upon or use of the details, forecasts, projections, estimates, opinions and other information.

6.9.6 Crown primarily liable

Where in this Section or any of its Attachments, an obligation is imposed on, or an action may be taken by, the Crown, the Crown shall either satisfy that obligation itself or procure Landcorp to comply with that obligation or allow Landcorp to take that action. Conversely, where an obligation is expressed to be imposed on Landcorp, or an action is to be taken by Landcorp, the Crown shall also be liable for that obligation or may also take that action.

6.9.7 Unconditional obligations

Clause 17.1 (which provides that this Deed is conditional on the Settlement Legislation coming into force) does not apply to those parts of the Farm Management Regime and the Valuation Methodology which require performance or action to be taken before the Legislation Date.

6.9.8 Errors and misdescriptions

The legal descriptions of the Farms in Attachment 6.1 is believed to be correct. If it is established that any error, misdescription or other inconsistency has occurred or exists, the Crown's obligation shall be limited to correcting the error, misdescription or other inconsistency.

6.10 NOTICES

6.10.1 Communications to be copied to OTS

Any correspondence, notice or other communication made or to be made under this Section and its Attachments to or from the Crown or Landcorp or to or from Te Runanga shall also be copied to OTS.

6.10.2 Application of Notice clause

Clause 20.7 shall apply to this section as if Landcorp were a party.

6.10.3 Recipients and senders of communications

All notices, correspondence and communications under this section and its Attachments shall be validly given or received:

(a) in the case of OTS, by any individual notified in writing to Te Runanga and Landcorp by the Director of OTS at the address or by facsimile to the facsimile number specified in that notification;

(b) in the case of Te Runanga, by any individual notified in writing to OTS and Landcorp by the General Manager of Ngai Tahu Property Group Limited and at the address or by facsimile to the facsimile number specified in that notification;

(c) in the case of Landcorp, by any individual notified in writing to OTS and Te Runanga by the Chief Executive of Landcorp and at the address or by facsimile to the facsimile number specified on that notification,

and clause 20.7 shall apply accordingly.

6.11 LEGISLATION

Unless there is an existing enactment to the same effect on the date the Settlement Legislation is introduced to Parliament, the Settlement Legislation shall contain the following provision or a provision to the same effect:

"Whereas the land described in paragraph (a) and the land described in paragraph (b) of subsection (2) of this Section is occupied by Landcorp Farming Limited as part of the adjoining Eglinton and Eweburn farm properties: And whereas, at the time of the transfer of the adjoining properties from the Crown to the company, it was intended that the Crown would subsequently transfer to the company the land described in those paragraphs and thereby regularise the company's occupancy of that land: And whereas section 11(1) of the National Parks Act 1980 prohibits the exclusion of land from a national park, except by Act of Parliament: Be it therefore enacted as follows:

(1) The land to which this section relates is hereby excluded from the Fiordland National Park and declared to be Crown land for the purposes of the Land Act 1948 and shall be available for alienation to Landcorp Farming Limited without payment and without public notice and without competition:

(2) This section relates to those pieces of land in the Southland Land District-

(a) Comprising 54.3800 hectares, more or less, being part Fiordland National Park situated in Block X, Te Anau Survey District, and shown marked "A" on S.O. Plan 11756, and being part of the land described in the Fiordland National Park Order 1978: